Why Grindr Stock Popped Today

What happened

Shares of Grindr (NYSE:GRND) were moving higher today after the online dating company focusing on the LGBTQ community posted better-than-expected results in its second-quarter earnings report.

As of 11:17 a.m. ET, the stock was up 13.9%.

So what

Grindr reported 32% growth in revenue to $61.5 million, topping the company's own guidance. Monthly average users (MAUs) rose 8% to 13.1 million, and it now has 929,000 paying users, representing 7.1% of its user base.

The company credited several feature improvements for the strong results, including a newly designed home screen, faster load times, and a new one-week subscription plan that helped drive an increase in average paying users.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose $26.9 million, equal to a 44% EBITDA margin.

On a generally accepted accounting principles (GAAP) basis, Grindr reported earnings per share of $0.13, compared to a loss per share of $0.03 in the quarter a year ago.

CEO George Arison said, "Through the first half of 2023, Grindr has executed very well on our near-term priorities, from delivering a better experience for our users to further optimizing monetization."

Now what

Looking ahead, Grindr also raised its outlook for the year, now calling for 28% revenue growth, up from a previous target of 25%, and it expects a 41% adjusted EBITDA margin.

Grindr, which went public through a special purpose acquisition company (SPAC) last November, now trades at less than 10 times forward EBITDA, making it look cheap for a stock with its growth rate. However, the company has a relatively high debt burden, creating a drag on profits as its interest expense was $13 million in the quarter.

The stock hasn't attracted much attention from Wall Street but growth stock investors may want to take a closer look at the stock after the strong round of results as it's likely to move higher if it maintains this momentum.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.