Conference Transcript - GRND 2026-03-03

Andrew Boone, Analyst — Citizens

Hi, everyone. I'm Andrew Boone. I cover internet here at Citizens. I'm very happy to welcome John North, the CFO of Grindr. Thank you for being here. John, let's just start off with kind of a big picture question, right? You guys have gone through a product iteration this year with Edge. You guys are incorporating more AI into the platform. We're now seeing adjacencies in terms of woodwork, in terms of broader Gaborhood kind of build-out that you guys have. What's the vision for the platform in three years? What's the overarching goal that you guys are trying to stitch everything together with?

John North, CFO

It's probably the most important question. Start back. Yeah, it's good. I appreciate it. I think what got me excited, and I joined pretty recently. I knew George from before we'd worked together but uh you know really the notion of grinder being a social network and the place that you know gay and bisexual men come to connect and you know in many ways to learn what it means to be gay you know almost half of our users are under the age of 30 over 90 of our users don't pay And so we often get kind of roped into this dating app comparison and look at Match Group or look at Bumble and then look at Grindr. But fundamentally, it's a different experience. It is the social network for gay and bi men. And I think what George has articulated as his vision and what the management team is delivering on is really trying to expand that white space and to do lots of other things beyond just dating and hookups, which is the core of what Grindr is. but really thinking about how do we use the brand awareness and the brand equity that we're building to do more things and to expand into other areas. So to your point, healthcare is a massive opportunity for us, and we've had really good traction with Woodwork, which is our performance drugs at TreatED. And that's been something that was just launched 10 months ago. We already have many thousands of users and subscribers, and brand awareness of Woodwork on the Grindr app is north of 65% of our users through no advertising whatsoever other than in the app. And so how do we use the ecosystem that's in effect and that Grindr has to really do more things and to serve more use cases for the user base, whether it's premium offerings, whether it's travel, whether it's health care. There are lots of other ideas that we have, but how do we take that, you know, amazing awareness and stickiness that we have and take it other places as opposed to solely being, you know, a subscription-based software application?

Andrew Boone, Analyst — Citizens

Okay. Let's talk about the U.S. opportunity in terms of users. How do we think about user growth in the U.S., or how do you think about U.S. monetization levers? So talk to us about kind of P times Q equals R from a domestic standpoint.

John North, CFO

Obviously, it's a very saturated market. Grindr has incredible social awareness. Everybody knows it in the U.S. And we are the destination for men that are looking for that experience in the U.S. And so that's something that is at our core. I mentioned a moment ago that obviously the vast majority of our users don't pay. Having a really powerful and effective free experience is critical to creating the social network and the density that attracts the users and you know what we find is that there's a subset of users and particularly older users that are quite willing and able to pay if you look at the demographics of our consumer base they tend to skew very educated higher than average income you know lots of lots of disposable money to spend on on experiences and things, and so the strategy has really been trying to get the existing group of users in the U.S. to pay more, as opposed to trying to grow the number of users and to convert payers. Now, we've done a good job of that in the last two or three years. We've gone from six or seven hundred thousand paying users to about 1.2, 1.3 million, and we've also grown the number of monthly active users pretty significantly, so the pie has gotten bigger, and we've penetrated a little bit more but we've really been focused on trying to figure out how to create enough value and perception of value in the app that we can raise prices which we're up to and rolling out now for the first time since 2018 if you can believe it so that's well underway that's part of what's contemplated in our outlook for this year and and so far so good there okay let's let's flip this now talk about international right international is a different story for you guys how does that algorithm change once you think about the rest of the world lots of work to do there you know I think grinder still remains the destination for you know people to use men to use around the world but obviously every country is unique and there are different regions and regional situations that we're working on so in particular we're focused on Latin America you know Asia and in particular India is a market we think there can be tremendous opportunity for us to grow but that requires you know localization that requires local language that requires a bespoke effort in each of those places that's somewhat different I mean as you probably appreciate you know most of our money and most of our revenue profit comes from Western markets and and places like you know the UK Australia New Zealand, you know, but we look at markets like Brazil, we look at markets like India as tremendous opportunities, and that's where, you know, we need to continue to lean in, and we've done a lot to invest in, you know, for example, what are we doing with Portuguese language, and how do we make sure that the Brazilian users get the right slang for, you know, how they communicate in Portuguese, and, you know, things like that are a focus for us, and I think a lot opportunity if you take a market like Spain which you know is a obviously gigantic part of Europe like you know brand awareness there is like 60 70 percent so there is a lot of opportunity for us which is still fantastic but compared to the US where it's like 95 plus you know what can we do to really lean into the local market opportunities there and that's that's an area that we're focused on this year do you guys have country managers if I think about something like Brazil that has tremendous opportunity a large population Again, it's kind of a mid-tier country from GDP per capita.

