Grindr (US:GRND)2023-03-17 21:28PART I Business Grindr, the largest LGBTQ social network, reported $195.0 million revenue in 2022, a 33.7% increase, primarily from subscriptions, with 12.2 million MAUs Key Operating Metrics (2022 vs 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Monthly Active Users (MAUs) | ~12.2 million | ~10.8 million | | Paying Users | ~788 thousand | ~601 thousand | | Daily Messages Sent (Average) | >308 million | >260 million | Financial Performance (FY 2022 vs FY 2021, in millions) | Metric | FY 2022 | FY 2021 | YoY Growth | | :--- | :--- | :--- | :--- | | Total Revenue | $195.0 | $145.8 | 33.7% | | Net Income | $0.9 | $5.1 | -82.4% | | Adjusted EBITDA | $85.2 | $77.1 | 10.6% | - Revenue is generated from two streams: Direct Revenue (subscriptions and add-ons) and Indirect Revenue (advertising/partnerships) In 2022, Direct Revenue was 83.7% of total revenue, while Indirect Revenue was 16.3%39405406 - The company's growth is primarily organic, driven by strong brand awareness and network effects, with customer acquisition spending comprising only 0.3% of total revenue in 202238121 - Key growth strategies include expanding monetization through new subscription features and stand-alone paid options, growing the user base in core and new geographic markets, and investing in machine learning and data science124127 Risk Factors The company faces significant risks including brand dependence, competition, platform reliance, data privacy regulations, indebtedness, and internal control weaknesses - A material weakness in internal control over financial reporting has been identified, which could affect the reliability of financial statements if not corrected22279 - The business is highly dependent on the strength of the Grindr brand, which could be damaged by unfavorable media coverage, user misconduct, or privacy concerns150151166 - Distribution and payment processing rely heavily on third-party platforms like the Apple App Store and Google Play Store, whose policies and fees can significantly impact operations and revenue181190 - The company is subject to complex and evolving data privacy laws globally, such as GDPR and CCPA, which could result in significant fines, changes to business practices, and increased operational costs The company has faced regulatory inquiries, including a fine from the Norwegian Data Protection Authority311312317 - As of December 31, 2022, the company had approximately $360.6 million in total outstanding net indebtedness, which imposes significant operating and financial restrictions343 Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments375 Properties Grindr's headquarters is a leased 25,000 sq. ft. office in West Hollywood, California, with the lease expiring in 2026 - The company's headquarters is a leased 25,000 sq. ft. office in West Hollywood, CA, with the lease expiring in 2026376 Legal Proceedings The company is involved in various legal proceedings, not currently expected to have a material adverse effect, with details in Note 13 - The company is subject to various legal claims and government investigations in the ordinary course of business Specific details are provided in Note 13 to the consolidated financial statements378 Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable381 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Grindr's Common Stock and Public Warrants trade on the NYSE, and the company does not anticipate paying cash dividends in the foreseeable future - Common Stock and Public Warrants are traded on the NYSE under symbols "GRND" and "GRND.WS"383 - The company has never paid dividends and does not intend to pay them in the foreseeable future385 Reserved. This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2022, revenue grew 33.7% to $195.0 million, net income decreased to $0.9 million, and Adjusted EBITDA increased 10.6% to $85.2 million Key Financial and Operating Metrics (FY 2022 vs. FY 2021, in thousands, except per user data) | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Revenue | $195,015 | $145,833 | | Net Income | $852 | $5,064 | | Adjusted EBITDA | $85,192 | $77,054 | | Average Paying Users | 788 | 601 | | Adjusted ARPPU | $17.28 | $16.21 | | Monthly Active Users (MAUs) | 12,246 | 10,799 | - The 33.7% revenue growth in 2022 was primarily driven by a $47.3 million (41%) increase in Direct Revenue, attributed to growth in both Paying Users and a 7.5% increase in ARPPU436 - Selling, general and administrative expenses increased by 146.1% to $75.3 million, largely due to a $23.7 million increase in stock-based compensation, a $6.0 million increase in employee-related expenses, and a $7.0 million increase in outside service fees439441 - Net cash provided by operating activities increased to $50.6 million in 2022 from $34.4 million in 2021466467 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Grindr is not required to provide information for this item - The company is a smaller reporting company and is not required to provide this information496 Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for FY2022 and FY2021, along with the independent auditor's report and detailed notes - The report from independent registered public accounting firm Ernst & Young LLP provides an unqualified opinion on the consolidated financial statements501 - The Business Combination on November 18, 2022, was accounted for as a reverse recapitalization, with Legacy Grindr as the accounting acquirer523 Consolidated Balance Sheet Highlights (As of Dec 31, in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Assets | $438,828 | $449,726 | | Total Liabilities | $434,776 | $186,489 | | Total Stockholders' Equity | $4,052 | $263,237 | - As of December 31, 2022, the company had total debt of $360.6 million (net of unamortized costs) under its Credit Agreement625 - The company is involved in ongoing legal and regulatory matters, including an appeal of a fine from the Norwegian Data Protection Authority (Datatilsynet) related to GDPR compliance655656657 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None reported725 Controls and Procedures Management concluded disclosure controls were ineffective as of December 31, 2022, due to a material weakness in financial reporting, with remediation underway - A material weakness was identified in internal control over financial reporting related to the accuracy and timeliness of the financial statement closing process728 - As a result of the material weakness, the CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2022726 - Remediation efforts are underway, including hiring more accounting staff, automating manual reconciliations, and implementing enhanced internal controls for the closing process729 Other Information The company reports no other information for this item - None731 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable731 PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is incorporated by reference from the forthcoming 2023 Proxy Statement733 Executive Compensation Information regarding executive compensation is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is incorporated by reference from the forthcoming 2023 Proxy Statement736 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information concerning security ownership is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is incorporated by reference from the forthcoming 2023 Proxy Statement737 Certain Relationships and Related Transactions, and Director Independence Information detailing related party transactions and director independence is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is incorporated by reference from the forthcoming 2023 Proxy Statement738 Principal Accounting Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is incorporated by reference from the forthcoming 2023 Proxy Statement739 PART IV Exhibits, Financial Statement Schedules This section lists financial statements and schedules, along with an index of all exhibits filed with the report, including key agreements and certifications - This item includes the list of financial statements and an index of all exhibits filed with the Annual Report on Form 10-K742 Form 10-K Summary The company reports no summary for this item - None752