# Grindr Inc. (GRND) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Grindr Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1820144/000182014425000013/grnd-20241231.htm
Accession: 0001820144-25-000013
Filing date: 2025-03-07
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/GRND/
All MD&A years: /company/GRND/mda/
Previous year: /company/GRND/mda/fy2023/ (FY 2023)
Next year: /company/GRND/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report. In addition to the audited consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in Part I, Item 1A. “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Overview

Grindr Inc.’s (“Grindr”, “we”, “us”, “our” or the “Company”) mission is to build the Global Gayborhood in Your Pocket™, and, through our success, to make a world where the lives of our global LGBTQ community are free, equal, and just. We manage and operate the Grindr platform, a global social networking platform primarily serving and addressing the needs of gay, bisexual, and sexually explorative adults around the world. We had 14.2 million Average MAUs and 1.1 million Average Paying Users for the year ended December 31, 2024, as compared to 13.3 million Average MAUs and 937 thousand Average Paying Users for the year ended December 31, 2023. Through gayborhood expansion initiatives, we are developing new products for users to engage with the Grindr platform, which include new partnership-based digital versions of services typically found in physical gayborhoods. Our social impact division, Grindr for Equality, advances human rights, health, and safety for millions of lesbian, gay, bisexual, transgender, and queer (“LGBTQ”) people in partnership with organizations in every region of the world.

The Grindr mobile application is free to download and provides certain services and features to Grindr’s users at no cost. We also offer a variety of additional controls and features for users who enroll in our paid subscriptions and add-on products. A substantial portion of our revenue is from direct revenue, representing 84.4% and 86.8% of total revenue for the years ended December 31, 2024 and 2023, respectively. Direct revenue is derived from users in the form of subscription fees, providing our users access to a variety of features for the period of their subscription. Our current subscription offerings are Grindr XTRA and Grindr Unlimited. We utilize a freemium model to drive increased user acquisition, subscriber conversions, and monetization on the Grindr platform. We also offer premium add-ons on a pay-per-use, or a-la-carte, basis. Leveraging strong brand awareness and our significant user network stemming from our first mover advantage in the gay, bisexual, transgender, and queer (“GBTQ”) social networking industry, our historical growth in number of users has been driven primarily by word-of-mouth referrals and other organic means.

In addition to our revenue generated from subscription fees and premium add-ons, we also generate indirect revenue, representing 15.6% and 13.2% of total revenue for the years ended December 31, 2024 and 2023, respectively. Indirect revenue includes both first-party and third-party advertising. We provide advertisers with the opportunity to directly reach the GBTQ community, a group with significant global purchasing power and economic potential. We have attracted advertisers from a diverse array of industries, including healthcare, entertainment, gaming, travel, and consumer goods. We offer our partners a diverse range of advertising opportunities to advertisers, including in-app banners, full-screen interstitials, and other customized units, typically sold on a cost per mille (“CPM”) basis. Additionally, we contract with a variety of third-party advertising platforms to market and sell digital advertising inventory available on the Grindr platform. We will continue to evaluate opportunities to increase advertising inventory by both enhancing and differentiating our advertising offerings in addition to scaling our advertising volume.

We generated $344.6 million and $259.7 million of revenue, for the years ended December 31, 2024 and 2023, respectively, representing year-over-year growth of 32.7% as compared to 2023. We had 1.1 million and 0.9 million Average Paying Users, for the years ended December 31, 2024 and 2023, respectively, representing year-over-year growth of 14.8% as compared to 2023.

While we have users in over 190 countries and territories, our core markets are currently North America and Europe, from which together we derived 84.7% and 85.1% of our total revenues for the years ended December 31, 2024 and 2023, respectively. We intend to grow our user base and revenues by continuing to introduce new and innovative products and services to all of our users across the globe.

On average, profiles on our platform sent 401.1 million and 332.2 million daily messages for the years ended December 31, 2024 and 2023, respectively.

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Certain Labor Matters

In July 2023, the Communications Workers of America AFL-CIO (“CWA”) filed an election petition with the National Labor Relations Board (“NLRB”) seeking to hold a representation election for certain classifications of our employees. CWA subsequently filed several unfair labor practice charges against us with the NLRB, including a request for injunctive relief under Sec. 10(j) of the National Labor Relations Act. Regarding the election petition, the NLRB conducted a secret mail-ballot election and held partial vote counts in November and December 2023. As of the date of filing of this Annual Report, the NLRB has not completed tallying all the votes from the election as there are numerous outstanding challenged ballots. In addition, on November 1, 2024, the local regional office of NLRB issued a complaint on the unfair labor practice charges, which is scheduled for a hearing in May 2025. This complaint is the first step in the administrative process and is not a finding of any wrongdoing, nor is it a decision or ruling of the NLRB.

Recent Developments

Reorganization of Engineering, Product and Design Teams

In September 2024, we merged our Engineering, Product, and Design teams under the leadership of our Chief Product Officer. By combining these three complementary teams into one, we expect to streamline decision-making, enable faster iteration, and create a better experience for our users.

