Q4 2020 Bumble Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Bumble Q4 and year end earnings Conference call. At this time all participant lines are in a listen only mode. After the speaker's presentation there will be.
A question and answer session to ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Brittany Johnson from the Blue shirt group. Thank you. Please go ahead ma'am.
Thank you for joining us to discuss bumble fourth quarter and full year 2020 financial results with me today is Whitney Wolpert, founder and CEO, Eric jacket, President and a new dual gradient CFO of bumble before I begin I'd like to remind everyone that certain statements made on this call. Today are forward looking statements. These forward looking statements are subject to various free.
And uncertainties and reflect our current expectations based on our beliefs assumptions and information currently available to us. Although we believe these expectations are reasonable we undertake no obligation to revise any statements to reflect changes that occur. After this call descriptions of these factors and other risks that could cause actual results to differ materially from these forward looking statements are discussed in more detail.
And our filings with the SEC, including the perspective right initial public offering filed with the SEC on February 12th 2021.
Periodic filings such as our upcoming annual report on form 10-K for the year ended December 31 2020 during.
During the call. We also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not a substitute for or in our leasing for my GAAP results reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at IR day, Bumble Dot com.
With that I'll turn it over to Whitney.
Thank you again Lee and thank you all for joining Bumbles first earnings call.
We're so excited about advancing our mission and our leadership position in the online dating and connection space as we strive to create a world where all relationships are healthy and equitable.
As we celebrate international Women's day in women's history month, I want to take a moment to honor and thank all of the incredible women leaders that have come before me and have paved the way for more women to be in the same state that I'm in today I'm proud to say that over 70% of our board and over 50 per.
Nine of our senior management team are women.
We've shown that when you prioritize women in business you can be a part of positive change and final opinion Lee fuel shareholder value.
Now, let's shift gears to our earnings we achieved strong fourth quarter results closing out a great 2020, our fourth quarter revenue increased 31 per site year over year to $166 million driven by a significant increase in paying users across both bumble and video App.
For the full year 2020 revenue increased 19 per client year over year to 582 million fourth quarter. Adjusted EBITDA was 44 million in full year adjusted EBITDA was $152 million.
We ended 2020 with over $2 5 million paying users up 22 per foot year over year, demonstrating the power of our brands and our staff and continuing to attract new customers.
Before sharing some highlights from Q4 and outlining our priorities for 2021 for those new to the story I want to share some background on bumble.
Bumble, Inc. As the umbrella brand of Bumble and Badu, the two apps.
I founded Bumble in 2014 as the solution, what I believe are broken and relationship.
From my time working at the forefront of the ryzen mobile dating and from my personal experiences I've had firsthand insight into both what work and even more importantly, what could be improved upon for women in dating and relationship.
I was able to identify immense white space recognizing that the product from the market will focus on only the mail, whereas there was a clear need for a woman force online dating platform a product with the woman reorient the mines in order to build the product technology and platform.
Women are helped us start from fixed thing what I saw is broken put them first for too long women around the globe have been told not to go first.
They've been told to wait and second the Internet is not accountable it doesn't encourage that behavior and it doesn't have guardrail to protect women. When you layer. These two issues the gender and equity becomes exacerbated so he's put out to address these two fundamental issues in relationships with the creation of bumble.
Bumble App is the women's birth dating and relationship platform we.
Womens wants needs and safety at the core of everything from product and engineering marketing on Bumble women must always makes up our flow unbuttoned buffer message. This helps recalibrate gender golan by giving women control at the start of the relationship. So not very first message. This makes connections better for ever.
This does not alienate or isolate men in fact, it may day.
Our experience better and makes relationships better and more meaningful for all.
So when I founded Bumble I did so in partnership with Baidu and their global team I did this to leverage their years of technology infrastructure their products resources and their boss international scale identified a massive market opportunity a new we had a differentiated approach the total addressable market for.
Dating is enormous and the other ancillary verticals for relationships online or even bigger given our brand and our relentless focus on product leadership, we are uniquely positioned to capitalize on this opportunity.
