Grindr Inc. Q1 FY2025 earnings call

George Arison highlighted that Grindr Inc. started 2025 with exceptional Q1 results and strong product development momentum. The company raised its full-year outlook to achieve 26% or greater revenue growth and at least a 43% adjusted EBITDA margin. RightNow has been rolled out in 17 major cities, with 20 - 25% of users engaging with RightNow weekly and initial monetization in select regions. RightNow is expected to expand to nearly 50% of weekly active users in the coming weeks. On the AI front, Grindr Inc. has launched AI-native products like A List, which is in testing with a quarter of unlimited users. Woodwork, a men's health subscription service, had a soft beta launch. In 2025, the company aims to launch over 40 products and features across core use cases, AI, and the gateway.

In the first quarter of 2025, Grindr Inc. reported total revenue of $94 million, representing a 25% year-over-year growth. Direct revenue stood at $80 million, a 24% year-over-year increase, driven by the continued demand for Unlimited Weekly and Extra Weekly. Indirect revenue for the quarter grew 26% year over year to $14 million. Adjusted EBITDA for the quarter was $41 million, which was 43% of revenue. Average monthly active users reached 14.6 million, a 7% year-over-year increase. The average number of paying users in the quarter was 1.2 million, up 16% year over year, resulting in a paid penetration of 8% for the quarter. The average direct revenue per paying user was $22.86, a year-over-year increase of 8%.

Grindr Inc. raised its full-year guidance to expect revenue growth of 26% or greater and an adjusted EBITDA margin of at least 43%. The updated outlook reflects the strength of the business model. It is expected that Q2 2025 will have EBITDA similar to Q1. Beginning in Q2 2025, there will be no longer a revaluation of the warrant liability, and the company expects to report positive GAAP EPS going forward.

During the call, it was noted that forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from the views expressed in forward-looking statements. Some of the risks that could cause actual results to differ from forward-looking statements have been set forth in the company's earnings release and periodic reports filed with the SEC, including the annual report on Form 10-K for the year ended December 31, 2024.

Q: On the higher 2025 guidance, what changed since the initial forecast and what were the biggest drivers of the higher revenue growth and EBITDA growth targets?

A: Tests of initiatives were successful over the last few weeks, RightNow's early monetization, FX tailwind in the back of March, and the product work with over 40 initiatives this year including AI-related ones contributed.

Q: Could you tell us how you plan to integrate Woodwork into the Grindr Inc. ecosystem over time and how it might open up Grindr Inc. to other healthcare-related offerings potentially in the future?

A: Woodwork is in the early stages. There are opportunities like subscribing to Woodwork and getting a discount on Grindr Inc. subscription, integrating payments between Woodwork's subscription and Grindr Inc., and it could potentially open to other healthcare offerings in the future.

Q: How do you see Grindr Inc.'s defensibility of its position against competitors and how is your product lineup addressing unmet needs?

A: Grindr Inc. has a robust product roadmap centered on intent-based offerings. RightNow is an intent-focused launch with positive user response. There are also plans to address long-term relationship needs.

Q: How is the picture from your seat regarding macro weakness in certain audience segments and potential impacts from a broader economic slowdown?

A: No consumer ecosystem weakness has been seen so far. The user base has higher education levels and disposable income, making them less affected by economic slowdown.

Q: How would you characterize the scope for growth on users, engagement, and monetization between international opportunity and the US as you look out over the next twelve to eighteen months?

A: There is opportunity to grow domestic user base as there are unmet users in the US. Internationally, there is more opportunity with less awareness, need for better localization.

Q: Can you just expand a bit on the AI-native product suite powered by A List? And the early progress you are seeing there and what you are most excited about?

A: A List applies AI architectural layer to users' track activity, providing smarter connections. It's an amazing product with early positive progress, and there are other AI products like Discover in the works breaking geographic barriers.