Bloomberg Talks
00:00:02 · Carol Massar, Tim Stenovec, George Arison
[00:00:02] S0: Bloomberg Audio Studios. [00:00:04] S1: Podcasts, radio, news. [00:00:08] S0: Shares of Grindr, we've seen them trading slightly higher, a little change today. This after earnings in which the company raised its guidance for the current year. The company also said it expects to meet its 2027 targets about 12 months ahead of schedule. Signs that the company has been succeeding in its strategy to market itself as more than just a dating app for gay men. They've been trying to broaden out their strategy. We welcome back George Arison. He's CEO of the $ 2. 4 billion market cap online dating app. It is Grindr. Stock is up roughly 1.8% year to date. 20% of the float is short. He is out there in our San Francisco bureau. [00:00:44] S2: How are you? [00:00:45] S0: Welcome back. [00:00:46] S2: Hi, thanks for having me. Good to see you. [00:00:48] S0: It's nice to have you back. You know, investors are kind of lukewarm. Actually, the stock right now is up about 1.4%, so it's building some momentum as we move towards the close. Tell us, though, if you could, George, about the progress in kind of pushing the company beyond being a dating app. You guys are thinking much more about where you can go.
00:00:48 · Carol Massar, George Arison
[00:00:48] S0: It's nice to have you back. You know, investors are kind of lukewarm. Actually, the stock right now is up about 1.4%, so it's building some momentum as we move towards the close. Tell us, though, if you could, George, about the progress in kind of pushing the company beyond being a dating app. You guys are thinking much more about where you can go. [00:01:06] S2: Well, we closed a transaction last quarter buying a company called B2B. Freddie, which is a telehealth provider of PrEP, a medication that avoids you getting HIV if you're on it properly. And that's a really big step in this direction where now we're going to be building a second business line. Freddie is a profitable business that has built a really great business in Canada and started bringing it to the U.S. about two years ago with really good scale so far, but a lot more growth to come. And, you know, their target audience is the Grindr user base. And so it's a really good match between us and them. And We believe that we'll be really effective in scaling the business, having done that once already, and that obviously will expand Grindr as a business far beyond what it is today. The margins on that business are really strong. Revenue per patient, if they're with you for a full year, that's $ 4, 800 per patient per year. So it's a really strong business, and we're really excited about it. And obviously, it'll really help us tell the story that Grindr is a lot more than just a dating product.
00:01:06 · George Arison, Tim Stenovec
[00:01:06] S2: Well, we closed a transaction last quarter buying a company called B2B. Freddie, which is a telehealth provider of PrEP, a medication that avoids you getting HIV if you're on it properly. And that's a really big step in this direction where now we're going to be building a second business line. Freddie is a profitable business that has built a really great business in Canada and started bringing it to the U.S. about two years ago with really good scale so far, but a lot more growth to come. And, you know, their target audience is the Grindr user base. And so it's a really good match between us and them. And We believe that we'll be really effective in scaling the business, having done that once already, and that obviously will expand Grindr as a business far beyond what it is today. The margins on that business are really strong. Revenue per patient, if they're with you for a full year, that's $ 4, 800 per patient per year. So it's a really strong business, and we're really excited about it. And obviously, it'll really help us tell the story that Grindr is a lot more than just a dating product. [00:02:06] S1: Well, one of the ways that you're trying to grow within the core product is this different tier. So Grindr Edge, for example, 400,000 users registered for early access in 72 hours. I think it's fair to say that that's a lot of user interest. What are they willing to pay a premium for? Are there specific features that have generated a lot of user interest?
00:02:26 · George Arison
[00:02:26] S2: So historically, Grindr has offered our premium users, meaning our extra and unlimited subscribers, access to more people if they were payers. That was kind of the primary difference between being a free user and a paying user. With Edge, we're giving you a lot more information about other users that we deduce based on people's behaviors in the app. So it's an AI tier where we use AI to understand the users a lot better and then share that information with you as a subscriber to Edge, as well as recommend people that you should be potentially meeting based on the things that we know about you and the things that we know about those other people. So it's a pretty different experience from what Grindr's ever done historically. The retention on people who have tested their way into Edge and subscribed during our test periods has been a lot higher than for the current paying tiers that we have so far. And the demand, obviously, as you said, is very high. We've been really sucked by the pre-registration numbers. Obviously, we don't expect all of them to convert, but The fact that people are interested in this is really great. We're going to price it at $ 120, which is 3x the price that we've charged people before for our most expensive tier so far. So it's a pretty significant premium.
00:03:35 · Tim Stenovec
[00:03:35] S1: Why did you settle at $ 120? Because last time we spoke, you hadn't settled on that price. And there were rumors this thing could be $ 500 a month, which I thought was a lot of money. Some people got in touch with me and said, that's not a lot of money. Others got in touch and said, that's crazy money. I think the people who said $ 500 was crazy will still say $ 120 a month is crazy.
00:03:54 · George Arison, Carol Massar
[00:03:54] S2: We tested a variety of prices. We actually never tested $ 500. We tested $ 500 in Canada, and people perceived that as being a U.S. price. So it was kind of close to $ 375 in the U.S. was the highest price that we tested. The reason we settled on $ 120 is because we want to create a lot of demand for the product in year one and get a lot of people to try it out. And then over time, we think we have a lot of pricing power. We could have priced it at more and still have had a very strong year next year and the year after. But we believe creating a lot more interest in it initially and getting people to try it out will be really beneficial. And that's why we picked 120. It was after a lot of testing and a lot of work. This is not the most expensive tier we're ever going to build. We're going to build a tier on top of that that's going to be even more expensive. And so part of the price test that we did this year, last year, has been around what are the different limits of how far can you go in price when you offer different things. And the takeaway is this is a really good price to start now. We have a lot of pricing power over the next couple quarters or a couple years in this tier. And then there's opportunity for even higher price tier above that. [00:04:57] S0: How much higher? I'm just curious about where you think this could go.