Andrew Boone, Analyst — Citizens

What does that look like in terms of the actual go-to-market for localization?

John North, CFO

In a word, no. You know, I think one of the most amazing things that I am still shocked by when I look at our business and having only been here for six months is we have 160 employees total. And we have, you know, a number of contractors, and we have people in Columbia from an engineering perspective. you know so if you round all that out you know we're probably just over 200 people or something all in and so you know one of the things that's incredibly powerful and we talked a little bit about that in terms of investing in you know people and in particular and then creating the opportunity to invest in the business is that every incremental person is tremendously additive so like as one example we just hired a marketing leader who is fluent in portuguese and spanish and like the zero to one of that effect is tremendous because we had no ability to do those kinds of things and every person makes a huge difference. But to answer your question, I mean, those are the things that have been challenging for us because, and I appreciate this about George's leadership, we were very particular about who can come and be part of the team. We have a very high bar and we're not going to add people just to add people's, you know, to create capacity. But the flip of that is that when we do add these people, it's truly additive and unlocks a lot of opportunity, which is one of the things we're going to hopefully get after in a market like Brazil, for example.

Andrew Boone, Analyst — Citizens

What's different about Brazilian, excuse me, international monetization versus domestic, though, right? You guys have done a really good job of widening your monetization levers over the last couple of years. Does this look kind of more like lower-end products, or is it the same kind of adoption that you see in the U.S.? What does that look like?

John North, CFO

Remarkably, it's pretty similar. You know, my intuition would have been that, you know, price points would need to be different, product offerings would need to be a lot more customized for the market. And I would say so far that hasn't really proven to be the case. We can take pretty much the same construct that we would apply in a Western market like, you know, the U.K., for example, And that translates well into the rest of the world as well. Now, I mean, I think if you take a very emerging market like India, that could be different. And 12 years ago, it was illegal to be gay in India. So there's still very much a cultural and social component here that we have to figure out. The use case and the user experience is not the same as in San Francisco. And so I think some of those questions are still early, and we don't necessarily know all the answers. But so far, we haven't had to have tremendous variety in terms of how we think about monetization internationally. And there's so many sort of, I guess, unlocks there that it appears that, you know, we don't have to be too creative right out of the gate. We'll iterate as we go.

Andrew Boone, Analyst — Citizens

On the last call, Grindr, broadly speaking, talked about the prioritization of premium products for 26. So flesh that out. What does that mean? Maybe introduce the audience to Edge. What are you guys going for in terms of premium?

