Grindr Stock

I think with that, we're going to get kicked off. Okay. So look, it's great to start our next fireside chat. I know people are moving from room to room. But in the interest of time, let's kick it off.

We're so happy to have Grindr back to the conference again this year. George has been nice enough to make this an annual tradition. I feel like we've had this conversation now for a couple of years in a row.

I was actually talking to somebody that I've now been to this conference 7 times total. This is my fourth for Grindr and 3 before, so a lot.

There you go. Well, I always enjoy the opportunity to talk and to catch up away from the usual earnings cadence where we're having those types of conversations. But maybe talk a little bit, for those who don't know it as well that are either listening in or in the audience, a bit about the journey the company has been on because the company has been evolving on the platform side, on the product side, and you've always had a lot of ideas about where you want to want to take the company over the medium to long term. Talk a little bit about going backwards before we go forwards.

So we -- Grindr is the largest network of gay and bi people anywhere in the world. We have about 15.5 million monthly active users around the world. The total number of people who, during the course of the year, use Grindr is actually much larger than that, but some of them use it for just for part of the year rather than all the time. We actually don't report users. We report devices. So that's an important consideration when you think about the number that you see.

Our -- we've been around for a long time. Grindr got started in 2009 and took off. Like we never did any marketing. Kind of the fact that it was on mobile and on iOS made it grow. Grindr was owned by Kunlun for a while and was then bought out by a group of investors under CFIUS' directive in 2020, right in the middle of COVID and then went public in 2022. I've been at Grindr since 2022 as well.

And the way we have thought about our journey since then is in the following kind of phases. First, we wanted to make the product live better. And I think we have done a lot of that, and we can talk through how we've done that, while at the same time, driving increased monetization by getting more people to pay for Grindr. We've gone from sub 6% payer penetration to over 9% payer penetration, while MAU has grown by several million users. And so if you stabilize MAU for where it was in 2022, we're actually over 12% payer penetration now, which is fantastic.

Secondly, by developing new products that will drive monetization even beyond that, and we'll talk about that in a minute as well; and then thirdly, by investing in new opportunities that can drive growth by capturing more of the wallet of our users outside of the connections experience. So that's been kind of the journey that we've been on. We've fundamentally transformed the team. Only about 20 people who were at Grindr in 2022 are still at Grindr today, so it's been a complete rebuild from that perspective.

We invested tremendous resources into rebuilding the technology. Most of our code base is rewritten now and all new. We've been very early in adopting AI in how we work. About 80% to 85% of our code base is now AI generated. And our engineering productivity has 2.5x-ed in the last year, which I think is fantastic.

For the first time in my career in technology, engineering is no longer the problem in terms of like, hey, I can't get something done. It's more we don't have enough product resources to actually manage all the work that engineers can do. And we've also been really early in adopting AI in the product itself and the experience that people have.

So it's been a really fun and awesome journey, and we still have a ton of opportunity. We've -- our kind of goal every year is to grow 20-plus percent with certainty. And I think we've done that, and I believe we can continue to do that for the next many years.

Okay. So we're going to go into all of those various areas, but let's start with how your view has evolved with respect to the market opportunity itself. How many people have the ability to identify with the app? What kind of growth opportunity do you see in developed markets versus emerging markets? How do you think that continues to evolve?

So there's definitely a tailwind behind Grindr in terms of more people being willing to say that they're gay, more people coming out and being comfortable and as a result, more people being willing to use our product. That was true in the U.S. in the time when Grindr launched, obviously, with gay marriage and acceptance increasing significantly. And it's now true in other parts of the world, whether it's in Latin America or Asia or India.

And so that opportunity is pretty significant, and it's a huge tailwind for us. That helps with users. It doesn't necessarily help with paying users and/or revenue because, obviously, in the countries where you see that benefit now, you don't have as much of an income opportunity for people. And so their ability to pay for the product is lower.

When it comes to the market opportunity from the revenue perspective, the way we -- when I started at Grindr, what everyone focused on is your payer penetration is 5-ish percent. Matches with Tinder is at 25%. If you get it to Tinder levels, the business is going to grow massively. That made sense to some extent, and we've done a lot of that so far, as I described. But what you realize along the way is that if you keep doing it, you actually end up with a product that no one wants to use because the free product will degrade dramatically, and that will not be good for anyone.

And so we did it for a few years, and then we said now it's time to enter a new phase where we actually start creating new product experiences within the product that people are willing to pay incremental amount of money for. That doesn't -- that means that we probably won't be converting more people to become payers, but we will get the people who are already payers to pay us more money.

And that's the phase of market growth in -- revenue growth that we are in today. The first step was to raise prices on our paid tiers. We've done that very successfully. Churn on that was much lower than we thought it would be, and we're really happy with the outcome. And then the next phase is launching some of these more premium tiers for our users. And I think that's going to be a really successful effort for us.

And then beyond that, the other really big learning for me has been how much opportunity there is in health care. We launched Woodwork as our first kind of toe in health care a couple of years ago. That's our performance medications brand. But the more time we spend in health care, the more we talk to our users about health care and the learnings that we got from Woodwork, we realized that doubling and tripling down on health care makes a ton of sense. And we think that, that can be a massive growth opportunity for us in the years to come.

Okay. I do want to maybe parse out a few of what you just said in there. Come back to the free tier and users who come on to the platform with that as maybe an entryway product or experience with your brand. Talk a little bit about what you need to do to foster the free tier, make sure it continues to be the avenue of top-of-the-funnel growth in the platform that it is today, just so you don't lose any momentum from that perspective.

Totally. So that is something that is very different about Grindr than other dating products. I think Grindr is more than a dating product in general, but in this sense, we're very different. An average user can use Grindr and never be a payer and have a very satisfactory experience. Now some of them might not like the fact that they see ads, but other than that, the usability of the product is very open, and you can speak to many people in an open way without being a payer. We never limit any chats that you can send. You can -- people can send as many chats as they want and engage in full-on conversations. So in that sense, Grindr is almost like Instagram than it is a dating product.

That is crucial because Grindr is a rite of passage for a lot of people who become 18, are trying to figure out, am I gay or not, what does it mean to be gay, what is the gay life like. They join Grindr, and it's a great source for them to figure all that out. And we want to be able to foster it all the time, so maintaining this really robust, free product is really critical for us.

We've invested a lot of resources into the free product, and we made it a lot better. The free product is way less buggy now. It doesn't crash anywhere near as much as it used to. And the feature set that we offer is deeper now than it was, and a lot more is on the come. That is, again, crucial to our user growth.

The really awesome thing is that our pay user penetration is much lower among 18 to 30 cohort. And then it grows as the user base ages and is quite high at the kind of 40-plus age cohort. We released this data last November, so it's available on our website.

And so we attract new users, mostly who are younger in that 18 to 30 cohort. And then as they age, they become payers. It so happens that as they age, they also develop more disposable income and are more able to pay. And that's a really good dynamic, which we want to continue to nurture.

Okay. And then as people age in or move towards being more monetizable users through the life cycle of the product, talk a little bit about what you've learned. You talked a little bit about raising price and not seeing as much impact on churn. But talk a little bit about the learning curve you've had about price elasticity around the service because you strike a very unique tone relative to other companies I cover where you're very protective of not overmonetizing and being protective of the user experience, but there is a monetization journey that I think the company can go on.

Well, our ARPU has gone up dramatically, right? I think we've had a 50-plus percent increase in our ARPU over the last 4 years. So we certainly are monetizing way more now than we used to, both in terms of -- we went from about 800,000 paying users in 2022 to 1.5 million paying users today. I mean that's a huge change. And those people are paying 50% more per user than they were paying previously. So we've had a really strong journey in monetization. But at the same time, we've done that without having any negative impact on the user experience, and our engagement metrics are the same as they were before we started on that journey, which I think is really important.

I'm not at Grindr to drive monetization and then go get a different job. I'm at Grindr to continue building an awesome product that has been incredibly important for our user base for the last 17 years and I hope will be important for the next 20. And so we need to balance what we do for revenue with ensuring that the product remains something everyone wants to use and come to when they're in that kind of 18 to 25 cohort.

That said, I believe that there are many new features and services that we can offer to our paying users for which they will pay significantly more money. And so far, our experience has been that when we offer those products and there's a real value in what we offer, our users are very willing to pay for them. And nothing that we've done so far has disproven that thesis, and we had a bunch of data points suggest that they are willing to do that.

And so what we're going to continue doing in '27 and '28 is offering these premium experiences through a tier that we're calling Edge to start with. That will be incrementally more expensive than anything we offer today. It's meant for a small number of people that will subscribe to it. We'll probably even cap it at, say, 1% of our MAU total if we ever get to that number. But the revenue opportunity in it is very large.

And maybe just talk a little bit about what an opportunity for subscription offering presents to you as a company in terms of like not only the monetization component to it but what it might also mean towards solidifying the upper end user and creating an engagement trend and all those things that are outputs as well.

So Edge is this new tier that we're building. It's an AI-based tier. Users obviously don't care whether it's AI or not. What they care about is the outcome of the features that they're getting, but the actual features were built with a lot of AI capabilities. What Edge offers you are things like insights about our users. So we look at our user behaviors. We look at their chat history with other people and try to infer certain new data points about them, which we then share to an Edge subscriber.

Edge goes through all your chats, and Grindr users chat a lot. An average Grindr user sends 50 chats per day. And by reading your chat, it creates a summary of each conversation and then prioritizes the individuals that you should be actually engaging and talking with, which is, in some ways, quite magical. Like you couldn't have products like this 3 or 4 years ago before GenAI. Now you can. This has all been packaged into a new tier that's called Edge, and Edge will continue to improve over time.

The opportunity here is that a few users will subscribe to it. Will it be 20,000, 50,000, 100,000? I don't yet know. But that's kind of the journey that we'll go on starting later this year, early next year and understand how big it can be. And by being subscribers to this new tier, they'll drive our growth in revenue while, in effect, subsidizing a really awesome free experience for everybody else. And that's really important because the reason these users want to pay for a value-added service is because they want to be able to engage with a very happy free customer.

Okay. In terms of marketing a subscription like that, how much of it will be a marketing effort? And how much of it will be already identifying who the more likely users are that will want to subscribe and just doing very hyper targeting and putting a message in front of individual users?

Both. And Grindr definitely historically has not been good at product marketing. Frankly, that's not been a muscle that we are very used to using. And for this launch, we want to be much better at it, and that is something we've been working on for the last few months. Like what will be the right marketing campaign for this product?

I'm not going to announce what it's going to be here, but when we go live with it, I think it's going to be pretty special. It certainly will be a lot more product marketing than anything we've done in the past.

That said, our AI now, we call it gAI, is actually really, really good. And we are pretty awesome at knowing which of our users are more likely to become subscribers to this new tier. And so obviously, we're going to do a lot more marketing targeting at those users than overall.

But part of our view on Edge is that we want to create FOMO around it. We want people to want to be in it. And so you do want to market both to people who are more likely to convert to it as well as to everybody else so that it becomes a self-fulfilling prophecy that more people want to become part of that tier.

Okay. You did talk earlier about health and the importance of health to your platform but also to the community that you serve. Talk a little bit about the opportunity set that sits in front of you to be a provider of solutions, advertising, product, how health might evolve broadly for the platform?

So Grindr has always played a really big role in our users' health. I think not surprising to anyone that health matters a lot to gay men for a couple of reasons. Number one, we're just a lot more wellness conscious. We do a national survey of gay men every year, and one of the most striking data points that is usually when we ask how often do you work out, and over 50% of gay men will tell you that they work out 5-plus times a day, which is like 10x national average. And so wellness does matter to our users a ton.

And then secondly, many people still have personal experience with how terrified they are of catching a sexually transmitted disease. And so from that perspective, health matters a lot as well.

Grindr has always played a really big role in the latter. PrEP, which is a medication that you take to avoid getting HIV, had been around for years and hadn't been seeing the uptick that it needed to see until Grindr put it on the profile in about 2014, 2015 on whether are you on PrEP or not. And that one small change pushed PrEP from being kind of out there on the periphery to becoming central to how many gay men think about their sexual health.

And now like being on PrEP is like a very common thing for so many people. And so people rely on us for a lot of information about health as a result. We, from all those data points, felt like health and wellness is a huge opportunity to expand Grindr and what we do. We entered health through a performance medication focus with Woodwork, which offers ED medications, GLP-1s, a couple of peptides. And we chose that as the first place to go to because it's cash pay.

And so the regulatory component to being cash pay is a lot simpler. It was easier to launch with a third-party partner, open loop that does all the fulfillment and the prescriptions and the logistics of that. But for us, it was a learning moment of like, hey, we're going to do this, see what we need to do and how can we do better with health. And what do our users expect? Do they even trust us with things like this?

But we really think of health as a 3-legged stool. The performance medications is one leg of that stool. STD transmission management and prevention is the second leg of that stool, and then clinical care and longevity is the third. And over time, we're going to build products and services across all 3. And we really believe that health care can be a huge opportunity for us. I'm not promising this, but I can envision a world where health care as a product set 5 years down the road is as big as core Grindr is today.

Got it. Okay. And then building on that answer with respect to health, you've talked about creating a wider sense of community and offerings around the concept of the gayborhood. And you've pointed out some examples around wallet share and purchasing habits. Talk a little bit about what you could stand up there directly or through partnerships that could create a more transactional or commercial nature to the platform over time as well.

When we became public and started talking to more investors, more analysts and frankly, talking to media as well. One of the things we realized is that most people still thought of Grindr in a very narrow sense of like, hey, this is a product for a casual connection, aka hookup. But in practice, a lot more was happening on Grindr than that, both in social connections but also in a lot of other ways. And so we wanted people to understand that we do so much more.

Now 50% of currently existing gay male relationships in America started on Grindr. So yes, there are a lot of casual connections, but also half of the long-term relationships started here. And so how do -- we wanted a way to explain this to people and kind of creating this moniker of a global gayborhood was a way to do that. Those of us who live in large cities have the opportunity to walk into a gayborhood and we have a community around us right away. But for most people, that's not something they can do, and Grindr is that community.

In a gayborhood, you have a lot of fun things to do like going to bars and going to restaurants. You also have a lot of businesses that cater to your community that understand you a lot better and you can buy from them. And so we felt that there's an opportunity to start expanding what Grindr offers and capturing more of the wallet of our users through those kind of services.

We've tested one, which is health care, and the feedback is that clearly works, and we should double and triple down on that. We're doing some things in travel, whether it's in-app features like maps where we tell you where to go to when you're traveling and over time, adding things like what are the activities happening in those locations, what are the right hotels for you to stay at, what are the right bars to go to. So travel is another big opportunity.

Two, perhaps content. We build a content hub on Grindr. We call it Grindr Presents in which we bring together Grindr-created content that people watch. And we have hundreds of thousands of people a month going to the content hub to consume that content. Perhaps over time, we start adding non-Grindr-created content to that content hub.

So there's many different ways in which we want people to experience what -- Grindr and what they do on it. Today, users do a lot of things by hacking the product. And over time, we want to be able to build features for those hacks, so they don't have to be hacking the product.

Okay. You referenced a little bit earlier some of your initiatives around how AI is changing the platform. Can you talk a little bit about both what it's doing for your cost structure but also how you think it might change the consumer-facing aspects of the platform over the longer term?

Absolutely. One of the reasons I was excited to take this role was that Grindr has so much data. And this richness of data, 50 chats a day, 1 hour on the app a day, like that's an incredible amount of data that our users create, was creating a massive opportunity for AI. If you look at AI companies today, start-ups that is, most of them are an enterprise. There's very little consumer-facing GenAI that is being created. And the reason is that a start-up needs data to make AI work, and it's very hard to get the consumer data.

But we don't have that problem. We have the data, and we can behave like a start-up in creating new experiences. To start with, just step back a little bit in terms of how we work. Our AI adoption has been incredible. Every engineer is now an engine manager of AI synthetics that are writing code. Our productivity has increased dramatically. Frankly, we need the tools to catch up in other parts of a business. The tools for products, the tools for design, the tools for finance using AI are nowhere near as good as the one for engineering. And that is actually now keeping the rest of our org behind.

So we've been very focused in becoming AI native in how we work. My workflow every day has changed as well. I think I'm a way better CEO, frankly, thanks to AI now. I'm way clearer in direction that I give to my team. I am able to share what's happening in my mind and what I'm thinking about, way better with the team because I am constantly in conversation with ChatGPT primarily and Grok secondarily around what I'm thinking about and asking them to like do things like, hey, today, you're going to be like Elon Musk and you're going to challenge me on these things and critique me as if you are him. And it's really, really strong. Like it's a completely different way of working now.

And the amount of stuff that I can get done is way higher. And I think that's true across everybody at Grindr. So I'm really excited about the world that's coming because this is all like super early days. And this is like 1996 for the Internet.

And then in terms of the products we're building, we have created some really cool previously unimaginable experiences, all of which are now in Edge for our users. But the way we think of them is a little bit like a Tesla Roadster. Edge is like the Grindr version of the Roadster. It's designed for a few people who are going to go and test drive it first. But then over time, we will take these product features and democratize them by making them available to a broader set of users over time, aka create our version of a Model X and then a Model Y because we want every Grindr user to have a really awesome AI-native experience.

My guess is that Grindr that will exist in 2 years as a product will be fundamentally different than the Grindr that exists today. It will be way more AI native and AI will be embedded into every single use case of what's happening in the product.

Okay. Understood. You've been on quite a journey with respect to your cost structure and investments because when you took the job and some of the earlier conversations we had were you found you could be more efficient as a company coming out of COVID than maybe you had thought when you'd first taken the job. And now there's a lot of things you want to invest in to make sure you don't miss the market opportunity. Talk a little bit about the investment and capital allocation journey you've been on as a CEO in finding the right balance between driving efficiencies but also not missing growth opportunities.

When I took this job, if I had to go back to 2022 and say like how big of an engineering team would you need today in 2026 to be doing all the things that you are doing, I would have said something like 300 to 350 people. And I remember meeting with the former CEO of PayPal, who is now the CEO of Verizon roughly in that time period. I think it was like early '23 and telling him this, and he's like, "No, George, you won't." And I'm like, "What do mean I won't? Like 300 people is not actually that many engineers." And he's like, "I'm telling you, you won't." And that was the first time I started to really think through like what will AI do to engineering, and he really challenged me on that point. And frankly, he was right and I was right.

We are doing what it would have taken 300 to 350 people to do from technology investment perspective in 2022. But we're doing it with about 100 people, about 95 to be exact. And we are not even done with all the efficiency. So that's one bucket of what I learned.

Number two, we learned that productivity at Grindr in 2022 overall across the entire business was nowhere near at the level that it needed to. And I think Grindr had hired a ton of people during COVID. All of them had been remote. It was really suffering from that remote environment because there was no unifying culture that was bringing people together and pushing us to go after audacious goals. And so the amount of hours people were working was nowhere near where it need to be.

And so we were -- we decided to come back to the office 2 days a week. That forced a lot of people to make a choice and many of them chose to leave. And the result was, today, Grindr has about 185, 186 people. That's less people than where we peaked at in 2023 at 222. Yet in terms of revenue, we are nearly 3x more. And so per employee, revenue has gone up dramatically.

What happened this year is we thought we'd end the year at like 220, 230. We're not anywhere near that. So clearly, we're not going to end the year at 220, 230. And the reason is that we are hiring at a much slower pace. Our bar has gone up, but because of AI, we don't need as many people. And so we are much more thoughtful about who we hire. We've not fired people because of AI, but we certainly have slowed down our hiring because of AI.

I don't think we're not investing in anything we need to be doing. Our investments are fairly strong. I don't feel constrained in going after new goals and audacious things. But I think that being lean is a virtue. And quite frankly, I probably would have been more cautious about this in 2023 had Elon not taken over Twitter and turned a 6,000 organization to a 50-person organization. Nothing had happened. And I'm like if you can do it, I can, too. And the result has been pretty positive, I think.

Yes. Understood. We only have a few minutes left, but I always like to leave on some big picture dynamics of what you're most excited about over the next 12 to 18 months or frame it as what will we be talking about in 12 months' time. Lay out the path forward for us over the next 12-plus months and what you're most excited about.

Number one, I'm super excited about our premiumization efforts and launching Edge and what that will mean for the product as well as how AI will start being used by every other Grindr user. I think we'll have a lot more proof points of that in product, and I'm psyched about that. Number two, I'm really excited about health care and what opportunities lie there. And number three, I don't know what the answer is going to be, but when I sit with our Head of Engineering and talk to him about what he is conceiving to do, it feels like you're talking about science fiction.

We had an engineer -- one of our lead engineers actually posted a note on Slack. I'm going to say 2 things. He posted a note on Slack a few weeks ago saying, I was walking my dog, and I got a notice in my e-mail of a bug that I had of data file -- it was a Saturday -- and so I went to Devin, which is one of the coding tools built by Cognition, and told Devin, can you look at this bug, replicate it, write code to fix it if it's actually real, and then let me know that you've done that. And he's like, before I got home, Devin had done all those things and sent me the full code that it had written to fix the bugs, saying it was ready to be checked in. And then I had to look at the code, review it and press one button and check it into production.

And when you hear things like that, it's literally like watching Star Trek in, I don't know, 2001 or something and thinking of like, oh, yes, like computer, blah, blah, blah, and then the computer would do that. But that's actually real life now.

And now we can't do that for totally new features yet. Like you do that for fixing a bug. But probably in a year, we'll be talking about that about new features. And not only engineers will be doing that, but product managers who had never written a line of code before will be engaging with a software tool that will be helping them be engineers. So like that is incredibly exciting to me, and I think the opportunity there is really massive.

And then the second thing I'm really excited about is self-improving product development, where, today, we design tests, like a product manager and data scientist will sit together, design a test and say, okay, I'm going to launch an A/B test, product with these features, product with these features, and I'm going to see which one does better. But a world that we will be seeing soon will be where you won't have to design a test. The product itself will be agentic enough where it will conceive what it needs to be testing and then will self-improve and come back to you and tell you, hey, I experimented with this, with this and with this. And I think this is the answer, and this is what we should be doing.

That, to me, is even more magical than the first thing, but it's coming. And I really can't wait for that because if somebody who's like a founder who has like 50 things I want to build and I don't -- can't do all of them, if the software itself can help me be building all those things, that's pretty amazing.

Okay. Well, there's a lot to talk about in 12 months' time, plus or minus, as we look forward. George, look, I always appreciate the opportunity to have a conversation. Please join me in thanking Grindr for being part of the conference this year.

Good day, everyone. My name is Megan, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr Second Quarter 2026 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Head of Investor Relations.

Hello, and welcome to the Grindr Earnings Call for the Second Quarter 2026. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. They will make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's Investor page at investors.grindr.com.

