Good morning, everyone. I'm John Blackledge, Internet Analyst here at TD Cowen. We're happy to have Vanna Krantz, CFO of Grindr, which has been a great story, coinciding with around the time that you got there, ish. That's always good. I'll have a bunch of questions. Maybe towards the end, open it up if folks have questions. Thanks for coming. Appreciate it.
Thank you.
Maybe just start on the overall kind of online dating category. Could you just talk about how Grindr differentiates versus the other popular dating apps? Broadly in the space, some of the bigger leading apps have faced headwinds, yet Grindr has continued to grow at a really healthy pace. Can you just talk to that dynamic?
Sure. First off, I'd say Grindr's use case is just a lot broader. It offers connectivity to the gay and bi communities globally. That connectivity really translates into our metrics. Our metrics, specifically with respect to engagement, are quite off the charts. In 2024, our users sent 131 billion chats. The engagement time per average user is over 60 minutes. I think the fact that our use case is not only for casual and long-term relationships, but also broader with respect to travel ideas, local discovery, networking, even health awareness and health information, translates into much better metrics with respect to engagement, which transfers into time spent on the app. The design of the app actually promotes this because it's not a swiping app. When you open up the app, it's a grid with 100 profile users. You can chat to anyone.
I think that really helps build the sense of community and the belongingness for everyone on it. Our brand awareness is quite spectacular, I'd say, globally. It is very high domestically, also very high internationally. I'd say that brand awareness allows us to have this constant inflow of users when they turn 18. When they turn 18, we do not spend any real money on marketing, as you know, but we continue to have this inflow. Frankly, we really want to have the best experience for our users. We are constantly updating the app so that the user experience is pleasing to them. I'd say those are the reasons why we are differentiated from what I would call the broad community.
That makes sense. At 1Q, you raised your 2025 revenue and EBITDA guidance. Maybe you can talk about kind of the first quarter and the confidence in kind of raising. On the revenue side, maybe talk about the impact of new products, subscription offerings, FX, top of funnel user trends that funnel into your annual outlook.
Yeah, sure. I think what you're really seeing and what you're going to continue to see is as we move forward toward the progress of our greater vision. In 2023 and in 2024, we had very nice success with our weekly subscription tier and Boost. I would say we're absolute home runs. We talked about a broader vision of AI forward and gay brotherhood expansion. You're just seeing those foundations come through in addition to a far more robust product roadmap, so 30-plus, 40-plus products and initiatives in 2025. How that relates to guidance is that our philosophy has always been that we guide to what we have line of sight to. We had a lot of testing. Some of those have been progressing nicely. That caused us to raise our guide to 26% or better on revenue.
As it relates to EBITDA, I think you've seen that we've tended in the past to have higher margins in the first half and held back until we saw really the business perform to the second half. You could see that because our business did perform, we did spend in the second half. This year, given how many initiatives we have on the go and being AI forward with those cloud costs, you should expect our EBITDA margins to remain in this zip code for the entire year, given really everything that's going on at the company. We did note that in our Q1 Call, but I thought it would just be worthwhile to note again.
Yeah, no, that makes sense. If we think about your 2024 to 2027 targets of 20%-25% annual revenue growth and then 39%-42% EBITDA margins, should we think about kind of that three-year guide any differently with the uptick in the 2025 outlook?
It was actually less than a year ago that we gave those. I think it was like June 27th or something. It has been less than a year. It is a long-term guide. We are nicely in that range. Everything is progressing well: our product roadmap, our AI forward features, as well as, I would say, the foundation of gay brotherhood expansion. When there is time to say something more, we will definitely provide that. It is very early days, and it is a long-term guide. We are pleased that we are within those guides, maybe just slightly ahead, but we are early days.
You're tracking.
Yeah.
Tracking in a good way. Maybe we can talk. You talked a bit about the users, and that over 60 minutes time spent is incredible generally. Maybe you can talk about the monthly active users, the trajectory relative to the addressable market, and how we can maybe think about that going forward.
Sure. So about 98% of our monthly active users are gay and bi men. We believe there's plenty of opportunity to serve that community even more with new products and services. We've started to pepper that in. That being said, we also think we can expand the MAU. What we mean by that is, for instance, relationships, which we've talked about. We believe that that could increase the demographic of what we're serving now. It's predominantly been a casual with long-term dating. If the intention is long-term dating, we think that we can provide a product or a feature that actually is more focused on that. That would be a MAU enhancer or grower. With respect to TAM expansion, you've seen the beginnings of, I would say, the gay brotherhood initiatives. I think that would be a TAM expander.