Warrant Redemption

In January 2025, we provided notice to the registered holders of our outstanding warrants, which consisted of (i) 18,560,000 private placement warrants, (ii) 13,799,825 public warrants; (iii) 2,500,000 forward purchase warrants; and (iv) and 2,500,000 backstop warrants (collectively, the “Warrants”), that we would redeem the Warrants at a redemption price of $0.10 per Warrant at 5:00 p.m. New York City time on February 24, 2025 (the “Redemption Date”). In connection with the redemption, Warrant holders were entitled to exercise their Warrants until 5:00 p.m., New York City time on the Redemption Date either (a) for cash, at an exercise price of $11.50 per share of common stock; or (b) on a “cashless” basis in which case, the holder would receive 0.361 shares of common stock per Warrant, which number was determined in accordance with the terms of the warrant agreement governing the Warrants.

After we announced the redemption of the Warrants and before the conclusion of the redemption notice period at 5:00 p.m. New York City time on the Redemption Date, an aggregate of (i) 9,469,634 Warrants were exercised on a cashless basis in exchange for the issuance of 3,418,518 shares of our common stock; and (ii) 27,315,105 Warrants were exercised for an aggregate of 27,315,105 shares of our common stock at an exercise price of $11.50 per share, for aggregate cash proceeds to us of $314.1 million. At the conclusion of the redemption notice period on the Redemption Date, the remaining 575,086 Warrants outstanding were redeemed at a price of $0.10 per Warrant for aggregate cash payment from us of $0.1 million. The Warrants were delisted pursuant to a Form 25 filed on February 24, 2025 by the NYSE.

Stock Repurchase Program

In March 2025, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $500 million of shares of our common stock for the period from March 7, 2025 to March 6, 2027. Our stock repurchase program does not obligate us to repurchase a minimum amount of shares. Under the program, shares of our common stock may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Consolidated Results for the Years Ended December 31, 2024 and 2023

For the years ended December 31, 2024 and 2023, we generated:

•Revenue of $344.6 million and $259.7 million, respectively. The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was $84.9 million, or 32.7%.

•Net loss of $131.0 million and $55.8 million, respectively. The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was $75.2 million. This resulted in a net loss margin of 38.0% and 21.5%, respectively.

•Adjusted EBITDA of $147.3 million and $110.2 million, respectively. The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was $37.1 million, or 33.7%. This resulted in an Adjusted EBITDA margin of 42.7% and 42.4%, respectively. See “Management’s Discussion and Analysis of

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Financial Condition and Result of Operations—Non-GAAP Financial Measures—Adjusted EBITDA” for more details on the calculations and reconciliations.

The Business Combination

Grindr Inc.’s predecessor public company was originally incorporated in the Cayman Islands under the Companies Law of the Cayman Islands on July 27, 2020, under the name Tiga Acquisition Corp., as a special-purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or engaging in any other similar business combination with one or more businesses or entities. Grindr was originally incorporated in February 2009 as a California limited liability company, and was subsequently held by Grindr Group LLC, a Delaware limited liability company which was incorporated in April 2020. Since the Business Combination, Grindr has conducted its business operations principally through its indirect wholly-owned subsidiary, Grindr LLC.

Operating and Financial Metrics

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(1)See “—Non-GAAP Financial Measures” below for additional information and reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures.

•Average Paying Users. A Paying User is a user that has purchased or renewed a Grindr subscription and/or purchased a premium add-on on the Grindr platform. We calculate Average Paying Users by adding up the number of Paying Users in each day and then dividing that number by the number of days in the relevant measurement period. A Paying User who is both a subscriber and an add-on purchaser on the same day will be counted as one Paying User. Duplicate Paying Users may exist if the same individual holds more than one Grindr subscription during the same period. We are focused on building new products and improving on existing ones to drive payer conversion. We believe Average Paying Users is a useful metric for assessing the health of our business.

•Average MAUs. A Monthly Active User (“MAU”) is a unique device that demonstrates activity on the Grindr platform during any given calendar month. Activity on the platform is defined as opening the app, sending or receiving a chat, or viewing another person's profile. We exclude devices with linked profiles banned for spam. We calculate Average MAUs as a monthly average, by counting the total number of MAUs in each calendar month and then dividing by the number of months in the relevant period. We use Average MAUs to measure the

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number of active users on our platform on a monthly basis. We believe Average MAUs is a useful metric for assessing the health of our business and our growth in users.

•Average Paying User Penetration. We calculate Average Paying User Penetration by dividing Average Paying Users by our Average MAUs for any measurement period. We believe Average Paying User Penetration is a useful metric for assessing the overall health of our business.

•ARPPU. We calculate Average Direct Revenue Per Paid User (“ARPPU”) based on Direct Revenue in any measurement period, divided by Average Paying Users in such a period and then divided by the number of months in the period. We believe ARPPU is a useful metric for assessing the growth of our business and future revenue trends.

•ARPU. We calculate Average Total Revenue Per User (“ARPU”) based on total revenue in any measurement period, divided by our Average MAUs in such a period divided by the number of months in the period. We believe ARPU is a useful metric for assessing the growth of our business and future revenue trends.

