Grindr Shares Dip on Slower Growth Outlook, Active User Decline

Grindr Inc. (NYSE: GRND) shares took a hit on Wednesday after the company reported a decline in active users and a slower growth outlook for 2025. The dating app, which caters primarily to the LGBTQ+ community, saw its stock price drop by 7.4% to $17.30 in post-market trading following the release of its fourth-quarter and full-year 2024 financial results.

The company reported 14.2 million average monthly active users in the fourth quarter, down from 14.6 million in the third quarter. Additionally, the average direct revenue per paying user decreased to $22.53 from $23.07 in the prior period. Grindr's paying user base grew by 15% to 1.11 million at the end of 2024, but the company did not provide details on how this key metric will perform in 2025.

Grindr's outlook for 2025 includes revenue growth of 28%, which is below the nearly 33% year-over-year increase reported for 2024 and the 23% expected by analysts, according to factset. The company's guidance for 2025 revenue growth follows a decline in active users and a decrease in the revenue generated per every paying subscriber.

During the earnings call, Grindr's Chief Financial Officer, Vanna Krantz, stated that investors should expect some payer growth in 2025, as well as an increase in average direct revenue per paying user. However, the company did not provide specific details on how these metrics will improve. Grindr's Chief Executive Officer, George Arison, mentioned that the company is still in the early stages of monetizing its new products and will work on its pricing strategy in the next 24 months.



Grindr's recent performance highlights the challenges facing the company in maintaining its competitive edge in the dating app market and attracting new users. To address these issues, grindr can consider the following strategies:

1. Innovate and Differentiate: Grindr can introduce new features and functionalities that set it apart from competitors. For instance, it could focus on enhancing its AI chatbot for more engaging interactions, as mentioned in the materials. Additionally, it could explore new revenue streams, such as the "gayborhood" feature for referring businesses or the "roaming" feature for users traveling.
2. Targeted Marketing and Advertising: Grindr can leverage its user data (while respecting privacy) to create targeted marketing campaigns. This could help attract new users who are more likely to be interested in the app's offerings. The company has already tripled its investments in advertising, which could be further optimized for better results.
3. Strengthen Trust and Safety: Grindr can focus on improving trust and safety features to attract new users and retain existing ones. This could involve enhancing moderation tools, implementing stricter privacy measures, and addressing user concerns about data management and safety, as highlighted in the materials.
4. Expand into New Markets: Grindr can explore expansion into new markets, particularly in regions where the LGBTQ+ community is underserved. This could help the app tap into new user bases and drive growth. For example, it could focus on countries like Brazil, India, and Mexico, which have a high number of downloads but lower revenue generation.
5. Engage with the LGBTQ+ Community: Grindr can actively engage with the LGBTQ+ community through initiatives like Grindr 4 Equality (G4E) to raise awareness for LGBTQ+ equality issues. This could help build a stronger connection with the community and attract new users who appreciate the app's commitment to social causes.
6. Optimize Pricing Strategy: Grindr can review and optimize its pricing strategy to make its premium features more appealing to users. This could involve offering more value for money or bundling features to encourage users to upgrade to premium subscriptions.

By implementing these strategies, Grindr can work towards maintaining its competitive edge in the dating app market and attracting new users, despite the recent decline in active users and slower growth outlook.