Before we begin, I will remind everyone that during this call, we may discuss our outlook, future performance and future prospects. You should not rely on forward-looking statements as predictions of future events. These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of the risks that could cause our actual results to differ from views expressed in our forward-looking statements have been set forth in our earnings release and our periodic reports filed with the SEC, including our annual report on Form 10-K for the year ended December 31, 2025, or any subsequently filed quarterly reports.

During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of these non-GAAP financial measures to their most closely comparable GAAP financial measure are included in the earnings release we issued today, which has been posted on the Investor Relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George.

Thanks, Tolu, and hello. Thank you, everyone, for joining us today. Grindr delivered another outstanding quarter and continued to build on the momentum we have established over the last 3 years. Our users are responding even better than we expected to the significant product work underway across the app, driving strong organic momentum and exceptional second quarter results. Today, we are raising our full year guidance to approximately $540 million in revenue and approximately $232 million in adjusted EBITDA.

What excites me most is that we are able to invest more aggressively in the future of Grindr than ever before while creating stronger operating leverage. With AI, we are delivering on our product road map and expansion efforts with less headcount growth than we expected, particularly in engineering. As always, I encourage you to read our shareholder letter for greater detail, but I believe 3 areas best explain the quarter. First, AI. Over the last several quarters, we have been terraforming Grindr into an AI native company, which is changing how we build software. Engineers are increasingly architecting, directing and reviewing AI synthetics rather than writing code themselves. As a result, our conservative estimate is that engineering output increased approximately 2.5x from July 2025 to April 2026 with roughly the same size team.

Before Gen AI, we estimate that producing that much output would have required roughly 200 additional engineers and about $60 million in annual cost. This is also assuming we could have found that quantity of exceptional engineering talent, which has historically been the true limiting factor. With this technological evolution, our exceptional engineers can now focus more of their time on creativity, judgment and architecture while AI increasingly handles implementation. That is why I call this AI terraforming. It's a bit like creating oxygen on Mars.

Second, product. Many of the product initiatives we have been investing in are beginning to reinforce each other. The free experience continues to improve. AI and better data are making the product more useful. Users are increasingly feeling the benefits of the work we have done over the last several years to simplify and rearchitect our code base. We also continue to make strong progress in both Right Now, which remains one of the most important opportunities to strengthen Grindr's core use case and Edge, our AI-enabled tier that will be a key driver of our revenue growth in 2027.

Third, Madonna. Even a couple of years ago, no one would have expected one of the world's biggest cultural icons to launch a major album through Grindr. Today, that is natural. That incredible moment in Times Square, where an estimated 50,000 people showed up after hearing about Madonna's performance just 30 minutes earlier through Grindr, demonstrated our unique ability to bring together product, culture, commerce and real-world experiences in a way that no other social connections platform can. We're showing that as the Global Gayborhood, Grindr can play a much larger role in gay life without moving away from our core. In fact, the strength of our core is what gives us the opportunity to do more.

Overall, thanks to our team and our users, our business is firing on all cylinders. I continue to believe the opportunity ahead for Grindr is much larger than the market has historically given us credit for. Thank you to our shareholders for your continued support. With that, I will turn it over to John for detailed financial results.

Thanks, George, and hello, everyone. Second quarter was an outstanding quarter across the board, as George highlighted. Revenue grew 33% year-over-year to $138 million. Adjusted EBITDA was $58 million, representing a margin of 42%. The performance was driven by continued momentum in core app revenue, reflecting strong conversion, ARPU and user retention as well as robust ads performance. App-based revenue grew 30% year-over-year to $113 million, supported by solid demand across our extra unlimited tiers and strong consumables performance.

Advertising revenue grew 44% to $25 million, driven by strength in programmatic advertising performance and the continuation of our large year-long direct brand campaign. We continue to expect advertising revenue to run in the mid- to high teens as a percentage of total revenue for full year 2026. This comes even as we are balancing a disciplined approach to third-party ad loads in connection with our priorities around user experience and ecosystem health. As previously discussed, we expect ads in a percentage of total revenue to normalize back near the historical 15% range in 2027 and beyond.

Adjusted EBITDA grew 27% year-over-year to $58 million or a 42% margin. This strong result reflects top line outperformance, combined with the operational leverage unlocked by our AI terraforming efforts. Operating expenses, excluding cost of revenue, were $71 million, up from $53 million in the second quarter of last year, with a portion of the uptick driven by onetime marketing expenses for our Madonna partnership. Our strong revenue growth more than offset this investment. Turning to share repurchase activity.

During the second quarter, we executed another accelerated share repurchase for an upfront payment of $60 million. As of quarter end, this and certain other repurchase transactions remain in progress with settlement expected to be completed in the third quarter. We have approximately $300 million remaining under our $900 million share repurchase authorization, and we'll maintain flexibility to buy back shares opportunistically.

Given our strong growth through the first half of the year, positive user response to core op improvements and higher-than-anticipated AI-driven operational leverage, we are raising our full year 2026 outlook today. We now expect full year revenue to be approximately $540 million, up from $535 million and adjusted EBITDA to be approximately $232 million, up from $227 million. In the second half of the year, as we have previously discussed, we expect growth rates will naturally moderate in the third quarter and fourth quarter as we anniversary the global rollout of our subscription pricing changes and lap more difficult comparisons from the second half of 2025.

Overall, we are pleased with how the business is performing. The structural leverage we're seeing allows us to reinvest in high ROI growth initiatives like Edge while both returning capital to shareholders and expanding our bottom line. We intend to carry this momentum for the rest of the year. With that, operator, please open the call to questions.

[Operator Instructions] Our first question will come from Nathan Feather with Morgan Stanley.

A few, if I may. First, talk about broadening right now. Can you go a little bit more into the changes in the product experience you're making there? And help us think through how right now adoption and utilization has evolved over the past few years that product matured?

Right now was the first product that we started working on after the current management team came into place with the idea that people who joined Grindr joined for many different intentions and users that wanted a more immediate or soon to happen connection that's more casual we're feeling like they couldn't have as easy of a time finding other people who wanted that given that some people didn't want that. And so right now is a way for people to express that kind of need directly and connect with other people who have that interest. We have very good usage on right now.

We're really happy with how much traction that product has gained over the last 1.5 years or so. At the same time, we've gotten feedback on things that users want to be different. As one example, people say, right now, even the name implies that I need to connect this moment. You're in the right now kind of period for an hour also implies that you have to connect this moment, whereas some people are saying, well, I want to be able to connect soon, like it could be tomorrow or the day after, but not in this very moment.

And so we are taking that feedback from users and are going to make some changes to the product to be responsive to that. I think that's a normal kind of process that you normally go through with the product. You launch one version, you get feedback and then improve on it, which is how we tend to build products in general. And I think all these things are going to make the product even better and lead to more people using it.

Some of the other things we've done recently is we now allow people to post in right now without tying that post directly to their Grindr profile because there are people who want to be able to say, "Hey, I am in right now mode. I'm willing to engage people in that, but I don't want people to know on my regular profile that I'm in right now, which I think was really well received as well. And so overall, I'm pretty happy with the product and really happy with the road map that we have for what we want to do to make it better.

Great. That's helpful. And then the 2.5x increase in engineering output is really interesting. And I haven't seen too many companies really try to frame the actual uplift they've seen through this AI tool utilization. I guess can you help us frame out, one, how you're calculating that the kind of methodology there? And then two, how should we think about token costs and how you're balancing between open and frontier models to balance that with profitability?

So we looked at how much was shipped in a period of time when we had our team working on things before we started to really push adoption of AI coding. I don't want to say it was like none at all because we did have some AI coding at the time, but very minimal. This is in July of last year. And then we compared that to how much stuff are we producing as engineers across various metrics in the month of April.

And when you compare those things, the numbers actually came out to 3.5x more, but then we reduced that number to 2.5x because we just thought it was unreasonable to expect things to have changed that much. And then also just looking at like the number of projects that people are working on at the same time now versus the number of projects that people are working on before, you can't really compare them. I think it's reasonable to say that you would be doing more things than you were doing, but what we're now doing is a totally different way of thinking. I remember when I took this job, I met with a very prominent CEO kind of as a mentorship meeting and I told them, hey, these are the things I want to do at Grindr over the next few years.

And my guess is in 3 years to 4 years, I'm going to need a team of about 250 to 300 engineers. And he's like, know your bone and let me tell you why and really pushed on the idea that AI coding would take over. And kind of he was right and now is right. Like for all the things that we're doing, we actually would have needed about a 250, 300-person team in the old world, but with AI coding, you actually don't anymore. So it's a really incredible kind of outcome for us.

We are of the view that people should use all the tools that are out there and not really worry about the cost of them as long as the ROI that we want to see is there. And ultimately, that has to do with management. If you manage the business really tightly, which we do, I don't think there's a risk that people are going to go and waste time and work on things that are not worth it and/or just kind of have agents running in the background for no reason as has happened in other places.

And so we encourage all tools possible. Historically, we've used a lot of Cursor and a lot of Claude code. In the last few weeks, we've actually seen a ton of adoption for Devon, which I think is quite exciting for us. And most of what we do are from frontier companies. We have deployed open source models in our system for other things, but not for coding in an aggressive way yet.

Okay. Great. That's helpful. And then one more, if I may. back half has a relatively large implied step down just on the through the year, but just help us think through the puts and takes here. And as we head into '27, can you help us stack rank maybe qualitatively, what are the major drivers of revenue growth that could hopefully lead to an acceleration versus at least back half levels?

Our guidance really -- our philosophy certainly hasn't changed. And I would say our expectations for the back half of the year are pretty consistent with how we started things all the way back in February. To your point, you communicated it well. I mean, we've anticipated the second half of the year is going to see some deceleration, which is really just an artifact of a couple of things. One is pricing increases that were put in place on subscriptions at the end of last year, beginning of this year, which is sort of a onetime pickup for the year, but there was not anticipated further increases in pricing in the back half of the year. So that was one factor.

The other was just anniversarying a pretty strong finish to 2025. And in particular, we saw acceleration in revenue growth each quarter last year. And so the comparisons are a little more tricky. And that was all kind of what we thought about and our philosophy around guiding to what we had line of sight to with a high degree of confidence hasn't changed.

The increase in the guidance we talked about today really is a function of outperformance in the first half of the year and in particular, the second quarter, despite the investment we made in the Madonna event, which was certainly significant, both in terms of just being something we hadn't done before, but also in terms of the quantum of investment and work that went into that event as an organization. It was a huge undertaking, and it did have an impact on our marketing spend. But despite all that, we were able to increase guidance primarily because our experience kind of churn and paying user conversion was better than we anticipated with the pricing increases.

So we run A/B tests on all these things. We have an informed hypothesis of what the response is going to be to pricing changes well before we roll them out more holistically and made those assumptions, and that was underpinning our guidance that we communicated earlier in the year. The results were better than that. People didn't churn as much as we expected. We saw better I guess, inelasticity to price increases.

And so we didn't see the degradation in some of those metrics that we had forecasted and that led to outperformance, which was the majority -- vast majority of what the increase in the revenue and EBITDA was this year, effectively just outperformance relative to plan in the first half of the year and not a big change in the second half. As we think about '27, I think we're in an exciting spot in that I think George and I still see great opportunity for growth next year. Certainly, and I think you've talked about this, Nathan, in your notes, but Edge, which is our AI-enabled sort of next tier premium product is a big part of the '27 story. We talked about direct advertising potentially modulating a little bit. We had some very good outcomes this year that we're not underwriting for next year that we've talked about a little bit and that revenue in the advertising business may trend closer to like 15%. And that's probably as much sort of qualitative conversation as we can offer on next year at this time.

Obviously, we'll have better views as we get to November and then certainly into the first part of next year when we introduce guidance more formally. But stay tuned. As we get through the year, obviously, we've got better line of sight and more precision to where things sit. So we should have more to share in November.

Your next question will come from Andrew Marok with Citizens.

This is [ Tim ] on for Andrew.

I believe you lost your audio. Are you there, Tim?

Can you hear me now?

Yes. We can hear you now.

Sorry about that. This is Tim on for Andrew. You talked about how you are moderating third-party ad load to better support the free user ecosystem. I'm curious how you distinguish sustainable ARPU growth from monetization borrowing from future engagement. What are the internal metrics or guardrails that inform how monetization intensity takes a toll on the free experience? And what did those metrics tell you in the first half?

So broadly speaking, Grindr is testing all the time. We run a lot of experiments across the board on many things, what free users are doing and what they're experiencing and product improvements with them, what paid users are doing, what leads people from being a free user to being a paid user and what impact one might have from a given conversion mechanism you might put in place, both in the short term and long term. And obviously, ads factor into that as well. What are the places where you might want to have an ad and might not. We had put in certain ad triggers in the past and got feedback on some of them from users, which led us to change some of those triggers earlier this year, not universally everywhere, but in many locations around the U.S. And so we track kind of what impact that has on revenue and what impact it has on the user experience. from what we hear from users, surveys that we do with them and their engagement.

Overall, our objective is to maintain an extremely robust free offering, and we have done that over the last 4 years. We've added a lot to the offering by introducing a lot of new features like right now that are available to everybody. And I would expect that we would continue to add more features to the free offering while aiming to maintain as robust of an offering as possible because free users are the lifeblood of Grindr.

And unlike other products in a similar category, we don't aspire to a world where as many people as possible are paying. We want some portion of our users, obviously to big payers. And then we want to be able to offer a set of our users even more premium offerings that we believe they are looking for. But we expect most of the users to not be payers and to be having as good of an experience as possible in that free cohort.

And a second, if I may. The guide now implies 43% margin for the year in a year that was a deliberate investment year. Is the 39% to 42% margin band being re-underwritten because of the lower user churn? Or is there investment sort of sliding into 2027?

I think longer term, that 39% to 42% guidepost is the right one to keep in your models. We certainly could improve operating and EBITDA margin significantly if that were the primary objective. We've talked a lot about specifically investing in very early stage or no revenue businesses today and incurring costs in both product development and SG&A, R&D work, et cetera, that are effectively setting the stage for 2027, 2028 and beyond.

And we've talked also about this year being an intentional year for investment where we were consciously making the decision to underwrite certain things that don't have associated large revenue contribution in order to position us for the future. None of that's changed. I think what is specific to this guidance was an outperformance in the second quarter, which gave us better operating leverage for the full year.

And then as George talked about, we did see a fairly significant improvement in productivity, particularly in our engineering discipline within the organization. And so that's allowing us to probably temper our headcount additions more than we had anticipated in the first part of this year. We're still hiring. We're still going to grow. We're not looking to cut headcount. We're just excited about the ability to produce more shippable code and better product given the capacity unlock of greater productivity with the team we have in place, and that's going to continue.

Yes. The only thing I'll add to that on the team is that we -- historically speaking, and I've been building software now for about 20 years. In a software company, engineering was always the primary driver of why you couldn't get everything you wanted done, done. Like the constraint on the business was how many engineers do you have. Most of the time, not because you couldn't afford engineers, but because you couldn't hire the engineers that you wanted. And what we've seen at Grindr, and I know some of the other kind of most in the forefront of adoption of AI coding companies are seeing is that engineering as a constraint is not going away, significantly decreasing. And other constraints are now coming into place such as product management. Like we actually today at Grindr don't have enough product managers to do all the projects that we want to do at the speed that we want to be doing them.

So the constraints have shifted. With that, where you're going to get headcount is going to shift as well. The kinds of product managers you need on a go-forward basis will not necessarily be the same kind of product managers you needed in the past because they're going to be doing a lot more of coding like work as well. The roles between engineer and designer and product manager are over time going to collapse. And so we will continue to hire, but we're being quite thoughtful in how we are hiring and how quickly we want to grow our team, given the fact that we are in this massive time period of transition and where we might have planned on hiring 10 or 20 more engineers than we will end the year with, we just found like that was not going to be necessary, and we could direct those resources to other things and/or push that into more profitability.

Your next question will come from Andrew Mark with Raymond James.

Sorry about that. I was unmuted on the last question as well. You said in your shareholder letter that packaging and marketing a premium experience like Edge is a new muscle for Grindr. So what are some of the key learnings that you made along the way so far? And what are some of the key markers that you feel yet to have addressed?

So historically, the way Grindr has pitched its paid tiers is people being able to see more users in the app wherever they were located, right? So we limit how many people you can see to a free user to a certain number. And then for an extra user, they see more and then unlimited user sees an unlimited number of people. There are some other things that people get, for example, Explore, et cetera, but the primary kind of offering has been more people. So you really didn't have to pitch that in a very advanced way. Like it's pretty obvious what does extra give you, what does unlimited give you. With Edge, the offering is more complicated to explain. There's a lot of extra stuff that is being offered to you that is very helpful if you are a Grindr user for managing the product and navigating through the product.

And frankly, if you are an Edge user, like I've been for many quarters now, it's very hard to imagine going to a product without that because it's so awesome. But people need to kind of be able to understand what they're getting into before they are in it, right, in order to be able to convert at that price. And so a lot of the work that we're doing is around how do we tell the story to them well in order to get them to buy. And I don't think there's any like key learning to that. I mean there's just a lot of testing of language and packaging and presentation, aesthetics around it, what kind of photography do we use that will result in people going to a product and saying, yes, I want to buy that." That is not something that historically we've had to do. It's a totally new thing. It's at a very different price point than anything we've offered. before. And so I don't kind of expect that learning process to ever be done.

We will obviously go live with a set of things that we have perfected over the last few months going into the fall. And then we'll continue to iterate and become better at that. But it is something that we've not done before, and we need to learn how to do it. The product itself is tested really, really well. User engagement with the features in the product is extremely high. Retention for people who sign up for Edge is higher than we would have expected, frankly. I've said this elsewhere, but we are getting people converting to Edge who are not pairs at all.

Our initial expectation had been that only unlimited users would convert to Edge, but actually a portion of people who had never been pairs at all are converting, which I think is interesting as well. So overall, we're really happy with it, but we will continue to perfect how we package and how do we present the story behind the product to the users so that they have a desire to go into it. While we are on Edge, I'll just add one other thing, which is there is kind of this information out there in [ ESA ] that we tested a $500 price point for it. We actually haven't. We tested a CAD 500 for it, which is not the same. We never tested 500 price in the U.S.

Got it. Maybe one more on the platform health initiatives, which you spoke to in the shareholder letter. I think we've heard similar moves from other players in the industry, and they've maybe been a bit more lingering than they'd hoped. So how are you approaching the issue? And what are your expectations for ongoing efforts to address new forms of bad actors?

Yes. I don't think anyone should assume that management of the ecosystem is something you can do once and then it changes all the time. Is this something that continuously has to happen. I certainly know that at Grindr for the entire period that this company has not been owned by the Chinese.

So basically since 2020, managing the ecosystem has been an important factor. There -- and the way we think about it is like illegal activity should not take place in the app. And if we find illegal activity, then we're going to remove those accounts and remove those devices and prohibit those devices from being able to create Grindr accounts ever in the future. If you go back to, say, 2020, 2021, '22, maybe probably through '24 or early '25, most of the management of the ecosystem was done manually, meaning we had a team of people who were navigating this process, reviewing flags that had been put in place by our users of accounts and/or reviewing accounts that were being reported or identifying accounts themselves. There was some technology, but it was fairly basic.

Over the last few years with Gen AI, we've been able to build far more powerful technology to identify bad actors proactively and get them removed both in-house technology and third-party technology that we deploy. And obviously, as modeling improves then -- meaning as foundational modeling improves, then you can create even better technology. And so it's going to be a constant effort to try to be as good as you possibly can be in removing bad actors. There is some level of impact on MAU from that because bad actors will appear in your MAU 1 month and then you remove them and they don't appear in your MAU next month. But I think that's very much a cost worth paying for having a better and a cleaner ecosystem in the product.

And lastly, while the technology capabilities to do better in fighting bad actors is improving, and we're utilizing it, that same technology can also be used by bad actors to create accounts in your app. And that's true for all social networks. I'm not just talking about Grindr. And so you're constantly having to become better at that and you're kind of playing whack-a-mole with them. So I don't expect this to go away at any point. We're just lucky that with modern technology, meaning like last 3 years, 4 years, you're able to do this a lot better than you ever were before.

Our next question comes from Logan Whalley with TD Cowen.

You called out that the free -- the core free experience on the app continues to get better. Could you talk about just changes you're making to the core app and whether you're seeing positive impacts to engagement or app opens, thanks to any updates? And then kind of as part of that, I'm curious as to whether the Madonna campaign acted as like a top of funnel demand driver drove new users to the platform at all? I just have one follow-up question as well.

So from the free experience perspective, first, we certainly have done a lot to make the free experience a lot better. I think the thing that's most kind of easy to talk about, but it's not as obvious because it's not a feature is the fact that the product is just so much healthier now. The code base of the product is so much healthier. As a result, we don't have as many crashes. We don't have as many bugs in the app.

Grindr's bugginess was like a meme in gay social discussions all the time and also in in-person discussions like because the app was very buggy. You can't say that about Grindr anymore. We've done an incredible amount of work to make the app not be buggy to not crash and for us to have a better experience when they're in it. It's also a lot faster now than it used to be, which I think makes a really big difference. And so that has been a massive investment of effort, time, and I'm super grateful to engineers for the work that they did on that because we had to basically rewrite almost the entirety of the Grindr code base.

We're not done with that yet. There's probably 3 quarters done and 1 quarter more work to do, but that process has been really incredible, which, by the way, made it even more possible for us to then deploy AI coding because before we had done at work, if you deployed AI coding, the agents actually created buggy code, and we needed to kind of avoid from that from happening. We -- right now is obviously another really big addition to the free experience that we are constantly improving.

And then maps is another big area that we have started to invest in, which is going to be a totally new surface area for people to use, which I think will make a pretty significant difference. Grindr's overall engagement metrics are so good that it's kind of hard to say, hey, X, Y, Z move made the engagement metrics better. I think we're perfectly happy with just ensuring that our engagement metrics stay as strong as they are. And this app continues to be a place that people when they turn 18, if they're either -- they know they are gay or they're trying to figure out are they are gay or not, they come to Grindr and use it as a place to build a community, build relationships and make it be the core kind of segment of their gay life. That's kind of our goal and continue to make the free experience be as good as possible in that regard is really important.

On the Modana partnership, it was a really incredible thing, quite honestly, to have 50,000 people turn up in Times Square on a 30-minute notice because we were not allowed to tell anybody that this was happening until 30 minutes before. Actually, we were living in fear that this would leak and the event would be canceled because New York City has strict rules about managing traffic and the risk of this kind of coming out. It was awesome. I think it was a really fantastic demonstration of what the Global Gayborhood means in practice that the fact that Grindr as an app can do that and can drive engagement in that way.

We really weren't thinking about it as a kind of top of funnel driver. That was not the goal. The goal was to own this big cultural moment and to continue to build really positive associations with our brand. Grindr is a very known brand, but we're not yet a loved brand. And a lot of what we're doing in marketing is to go from being known to being loved. And that's going to be obviously a multiyear effort that will take a long time to achieve, but we believe that we can get there eventually. And through that, we can make the app be more valuable to people because if they love something, they're even more likely to use it than just, hey, I need it.

