Can we, Well, yeah. Thank you.
Okay, great. Good afternoon, everyone. Thank you so much for joining us. My name is Nathan Feather. I am Morgan Stanley SMID Internet Analyst. I'm excited to be joined by George Arison, Grindr CEO. Thanks so much for joining us.
Thanks for having me.
Before we begin, 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. With that, let's kick it off. 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?
Grindr is the largest social network for gay people in the world by far. There's nothing really as large as us or even close to it. you know, 98% of our users are gay and bi men all over the world. We're 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, hopefully not in too distant future. You know, we've been around for almost 17 years now. the product kinda took off like wildfire when it launched on iPhone and has grown, you know, every year ever since then.
Grindr became public in 2022, 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 really 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. 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. 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. Like, how do we launch those products, and how do we bring those dollars to Grindr?
Which is not gonna be something we'll see in the bottom line in the next year or two 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.
Thinking of the financials at your Investor Day back in 2024, you outlined targets for 2027, revenue of about $600 million, adjusted EBIT 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?
Based on our guidance, I think we're tracking really well. We finished one year of the three years that 'cause we really gave 3.5 years at Investor Day. We finished the first year and a half of that guidance, and now we're in year, kinda two, fully, full -year two. 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. 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.
I've been very happy with the results. We should be able to achieve everything that we set out to achieve. Beyond that, you know, while we haven't given guidance beyond the third year, which would be 2027, there's nothing that's happening at Grindr today that makes me feel like we can't continue on a very similar trajectory into the future. The big thing for us is gonna be where the revenue comes from. We had outlined at Investor Day that we will be building products focused on intentions, 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, something like travel. We are doing that. 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. Boost is a way people can Boost their profile for more people to be able to see it. You know, historically, we've had like a $9.99 Boost as well as a $90.99 Boost. Just, I mean, literally totally randomly, I said, "Well, what if we tried like a $99 Boost?" We did.
Turns out that actually a really large number of people will pay for a Boost that lasts 24 hours, whereas previous one only lasted an hour or an hour plus with specialized in who you targeted at, and are willing to pay a lot of money for it. Now, $9.99 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. What we're 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 service 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.
A lot of our monetization will be focused on those users. 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, whether they're paying customers or free customers.
Well, wanna get into a lot of those things. First, since the proposed take private last year, there's been a lot of noise related to ownership, governance, and share pledging. You know, can you talk through the latest on those topics and the changes the company's made to the corporate governance structure since?
Thanks for that question. That's probably the toughest question I get. I get it unfortunately too often, so good to talk about it. I totally appreciate how that's really important to shareholders. Again, they ask me that as well, we know, and I think the board knows that as well and is very focused on these issues. To start with, you know, the issues with a margin call last year and what happened, James is no longer on the board. He has stepped down as Chairman and as a Board Member, I think that was addressed kind of well. Number two, we have a very independent board. That was something that was very important to me coming into this job, that the company maintain a majority independent board.
Now the board is, you know, overwhelmingly independent, and I think has shown its independence in a pretty strong way, given the actions that it's taken, over the time that the company's 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 evaluated the proposal and responded, and, you know, there were other analysts who thought that the deal was done just because it was made by, you know, 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, you know, 30, 40 years. 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. 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. We have two different recruiting firms helping us fill out the available slots on the board for the shareholder meeting coming up this summer. I think we'll have some more names to announce, you know, in the coming months. Lastly, you know, Ray is our largest shareholder, and his 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 Chinese ownership through a U.S. required investor actually saved the product for the user base and have invested significant resources over time into ensuring that the product remained really strong, and Ray's been at the forefront of that. As a, you know, 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.
Oftentimes investors are the ones that are kinda keeping you more in check with reality. Well, Ray's the kind of investor you wanna have as a founder because he's also super optimistic about the future and always believes that more can happen. 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. My relationship with him is very strong, and I think he remains a very committed shareholder for the long term of this business.
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. Just had earnings last week guided to fiscal 2026 revenue growth of at least 20% year-over-year. You know, 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%? What are the one or two things that could deliver the most upside?
We 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. We went in a company through a stock process and had to give long-term and short-term guidance in the stock process. We missed it the first quarter we were public. That was very painful. I don't like going through those kinds of experiences. I tend to be really careful in how we give guidance as a result. I found that, you know, if you deliver 98% to private investors, they're really happy. If you deliver 98% to public investors, they're usually not.
We give guidance only to the things that we have clear line of sight to today. 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 Xtra and Unlimited tiers, which are our two paid tiers so far. We never charged users for that value. A lot of new features went into those products, we put in some paywalls for free users as well, which made the tiers even more valuable.
The price on the tiers didn't go up. Indeed, price on the tiers hadn't changed since 2018. 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. 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. We moved forward with those pricing changes in Q4 of last year, initially for new payers.
