Grindr CEO believes AI 'will really change dating'

Grindr (GRND) shares are up 60% year-over-year, and with the dating app set to report earnings in the coming months, CEO George Arison joins Yahoo Finance Live to discuss their recent success.

After raising full-year guidance in both August and November 2023, Arison says he expected 2024 to go well for Grindr,and "so far everything is going as well as we expected." He attributes the platform's success to its "dedicated users" who spend an average of one hour daily in the app. Grindr has shifted focus to monetization by building "features users want to pay for."

Grindr currently offers three pricing tiers starting at $12.99 weekly and up to $39.99 monthly for premium features. As Grindr builds more value-added offerings, Arison believes users "should be willing to pay for it" if they see value.

Looking ahead, Arison believes "AI will really change dating" by enhancing matches through personalized insights versus just profiles. Though Grindr lacks a built-in match feature now, they are exploring this AI potential.

Other planned innovations include a "Teleport" feature enabling travelers to use Grindr anywhere, and tools to "express interest" beyond just messaging. Arison says they also aim to leverage analytics to help users understand each other better.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: Dating-app stocks in focus today as Match Group reports a drop in paying Tinder users, its fifth quarter in a row of that, a potential worrisome sign for the sector. But in two weeks, we are going to hear from another big player in this space. We've got Grindr set to report its results on February 12. Shares have certainly been on a tear over the last year, up nearly 60%. Still, though, trading around half of the debut price.

Let's talk about the recent momentum, though, that we have seen in the name. For that, here with us at the desk, we want to bring in George Arison-- he's the CEO of Grindr-- alongside Yahoo Finance's Executive Editor Brian Sozzi. It's great to have you here at the desk with us, George.

Let's talk about the momentum that you've seen in your business. Going back to the previous results, you certainly have seen tremendous amount of growth. Revenue up 39%. What have you seen in terms of some of those trends carrying over here into the new year?

GEORGE ARISON: Yeah, so we gave guidance in November that the year was going to be really positive. We raised our guidance in November and in August, so it's been a really good year for us. And we also said that we expect 2024 to go really well. So far, everything is going as well, as we expected. Obviously we've not done earnings yet, so I'm going to be a little careful in what I say.

But Grindr is a really great business, and we have users who are very dedicated to the platform. They're spending about an hour a day in it. And the really big thing for us coming in-- I started about 16 months ago now-- has been to think about monetization, right? How do we build features that users want to pay for? Because that's not been the focus historically at Grindr, but that's where, kind of, what we're focused on now, and I think the results so far are really positive.

BRIAN SOZZI: Is the large move in the stock price, George, you think in part because investors are thinking about AI and how it might unlock growth or that monetization you're talking about? And what are you working on in AI?

GEORGE ARISON: Yeah, I mean, I hope the movement in the share price is that we've had five quarters of awesome results, and so that's, hopefully, why the stock's moving. I think we've been delivering, and I think we've been really careful in showing our investors that we have ability to have predictable results into the future. That's, I think, really important as a kind of company when you come out, and we've been trying very carefully not to raise expectations too high.

From the AI perspective, I think AI is going to really change dating in general, both in terms of how people converse with each other and also who is matched with who. Because a lot of really important information is sitting inside people's chats, and kind of they are actually much more real in who they are in those chats versus the profile that you try to build based on, like, I think this is what people want to see. And if you have better information about users-- obviously, with their permission-- you can match them with other users a lot better.

Grindr doesn't do matching yet, but that's kind of the direction we want to go into for dating in particular. So I think dating will be really changed by AI, and that's all kind of on the come. And, you know, people are, in some other apps, frustrated with kind of in real world versus what happens online experience. We don't have that issue with our users, but I still think that potential for AI to make people meet each other better is really huge.

BRAD SMITH: That's a significant value proposition that you're adding into the service as well. How does that then have an impact on pricing when you're thinking about how you're extracting the most value out of your users too?

GEORGE ARISON: Well, the way I tend to think of it is if you provide really awesome product to users and they gain value from it, they should be willing to pay for that, right? That's kind of the capitalist system.

So far, we have had two pricing tiers, a $19.99 tier that we call Extra and a $39.99 tier that we call Unlimited. We then this year added a weekly product that's $12.99 in the US for those that want to do that, and that's actually one of the reasons why our paying-user numbers have gone up because people who didn't pay before are now using the weekly.

I think there's a potential for a much higher priced tier. Much higher being-- like I don't know if it's $60 or $80, kind of TBD, but we'll experiment for the kind of more dating set of features. And then there's probably an opportunity for a lower-priced tier as well for the younger user set. Tinder does that. Others do that as well. We've not done that, but I think there's opportunity there.