And Modana was obviously the biggest one we've ever done, but we've done activations like this in the past with artists, with festivals. People know about the Grindr bus, which whenever it goes, ends up being a big deal as it was in cans in the month of June. And I think we'll continue doing things like that in the future as well, again, with the goal of building love for the brand.

Lastly, we still face significant challenges in getting advertisers to work directly with Grindr versus third-party ads to advertise in the product. There's a lot of reasons for that, some of which are not the most encouraging things that I do with on a daily basis in terms of why somebody might not want to work with us as an advertiser. But I think having this case study of Madonna launching her album on the app, us being a massive driver of the album sales in the beginning is going to be a really powerful case study for advertisers to come and do things with us as well to help their brands, not from just like musical perspective, but from actual like commercial brands.

That's good to hear. Then just One question on the cost lines. Obviously, you called out that the marketing expense, the SG&A expense stepped up in 2Q, along with the Madonna campaign. Looking at like SG&A and product development expense, it stepped up as a percentage of revenue. Should we expect those cost lines to step down in 3Q and 4Q at levels kind of in line with 1Q? Or what is the best way to think about costs there?

I mean, I think in general, our operating margins stayed pretty consistent in the quarter despite revenue growing significantly year-over-year, which is in line with our stated longer-term objective of 39% to 42%. We've also given the EBITDA approximation relative to revenue. So I don't think there's enough nuance there to tease out anything more specific than we should be relatively similar in terms of trajectory.

We held operating margin consistent year-to-year despite a big increase in revenue. And we did see some elevated costs in the marketing line associated with the Madonna event in the second quarter. It will moderate a bit, but I don't think it's going to make a material difference to your forecast going forward. And if you need more help, we can pick this up offline.

Our final question comes from the Wall Street [ Pest ] community.

How are you engaging with Gen Z, given the perception that they are less interested in traditional dating and they prefer to avoid getting entangled in relationships? Are you seeing increasing interest and engagement in this age group? And how does that compare with millennials, Gen X and other cohorts? Looking further ahead, how do you plan to attract the generation after Gen Z, which may be even less interested in interacting with people in traditional ways?

And I know that I'm going to be doing something with Wall Street Pet later this quarter, so excited about that. We released data in November of last year in our shareholder letter that looked at Grindr demographics in the various different cohorts. And if you look at that, it told you that 46% of Grindr users in the U.S. are ages 18 and 30, and that number is actually over 50% on a global basis.

And so Grindr is the central place where gay Gen Z people come and connect. There's kind of no other way to square that. Those numbers way over-index versus that cohort's share of the population. If anything, where we probably have more opportunity is getting older game men to stay in the app when they're, say, in the 50s and 60s versus any concerns with Gen Z. I think it's -- they're very engaged, and that's obviously awesome.

My general sense about the dating apps and Gen Z is that Gen Z doesn't want to use apps that are stale and that haven't innovated and that are so heavily monetized that you can't use them if you're not paying. But if apps respond to what you need and if they're usable as a paid -- as a free user, people are very inclined to use them. I mean, look at TikTok and Gen Z, like no one can say that they're not online all the time. I think in that sense, maintaining a really robust free experience is really important, and obviously, we'll continue to do that.

With regard to kind of what might happen in the future, I think the -- hard to predict, right, obviously. But our goal always is to ensure that as people become 18 and whether it's at 18 or at 22 when they finish college or soon thereafter, whether if they're out before they are 18 and kind of at 18, they can come to us because Grindr is an 18-plus only product or are going through a coming out process later, they think of Grind as a place where they need to come to and kind of use it as a way to understand what it means to be gay and build the community. And if we do that for them on a continuous basis, we'll be in a really strong place with future generations. But again, as an 18-plus product only.

The last thing I'll say on kind of our cohorts is that we are able to maintain such a robust free product because as people mature and reach older ages, so get to 30 and then to 35, their inclination to become pays increases significantly. So we have a very robust free users when they are 18 to 30, maybe a little bit to 30 to 35. And then they're much more likely to become payers, which works very well in the business. And so they kind of complement each other. And I think that's another big distinction between us and other products like us.

This completes the allotted time for questions. I will now turn the call back over to George Arison for any closing remarks.

Well, thank you, everybody, for being here, and we'll speak to you in November.

Good day, everyone. My name is Dannie, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr First Quarter 2026 Earnings Call.

[Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Director of Investor Relations. Thank you.

Hello, and welcome to the Grindr Earnings Call for the First Quarter 2026. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. They will make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's Investor page at investors.grindr.com.

Before we begin, I will remind everyone that during this call, we may discuss our outlook, future performance and future prospects. You should not rely on forward-looking statements as predictions of future events. These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of the risks that could cause our actual results to differ from views expressed in our forward-looking statements have been set forth in our earnings release and our periodic reports filed with the SEC, including our annual report on Form 10-K for the year ended December 31, 2025, or any subsequently filed quarterly reports.

During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of these non-GAAP financial measures to their most closely comparable GAAP financial measure are included in the earnings release we issued today, which has been posted on the Investor Relations page of Grindr's website and in Grindr's filings with the SEC.

With that, I'll turn it over to George.

Thanks, Tolu, and hello, everyone. We delivered exceptional results in Q1 2026. Revenue grew 38% year-over-year with a net income margin of 21% and adjusted EBITDA margin of 45%. We have now shown repeatedly that when we improve the product, expand the value users get from Grindr and monetize thoughtfully, the business responds.

Given our Q1 performance and what we can see today, we are raising our full year outlook and now expect at least $535 million in revenue and at least $227 million in adjusted EBITDA for 2026. I will focus on a few highlights. And as always, I encourage you to read our shareholder letter, which goes into significantly more details on these topics as well as a number of others.

Our focus in 2026 is clear, making Grindr a more useful day-to-day, more personalized and more valuable across a broader range of user needs and intentions. That means continued work in the core app, including Right Now, Maps, Health Center, significant rearchitecture and broader deployment of gAI.

We're also driving towards the global rollout of Edge, our new premium tier. Built around our gAI capabilities, Edge is designed for power users who wants the most advanced experience current technology can offer. Based on user testing, we expect that Edge will command a significant premium to our current subscription offerings and anticipate that it should be our largest driver of revenue growth in 2027.

As our offerings expand, Grindr's position in the market is broadening as well. We are staying true to and strengthening our core use case with Right Now while also becoming a broader and more durable category leader, serving one of the most culturally influential communities in the world across many use cases. That is what the Global Gayborhood in Your Pocket means, now moving away from what is core to Grindr and to gay life, but building outward from it into a product, brand and platform that play a larger role in the lives of our users.

Over time, we aspire to be not just a known brand, but a loved one, with greater cultural relevance, broader utility and the ability to expand into adjacent categories where our relationship with users gives us the unique right to win. Our recent Madonna partnership is a strong example of that strategy in action. It is a major in-app activation ahead of the global release of our new album, Confessions on a Dance Floor II, and exemplifies the content partnerships component of our product and business.

It also is reflective of Grindr's position and culture. Our users do not just consume culture, they help shape what breaks and what matters. As we introduce more elevated experiences, Grindr is also becoming a more premium platform, one that's able to attract iconic partners and create new forms of value that strengthens the brand and expands our positioning well beyond that of a narrow-use-case app.

We also continue to build our advertising platform as a meaningful driver of long-term growth. A strong free product remains essential to the health of our network. And this year, we are taking steps to improve the free experience meaningfully, including reducing certain ad triggers, expanding rewards-based advertising and rearchitecting the front end of our iOS and Android apps.

Activations, reactivations and overall engagement remains strong, and retention is improving, notwithstanding pricing changes. These strong engagement results are clear indicators that the product quality is getting better. While our MAU growth remains strong, in a small number of international markets, we are also seeing MAU headwinds from 2 types of government actions. First, certain new age-assurance rules lead some adults, including those particularly focused on privacy to drop out of the account sign-up or login flow prior to even entering the age assurance process.

Separately, and far more troubling for our users, we face real pressure in certain countries with the repressive policies against members of our community like Malaysia and Indonesia. We estimate that in total, MAU would have grown by an average of 400,000 more in 2026 than the current full year trajectory if we were not facing these 2 distinct factors. This is not financially material to us for reasons discussed in my letter.

We are continuing to strengthen Grindr for the long term on behalf of shareholders, including nominating 3 new independent directors for election at our annual meeting, and as John will discuss, beginning execution under our expanded share repurchase program.

Overall, I could not be happier with our fantastic start to 2026. The team is executing exceptionally well across technology, product, brand and the business more broadly. And I'm very proud of and grateful for their hardcore approach to everything we do. Because of their dedication, we believe Grindr is set up to deliver strong growth this year and next, and we are excited for what lies ahead.

With that, I'll turn it over to John to walk through the results in more detail.

Thanks, George, and hello, everyone. Q1 was strong across the board, as George highlighted. Revenue grew 38% to $130 million. Adjusted EBITDA was $58 million or a margin of 45%. The performance was driven by strength in core app revenue, including our pricing changes, but also better conversion and retention as well as ads.

App-based revenue grew 33% year-over-year and ad revenue was up 68%. In ads, we have our first big year-long direct ad campaign, which will take our ads revenue up into the mid-to-high teens as a percentage of total revenue for 2026. That's netted against moderation in third-party ad loads that we began implementing in the first quarter in connection with our priorities around user experience and ecosystem health. In 2027, we expect ads as a percentage of total revenue to normalize back to the 15% range that we've historically delivered.

Adjusted EBITDA grew 44% to $58 million or a margin of 45%. The strong result is an outcome of both the revenue outperformance and the timing of planned expenses. In our March call, we communicated that we planned higher investments this year in support of our priorities for the business. While these investments began to flow through the P&L in the first quarter, we expect to see that pick up in the second quarter as we execute on planned product and tech development initiatives as well as marketing in support of the brand initiatives George highlighted.

Turning now to share repurchase activity. This is detailed in our shareholder letter, but I'll call out that we retired 8.3 million shares of our common stock in the first quarter. Across December and the first quarter, we've deployed approximately $140 million in authorized repurchases. We've used a variety of mechanisms, including prepaid written put options, an accelerated share repurchase, and forward repurchase transactions so that the capital deployed will -- so far will settle over time through the third quarter of this year. We have $350 million remaining in our current buyback authorization.

Now for our guidance. We are raising our 2026 outlook to include revenue of at least $535 million and adjusted EBITDA of $227 million, a $10 million increase from our February outlook. The increase in estimated revenue reflects stronger payer conversion, which is continuing into the second quarter and the lift from the brand campaign. Keep in mind that we expect our growth rates will moderate in the second half of this year, in particular, in the fourth quarter as we anniversary the rollout of our pricing increases.

A higher adjusted EBITDA outlook reflects the stronger revenue picture and continued strong AI leverage in engineering, offset somewhat by the planned investments we discussed, which are starting to increase in the second quarter. Overall, we are excited about the strength of the business, and we'll manage with discipline as we execute on our plans for the year as we always do.

And with that, operator, let's open up the call for questions.

Our first question today comes from Nathan Feather at Morgan Stanley.

Congrats on the strong quarter here. Can you provide a little bit more color on what you're seeing in the testing so far for Edge, both in terms of consumer receptivity to the individual features along with the price receptivity? And then even though it's going to be the major driver for 2027, I guess, how should we think about the rollout timing here?

Nathan, good to talk to you. Great question. We have a lot of data on Edge from the testing that we've done. So I'll split that into 2 things. On the product side, a bunch of the features that are all in Edge have actually been tested for quite some time in 2025. And so we feel really confident about the product experience that we've created and about the features that we've built and that users really will like them, and it will be a really great thing for the product overall.

Where we are really focused on now is pricing. So we've done one pretty big price test in an English-speaking country, not in the United States and got really good results, which tell us that Edge will be priced at a significant premium to what we offer today, incrementally more. And that gives us a lot of confidence that Edge is a very good home run.

And what we're now spending time on is determining whether Edge can be a grand slam with a higher price point. But the key to that is having better clarity around how we want to position it in the product and kind of the marketing that we want to do around it. Edge is not designed as a product for mass consumption. It is built for a small number of power users on Grindr.

I think someone's asked me in the past, and I said anywhere between 0.5% to 1 percentage point of our MAU being in Edge after several years, I would view as a really powerful outcome. And so we're now looking at that kind of marketing piece of it and how to position it into the market and how to then price it based on the value that users are getting. The value equation is really the critical thing for us. So we feel really good about where Edge is headed.

We are going to put another test into the market later this Spring or perhaps in June. And then based on those results, we'll have a better sense on when we want to launch it. For us, the really critical thing is to have it be ready for 2027. That would imply late 2026 or early 2027 launch. But we're doing so well this year and everything is firing on such kind of -- in such a strong way that there's no rush to put Edge into the market. We think that getting it right and making sure that it can be as big as it can be and unleashing its full potential is where we would win the best.

Great. That's helpful. And then just one more for me. 1Q revenue growth, really strong, but also kind of tracking well ahead of the full year guidance. John, can you give me a sense of the shape of revenue growth over the course of the year? And then what are the major puts or takes that could lead revenue growth in the back half to be a little bit higher than we're expecting here?

Yes, Nathan, thanks for the question. So I'd break it into a few, I guess, topical comments to help frame it for you, and we alluded to this in the prepared remarks. We've certainly got a benefit from the pricing increases that we introduced at the end of last year. That was planned, that was baked in our forecast. That was in the numbers we gave you when we introduced this year. I think we have a little bit of upside there in the quarter because we didn't see the typical churn to the degree that we would with pricing increases happening.

So there was a little bit of a benefit there. The direct ads business we talked about has that large benefit this year with the campaign with one of our key partners. And that came in a little -- I would say, a little faster than we expected in the first part of the year. And so there's going to be an impact in the back half of the year as a result.

And those are the 2 kind of big drivers that push things ahead for us in the first quarter and led us to be confident enough to raise what our outlook was for the year. But on the back end of that, it's exactly what you flagged, which is that we're going to see a deceleration in the third and the fourth quarter. Some of that's a function of having a really good fourth quarter last year where we outperformed. So it's a tougher comp. And some of it's really just the product cadence and how things are going to launch this year, which is exactly what we're expecting.

We did also mention that we're investing in the future. So our margin is an important thing to talk about as well. We're expecting that to be impacted through the year because we're bringing on people, and we're investing in products and things that are not revenue generating that are going to set up 2027 and beyond. And so that's all kind of what's in the thinking and happy to dive into that in more detail with you offline if we can be more helpful from a modeling perspective, but we are anticipating a bit of a deceleration in the third and particularly the fourth quarter to get to that implied full year number, which is exactly what we're anticipating.

And George, maybe can talk a little bit more about some of the specifics around the product side.

Yes. So if you look at Grind's history over the last 5 years, usually a step change in revenue, kind of new revenue has come from something significant that we've launched on the product side because we are a product-driven kind of revenue company. So if you look at, say 2021, we launched more profiles that led to a big step change in revenue growth. In 2022, we launched Boost middle of the year that led to a big growth in revenue in 2022 and then in 2023.

In 2024, we launched weekly pricing for Unlimited that drove growth in revenue. So for our business to continue to grow revenue in a significant way, we need to launch the next big thing kind of in a reasonable time frame. The last big thing we launched was the price change, which was a way for us to monetize the value that we have created for users over the last 2 to 4 years. And the results of that have been really strong. Churn is down, reactivations and activations are up, which is not what you'd expect to happen when you raise prices, but I think it speaks to the fact that we have created a ton of value in the product, in our paid tiers and users are recognizing that.

So, given that we started the price increases in Q4, then for us to have another step change in revenue growth in Q4 of this year, we would need to launch some big product. That next big product is Edge. And as I spoke earlier, we feel very confident about how well Edge will do, but we might not launch it in Q4. And that would lead to deceleration in Q4 and then acceleration looking into 2027. And that year, obviously, is looking really good from that point of view as well.

Our next question comes from Andrew Boone at Citizens.

I would love to ask about 2 things, one near term and then maybe one more that's strategic. George, how do we think about Match and Sniffies in the competitive environment now that Sniffies may have a larger balance sheet and funding behind it? And then as we think about your platform evolution here, it's really clear that there's a bigger picture strategic view. Can you bring us more into financial terms for us and talk about the benefit that we should expect in terms of shareholders from the broadening of the platform and what that could mean from a financial lens?

Great. Thanks for the question. So on Sniffies, I'll start with a congratulations. We've gotten to know the Sniffies guys over the last couple of years. I've spent time with Blake and his brother and I'm very happy for them. They were looking for liquidity, and I'm very glad that it happened in this powerful way.

I'm also a little bit happy for Grindr because this investment really speaks to the work that we've done in getting the public market used to a company like Grindr. If you look at where we are today versus where we were 3.5 years ago, the world has fundamentally changed. And so I think our team has done a really fantastic job in letting people understand what Grindr is and how big the opportunity space here is. I don't know if people know, but about a decade ago, Match really wanted to buy Grindr. And the team was really behind it and they got blocked by the Board. So it's awesome that we're now past that and there was acceptance of investing in Sniffies.

As far as the competition for us, we always pay attention to competition and Grindr had plenty of competition from the day, frankly, it started, right? Grindr was not the first digital gay product. Manhunt and Adam4Adam were by far the dominant platforms when Grindr launched. And ever since then, Grindr had competition. And so, we always pay attention to competition and it obviously matters.

But from our perspective, what really matters is us being the product that people go to first in wallet and spend the most amount of time in and are most engaged with. And by every metric that we have internally, that has continued to be the case. And frankly, in some respects, it is accelerating. Like in the time period that I've been at Grindr, the amount of time that people spend on the app has only increased. And so, we feel really good about our position in the market and what we need to do on a go-forward basis.

Sniffies is a different product, and it serves a very specific use case. So Sniffies entered the market when Craigslist eliminated personals out of concern for sex trafficking and that opened up this space for cruising for people who were using Craigslist before and was a very heavily used product. And that's the kind of space that Sniffies has captured. We obviously have a much broader set of use cases that really kind of offer users many different things. And so we feel we're in a really good place in that regard.

And again, there's place for more than one product. We know people use more than one product and that's probably okay. So we are focused on executing our strategy, and we're speeding up, not slowing down. That's how I think about it.

On your second question on the platform, when I joined Grindr and frankly, for the year before I joined Grindr when I was learning more about Grindr, the assumption I would hear from everybody was the best way for Grindr to make more revenue is to get more people to become payers. And there is logic to that, right? The Grindr was at sub-6% payer penetration and our peers in the straight category are at 15%, maybe even 20%. And so it would make sense that you could convert a lot more people to become payers.

But our -- and we've done a bunch of that, right? We've gone from sub-6% to 8.5%-plus and that's with MAU growing pretty significantly. So if we had stayed static, we'd be over 10% payer penetration today. But ultimately, the free experience on Grindr is really, really critical. And that's the reason why everyone comes into the product on a regular basis as they become adults.

And so, from our view, the better way to monetize on a go-forward basis is to create value-added experiences for people on a premium level. And hence, why we're building Edge and a bunch of other premium experiences inside the product.

So from that perspective, creating a more upscale experience for our brand is something that will help a more elevated and a more premium experience in the product. And that will be the primary way in which we drive revenue growth in '27, '28 and beyond. By the way, none of this is new, like this is what we had set out to do when we talked about it in Investor Day. We're just executing on it at roughly the time line that we had expected we'd be doing.

And George, I'll just hop in. I mean on the longer-term margin question, that's really not the primary focus for us. There's certainly a world in which we could continue to turn levers within the business to improve the EBITDA margin, whether it's more payer conversion, whether it's getting more productivity out of people, whether it's figuring out direct payments, so we don't pay so much in fees to the App Store. There's things that can be done, but that's not been the primary focus.

Growing the revenue base overall and diversifying the revenue base in different ways is where the focus is, and we're consciously investing and taking a view to the future, both this year and beyond, to continue to create the growth avenues for Grindr, which is more important to us. So I would much rather see an improving growth rate as opposed to an improving margin percentage.

Our next question comes from Andrew Marok at Raymond James.

Maybe first on the age-assurance issue. We've seen some other companies in the digital media ecosystem kind of have variable results with how they are impacted by age restrictions or age checks. So I guess what are some of the key learnings that you've seen in the geographies where they've been required so far? And how can they inform future potential implementations to kind of minimize the friction of engagement or sign up based on the particular concerns of the Grindr community?

And then maybe second on advertising. Great to hear about the full year campaign. I guess, was there anything in particular that got this company to come on and make a big campaign? Or was it just kind of fortuitous timing and how the pipeline of those bigger deals might be?

Thanks for the questions. On age-assurance, I always want to start by saying Grindr is an 18-plus product. We don't want anybody under 18 using Grindr, and we are really strong proponents of App Store or phone-based age verification, and we've endorsed federal legislation that would mandate that at the national level, and we've supported legislation in California and Texas and Utah that's achieved that as well. And I think that's really, really important. I'm a dad and I don't want my 6.5-year-olds being on Grindr, and I don't want them touching Grindr until they're 18, and that's something we believe in really, really strongly.

The approach that some of the countries have taken internationally at mandating age verification at the app level comes with a lot of challenges to the user. It means that a user has to validate their age in multiple apps, which obviously increases the risk that their information will come out. And we have a set of users -- because something is leaked, et cetera. And we have a set of users who are extremely privacy conscious. Oftentimes, there are people who are still in the closet, who are very, very discrete. And these adult users, and I want to be very clear, we're talking about adults, just simply choose to drop out of the process before they go through the age verification flow.

We actually have a pretty good age verification flow. We use facial recognition to determine if you are of age first and only if that technology is unable to determine that you are over 18, do we then put you to a secondary flow where you have to show ID. But even that process alone gets some people to drop off, and these are adults, not people who are under-age. And so we think that the alternatives to that, which is the App Store or mobile device-based verification is a much better approach, and that's what we're going to keep advocating for. But obviously, we'll comply with laws as they happen.

It has impacted MAU growth. To be very clear, MAU is still growing very nicely actually, but MAU would have grown by an amount larger than what it's going to grow this year if these rules were not in place in some of the countries. And I would expect more countries will adopt rules that are similar to this. Though again, we're going to continue advocating for App Store or device level verification.

On advertising, so maybe to step back a little bit on the ads business overall before I answer the specific question. We've had incredible success with that business. We went from a roughly $30 million business in 2022 that was decelerating and frankly, didn't really have a path to grow to a business that, based on guidance that we've shown you, is going to be over $90 million this year. So that's tripling the business in a 4-year period, which I think the team deserves nothing but huge congratulations for that.