Key Factors Affecting our Performance

Our results of operations and financial condition have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Item 1A. “Risk Factors” in this Annual Report.

Growth in User Base and Paying Users

We acquire new users through investments in generating brand awareness, as well as through word of mouth from existing users and others. We convert these users to Paying Users by offering premium features that maximize the probability of developing meaningful connections, improve the user experience, and provide more control over the experience. For the years ended December 31, 2024 and 2023, our Average Paying Users were 1.1 million and 0.9 million, respectively, representing an increase of 14.8% year-over-year. We grow Paying Users by acquiring new users and converting new and existing users to purchasers of one of our subscription plans or our add-on offerings. As we scale and our community grows larger, we seek to facilitate more meaningful interactions as a result of the wider selection of potential connections. This in turn increases our product value and can increase conversion to one of our paid products. Our revenue growth depends on growth in Paying Users. While we believe we are in the early days of our opportunity, at some point we may face challenges increasing our Paying Users, including competition from alternative products and services and lower adoption of certain product features.

Growth in ARPPU

We continually work to develop new monetization features and improve existing features in order to increase adoption of premium add-ons and our subscription programs. Many variables will impact our ARPPU, including paid product mix, the geographic location of Paying Users, and the revenue generated from subscription versus premium add-on revenue. Our pricing is in local currency and may vary between markets. As foreign currency exchange rates fluctuate, transactions carried out in foreign currencies other than the U.S. dollar could negatively impact revenue and distort year-over-year comparability of operating results. To the extent our ARPPU growth slows, our revenue growth will become increasingly dependent on our ability to increase our Average Paying Users.

Investing in Growth While Driving Long-Term Profitability

Key investment areas for us include continuing to expand and enhance our team as well as enhancing our platform and increasing the value we provide our users. Part of our efforts are focused on introducing new products, improving pricing and packaging, and localizing our products in international markets. We are also harnessing artificial intelligence and machine learning, which we refer to as AI/ML, along with prioritizing security and privacy, and improving matching capabilities for successful connections.

Attracting and Retaining Talent

Our business relies on our ability to attract and retain talent, including, but not limited to, engineers, data scientists, product designers and product managers. As of December 31, 2024, we had 147 employees globally, 142 of which were full-time employees. In 2024 we expanded and enhanced our team with new employees and contractors. In doing so, we significantly grew the size of our engineering team, including with the addition of a dedicated contractor team in Colombia consisting of 20 full-time engineers as of December 31, 2024. We will continue to selectively supplement immediate

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capacity and product development needs with contractors, particularly in supporting our engineering function. By building a performance-driven culture, we want to unleash Grindr’s and each of our employees’ full potential. In 2025, we intend to continue to focus on adding talent at a measured pace, especially in applied science, data engineering, and artificial intelligence and machine learning. We believe that many people want to work at a company committed to creating a world that is fair, equal, and just for the global LGBTQ community and that aligns with their personal values, and therefore our ability to recruit and retain talent is aided by our mission and brand reputation. We compete for talent within the technology industry.

Factors Affecting the Comparability of Our Results

Temporary variability and general advertising demand

Our ability to maintain consistently high advertiser demand for our platform can be affected by temporary trends in advertisers’ appetites to engage with our users or our brand. For example, events that result in temporary positive or negative publicity for our company (even if unfounded) may play a significant role in our advertisers’ desire to continue to advertise on our platform. Further, general economic conditions may lead to changes in advertising spending in general, which could have a significant impact on our results of operations. Such fluctuations in advertising demand are often unpredictable and likely temporary, but nevertheless could have a significant impact on the financial condition of our business.

Return-to-Office

In 2023, our leadership team announced a transition to a hybrid work model involving a multi-phase return-to-office plan (“RTO Plan”) beginning in the fall of 2023, which was largely completed by January 2024 and we expect to fully conclude by spring 2025. Our hybrid work model requires employees to work two days per week in offices where their respective teams are based. The RTO Plan provided employees with a one-time relocation package to support relocation if necessary, or separation packages for employees who chose not to relocate or participate in our RTO Plan. The RTO Plan temporarily resulted in (i) lower headcount, (ii) a greater reliance on contractors and other services, and (iii) higher severance expenses in 2023, and lower people related costs. In 2024, we expanded and enhanced our team while selectively supplementing immediate capacity and product development needs with contractors, particularly in supporting our engineering function.

International market pricing and changes in foreign exchange rates

The Grindr platform has MAUs in over 190 countries and territories. Our international revenues represented 42.2% and 41.7% of total revenue for the years ended December 31, 2024 and 2023, respectively. We vary our pricing to align with relative value to local competitors. Our international businesses typically earn revenues in local currencies. In addition, some of the platforms we work with utilize internally generated foreign exchange rates that may differ from other foreign exchange rates, which could impact our results of operations.

