Grindr Inc. 2026 Q2 Earnings Call

Hello, welcome to the Grindr earnings call for the second quarter 2026. Today's call will be led by Grindr's CEO, George Arison, and CFO, John North. They will make a few brief remarks. Then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon. This is available on the SEC's website and Grindr's investor page at investors.grindr.com. Before we begin, I will remind everyone that during this call, we may discuss our outlook, future performance, and future prospects. You should not rely on forward-looking statements as predictions of future events. These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today.

Some of the risks that could cause our actual results to differ from views expressed in our forward-looking statements have been set forth in our earnings release and our periodic reports filed with the SEC, including our annual report on Form 10-K for the year ended December 31st, 2025, or any subsequently filed quarterly reports. During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of these non-GAAP financial measures to their most closely comparable GAAP financial measure, are included in the earnings release we issued today, which has been posted on the investor relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George.

Thanks, Tolu, hello. Thank you everyone for joining us today. Grindr delivered another outstanding quarter and continued to build on the momentum we have established over the last three years. Our users are responding even better than we expected to the significant product work underway across the app, driving strong organic momentum and exceptional second quarter results. Today, we are raising our full year guidance to approximately $540 million in revenue and approximately $232 million in adjusted EBITDA. What excites me most is that we are able to invest more aggressively in the future of Grindr than ever before while creating stronger operating leverage. With AI, we are delivering on our product roadmap and expansion efforts with less headcount growth than we expected, particularly in engineering. As always, I encourage you to read our shareholder letter for greater detail. I believe three areas best explain the quarter.

First, AI. Over the last several quarters, we have been terraforming Grindr into an AI-native company, which is changing how we build software. Engineers are increasingly architecting, directing, and reviewing AI synthetics rather than writing code themselves. As a result, our conservative estimate is that engineering output increased approximately 2.5x from July 2025 to April 2026 with roughly the same size team. Before GenAI, we estimate that producing that much output would have required roughly 200 additional engineers and about $60 million in annual cost. This is also assuming we could have found that quantity of exceptional engineering talent, which has historically been the true limiting factor. With this technological evolution, our exceptional engineers can now focus more of their time on creativity, judgment, and architecture while AI increasingly handles implementation. That is why I call this AI terraforming. It is a bit like creating oxygen on Mars. Second, product. Many of the product initiatives we have been investing in are beginning to reinforce each other.

The free experience continues to improve. AI and better data are making the product more useful. Users are increasingly feeling the benefits of the work we have done over the last several years to simplify and re-architect our code base. We also continue to make strong progress in both Right Now, which remains one of the most important opportunities to strengthen Grindr's core use case, and EDGE, our AI-enabled tier that will be a key driver of our revenue growth in 2027. Third, Madonna. Even a couple of years ago, no one would have expected one of the world's biggest cultural icons to launch a major album through Grindr. Today, that feels natural. That incredible moment in Times Square, where an estimated 50,000 people showed up after hearing about Madonna's performance just 30 minutes earlier through Grindr, demonstrated our unique ability to bring together product, culture, commerce, and real-world experiences in a way that no other social connections platform can.

We are showing that as the global gayborhood, Grindr can play a much larger role in gay life without moving away from our core. In fact, the strength of our core is what gives us the opportunity to do more. Overall, thanks to our team and our users, our business is firing on all cylinders. I continue to believe the opportunity ahead for Grindr is much larger than the market has historically given us credit for. Thank you to our shareholders for your continued support. With that, I will turn it over to John for detailed financial results.

Thanks, George, and hello, everyone. Second quarter was an outstanding quarter across the board, as George highlighted. Revenue grew 33% year-over-year to $138 million. Adjusted EBITDA was $58 million, representing a margin of 42%. The performance was driven by continued momentum in core app revenue, reflecting strong conversion, ARPU, and user retention, as well as robust ads performance. App-based revenue grew 30% year-over-year to $113 million, supported by solid demand across our XTRA and Unlimited tiers and strong consumables performance. Advertising revenue grew 44% to $25 million, driven by strength in programmatic advertising performance and the continuation of our large year-long direct brand campaign. We continue to expect advertising revenue to run in the mid to high teens as a % of total revenue for full year 2026.

This comes even as we are balancing a disciplined approach to third-party ad loads in connection with our priorities around user experience and ecosystem health. As previously discussed, we expect ads in a percentage of total revenue to normalize back near the historical 15% range in 2027 and beyond. Adjusted EBITDA grew 27% year-over-year to $58 million, or a 42% margin. This strong result reflects top-line outperformance, combined with the operational leverage unlocked by our AI terraforming efforts. Operating expenses excluding cost of revenue were $71 million, up from $53 million in the second quarter of last year, with a portion of the uptick driven by one-time marketing expenses for our Madonna partnership. Our strong revenue growth more than offset this investment. Turning to share repurchase activity. During the second quarter, we executed another accelerated share purchase for an upfront payment of $60 million.

As of quarter end, this and certain other repurchase transactions remain in progress, with settlement expected to be completed in the third quarter. We have approximately $300 million remaining under our $900 million share repurchase authorization and will maintain flexibility to buy back shares opportunistically. Given our strong growth through the first half of the year, positive user response to core app improvements and higher than anticipated AI-driven operational leverage, we are raising our full year 2026 outlook today. We now expect full year revenue to be approximately $540 million, up from $535 million, and adjusted EBITDA to be approximately $232 million, up from $227 million.

In the second half of the year, as we have previously discussed, we expect growth rates will naturally moderate in the third quarter and fourth quarter as we anniversary the global rollout of our subscription pricing changes and lap more difficult comparisons from the second half of 2025. Overall, we are pleased with how the business is performing. The structural leverage we're seeing allows us to reinvest in high ROI growth initiatives like EDGE, while both returning capital to shareholders and expanding our bottom line. We intend to carry this momentum through the rest of the year. With that, operator, please open the call to questions.

Hi, Nathan. Good to talk to you. Right Now was the first product that we started working on after the current management team came into place with the idea that people who join Grindr join for many different intentions. Users that wanted a more immediate or soon-to-happen connection that's more casual were feeling like they couldn't have as easy of a time finding other people who wanted that, given that some people didn't want that. Right Now is a way for people to express that need directly and connect with other people who have that interest. We have very good usage on Right Now. We're really happy with how much traction that product has gained over the last year and a half or so. At the same time, we've gotten feedback on things that users want to be different.