But this is just the beginning we want to build the preeminent global women's brand and to be there with a woman's entire lifecycle.
There is so much bigger than just our apps alone through our mission. We're building a movement on the brands that connect deeply with people around the world. Our platform is purposely designed for us to diversify outside of dating we've always had this in mind in fact, our friendship and networking offering bumble bee.
From Bumble bids are derivative of our users looking for opportunities to meet new people Platonic lean professionally through our app.
Our performance this past year has proven the durability of our business model through the pandemic. Our team reacted quickly to the changing landscape, where people became increasingly comfortable with leveraging technology to interact with other women engagement in particular has increased during COVID-19 and we've continued to see strong paying us.
Our growth in user engagement, which will enable us to emerge from the pandemic in an even stronger position, allowing us to continue to grow in the post COVID-19 environment.
Much like Q3, Q4 demonstrated our team's ability to mobilize during the ongoing pandemic and to provide features across bumble app and baidu app in a manner that drove notable growth in user and engagement.
On Bumble up recent launches like our Covid preferences, our improved unmatched process safety center in our body shaping policy underscore our commitment to prioritize the safety and accountability to enhance the user experience.
For example, the updated unmatched process makes it impossible for a bad actor to unmatched with someone without that user having the option to report any bad behavior to a moderation team. This.
Advanced represents another industry first for Bumble and provides added protection for our users.
We also launched our second revenue tier bumble premium with a range of additional value added features such as incognito mode and travel mode. We are pleased with the results. We've seen so far and we expect the global rollout to be completed in 2021. Additionally, we launched reactions, which gives users the ability to pay.
Abide emoji baked feedback on photos and their profile, providing another way for people to discover and match with each other and we launched our make the first smoothed camp home showcasing the inspiring love stories of the couples that met on bumble. During Covid. This was coupled with a dating one O. One in 2021 guide on.
The Baidu App in Q4, we furthered our mission of dating honestly true the rollout of moods and satisfies this new feature allows users to express themselves cheaper through emojis and by adding fodder says that reflect our current moves such as ready to chat message me looking to meet up and many other the day we have.
Seen a significant increase in charter activity and chat initiation, giving the user sentiment we've seen in the pandemic in different countries, we shifted our marketing focus on higher ROI campaigns on per acquisition at the expense of MAU growth. We believe this has been the right trade off to position the brand for future growth as conditions in.
Proven regions like Brazil in Western Europe.
As our momentum continues in 'twenty 'twenty, one and beyond we are laser focused on free top priority driving scale, increasing monetization and improving profitability.
First we're driving scale by growing our user base and improving conversion in our existing markets for both bumble in Baidu App. Our plans include continued efforts to attracting users through marketing and product innovation, our users connect deeply with our brands, making them powerful marketing tools, which generate word of.
Now virality and powerful network effects, thus driving user growth and strong unit economics. We're also growing through international expansion the power of our mission coupled with our expertise in building local market ecosystems across both bumble and Baidu apps helps us expand efficiently.
For example.
Oh, we have seen our play book work, well in India, Mexico, and Germany, where we have seen rapid acceleration of users in the last few quarters. We can draw on these lessons to accelerate expansion into markets, such as Western Europe, Southeast Asia, and Latin America.
Technology is at the core of what differentiates our platform and enables us to remain customer obsessed driving our growth is our continued investment in product features and functionality.
On the foundation of safety and accountability, but it's so core to everything we do in particular, we see a real opportunity to build for the post COVID-19 environment, where we expect our users to continue some of the flow and virtual dating behaviors that they've adopted through the pandemic, we expect the future to be a much more robust mix of ores.
Mine in offline, even more so than what we saw pre pandemic.
And we're also expanding beyond just stating we're going into new categories, we see a huge opportunity here and we're just at the very early stages, we've seen strong engagement from our two ancillary products Bumble Bee ethos.
As for Platonic relationship from bundled bids which are for professional relationship we're planning to increase our focus on bumblebee at Fox with anthem.
So first on enhancing the product beyond the minimum viable product and then driving real user engagement next we are focused on improving monetization. We are still early in our monetization journey.