Key Components of Our Results of Operations

Revenue

We currently generate revenue from two revenue streams — direct revenue and indirect revenue. Direct revenue is revenue generated by our users who pay for subscriptions or premium add-ons to access premium features. Indirect revenue is generated by third parties who pay us to advertise to our users. As we continue to expand our revenue streams, we anticipate increasing monetization from premium add-ons and subscription offerings, contributing to an increase in direct revenue over time, and increasing our advertising inventory, contributing to an increase in indirect revenue over time.

Direct Revenue. Direct revenue is reported gross of distribution fees for subscriptions and premium add-ons as we are the primary party obligated in our transactions with customers, and we act as the principal. Our subscription revenue is generated through the sale of subscriptions that are currently offered or renewed in one-week, one-month, three-month, six-month and twelve-month periods. Customers pay in advance, primarily through mobile app stores, including Apple and Google Play, and, subject to certain conditions identified in the Company’s terms and conditions, generally all purchases are final and nonrefundable. Subscription revenues are recognized ratably over the term of the subscription. Premium add-on revenue is generated through the sale of an add-on feature on a pay-per-use, or a-la-carte, basis. Premium features are activated upon purchase and are available to use by the customer for a short duration, generally, within one day. Revenue from premium add-ons is recognized upon usage of the premium add-on. Direct revenue is recorded net of taxes, credits, and chargebacks.

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Indirect Revenue. Indirect revenue primarily consists of revenue generated by third parties who pay us to advertise to our users. We provide advertisers with the opportunity to target and directly reach the GBTQ community, a group with significant global purchasing power and economic potential. We have attracted advertisers from a diverse array of industries, including healthcare, gaming, travel, entertainment, and consumer goods. We offer a diverse range of advertising opportunities to advertisers, such as in-app banners, full-screen interstitials, and other customized units, typically on a CPM basis. Revenue from advertising transactions with advertising service providers is recognized net of the amounts retained by the advertising service provider as we do not know and expect not to know the gross amount paid by advertisers.

Cost of revenue and operating expenses

Cost of revenue. Cost of revenue consists primarily of the distribution fees we pay to Apple and Google Play, infrastructure costs associated with supporting the Grindr platform, which stem largely from our use of Amazon Web Services, and costs associated with content moderation, which involve ensuring that users are complying with our community standards.

Selling, general and administrative expenses. Selling, general and administrative expenses consists primarily of compensation and other employee-related costs, professional fees, sales and marketing expenditures, and general and administrative expenses, including facilities, insurance, and information technology support. We plan to continue efforts to attract new users, retain existing users and increase monetization of both our new and existing users, which may result in increased sales and marketing expenses in future periods.

Product development expense. Product development expense consists primarily of employee-related and contractor costs for personnel engaged in the design, development, testing, and enhancement of product offerings, related technology, and related software costs.

Depreciation and Amortization. Depreciation is primarily related to computers, equipment, and leasehold improvements. Amortization is primarily related to capitalized software development costs and acquired definite-lived intangible assets (customer relationships, technology, etc.).

Other income (expense)

Interest expense, net. Interest expense, net consists of interest expense incurred in connection with our long-term debt and revolving credit facility, net of interest income received on a promissory note to a member.

Other (expense) income, net. Other (expense) income, net consists of realized and unrealized exchange rate gains or losses.

Loss in fair value of warrant liability. Loss in fair value of warrant liability represents the change in fair value of our public and private warrants. As the private warrants are substantially similar to the public warrants, all of the warrants are remeasured from the publicly traded quotes from the active market. In February 2025, we completed the redemption of all outstanding public and private warrants.

Income tax provision

Income tax provision represents the income tax expense associated with our operations based on the tax laws of the jurisdictions in which we operate. Our effective tax rates will vary depending on changes in the valuation of our deferred tax assets and liabilities, fluctuations in permanent differences, and changes in tax laws.

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Results of Operations

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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Revenue

Revenue for the years ended December 31, 2024 and 2023, was $344.6 million and $259.7 million, respectively. The increase in revenue year-over-year was $84.9 million, or 32.71%.

For the years ended December 31, 2024 and 2023, direct revenue was $290.9 million and $225.3 million, respectively. The increase in direct revenue of $65.6 million, or 29.1%, was driven by year-over-year increases in ARPPU of $2.48 and in Average Paying Users of 139 thousand. Year-over-year growth for revenue was driven by enhanced paywall optimizations and merchandising strategies throughout the year, which strengthened subscription adoption across our XTRA and Unlimited tiers, and fueled continued demand for our premium add-ons. Weekly XTRA was introduced late in the second quarter of 2023 and weekly Unlimited was introduced late in the first quarter of 2024. Introducing our shorter duration weekly products gave our users lower priced options for both XTRA and Unlimited subscriptions. ARPPU increased by 12.4%, or $2.48, to $22.53 for the year ended December 31, 2024, from $20.05 for the year ended December 31, 2023. Our ARPPU increased as a result of improved product mix, with higher revenue generated by subscription products with higher average monthly-equivalent price, such as weekly Unlimited. We expect ARPPU to fluctuate in the near-term as we continue to test different subscription options across different price points and focus on generating more Paying Users. For the year ended December 31, 2024, Average Paying Users increased by 139 thousand, from 937 thousand for the year ended December 31, 2023, to 1,076 thousand for the year ended December 31, 2024.