And we've said at Investor Day, we want -- advertising is going to be kind of roughly the same percentage of revenue as it was in 2022, which is roughly 15%. That meant that the ad business had to grow faster than the core business. And again, it's achieved that. So I'm very, very proud of what the team has done. At the same time, where I've probably been most disappointed in my time at Grindr is that getting the direct ad business where brands come and work directly with us has not been as successful as, frankly, I would have liked it to be.

We hear from brands a ton that they want to reach our type of audience that is tastemaking, that has high disposable income, et cetera, but they're not willing to put dollars to work on Grindr. And that's still work that we have to do from the brand perspective, on our brand. That's the work that we have do from a technology perspective and creating the technology that advertisers want us to have in the application to help them advertise as well as from a data perspective, like what are they actually getting in return. Grindr is a great place to advertise from the point of view of building your brand.

It is not a direct response type of a channel because people are in a different mindset when they're on Grindr. They're not actually looking to kind of transact on something else when they're in the app. And so that obviously creates a special way of pitching the brand perspective of it. People are very used to buying direct response ads, but less so for what we offer.

I'm still very bullish that over the long term, we will win in that direct advertising business, but I think it's going to take us a really long time. That doesn't mean that the ad business cannot grow. We expect the ad business to keep growing in the years to come and to stay at that 15% of total revenue baseline that we had in 2022 and that we've aimed to maintain. So there's still a ton of growth for the ad business.

I think we'll continue to see a ton of positive results from Rewarded Video, which actually makes the user experience in the app better as well. So that's one of the things that we are seeing a lot of traction with. With this particular advertiser, we had been working on them for almost 2 years, and they had been advertising with us during that period of time as well. It's the same advertiser that had a big push in Q4 of 2024, you might remember, when we had a big uptick in revenue as a result of that.

So we have a relationship with them. We're really happy that they're advertising, but I wouldn't expect something similar to repeat in 2026. Hopefully, we can create more opportunities for bigger direct advertising partners in 2027 -- sorry, in 2028 and beyond.

Our final question today comes from Logan Whalley at TD Cowen.

First, to ask about discrete mode and kind of how you think users will engage with that feature looking forward? Do you expect this kind of opens up a new use case with the app or maybe just changes how people engage with the app? And then, secondly, on your plans for incremental hiring in the middle of the year, where do you expect that headcount efforts will be directed towards within the business?

Great. Well, I'll take the first one, and then maybe John and I can split the second one. So on discrete mode, discrete is for Right Now specifically. So it's not a -- you can -- not to be discrete on the app overall. We already have a way for people to browse the grid without actually showing up on the grid if that's what they want and some people do want that. But this is for Right Now.

What we heard from a lot of users who we surveyed or got feedback from was that they want to post in Right Now, but they don't want their posting in Right Now to be connected to their profile on Grindr because a lot of people have friendships on Grindr and for discretion reasons, they don't want to be telling everyone they know, "Hey, I'm posting in Right Now," which is perfectly reasonable. And so the discrete mode has enabled that capability where a person can post on Right Now, will receive messages from other people who are in Right Now or who are interested in Right Now. But you will not be able to see the connection to your regular profile and that way you kind of keep that discretion.

So, that's something that people really wanted. I think it's going to be a good feature in making Right Now a better product for people who want that. But there's a ton that we're doing with Right Now that I'm not yet in a position to publicly talk about that I think will keep making that experience better and better for people. We have a very large percentage of branded users that use Right Now on a multi times a week basis. And so we're really happy with that, but we still think there's more that we can do to make it even better.

When it comes to hiring, we definitely went into -- we've been behind on the number of people that we need for quite some time, right? I am known to run a very lean operation. Grindr has over $2.7 million in revenue per head at the end of last year. And so we felt that we need more people. And we had a fairly aggressive hiring plan for the year. We are probably -- we're doing very well on hiring, but I don't think we're going to end up hiring everyone that we had envisioned, and that's reflected in the EBITDA margin or in the EBITDA raise that we gave for the year in this release.

One of the reasons why we won't probably hire everyone is because how we work is fundamentally changing. We've said in the past that our engineers are self-reporting that they are 1.5x more productive than they were 9 months ago. We now have teams of -- on the product team that are being -- small teams of 4 people are able to produce as much work in a week as teams of 10 or 20 people would have previously produced in the course of a month. And that's all because of AI.

The roles of engineer, product manager, designer, data scientists are all kind of collapsing in that now they are all doing all parts of that work, meaning a designer can code and function as a product manager or a product manager can code and also do design. And so we're terraforming this business to be an AI-native business. It's is really changing how we work and the amount of productivity you're getting from the teams.

And as a result, we -- given how lean we are, we don't have the same problems that a lot of other companies have. But we do -- and we still need more people in terms of hiring, but we do want to be judicious in how we hire and who we bring on board because we want them to be much more AI native to fit in this new mode of working that we are now evolving inside the company.

I don't know, John, if you want to add anything to that.

I would just say the 39% to 42% EBITDA margin is healthy. As we talked about on an earlier question, even as the CFO, if you told me I could grow revenue or I could grow margin, I would choose revenue right now. I think that margin optimization isn't the most important thing. To George's point, the guidance and the plan that we had in place contemplated hiring and investing in the future and that it was going to impact margin as a result, which it did.

But also to his point, we've been able to increase that because the plan has changed as we've evolved. And I do also echo the sentiment that we're investing in the business in other places, which would include like investing in marketing efforts and spending more money there. And you see us doing more, I think, culturally-relevant events like the White House Correspondents' Dinne or partnering with Madonna on our album launch. And those are things we're doing that are marketing investments outside of attracting users to the app. They're really about improving our cultural relevance and what we bring to the community and to the user base overall.

And we've been working our way through that, testing those things. And then I think as we've achieved success, in some of these events and these touch points that become these cultural flashes, we have more confidence to invest some more money in marketing because it's working. And so those are the kind of things we're thinking about and balancing.

And certainly, there's a case to be made to just optimize for margin all the time, but that really doesn't give us the trajectory to execute on the vision that George has laid out to really continue to round out the app in many different ways and to expand the number of modalities in which we can reach revenue and reach users.

That concludes today's call. Thank you for joining. You may now disconnect.

Okay. Great. Good afternoon, everyone. Thank you so much for joining us. My name is Nathan Feather, and I am Morgan Stanley's small and mid-cap Internet analyst. I'm excited to be joined by George Arison, Grindr's CEO. Thanks so much for joining us.

Thanks for having me.

Now before we begin, a quick housekeeping item. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

And with that, let's kick it off. So George, for investors new to the story, can you give us an overview of the Grindr business and how it's evolved since you joined?

So Grindr is the largest social network of gay people in the world. By far, there's nothing really as large as us or even close to it. 98% of our users are gained by men all over the world. We are in almost every country in the world, except for the ones that U.S. has sanctions on, including Iran, although we have gotten a lot of requests from Iran to be available there. So hopefully, not in too distant future.

And we've been around for almost 17 years now. The product kind of took off like Wildfire when it launched on iPhone and has grown every year ever since then. Grindr became public in 2022, and I became CEO that year as well before we went public. What we've been focused on as a business is really three things since I've been here. Number one is preserving the core free product to be as strong as possible. We have a very robust free product, and we want it to be as good as it can be and frankly, better than it has been so far.

Number two is driving monetization by getting either users to convert to become payers or getting people who are already paying to pay more because of the value that we're adding to the product for them. And I think that's been successful so far. We're probably shifting a little bit from focusing on conversion to actually driving value from people who are already paying on a go-forward basis.

And then thirdly, thinking about new initiatives or new business lines that we can build out that can serve this core audience, but drive new dollars to Grindr outside of our core product. And so we know that our users are spending money on other things as well, which we believe we can provide to them better than some of the other providers might and like how do we launch those products and how do we bring those dollars to Grindr, which is not going to be something we'll see in the bottom line in the next year or 2 years.

But over the long term, we believe we can establish that to be a bigger part of the business that we have more revenue sources than just one core app.

Okay. Great. Now thinking of the financials at your Investor Day back in 2024, you outlined targets for 2027. revenue of about $600 million, adjusted EBITDA of around $245 million. How are you tracking towards those targets? And what will be the one or two key drivers over the next 24 months to help you attain those goals?

So based on our guidance, I think we're tracking really well. We finished 1 year of the 3 years that -- because we really gave 3.5 years at Investor Day. So we finished the first 1.5 years of that guidance, and now we're in year -- full year 2. Based on what we said for about 2026, I think we're tracking really well.

I think $528 million for revenue and $217 million for EBITDA. And we're really happy with where the business is. I think we've launched products at a really good pace. Feedback from users has been really good. The productivity on the team is very strong. And so I've been very happy with the results, and we should be able to achieve everything that we set out to achieve.

And beyond that, while we haven't given guidance beyond the third year, which will be 2027, there's nothing that's happening at Grindr today that makes me feel like we can continue on a very similar trajectory into the future. The big thing for us is going to be where the revenue comes from. We had outlined at Investor Day that we will be building products focused on intention and finding what are the intentions of our users and how do we serve them for those intentions with features.

One intention is right now, another intention is around relationships. A third intention is something like travel, and we are doing that. And the takeaway in doing that is that people are very willing to pay for premium products and premium services.

For example, last year, we tested what we call Mega Boost. So boost is the way people can boost their profile for more people to be able to see it. And historically, we've had like a $9.99 boost and as well as a $19.99 boost. And just -- I mean, literally totally randomly, I said, well, what if we tried like a $99 boost? And we did. And it turns out that actually a really large number of people will pay for a boost that lasts 24 hours, whereas the previous one only lasted an hour or an hour plus was specialized in who you targeted at and are willing to pay a lot of money for it.

Now $9.9 was a bit of a stretch. They're only willing to pay $59.99, but that's still a lot more than we were charging previously. And so what we are finding is that for the segment of users who are Grindr's power users who use the product a lot and who like the value-added services and have disposable income to the point where they can afford to do these things, there is a much higher limit to what they're willing to spend than we might have thought previously.

And so a lot of our monetization will be focused on those users. And the benefit of that is that then we can take some of that revenue and invest it back into the free product experience to keep the product -- free experience really robust since having more free users makes all users happy where they're paying customers or free customers.

Well, I want to get into a lot of those things. But first, since the proposed take last year, there's been a lot of noise related to ownership, governance and share pledging. Can you talk through the latest on those topics and the changes the company has made to the corporate governance structure?

Thanks for that question. That's probably the toughest question I get. And I get it, unfortunately, too often. So good to talk about it. I fully appreciate how that's really important to shareholders.

Again, they ask me that as well. And so we know and I think the Board knows that as well and is very focused on these issues. So to start with, the issues with the margin call last year and what happened, and James is no longer on the Board. He has stepped down as Chairman and as a Board member. And I think that was addressed kind of well.

And number two, we have a very independent Board. That was something that was very important to me coming into this job that the company maintained a majority independent Board. Now the Board is overwhelmingly independent. And I think has shown its independence in a pretty strong way given the actions that it has taken over the time that the company has been public, whether it was in terms of addressing the warrant overhang or in how it dealt with the proposal to go private last year. It formed a committee.

The committee valued the proposal and responded. And there were other analysts who thought that the deal was done just because it was made by majority shareholders. And clearly, that was not the case, which I think speaks to the independence of the Board. When James stepped down, we were really fortunate that Michael Gearon stepped in as a Lead Independent Director. Michael literally is probably among the top entrepreneurs in the United States over the last 30, 40 years. And so it's awesome for me to have him be in that role. He's been a great mentor to me, and I've learned a ton from him. And the Board is actively working on adding more independent directors to it, not something we started out just last fall. We had been working on that previously.

We added Chad Cohen as the Chair of the Audit Committee in May of last year. And we have two different recruiting firms helping us fill out the available slots on the Board for the shareholder meeting coming up this summer. And so I think we'll have some more names to announce in the coming months.

And then lastly, Ray is our largest shareholder and my relationship is really strong. I really like working with Ray. He is very committed to the long term of this business. I think the reality is that Ray, Michael and James in buying this company from China's ownership through a U.S. required divestiture actually saved the product for the user base and have invested significant resources over time into ensuring that the product remains really strong, and Ray has been at the forefront of that.

And as -- I'm a founder at heart, I have built companies from scratch, and you always want investors who are as optimistic as you are about things when you are a person like me because you believe that anything is possible. And oftentimes, investors are the ones that are kind of keeping you more in check with reality.

Well, Ray is the kind of investors you want to have as a founder because he's also super optimistic about the future and always believes that more can happen. And I think that's really positive to have that kind of a voice on the board. He obviously has a ton of expertise in areas that I'm not as of an expert on like capital markets, and I think that's also super helpful.

So my relationship with him is very strong, and I think he remains a very committed shareholder for the long term of this -- so those are the things I'd say kind of on that topic. I realize that there's more to do. I think the Board realizes there's more to do, and we'll continue to work on those issues for the future.

Very helpful. Now back to the financials. So I just had earnings last week, guided to fiscal '26 revenue growth of at least 20% year-on-year. Can you walk through the puts and takes as you were thinking about putting together that revenue guidance? And what key changes are included within the 20%? And then what are the one or two things that could deliver the most upside?

Yes. So we -- just to step back on how we guide, and this is really very much driven by my own experience because I was a private company CEO before Grindr. I then took that company public. And we went in a company through a SPAC process and had to give long-term and short-term guidance in the SPAC process, and we missed it the first quarter we were public, and that was very painful.

And I don't like going through those kinds of experiences. And so I tend to be really careful in how we give guidance as a result. I found that if you deliver 98% to private investors, they're really happy. But if you deliver 98% to public investors, they're usually not. And so we give guidance only to the things that we have clear line of sight to today. And then as the year progresses, we update guidance based on things that develop because obviously, we're not stopped and we're working on more things.

What had happened over the last few years at Grindr was that we created a ton of new value in our extra and unlimited tiers, which are our two paid tiers so far, but we never charged users for that value. So a lot of new features went into those products. And we put in some paywalls for free users as well, which made the tiers even more valuable.

But people -- but the price on the tiers didn't go up. Indeed, price on the tiers hadn't changed since 2018. And so last year, we started to look at whether we needed to change pricing to better align the value that the users were getting with the price that they were paying. And in August, we started to run some experiments on price tests.

The results were actually much better than we thought they would be in terms of people being okay with the price changes and not churning off being paying subscribers. And so we moved forward with those pricing changes in Q4 of last year initially for new payers. And that's going to percolate through in the first half of this year across the entire global ecosystem, including the current paying customers who are still on the old price. That is going to be the lion's share of our revenue growth in 2026, which is really monetizing all the things we had launched in '23, '24 and '25 this year and kind of harvesting that.

So I think that's really great for us because it's not impacting free users in any way. It allows us to kind of keep the free experience as robust as it is. What is not included is anything that we're doing on Edge. Edge is our premium tier that we are just testing now. We started testing it in Q4 of last year in Australia. Results on that were very strong. We're now running tests on that in a bunch of other markets, including a few U.S. markets, and I'm happy to talk more about that in a minute.

And we are really targeting Edge as a 2027 launch and for that to be the driver of revenue growth in 2027, in line with what we said at the Investor Day in 2024. But if the tests go well and we feel comfortable launching that product globally earlier, then there would be upside to what we are giving in guidance. And as the year progresses, we'll know more about that, and we'll update folks on that.

Additionally, last year, we started building our first gate expansion initiative, which is a business outside of the core app. That's what we -- how we call them. And that's Woodwork, which is our performance medications business as an anchor to our health business. Woodwork revenue is also not included in the guidance because it's still very early. So Woodwork has served many thousands of users and is ready for more scale, but it's still very early. It's only month 10 of it being in operations.

And so we didn't feel like including it in guidance made sense. So that's another area that's a pure upside. And then we have a few of our smaller products that have potential to have upside as well. So we I think that is the right approach for Grindr in terms of how we give guidance, and we'll update folks when we do the earnings again in May.

Well, thinking a little more holistically here, you mentioned of your three main priorities, there's increased monetization and improving the free user experience. I'd say that's different from a lot of similar companies where you're doing one or the other a little bit more strictly. And so interested how do you try and balance those dynamics there? What you're maximizing for? And I guess looking ahead, where do you see the room to really continue to improve that free user experience?

Yes. So when I started at Grindr and I came in as a tech CEO and I had started three different tech companies, I'd never run a subscription business previously before. The thing I heard from people internally and our Board and large shareholders as well as outside there like potential investors is, hey, Grindr is awesome because you have 6% penetration and Bumble has 15%, so much room, which made sense to me in some respects.

But as we learned more about the business, we realized that there's a lot more to this than just, hey, go from 6% to 15%. Now we have increased pet penetration significantly. We are now at 8.5%, which is way more than 6%, and the user base has grown from 12 million to 15 million. So if you hold the user base steady, actually, the conversion on the users we had back then is even higher than 8.5%, but it's actually much closer to where Bumble might be today.

But what you learn within the dynamics of that is that there's a big difference in who is the payer, and we released some of this data to investors last November, where our younger users, so people 18 to 30, tend to have a lower payer penetration. And then our older users, 35-plus, but especially 35-plus have a much higher penetration rate on being payers, which means that they're more willing to pay for these value-added services that they benefit from, whereas the younger users don't find that need to pay for those.

But we all want as many new people coming into the product as possible, especially as they turn 18 and start becoming kind of aware of Grindr and/or join as the rider passenger because they want to come out and figure out what it's like to be, et cetera. And so we want to keep that user base as vibrant as possible. And I think that's why we don't have some of the challenges that some of the other products have as far as the new -- younger users are concerned.

And so keeping that free product really robust for people who don't feel like they need to pay for it is great because they can mature to become impairs over time, right? We don't need to have them become pairs right away. Some of our straight peers are in a world where if you don't become a pair in the first week, you never become a pair.

But that's not the case at Grindr because with Grindr, as you age, you mature into becoming a pair. And so we do want to keep that very robust. And so we are less focused on kind of grow the payer penetration and more on saying, where is there revenue to be had with the people who already pay and how do we get them to be payers at high percentage rates and/or to be paying more than they're paying today.

As far as the free product is concerned, I think the single biggest thing we can do today for them is actually make the product be less buggy. And historically, we have had a lot of bugs in the product. A lot of it is an outgrowth of just the company history. Grindr was founded by a solo founder, 0 investment dollars put into the business. He funds it all himself and makes it be profitable like right away and then grows it from there and it kind of grows very quickly and exponentially. And it's all contractors. And so the initial code base is not great. And that just continued for a long time, then Grindr is bought by the Chinese ownership. They don't invest in the product at all.

They just kind of harvest the revenue and don't do technology investments. So then in 2020, when the company is bought out from Chinese, it's left with a very old code base. And we've been slowly chipping away at that. We've done all the back-end work. We hadn't done the front-end work. We started to refactor the front end of the product and rewrite a lot of the code last Q4. We are now well along on that. As one example, we said it in our shareholder letter last week for our Cascade, which is our front page, the main page that people go to, we went from 30,000 lines of code to 6,000. So we reduced the number of lines of code by 80%, which like is a significant change and the number of bugs that you could potentially put into that code base now is a lot lower.

So doing that across the entire code base, both on iOS and Android will be a big step forward for us. It's going to take about 1.5 years still, but I think it will be a big improvement for the free users. And then secondly, I think a really big thing that we need to focus on, and that will not be a change in 1 quarter. It's going to take some time is improving the quality of the ads that people see and the type of ads that they -- that is one of the ways we monetize it for users is through advertising.

We have a very robust and good advertising business at $70-plus million last year and continues to grow. But it's all third-party ads. We would prefer to have a lot more direct ads in the business that could both drive even more revenue but also be much more relevant to the user. And we can have other ad formats besides what we offer today, for example, reported video, which has much higher CPM when you show it, but it's also higher quality.

And so that's going to be another big area of investment for us this year, next year and beyond is taking this very good ads business and making it even better through better quality ads and more relevant ads that are more direct that will take some time to materialize, but I think will be very effective for the future.

All right. Great. Now one of the things the market has been really focused on is certainly MAU growth moderated a little bit over the past few quarters, nice improvement in 4Q. I guess, can you talk to what led to that recent slowdown and the path forward for user growth? And then just as you think about all the dimensions of the business, to what extent are you managing that KPI?

So we don't manage the MAU almost at all. And I realize that's very tough for investors because you all build models on how the business will do based on MAU, but that's not how we think about it internally. We have this very good flywheel where people turn 18, they come to Grindr and that just kind of happens on its own without us really doing much about it. Are there things we can do to impact MAU? Yes. Have we done them historically? No. Should we do them in the future? Probably, but it's going to take time for that to have an impact.

And most of it is going to be outside of the United States because we are pretty well penetrated in the U.S. and very well known. and I can talk about that in a minute as well. But historically, we have not managed the MAU at all. And internally, we don't really manage the MAU number at all. What we do manage for is actually a healthy ecosystem and ensuring that we can remove bugs -- sorry, remove bad actors from that ecosystem, whether it's illegal behavior or bots or spamming of people, et cetera.

It's another area where historically, we've done less work and we do more work on it now, partly because we can build way better tools to find bad actors today than we could 3 years ago because of Gen AI. Also, the same with tools that you use to find bad actors, bad actors can use to create more bad behavior. So you're playing whack-a-mole with them a little bit.

But overall, we are removing significantly more bad actors from the platform today than we were 12 months ago and 24 months ago. And it turns out that most bad actors show up in the new MAU that you might be getting at any given time. because they were always going to be removed at some point, but they were going to be in the product for longer previously versus what they're going to be in the product now.

And so if you look at our MAU growth in '25 versus '24, the only real difference is the account removals that we did, which we shared as a number. We removed about 350,000 unwanted MAU more last year than we did in 2024. And we -- had we had the tools that we had in '25, we would have removed those in '24 as well. And so the MAU growth would have been roughly the same as it was in '24. But we think the rough number of new aggregate adds that we saw in MAU last year is going to be what we'll see in the future as well, all through organically.

Now where we have potential for a lot more MAU growth is internationally, Latin America, in Asia and India in particular. And there, marketing can play a role because our brand awareness is not as high as it is in the U.S. Here, we have like a 90, 95-plus brand awareness. That's not the case in most of Latin America and Asia and even in some European countries. And so obviously, people know you, they use you, but if they don't know you, they can't use you. And so more people knowing us can be really valuable in driving more MAU growth.

Understood. Now one other area the markets had growing concerns over has really been a competitive intensity within the space. And so -- can you map out the competitive landscape in your view on where you think Grindr fits in? And do you believe competition has an increased impact in your business over the past year?

So this space, broadly speaking, whether you think of it as dating products or social media products is a very competitive -- and people use more than one product at once, and we know that. That's true for straight people. That's true for gay people, right? And there's many reasons why people do that.

So we are totally comfortable knowing full well that people are going to use more than one product. What we aim at is ensuring that we are the first in wallet product, if you kind of take the credit card analogy and that we're the product people come to for the longest amount of time, which has, I think, been the case for a long time and has continued to be the case regardless of what the competition may or may not do.

