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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong financial performance, with significant revenue growth and net income increase. Product updates and AI integration are promising, enhancing user engagement and monetization. The Q&A session revealed positive user engagement trends and international growth opportunities, despite some lack of clarity on specifics. The market strategy and financial health appear robust, with a focus on innovation and expansion, suggesting a positive stock price movement, especially given the company's market cap.
Revenue Total revenue was up 30% year-over-year to $116 million. This growth was largely driven by outperformance in the ads business, with strong results from international third-party advertising partners, and strength in the unlimited tier of the core app.
Adjusted EBITDA Adjusted EBITDA of $55 million was up 37% year-over-year, resulting in 2 points of margin improvement to 47%, a record for Grindr. This reflects strong flow-through of revenue outperformance to the bottom line and higher capitalized product development costs.
Direct Revenue Direct revenue grew 25% year-over-year. This was driven by the introduction of additional duration options and feature updates in the unlimited tier, alongside the ongoing success of the weeklies product across subscription tiers.
Indirect Revenue Indirect revenue was up 56% year-over-year. The ads business was the primary driver of this outperformance.
Net Income Net income for Q3 was $31 million or $0.16 per diluted share, compared with $25 million or $0.09 per share a year ago. This increase reflects the overall revenue growth and operational efficiency.
Free Cash Flow Approximately $51 million in free cash flow was generated in the third quarter. This reflects strong operational performance and efficient capital allocation.
Paying Users The average number of paying users in the quarter was 1.3 million, with an improved penetration rate of 8.6%. This growth was supported by the success of subscription tiers and feature updates.
Monthly Active Users (MAU) Average MAU totaled 15.1 million, reflecting strong user engagement and platform growth.
Average Revenue Per User (ARPU) ARPU was $24.70, indicating effective monetization strategies and user value capture.
Product Expansion: Grindr has expanded its product service area significantly over the past three years, introducing features like Albums, Boost, Travel Boost, Viewed Me, and Right Now. Additionally, Gen AI-powered features such as chat summary, discovery, and profile recommendations have been added.
Subscription Price Testing: Grindr tested subscription price increases in select markets with minimal impact on the paying user base and high retention rates. A global rollout is planned for early next year.
AI-Powered Premium Tier: A new AI-powered premium tier targeting power users is being tested in one country, offering advanced features and expected to generate meaningful revenue starting in late 2026.
Demographic Insights: Grindr disclosed that users aged 18 to 29 make up the majority of its global user base, driving engagement and positioning the platform for long-term growth.
Revenue Growth: Total revenue increased by 30% year-over-year to $116 million in Q3 2025, with adjusted EBITDA up 37% year-over-year to $55 million, achieving a record margin of 47%.
User Metrics: Grindr reported 1.3 million paying users in Q3 2025, with an average MAU of 15.1 million and ARPU of $24.70.
Capital Allocation: Year-to-date, Grindr repurchased 25.1 million shares for $450 million, with $50 million remaining under the current authorization.
Private Takeover Proposal: Two large shareholders, Ray Zage and James Lu, proposed taking Grindr private. A special committee has been formed to evaluate the proposal.
Regulatory Risks: The company acknowledges that forward-looking statements are subject to risks and uncertainties, and actual results could differ materially. Specific risks are set forth in their earnings release and periodic reports filed with the SEC.
Competitive Pressures: The company is testing subscription price changes and introducing a new AI-powered premium tier, which could face challenges in user adoption and retention, especially in competitive markets.
Economic Uncertainties: The company’s revenue growth and user retention could be impacted by broader economic conditions, particularly as they test higher subscription prices and premium tiers.
Strategic Execution Risks: The company is undergoing significant product and pricing changes, including global rollout of subscription price increases and a new premium tier. These initiatives carry risks related to execution and market acceptance.
Dependence on Advertising Revenue: The company’s Q3 revenue growth was significantly driven by outperformance in its ads business, which is not expected to repeat in Q4, indicating potential volatility in this revenue stream.
Shareholder Proposal to Take Company Private: The proposal by two large shareholders to take the company private introduces uncertainty, as the board evaluates the proposal with independent advisers.
Full Year 2025 Adjusted EBITDA: Grindr has increased its expectation for full year 2025 adjusted EBITDA to a range of $191 million to $193 million, implying a margin greater than 43%.
Revenue Growth Outlook: The company reaffirms its revenue growth outlook of 26% or greater for 2025.
Subscription Price Changes: Grindr is testing subscription price changes in select markets, with plans for a global rollout early next year, following positive results from initial tests.
AI-Powered Premium Tier: The company is testing a new AI-powered premium tier targeting power users, with a planned launch in late 2026 and expected revenue acceleration in 2027.
User Demographics and Engagement: Grindr highlights strong engagement among users aged 18 to 29, who make up the majority of its global user base, positioning the platform for durable long-term growth.
Share Repurchase: Year-to-date, we've repurchased 25.1 million shares of our common stock for approximately $450 million, leaving us with $50 million remaining under our current authorization as of September 30. Our Board regularly reviews capital allocation plans, including options for returning excess cash.
The earnings call reflects strong financial performance, with significant revenue growth and net income increase. Product updates and AI integration are promising, enhancing user engagement and monetization. The Q&A session revealed positive user engagement trends and international growth opportunities, despite some lack of clarity on specifics. The market strategy and financial health appear robust, with a focus on innovation and expansion, suggesting a positive stock price movement, especially given the company's market cap.
Grindr's earnings call highlights strong financial performance with a 27% revenue growth and a positive net income swing. The international expansion and advertising platform development are promising, despite challenges. The share repurchase program and strong free cash flow add to positive sentiment. While there are risks, such as stock-based compensation costs and CFO transition, the overall outlook is positive, especially with the market cap indicating a likely reaction in the 2% to 8% range.
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