We expect to increase paying user of an RP pool over time for both bumble and Bumble App.
We're developing new monetization features and improving existing theatre in order to increase adoption of in App purchases and our subscription programs. We're also testing new pricing strategies, including different tiers and user fragmentation and finally, we believe that we will be able to improve our profitability.
Our business continues to scale, our near term focus is on making strategic investments in growing our community our product and our technology to capitalize on the large market opportunity that exists our financial model is characterized by a rare combination of growth scale strong profitability.
Our cash flow generation and this positions us well for the long from.
Our IPO with a pivotal milestone, but we're truly just getting started and we're so excited for the next chapter of our journey and now more than ever people all over the world have come to understand the fundamental value of healthy and meaningful relationships and their lives looking ahead, we believe that as well.
<unk> slowly transitioned back to a post pandemic lifestyle more customers will have identified the value proposition that online dating.
Really truly offers them, we expect that there's a lot of pent up demand from people who've been avoiding in person dating all together during COVID-19. So not only have we been hyper resilient through Covid. We believe we are going to benefit significantly and that we are well positioned in the reopening as well so in conclusion.
Susan Bumble is more than our App. Our mission is powering a movement and this approach ensures that our values guide our business decisions and that our business performance enables us to drive impart our strategy is anchored by our powerful brands product leadership operational excellence.
Lynn and impact initiatives in 2021, we will focus on driving scale and increasing our active user improving our monetization.
Positioning Bumble, Inc for long term profitability.
Before signing off I want.
Want to thank our amazing team, who have shown incredible resilience through a very difficult year without you we would not be where we are today and thank you so much to our partners and to our investors.
I look forward to keeping you all updated on our progress and with that I will turn it over to <unk> to discuss our financial performance.
Thanks, Whitney and Hello, everyone. Thank you again for joining us on our first earnings call.
I will first talk about our fourth quarter earnings and full year 2020 performance and then I will provide our outlook for Q1 and full year 2021.
Before we dive in I wanted to recap what everyone. Some of the key metrics that we use to manage our business.
Both the bumble and Baidu app's monetize by a freemium model, where the use of our service is free and a subset of our users pay to access premium features either buy our subscriptions are in app purchases.
We look at paying users during a given period of time as a key indicator affordability to convert free users into users that pay for access to these premium features.
So look at the average revenue generated by these paying users, which we call our people.
Now, let's talk about earnings in the fourth quarter, we continued to build on the strong momentum we saw in Q3 and close out the year with very strong Q4 performance.
Our total revenue for Q4 was 166 million up 31% year over year.
Bumble App revenue was 106 million for the quarter, which was up 47% year over year.
This growth was driven by a combination of increases in paying users as well as our people.
Bumble are paying users were up 42% year over year with increases coming from both North America and international markets.
The growth in paying users was driven by February monetization and product features that we rolled out all throughout 2020.
As Wendy mentioned, we also introduced our second pricing tier and bumble called Bumble premium, which we rolled out successfully in Q4 two.
Two tier subscriptions are now live globally for Iowa, and are being rolled out country by country for Android.
Early indications have shown a positive impact on our people in these launch countries.
We've also continued to iterate on packaging of in App purchases such as spotlight in Superscribe. This combined with other pricing optimization work has also led to an increase in our people.
Bumble apps are people increase from Q4 by 4% sequentially compared to Q3 and was up 3% year over year.
But do App and other revenue was $60 million in Q4, which was up 10, 5% year over year.
Similar to Bumble. This growth was driven by strong improvements in per penetration with paying users up 25 per cent year over year in Q4 with strong contributions from countries, such as Brazil, Russia and Poland.
But do App, our people increase from Q4 by 1% sequentially compared to Q3.
Now moving on to expenses for the quarter.
Our cost of revenue was stable from Q4 at 27% of revenue.
And our sales and marketing expenses in the quarter were 29 per cent of revenue a significant improvement compared to 32% in Q4 of 2019.
The decrease was mainly driven by efficiencies in marketing campaign as revenue have scaled.