All the data that we have shows that that's the case. People spend more time in the app than they ever had. More people are coming to the app than they have ever come to the app before and young people are coming to the product pretty actively, and that's not an issue.

And whenever I say young, to be very clear, I refer to people 18-plus Grindr than 18-plus only product. So competition is out there that fully fine. We look a little bit at what they do. We try to stay ahead of competition, but that's not the main focus of our actions at all. What we are focused on is just really good activity for our users and ensuring that they're very happy in the product.

Okay. Great. Well, another area where you've been really early adopters has been Gen AI. I think you've been, especially within the consumer Internet space, one of the most proactive and not just internal operations but also launching products in the.

Tell me why I quickly jumped.

Which is great. And so can you talk to us about, one, what you think the most underappreciated Gen AI opportunity is? And two, what you think the most underappreciated challenge is among investors?

So for us, the way I thought about AI coming into Grindr is I actually had built an AI company in 2019, 2020 and then sold it in the automotive space. And I knew a lot more about AI think than most people did as a result. And AI is only as good as the data that is driving it, and Grindr has an incredible amount of data.

And so to me, coming into this job in 2022, that was a really exciting piece. I'm like, hey, there's like this gold mine of information. And by the way, you have users that are early adopters, right? Like they adopted the iPhone very, very early, and so you could make a conjecture that they would adopt AI early as well. And you could build a truly AI native experience for them the same way that you were building -- you built a mobile-first experience for them in 2009, 2010.

So to me, that was really, really exciting. And the things that I see as huge opportunities is solving some of the challenges that game people face in meeting other people because of density. So if you talk to game men, a very large number of them will tell you, actually, I want to be in a relationship, but it's really hard for me to meet somebody that matches what I'm looking -- and that's because most dating in the U.S. is done by geography for where you live.

And in most geographies, maybe say, other than New York and London, the density of people is very low for total number of people to choose from, right? Even in San Francisco, where we are right now, it's one of the gate cities in the world, if not the gate city in the world as far as percentage of total population.

But you're talking about somewhere between 30,000 and 60,000 potential partners if you look at every person in the city of San Francisco. That's not a lot of people to choose from if you are looking for a partner. And so what AI can help us do is allow people to meet other people outside of their geographies and reduce the barrier of, hey, I don't want to travel this far to meet this person because we can share so much more information about the other person with you and match you so much better.

And that's what we're doing with AI is taking all this rich data that we have in people's messages, and their activity and their behavior in the app and using that to create better matches between people. And that's ultimately what the Edge product is all about, right? It's taking all this unique data, putting it into product experiences and putting them all in one tier and saying, Hey, you can use this to either find your casual partners or find your long-term partners or find your friends, et cetera, or use it when you travel.

One of the most amazing things for me being in this job now is some of the data I've seen about how gay men thinking about long-term life has changed post-game marriage. So when I was young girl and not married, I knew I want to have a long-term partner, and I even more knew that I want to have children. And so in my 20s, when I would say, I want to be married and I have children, I was like this weird where like maybe like 1 in 10 guys would say they want to be married and 1 in 100 guys would say that they want to have kids.

We do a national survey every year, State of the Gay Nation, we call it, and we did it last year, we did it this year. Half of the gay men, 35 and under say they want to be married and 25% of the gay men, 35 and say I want to have children. That's a higher rate of I want to be married among gay men and among great women of the same age cohort. And so we have like a huge opportunity to service that cohort in ways that never has been done before through these AI products that I'm like super excited about.

Great. Now flipping over to the margin side. You've maintained strong EBITDA margins of 40% plus for many years now. As you think about all the different areas you want to expand in and invest in, how do you balance the margin trajectory with revenue growth? And then from an AI perspective, as you lean in here, do you see opportunities to really push the productivity that you could have internally?

Yes. So -- that's two different questions, and I'll answer both. When we gave our guidance in June '24, we said 39% to 42% EBITDA margin. We've stayed consistently above that in large part because we've been leaner than we thought we would be in terms of number of people working there because ultimately, our single biggest expense is people.

I think implied EBITDA guidance for this year was $41 million, which is kind of on the high end of that number for the year, if you look at the revenue and EBITDA that we gave, and it assumes that we're going to actually hire the people that we want to hire, but we tend to usually be behind on hiring because we keep a very high bar because that will not allow the company to get bloated.

We had 225 people when I joined. We went down to 90 at one point. Now we're at 16 in the U.S. and 30 in Colombia, but still below where we peaked, but the business is twice as big or more than twice as big now as it was back then. So in terms of revenue per head, it's much higher now. We're like $2.75 million in revenue per head. And so I think keeping -- and that's possible because we have a very high bar.

I mean, I think our team is about as good of a team as any tech company team in Silicon Valley today. And that's very important to me, and we'll continue to keep a bar that's very, very high in that sense. And so the opportunity in margin this year would be higher slower than we think we will. And as a result, margin comes in higher or revenue does better than we're guiding to.

And then obviously, we're not going to spend that money. That's going to drop down to margin as well. With regards to making the team even more efficient, I mean, we -- 0% of our code last January was written by AI. 70% of our code this January was written by AI. I don't think there's another legacy product company that can say that. And that happened because we made a decision that we're going to become AI native in how we code, and we did.

Now we're not at 100% AI-generated code. There are some teams at grinded that do that, but not every team. And we'll get to, I think, that number over the next couple of years. I think some of the refactoring that we need to do our code will help us do that because not all parts of our code actually can accept AI agents today. But what we're doing with our engineering organization is going to happen across every other organization.

For example, we need to stop thinking about engineers -- well, first, we need to stop thinking about Android engineer and iOS engineer, like those terms will disappear because you're going to be an engineer. And if AI is writing your code, it doesn't matter if you were an iOS expert and Android actually should be able to work across the stack. Then we're going to probably stop thinking about PMs, designers and engineers because they're all going to be doing similar stuff.

And that part, we have not yet actively started to do, like our PMs are not yet asked to check in code, but that's going to start happening and people are going to become more efficient. And then obviously, we want to do that across every other part of the organization, whether it's in finance or in marketing or in sales or legal, et cetera. I think we're far along in a lot of those, but not all of those and not as far along as we are in engineering

Well, we covered a lot of ground here. So maybe leave us with the one or two things you think investors most underappreciate or misunderstand about the story.

Well, I think people still think of Grindr as a dating product and use the dating companies as the comps, which I think is completely off. I think Grindr should be thought of as a social network and the social network company should be the comps to Grindr except that we are narrowly focused on this particular gay and by male user base cohort, which, by the way, is significantly wealthier and has significantly more disposable income than almost any other set of the population and is a trendsetter, which is really valuable. So that's number one.

And then number two is the fact that -- and the first one is hard for me to understand why that confusion is still there, but I keep hammering on that. The second one I actually do understand why people don't fully get this piece yet because we've not proven it yet is our users spend a lot of money with other products and services. And our hypothesis is, hey, we know them better than anybody else does. The products that they buy were not built for them. They were built for the general population that just happen to buy them.

We can actually replicate those products specifically for them better than somebody who is not targeting them. And can we bring them to start buying from us versus somebody else, using, by the way, a product to drive brand awareness and distribution that they use for over an hour day. And I think that's a very strong thesis. And if you think of Grindr that way, then it's a lot more than even a social network. It can -- has a potential to be like the primary super app for gay people. And I think that's the big thesis that people should be thinking about when they think about our business.

Okay. Well, George, it's been great. Thanks so much for being here. Thanks for having me. I appreciate it.

My name is Kate, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr Fourth Quarter 2025 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Director of Investor Relations.

Thank you, moderator. Hello, and welcome to the Grindr Earnings Call for the Fourth Quarter and Full Year 2025. Today's call will be led by Grindr's CEO, George Arison and CFO, John North. They will make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon and this is available on the SEC's website in Grindr Investor page at investors.grindr.com.

Before we begin, I will remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate or similar such statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC.

During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures including a reconciliation of GAAP to non-GAAP measures are included in the earnings release we issued today, which has been posted on the Investor Relations page of Grindr's website and in Grindr's filings with the SEC.

With that, I'll turn it over to George.

Good afternoon, everyone, and thank you for joining us today. 2025 was an exceptional year for Grindr. Revenue grew 28% year-over-year to $440 million and we delivered roughly $196 million of adjusted EBITDA, meaning we achieved more EBITDA than our revenue just 3 years ago. We accomplished that while materially improving the product and platform and while rapidly terra forming Grindr into an AI-native organization. In such a fantastic year, I'd point to 3 highlights. First, the core business stayed strong. We expanded the product in ways that deepen engagement and Clariteintent, including the global expansion of right now and launches like for you, chat summaries and A-List.

We strengthened Extra and unlimited and expanded monetization through ad formats like rewarded video. Second, we made real progress on AI, not as a feature, but as an operating advantage. In Q4, AI ages grow between 60% and 70% of our new code and our engineers are reporting roughly a 1.5x productivity improvement per person. We're now able to ship faster with higher quality without the company getting heavier and slower.

Third, we expect to drive revenue growth in a way that matches what we've built. Over the last several years, we've added a lot of new value to expand unlimited, significantly expanding what users get from both tiers to make sure we're capturing the right economics in return, in August, we'll begin rolling out new pricing for [indiscernible]. Results have been encouraging, and we are continuing to roll out these changes globally through the first half of 2026.

Looking ahead, our framing for 2026 is to raise the baseline. Our best execution periods during 2025 with high output, high urgency, high quality will become our default operating mode. And from that baseline, we intend to push even higher. Therefore, this year, we are constituting on 4 priorities: first, premium experiences encompassed and edge. This AI-native premium tier is built for power users who want the most capable version of Grindr and today's technology enables us to build. We'll continue refining the experience and testing price points for the year; second, durable core growth, that means improving onboarding translation and localization, offering personalization and intent clarity through AI, and beginning to strengthen the user experience in lower-density and international markets.

Third, operational rigor through grinder mode, so ownership, higher productivity, faster decision-making, greater leverage for our management layer and AI embedded into everyday workflows across countries. Fourth, deliberate investment for durability and upside, we are leaning into reinvestment in our team, our platform foundations and ecosystem health. That same posture applies beyond subscriptions, we will continue building Grindr Health anchored by Wood work, and we will keep strengthening our ads platform with increased focus on direct advertising and brand partnerships.

Up to this point, these remarks were read by AI, using a proprietary voice model trained on my voice by one of our Gayborhood expansion teams. We did that deliberately as a small demonstration of how deeply AI is becoming embedded in both our product and our operations. Our continued focus as a management team is to execute against a strategy that creates significant long-term shareholder value by building exceptional experiences for our users while driving sustained growth in revenue and profitability.

At both the management and the Board level, we are committed to demonstrating this through our actions and to continue doing all we can to earn our investors' long-term trust and support. Thank you to the Grindr team for delivering through another ambitious year and to our users for their continued willingness to come to Grindr for the [indiscernible]. With that, I'll turn it over to John to review the financials and guidance.

Thank you, George, and hello, everyone. I'll start by summing up the year and then dive into the fourth quarter. Grindr delivered outstanding results in 2025. Revenue grew 28% year-over-year to $440 million, and adjusted EBITDA was $196 million, representing a 44% margin. For the full year, we reported net income of $103 million compared with a loss in 2024 that reflected a noncash warrant liability revaluation.

In the fourth quarter, revenue was $126 million, up 29% year-over-year. Direct revenue was $103 million and indirect revenue was $23 million for the quarter. Revenue exceeded our increased full year guidance provided in November due to continued strength from our subscription and add-on offerings as well as strong performance in our TPA business, which benefited from strong demand from both our partners and growing international markets.

Adjusted EBITDA for the quarter was $56 million, a 44% margin and net income was $29 million. We demonstrated operating leverage in the fourth quarter. Operating expenses, excluding cost of revenue, were $63 million. As a percent of revenue, those expenses declined to 50% from 54% in the prior year, which supported operating income for the quarter of $31 million or 25% of revenue. For the full year, operating expenses, excluding cost of revenue, were $201 million declining 2% to 46% of revenue versus 48% in 2024.

Operating income for 2025 was $126 million or 29% of revenue. We finished the year in a strong liquidity position. Cash and cash equivalents were approximately $87 million at year-end and total gross debt was roughly $396 million. We generated $133 million in free cash flow in 2025 and which we utilized for both investment and growth initiatives and our share buyback program. Today, we announced a 3-year $400 million expansion of our share repurchase authorization and extended the program by 3 years to March 2029.

This step reinforces our conviction in the strategy and our optimism of what's ahead for Grindr. In 2025, we repurchased 25.1 million shares against the original $500 million authorization for approximately $450 million. The balance of approximately $50 million will roll into the [indiscernible] extended program announced today, giving us total repurchase availability of up to $450 million. When we launched the initial 2-year $500 million authorization a year ago, the key objective was to offset the dilution we expected from the cash exercise of Grindr post the leaseback warrants. We moved through most of that authorization quickly clearing the warrant overhang, eliminating nearly all of the associated dilution and doing so without increasing our aggregate debt.

This expanded authorization gives us flexibility to buy shares when appropriate and in doing so, return capital to shareholders. Going forward, we expect our pace to be materially more measured. And because the business continues to execute at a high level with strong cash generation and real durability, we can return substantial capital to shareholders and keep investing aggressively in the long-term road map that will compound growth and profitability over time.

Before I discuss our outlook, I'll briefly expand on user metrics and our updated MAU disclosure. Average MAU for 2025 was $15 million. Average paying users were approximately 1.26 million and ARPU was $24.25. As we discussed in November, we will be providing average MAU on an annual basis rather than quarterly going forward. This change better reflects the way we manage our business, focusing on delivering value and a great experience to our reliable funnel of freezers and enhancing the features we provide to our paying users and aligns our disclosures with many of our public consumer Internet peers.

We'll continue to provide quarterly visibility on leading engagement indicators. Finally, we have introduced our outlook for 2026. We expect to continue growing the business while scaling investments in longer-term initiatives, including premiumization, AI and the Gayborhood. For full year 2026, we expect revenue of greater than $528 million and adjusted EBITDA of greater than $217 million. As we have consistently discussed, we guide to what we have clear line of sight to. George noted that some of our early initiatives like Edge and Wood work are not yet included in our outlook as the pay revenue growth is not yet predictable, though the investments in expense are factored into our adjusted EBITDA for the year.

We will continue to invest carefully and with discipline and to protect our ability to generate strong cash flow. Additionally, while we do not provide guidance on a quarterly basis, we currently expect our revenue growth rate and adjusted EBITDA margin in Q1 to pace well ahead of our annual results reflecting earlier revenue momentum and the timing of our planned 2026 investments, respectively. As noted in the past, we do not manage our business for quarter-to-quarter performance, but for long-term durable and sustainable growth and profitability.

In closing, 2025 is a great year of strong growth, outstanding margins and durable free cash flow generation. In addition to our highly cash-generative business model, we have a healthy balance sheet that gives us the flexibility to invest and return capital.

And with that, operator, please open the line to questions.

[Operator Instructions] Your first question comes from Andrew Marok with Raymond James.

Thanks to AI, George, for the remarks. If we could start with 2026, I guess, what you've seen so far in terms of things like retention and churn impacts from your pricing actions that you've done to your base plans at this point and kind of some of the assumptions underpinning Edge into the '26 outlook? And then I have a follow-up.

Sure. I can start with that and then John chime in if he wants to add anything. So with regards to '26 and pricing changes, we were very happy with the results of the test that we ran in 2025, starting in about August on pricing. The user base accepted the price changes very well. I think that speaks to the fact that we have added an incredible amount of value to both AIXTRON limited over the last 3 to 4 years and a lot of new features and products were added to those tiers. But we never charged for those, right? So I think users like the features and the offering that is there. And so now having to pay a little bit more for all that extra value that has been generated over the last 3 years was not a significant challenge, and I think has been really well received.

So we don't expect to have any significant impact on conversion from the price changes that we made. And we will be rolling out the price changes throughout the first half of the year across the globe. It's live with a lot of users already, but not live at 100%, and that's something we expect to happen in H1. With regard to Edge, we started Edge in -- the products that are in Edge have been in testing for a while, but as a tier, it went live in Q4 of last year in Australia. The feedback on that was extremely positive. Frankly, was higher than we had anticipated in a pretty significant way, which told us that there's a lot of value in what we're creating. And potentially, we were not pricing it appropriately or the amount of value that we were generating.

To get a better sense of the price points, given that we've never done anything of that nature before. We've never offered a product of that much value in the past. We felt that it was important to do tests outside of Australia as well. And so we launched tests in certain U.S. and other global markets where we have a significant number of users who are paying customers. Those tests are ongoing today and that some of the information that got out into the public, which was inevitable when you start doing price test like this, it will trietension. We would expect testing to continue through H1 and probably in Q3 as well. Edge is being really built as the core foundation of growth in 2027. If we go global with Edge outside of testing in 2026, it will be upside. It's not assumed at all in our guidance for the year.

Great. really clear there. And then maybe in a different direction. Following the break of the proposed takeout offer a couple of months ago, you were left with 2 major shareholders, one of whom has been selling down a stake pretty significantly. I guess, can you give us any color as to your expectations for how the situation plays out and how you're approaching the governance situation in the meantime?

Thanks for the question. I appreciate where the question is coming from, and I understand that this is an important issue for a lot of shareholders. We, ourselves, get this question from folks pretty regularly. And also appreciate that in light of last fall, there is more interest in that. As I believe everybody knows, James has stepped down the Board and the Board does continue to view this issue as quite important. And that's something that I've always thought about. I think one of the things that came out from last fall is that everybody is an alignment that Grindr remaining a public company is the best thing to do.

And that's true for Ray as our largest shareholder. That's true for the remainder of the Board, and that's true for management as well. I think the other thing that came out last fall that was very positive is that Michael Guerin, our Lead Independent Director, was willing to step into that role when James stepped down. Michael is among the most successful entrepreneurs in the world here yet. And so to have him be in that role is extremely valuable to me. He's been a great mentor, and I've learned a ton from him in the 3.5 years we've been working together and very much looking forward to continuing to work with him in that role.

Since going public, Grindr has had an impendent Board and our Board is very committed to remaining independent and to continue to be stronger. That's not something new that got started just in the fall. It's been going on for a long time. We have been adding new directors. We added Chad Cohen as a Director in May. I think it was a very positive addition to us given his financial expertise and rose twice as the CFO of a public company. And we are in the process of interior in candidates for Board membership now with into over a dozen very serious and credible candidates so far with support from 2 different search firms, and we will continue that process for the next several weeks as we get ready for the shareholder meeting this summer, and I think there'll be an update on that at the shareholder meeting.

And then lastly, what I'd say is that I have a very positive relationship with Ray. Ray has been a very good shareholder to Grindr. What Ray, James and Michael did when they rescue this company from Chinese ownership was massive, and it really saved the product and saved it for the community, and I think that's really valuable. And in the 4 years that I've known Ray, we've had a very positive and strong working relationship. He is a very entrepreneurial investor and that he very much likes to think about the long term and is very optimistic about the future and what the company can do whether it's in -- as a business overall or within products that we're launching.

And it's pretty deep in knowing what we're doing and what the road map is, which I think is really positive. So we've had a very good working relationship. I've learned a lot from him as well. Obviously, he has expertise in areas that I don't know as much about like capital markets. And so I've very much enjoyed working with him. I think he's a very strong shareholder, and I believe he'll continue to be a very committed shareholder for the long term, who is dedicated to this business. And there was -- you could speak to that from the fact that last year, even though he owns so much of the company, he bought even more ownership in the business by putting in nearly $200 million into the company at the time.

So I think we are in a very strong position from the governance standpoint, and the Board will continue to be very focused on ensuring that we are run as an independent company, which is something that's very important to me and to the Board.

Your next question comes from Nathan Feather with Morgan Stanley.

Congrats on the results here. I guess, first in thinking about the at least 20% revenue growth guidance you gave, can you help us think through the primary contributors that are included within that, whether it's the price increase or are there kind of factors. And then second, really interesting to hear the positive receptivity to the Edge year. Can you just provide some more information on within that what are the early subscribers saying is the primary value they're getting. There's a lot of different features. So trying to help kind of contextualize what are the things that people are really circling is, these are things that are really improving my experience.

Nathan, good to hear from you, and really appreciate you picking up coverage earlier this week. So thank you for that. I'll take the guidance question, and then maybe I can turn it over to George for the second question. When we think about guidance, our philosophy has been pretty consistent from the beginning, which is what do we have line of sight to. And how do we think about the business over the long term. We're not going to take a quarterly approach to managing the business. We're going to be long term and thoughtful in how we talk about what our outlook is, and that's reflected in the guidance for '26. It's what we have line of sight to.

And I think the 20% revenue growth, to your point, is still a great growth rate. It's primarily focused off of the product enhancements that we've been making over the last 18 to 24 months. And then the fact that we haven't really taken a price increase in 2018, if you can believe it. And so as George mentioned earlier, we implemented those pricing changes just right at the end of last year, and those are going to continue to work their way through the first 2 quarters of this year. And that's our expectation in terms of where the majority of the revenue growth is going to come along with continued growth in our advertising business. It was up 37% last year and making sure that we also enhance the quality of that business, both through better advertising things like rewarded ads and then also through [indiscernible]. So those are the primary drivers as we think about it. To the extent there are expansion opportunities, Edge gets pulled forward, things of that nature, we don't have line of sight to that now. It's not included in the guidance. And if and when that happens, it would hopefully lead to upset.

And with regards to Edge -- thanks for the question, I'd be looking forward to seeing you on Monday at the conference. And Edge is something that I super excited about because honestly, I [indiscernible] up with it, thinking through like what the opportunity is, and the team has done a really awesome job at making it happen. And also it's awesome because it's built on technology that wasn't in existence 4 years ago. One of my theses about taking this role and coming to Grindr was AI would become a game changer in how technology is being built. And Grindr was very uniquely positioned to be able to be an AI-first company, an AI-first product because we have so much data.

I think AI is good theoretically, but if you don't have the data, it can't really do very much, and we do have a ton of data that we can utilize. So the things that we're trying to solve with Edge are twofold. One is that people end up having many, many conversations like Grindr, which don't go very far. partly because new conversations take over, right? So because we're an open architecture platform, people can talk to anybody and people have many, many conversations at once. power users, in particular, have even more conversations but an average is a sense 50 messages a day. So you have many people that you're talking to all the time. That's really magical, and that's where a lot of the excitement of Grindr comes from.

But one of the negatives of that is that some of the great conversations you might be having get kind of pushed down and lost in the inbox. And I think we've been kind of thinking about over the years is how do we avoid that from happening? How do we help the user have a better sense of -- these are the conversations that I'm having and I want to maintain them and maybe they go somewhere beyond just the conversation over the long term. That's especially for users with travel a lot, because you might be having competition in different places. And then you're in New York, you have a bunch of companies in New York, then those get lost when you go back to, say, Chicago and not having compensation in Chicago.

