Can you guys hear me? There we go. Hi, everyone. I'm Andrew Boone. I cover internet here at Citizens. Very happy to welcome John North , the CFO of Grindr. Thank you for being here.
Thank you.
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 Gayborhood, 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?
It's probably the most important question.
Start big.
Yeah, it's good. I appreciate it. I think what got me excited, and I, you know, I joined pretty recently. I knew George from before. We'd worked together. You know, really the notion of Grindr 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. We often get kind of roped into this dating app comparison and, you know, look at Match Group or look at Bumble and then look at Grindr. Fundamentally, it's a different experience. It is the social network for gay and bi men.
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. To your point, healthcare is a massive opportunity for us, and we've had really good traction with Woodwork, which is our performance drugs that treat ED. You know, 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, you know, north of 65% of our users through no advertising whatsoever other than in the app. How do we use the ecosystem that's, you know, 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 healthcare. You know, 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.
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? Talk to us about kind of P times Q equals R from a domestic standpoint.
Obviously, it's a very saturated market. You know, Grindr has incredible social awareness. Everybody knows it in the U.S. We are the destination for, you know, men that are looking for that experience in the U.S., 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. 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 experiences and things. 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, you know, 600,000 or 700,000 paying users to about $1.2 million-$1.3 million. We've also grown the number of monthly active users pretty significantly.
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. That's well underway. That's part of what's contemplated in our outlook for this year and so far, so good there.
Okay. 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 Grindr still remains the destination for, you know, people to use, men to use around the world. Obviously, every country is unique, and there are different regions and regional situations that we're working on. 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. 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 places like, you know, the U.K., Australia, New Zealand.
You know, we look at markets like Brazil, we look at markets like India as tremendous opportunities. 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? How do we make sure that the Brazilian users get the right slang for, you know, how they communicate in Portuguese? You know, things like that are a focus for us, and I think a lot of 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%.
There is a lot of opportunity for us, which is still fantastic. Compared to the U.S. where it's, like, 95%+, you know, what can we do to really lean into local market opportunities there? 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, large population. Again, it's kind of a mid-tier country from GDP per capita. What does that look like in terms of the actual go-to-market for localization?
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. We have, you know, a number of contractors, and we have people in Colombia from an engineering perspective, you know. If you round all that out, you know, we're probably just over 200 people or something all in. You know, one of the things that's incredibly powerful, and we've talked a little bit about that in terms of investing in, you know, people and in particular and in creating, the opportunity to invest in the business, is that every incremental person is tremendously additive.
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, you know, 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, you know, have been challenging for us because and I appreciate this about, you know, George's leadership. You know, we're very particular about, you know, who can come and be part of the team. We have a very high bar and, you know, we're not gonna add people just to add people you know, to create capacity.
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 gonna hopefully get after in a market like Brazil, for example.
What's different about Brazilian monetization or, 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 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?
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. 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. I mean, I think if you take a very emerging market like India, that could be different, you know. 12 years ago, it was illegal to be gay in India. You know, 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. I think, you know, some of those questions are still early, and we don't necessarily know all the answers. So far, we haven't had to have tremendous variety in terms of how we think about monetization internationally. 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.
On the last call, Grindr, broadly speaking, talked about their prioritization of premium products for 2026. Flush that out. What does that mean? Maybe introduce the audience to EDGE. What are you guys going for in terms of premium?
Yeah. I think that's where, you know, 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, you know, in terms of AI, really thinking AI first. We've talked a little bit about that, you know, both in terms of what it means internally and also what it means externally. Internally, we've seen, you know, tremendous results. I think, you know, self-reported, but our engineers are basically saying they're about 1.5x more productive than they used to be. 60%-70% of the code that we're writing is done through AI. 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. 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? That is EDGE.
This is gonna be a new tier. We're just iterating on it today. It's gonna 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. 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. 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 wanna talk with, or here are some people that you did talk with in the past and might wanna pick these conversations up.
You know, we've got suggested matches in terms of these are users we think you might be interested in that we've curated for you. The other one is, you know, 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. One of the biggest issues is, you know. A lot of users don't share a ton of information about themselves, 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? We've done a tremendous job of really using technology to help to make that all quicker and more seamless.
We experimented with this starting in the end of last year in Australia and New Zealand. You know, we introduced it at AUD 110 a month Australian, which is like $80 a month. To put that in perspective, you know, our premium plan prior to that, it's like $39.99 a month, so over double the price. The acceptance was better than we anticipated, and we also saw a number of users that weren't subscribers actually subscribe to this. You know, we're thinking of it really as a very premium product. 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, you know, where is the actual value proposition?
What's the right pricing for this, how do we make this truly an exclusive kind of tier? 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. That's a very fundamental and important thing to keep in mind as we, you know, talk about 2026 thereafter.
Is EDGE the premium offering, though, that we should be focused on, or is premium part of a wider swath that you guys wanna think about?