John North, CFO

Yeah, I think that's where the leadership team, and in particular, George, really has done a fantastic job. I think we are certainly well ahead of any other dating app, and I hesitate to call us that, but for argument's sake, I'll use it. Social network. Social network in terms of AI and really thinking AI first. And we've talked a little bit about that, you know, both in terms of what it means internally and also what it means externally. And internally, we've seen, you know, tremendous results. I think, you know, self-reported, but our engineers are basically saying they're about one and a half times more productive than they used to be. Sixty to seventy percent of the code that we're writing is done through AI. And we're really working. And one of our goals this year is to become such an AI-first company that we don't have to talk about it anymore. And, you know, I think we pushed hard on that. But we've also thought about, okay, how do we actually create an AI-first experience for our users, and that is Edge. And so this is going to be a new tier. We're just iterating on it today. It's going to be at a significantly higher price point than where our existing tiers are today. And it really has a number of features that are pretty powerful. So one of the things that I've learned in experimenting and playing with the app is just the number of messages and the number of interactions that a user receives are tremendous. And so one of the features that we've put in place is called A-List, and it basically uses LLMs to summarize chat history to suggest, you know, here are some people you might want to talk with, or here are some people that you did talk with in the past and might want to pick these conversations up. We've got suggested matches in terms of these are users we think you might be interested in that we've curated for you. And then the other one is we use the information that we have about the users in the app in order to try to identify who you might be compatible with. And one of the biggest issues is a lot of users don't share a ton of information about themselves. And so there's a lot of discovery that has to happen in order for you to see, like, is this someone that I might be compatible with? Are they compatible with me? And we've done a tremendous job of really using technology to help to make that all quicker and more seamless. And so we experimented with this starting in the end of last year in Australia and New Zealand. You know, we introduced it at $110 a month Australia, which is like $80 a month. To put that in perspective, you know, our premium plan prior to that was like $39.99 a month, so over double the price. And the acceptance was better than we anticipated, and we also saw a number of users that weren't subscribers actually subscribe to this. But we're thinking of it really as a very premium product, and so one of the things we've been piloting in the U.S. is actually different price points that are even higher than that to try to understand where is the actual value proposition, what's the right pricing for this, and how do we make this truly an exclusive kind of tier. And so the way to think about it maybe most simply is we're not trying to convert more of our users to pay. What we're trying to really do is get our paying users to pay slightly more because they see the value. And that's a very fundamental and important thing to keep in mind as we talk about 2026 and then thereafter.

Andrew Boone, Analyst — Citizens

Is Edge the premium offering, though, that we should be focused on, or is premium part of a wider swath that you guys want to think about?

John North, CFO

So Edge is the first premium offering, but I think we also believe there could be even another tier beyond that you know and like I heard George describe it this way which I like you know there's there's like economy class on the airplane then there's like business class which would be like edge and then there's like a private jet and you know the private jet offering we're kind of we're thinking about like this VIP you know invitation only very exclusive and limited thing that would be you know offered to just our very best users and the people that, you know, are affluent and want to potentially have that designation, either to showcase in the app or just want to be invited to the club. You know, it's sort of like, how do you become global services on United? We don't really know, but they'll invite you when you qualify. And I think that's in the cards for us probably 27 and 28.

Andrew Boone, Analyst — Citizens

Okay. Talk to us about the gains that you guys do have with pricing, right? You guys just took price. You talked about that earlier in terms of the core experience. Edge is clearly the super-priced product that's coming out. Talk about reinvesting that back into the free user experience. How do you guys support the broader 90% of users who are not paying with the dollars you're gaining in terms of just price?