Right now, the other thing also is international. We have 75% of our MAU is internationally. We've provided that before. Those markets are growing. I would say the winds of change may have been the most active in North America, but they are continuing to go overseas. That also could be a MAU extender as we think about localization in those markets that just offer a slightly more relevant imagery or app store work. Certainly bullish on MAU expansion over time.
Oh, wow. That's great. The other kind of piece to rising monetization is, of course, the payer conversion, which ticked up throughout 2024 and again in the first quarter. I think Tinder at its peak was 21% penetration of MAUs. Grindr at this point is like 8%, something like that. How should we think about that payer conversion trajectory, opportunities to kind of push it, continue to kind of push it up as we go along?
I think you've noticed that we're highly focused on providing value to our users such that they are compelled to want to pay and move from free to pay, despite the fact that our free offering is quite generous. The product roadmap is fully focused on increasing that value proposition such that more and more people would want to pay. That's working very nicely. Remember, to get to a 21%, we have an incredible headwind on that, which is MAU growth at, what did we have, 11%, 8%, 7%? I mean, we have some nice headwind on that. That formula makes it challenging for us to move quicker. I'd say we also don't view 21% as the ceiling because typically, I believe at Tinder, and you would probably know better, mostly the men paid. We're all men, essentially.
We don't view that as a ceiling. That being said, we actually don't have that in our model as an input for our three-year guide. It was basically an output. You don't have to get anywhere near that number to make that work.
Yeah.
Nowhere near.
Yeah. I think in our out year of our model we're like 10% or 11%. Yeah. So there's.
Yeah, there's a lot of room there.
It's a really incredible long-term opportunity for the company.
We couldn't agree more. I mean, there is an incredible long-term opportunity. We are in the early days of our monetization journey of just learning what's really resonating with our user base. I think so far we've been pretty successful. We expect to continue to be so.
That's great. Maybe we can talk about some investment areas. You're growing headcount, but it's not off a huge base. I think under 150 people kind of exiting the first quarter. As you grow headcount, have you seen positive change on product development and on the roadmap? How should we think about kind of headcount growth as we get through the year?
Sure. Yes, when we joined, the headcount was like, I think, in the neighborhood of 220, 225 in that zip code. As you noted, we are not nearly at that number yet again. I would say that the RTO, so we had return to office in the fall of 2023, saw massive attrition. That is what happened. We decided it was just better for our employees as well as our users to be in the office two days a week. That was a very thought-out and good decision, I would say. It's also turned out that we've been really focused on where to hire, meaning in what areas. As you mentioned, AI forward, ML, data science, product engineering, those are all areas that we expect to continue to invest in as we've built out the roadmap.
We want to put the talent in place to do it. I'd say the talent that we brought in to date has been outstanding, really, really outstanding. I think having a company that's public that you can see all the data on has been helpful for us in terms of getting talent. It certainly makes us more confident and bullish on being able to execute on our roadmap. I'd say that we are focused on productivity. I think you've seen our talent density and our focus on performance is pretty serious at our company. That means that we don't know what number. We don't have a full target. Yes, we are hiring this year. We are hiring, I'd say, to make sure that the product roadmap is executed well on and we're well set up for the future.
We're not holding back on hiring in any way. We are interested. But finding the right talent takes a minute.
Is it with the performance of the company since you've been there and frankly, the stock performance, is it a little bit easier now to attract talent? Is there more demand from your vantage point?
From where I sit, just not a scientific answer, but a qualitative one, it certainly is helpful to have all your 10Qs, 10Ks out there to have a bunch. We have an investor day that is pretty, I would say, fulsome. Anyone who's interested in the company can learn a lot about it from a public information perspective. As they interview, I would be surprised if they were not impressed with the talent that they're interviewing with. For me, the answer is yes. I think it's hard to deny that it wouldn't be more attractive for a lot more people to want to work at the company.
Makes sense. Just in terms of other investment areas, and you talked about a really large product roadmap, but product investment, obviously advertising is industry-leading from an ad expense as a % of revenue by a wide margin. How should we think about investment in product, maybe cranking up the advertising relative to kind of maintaining the great margins that the company has?