Our G&A expense, excluding stock based comp and one time costs reduced to 11% of revenue compared to 15% in Q4 2019, and this was partially driven by COVID-19 related savings.
We have strong operating leverage in our business, which is driven by our high flow through rate efficient marketing strategy and our share tech platform and infrastructure.
All of this translates to a profitable financial model for us.
Adjusted EBITDA of 44 million was up over 100 per cent year over year and the adjusted EBITDA margins in the fourth quarter expanded to 27 per cent from 17% in Q4 2019.
On a full year 'twenty 'twenty basis, our revenue was 582 million up 19% year over year.
Bumble App revenue was $360 million, which was up 31 per cent and Baidu App and other revenue was 222 million, which was up 4% year over year.
Total paying users for the year increased 22 per cent to $2 5 million. The bumble are paying users at 1.1 million and Baidu app and other paying users at 1.4 million per the year.
Our people for the full year was $18.89 down 2% versus 2019, and this was impacted by a reduction in deferred revenue of $15 million recorded in purchase accounting.
Excluding the impact of that are our people would've been up 1%.
Adjusted EBITDA for 'twenty, 'twenty was 152 million with margins growing to 26 per cent from 21 per cent in 2019.
Now moving on to our financial outlook for 2020 one.
Q1, we're expecting revenue to be in the range of 163 $265 million.
This represents a growth rate of 38% at the midpoint of the range versus Q1, 'twenty 'twenty four.
But adjusted EBITDA, we'd expecting to be in that age of 41 to 42 million, which represents an EBITDA margin of 25 per cent at the midpoint and a growth rate of 88% versus Q1 2020.
For full year 'twenty 'twenty, one we'd expecting revenue to be in the range of 716 to 726 million.
This represents a growth rate of 24 per cent at the midpoint of the range.
But adjusted EBITDA, we are guiding between 273 278 million, which represents an EBITDA margin of 24 per cent at the midpoint.
Our outlook for full year 'twenty 'twenty, one reflects additional investments in areas of product and technology potential impact of Google play starting in Q4 as well as step up in G&A costs in the areas of finance legal and compliance.
In conclusion, we are proud of the business, we've built and are very excited for the future.
We see a significant opportunity ahead of us from a user growth and revenue as well as from a profitability perspective.
So I just wanted to say, thank you and now we can turn to Q&A.
Thank you.
To ask a question you would need to press Star then one on your telephone to withdraw your question. Please press the pound key.
Our first question comes from the line of Nick Jones from Citi. Your line is now open.
Great. Thanks for taking the questions two from me I guess one.
I guess in <unk> and maybe you know through once you so far what changes or shifts are you seeing in engagement and willingness to pay.
Exchange rollout and restrictions loosen and then the second question really is can you expand a little bit on your international expansion plans for 2021. Thank you.
Sure Hey, this is this is park.
So I'll try and take those in turn.
So from an engagement standpoint, we're really seeing a continuation of the trends and we've really been seeing for most of 2020, which is that engagement itself in terms of daily.
Daily usage of the App stickiness of the App repeat usage and chat on the App is generally been very strong and increasing throughout the year even in markets that are on a relative basis loosening up from a markdown standpoint, we're seeing those engagement gains that we've seen this year really holds up.
Quite strong. So we are encouraged by the activity that we're seeing on both bumble and do and particularly that engagement with existing users.
As it relates to international expansion I think that a lot of the success that we've been seeing if I take the <unk>.
Bumble App.
In parts of Western Europe. For example, we're very much leaning into those opportunities is a bit of a strange year you'd imagine with vaccine rollouts in lockdown plans, we have a very nimble and agile approach to this but we are seeing a lot of traction in markets in in Western Europe as well as some markets in South east.
Asia and so we're continuing to lean in to those markets, where we see traction there on the Baidu App and.
We already have quite a global footprint and to do and we're really again, just being agile investing where we see those green shoots in these different markets, but really focusing on the existing footprint for Purdue. Yeah. This is Whitney I just want to chime in there and say that we're also seeing the trends continue.
As it pertains to women really being in control of their narrative in.
