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spk04: you know, slowly launch it in a few more markets to kind of parallel test and get user feedback in those as we work on scaling this product through the end of next year. And next year is not going to be focused on monetization with right now. It's going to be very much focused on scaling engagement and getting as much as good of a product experience as possible set up for the user. And then I'll turn over to Vanna for the last question.
spk00: Hi, Nick. Just to follow up on the ads, so yes, we've had a strong quarter across really all of our business lines, including indirect revenue, which grew at 43% year over year. As you know, ads are a differentiator for us because of our robust premium offering and our ability to really monetize here. We also have fairly nice margins on this because there's really no third-party payments to the App Store or Google. And so when we joined, I'd say the ad business had been a little underinvested, both from a tech Susy King, perspective and from a sales talent perspective, both of those have been addressed and are in the process of being being addressed we've opened up more third party ad partners that demand has been able to be filled by us. Susy King, And we've also enhanced our ad formats and what I mean by that is really native ads we're starting to think about rewarded video and we're also having more interstitials and those interstitials. are slightly more complicated and therefore drive a little bit higher CPM. So we're still really early in our journey, I'd say, for ads, but we feel pretty confident that we'll be able to continue to show some real returns here.
spk04: I mean, even little things like the ordering of what would appear in the ad, so our order had been set up where a house ad would appear first and then an external ad would appear second, which obviously does not make sense from the perspective of making money on the ad. And so we switched that, which is obviously not a major thing, but actually had a very positive impact. So it's just an area where huge opportunity and not a lot of attention had been paid. And so we did a lot of work last year to set up the business well for this year and a lot more work is being done this year to move us into a successful growth year for ads into 2025. Thanks, George.
spk03: Thanks, Pana.
spk01: Your next question comes from the line of Andrew Merrick from Raymond James. Your line is open.
spk02: Thanks for taking my question. You mentioned pricing and merchandising being key contributors to direct revenue growth this quarter, and I think you touched a little bit on it in your last response, but just want to be maybe a bit more explicit, I guess. How are you kind of balancing that move forward in pricing and merchandising versus, I think you've mentioned in the past that historically, given an under-monetized service, your user base might be a little bit more sensitive to monetization changes in the early stages as they start to take hold. So I guess, how are you philosophically balancing that, and how much room do you think there still is to run on pricing and merchandising optimizations and improvements? Thanks.
spk04: Totally. So thanks for the question. Definitely have a very robust free offering, and that's something that's different about Grindr versus really anybody else in the space. You can use Grindr fully and have very few limitations and never pay for the product. That obviously comes with a significant benefit, which is that people join Grindr when they turn 18 as the primary product, and we don't have trouble attracting new users as they kind of mature and become adults. And I think that's really important and acknowledging that is crucial. And one of the things that you learn about this space as you start working is that free users are just as important as paid users because paid users want to meet with free users. And so having a very robust free user base is crucial. That said, you know, there is always a discussion here around where should the line be between a free user experience and a paid user experience. And some of the things that we are tightening, frankly, are things that some people call them back doors, meaning like no one has to be playing on them being that way, but they just kind of happened. And then others are where we actually having a discussion like, is this value that is being offered so significant that that should be part of our paid tier? So one of the things we did this year is move a change of how many messages a user, a free user, could send to other users that they found through the explore feature. So we have a feature where you can go on a map, put that map in a different location from where you are, and see who is on the grid in that particular location. And that can be either, you know, I'm in Palo Alto and I can look up people in San Francisco, or I'm in Palo Alto and I can look up people in New York. You can, you know, if you're not a paying customer, historically, you're allowed to send three messages per day to users through Explore. We've now limited that to just one. And the reason is that we think that that has an incredible amount of value. And we believe that that value should sit with our paid tiers. And the benefits there were pretty significant. And obviously, we did see an improvement in conversion from that change. So we believe there is a fairly long list of things we can do that are like that, that result in the value in paid tiers increasing while maintaining a really robust free product offering. At the same time, we do continuously invest in making the free user experience a lot better. Building the interest tab is not limited to a paying user. That's something that free users have as well. And we've seen a really significant jump in Vue.me It's a feature that existed, but by changing where it's located and how users engage with it, we saw a big jump in usage, which is fantastic. us moving to a different chat architecture um obviously was something that was offered to everybody and that significantly improved the user experience as well us addressing bugs in the product obviously solves everyone's problems and and makes the free user experience a lot better and there's a lot of stuff on the roadmap both things that we publicly talked about and things that we are working on that will be going to come in the future that we've not discussed that is built in a way that free users can enjoy as well. That's really important to me. It's really important to the product team that the free experience remains very, very robust. But we do think there are ways in which we can deliberately think about should a specific feature set or a value that exists in the product sit on the paid side and shifting those makes sense. And we think there's plenty more opportunity there for us to continue doing that. We're not going to be so progressive with it. We're going to do it in a very thoughtful manner. I guess I'll add one last thing. This is something that people who look at Reddit know. We did experiment with changing how taps worked in the product where you could only see taps from a certain number of hours and otherwise you'd have to be a paying customer. And that's an area where we did run a test and then we decided that at this time it did not make sense to make that change and we rolled it back and did not go global with it, right? So there will be things that we will test in terms of changing the line between free and paid that we might not decide to pursue fully based on the testing that we run.
spk00: Just one last thing to add, Andrew, and that would be a simple merchandising change of suggesting what you saw on ad, and if you wanted to get a no ads upsell, We saw a nice conversion into extra weekly just with that simple pop-up message.