What we've built within Edge is a product called A-List which takes your entire chat history and builds on top of it a set of summaries of the [indiscernible] and the best conversations that you've had with people that the AI believes are your best matches. And then you can go to your A-list and see those conversations and brings together those conversations. It brings together the summary. It tells you what you told them, what that person told you and why that's interesting. What are the important information that you shared about each other, whether it's your name or other relevant information, et cetera. It brings together the Ava person's photos as well. So you can see all the photos that he has shared with you or anything that you shared with him.

And that feature is a [indiscernible] feature. The users really frankly love it. And I very much remember in my head, the day when we, as a team, described it for the first time about 2 years ago and to go have it go from like just a concept in a conversation to here it's live and is as awesome as it is, I think it's fantastic. So that's the first piece of what we're trying to solve. The second piece that we're trying to solve is discovery. Grindr does not have a lot of information about its users on its profile. That's, again, part of the magic of Grindr, privacy is very important to users. And so we don't require to say a lot about you.

But there is a limitation to that in that you don't actually oftentimes know is this the right person for me to be reaching out to or not. And what we are doing with Edge is for people who want to be a part of this, obviously, it's all by person's choice. We don't force people into our AI functionality only people choose to be part of the functionality. Is this true? And the user who is subscribing to Edge will be able to see Grindr derived information about the other user. So if I'm looking at somebody's profile, and I'm an Edge subscriber, I will know things about that user behavior patterns that are useful for me to know in deciding whether I should reach out to him or not.

And I think that's extremely valuable and people are really loving that experience. And tied to that is the second piece, which is discovery. In almost every location in the world, the number of game people in a given geography is actually quite limited because we're about, what, 5% of population, maybe 6%. And that's not that many people, when you take half of the populations mail and then 5% of that is Gay. Maybe New York that's an exception where you do have a critical density, but everywhere else density is lacking. And so through a feature we call Discover, we're able to identify and service people to you that are the right matches for you, meaning we believe you will like them based on everything we know about you and everything we know about them, but you otherwise might not find and that's less contained by geography where Grindr is very geography focused, like I'm here and he's migrate around me. by geography is broader in nature. And that allows people to find new people that they otherwise might not connect with. But because it is based on all this information that we possess, it's actually a very positive recommendation. And because it's transparent because of insights, there's actually a desire on the person's part to engage in a conversation and take a risk on a longer distance because there's so much alignment of interest.

So that's what Edge is doing. I think it's a really incredible set of products because it's truly AI-natifying Grindr for people. I've been using it since about September when it got put on my phone. And it's really an incredible user experience. It also is very magical because as a product guy, knowing we can do this, you now know that every other company is going to build products like this over time, meaning legacy products and the legacy product is going to become even better with AI as a result. And so kind of thinking through that is really cool.

One last thing I'd say is we are starting this out at the premium tier, obviously. But over time, elements of what we are building with Edge will be available to everybody because we want the entirety of brand experience to be AI-defined and to be really amazing. Their free user experience and 91.5% of our users or 90% of our users don't pay for Grindr at all. And we do want to keep a really robust experience for them, and that's something that we will continue to do in the future as well.

Your next question comes from Eric Sheridan with Goldman Sachs.

And maybe building on that last answer, George, the first part would be just how your philosophy might change over time with respect to striking the right balance in terms of tiering the products and the platform. So you're continuing to grow the user base and also continue to sort of evolve the user funnel will broadly describe on the platform. And then the second part of the question would be, what have you learned about marketing as a potential stimulant for either accelerating the path towards higher tiers or more monetization for the platform more broadly or just user acquisition or traffic more broadly?

Thanks, Eric. Let me start with the first one. So historically, Grindr has had a very, very strong free tier, very robust for tier. There are 2 things that make, I think, a particularly robust compared to most other products of our kind. One is unlimited messaging, the fact that you can message anybody and continue having those conversations in an unlimited way. It's not like we tell you can only see 10 messages at a time or 20 messages at a time. It's completely free and the result is people send 50 messages a day on average, and that's more messages than you see on WhatsApp a day, right? And messaging is just one portion of Grindr.

And the second part is Discovery, the fact that you see this group of people, and you can start a conversation with anybody. And as you move around the city, the grid changes because different people come close to you and you can see them. That robustness, we obviously want to maintain and we want to keep. What we've done since probably 2020, so both during my time here and before, is start to slowly introduce some payrolls across the experience, whether it's in filtering or in visibility or in other areas that drive more people to convert to become paying users.

And that has served us well. It has allowed us to put a lot more value into the extra nary unlimited tiers. And we are seeing the benefits of that now because people very much value those tiers and are willing to pay slightly more for them in light of all the extra value that we put into them over the last few years. We could continue doing that, and that's a path that a lot of our companies have taken as well and continue to monetize by putting in more and more paywalls along the way, which would end up pushing more and more people to become paying customers.

But as we discussed at Investor Day back in June of 2024, the alternative way of monetizing is to actually start offering more premium features which a smaller subset of people will really value and want to pay more, and that would then eliminate the need for you to put in payrolls that are new and force more people to become converted to paying customers. And we believe that for Grindr, given the magical nature of the free user experience and keeping it very robust, that latter way of doing things might be a better approach, and so what we're going to be focusing on in 2026 and 2027 is that AI driven premiumization where we will be offering new features and new products to a smaller subset of users, initially power users and then slightly broader that we believe will really serve them very well, and they will be willing to pay for.

That will be the driver of our revenue growth this year, next year and so forth. And then we'll be able to take some of that growth and be able to push it back to the free user to ensure that the free experience ends up being really awesome and actually starts to improve. And so one of the things that we're doing this year is actually unwinding some of the paywalls that have been put in place over the years. and reducing some of the ad triggers that have been put in place as well as I give back to the 3 user experience to make the experience even better than it is right now. And that's something that we believe we can continue to do as we premiumize the product.

I think if you look back at last year's data from November, you'll see that younger users, 18 to 29 have a much lower pay rate, but that's okay because they can use the free product very successfully. And then as they age, they become more likely to pay because they want those added features at the more older age level. With regards to marketing, I oftentimes say that Grindr became successful in spite of its marketing rather than because of it. We, frankly, were not really focused on marketing at all and not really paying attention to it. When I got here, I felt that marketing was a huge opportunity, and we need to really lean into it. even though we have amazing brand awareness, 95% brand awareness in the United States, but that doesn't mean that everyone loves us. And marketing is both should be partly to have the product be loved.

And what we are really doing with our marketing efforts is creating an experience that -- or creating experiences in real world. and digitally that will get people to appreciate us as a business and as a product and love us more. And so what you saw last year a lot with things like the Gashit campaign or the Cristina Aclara campaign are these really cultural shaping magical moments that's to the power that Grindr has on society in terms of cultural impact. We have an audience that is very much a trend setter. And when they start doing something, a lot of other people follow, and we very much like to lean into that with our marketing efforts.

And I think the marketing change that we've seen through our new brand approach has been really fantastic and the users really love it. And we just got a little bit of data from a survey we did where like love for Grindr actually has increased in a significant way over the last 2 years, and we're very happy about that among gaming, the kind of the core audience. We do believe there's a lot of opportunity with brand building internationally because our brand is not as known in many countries as in the United States. And so that is an area that we have not historically leaned into, but we will be spending more of an effort on.

You saw this a little bit last year with us launching our social media channels in Spanish. We now have an agency supporting our communications work in Latin America, where we are doing a lot more palms work than we had done in the past. and we'll be leading to that. And so we are starting to take a little bit more of a global footprint on marketing. And I do believe that over time, though, that's not going to be immediate. We will see positive results in terms of user growth from more and more people knowing that we exist and then using this, right?

Because what we do know is that when people know us about us in certain countries like Brazil or Philippines or India, they use us and they really like us. but a lot of people still don't know us and they can't use us if they don't know us, right?

Your next question comes from Andrew Boone with Citizens.

I wanted to ask about Wood work. Can you guys just help us understand how that fits into the monetization playbook for 2026 and then out years? And then understood you're moving away from the mal metric, but we've seen 2 quarters of slowing growth. Is there anything that we should be thinking about or you want to highlight as we think about MAU growth on a go-forward basis as you do move to the annual disclosure?

Totally. So let me start with wood work. question. Woodwork is not at all in our guidance for 2026 from the revenue perspective, it is in there from the cost perspective, but costs on it are fairly modest. There's a small team that is working on that. But because we mostly partner with third parties for how it operates. There is not a lot to kind of cover in terms of costs other than the team. What I've said about Woodwork is everyone should think of it as a start-up inside Grindr. And it's a 10-month old start-up. We launched it in the spring of last year. In that time period, it has served thousands of users and thousands of patients has launched more than 1 product. So it started out with ED.

Now it offers more than ED medications, and we believe there's opportunity to offer several other treatments over time as well, such as hair care, which we don't yet offer and to really go through a test and learn process of like how do you go from 0 to 1. Well, now it's gone to 1 because it's able to go after more scaling, but it still is a startup. And I joked, I think, at the Board meeting if it were a stand-alone company, and was in Silicon Valley to be one of the hottest companies come out and given how much scale it's achieved in a very short amount of time with a minimal spend.

But it is still a start-up. And so we don't want to put the pressure of a public company on that team. We want them to operate like a startup, with deep start-up rigor as well as hard cores that start-up companies are run with. And so that's kind of how we're envisioning with work. But we do believe that over time, Woodwork can be a very valuable growth lever for us as well as an anchor for the broader health offering that we are working on and developing. And concurrently with that, it also makes the overall offering from Grindr better, right, because there's a lot of synergy between I subscribe to Grindr and I subscribe to, say, ED medications from with work, and we are seeing a lot of positive synergy when we are offering those 2 things together.

So that's kind of, I think, what I'll say about Woodwork. We're going to continue to maintain the view that giving information about that beyond that, probably is not in the best interest of that product being successful. With regards to MAU, to start with the quarterly MAU not how we think about our business. That is just not generally what means day-to-day management and how we operate. MAU has grown very nicely for a long time at Grindr, purely throw out of mouth. Last year, unadjusted MAU growth was 5.2%. I think I've said this before, and I'll explain again for those who haven't heard me, we did start to much more aggressively remove unwanted accounts from Grindr than we had done in the past in 2025.

And the result was that we removed about 350,000 more accounts out of MAU in 2025 than we would have done in 2024, had we not put in place all the new tools that we developed and implemented in 2025 for unwanted account removal. And so at the request from analysts and investors, we also did share an adjusted MAU growth number, meaning what would MAU growth have been like had we not removed these unwanted accounts. and that was 6.1%. So quite similar to what MAU growth would have been in the past years.

The only difference really is the fact that we did have this pretty significant adjustment from the more aggressive MAU removal. I do believe that we're going to continue to remove unwanted accounts quite aggressively. And so I think the amount of raw MAU growth that we saw in 2025 is how we should think about MAU growth for 2026 as well. And we do believe that there's a ton of opportunity for MAU growth beyond what we already do, especially internationally, with all the users -- all the potential users who don't know about Grindr, but could as well as the fact that they are very positive things happening in certain countries as far as acceptance in India, for example.

And so over time, you will have more and more being willing to use Grindr. And so we are thinking about what types of that we want to be doing internationally. That has been an area that we see as a big opportunity, but it's not one that we've gone after so far. purely out of focus. You can only focus on so many things, and that's not been one that we've been focused on yet, but it will become a bigger part of our focus in '26 and '27. And then the other piece that I think is an opportunity with now is older cohort retention and reengagement. As you saw from the data we released in November, we have a very strong younger user base, 18 to 29, but we become a little bit weaker at the kind of 45-plus cohort. And we believe that getting those users to reengage with us is an opportunity, especially in countries like the U.S. and the U.K., and that is also something that we are working on as well.

But both of those things are going to take a long time to have an impact. And so I wouldn't kind of look to, hey, in 1 quarter, that's going to have an impact.

Your next question comes from Logan Whalley with TD Cohen.

Yes, Logan on for John Blackledge here. Two questions. I guess, first, as you improve app functionality and then undertake big projects like you mentioned rewriting the code base. How do you weigh investment behind engineer head count versus, say, investment behind AI tooling to make your current engineers more productive? And then secondly, as part of your '26 guidance, you called out -- and the later you called out unwinding paywall dynamics and add triggers, could you talk about that in a little more detail, like what exactly that looks like for app users?

Sure. Yes. Thank you for that question. The first one is one of my favorite questions. And I think every Grindr employee would certify that George has been pushing him on this point for a lot longer than almost every of our executive in tech. I said at a conference in the fall of 2024 that there will be a time that when there are synthetic employees working alongside humans, inside companies. and I got a lot of flock for that. But I think no one denies that that's going to happen anymore. Synthetic AI agents or employees are going to be a fundamental part of our work on a go-forward basis. And we are seeing the impact of that now. At Grindr, we have been at the very, very forefront of adoption of AI in our day-to-day work. especially in engineering.

And I'm pretty confident in saying that we're probably in the top 5% of companies in tech in terms of how quickly we're adapting to that and how quickly we're teraforming to being an AI-native organization inside the company. The result of that is that in Q4, somewhere between 60% and 70% of the code that Grindr engineers produced was written by AI rather than by human beings. That number is higher in January and it's going to continue to be higher for the long time. And I believe that there's going to be a time when almost all the code that we produce will be written by AI agents.

That does not mean that engineers don't matter. Engineers actually matter even more now. And awesome engineers matter even more because the really great engineer is able to take advantage of these tools even more than anybody else's, making themselves even more valuable because they can do so much more, right? The concept of a 10x engineer is now becoming a 100x engineer because one 10x engineer can do 4, 5, 6, 7 10x engineers worth of work as a result of what the coding agents and AI-based synthetics are able to do for him or her when they are writing code.

And the way code is being written completely changes, right? I have some engineers who will write me know things like before I would come in and I would have a new project, and I would think about how I'm going to assign work for it. I want to give this much to this person and this to this person and would take each of these 2 individuals, 6 weeks to write the code that they were going to be working on for that particular project, and I would spend a lot of time helping them be more successful plus writing my own code and then bringing it all together.

Now I sit down with an AI agent, I started talking to it about what it is that I'm working on. I send it off to have them do the work. And within 2 days, that whole thing is done, right? So the speed by which we're going to be producing code is increasing rapidly. Internally, we've seen about a 1.5x increase in productivity per engineer that's self-reported data. So kind of it's pretty awesome. And we're going to continue to lean into that at Grindr, not just inside engineering, but everywhere else.

That does not mean we don't need more people. We are very -- our operational leverage is really high, $2.75 million in revenue per head, which I think is awesome. We only have 160 U.S.-based employees. Our EBITDA per employee is also very high. And we're going to continue to be best-in-class in that, but we do need more people, and we do want to continue scaling our team while maintaining extremely high talent bar. And so that's very much one of the big focus areas for us for this year, as I spoke about in our shareholder letter kind of pushing that Grindr mode that we'll be talking a lot about both internally and publicly as the year progresses.

As far as the unwinding is concerned, one of the things that historically has been true for us is that when we do launch a paywall or we do ad, they're global, right? We do them everywhere, all the same. And one of the things that we are learning is that maybe that's not ideal, certain ad triggers might not matter in some parts of the country or some parts of the world, but really do matter to users in other places. Certain paywalls might not matter to people in certain parts of the world, but really do matter to them in other places based on geography, based on density, based on the type of users where we have in those locations.

And so some of the unwinding that we're going to be doing on ad triggers and on payrolls will actually be geographic in nature as well as use of focus in nature, meaning understanding the user, what type of category of a user does that person fall into and whether those triggers should be in place for them or not. And we believe that it will end up having a better user experience as well as better long-term retention of users based on that section.

There are no more questions at this time. I'd now like to turn the call over to George for closing remarks.

Well, thank you, everybody, for joining. Hopefully, this video version of it all was worth it and helpful for folks, and we'll aim to do that again in May. Looking forward to seeing you then.

Ladies and gentlemen, thank you for standing by, and welcome to Grindr's Third Quarter 2025 Earnings Call. My name is Janine, and I will be your lead operator for today. [Operator Instructions] I would now like to turn the call over to Tolu Adeofe, Grindr's Head of Investor Relations. Please go ahead.

Thank you, moderator. Hello, and welcome to the Grindr Earnings Call for the Third Quarter 2025. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. They will make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's Investor page at investors.grindr.com.

Before we begin, I will remind everyone that during this call, we may discuss our outlook, future performance and future prospects. You should not rely on forward-looking statements as predictions of future events. These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of the risks that could cause our actual results to differ from views expressed in our forward-looking statements have been set forth in our earnings release and our periodic reports filed with the SEC, including our annual report on Form 10-K for the year ended December 31, 2024, or any subsequently filed quarterly reports.

During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of these non-GAAP financial measures to their most closely comparable GAAP financial measures are included in the earnings release we issued today, which has been posted on the Investor Relations page of Grindr's website and in Grindr's filings with the SEC.

With that, I'll turn it over to George.

Thanks, Tolu, and hello, everyone. The Grindr team delivered another awesome quarter with revenue up 30% year-over-year and adjusted EBITDA margin of 47%. The results put us in a great position as we finish the year. Today, we are increasing our expectation for full year 2025 adjusted EBITDA to a range of between $191 million and $193 million, implying a margin of greater than 43%, and we are reaffirming our revenue growth outlook of 26% or greater.

Our new CFO, John North, will walk you through the results in a moment. We're thrilled to have him join Grindr. He's led high-performing finance teams at Fortune 500 and S&P 500 companies and served as a public company CEO. He's already become an invaluable partner to [indiscernible] as we execute on our long-term vision.

Over the past 3 years, we focused on expanding Grindr's product service area, delivering more capabilities and high-quality experiences for free and paid users alike.

On Page 4 in my shareholder letter, you will see a chart showing that our product expansion has been tremendous, creating enormous value for users and driving higher conversion, more revenue capture and an increased revenue per pair. Grindr now offers a richer, more effective experience powered by strong technology and a broader feature set. Users endure products like Albums, Boost, Travel Boost, Viewed Me and Right Now. Through Gen AI, we are giving users access to powerful features like chat summary, discovery and profile recommendations.

All in, we've made the Grindr app more magical, dynamic and rewarding than it was just a few years ago, and we're only getting started. Expanding both our product surface area and the value we've created for paying users has put us in a strong position to test subscription price changes for the first time since 2018. We asked new subscribers in a large set of test markets to pay slightly more and experienced a de minimis impact on our paying user base with retention exceeding even our most optimistic projections. We're deeply grateful for our paying users' vote of confidence in our direction, demonstrated by their willingness to invest more for the new value and capabilities we've built. Over the next few months, we'll continue gathering data and prepare for a global rollout early next year.

Concurrently, in one country, we've begun offer testing a new AI-powered premium tier designed for power users for one of the most advanced and magical experiences. Think of it as a flagship first-class cabin of Grindr with features that simply weren't possible 2 or 3 years ago before Gen AI. This tier targets a smaller segment interested in higher-value products, offering distinctive user benefits and a meaningful revenue opportunity beginning in late 2026 and accelerating in 2027. Our rich, free experience remains central to Grindr's power, fueling the unmatched scale and vitality of our network. Capturing revenue through exceptional value-added features enable us to continue bolstering an already rich, free experience and to maintain the open conversational architecture that makes Grindr unique among any gay or straight platform that will always remain our top priority.

A defining strength of Grindr is its ability to renew itself with new users. Every year, Gay and bi men all over the world join as they become adults. Grindr is often the first place they learn about the engage, explore gay culture and find all types of connections from casual dates and hookups to love, to workout mates to friendships. This generational influx keeps the platform vibrant, relevant and ever growing with younger cohorts driving engagement across the network and older ones driving monetization.

To help illustrate this characteristic, which is very unique to our platform, we've included a onetime demographic disclosure with our shareholder letter. It highlights why Grindr's strong, consistent engagement, especially among users aged 18 to 29, who make up a majority of our global user base, positions us for durable long-term growth. We recognize that many of our investors are Grindr users and hope these insights make our user dynamics and community more tangible to you.

Overall, the products and business are performing exceptionally well, and the team remains laser-focused on delivering more value and more success to our users every day.

Before I wrap up, I'm sure everyone has seen the filings from 2 of our large shareholders, Ray Zage and James Lu proposing to take Grindr private. The Board has formed a special committee of independent disinterested directors to evaluate the proposal. The committee is working with its own independent financial and legal advisers. From the company standpoint, that process will run its course. Our team remains unwavering focused on execution. We are fortunate to work every day on things we love that bring happiness to millions of people and make a world that is more free, equal and just. Grindr has enormous potential to create value while continuing to deliver a product of deep importance to its users, and our job is to keep driving towards that. That's all we'll say on this matter at this time, and we won't be taking any questions about it on today's call.

Thank you to the Grindr team for delivering outstanding results we are reporting today. We're proud of what we've achieved, excited for a strong finish to the year, setting the stage for another standout year in 2026.

Now here's John to cover the results.

Thank you, George, and it's great to be here with all of you. I look forward to meeting many of you in the near future. I'm excited to be a part of Grindr and what the incredibly talented team is building. I've known and respected George for a long time, and the Grindr business model is among the most powerful I've ever seen. I see my role as further strengthening the finance organization, expanding our capital markets relationships and ensuring the company scales efficiently and profitably as we deliver on our vision.

As George highlighted, we had a phenomenal Q3. Total revenue was up 30% year-over-year to $116 million. Adjusted EBITDA of $55 million was up 37% year-over-year, resulting in 2 points of margin improvement to 47%, a record for Grindr. Our direct revenue grew 25% year-over-year, while indirect revenue was up 56%. Our ads business was the primary driver of outperformance in the quarter as we saw strong results from international third-party advertising partners. In the core app, revenue growth was driven by our strength in our unlimited tier, which this year saw the introduction of additional duration options and feature updates alongside the ongoing success of our weeklies product across subscription tiers. Our user KPIs were strong with an average of 1.3 million paying users in the quarter for an improved penetration rate of 8.6%.

Average MAU totaled $15.1 million and ARPU was $24.70. Our adjusted EBITDA margin performance reflected the strong flow-through of our revenue outperformance to the bottom line as well as higher capitalized product development costs. Operating expenses, excluding cost of revenue, were up 9% year-over-year, largely related to people costs as we execute on our innovation road map, including our AI initiatives. Grindr's net income for Q3 was $31 million or $0.16 per diluted share compared with $25 million or $0.09 per share a year ago. We generated approximately $51 million in free cash flow in the third quarter. Year-to-date, we've repurchased 25.1 million shares of our common stock for approximately $450 million, leaving us with $50 million remaining under our current authorization as of September 30. Our Board regularly reviews capital allocation plans, including options for returning excess cash.