Relationships and so this this woman first approach is really resonating in our international markets as well.
Great. Thank you.
Thank you.
Thank you.
Our next question comes from the line of Mike <unk> with Goldman Sachs. Your line is now open.
Hey, good afternoon, and congratulations on your first earnings call. Thanks for the question I was just wondering if you could talk a little bit about how changes in stay at home measures might affect engagement with the bumble up and what you're assuming for this year, specifically do you think theres going to be pent up demand that will draw.
Five outsized engagement at some point later this year or do you expect people to be a little bit more cautious about dating with some lingering concerns around COVID-19. Thank you very much.
Hey, Mike.
Sure. So I think just building off of what I was saying on the engagement side, certainly where markets start to reopen we do see some evidence of that of that pent up demand that there's there's markets around the world.
Such as New Zealand as an example that have had more success.
Controlling COVID-19 than in other markets and we do see in those places that you have the engagement gains as I as I mentioned earlier that persists, but more people coming into the market that would otherwise have been sitting it out so.
We see that I think we're taking a fairly cautious and.
And nimble approach on on projecting exactly when that pent up demand will will materialize and has not followed an obvious pattern for us, meaning just because one country may lift the lockdown it doesn't necessarily change consumer behavior that quickly and so I would say that we are.
Painting, a very nimble stance on this or we invest where we see traction, but we're not counting on.
And overly fast.
Our spring back I guess as conditions change just to jump in as well to further <unk> point. This is Whitney speaking.
Yes.
It's really never been a moment in recent history that will present itself with such a demand to meet new people and to date again, the entire globe has gone through incredibly lonely period, and while we've seen you know the connection take place in relationship.
Form digitally we believe that that digital first approach lives on in a post pandemic world where people have found the ease and the safety component and the accessibility and the opportunity that they get through meeting on bumble or Madhu that has served them so well and we believe that this.
Digital approach is going to only further our opportunity meaning they meet digitally they get to know each other digitally and then they go meet in the real World and then not just creates more word of mouth and that just creates a more user acquisition opportunity and so we are very optimistic about the reopening and we also bill.
Leave that people will still rely on the digital per approach.
Great. Thanks, Whitney Thanks, Tarek that was very helpful.
Thank you Mike.
Thank you. Our next question comes from the line of launching with Morgan Stanley. Your line is now open.
Great. Thank you I was just wondering if you could talk a little bit about geographic performance that you saw in the fourth quarter. If there are any sort of regions or countries. In particular that may have had an outsized impact on the quarter quarter quarter over quarter decline in net adds maybe some of the lockdown countries and then my second question is just any.
Additional color on the rollout of a bumble premium how that's going in terms of upgrade rates or conversion rates from free users.
Sure. So in terms of if I understand the question correctly.
The international side, we certainly I think probably the most notable piece was a little bit of a bump and I wouldn't overstate this but in the UK as they instituted some of their really.
Really quite severe lockdown measures that they've had in place for a while we did see particularly some registration slowdown in in the U K, what we typically find with this win new measures are put in places there's a essentially an adjustment period that happened. So we haven't found needs to be permanent reductions from the kind of.
Covid trend, we had seen before but you do see this initial reaction of people hunkering down or just trying to figure out what their life is going to be like and locked down and then life gets.
A little bit back to normal and so.
We call it the UK as being possibly the.
The most notable.
Sample there if you look at markets.
Like India, which have had a slightly more success in controlling the virus recently, we do see some slight upticks, there as well, but as I mentioned earlier, it's really hard to draw a straight line between lockdown measures and registration performance because there is I think just some consumer psychology that goes into this.
To predict.
And then Andy why don't you take the normal premium.
Yeah, so in terms of bumble premium.
In my remarks, so two tier subscriptions or non live globally with iOS.
And we're starting to roll it out for Android and you know.
I'll go through the first half of the year.
We've seen very positive impact on RFP blue App in.
Of these launch countries.
You know in the beginning of November for example in Q4, when we launched in the U S. We saw bumps.
Now up to 6% just in the U S. For example.
So we are very pleased with the results that we've.