And then, you know, Tinder has been experimenting with this, like, $500 a month tier. That's something much more kind of concierge style and special. Again, I think there is an opportunity there as well. So I think pricing can be a lot broader than what we're doing today, but first we need to build a lot more features to justify a higher price, and that's what we're going to spend 2024 and 2025 focused on.

BRIAN SOZZI: What's the big features that you can speak to for this year?

GEORGE ARISON: So one of the things we've talked about in the past is Teleport. Our users travel a ton. They are on the road a lot because they have time and disposable income to do it. But you can't, today, show your profile in a different market from the one you're in. And so enabling users to do that is something a lot of our users have been asking for. I've had people walk up to me at conferences and be like, I would pay $1,000 a year for this. And I'm like, well, you're in luck. It's coming. So that's one of the ones that we're really excited about.

Being able to express an interest in a user a lot more than just sending a message is another one. Our peers have done that for a long time. We don't. We think that's a huge opportunity.

And then ultimately analytics about a user. So, like, this is what we know about this user. Do you want to know that information as well? I think something that users will really appreciate as well-- how frequently do they respond to messages? you know, what kind of individuals they want to talk to, et cetera.

SEANA SMITH: And, George, there has been some talk about using Grindr as a networking-- a job-networking tool as well. What do you see as the potential opportunity there and who you almost rival or you view as a potential rival within that space?

GEORGE ARISON: Yeah, we definitely get compared a lot to obviously Match and Bumble, and that's the primary use case. But our users are there for a lot of other reasons. When you survey them, it's like casual dating, a huge percentage. Dating another really large percentage, but then social connections and friendships and networking are also really high on the list as well when you give them a reason for why they're on the app.

And that kind of speaks to the fact that our users view Grindr as a social-networking community in addition to a dating product. And so there's really nothing analogous to that out there, and our users also don't leave the app. Once you kind of couple up, they still stay on the app for all these other reasons because they have these relationships with people on there.

Users also use it a lot for travel. A lot of gay men who might be saying, I'm going to a different city, start talking to people in that city to understand, hey, what can I do? Where should I stay? So our view is Grindr is a gayborhood on your mobile phone where you have this great community of people that are more like you, and you can converse with them about anything you'd like.

BRIAN SOZZI: What's your philosophy in terms of end game for Grindr? Why not join forces with Bumble and become that one-stop shopping for dating? Do you think like that?

GEORGE ARISON: I'm focused on building a really great product for our users today and where it can go into the future. What happens kind of on that front, you know, will take care of itself. I think as long as you deliver really good value to users, you're creating great shareholder value and great user value, and I think that's what really is important.

BRAD SMITH: You know, you've had one of the trickier kind of events in return to office, and a lot of CEOs are trying to figure out how to go about that the right way, if they even do. What would you-- any advice that you would give towards those leaders in management?

GEORGE ARISON: My view is you have to have a really awesome performance culture for a company to be successful. In Grindr's case, you know, we are going after some really audacious goals. We are serving a user base that historically has been really underserved. That's also under a lot of threat around the world. 60 countries in the world, it's illegal to be gay. We operate in almost all of those countries. So, like, when we do things, it's for users who really need a lot of support.

And so I want us to be working really hard. I want us to be delivering really strong results. And to do that, one of the things you need is to have really good relationships with each other. And so having people never see each other for a course of the year I don't think works. So I think we actually went pretty mild. Two days a week, Tuesdays and Thursdays in the office. By the way, on those days, we serve you breakfast, and we serve you lunch, and we give you a stipend to come to-- to pay for transportation to come to the office. So it's actually a pretty, like, minimal set of requirements.

We want to do that because we want to attract really amazing talent to work at Grindr. We are a very lean company. You know, our numbers in terms of employees are very low, and revenue per employee is also really low. So we are fortunate we can do those types of things.

My view is, so far-- I mean, we've only been at it for three months-- the results are really positive, especially among engineers. I'm now talking to a lot of candidates who say, I wouldn't have considered this job if you were not back in the office.

So a lot of back in the office discussion's around, hey, all the people who are upset about having to come back, but no one's really talking about, I think, a much larger cohort of people who want to be back in the office because they want the mentorship. They want the coaching from senior people that they were not getting online as well as senior people who want to be doing the things they used to do but can't when they're not in the office.

And so that's kind of been, I think, missing from the conversation, and all the focus has been on people who don't want to come back to the office, which is a legitimate argument. It's just actually a much smaller percentage than people who want to be in the office.

BRAD SMITH: Grindr's CEO George Arison joining us here on set alongside Yahoo Finance's Brian Sozzi. Thanks so much for taking the time here with us.

GEORGE ARISON: Thank you very much. Appreciate it.

BRAD SMITH: Appreciate it.