That's gonna 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 gonna be the lion's share of our revenue growth in 2026, which is really monetizing all the things we had launched in 2023, 2024, and 2025 this year and kinda harvesting that. 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. You know, 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. If the tests go well and we feel comfortable launching that product globally earlier, then that would be upside to what we are giving in guidance.
You know, 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 Gayborhood expansion initiative, which is a business outside of the core app. That's 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. Woodwork has served, you know, as many thousands of users, but it's still very early. It's only month 10 of it being in operations.
We didn't feel like including it in guidance made sense. That's another area that's pure upside. We have a few other smaller products that have potential to have upside as well. You know, I think that is the right approach for Grindr in terms of how we guidance, and we'll update folks when, you know, we do the earnings again in May.
Thinking a little more holistically here, you mentioned of your three main priorities, there's increased monetization and improving the free user experience. I think that's different from a lot of similar companies where you're doing one or the other, a little bit more strictly. You should— how do you try and balance those dynamics there? You know, what you're maximizing for. I guess looking ahead, where do you see the room to really continue to improve that free user experience?
Yeah. When I started at Grindr, and, you know, I came in as a tech CEO, and I had, you know, 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 was, like, potential investors, "Hey, Grindr is awesome because you have 6% paid penetration and Bumble has 15%, you know, so much room," which made sense to me in some respects. 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%." We have increased paid 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. 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. We released some of this data to investors last November, where our younger users, so people 18– 30, tend to have a lower payer penetration, and then our older users, 35 +, but especially 35 +, 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. We all want as many new people coming to the product as possible, especially as they turn 18 and start becoming kind of aware of Grindr and/or join as a rite of passage because they wanna come out and figure out what it's like to be gay, et cetera. We wanna keep that user base as vibrant as possible. I think that's why we don't have some of the challenges that some of the other products have as far as the younger users are concerned.
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 becoming payers over time, right? We don't need to have them become payers right away. Some of our straight peers are in a world where if you don't become a payer in the first week, you never become a payer. That's not the case at Grindr 'cause with Grindr, as you age, you mature into becoming a payer.
We do wanna keep that very robust, and so we are less focused on kinda 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 higher 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. You know, 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, zero invested 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, you know, very quickly and exponentially. It's all contractors. The initial code base is not great, and that just continued for a long time. Grindr is bought by the Chinese ownership. They don't invest in the product at all. They're just gonna harvest the revenue and don't do technology investments.
In 2020, when the company is bought out from Chinese, it's left with a very old code base. We've been slowly chipping away at that. We have 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're now well along on that. As one example, we said in our shareholder letter, last week, you know, 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.
We reduced the number of lines of code by 80%, which, like, is a significant change. The number of bugs that you could potentially put into that code base now is a lot lower. Doing that across the entire code base, both on iOS and Android, will be a big step forward for us. That's gonna take about a year and a half still, but I think it will be a big improvement for the free users. Secondly, I think a really big thing that we need to focus on, and look, that will not be a change in one quarter, it's gonna take some time, is improving the quality of the ads that people see and the type of ads that they see.
You know, that is one of the ways we monetize the free users is through advertising. We have a very robust and good advertising business at, you know, $70 million+ last year and continue to grow. 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. We can have other ad formats besides what we offer today. For example, rewarded video, which has much higher CPM when you show it, but is also higher quality.
That's gonna 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'll 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's 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? Just as you think about all the dimensions of the business, to what extent are you managing that KPI?
We don't manage the MAU almost at all. 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 kinda 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. It's gonna take time for that to have an impact, and most of it is gonna be outside of the United States because, we are, you know, pretty well penetrated in the U.S. and very well-known. I can talk about that in a minute as well. Historically, we have not managed 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 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 three years ago because of GenAI. The same way tools that you use to find bad actors, bad actors can use to create more bad behavior, you're playing whack-a-mole with them a little bit. Overall, we are removing significantly more bad actors from the platform today than we were 12 months ago, and 24 months ago. It turns out that most bad actors show up in the new MAU that you might be getting at any given time.
They were always gonna be removed at some point, but they were gonna be in the product for longer previously versus what they're gonna be in the product now. If you look at our MAU growth in 2025 versus 2024, 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. We had the tools that we had in 2025, we would have removed those in 2024 as well. The MAU growth would have been roughly the same as it was in 2024.
We think the rough number of new aggregate ads that we saw in MAU last year is gonna 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. 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%+ brand awareness. That's not the case in most of Latin America and Asia and even in some European countries.
Obviously, people know you, they use you, but if they don't know you, they can't use you. More people knowing us can be really valuable in driving more MAU.
Understood. One other area the market's had growing concerns over has really been the competitive intensity within the space. Can you map out the competitive landscape in your view of where you think Grindr fits in? Do you believe competition has had an increased impact on your business over the past year?