John North, CFO

Yeah. So, I mean, at a high level, just to recap, 92% of our users don't pay. They do pay because they obviously consume ads and you know that's a part of our offering 16% of our revenue is generated through ads predominantly third-party advertising programmatic things with you know the apple ovens of the world that are you know showing interstitial ads and that kind of thing we also are doing now rewarded video which is very lucrative and then you know we're doing direct advertising and trying to build that business out you know we do offer We're a very, I think, desirable demographic in terms of our user base. So what can we do to really think about those kind of things? I think if there was a criticism that we've heard last year, it was that maybe the ad loads were a little bit too high. We dialed some of those things up and really went from a place of very little advertising happening a couple of years ago to a more robust part of the business. And we've grown the revenue overall. We've also grown the advertising business proportionately at about 15% to 16%, as I mentioned. And we are thinking about potentially dialing some of that back this year, in particular, as we have the gains from the pricing increases, as I mentioned, the first time we've taken price since 2018. So I think there's an interplay there. There's a balance. I think part of it is also, what can we do to try to improve the quality of the ads? You know, I think most people don't think of Instagram as something that's annoying because the ads are so tailored and they fit what you're interested in. You know, and so I think part of our question there, too, is can we get better at discovering and offering advertising that's more relevant to our users? You know, I think that's part of the mix as well. So there's, you know, some combination of how do we sell more direct, some combination of let's back off some of the ad load. And, you know, we might show five or six ads an hour. So it's not, you know, a tremendous amount, but, you know, can we potentially give some of that back? And then importantly, can we just improve the quality of the ads relative to our user base so they're more relevant and less disruptive? And, you know, those are the things we're thinking about that hopefully comes off of the back of this price increase and the revenue growth that we're able to achieve through, you know, what we've seen from our paying users.

Andrew Boone, Analyst — Citizens

Operationally, what does direct sales look like or what is the quality improvements of ads? How do you guys actually execute on that?

John North, CFO

Yeah, I mean, I think, you know, unfortunately, the Anheuser-Busch thing that happened a couple of years ago, you know, really has made, you know, some of our partners gun shy. And in particular, you know, I think there's just, you know, a need for us to really educate and to build the equity that exists within the brand as we go out direct to different advertisers. And, you know, I think what we believe is we offer a pretty interesting demographic, you know, people that are highly educated, people that are tastemakers, that have high disposable income, you know, and there are lots of brands that are, you know, interested in displacing or disrupting and kind of growing, you know, and taking on the established brands that I think are a great natural fit for us. You know, we've got, again, 160-ish employees, relatively small team of people selling this stuff, and how do we achieve better success there? That's a big focus for us. I think the other is really to think about, you know, what can we do to either make the ads better, you know, or what can we do to do things like rewarded ads where, you know, can you watch this whole video and then you don't see ads for an hour? The CPM on that's much higher. So there's really two different kind of areas that we're focusing on. One is trying to reach these advertisers directly, obviously, and then the second is what can we do to either have better information to share with the TPA advertisers as we think about programmatic, and what can we do to hopefully improve just the user experience in terms of when the ads are triggered and how frequently.

Andrew Boone, Analyst — Citizens

You mentioned just the equity that Grindr has with the gay community, the population at large. And you mentioned travel earlier. Can you just speak to what may be available or what are you guys thinking about in terms of what are adjacencies to the business that we don't necessarily associate with Grindr today? And then how do you think about testing that, right? Like, as an investor, I'm always worried that you guys are going to go into an investment cycle. You guys have tremendous margins. But what does it look like as you guys do think about extending the brand into new categories?

John North, CFO

Yeah, I think the beauty of this business is that I think we can do both. I think it's got a tremendous margin profile, and we've got great line of sight to improving earnings and improving EBITDA this year. But we've also budgeted for investments and for us to be able to put things into the business to try to really expand into the gayborhood as we started the conversation with. It's like how do we think about the drivers for 27, 28, 29 as opposed to managing to this year or even in my history, managing to this quarter or this month or frankly this week, which sometimes you have to do in traditional businesses. And I think we have an abundance of riches and can do both. At its core, Grindr started in 2009 as I believe the first location services app outside of a map in the iPhone. And it was the first that allowed people to see proximity to each other, which is, you know, part of the whole allure. If you open up the app, for those of you that aren't users, front page is Cascade. It's a picture of a bunch of profiles, and it shows you distance, like how far are you from this person, that person. Well, if you think about what that creates, obviously, we have a tremendous data set in terms of where are users. So, for example, if you're going to go to Barcelona, what's the neighborhood in Barcelona that you want to be in if you're a gay man? Well, we know where all the users are in Barcelona. So if you think about our ability to potentially sell, for example, and this is just a hypothetical, but maybe a hotel reservation, or maybe we could do local market advertising with restaurants or bars or people that are trying to reach our consumers. That's one example. I think another could be, are there events? Are there destinations? There's Gay Ski Week that happens in Utah. Could we do some kind of a partnership there? Are there ways that we can use the fact that our average user spends 67 minutes a day on our app? The only app that has more engagement than that is TikTok. We are better than Pinterest, Instagram, you name it. And, you know, how do we take that engagement and then think about ways that we could expand that to offer our users? And, you know, the reality is, you know, I'd love to tell you we're super smart and figure all this stuff out. But frankly, a lot of this stuff we learned through our users. We know that our users purposely use the app when they're going to travel somewhere in order to figure out where they want to go and to make connections in advance of that and to have people that are in the community, even if it's just for let's meet and have a coffee or a drink. And, you know, those are things that we're trying to iterate on and that we think are really powerful opportunities going forward that can take, you know, the core of what our business is but then provide, you know, frankly, better user experience that also turns into monetization opportunity for us. And that's very exciting.