For the years ended December 31, 2024 and 2023, indirect revenue was $53.7 million and $34.4 million, respectively. The increase in indirect revenue of $19.3 million, or 56.1%, was primarily driven by growth in first-party advertising and revenue from interstitial advertising from our third-party advertising platforms. First-party advertising was driven by existing advertisers continuing to make significant investments and by increasing the number of first-party advertisers on the platform.

Revenue from North America increased by $49.6 million, or 31.2%, to $208.6 million in the year ended December 31, 2024, as compared to $159.0 million for the year ended December 31, 2023. During this same period, revenue from Europe increased by $21.5 million, or 34.7%, to $83.4 million in the year ended December 31, 2024, as compared to $61.9 million in the year ended December 31, 2023. Revenue from the remainder of the world increased by $13.9 million, or 35.9%, to $52.7 million in the year ended December 31, 2024, as compared to $38.8 million in the year ended December 31, 2023.

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Cost of revenue

Cost of revenue for the years ended December 31, 2024 and 2023, was $87.6 million and $67.5 million, respectively. The $20.1 million increase, or 29.8%, was primarily due to a $14.9 million increase in app store distribution fees (consistent with direct revenue growth), and increased infrastructure costs of $5.1 million.

Selling, general and administrative expense

Selling, general and administrative expense for the years ended December 31, 2024 and 2023, was $114.7 million and $80.4 million, respectively. The $34.3 million increase, or 42.7%, was primarily due to higher personnel related expenses of $26.9 million from the increased headcount, including an increase of $18.9 million in stock-based compensation expense primarily related to executive incentive awards, and an increase of $8.1 million in employee compensation. There was also an increase of $7.1 million in marketing expenses to expand our branding efforts and an increase of $3.3 million in contractor expenses to support scaling our team. This increase was partially offset by a decrease in professional fees and legal fees of $2.9 million and $1.4 million respectively.

Product development expense

Product development expense for the years ended December 31, 2024 and 2023, was $32.8 million and $29.3 million, respectively. The $3.5 million increase, or 11.9%, was primarily related to a $6.7 million increase in contractor fees to support the engineering function while scaling the size of our team and an increase of $2.6 million in stock-based compensation expenses. This increase was partially offset by a decrease in personnel related expenses primarily driven by $7.8 million of severance expenses incurred in 2023 related to our RTO Plan with no comparable costs in 2024.

Depreciation and amortization

Depreciation and amortization for the years ended December 31, 2024 and 2023, was $16.9 million and $27.0 million, respectively. The $10.1 million decrease, or 37.4%, was primarily due to acquired intangibles amortization from an acquisition in June 2020. There was a $5.3 million decrease due to technology intangibles that had a three-year useful life, which were fully amortized in the second quarter of 2023, and a $4.4 million decrease due to customer relationship intangibles that were amortized under an accelerated amortization schedule, with higher amounts expensed in 2023.

Interest expense, net

Interest expense, net for the years ended December 31, 2024 and 2023, was $25.6 million and $46.0 million, respectively. The $20.4 million decrease, or 44.3%, was primarily due to lower debt balances and lower interest rates under the 2023 Credit Agreement entered into in November 2023.

Other (expense) income, net

Other (expense) income, net for the years ended December 31, 2024 and 2023, was net other expense of $0.7 million and net other income $0.1 million, respectively.

Loss on extinguishment of debt

Loss on extinguishment of debt for the year ended December 31, 2023, was $11.6 million due to the loss recognized on the early termination of our prior credit facility with Fortress Credit Corp. Refer to Note 9 to our audited consolidated financial statements included elsewhere in this Annual Report for additional information.

Loss in fair value of warrant liability

Loss in fair value of warrant liability represents the change in the fair value of our Warrants between each reporting period. The Warrants were remeasured to a fair value of $252.2 million as of December 31, 2024, because of the change in our public warrant price. For the years ended December 31, 2024 and 2023, we recognized a loss of $184.6 million and $49.7 million, respectively, related to the increase in our public warrant price between reporting periods. In February 2025, we completed the redemption of all outstanding public and private warrants.

Income tax provision

Income tax provision for the years ended December 31, 2024 and 2023, was $12.7 million and $4.0 million, respectively. The $8.7 million increase, or 217.5%, was primarily due to changes in year over year income, and changes in the computed annual effective tax rate, including nondeductible fair value adjustments on the change in the warrant

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liability, release of the valuation allowance, limitations on the deduction of officer compensation, foreign derived intangible income deduction, and research and development credits.

Our effective tax rates in future periods may fluctuate, as a result of changes in our forecasts, changes in actual results versus our estimates, or changes in tax laws, regulations, accounting principles, or interpretations thereof. Refer to Note 15 to our audited consolidated financial statements included elsewhere in this Annual Report for additional information.

