• Total Revenue: Increased by 27% year over year to $89 million.
• Adjusted EBITDA Margin: 45% for the quarter.
• Direct Revenue: Increased 25% year over year to $77 million.
• Average Monthly Active Users: Increased 8% to 14.6 million.
• Average Paying Users: Increased 15% to 1.11 million.
• Payer Penetration: 7.6% for the quarter.
• Average Direct Revenue per Paying User: Increased 8% to $23.07.
• Indirect Revenue: Grew 43% year over year to $12 million.
• Operating Expenses (Excluding Cost of Revenue): $38 million, up 7% year over year.
• Adjusted EBITDA: $40 million, compared to $33 million a year ago.
• Cash and Cash Equivalents: $39.1 million at the end of the quarter.
• Gross Leverage Ratio: 2.1x based on the last 12 months of adjusted EBITDA.
• Free Cash Flow: Positive $27.9 million, with a conversion rate of 69% from adjusted EBITDA.
• Revised 2024 Revenue Growth Guidance: 29% or greater.
• Expected Adjusted EBITDA Margin for 2024: 42% or greater.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Grindr Inc (NYSE:GRND) reported a 27% year-over-year increase in total revenue for Q3, reaching $89 million.
• The company saw a 15% increase in average paying users, bringing payer penetration to 7.6%.
• Advertising revenue exceeded expectations, growing 43% year-over-year due to increased demand from third-party partners.
• The launch of new features like the 'right now' mode and the 'interest tab' significantly boosted user engagement and conversion rates.
• Grindr Inc (NYSE:GRND) generated positive free cash flow of $27.9 million, with a conversion rate of 69% from adjusted EBITDA.

Negative Points

• Operating expenses, excluding the cost of revenue, increased by 7% year-over-year to $38 million.
• The company is still addressing technical debt, which includes legacy bugs and app stability issues.
• There is a risk that some new products and features may not perform as expected, given the company's approach to product development.
• Grindr Inc (NYSE:GRND) faces challenges in balancing free and paid user experiences, which could impact user satisfaction and conversion.
• The company acknowledges that some features may not be as successful as others, which could affect overall product performance.

Q & A Highlights

Q: Are there opportunities to accelerate investment and timelines given the recent performance? A: George Arison, CEO, emphasized that Grindr aims to exceed targets and is happy with the current product roadmap. The company is on track or ahead of schedule with its public plans and is also working on additional features not yet disclosed. The focus is on scaling products and ensuring user satisfaction before monetization.

Q: What are the most exciting learnings from the "Right Now" feature rollout? A: George Arison, CEO, noted that "Right Now" is designed for users wanting immediate connections. The feature is being tested in two markets, with positive re-engagement metrics. Future updates will include photo sharing in group chats. The focus for 2025 is on scaling engagement rather than monetization.

Q: Can you discuss new ad formats and monetization progress within indirect revenue? A: Vandana Mehta-Krantz, CFO, highlighted a 43% year-over-year growth in indirect revenue. Grindr has enhanced ad formats, including native ads and interstitials, and opened more third-party ad partnerships. The company is early in its ad journey but confident in continued growth.

Q: How is Grindr balancing pricing and merchandising with user sensitivity to monetization changes? A: George Arison, CEO, explained that Grindr maintains a robust free offering, which is crucial for attracting new users. The company is strategically shifting some features to paid tiers to increase value for paying users while continuously improving the free user experience.

Q: How is the weekly unlimited tier affecting payer conversion? A: Vandana Mehta-Krantz, CFO, reported that the weekly unlimited tier is driving higher conversion rates with minimal cannibalization of existing tiers, contributing positively to overall revenue growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.