We've seen from mumbled premium and we're looking forward to the Android launch them for the rest of the year.
Great. Thank you.
Hey, good morning.
Thank you. Our next question comes from the line of John Blackledge with Cowen. Your line is now open.
Great. Thank you two questions what has worked in markets like Germany, Mexico, and India to drive the SaaS paying.
To drive those faster user growth.
And can you replicate that in other markets and then just any color on the adjacent services like Bff index.
Thank you.
Thank you.
So we have a very unique approach a bubble and we really lean into our organic story, our organic brand narrative and we've seen that really be the foundation and the flywheel to the growth in these international markets, namely we focus on the women customer and as we go.
In two different markets.
One thing remains the same across the world women want relationships and they want to be treated with respect and they want to be in control of their relationships. This is a global need and so we really.
We make sure that we are paying attention to the nuances and culture and in the hyper local areas and then we deploy our organic growth strategy that has been so successful in our core markets. So we replicate that but with nuances to be mindful of the culture and as you've seen from our.
Our tanks are our performance split in terms of how we spend organic versus paid we really lean into these organic channels really building our brand really building advocates for our brand really leaning into our competitive advantage, which is a safe empowering platform that focuses on the one.
<unk> experience.
And this is really foundational to.
A word of mouth, and then we support that through our meaning.
Meaningful distribution channels, either organic or through our support are supported paid channels as well. So this is a strategy that we have seen work in numerous markets and we really would attribute that to our unique.
Our unique brand approach and those are really what fuel our growth and give us a competitive edge.
Okay.
Oh and lets discuss yes, app, so that there's a really interesting trends.
That has been taking place in the connection space, which is this desire to have put tonic relationships you.
Net on technology Doctor find love anymore, now that's not negating the massive opportunity ahead for dating which we are very focused on at this fascinating thing that has taken place with our brand in particular over the last few years is the desire and the willingness to use our products for more than <unk>.
Early on Bumble up and so we are really leaning into this opportunity and our brand gives us permission. There is not stigma around finding a friend on humble and so we're taking advantage of that opportunity and we are really working on moving from this.
Early call it test phase product that we have had over the last few years.
We're working on a strategy to really deploy.
A real resource and allocated approach to be up how can we think that friendship is going to be a massive opportunity in the future platonic relationships at large.
And John it annoying.
Annoying.
Moving to your question on kind of be replicated what we're seeing for example in Germany.
In Q4 about 100, roughly 150% increase in monthly active users year over year and <unk>.
And that has really been a focus of ours, but we're seeing almost a.
Call. It a spillover effect in countries nearby where we're seeing very high double digit growth and in some cases triple digit growth in the surrounding market. So we do think that that as we build scale in different regions you have the.
Yes, we have the ability to accelerate the pace of rollout.
Super helpful. Thank you.
Sure.
Thank you. Our next question comes from the line of Cory Carpenter with Jpmorgan. Your line is now open.
Thanks for the questions, hoping you could talk a bit about the product roadmap. This year and your key priorities for the bumble out maybe beyond premium, which I know we've discussed and then I think for new just within the context of your revenue guide could you talk about how you're thinking about the relative contribution from payers and <unk> and then also.
Bumble App and Baidu. Thank you.
Great well why don't I start.
And then I'll turn it over to on your on the second piece, though in terms of the product roadmap.
On both bumble and.
We could do there is a couple of key themes we are definitely.
Preparing and leaning into the reopening theme you know exactly when it happens we don't know, but this notion of the Whitney mentioned earlier of.
We believe people will still be using digital are apt to find connections to make connections, but theyre going to one helping the rest of their dating life and and we believe that's a sizable opportunity for us. So we're really thinking through how do we help people from a product standpoint take that next step in the real world.
Make the planning in the organization and in the ability to spend really in making.
The relationship successful.
Easier and so that's certainly one key theme. We're also very much leaning the discovery mechanisms you know we think that.
You know, we have a number of different ways, where people can discover and meet each other but a lot of this.
Really is ripe for innovation and we are spending a lot of time thinking about how do we ensure that we are doing our job of helping you find and discover people.