Net loss

Net loss for the years ended December 31, 2024 and 2023, was $131.0 million and $55.8 million, respectively. Net loss increased by $75.2 million mainly due to $134.9 million increase in the loss in fair value of warrant liability, $47.8 million increase in operating expenses, and $8.7 million increase in income tax provision, partially offset by a $84.9 million increase in revenue and $20.4 million decrease in interest expense.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, and free cash flow conversion as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may differ from similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA adjusts for the impact of items that we do not consider indicative of the operational performance of our business. We define Adjusted EBITDA as net loss excluding income tax provision; interest expense, net; depreciation and amortization; stock-based compensation expense; loss in fair value of warrant liability; and severance expense, litigation-related costs, and other items, in each case, that are unrelated to our core ongoing business operations. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period.

Management uses this measure internally to evaluate the performance of our business and this measure is one of the primary metrics by which management and other employees are compensated. We exclude the above items as some are non-cash in nature and others may not be representative of normal operating results. While we believe that Adjusted EBITDA and Adjusted EBITDA Margin are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared and presented in accordance with U.S. GAAP.

Free Cash Flow and Free Cash Flow Conversion

We define free cash flow as net cash provided by operating activities less capitalized software development costs and purchases of property and equipment. Free cash flow is an indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after capitalized software development costs and purchases of property and equipment, that can be used to repay debt obligations and/or for strategic initiatives. Free cash flow conversion is calculated by dividing free cash flow for a period by Adjusted EBITDA for the same period. Free cash flow and free cash flow conversion do not represent our residual cash flow available for discretionary purposes and does not reflect our future contractual commitments.

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The following table reconciles our non-GAAP financial measures to the most comparable GAAP financial measures for the years ended December 31, 2024 and 2023.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["($ in thousands)","2024","","2023"],["Reconciliation of net loss to Adjusted EBITDA"],["Net loss","$","(131,001)","","","$","(55,768)"],["Interest expense, net","25,616","","","46,007"],["Income tax provision","12,711","","","4,023"],["Depreciation and amortization","16,910","","","27,041"],["Litigation related costs (1)","1,190","","","2,339"],["Stock-based compensation expense","37,272","","","15,824"],["Change in fair value of warrant liability (2)","184,557","","","49,689"],["Severance expenses (3)","58","","","9,355"],["Management fees (4)","\u2014","","","(97)"],["Loss on extinguishment of debt","\u2014","","","11,582"],["Other expense (5)","\u2014","","","163"],["Adjusted EBITDA","$","147,313","","","$","110,158"],["Revenue","$","344,636","","","$","259,691"],["Net loss margin","(38.0)","%","","(21.5)","%"],["Adjusted EBITDA Margin","42.7","%","","42.4","%"],["Reconciliation of net cash provided by operating activities to free cash flow"],["Net cash provided by operating activities","$","94,957","","","$","36,147"],["Less:"],["Capitalized development software costs and purchases of property and equipment","(5,345)","","","(4,230)"],["Free cash flow","$","89,612","","","$","31,917"],["Operating cash flow conversion (6)","(72.5)","%","","(64.8)","%"],["Free cash flow conversion","60.8","%","","29.0","%"]]
[[/GREPCENT_TABLE]]

_________________

(1)Litigation-related costs primarily represent external legal fees associated with outstanding litigation or regulatory matters, including fees incurred in connection with the potential Norwegian Data Protection Authority fine and CWA unionization.

(2)Change in fair value of warrant liability relates to the Warrants that were remeasured as of December 31, 2024 and 2023.

(3)Severance expense relates to severance incurred for employees who elected not to relocate or participate in our RTO Plan and other severance arrangements.

(4)Management fees represent administrative costs associated with San Vicente Holdings LLC's administrative role in managing financial relationships and providing directive on strategic and operational decisions, which ceased to continue after the Business Combination. In September 2023, certain management fees previously accrued were forgiven.

(5)Other represents other costs that are unrelated to our core ongoing business operations.

(6)Operating cash flow conversion represents net cash provided by operating activities as a percentage of net loss.

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Liquidity and Capital Resources

Cash Flows for the Years Ended December 31, 2024 and 2023

The following table summarizes our total cash and cash equivalents:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["($ in thousands)","2024","","2023"],["Cash and cash equivalents, including restricted cash (as of the end of period)","$","59,757","","","$","28,998"],["Net cash provided by (used in):"],["Operating activities","$","94,957","","","$","36,147"],["Investing activities","(5,345)","","","(4,230)"],["Financing activities","(58,853)","","","(13,036)"],["Net change in cash and cash equivalents","$","30,759","","","$","18,881"]]
[[/GREPCENT_TABLE]]

Cash flows provided by operating activities

Net cash provided by operating activities are primarily dependent on our revenues affected by timing of receipts from subscription and advertising sales. It is also dependent on managing our operating expenses, such as salaries and employee-related costs, selling and marketing expenses, transaction costs, and other general and administrative expenses. We expect to maintain strong operating cash flows given our historical performance. We will continue to invest in the right resources to support longer term profitable growth. Our operating cash flows should continue to cover our operating and financing costs.