Turning now to our guidance. Our strong Q3 results give us increased confidence in our 2025 outlook. And as George mentioned, we now expect our full year 2025 adjusted EBITDA will be between $191 million and $193 million, implying a margin greater than 43%, and we are reaffirming our revenue growth outlook of 26% or greater. As I noted in the P&L review, our 30% total revenue growth in Q3 was largely driven by outperformance in our ads business, which we do not expect to repeat in Q4. Recall that in our 2024 fourth quarter, we benefited from a large onetime brand campaign.

In conclusion, Q3 was a very strong quarter that reinforces Grindr's powerful business model. We're in a great position to deliver on our annual guidance, which we increased earlier this year and are revising upward today. And with that, we'll open the call up for some questions.

[Operator Instructions] Our first question comes from the line of Andrew Marok from Raymond James.

I wanted to talk quickly on pricing first. So I think you've mentioned in the past and your payer conversion rate kind of points to this that given that Grindr had a little bit farther to go in terms of product breadth that getting users to pay at all was one of the biggest milestones that you would make as a user. So I guess in light of that, how do you balance that philosophy of raising prices versus getting people to pay at all? Like is the increased price a potential higher barrier to make that first purchase?

Andrew, good to talk to you. We are obviously excited for users to pay if they've not paid before, but we also believe it's important for users who are getting a lot more product in the paid tiers and a lot more value to pay a little bit more for that value. And the price changes are, I think, fairly minor in the large scheme of things, given the amount of value that we've added to the product. We have seen significant growth in our number of paying users. The change over the last 3 years has been pretty significant. As you know, I think we went from something like 6.5% to 8.5%. And that, I think, speaks for a lot, especially given that MAU has also grown dramatically in that time period.

And secondly, we want to maintain a very robust free offering. I think one of the things you'll see in the shareholder letter in the disclosure that younger users who constitute a vast majority of our user base worldwide and nearly a majority of our user base in the United States and the U.K. tend to pay at a much lower rate than slightly older users. So on Page 8 of the letter, you'll see that 18- to 22-year-olds have the lowest penetration and then that kind of increases dramatically as they go to 30, 39 or 40, 40, 49, et cetera. And so we kind of have a 2-parted strategy, right? On the one hand, we want as many young users coming into the product and having a really awesome experience through a very robust free offering where they can use all the features that we offer, including being able to talk to anybody for free with no limits. We're the only product of our kind that has that, whether gay or straight.

And then from there, we want people to be able to pay for the value-added services that we offer them. And what we are learning is that people who -- as they age and get older, they end up getting more value from the features that we offer in paid tiers, and they're willing to pay for those. What we've seen in our price testing as prices have changed is that we have had very little to de minimis change in our conversion rates when you compare new prices versus old, which is really great and it speaks to the fact that people value the products they're getting in those paid tiers.

And then a couple of more things on that. Number one is we do monetize our free users through ads. Obviously, we had a significant increase in our ad revenue over the last 3 years as well, and we continue to do very well there. And I think that's an important component of that equation as well. We have thought about whether we should offer a cheaper tier as well for users who might want to not have ads at all, but are not quite ready to pay for XTRA because they don't need the value that XTRA includes in terms of features and products. And that's something we're still thinking about. I don't want to promise either way that we'll do that, but that's certainly a possibility as a way to get more people to potentially be payers. But if you do that, you actually won't have that big of a revenue impact because the price point on that would be fairly low.

And then lastly, I think the important thing for us is by creating a lot more product value, we are now asking people to pay a little bit more for that. This isn't just a price raise for the sake of a price raise or because we want to make more money. It's to ensure that users who are enjoying a lot more value in the experiences because the XTRA and the Unlimited tiers are way more robust today than they were 3 years ago as a result of a lot more product area that we've created in those tiers are actually paying for the value they're getting from those tiers.

Got it. Really appreciate that. And then maybe if you could just give us a quick update on how some of the newer products, especially thinking of something like Right Now is trending in terms of things like engagement metrics and to the extent that you can measure them, things like user satisfaction or outcomes.

I don't really have much new to say on that beyond what we've said before, which I'll be happy to repeat. I think the way we tend to think of our products is launch a lot of product surface area. Some will be free, some will be paid. We want to have a robust free offering and some things that are more special might be offered to paying users only. With Right Now, our objective was to dramatically increase the surface of a free product. So everybody who is on Grindr, whether paid or free can utilize Right Now and enjoy it. Somewhere between 20% and 25% of our users post in Right Now, at least once a week. And over 75% of our users look at Right Now postings within -- once people are in Right Now, which I think shows really high engagement, and we are very happy about that. But obviously, there is a lot more that you can do with Right Now.

I was in New York a couple of weeks ago, where we have the mapping feature in Right Now on as well. I'll be totally honest. I was not sold on the idea of mapping in Right Now when the team first went after it. But when you're in New York and are seeing the product kind of in your hands, it's a really incredible magical experience and looks really, really nice. And I think people really like that. And so we're really happy with where the product is trending. And normally, we don't really share a lot of product metrics, but I do want to call out, again, in the shareholder letter, we did share a very extensive disclosure on our user base and kind of how that is split out.

The fact that we have -- in the U.S., for example, 15% of our users are ages 18 to 22, 31% of our users are ages 23 to 29 that 46% of all Grindr profiles are kind of in that age range of 18 to 29. And that to me is something that kind of speaks to the uniqueness of Grindr as a business and a product and the fact that users -- the younger generation really likes what they're getting in the product, and it's very much working for them. So as long as our products are accomplishing the idea of bringing young people into the product as they become adults as a right of passage like it has for the last 15 years, I think we're in a very strong position.

Our next question comes from the line of John Blackledge from TD Cowen.

It's Logan Whalley on for John. So just looking at top of funnel, MAUs grew nicely again in 3Q. Could you discuss any trends which drove the top of funnel users higher in the quarter? And then also in 2Q, you called out some significant removal of bad actors in a certain region. Could you just update us on any similar efforts globally in 3Q and then looking forward just based on health of the platform?

Thanks for the questions. So first, let's start with what it is that we actually report. We report monthly active devices, not users and not profiles. A lot of Grindr users have more than 1 profile, and those are pretty hard to debug in terms of are they 1 individual or 2. That happens for many different reasons. Some people might have a profile that is more friendship focused and then they might have a profile that is more casual dating focused, and they have different information on those profiles, and we definitely don't discourage that and are happy with users having more than 1 profile. So the best way for us to debug what we report is monthly active device, not user. And I think it's really important for people to understand, especially when I try to compare it to external data, which, as we have spoken before, tends to be perpetually wrong about Grindr information. I think in part because people don't pay attention to what it is that Grindr actually reports.

Secondly, our ecosystem is really -- the health of the ecosystem is really important to us. And so as we see bad actors come into the ecosystem, whether those are stammers or other types of bad actors, we take actions to remove them. Over the last 2 to 3 years, I think all social networking companies would validate this. Scammers have become more sophisticated with Gen AI, and that means that you have to become more sophisticated in fighting them. And as we do that, it can impact MAU. In Q2, in the first half of the year, there were a significant impact on MAU, and we've spoken about that. It doesn't always impact MAU when we go after bad actors because some bad actors have profiles that don't have a device ID associated with them. They do that by spoofing Android devices. That's a known kind of flaw with the Android ecosystem that you can do. And so when we remove actors that are bad, that don't have a monthly active device, they don't get associated with MAU one way or the other because they were never in our MAU in any way. But when we remove bad actors that do have devices, they do.

Thirdly, we have never really done much to drive MAU growth. Our MAU grows almost completely organically through word of mouth. As I said earlier, Grindr is a rider passage for people as they turn 18. And if they are gay, they come to Grindr as a way to figure out who they are, what it's like to be to start meeting people for any number of types of connections. And so organically, our MAU tends to grow really nicely. We are very happy with our MAU growth. And frankly, the numbers that you're seeing in terms of growth are very much in line with our long-term guidance assumptions that we shared at Investor Day 1.5 years ago.

And then lastly, I'll call out again the disclosure towards of our user demographics. You couldn't have the demographics that we have in our profile set that we share on Page 7 and 8 unless you're attracting a lot of new users. It would be impossible to have 50% of the user base be 18 to 22 in the United States when only 9% of the U.S. adult male population is in that age cohort unless you're constantly attracting people who are young and attracting them at very high rates.

And that's even more true internationally in places like India and Philippines, et cetera, where older users are still stigmatized and might not so comfortable being a [indiscernible] while younger users are coming out and more comfortable. So in those places, our user base is even more heavily young. And a lot of our focus is ensuring that we continue doing that through the right product initiatives so that we serve this younger adult male cohort as well as we possibly can.

Great. Maybe one other question just on the premium tier. You mentioned that would be designed for power users. Like could you give us any kind of an idea of what how many power users are on the Grindr platform? Like what percentage of overall users might kind of fall into the bucket that you're designing the subscription for?

Yes. So the premium tier was a significant component of what we envisioned in terms of the long-term strategy that we shared at Investor Day because we knew that a lot of our investments would be around AI features, which are really magical and previously were not possible to build. We are building those and making them available. And we just think that the amount of value that we will be generating through those features and products for people, we will see -- I think people need to be prepared to pay for the value they'll be getting from that.

That tier is meant for our power users and for a very select set of people. We don't expect a huge number of people going into that, but it will be priced appropriately for that. We have something like, I think, 350,000 Unlimited subscribers. So if you imagine that 20% of those subscribers switched over to Unlimited, I think you'd have -- sorry, to the premium tier, you'd have a very nice kind of growth in our revenue because it's a significant dollar amount at the price points that we are thinking about. And I would call that like a good home run.

If 30% or 40% or 50% of our Unlimited users switch to the premium tier, then you'd have like a grand slam because it'd be like an incredible result. I don't know which one of those is going to happen. That's why we need a few quarters of testing and learning to understand what happens. But I do know that the kinds of features that we offer in this new premium tier are pretty magical. And I think a lot of people will be very happy with them. But at no point have we thought about as something that a very large percentage of our overall user base will utilize. This is very much meant for our power users who can benefit from the unique features that will be put into that tier or that have already been put in that tier.

And quite frankly, I think 1 of -- maybe 5 people in the United States who is in the beta because the beta is starting somewhere else. And when you use Grindr with these features, it is a very, very different experience. We were entering a fairly senior product candidate about 2 weeks ago and kind of walked them through what it's like on the app and he's like, wow, that's really, really special. And I really very much hope that everybody else feels the same way as this tier kind of expand more broadly to be available to more people. But I would not expect to have a global rollout until at the earliest sometime in H2 of next year.

Yes. And maybe, George, if I can just jump in and add on to that. The one thing I want to triangulate back to is that we are looking at continued investment in these enhancements that are going to bring new and exciting features and differentiation as we move forward. And that's been contemplated in the 3-year plan that we put out in the summer of 2024. We're going to finish the year at better than a 43% EBITDA margin, but I want to make sure we remind everyone that in that plan, we anticipated many of these investments. And so we still think triangulating to the EBITDA margin range we gave at the time of 39% to 42% as you think about years '26 and 2027 is an important point to keep in mind and that you can't just roll forward what we may finish this year at as you think about next year and beyond.

Our question will come from the line of Andrew Boone from Citizens Bank.

Three for me, if I could. I would love to get an update in terms of international. Just how did that trend in the quarter? And then any new initiatives you guys may have in terms of localization or anything else we should think about there? gAI, George, can you just talk about the bigger opportunity with that product in the quarter? And kind of what's your vision in terms of bringing more AI tools in terms of incorporating AI into the Gayborhood? And then lastly, just on advertising. Can you guys just help us understand, it sounds like it was very strong in the quarter. What was the driver of that growth? Is there anything to call out? And then how do we think about that going forward?

Great. Thank you for all that. I wrote it down, but hopefully, I don't forget, if I do, please remind me, I'm not ignoring any of the questions. They're all fun things to talk about. So on international, what we said at Investor Day is that international is a very large opportunity for Grindr. And I'll walk you through kind of how we think about that. But first to kind of preface, I think one of the main jobs of the CEO is twofold, right? Number one is to paraphrase another very prominent CFO, CEO whom I really admire is to amp things up, meaning to put pressure for things to happen as fast as possible and as many things to get done as possible. And I think everyone who knows me knows that I'm costly amping it up on the team.

But concurrently with that, another really critical place is to prioritize things properly. If you try to do everything, you'll get nothing done well and finding the right prioritization on things is really important. There was a lot to do at Grindr when we got started 3 years ago, and we've been prioritizing things based on what we thought was most critical. And in total fairness, I think going after our international opportunity was not as top of a priority as some other things have been so far because those were more important even for the user base or from a perspective of what we wanted to achieve over the long term, which still means that international is a huge opportunity and is something that should be viewed as upside when you think about it from the long-term modeling perspective rather than something that we assumed would be the case in our 3-year plan that we shared June 2024.

The way we think of international is in 3 buckets. So first, in countries where we already have a pretty significant presence and those countries are economically advanced, we believe that there is opportunity to continue driving more users to become paying customers and to pay for the extra value they're seeing from the added new features that we're building. So we -- our payer penetration in Europe, for example, is lower than our payer penetration is in the United States. And we'd love to do things that would help us drive payer penetration to be more akin to the U.S. in Mainland Europe, which we think is possible. Obviously, U.S. will continue to grow as well. I'm not saying U.S. is going to just stop growing. But if we could get them closer to U.S. levels of payer penetration or even the U.K.'s levels of payer penetration, that would be a really big win. So that is one bucket of focus for international is Europe and countries like Europe in terms of their economic development, get them to have more payers.

Number two is countries where we have very large sets of users and do okay on payers, but we believe that there is still opportunity for people to learn that we exist and to use us, have a ton of user growth opportunity. Places like that are Brazil, Philippines, rest of Latin America, Mexico, Colombia, Chile, et cetera. And Asian countries like Thailand, Vietnam, potentially Cambodia. In many of these places, we know from research that a very large number of people in our user cohort know that we exist and those that know about us, use us. But then there are a bunch of others that don't know about us and because our brand recognition is not as high in those countries as it is in the United States or the U.K. And so as they learn about us, we believe there will be opportunity for them to start using us, which we think will be very valuable.

And then the third bucket is India, which should be called out separately because of its size. 10 years ago, it was illegal to be gay in India. So obviously, there's a ton of social stigma attached with being gay. It is changing for young users, as you can see from the data that we shared. But we want to be present there as the social transition changes, or happens and as more and more people become comfortable with who they are, and kind of continue to be the primary product for gay people in India like we already are as many more of them become comfortable using our product.

And so that's the kind of opportunity. A lot of what we need to do internationally is around localization of the product. That might be simple things like how we show up in a specific language in a given country. We don't use a lot of slang in how we describe ourselves in a lot of these places in our translations, and we probably should and kind of what -- how people communicate in those languages to what kind of imagery we show you in each of these countries. And then on a more advanced level, what kind of products do we build?

If you go to New Delhi, for example, and you open up Grindr, the grid will look very, very different from what the grid looks like in New York. Everywhere, there are a lot of people who are discrete and who might not show their face. or might not have a picture at all. But in India, vast majority of people don't show their face in a picture at all because it's still really hard to be gay. And so maybe in a place like India, the grid should actually look a little bit different. Maybe we should allow people to have AI-generated photos that they can post. I'm not saying that's what we would do, but like you can imagine through product solving the problem of discreetness in India differently than you deal with it in other places because they have unique needs in that country.

And those are all things that we can do to help grow our presence. And obviously, through marketing, we can do a lot as well. We've spoken the shareholder about the fact that we have now launched our Spanish-speaking social media channels. We've also launched our first social show in Spanish. And those are the kinds of things we'll be doing in other languages as well, such as Portuguese and for specific countries like India as well. So that's on international.

When it comes to gAI, we believe that AI, and I detailed this quite a bit in the document we shared last quarter about AI incumbent companies with a lot of data can benefit significantly if they start taking advantage of AI early before potential challenges are able to catch up with data because AI is better with data. And if you are kind of at the forefront, you can make your product be very, very different from a technology point of view with AI. And we do want our product to be turned into an AI-native product. And that's very much what we've been striving to do by retraining models to be able to speak gay, and I think we're doing a pretty good job at that. And then being able to use those models inside our product to do specific new experiences that previously did not exist.

To start with, a lot of those experiences will go into the premium tier that I spoke about in the previous question in the shareholder letter. And there will be things like insights where we will actually provide users with detailed information about people that might be talking to that we can infer based on people's behaviors or conversations. Obviously, that will only be done with permission, meaning only people who agree to be part of our AI features will be able to see those features and we'll have those features or the information available about them in the app.

Another kind of product that we've built through AI is called A-list, which goes through all your messages and creates a short list of people that we believe you should keep talking to and gives you summaries of conversations that you have with those people, brings together all the photos that you've exchanged with those people, all in a really nice summarized folder that makes it much easier for you to navigate the product. You can envision that as the next step of that, we will add a little button that will be the gAI button, and you can start asking gAI questions about that specific user that you were previously talking to. So it's something that you discussed previously does not appear in the chat summary, you can say, hey, I believe we talked about XYZ, can you get that information back to me to remind me what it is that we exactly talked about. So very similar to what Grok is doing inside X, where you can actually get information about a specific post with a lot more detail that would be quite kind of -- that's quite beneficial.

So those are the kinds of features that we are working on. I don't know of a lot of consumer-facing products that are doing the kind of stuff that we're doing yet. But the same way that Grindr invented the use of mobile in the way it is used today, I think we'll be at the forefront of using AI in the consumer experiences in the future. And for advertising, I'll switch over to John to speak about that.

Yes. Thanks, George. We did have a good quarter in terms of our advertising growth. That's been an area of focus both through the TPA and then the direct piece. It's also a very nice contribution margin because it doesn't have the cost of sales associated with the subscriptions do come in through the app stores. So that tends to be more accretive to EBITDA, and we did see some benefit in that in the third quarter, you're right to call it out.

But more importantly, I wanted to focus and just remember -- remind everyone that last year, we had a pretty significant direct advertising boost in the fourth quarter that we don't expect to continue this year. And so that's contemplated in the range of guidance that we gave. And certainly, we think this is an area that can continue to be a focus for us and that it should give us opportunity for potential additional growth in the future. There is much more we can do here, and we've had good success with Brian and the advertising team, but we're going to continue to look for ways to grow that in 2026 and beyond.

[Operator Instructions] There are no further questions at this time. I will now turn the call -- we have a question, by the way, from John Blackledge from TD Cowen.

It's Logan on for John again. Just -- maybe one follow-up on the user base breakdown. It's really interesting. Could you talk maybe about any trends you've seen over time or since you've come on board, George, in usage amongst different age groups? Like have you seen any trends among older age groups or younger age groups like more engagement or less engagement over time? And do you think there -- like you may have any initiatives in place in the future to kind of boost engagement amongst specific age demos like maybe older people, for example?

Yes. Great question. Thank you for that. We debated whether we should put in more, but we thought for competitive reasons, probably kind of what we shared made sense because we do have obviously data on the things you're asking. So I'll try to speak to it directionally without being too specific because I thought that for competitive reasons, releasing more of that would be potentially risky.

What we know are the following things. One is our young adults, meaning people in the 18 to 35 age range, tend to do a lot of communication with each other, but they also get messaged a lot by older users, and they respond to older users as well, whereas the younger adult cohorts such as 18 to 30 don't actually initiate a lot of conversations with older users themselves. Since we know that they actually do respond to people who are older when they get messages, that is something that you could probably solve the product, right? Because I think what happens is a lot of younger adults, such as 18- to 30-year-olds, might feel uncomfortable messaging somebody who is older because they think, hey, this older person might want to talk to me. And that's why they're not messaging out to them, but they're getting messages from them and then they're willing to respond. And so that is something that we could solve through product by saying -- by having product features that kind of facilitate that a little better.

We also do know from our older users kind of in that 50-plus age demo, and I'm approaching that cohort soon. So I'm kind of learning about that more, is that sometimes they don't always feel as welcome in the app as they did before, meaning they all have Grindr accounts. But as they age, their priorities tend to change. And as a result, sometimes they don't quite feel as at home. And we definitely can do things, I think, through a product to make that experience be better for them. That is part of the thinking behind the premium tier and the AI features with insights, right? Because part of what we can do with insights is tell a user, yes, this person is likely to engage really well with you based on what we know about you.

And that I think would be very helpful for users who are older who might feel a little bit uncomfortable with the app because their priorities today might be different, right? If you are a 45-year-old or 50-year-old guy with kids living in the suburbs, your priorities are probably different than what they were when you were in your 20s and frequent circuit party. So I think those are the kinds of things that insights can really help solve, and that's something that we are envisioning. Obviously, older users do have more disposable income as well. And so I think the alignment there is quite interesting in terms of offering them better functionality that is unique through AI that is also creates a lot more value for them and so it is more expensive at the same time. Does that answer the question or any follow-ups on that?

Before we close, unless there are more questions, I just do want to add one other thing. Grindr is an 18-plus product only. We do not allow people who are not 18 on the product. You cannot download the product if you are not 18 on either Android or iOS, and you cannot log into Grindr by creating an account on the web. We only allow you to create accounts through the app stores. And so whenever I refer to younger users, I'm referring to people 18 and older, nobody below 18.

Thank you. This ends the conference call for today. You may now disconnect.

Moving. It's my pleasure to have the team from Grindr here at the conference this year, George Arison, CEO. George, thanks so much.

Thanks for having me.

I feel like this is the third year you're at the conference.

The third year I've done this as a Grindr CEO but I've done this conference actually in my last company.

That's correct. Right. [indiscernible] Alexandra before me -- before she went on to SAP. So thank you so much for always being part of it and always making yourself available. Really appreciate it. So for those in the audience less familiar with the company and the platform and what you're trying to build, why don't you take the opportunity to talk about a little bit of the evolution you've been on and the journey for the company.

So Grindr has been around for 16.5 years. We really invented the idea of using mobile device for local discovery, and we're one of the very first geolocated products on mobile, on iOS, launched in March 2009. And it really took off like instantaneously through word of mouth among gay people in the United States initially. To the point where like I've seen estimates from investors like 0.5 million iPhones were sold in 2010 because Grindr was iOS only at that time. So it's been a fundamental part of gay life ever since then. And it's an open architecture platform.

So you can talk to anybody you want, anyone can talk to you, and you can maintain messages going as long as you want. There's no like double opt-in kind of on Grindr, the way there is on straight product. So we don't really think of Grindr as a dating product. We think of Grindr as a social network that's used by gay people to connect to each other for any number of reasons. We just monetize the hookup, casual dating, relationships, et cetera, component of the experience, but people are doing a ton of other stuff on Grindr, and they don't leave the product necessarily when they're in a relationship. You can still see a lot of people who are using the product in -- when they're in a relationship because so much more is happening on Grindr.

We are in 190 countries around the world. We went public in 2022. And I joined about 2 months before we went public. And there's been a lot of company building that has to happen along the way. So we've been flying the plane while building it at the same time. And so far, like I think it's gone really well. We've been very focused on driving growth in our revenue while building a lot of product. So it's product-led growth rather than anything else, and we're very happy with the results so far. Yes.

