Grindr Inc.

and 28 and beyond. By the way, none of this is new. This is what we had set out to do when we talked about it in Invest Today. We're just executing on it at roughly the timeline that we had expected we'd be doing.

And George, I'll just hop in. I mean, on the longer term margin question, that's really not the primary focus for us. There's certainly a world in which we could continue to turn levers within the business to improve the EBITDA margin, whether it's more payer conversion, whether it's getting more productivity out of people, whether it's figuring out direct payments so we don't pay so much in fees to the app store. There's things that can be done, but that's not been the primary focus. Growing the revenue base overall and diversifying the revenue base in different ways is where the focus is, and we're consciously investing and taking... you know, a view to the future, you know, both this year and beyond to continue to create the growth avenues for Grindr, which is more important to us. So I would much rather see an improving growth rate as opposed to an improving margin percentage.

Thank you. Our next question comes from Andrew Marrock at Raymond James. Andrew, you may now unmute your line and ask your question. Thank you.

Hi, thanks for taking my questions. Maybe first on the age assurance issue, we've seen some other companies in the digital media ecosystem kind of have variable results with how they are impacted by age restrictions or age checks. So I guess, what are some of the key learnings that you've seen in the geographies where they've been required so far, and how can they inform future potential implementations to kind of minimize the friction of engagement or sign up based on the particular concerns of the Grindr community. And then maybe second on advertising, great to hear about the full year campaign. I guess, was there anything in particular that got this company to come on and make a big campaign or was it just kind of fortuitous timing and how the pipeline of those bigger deals might be? Thank you.

Thanks for the questions. On age assurance, I always want to start by saying Grindr is an 18-plus product. We don't want anybody under 18 using Grindr, and we are really strong proponents of app store or phone-based age verification. And we've endorsed federal legislation that would mandate that at the national level. And we've supported legislation in California and Texas and Utah that's achieved that as well. And I think that's really, really important. I'm a dad, and I don't want my six and a half year olds being on Grindr, and I don't want them touching Grindr until they're 18, and that's something we believe in really, really strongly. The approach that some of the countries have taken internationally at mandating age verification at the app level comes with a lot of challenges to the user. It means that a user has to validate their age in multiple apps, which obviously increases the risk that their information will come out. And we have a set of users, because something's leaked, et cetera, and we have a set of users who are extremely privacy conscious. Oftentimes there are people who are still in the closet, who are very, very discreet, and these adult users, and I want to be very clear, we're talking about adults, just simply choose to drop out of the process before they go through the age verification flow. We actually have a pretty good age verification flow. We use facial recognition to determine if you are of age first, and only if that technology is unable to determine that you are over 18 do we then put you to a secondary flow where you have to show ID. But even that process alone gets some people to drop off, and these are adults, not people who are underage. And so we think that the alternatives to that, which is the app store or mobile device-based verification is a much better approach, and that's what we're going to keep advocating for, but obviously will comply with laws as they happen. It has impacted Mao growth. To be very clear, Mao is still growing very nicely, actually, but Mao would have grown by an amount larger than what it's going to grow this year if these rules were not in place in some of the countries. And I would expect more countries will adopt rules that are similar to this, though, again, we're going to continue advocating for app store or device level verification. On advertising, so maybe to step back a little bit on the ads business overall before I answer this specific question. We've had incredible success with that business. We went from a roughly $30 million business in 2022 that was decelerating and, frankly, didn't really have a path to grow to a business that, based on guidance that we've shown you, is going to be over $90 million this year. So that's tripling the business in a four-year period, which I think the team deserves nothing but huge congratulations for that. And we've said at Investor Day, we want advertising business to be kind of roughly the same percentage of revenue as it was in 2022, which is roughly 15%. That meant that the ads business had to grow faster than the core business. And again, it's achieved that. So I'm very, very proud of what the team has done. At the same time where I've probably been most disappointed in my time at Grindr is that getting the direct ad business where brands come and work directly with us has not been as successful as, frankly, I would have liked it to be. We hear from brands a ton that they want to reach our type of audience that is tastemaking, that has high disposable income, etc., but they're not willing to put dollars to work on Grindr. And that's still work that we have to do from the brand perspective, on our brand. That's the work that we have to do from technology perspective in creating the technology that advertisers want us to have in the application to help them advertise as well as from data perspective like what are they actually getting in return. Grindr is a great place to advertise from the point of view of building your brand. It is not a direct response type of a channel because people are in a different mindset when they're on Grindr. They're not actively looking to kind of transact on something else when they're in the app. And so that obviously creates a special way of pitching the brand perspective of it. People are very used to buying direct response ads, but less so for what we offer. I'm still very bullish that over the long term, we will win in that direct advertising business. But I think it's going to take us a really long time. That doesn't mean that the ad business cannot grow. We expect the ad business to keep growing in the years to come and to stay at that 15% of total revenue baseline. that we had in 2022 and that we've aimed to maintain. So there's still a ton of growth for the ad business. I think we'll continue to see a ton of positive results from rewarded video, which actually makes the user experience in the app better as well. So that's one of the things that we are seeing a lot of traction with. With this particular advertiser, we had been working on them for almost two years, and they had been advertising with us during that period of time as well. It's the same advertiser that had a big push in Q4 of 2024, you might remember, when we had a big uptick in revenue as a result of that. So we have a relationship with them. We're really happy that they're advertising, but I wouldn't expect something similar to repeat in 2026. Hopefully, we can create more opportunities for bigger direct advertising partners in 2028 and beyond. Thank you.