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 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. You know, the private jet offering, 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 wanna be invited to the club. You know, it's sorta 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 2027 and 2028.
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 j ust price?
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 AppLovin 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 a very, I think, desirable demographic in terms of our user base. What can we do to really think about those kind of things?
You know, I think if there was a criticism that we've, you know, heard last year 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, very little advertising happening a couple years ago to, you know, a more robust part of the business. We've grown the revenue overall. We've also grown the advertising business proportionately at about 15%-16%, as I mentioned. We are thinking about, you know, 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.
I think there's a interplay there. There's a balance. I think part of it is also, you know, 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? 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. 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?
Importantly, can we just improve the quality of the ads relative to our user base so they're more relevant and less disruptive? 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 for our, from our paying users.
Operationally, what does direct sales look like, or what is the quality improvements of ads? How do you guys actually execute on that?
Yeah, I mean, I think, you know, unfortunately, the Anheuser-Busch thing that happened a couple 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. 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 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, a relatively small team of people selling this stuff, you know. How do we achieve better success there? That's, 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, okay, watch this whole video, and then you don't see ads for an hour. The CPM on that's much higher. There's really two different kind of areas that we're focusing on. You know, one is trying to reach these advertisers, you know, directly, obviously.
The second is, you know, what can we do to either have better information to share with the TPA advertisers as we think about programmatic and, you know, what can we do to hopefully improve just the user experience in terms of when the ads are triggered and how frequently.
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? Then how do you think about testing that, right? Like, as an investor, I'm always worried that you guys are gonna go into an investment cycle. You guys have tremendous margins. What does it look like as you guys do think about extending the brand into new categories?
I think, the beauty of this business is that I think we can do both. You know, I think it's got a tremendous, you know, margin profile and, you know, we've got great line of sight to improving earnings and improving EBITDA this year. We've also budgeted for investments and for us to be able to put things, you know, into the business to try to really expand into the Gayborhood as we started the beginning conversation with. You know, how do we think about the drivers for 2027, 2028, 2029, you know, 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. You know, I think we have an abundance of riches and can do both.
You know, at its core, right, Grindr started in 2009 as, I believe, the first location services app outside of a map in the iPhone. 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 who aren't users, front page is Cascade. It's a picture of a bunch of profiles, and it shows you your distance, like how far are you from this person, that person. If you think about what that creates, you know, obviously, we have a tremendous dataset in terms of where are our users. For example, if you're gonna go to Barcelona, you know, what's the neighborhood in Barcelona that you wanna be in if you're a gay man?
We know where all the users are in Barcelona, so if you think about our ability to potentially sell, you know, 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. You know, that's one example. I think another could be, you know, are there events? Are there destinations? You know, there's gay ski week that happens in Utah. Like, could we do some kind of a partnership there? You know, 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. Like we are better than Pinterest, Instagram, you name it.
You know, how do we take that engagement and then think about ways that we could expand that to offer our users? 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 learn through our users.
We know that our users purposely use the app when they're gonna travel somewhere in order to figure out where they wanna 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." 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.
Yeah. Transitioning somewhat, 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? What are you guys trying to unlock there?
The perfect example to answer that question is our, is our main, you know, Cascade, which is the page you see when you open the app. It's got the profiles on it. 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. We've reduced it by 80%. You know, we spent a bunch of effort in the last 12-18 months really working to recruit and to bring better engineering talent that can undertake this redevelopment and this redeployment, you know, and it makes the app, you know, faster. Obviously, there's still bugs and things that need to be squashed that we're getting at.
Importantly, it also does two things. One, unlocks AI stuff for us. As we think about EDGE and our ability to do things there, as we think about, you know, what can we do? What are the capabilities? You know, we improve that. Then, you know, secondarily, you know, it allows us to modernize the app. 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, you know, the apps that we're used to using that are just seamless today, whether you're talking about, you know, I don't know Uber or, you know, Instacart or something like that. Airbnb. Just these very seamless, intuitive experiences.
A lot of the code redesign is allowing us to start to think about product, which is, you know, the, the kind of hand-in-glove relationship. Which is how do we actually make this experience better, modern, feel more intuitive, you know, be something that really is a, is a rich experience for the user. You know, that's gonna come over the next, basically, year and a half. I think it's gonna take us this year and probably most of next to get all of that done, and it's gonna 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.
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. Yeah.
Talk me through that. Talk me through the drivers and then what did change? Explain it to me.
Appreciate, yeah, the question. 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 2022. 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 potential to take the company private this fall. You know, the on the flip side of that, the coming out of the transaction, you know, really it's a few things. Number one, you know, I think we had some changes at the board level I think are positive. We have a great lead independent director.
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 to take the company private without an invitation from the board and, you know, the majority of our minority shareholders voting in favor of it. I think the governance is just much more positive for, you know, investors that might be looking to take a position going forward, so pretty happy about that.
With that, John, we're out of time.
Thank you.
Thank you so much.
Appreciate it.