So I think there's a lot to mine in there from what you said. But if you take a step back and you try to draw the distinction between dating and social connectivity and the intersection between the 2, how do you think about the addressable market opportunity for the company? When you think about what the user base might be or what the payer conversion might be? And how do you characterize how different that might look in different geographies?

So we did a survey last year right prior to the election in the U.S. asking -- we did a very targeted gay and [ bi man ] survey run by one of Kamala Harris' primary posters and co-run by a poster for John McCain. So it was a very high-quality, fairly expensive poll. And we actually -- one of the questions you asked, do you have a Grindr account or not? And 50% of people in that poll said they had a Grindr account. But when you look at our U.S. MAU, it's less than 50% of U.S. gay bi people in the country. And so there's about 1 million people in there that claim to have a Grindr account, but don't appear in our MAU.

So that's all, I think, like reactivation opportunity for us from a MAU point of view in the U.S., where people are -- kind of have used Grindr a lot before, but don't appear on our MAU because they don't use Grindr on a regular basis anymore. Obviously, we are way less penetrated in every other country in the world because we started out in the United States and then go everywhere else. And in a lot of places in the world, it was very uncomfortable people to be gay 10 or 15 years ago, which is a lot easier today. India is an example. And so in those countries, you're seeing much faster MAU growth. And so MAU for us is growing very well in there.

On the payer side, people oftentimes assume that having high payer penetration is a good thing. I actually don't think it's necessarily true because you want the free users in a product like Grindr to be as big as possible because people who are paying want to be able to connect with people both who are paying, but also people who are not paying. And the more options of core connections that you offer, the better off the users will be who are paying. So it's like one way to satisfy your not paying users is by having a lot more -- sorry, paying users by having a lot more nonpaying users on them and necessarily driving the product to be one way it's not usable if you're not a paying customer, is not a good thing at all, and we are trying to avoid that from happening.

We are increasing the surface area of the product by creating new product experiences that people could go and pay for if they wanted to. Some of the things we're building are premium. Some of them are only premium only, but you can still continue to use the core Grindr product without being a payer, and we want to kind of facilitate that very much. So free users matter to Grindr a lot. We also have a pretty big advertising business. It's about 15%, 16% of our total revenue. And that business obviously monetizes free users because we don't show ads to paying customers, and that's another way in which we make money as well.

Okay. Understood. Maybe sticking with the theme of engagement first. When you think about how the product has evolved with the goal of sort of incenting engagement across a wide array of users, how has the product evolved? And what are you most excited about in terms of engagement mechanisms that have launched most recently?

So Grindr's evolution was you see a certain number of people on the grid that you can talk to. Then Grindr added XTRA, which was our first paying subscription offering, and we showed you more people than we were showing you before. And then we added Unlimited, which shows you basically unlimited number of people. You can see anybody on the grid anywhere and you can talk to any of those people. That's kind of how engagement was driven initially, plus in that the chatting system is open to everyone, and you can talk to anyone you want. And whether you're paying or not paying, you can engage in as many conversations you want.

Grindr users sent 130 billion messages last year, which kind of tells you how, like, active they are in chatting. That's more messages per day per user in DAU than WhatsApp has in their product. And WhatsApp is just a chatting product, we're a lot more than just a chatting product. What we have been thinking about a lot now is creating intention-based experiences for people. Like they're there for a specific intent, how do you create a really good experience for them in that regard. So we built what we call -- right now, which is for people who want to have a connection happen immediately, they can use that experience for that.

We are now building a lot of dating experiences, a lot of dating features where if you're looking for a long-term partner, we'll offer you products for that to make it easier. And then concurrently with that, we're building a ton of features that are AI first, AI native features that are making the app a lot more targeted for the kinds of people you want to be talking to, which is something we never offered before. But now we can offer you a grid that is different from what it was prior in that it's targeted for your interests. And we call that Discover. And then within that, on the profile, we will show you not just what the user says about themselves in the profile, but insights that we, Grindr are able to glean about them and you see those as insights.

And those are all AI-generated insights. That is going to be all combined into a separate tier on Grindr, right? Like now we have 2 tiers for payment, XTRA and Unlimited. We're going to create a new tier on top, which is going to take all these AI features into that because they are very, very high-value features, and we believe they are worth a lot more than $40. And so figuring out what the price is something that needs to be still being done, but the idea of putting all that together into a tier is very much kind of the intention, which will then allow us to monetize a lot of the features that we're creating that add so much new value to the product in a different way.

Okay. Understood. Probably the biggest debate coming out of the most recent set of results was a bit of noise around the MAU growth. We spoke about this at night of earnings, and I'm sure you've been getting this question a fair bit. Why don't you talk a little bit about what you were trying to accomplish with a bit of a cleanup dynamic around MAUs because I think the inclination I heard from investors was this, they've overreached on monetization and they're harming the user growth dynamics. So maybe give your take on where this sits right now.

Totally. This is something that we have spent some time talking to people about. So let's kind of go through that. Bear with me as I do it, there's like 6 points I want to make. I want to have each of the points written down. So first, let's define what Grindr reports is now versus what other people do. We do not report users, we report device. So monthly active devices. And the reason for that is that a lot of our users have more than 1 Grindr account, and they might have like a travel account and a local account and a more discrete account. And they'll be using all 3 of them in any given month. And so if you report it at a user level or account level, it would come off like we're reporting 3 people when in reality, it's only 1.

And so we report device. And for you to get into our monthly active device reporting, your device needs to have a device ID. Not every legitimate Grindr user gets reported in that because their login does not have a device ID associated with that. You can go ask Apple and Android, mostly Android, why that's the case. But the reality is that there are people who we don't actually report out at all in our monthly active devices because their device does not have an ID that we can look to, but they are legitimate users that are using Grindr.

Secondly, we have been in a very active process of removing what we would classify as unwanted MAU or users that should not be in the product, meaning removing their profiles. There are 2 categories of people that we -- not people, profiles that we remove. Category 1 is when there is a device ID, and those get reported in our MAU. And when they're there and they get removed, they're no longer in our MAU, obviously. And then there are profiles that don't have a device ID associated with them at all. These are spammers who spoof accounts on Android using a computer and create accounts on Grindr, and we aim to remove those as well. Obviously, you need to do that for the health of the platform.

What we have seen in the last year is, one, increase in spam because technology allows you to create spam more now than it did before, meaning AI in particular, as well as a significant increase in our removals. So the increase in removals is in far excess of the spam increases that we've seen because our ability to identify unwanted users, meaning users who are engaged in illegal activity or in spam, a lot better than it used to be before. So we're removing a lot more people. Roughly 2x the number of accounts that are being removed -- were being removed in Q2 that had been removed in Q2 of last year. So it's been like a significantly larger number. That does not mean that our spend went up 2x. It did not. It's just that we were able to identify bad actors and remove them from the ecosystem a lot better.

The total amount of MAU impact that happened as a result of the removals that we have undertaken in Q1 and Q2 of this year and a little bit in Q4 of last year is in the hundreds of thousands, not in the tens of thousands, right? So we were sharing with you an adjusted MAU number that accounted for that change. The MAU number would actually be significantly higher than the number that we reported in Q2.

Even with that, though, the MAU increase was very significant, right? Like we grew MAU 6% year-over-year in Q2, even while we were doing all these removals. Now these removals are continuing because it's not a onetime thing that you need to do, and we'll do more of that. We think that ultimately having a cleaner ecosystem that does not have spammers in it is a good thing, and we want to continue kind of doing that.

And then lastly, I think it's worth discussing demographics of Grindr. A lot of other products have said that, hey, they're having trouble with MAU because their demographics are not looking very good, meaning young people do not want to use dating products for dating. We have not seen anything like that. Grindr is significantly over-indexed in the 18 and 22 category versus U.S. male population and in the 23 to 29 category.

And on the overall product, nearly half of our users fall into those 2 categories. So if we had any trouble in driving more MAU for things like monetization, that will be most impactful on young users because our payer penetration among young users is by far lower than it is for older users, which obviously makes total sense because they have less money and they are more successful in the product, even just using the free product because they're able to get what they want out of it versus if you're older, you might need to get -- pay because you're less successful in the product.

And so we don't think there's like any issue with Grindr MAU. Grindr good MAU, meaning wanted MAU is actually growing really well. It's just that as we removed more accounts, that kind of impacts the actual MAU growth number that we show. And as far as younger demographics, which are the demographics that matter the most for a product like ours, we are seeing nothing but growth and new people coming into the product all the time.

And last point on that is internationally, that's even more over-indexed on younger people. Like if you look at India, like 2/3 of the app is under 35, which is not surprising because it was illegal to be gay in India until 10, 12 years ago. So older men are less likely to be using the product versus younger men.

Okay. Understood. Last year, you laid out sort of a multiyear product road map. And as we sit here now, coming up on the last 1/3 of 2025, where does that product road map sit in terms of what's been deployed, what's soon to come? And how should investors think about executing against that road map on a 2-, 3-, 4-year view?

Yes. So we -- I think what you're referring to is our Investor Day, which was in June of last year, and we shared a 3-year plan for the product. We gave some examples. We didn't give all examples, obviously, in terms of what we're going to build. And then we had a Product Day last January, we shared, hey, these are the things we're going to launch this year. A lot of the products we're building are these intention-based products for specific unique intentions that people might have in the app, such as right now or relationships.

Another one that we're going to work on in the future more is around travel as well as creating AI native product experiences. So this is not latching on AI to an existing product and declaring that that's AI, that's silly, in my opinion. It's literally products that you could not create before until Gen AI existed. And so these are like AI-native AI-first experiences. And we are building all of those.

And I think we're like either on schedule or ahead of schedule on virtually everything that we had intended to build. Some of those things are either live to everybody. So right now, it's live to all our users. Others are in testing with a portion of our users. And others, we're actually holding back until we make certain pricing and tiering changes because we don't want to go live with them in our existing tiers. We want to only go live with them with higher-priced tier. So for example, Discover is an AI product that lets you discover people more closely aligned with your interests. But we don't want to release that to the overall user base. We're going to reserve that only for the premium tier, and so it's going to go live when the premium tier goes live.

Insights is also something that we will not release to a broader user base. It will only go to the premium paying users. And so we're holding those back until we get the premium tier out and ready to go because those are so valuable, the kind of information that you're getting from that is so powerful that I don't think it'd be fair to put that into a tier even at $40 a month because the value that you're getting from it is way more than that, and the company should benefit from that as well.

Okay. Understood. That dovetails with my next question will be when you think about user monetization, I know we've focused a lot of this on user growth and engagement so far. But when you focus on monetization, we'll talk about the ad tier, but away from the ad tier, how do you think about tiering? How do you think about the platform's overall approach to monetization evolving in the years ahead?

So in the last 3 years, we did the following 2 things. In 2023 and 2024, we launched weekly payment plans for people. That was based on user demand. We did not come up with on our own. I know it's counterintuitive, but a lot of people, especially younger users, prefer to pay for things on a weekly basis versus monthly basis. And so we launched weeklies. Those have been really successful and they drove a lot of our revenue growth and our payer conversion growth in 2022 and 2023 -- sorry, in 2023 and 2024.

In 2025, a lot of the focus was on driving more people to become payers rather than on things like weeklies, which drove ARPU up, even though that was not what we were aiming towards. We knew that as a result of weeklies, ARPU would go up. This year, there's not really much that we're doing to drive ARPU up, but there are things that we're doing to drive conversions up and those have been very active. We did not feel comfortable launching some of those conversion drivers until after we launched a lot more free product so that as we potentially took some things away from our free users, we wanted them to be experiencing a lot of new things.

So there was a little bit of give and take in kind of how that happened. Next year is going to be a lot around driving a price increase in our existing tiers because so much new things were launched in our XTRA and our Unlimited tiers. The value of those tiers went up. And now it is fair to ask users to pay a couple of bucks more for that than they were paying before as well as starting to launch this premium tier, which will be a driver of revenue growth in a significant way in 2027, though it will have some level of impact in '26 as well because at that point, the tier and the offerings in that tier are going to be fully mature, and we'll be able to kind of expect to have a large number of people go into it.

Now the premium tier is a very unique thing that we've never done before, which is we actually do not want too many people to sign up for that. So the price that we'll pick for it might be one that's very high for an average user. But the amount of experience that you're getting in that tier, you need to really kind of offer in a measured way. So think of it a little bit as like Disney, they have a new like Lightning Pass where you basically get to skip a line in every ride only once.

So our, like, premium tier is something similar to that. And they don't offer that to everybody. Like you have to get in line and get it in a specific day and you might not get it. And so we think of premium tier the same way. We don't want to have everyone to have it because if too many people have it, that might actually degrade our users' experience, and we don't want that to happen.

Okay. Understood. You referenced earlier the size of your advertising business today. Against that size today, when you think about the base of users you have, how do you think about drivers of advertising going forward, whether it be ad load, different types of ad offerings, U.S. market versus international markets? What's the scope for opportunity there?

Totally. So when I joined Grindr, my hypothesis was that we were not leaning into advertising anywhere near enough. And frankly, if we didn't do that, then we might be pushed towards having to monetize more of the free users, i.e., doing more things to drive more free users to become payers that would degrade their experience and that was necessarily not the ideal thing. Why not lean more into the advertising. And we kind of saw a 3-part process for what needed to happen there. Number one was just increase the total number of ads that we have in the product.

We were showing people like 2 ads an hour, which is like very, very low. I think we were very successful at driving the ad load up in the United States. We're now closer to like 8 ads an hour, which is still less than a comparable social media product, but it's a lot better than it used to be. And we did that without seeing a decrease in our CPM per ad by adding a lot more third-party advertising partners, we're able to fill the supply that we're creating from these additional ads.

So I think in the U.S., we've like reached the max of how many ads we want to show per hour, per day. In Europe and Asia and Latin America, we're not yet at the same level, probably because the third-party ad ecosystem in these parts of the world is not as developed as in the United States. So there's still some opportunity for more ads there, but not in the U.S.

The next step for us is to replace the kinds of ads people are seeing with the types of ads that are both more valuable to us and have higher quality to the user. That includes video ads and rewarded video ads as well as native ads that are more targeted and allow you to like exit the ad when you're looking at it and replace with a different ad. So we are -- and that will also have high CPM, right? Both of those ad formats actually have a higher CPM.

So next year, we expect a lot of the revenue growth in ad business to be focused around this transition from current type of ads to these higher quality and more premium ads. So that's kind of the second leg of this stool that we're working on in terms of our ad revenue growth. And then the third one is around the direct advertising business. So these are when we actually partner with an advertiser to have ads in Grindr directly rather than through a third party.

For me, probably the single biggest change in my opinion since I got here was around this third-party business. I was a lot more bullish in being able to get more advertisers to sign up to work with us sooner than I -- than it has happened. But unfortunately, the Anheuser-Busch incident took place along the way 2 years ago, and that really made it a lot harder to get advertisers to work with us at the pace that we actually wanted. I'm a founder, and so I don't give up when things going to stop happening is that we're going to continue pushing on this, and we believe there is a huge opportunity.

We just need to cast the conversation here in the right way where for Grindr, Grindr is full of high income, lots of disposable income of gay men who are not only wealthy and are able to spend things on experiences and luxury products, they also set trends, right? They start buying something, then they tell their girlfriends about that because girl friends go and get their husbands and/or partners or boyfriends to buy those things as well. And so you can, like, really use Grindr as a trendsetter for luxury brands and luxury experiences.

And that's the way to kind of, I think, lean into the advertising story. This is going to take us, I think, longer than I had anticipated. But fortunately, we've been able to drive a lot of growth in our ad business without the direct advertising business having to do things. We feel really good about how that's going so far and what will happen in '26, '27 on the ad side as well.

Understood. You've alluded a lot so far to AI and elements of machine learning and what can be built for the company. Talk a little bit about how the platform products, certain initiatives are increasingly being driven by AI and ML and how you plan on bringing some of those to the market in the years ahead.

So I had built an AI company in 2018, 2019, 2020. And so coming into Grindr, like one of the things I was most excited about was the data that Grindr possesses because unlike previous platform shifts in technology, AI is best when there's a lot of data. And so -- where like mobile, for example, was massively beneficial to start-ups. The AI shift actually is really beneficial to incumbents if the incumbents make the transition quickly enough. Now most won't, but those that do will be able to create competitive advantage in their user experiences that no one else will be able to have, and that will be long-term competitive advantage.

So we've been really thinking through AI and how to drive that from the very beginning of me getting here. And that's kind of what we're working towards. The infrastructure that we've built for our AI products and experiences is no different than what most advanced AI companies out there are doing for themselves. Like when I meet AI founders of these super successful AI products, I'm not talking about foundation models, but like products that are built on these foundational models, their architecture, their infrastructure is no different than the infrastructure and architecture that we're creating, which makes me very proud because here, we are like a 16-year-old company doing the same thing and really transitioning the product to be much more AI first and AI native.

So now we're in a place where we can actually start utilizing this infrastructure to build actual product experiences. So the product that is most AI forward on Grindr right now is called A-List. It goes through all your chats that you've ever had and creates a subset of those chats that the AI, which we call [ GayAI ] believes are most relevant to you for the long term. And it kind of creates a summary of the conversation that you've had, whether -- whatever information you share, whatever information that person shared with you and creates a different list of people that we call the A-List that you can go to.

All the images and media that were shared between people is also going to be there, which is really valuable because obviously, people really care about that video. And you kind of see this like short list of people you should be engaging with. That's going to form the cornerstone of our premium tier, and we think it's going to be a really kind of game-changing offering into Grindr.

And then secondly, we have 2 other big AI features coming out. One is called Discover, which takes all the information we have about users and slowly start utilizing it to offer you a set of profiles to look at that are more targeted to you.

And then the third one is Insights, like, for example, showing a person that, hey, you are interested in this our user, this our user really tends to respond heavily to people in the 35 to 45 age category, even though they are only 25. And so if you are a 40-year-old person who is seeing that, that will give you the confidence to go and e-mail that person, whereas otherwise, you might not have that confidence, right? And so that Insights piece is going to be really critical as well.

These are all very new. Usually, when we launch things, the first iterations are not perfect. That's totally fine. That's how products -- you launch an alpha, then you launch a beta and then you kind of innovate on that. 0 to 1 is always way harder than 1 to 2 and 2 to 3. And so we are really psyched about where we are in this development now, but it is very much in the 0 to 1 stage. Like we're launching V1s of these products, not V2s and V3s and over time, they'll get a lot better. So I would not have people expect financials necessarily like right away because we are going to give these things to -- time to mature and develop. But ultimately, I think they'll be very, very successful.

Okay. I know we only have a few minutes left. But when you bring all of this together, what do you see as the key strategic priorities to deploy growth investments into the company over the next 12 to 18 months?

Yes. So the way we think about Grindr growth is along kind of 3 vectors. One is core app. We want the app to continue to monetize really well, and I talked a lot about today how we're doing that. Second one is AI and all these AI features and kind of monetizing those. And then the third bucket of growth for us is building new products that are not necessarily directly tied to Grindr, the core connections app, but are offerings that make a lot of sense for gay men and where we can use Grindr, the core app, as a distribution engine for these new products and services that we are starting to offer people.

We call these Gayborhood expansion opportunities because we're building the global Gayborhood on the phone. The first thing we've launched so far is Woodwork, which is a telehealth platform. But its first offering is ED medications, but it's going to extend into many other offerings over time. We purposely don't talk about that in earnings calls. I think I got some rumors that people like, oh, you talked a lot about it in May, but then you can talk about it in August. Well, in May I also did say like do not expect updates on Woodwork for a while on purpose because we want to give this very small nimble team that is working on Woodwork the time to be able to build basically a new company inside Grindr.

But it's using Grindr as a distribution engine, which means that its CAC for customer acquisition is really, really low or 0 and building a new brand. And that's all going really, really well, and we're really happy with how that's going. So that's one business we're launching. We have a second business around luxury experiences that we're launching that is not live yet, but it will go live kind of next year. Similar thing, like we're not going to talk about that very much because we want to give the team time to get it right.

And then the third one is already in the works that's going to be stuff for now, but it's actually probably the single biggest business opportunity that we are pursuing. And the goal is to have like 6 or 7 of these new business initiatives that are using Grindr as a distribution engine live over the next 3 years, knowing full well that not all of them are going to work. But if 3 of them work, that would be like a huge win for us over the long term because then we can drive this kind of growth, not just for the next 5 years, but for the next 10 and 15 years.

Last question for you before we lose you, just in terms of capital allocation. So those are the areas of investment and growth. You've laid out the growth narrative. How should investors broadly think about $1 of capital either going back into the business or coming back in forms of return you have been opportunistic with your stock on the buyback front?

So one thing to say is all these business things that I mentioned, the new businesses. The cost of launching these is all accounted for in our 3-year plan as far as EBITDA guidance that we gave, but none of the revenue is. So all the revenue is kind of incremental to what we guided towards. I run a pretty lean ship. So we kind of peaked in at 225 U.S. employees and 15 people in Asia. And 3 years in of me being there, we are at 150 U.S. employees, maybe 155 now and 30 people in Colombia.

So we are not even back yet at the stage of where we were at our peak. That's because we did a return to office. A bunch of people said they didn't want to come back to office. I said, great, you don't have to come back to office. Self-selection is a good thing. But the people we did keep and people we've hired are being way more productive, and we are very, very lean. I believe in really lean organizations because I think those are way more effective at getting stuff done.

So we run a very high revenue per employee number, probably a little bit too high, honestly, right now in as much as like everyone is telling me, George, we need a lot more -- a little bit more people. But even at the end of the year, we will not be close to the number of people that we had in 2023 January, right, even though the business has doubled in size since then. So I think we will definitely continue to hire, but we'll still generate a ton of cash, and our EBITDA margins will remain very, very high. Our 3-year guidance is 39% to 42% EBITDA margin. We've done a little bit better than that because we've been so lean on people, but like that either one is a great number.

And otherwise, we'll return capital to shareholders. Our focus has been through the buyback. We've actually been, I think, using the buyback pretty aggressively this year, and people should expect us to continue doing that into the future. We think our stock is very cheap right now, quite honestly, given what we are delivering and what we can deliver into the future.

Again, Grindr is not a dating product. Grindr is a social network, and I want investors to think of it as a social network and value it as such. And we are one of the very first existing technology companies to be actively moving towards creating our products that are AI-driven, not bolt-ons on top. And I think we'll be very successful at that. So that's how we think of value in Grindr. And obviously, in that sense, our share price is not reflected in that, and we'll be as aggressive as we can be in returning money back to shareholders.

All right. Well, all super clear. I think we're just inside of a minute. So we're going to leave it there. George, thanks so much for being part of the conference. Please join me in thanking Grindr for being part of the conference this year.