During the year ended December 31, 2024, our operations provided $95.0 million of cash, which was primarily attributable to our net loss, adjusted for non-cash items, including loss in fair value of warrant liability of $184.6 million, stock-based compensation of $37.3 million, and depreciation and amortization of $16.9 million, partially offset by the cash flow impact from a change in net working capital of $8.8 million, primarily from a $15.0 million increase in accounts receivable due to increase in direct revenue and indirect revenue during the year, which was offset by $6.8 million increase in accrued expenses and other current liabilities due to timing of payments.

During the year ended December 31, 2023, our operations provided $36.1 million of cash, which was primarily attributable to our net loss, adjusted for non-cash items, including loss in fair value of warrant liability of $49.7 million, depreciation and amortization of $27.0 million, stock-based compensation of $15.8 million, and the recognition of a loss on extinguishment of debt of $11.6 million, partially offset by the cash flow impact from a change in net working capital of $7.3 million, primarily from $11.9 million increase in account receivables due to increase in direct revenue and indirect revenue during the year, which was offset by $4.7 million increase in accrued expenses and other current liabilities due to the timing of payments and certain litigation-related funds received from escrow. See Note 19 to our audited consolidated financial statements included elsewhere in this Annual Report for additional information.

Cash flows used in investing activities

Net cash used in investing activities in the year ended December 31, 2024, consisted of additions to capitalized software development costs of $4.4 million, as well as purchases of property and equipment of $0.9 million.

Net cash used in investing activities in the year ended December 31, 2023, consisted of additions to capitalized software development costs of $3.7 million as well as purchases of property and equipment of $0.5 million.

Cash flows used in financing activities

Net cash used in financing activities for the year ended December 31, 2024 was $58.9 million, resulting primarily from principal payments on debt of $50.8 million, payment to tax authorities for employee equity awards of $12.1 million, partially offset by proceeds from the exercise of employee stock options of $4.0 million.

Net cash used in financing activities for the year ended December 31, 2023 was $13.0 million, resulting primarily from net borrowings of $23.1 million and payment of an early termination fee of $6.3 million in connection with the refinancing of our credit agreement in November 2023, partially offset by proceeds of $19.4 million received upon repayment in full of our related party note to Catapult GP II LP. In January 2024, we repaid $22.0 million under our revolving credit facility.

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Sources of Liquidity

Since our inception, we have financed our operations and capital expenditures primarily through cash flows generated by operations, borrowings under our credit facilities, and the sale of equity. To the extent existing cash and investments and cash from operations are not sufficient to fund future activities, we may need to raise additional funds. We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of additional indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain additional covenants that restrict operations, including our ability to raise additional capital. Any additional equity financing may be dilutive to existing stockholders. We may also enter into investment or acquisition transactions in the future, which could require us to seek additional equity financing, incur indebtedness, or use cash resources.

As of December 31, 2024, we had cash and cash equivalents of $59.2 million. We believe that our cash and cash equivalents, cash flows generated by operations, and borrowings under our revolving credit facility will be sufficient to meet our working capital and capital expenditure needs for the next twelve months.

As noted above, in January 2025, we provided notice that we would redeem all of our outstanding Warrants on February 24, 2025. After we announced the redemption of the Warrants and before the conclusion of the redemption notice period on February 24, 2025, an aggregate of 27,315,105 Warrants were exercised for an aggregate of 27,315,105 shares of our common stock at an exercise price of $11.50 per share, for aggregate cash proceeds to us of $314.1 million. In addition, 9,469,634 Warrants were exercised on a cashless basis in exchange for the issuance of 3,418,518 shares of our common stock.

As a result of the $314.1 million cash proceeds received from the exercise of the warrants, we had cash and cash equivalents of $394.7 million as of March 5, 2025. In March 2025, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $500 million of shares of our common stock for the period from March 7, 2025 to March 6, 2027. Our stock repurchase program does not obligate us to repurchase a minimum amount of shares. Under the program, shares of our common stock may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Senior Secured Credit Facility

See Note 9 to our consolidated financial statements included elsewhere in this Annual Report for additional information.

In November 2023, we refinanced our existing credit facility with a new $300.0 million term loan and $50.0 million revolving credit facility. We entered into a credit agreement with JPMorgan Chase Bank, N.A., as the administrative agent, and other lenders party thereto (the “2023 Credit Agreement”) that governs the term loan and revolving credit facility. We borrowed the full amount of the $300.0 million term loan and $44.4 million under the revolving credit facility upon closing of the new credit agreement and used the proceeds and cash on hand to repay in full all outstanding obligations under, and terminate, our prior credit agreement with Fortress Credit Corp. As of December 31, 2024, $282.0 million was outstanding under the term loan and $11.6 million was outstanding under the revolving credit facility. In January 2024, April 2024, and June 2024, we repaid $22.0 million, $7.0 million, and $3.8 million, respectively, under our revolving credit facility. We have the option to request that lenders increase the amount available under the revolving credit facility by, or obtain incremental term loans of, up to $100.0 million, subject to the terms of the 2023 Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.

