Grindr (US:GRND)2025-05-09 20:33PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Grindr reported a significant financial turnaround in Q1 2025, posting $27.0 million net income and 24.7% revenue growth, while strengthening its balance sheet through warrant redemption Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $679.4 million, with stockholders' equity shifting from a deficit to a positive $319.8 million, primarily due to warrant liability elimination Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $255,868 | $59,152 | | Total current assets | $319,714 | $116,984 | | Total assets | $679,445 | $479,090 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $75,784 | $67,809 | | Long-term debt, net | $272,021 | $275,580 | | Warrant liability | $0 | $252,178 | | Total liabilities | $359,629 | $610,660 | | Total stockholders' equity (deficit) | $319,816 | $(131,570) | Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) For Q1 2025, revenue grew 24.7% to $93.9 million, resulting in a net income of $27.0 million, a significant improvement from a prior-year loss, aided by a gain on warrant liability fair value Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $93,938 | $75,345 | | Income from operations | $25,392 | $19,256 | | Gain (loss) in fair value of warrant liability | $9,905 | $(18,680) | | Net income (loss) | $27,019 | $(9,406) | | Diluted EPS | $0.09 | $(0.05) | Condensed Consolidated Statement of Cash Flows In Q1 2025, operating activities provided $23.8 million in cash, while financing activities generated $173.6 million, primarily from warrant exercises, leading to a $196.7 million net increase in cash Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $23,793 | $20,449 | | Net cash used in investing activities | $(628) | $(1,148) | | Net cash provided by (used in) financing activities | $173,551 | $(26,146) | | Net increase (decrease) in cash | $196,716 | $(6,845) | - Financing activities in Q1 2025 were dominated by $314.1 million in proceeds from the exercise of warrants and $132.0 million in payments for common stock repurchases24172 Notes to Unaudited Condensed Consolidated Financial Statements Key notes detail revenue streams, debt, equity events like warrant redemption and stock repurchases, and ongoing legal proceedings, including a new UK group action Revenue Disaggregation (Q1 2025 vs Q1 2024, in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Direct revenue | $80,082 | $64,378 | | Indirect revenue | $13,856 | $10,967 | | Total Revenue | $93,938 | $75,345 | | By Geography | | | | North America | $57,799 | $45,503 | | Europe | $21,146 | $18,107 | | Rest of the world | $14,993 | $11,735 | - In January 2025, the company announced the redemption of all outstanding warrants. By the February 24, 2025 redemption date, this resulted in cash proceeds of $314.1 million from cash exercises and the issuance of 3.4 million shares from cashless exercises. As of March 31, 2025, no warrants were outstanding717273 - In March 2025, the Board authorized a $500 million stock repurchase program. During the quarter, the company repurchased and retired 8.3 million shares for an aggregate price of $141.1 million75 - The company is facing a new group action lawsuit in the English Court, served in April 2025, on behalf of over 10,000 alleged users claiming breach of UK data protection laws. The company states it is too early to determine the likely outcome104 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 24.7% revenue growth to increased Average Paying Users and ARPPU, leading to higher Adjusted EBITDA and significantly boosted liquidity from warrant exercises funding stock repurchases Operating and Financial Metrics The company experienced broad growth in Q1 2025, with Average Paying Users up 15.5%, improved monetization metrics like ARPPU, and a 28.8% increase in Adjusted EBITDA to $40.7 million Key Operating and Financial Metrics (Q1 2025 vs Q1 2024) | Metric (in thousands, except percentages and per-user amounts) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average Paying Users | 1,168 | 1,011 | | Average Monthly Active Users (Average MAUs) | 14,613 | 13,705 | | Average Paying User Penetration | 8.0% | 7.3% | | ARPPU | $22.86 | $21.25 | | ARPU | $2.14 | $1.83 | | Revenue | $93,938 | $75,345 | | Net income (loss) | $27,019 | $(9,406) | | Adjusted EBITDA | $40,689 | $31,607 | | Adjusted EBITDA Margin | 43.3% | 41.9% | | Free cash flow | $23,165 | $19,301 | Results of Operations Q1 2025 revenue increased 24.7% to $93.9 million, driven by direct and indirect revenue growth, while operating expenses rose, leading to a net income of $27.0 million primarily due to higher revenue and warrant liability fair value changes - Direct revenue increased by $15.7 million (24.4%) due to growth in both Average Paying Users (up 157 thousand) and ARPPU (up $1.61). This was attributed to paywall optimizations, new weekly subscription offerings, and strong demand for premium add-ons145 - Indirect revenue grew by $2.9 million (26.4%), driven by the introduction of new ad formats, improved ad technology, and the addition of new third-party advertising partners146 - Product development expenses rose by $4.6 million (80.7%), mainly from a $2.0 million increase in contractor fees and a $2.8 million increase in personnel costs to scale the engineering team150 - Net income was $27.0 million, a change of $36.4 million from the prior year's net loss, mainly due to a $18.6 million increase in revenue and a $28.6 million positive change in the fair value of warrant liability157 Non-GAAP Financial Measures The company utilizes Adjusted EBITDA and Free Cash Flow to assess performance, with Q1 2025 Adjusted EBITDA increasing 28.8% to $40.7 million and free cash flow reaching $23.2 million Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) | $27,019 | $(9,406) | | Interest expense, net | $3,875 | $7,185 | | Income tax provision | $4,551 | $2,680 | | Depreciation and amortization | $3,477 | $4,119 | | Litigation related costs | $226 | $422 | | Stock-based compensation expense | $10,947 | $7,869 | | Severance expense | $499 | $58 | | Change in fair value of warrant liability | $(9,905) | $18,680 | | Adjusted EBITDA | $40,689 | $31,607 | Reconciliation of Net Cash from Operations to Free Cash Flow (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $23,793 | $20,449 | | Less: Capitalized development software costs and purchases of property and equipment | $(628) | $(1,148) | | Free cash flow | $23,165 | $19,301 | Liquidity and Capital Resources The company's liquidity significantly strengthened in Q1 2025, ending with $255.9 million in cash, primarily from $314.1 million in warrant exercise proceeds, which also funded $132.0 million in stock repurchases - The company's cash and cash equivalents stood at $255.9 million as of March 31, 2025176 - In Q1 2025, the company received aggregate cash proceeds of $314.1 million from the exercise of warrants before their redemption175 - A new stock repurchase program of up to $500 million was authorized in March 2025. During the quarter, the company repurchased 8.3 million shares for $141.1 million186 - As of March 31, 2025, the company had $278.3 million outstanding under its term loan and $11.6 million under its revolving credit facility178 Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk from variable-rate debt and foreign currency exchange risk from international operations, impacting pre-tax interest expense and revenue respectively - The company's primary market risk is interest rate risk related to its $272.0 million in outstanding variable-rate debt. A hypothetical 100 basis point change in interest rates would result in approximately $0.7 million of additional or lower pre-tax interest expense for the quarter190191 - The company has foreign currency exchange risk, as international revenue accounted for 41.2% of total revenue in Q1 2025. A hypothetical 10% adverse change in the Euro and British Pound would have reduced revenue by $2.1 million for the quarter194195 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level197 - There were no changes in internal control over financial reporting during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, internal controls198 PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, with management generally not expecting a material adverse effect, though outcomes for some matters remain uncertain - The company does not believe the final outcome of its current legal matters will have a material adverse effect, other than those for which it is too early to determine materiality and probability of outcome200 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, have been reported203 Unregistered Sales of Equity Securities and Use of Proceeds In March 2025, the company initiated a $500 million stock repurchase program, buying back 8.3 million shares for $141.1 million during the quarter, with $358.9 million remaining Issuer Purchases of Equity Securities (March 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Value of Shares Purchased (approx.) | Approx. Value Remaining Under Program (in thousands) | | :--- | :--- | :--- | :--- | :--- | | March 1-31, 2025 | 8,268,937 | $17.07 | $141,139,000 | $358,861 | - In March 2025, the Board of Directors authorized a stock repurchase program for up to $500.0 million of the Company's common stock, valid until March 6, 2027205 Other Information During the last fiscal quarter, several company officers, including the CFO, Chief Product Officer, and General Counsel, adopted new or terminated existing Rule 10b5-1 trading plans for the sale of company securities - Certain directors and officers, including the CFO Vandana Mehta-Krantz, CPO Austin "AJ" Balance, and General Counsel Zachary Katz, adopted new Rule 10b5-1 trading plans and terminated previous ones during the quarter208 Exhibits This section lists the exhibits filed with the Quarterly Report, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data files