Andrew Boone, Analyst — Citizens

Transitioning somewhat, but let's talk about some of the re-platforming that you guys have talked about in terms of the tech stack. What exactly are you guys doing and what are you guys trying to unlock there?

John North, CFO

So the perfect example to answer that question is our main Cascade, which is the page you see when you open the app. It's got the profiles on it. So we've started the process of revamping both the iOS and the Android version of these apps. To put it in context, the Cascade code that actually produces that page, We took from 30,000 lines to 6,000 lines. So we've reduced it by 80%. And we spent a bunch of effort in the last 12 to 18 months really working to recruit and to bring better engineering talent that can undertake this redevelopment and this redeployment. And it makes the app faster. Obviously, there's still bugs and things that need to be squashed that we're getting at. But importantly, it also does two things. One, unlocks AI stuff for us. So as we think about Edge and our ability to do things there, as we think about what can we do, what are the capabilities, we improve that. And then secondarily, it allows us to modernize the app. And I think that's one of the things that we talk about quite a lot, which is that if you look at the app, it still doesn't feel like the apps that we're used to using that are just seamless today, whether you're talking about, I don't know, Uber or Instacart or something like that, where it's Airbnb, just these very seamless, intuitive experiences. And a lot of the code redesign is allowing us to start to think about product, which is the kind of hand-in-glove relationship, which is how do we actually make this experience better, modern, feel more intuitive, be something that really is a rich experience for the user. And that's going to come over the next, basically, year and a half. I think it's going to take us this year and probably most of the next to get all of that done, and it's going to create a bunch more capabilities for us to be able to, you know, obviously provide a better experience and then also to leverage AI tools.

Andrew Boone, Analyst — Citizens

Okay. Let's have a last question. Let's end on corporate governance. You guys have made some changes in the last shoot, kind of six months. Six months?

John North, CFO

Yeah.

Andrew Boone, Analyst — Citizens

Talk me through that. Talk me through the drivers, and then what did change? Explain it to me.

John North, CFO

Appreciate, yeah, the question. And, you know, this is probably the one we hear the most, you know, from investors outside of our, you know, what's going on with the business. You know, obviously the company went public in 22. It has a couple of large shareholders. You know, one of those shareholders, you know, stepped down from the board and there was some noise around a potential to take the company private this fall. you know the on the flip side of that but coming out of the transaction now really it's a few things number one you know I think we we had some changes at the board level I think are positive we have a great lead independent director and then importantly and recently with the announcement of our share repurchase authorization being increased to 400 million and we added three more years to it we also got a standstill agreement with our majority shareholder that basically says that he won't attempt take the company private without an invitation from the board and you know the the majority of our minority shareholders voting in favor of it so I think the governance is just much more positive for you know investors that might be looking to take a position going forwards pretty happy about that okay with that John more time thank you so much for just better yeah