Appreciate it.

Thank you. Our final question today comes from Logan Worley at TD Cohen. Logan, you may now unmute your line and ask your question. Thank you.

Hey there, thanks for the questions. First, can I ask about discrete mode and kind of how you think users will engage with that feature looking forward? Do you expect this kind of opens up a new use case with the app or maybe just changes how people engage with the app? And then secondly, on your plans for incremental hiring in the middle of the year, where do you expect that headcount efforts will be directed towards within the business? Thanks.

Great. Well, I'll take the first one and then maybe John and I can split the second one. So on discrete mode, discrete is for right now specifically. So it's not to be discrete on the app overall. We already have a way for people to browse the grid without actually showing up on the grid, if that's what they want. And some people do want that, but this is for right now. What we heard from a lot of users who we surveyed or got feedback from, was that they want to post in right now, but they don't want their posting in right now to be connected to their profile on Grindr. Because a lot of people have friendships on Grindr, and for discretion reasons, they don't want to be telling everyone they know, hey, I'm posting in right now. which is perfectly reasonable, and so the discrete mode has enabled that capability where a person can post on RightNow, will receive messages from other people who are in RightNow or who are interested in RightNow, but you will not be able to see the connection to your regular profile, and that way you kind of keep that discretion. You know, that's something that people really wanted. I think it's going to be a good feature in making right now a better product for people who want that. But there's a ton that we're doing right now that I'm not yet in a position to publicly talk about that I think will keep making that experience better and better for people. We have a very large percentage of Grindr users that use right now on a... multi times a week basis, and so we're really happy with that, but we still think there's more that we can do to make it even better. When it comes to hiring, we've been behind on the number of people that we need for quite some time. I'm known to run a very lean operation. Grindr has over 2.7 million revenue per head at the end of last year, and so we felt that we need more people. And we had a fairly aggressive hiring plan for the year. We are probably – we're doing very well on hiring, but I don't think we're going to end up hiring everyone that we had envisioned, and that's reflected in the EBITDA margin – or in the EBITDA raise that we gave for the year in this. One of the reasons why we won't probably hire everyone is because how we work is fundamentally changing. We've said in the past that our engineers are self-reporting that they are 1.5x more productive than they were nine months ago. We now have teams on the product team that are being, you know, small teams of four people are able to produce as much work in a week as teams of 10 or 20 people would have previously produced in the course of a month. And that's all because of AI. The roles of engineer, product manager, designer, data scientists are all kind of collapsing in that now they are all doing all parts of that work, meaning a designer can code and function as a product manager, or a product manager can code and also do design. And so terraforming this business to be an AI-native business is really changing how we work and the amount of productivity that you're getting from the teams. And as a result, given how lean we are, we don't have the same problems that a lot of other companies have. And we still need more people in terms of hiring, but we do want to be judicious in how we hire and and who we bring on board because we want them to be much more AI native to fit in this new mode of working that we are now evolving inside the company. I don't know, John, if you want to add anything to that.

I would just say the 39% to 42% EBITDA margin is healthy. As we talked about on an earlier question, even as a CFO, if you told me I could grow revenue or I could grow margin, I would choose revenue right now. I think that margin optimization isn't the most important thing. To George's point, the guidance and the plan that we had in place contemplated hiring and investing in the future and that it was going to impact margin as a result, which it, you know, which it did, but also to his point, you know, we've been able to increase that because the plan has changed as we've evolved. And I do also echo the sentiment that we're investing in the business in other places, which would include like investing in marketing efforts and spending more money there. And you see us doing more, I think, culturally relevant events like the White House Correspondents Dinner or partnering with Madonna on her album launch. And, you know, those are things we're doing. that are marketing investments outside of attracting users to the app. They're really about improving our cultural relevance and what we bring to the community and to your user base overall. And we've, you know, been working our way through that, testing those things. And then I think as we've achieved success in some of these events and these, and these touch points that become these cultural flashes we have more confidence to invest some more money in marketing because it's working. And so those are the kinds of things we're thinking about and balancing. And again, You know, certainly there's a case to be made to just optimize for margin all the time, but that really doesn't give us the trajectory to execute on the vision that George has laid out to really continue to round out the app in many different ways and to expand the number of modalities in which we can reach revenue and reach users.

Great, thank you. That concludes today's call. Thank you for joining. You may now disconnect.