We said in our investor day that we always wanted advertising to be around that 15%-16% of total revenue. We're keeping track with that so far. I don't think we're looking for it to outpace certainly the direct revenue. That is a nice, healthy area in our opinion. There are two levers for advertising revenue, right? Quantity and price. I would say that what you've seen is that when we joined, it was probably a little underinvested in. We've been investing in our ad tech that is just starting to bear fruits with rewarded video and native ads. The other side, on the quantity side, we have opened up the funnels and brought in ad partners for third-party advertising internationally. The international ad load is increasing, but still far below any other social messaging or social internet company.
I'd say that it's still new for people, so they're getting used to it. It's still within very healthy ranges. I think advertising, we offer a very, very robust free product. I think advertising is part of our business profile, but not to get over its skis.
It's a luxury to have users spending over 60 minutes a day.
Yes.
You don't have to necessarily crank up the ad load too high to kind of disturb the user experience.
Yeah. We're not looking to cause too much friction with the user, that's for sure.
Yeah.
We enjoy the healthy ecosystem of keeping people in the app and being happy with the app. That is also a very important priority for us.
Yeah. You mentioned AI a couple of times. We're focused on AI broadly. I'm just kind of curious, what are the biggest opportunities in AI for Grindr for external products and also for internal efficiencies? If you can just kind of address.
I'll start with the external side. You may or may not have noticed, we put out a little video on our Chat AI. We're really proud of it. We think it's remarkable. We think it could be really helpful to our users. It basically summarizes all their chats into quick soundbites so they can quickly have a jog of their memory on when they might have spoken to the person last or seen the person last or what really happened in that interchange. It is out for test with approximately 20% of our unlimited users. We haven't really received any data yet. We're pretty hopeful that that's something that really resonates with our users. We'll take it from there. Really proud of the work that the team has done to date on that.
The Discover, sorry, the Chat AI is something that we're really proud of. With respect to internally, George is a big advocate of AI. The engineering teams are using it to as great an extent as possible. We have all the tools available. I, for one, am keen to see how we can use it in finance. I know that in the legal department, with respect to trust and safety, we're interested in it. It's something that we have open arms with. It could also help with our level of productivity in the company. I think from this company's perspective, we are all in.
Just one more on the internal. Do you see, are the big cloud companies, are they actively pushing products for you guys, like productivity products across different departments? Do you see that? Or is it kind of not there yet? I mean, the promise is there, but maybe the product isn't totally there, or.
I think that there's lots of baby steps, for sure. We're pretty interested in also taking some baby steps. In the scheme of things, although we're a company that's been around for 16 years, in the scheme of things, there's lots of replatforming and rework that we're doing to enhance our infrastructure. This might be a good time for us. The timing might be right from a lot of perspectives. Are all the products perfectly set up? I don't think it's a plug and play like NetSuite. I'll just use something that I'm more familiar with. It's not quite there yet. I think lots of companies are also, dare I say, interested in building out their products and defining their product use case pretty nicely. It's a good time to be where we are with respect to our infrastructure.
Given George, our CEO's keenness on it, I think, and our ability to fund it, quite frankly, I think it could all come together very nicely. We're pretty bullish.
Great. Maybe just talk about pivoting to the product side. Right Now, that product rolled out, I think, in 15 cities in March and then plans for further rollout. Just can you talk about that product and uptake and what you guys are seeing there?
Sure. It was part of the reason for our uptake in our guide at the Q1 print. It's a product that's been out there for a minute. George is absolutely right. He's been really focused on engagement. Because part of the secret sauce of Grindr is that everybody's on it. It's so integral to the community that the engagement becomes, you know, it's almost taken for granted. If Right Now didn't have that kind of engagement, it wouldn't have a chance of being successful. We took our time to allow for that engagement to happen. Now we think it's the right time to start to monetize and to decide how best to monetize it. It's what we think is a very good feature and should deserve to be monetized. It started off with ten free sessions in a week.
I think we give three to four, depending on the city. That is to keep the engagement alive. I think that makes sense. Just like we have, obviously, we have 92% of our people that are free, right, for our whole app. This is like following that same kind of idea. We give three or four for free. After that, you pay. It is $4.99. I think monetization, as we did with Boost over a few versions, that will also happen with Right Now. This is our first test case. Let's see how it turns out. We might change it a little bit. We might bundle it. The jury's out. There is lots of opportunity here.
Yeah. That sounds like an optionality, yeah, for sure. What about other products as we round through the year? Anything that we should think about in terms of either driving MAUs and/or the payer conversion?