spk02: Thank you for all the color there, really thorough. And then just maybe a very, very quick one. There was a competitor out today who had noticed some changes or potential disruptions in App Store rankings around what they believe to be the iOS 18 launch. Is that anything that you had seen or any evidence that the new iOS may have thrown a wrench into things?
spk04: I don't have anything to add to that yet. Obviously, we do track our ratings quite closely, but with the new iOS function, we've not noticed anything.
spk00: Yeah, we saw that in a transcript as well, and it didn't bubble up to us, but we'll definitely take another look.
spk02: Gotcha. Appreciate it. Thank you.
spk01: Your next question comes from a line of John Blackledge from TD Cowan. Your line is open.
spk03: Great. Thanks. A couple questions. First, on the weekly unlimited tier, do you see that driving higher payer conversion, or is it more so driving existing payers to switch to the tier, or is it a mix of both? And then I have two follow-ups.
spk00: Sure. Thanks for the question. We have seen conversion rates continuing to increase and we do track cannibalization very closely. And so what I think you're asking is how was the cannibalization as you brought out this new duration for unlimited weekly? And I would suggest that we were pleasantly surprised that the cannibalization was very low. And so it is helping drive conversion rates.
spk03: Okay. That's helpful. And George kind of just touched on this a little bit, but the top of the funnel user growth remained pretty strong, up 8%, just kind of clicking back on some of the key drivers of that sustained MAU growth and then any geos that stood out in terms of the MAU growth. And then the final question for me is, and you mentioned it, you know, kind of in the release is addressing the technical debt. And just if you can just talk where a grinder is in terms of addressing that technical debt that accrued from prior management teams and, you know, kind of how much has the team, the current team achieved in fixing the technical infrastructure?
spk00: I'll start with Mao. And so from a Mao perspective, as you noted, yes, we are at 8% growth. And that, we're happy with that number. A couple of things that are working in our favor, and one of them is the, from the macro level, we continue to see more and more countries being more open At a micro level, we see more and more people identifying as fluid. And so that's helpful as well. We're actually happy with a couple of things with respect to focusing on a great user experience. And so that focusing on a great user experience helps keep people in the app, bring people in the app. And so I would suggest that the bug fixes, for instance, are a great user experience and therefore helping our mouth. Secondly, I'd like to just mentioned that all the features on our product roadmap also help bring people in and keep our MAO at good numbers. And so all those things are working in our favor for MAO growth.
spk04: Yeah, I think one thing I lied on MAO is we do know that there are users kind of on a mid-stage of their lives and later that might have had a Grindr account, might still have a Grindr account but don't use Grindr as much as they used to. One of the reasons is that they want to, they move into a stage of their lives and they want to settle down and find a long-term partner. And the fact that we don't have a lot of the features for long-term relationships make them, you know, less excited about using Grindr for that purpose, even though we also know that Grindr is the primary way in which people find long-term partners in the gay community around the world. We do believe that there is a way to better engage those users as we build the relationship use case, which obviously is something that we're working on and that's on our product roadmap. I think while that's not being built with the idea that, hey, it's going to help Mao, we think that inevitably it will have an impact on Mao as well because of the ability to re-engage that older cohort. When I use older, I do that a little bit in my age cohort. So it's not necessarily very old, but older versus what you'd expect on a product like us. And then with regards to technical debt, Grindr is a product that's been around for a long time now. It's going to be turning 16 years old in March. In the totality of years, that's not very long. In the world of mobile technology, that's actually a very long time because the mobile transition only happened in the last 20 years. And so as a foundation, Grindr was built with technology that made a lot of sense to use when it was built, but it's not necessarily how you build technology today. We have done a lot of work over the last really four plus years, right, since 2020 to address the technical debt that was inherited. For example, on the back end, the technology that underlines the product today is fundamentally different from what was there when the folks who bought Grindr out from Chinese ownership and remain very large shareholders today kind of completed that purchase. And so that's in a really strong place. Moving to new architecture was another really big transition that we needed to make. In the mobile code base, right, so this is the Android and iOS code base, there are still things that if you were building the app from scratch today, you would do differently. And that causes challenges because, for example, the architecture is much more monolithic in nature. And so sometimes you're working on a new feature in one part of the code base and you run tests related to that part of the code base based on that new feature and you don't find any bugs. But then you discover after you release the feature that it's impacting something in a totally different part of the code base. and causing a bug, right? And modern apps like ones built recently wouldn't be built that way. And so you wouldn't have that kind of a bug situation. So we are working through that. And the decision that was made four years ago, and I think the right decision was to say that we will address these changes in the code base as we work through them, meaning as we make changes and add features, we then also rewrite parts of the code base for mobile. And so that'll kind of come along on its own and it will take some time. We did have a lot of bugs in the product that, you know, kind of had been accumulated over time. And what we did is run a two-week bug bash You know, as a technology builder, I actually don't love that because bugs should be bashed all the time. But there had been this accumulation of bugs. And so I felt like it made sense to just stop product development for two weeks and just work on bugs. As you can imagine, it's a pretty expensive process when you have, you know, 80 plus people working just on a backbash. Um, but, uh, the results were really positive. We bashed more than 75% of all the bugs out there. Um, and that I think will have a very direct. Positive impact on the user experience, uh, in the, in the product. Uh, and so I think it was very much worth doing and frankly speaks to the commitment that we have in ensuring that the product is a very high quality and also that we need to build product. with an eye towards having high quality right we should not ship things that are potentially problematic and cause more bugs and so i think having that bug bash was a very positive thing for us and we'll continue investing in ensuring that the product is of a high quality as time goes goes on thank you and we have reached the end of our question and answer session this concludes today's conference call we thank you for your participation you may now disconnect
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