But you really want to meet and.
So that's a big area of focus both algorithmically from a machine learning standpoint, as well as from a actual discovery.
The mechanisms for swiping through different profiles and things like that.
And then lastly, we have a number of areas, where we believe that.
That.
That helping you break the ice to start getting to know each other better is really a key area. It's been a GAAP predating apps historically we.
<unk> had been piloting as an example, this program we call night in which is starting with a trivia night that you and your match can and start to get to know each other through games and through other types of mechanisms. This has been piloted in Canada. It actually launches in the U S Tomorrow.
March 11th.
And we're very optimistic that.
About that that line on our <unk>.
I'm thinking in a product roadmap because it's not just about finding that initial connection it's about starting to get to know each other in these lower stakes ways in these more casual ways and so we're very much experimenting and leaning into those areas. Yeah. This is whitney just to further that with a couple of other topics, we're paying very close attention to safety and accountability.
So really reinvesting and further investing into the safety and the accountability of our community and our ecosystem really engineering, a safer better and more authentic and more accountable experience across the board and then.
Theme that we're really focused on our product roadmap is community. So when you think about dating products historically and currently a lot of it is one to one but the need and desire to both meet that special someone through community or to build community around these one to one connections is really important so we're really.
Flooring and working through the future of that and being part of bringing people together through community driven teams topics struggles joy is and that will extend beyond romantic. So you can expect to see this deep focus on community building and building and relevant community building.
Our in our relaunch of CFS win when that rolls out and so community is very important but the underlying scheme for everything is safety and accountability and Ani was going to jump in as well yeah, hi, So just to answer the question around outlook. So if you think about Q1, just based on what we are seeing today.
Bumble.
We are.
<unk> seen strong growth in Paris, as well as our people.
And that's really been a function of a lot of the work on monetization that we started in the second half of 2020.
We are still seeing benefits.
So we will continue to see strong growth in Paris with Q1 on the bumble side and on the people side as well you know on a year over year basis, you should expect to see a nice.
Nice growth on a sequential basis, it would be less because no Q4 does take into account quite a quite a large portion of the bumble premium increase.
Increase that we've seen.
And on the book side as well.
The work that we've been doing around improving per penetration and the parents.
Something that is continuing in Q1 as well.
Just to do just given the global nature.
Off Badu vs. Bumble Covid is it still is very much a strong presence in Q1, and so you know.
I would say that compared to bumble badu is feeling the effects of that a little bit more again, just given the geographic.
Neil.
Now do updates.
But that's.
Largely how we're thinking about the mix of where we think the revenue growth comes from for Q1.
Thank you.
Our next question comes from the line of John Egbert with Stifel. Your line is now open.
Great. Thanks for taking my question.
Two kind of related question, taking a bigger picture view on the pandemic impact obviously lockdowns created challenges for paying user growth in the short term because so many people weren't going out and moving people in real life. So there's less incentive to take advantage of the all the paid features available but with numerous instances of COVID-19 accelerating usage of digital services. Among later adopters.
Do you think Covid may have accelerated sign ups from some of those harder to reach demographics at the top of the funnel, which maybe could could lead to faster growth in paying users down the road than you might've seen in the absence of the pandemic and kind of similarly wondering whether BSF and betas might have seen a positive uplift during the pandemic from consumers looking for more photonic connections.
Whether it's big.
Because there are isolated or had friends, leaving the city maybe they themselves are leaving their sit either their job just curious whether you've had any interesting learnings on that front as well.
Yeah, Great question. Thanks, So so let's just start at the basics, we as humans. It doesn't matter, where you live where you are from a or what life stage or in we need relationships all of us. It's a universal true not only do we need relationships, but we need healthy equitable.
And respectful relationships and that is what our business serves.
Not only that but the second truth here is that the planet is low.
Ben.
The isolated in ways that we've never been isolated before and so I think what to answer your question. What we have seen is this the stigma surrounding online dating that may have still have this overhang before the pandemic that stigma has really started to dissipate. It started to go away there was a.
A group of us.
Community.