Our wholly owned subsidiary, Grindr Capital LLC, is the borrower under the 2023 Credit Agreement and all obligations of Grindr Capital LLC under the 2023 Credit Agreement are guaranteed by Grindr Inc. and, subject to certain limited exceptions, our wholly owned domestic subsidiaries and are secured by substantially all of the assets of Grindr Inc., Grindr Capital LLC, and the guarantor subsidiaries.

Borrowings under our the 2023 Credit Agreement (other than swingline loans) bear interest at a rate equal to either, at our option, (i) the highest of the Prime Rate (as defined in the 2023 Credit Agreement), the Federal Funds Rate (as defined in the 2023 Credit Agreement) plus 0.50%, or one-month Term SOFR (as defined in the 2023 Credit Agreement) plus 1.00% (the “Alternate Base Rate”); or (ii) Term SOFR, in each case, plus an applicable margin ranging from 2.75% to 3.25% with respect to Term SOFR borrowings and 1.75% to 2.25% with respect to Alternate Base Rate borrowings. The applicable margin will be based upon our total net consolidated leverage ratio. Swingline loans under the 2023 Credit Agreement bear interest at the Alternate Base Rate plus the applicable margin. We are also required to pay a commitment fee for the unused portion of the revolving credit facility, which will range from 0.375% to 0.50% per annum, depending on our total consolidated net leverage ratio.

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The term loan will amortize on a quarterly basis at 1.25% of the aggregate principal amount outstanding as of the initial closing date of the 2023 Credit Agreement, until the final maturity date on November 28, 2028. Any borrowings under the revolving credit facility may be repaid, in whole or in part, at any time and from time to time without any other premium or penalty, and any amounts repaid under the revolving credit facility may be reborrowed, in each case, until the maturity date on November 28, 2028.

Mandatory prepayments are required under the revolving credit facility when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders. Mandatory prepayments are also required under the term loan in connection with (i) certain asset dispositions and casualty events, in each case, to the extent the proceeds of such dispositions or casualty events exceed certain individual and aggregate thresholds and are not reinvested, and (ii) unpermitted debt transactions. For the years ended December 31, 2024 and 2023, we were not required to make any mandatory repayments.

The 2023 Credit Agreement requires compliance with certain financial covenants including a maximum total net leverage ratio and minimum fixed charge coverage ratio. The 2023 Credit Agreement also contains customary restrictive covenants regarding indebtedness, liens, fundamental changes, investments, restricted payments, disposition of assets, transactions with affiliates, hedging transactions, certain prepayments of indebtedness, amendments to organizational documents, and sale and leaseback transactions. The 2023 Credit Agreement contains certain customary events of default. If an event of default has occurred and continues beyond any applicable cure period, all outstanding obligations under the 2023 Credit Agreement may be accelerated or the commitments may be terminated, amongst other remedies. Additionally, the lenders are not obligated to fund any new borrowing under the 2023 Credit Agreement while an event of default is continuing.

Uses of Cash

Our principal commitments consist of obligations under our credit agreement, operating leases for office space, and our payments for the use of cloud services. In addition, we are subject to pending legal proceedings from time to time, including a potential NDPA fine. If we receive unfavorable results in one or more legal proceedings, we could be required to make substantial cash payments. See Note 19 to our audited consolidated financial statements included elsewhere in this Annual Report for additional information.

Critical Accounting Policies and Estimates

We believe that the following critical accounting policy reflects the more significant estimates, assumptions, and judgments used in the preparation of our consolidated financial statements. These estimates, judgments, and assumptions impact the reported amount of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities as of the date of the consolidated financial statements. Because of the size of the financial statement elements to which they relate, some of our accounting policies and estimates have a more significant impact on our consolidated financial statements than others. We have based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from our estimates. For additional information, see the disclosure included in Note 2 to our consolidated financial statements included elsewhere in this Form 10-K.

Stock-based Compensation

We measure the fair value of restricted stock units that are subject to market conditions using a Monte Carlo simulation model. Prior to vesting, compensation expense is recognized over the derived service period, which is determined at the grant date. The Monte-Carlo model is updated to measure the fair value of the liability classified awards at each reporting period. Our use of the Monte Carlo simulation model requires estimates, including the expected volatility. The expected volatility assumption is developed using a blend of historical volatility observed for the peer group companies and the Company's specific volatility. The determination of the peer group is inherently uncertain and changes in the assumption could have a material impact on the fair value of the liability classified awards.

Other Matter

Organization for Economic Cooperation and Development Base Erosion and Profit Shifting Project - Pillar 2

Changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project undertaken by the Organization for Economic Cooperation and Development (“OECD”). The OECD, representing a

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coalition of member countries, has recommended changes to long-standing tax principles related to transfer pricing and has developed model rules, including establishing a global minimum corporate income tax tested on a jurisdictional basis (referred to as “Pillar Two”). Many jurisdictions have either adopted or announced an intention to adopt Pillar Two for tax years beginning in 2024. While there was no impact in the current year, legislation will be monitored going forward for potential impacts in prospective periods.

Recently Issued and Adopted Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report for additional information.