This space, broadly speaking, whether you think of it as dating products or social media products, is a very competitive space. 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? There's many reasons why people do that. We are totally comfortable knowing full well that people are gonna use more than one product. What we aim at is ensuring that we are the first in-wallet product, if you kinda 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. Young people are coming to the product pretty actively, and that's not an issue. Whenever I say young, to be very clear, I refer to people 18 +. Grindr is an 18+ only product. You know, competition's out there. That's totally 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 GenAI. I think you've been, especially within the consumer internet space, one of the most proactive at not just internal operations, but also launching products in the app.
Probably why I took the job.
Which is great. Can you talk to us about, one, what you think the most underappreciated GenAI opportunity is, and two, what do you think the most underappreciated challenge is among investors?
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. You know, I knew a lot more about AI, I think, than most people did as a result. AI is only as good as the data that is driving it, and Grindr has an incredible amount of data. To me, coming into this job in 2022, that was a really exciting piece. I'm like, "Hey, there's like this goldmine of information." By the way, you have users that are early adopters, right?
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 built a mobile-first experience for them in 2009, 2010. To me, that was really, really exciting. The things that I see as huge opportunities is solving some of the challenges that gay people face in meeting other people because of density. If you talk to gay 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 for."
That's because most dating in the U.S. is done by geography for where you live. In most geographies, maybe save 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 gay cities in the world, if not the gay city in the world, as far as percentage of total population. You're talking about somewhere between 30 ,000 and 60,000 potential partners if you look at every gay person in the city of San Francisco. That's not a lot of people to choose from if you are looking for a partner.
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 wanna 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. That's what we're doing with AI, is taking all this rich data that we have in people's messages, in their activity, in their behavior in the app, and using that to create better matches between people. 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's thinking about long-term life has changed post-gay marriage. When I was young, and not married, you know, I knew I wanted to have a long-term partner, and I even more knew that I wanted to have children.
In my 20s, when I would say, "I wanna be married, and I wanna have children," I was like this weirdo. Or like, maybe like one in 10 guys would say they wanna be married, and one in 100 guys would say that they wanna 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 wanna be married, and 25% of the gay men 35 and under say they wanna have children.
That's a higher rate of, "I wanna be married" among gay men and among straight women, of the same age cohort. We have like a huge opportunity to service that cohort, in ways that never have been done before through these AI products that I'm like super psyched about.
Great. Now, flipping over to the margin side, you've maintained strong EBITDA margins of 40%+ 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? From an AI perspective, as you lean in here, do you see opportunities to really push the productivity that you can have internally?
Actually, that's two different questions, and I'll answer both. When we gave our guidance in June 2024, we said 39%-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, 'cause ultimately our single biggest expense is people. I think implied EBITDA guidance for this year was 41%, which is kinda on the high end of that number for the year, if you look at the revenue and EBITDA that we gave.
It assumes that we're gonna actually hire the people that we wanna hire, but we tend to usually be behind on hiring because we keep a very high bar, because I 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 160 U.S. and 30 in Colombia, you know, still below where we peaked. The business is twice as big or more than twice as big now as it was back then. In terms of revenue per head, it's much higher now, like $2.75 million in revenue per head.
I think 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. That's very important to me. We'll continue to keep a bar that's very, very high in that sense. 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 gonna spend that money. That's gonna drop down to margin as well.
With regards to making the team even more efficient, I mean, you know, we—zero percent 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. That happened because we made a decision that we're gonna become AI native in how we code, and we did. Now we're not at 100% AI-generated code. There are some teams at Grindr that do that, but not every team. We'll get to, I think, that number over the next couple 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. What we're doing with our engineering organization is gonna happen across every other organization. For example, you know, 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 just gonna be an engineer. If AI is writing your code, doesn't matter if you're an iOS expert or an Android expert, you should be able to work across the stack.
We're gonna probably stop thinking about PMs, designers, and engineers because they're all gonna be doing similar stuff. That part we have not yet actively started to do. Like, our PMs are not yet asked to check in code, but that's gonna start happening, and people are gonna become more efficient. Obviously, we wanna do that across every other part of the organization, whether it's in finance or in marketing or in sales or, you know, 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, covered a lot of ground here. 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 bi 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. That's number one.
Number two is the fact that —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, you know, our users spend a lot of money with other products and services. 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, they just happen to buy them. We can actually replicate those products specifically for them better than somebody who is not targeting them.
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 a day. I think that's a very strong thesis. If you think of Grindr that way, then it's a lot more than even a social network. It has a potential to be like the primary super app for gay people. I think that's the big thesis that people should be thinking about when they think about our business.
Okay. Well, George, this has been great. Thanks so much for being here.
Thanks for having me. Appreciate it.