There is lots on the roadmap when we have 30-40 products and initiatives. All of those are, there are so many of those that we're quite excited about. We've always been relatively, I would say, fortunate and cautious on monetizing any of them too early or too much. I think the only one that we're really talking about from a monetization perspective is Right Now. From a perspective of excitement, I think we're excited about Chat AI and the future that that could hold. We're also excited about the Discover tab. I think the Discover tab is also using AI because you can get better recommendations. We think we're continuing to evolve to have the best meetups. That is what Discover is all about, recommendations and really getting the right folks together and seeing how good it all works out for everyone.
That's what it's all about, right?
Yeah. Makes sense. We have about five minutes left. If folks in the audience have any questions, you can raise your hand. I'm going to keep going, just giving people an opportunity here. How about pivoting to within the cost of revenue line, the App Store changes? The other public dating companies have talked about this for years. It's been kind of out of reach. Maybe I'm just curious if you, in the coming years, would expect any relief from App Store fees.
This is, for us, I'd say this is a complicated one. Because right now we don't offer direct pay. We'd have to build it out. Sure, we could do that. No question about it. Other companies have. We could as well. Arguably, it could be easier now than it has been in the past. We're very open-minded to that. We know that there's more work involved than just building that out. There's also the returns and the whole customer service side. Yes, we could do that as well. We also get some benefits from being part of the Apple and Google ecosystem. It might be that it's better to negotiate with Apple, which is what we've heard other companies are thinking about doing. It might be that I think it's early days. Should we expect some relief? Maybe.
We don't have to put it in the model yet. I think give us a quarter or two, and then we'll have a better answer. At the moment, certainly we're investigating it. No question about it. Let's see what the teams come back with with respect to what it's going to take to build this out and for it to be a positive experience for the user. You could imagine that there could be some friction involved.
Right. Yeah. You have to allocate resources to all that, and so.
Maybe. Yeah. Let's see how it goes.
How about you mentioned international, a big audience. It is a pretty big part of your revenue. Just curious, relative to the United States, despite it being 75% of your users, it is under-monetized relative to the U.S., which is not uncommon for a lot of companies that I cover. The opportunity there is pretty great. Maybe expand on that a little bit.
The reason that we are pretty bullish on it is that we think we have a couple of macro things working in our favor. You could suggest that North America has been the most open and welcoming to the community compared to some of the other countries. That it would be natural for this evolution to continue in more countries. I can tell you that George has some great examples of how much movement and how much progression is had in some countries. Whereas it took, the first time, it took like 15-20 years. Then over a five-year period, the changes in India have been quite eye-opening. I think that macro change of attitude has been quite helpful for us. Then from a, let's call it, user perspective, we see that more and more fluidity in users is becoming the norm.
That also is a positive factor. The other thing that we've seen is that our app, because it provides such a sense of community as soon as you open it, is actually more vital in countries that are more closed. Countries that are more closed, the only place you can feel potentially at home, not the only, but one of the only places you can feel really safe and free could be on the app. Our belief is there is a lot more room in the international monetization journey. Of course, the ARPUs could be lower and would be lower. That's why we've been very open with ARPU as an output, not an input. It's going to be a bouncy ride. It could be that domestically, Chat AI is very, very, very, very successful. That could bring up our ARPU.
It could be also that the international markets continue to grow at a very healthy pace. Even, I agree, they're at much lower paid penetration, for sure, as they are in any app. But there's room to go there as well. We'll see how it all plays out. I think in the end, when you have more payers paying or you have a lot higher ARPU from some very high-tier payers, I think it's all going to work with direct revenue. That's what we're focused on, direct revenue.
Makes sense. Maybe one quick one, just macro with all the tariffs, up and down nature of it. How does Grindr, if there was like a modest downturn with the consumer, maybe just in the U.S., call it, how does Grindr fare in that kind of environment?
I mean, we've only been around 16 years. It's really hard to go back to the old data because there isn't that much. We have seen that they tend to be more resilient because they tend to have higher incomes, dual incomes with more advanced degrees. We haven't got any data to support what a number could be for a downtick. Of course, we also would assume that we can't be immune to anything macro. Of course not. Unfortunately, I have nothing scientific to say other than qualitatively, we know this is a community-based app. There's a lot of, there's a lot with the time spent, you can see with the engagement. There's a lot of love behind it. That, coupled with the fact that you could also imagine it may not be the first.
Good morning, everyone. I'm John Blackledge, Internet Analyst here at TD Cowen. We're happy to have Vanna Krantz, CFO of Grindr, which has been a great story, coinciding with around the time that you got there-ish. That's always good. A bunch of questions. Maybe towards the end, open it up if folks have questions. Thanks for coming. Appreciate it.