And want to use dating apps because they wanted to rely on quote unquote the old fashion way meeting someone at a bar or a wedding or a or a social gathering and when those opportunities just went away.
This became their only option and once they got onto our product they recognize the benefit of that.
Oh My Gosh, you can get on Bumble and you can learn more about an individual in 10 seconds, then maybe sitting in spending 30 minutes in a coffee shop with a stranger and not only that but the benefit of the safety.
And and this layer of protection between meeting someone you don't know in the physical world and starting digital so the answer is we have seen a new group of people that otherwise were hesitant to use our products really warm to the idea and they have common. So we think there is a major opportunity for.
<unk>, new payers from new audiences that have really come to us because of the pandemic and then the second answer is surrounding GAAP Athens is that same truth remains for the Platonic friendship category people are alienated an isolated from their friends and they want to meet people.
To not only go and do things with that they want to meet people to find support defined camaraderie to find community around the tough things are going through or the celebrate celebrations are experiencing as well and so we have seen these micro community its form on bumble in the sense that people are seeking.
Friendship in ways. They would have only done offline before the pandemic and so the shift has really taken place and we think that the propensity to build relationships online has only strengthened due to the pandemic.
Great. Thank you.
Okay.
Thank you. Our next question will come from the line of Andrew Mora with Raymond James Your line is now open.
Hi, Thanks for taking my questions I have two can you talk a little bit on the lower price subscription tier any evidence or proof points, you're seeing that that services expanding the number of people for whom a subscription is an attractive option, whether it's people who had only monetize true in app purchases or maybe non monetizing users and <unk>.
On the <unk> side as we look at the revenue trajectory can you talk a bit about the relative focus on product innovation versus pricing optimization over the next year. Thanks.
Sure why don't I start with the second one.
And then Tom can jump in with the first one so.
As we think about revenue growth for next year, if you really think about our pillars.
Flow.
They really are around.
Moving.
Sales in existing markets are getting users.
In new international markets, but we are not in today.
And you know improving monetization of these users right and then obviously the fourth pillar really is.
Focusing on on beyond gating in 'twenty, one and beyond so if you sort of think about the coordinating business, we really think about our revenue growth coming from them.
Both improvement in user as well as in monetization and monetization definitely has it leveled off.
Additional product features that allow people to move from the sort of freemium user category into paying user. So that's certainly a big part of our strategy for next year in our paying user growth.
In Q4.
And some of the work that we've done in 2020 really to advance that.
And then.
We've always said we are in very early stages of monetization journey.
Premium is really the first time, we've introduced a second tier.
And you know it.
Patients of.
It is always something that has been great. So.
The work that we would be doing it on pricing optimization is definitely something we are very much looking forward to in 2021 and the plan would be to take all of the learnings we have from humble and also apply to Purdue again, the advantage that we have in terms of the share platform and infrastructure that we have is that being able to seamlessly.
Take learnings from humble and apply it to Purdue and vice versa.
It is definitely a multi pronged approach in terms of how we're thinking about revenue.
To further that I think it's also important as we look towards going back to the physical world the amount of money that people spend on their dating lives in the real world. The dating wallet is immense it drives a lot of consumer spend and we really as onno said believes that we're just at the very beginning of the monetization.
<unk> journey, and we believe that there's there's a lot of more levers that we have to lean into in the coming quarters and we're very very excited about that.
And just to.
So first question around the <unk>.
Lower pricing lower price tier absolutely I think one of the the sort of caught in pensions of introducing a second pricing tier is too.
Have more people move in you know that our non payers today moving.
And so having a lower price tier definitely allows us to improve per penetration from that perspective, so again that is.
It is work that we will be doing around that through the course of 2021, yes, we hear in our in our user research that one of the biggest challenges that we have an increasing payer penetration is just convincing people you think of us as a paid app.
Free up and we believe that the more we can yeah.
Taken minimum does start along that journey is on who says the more likely it is weekend, then pretty rapidly upsell them into these higher price tiers.
Great. Thank you.
Thank you.
Thank you. Our next question comes from the line of Brent Thill with Jefferies. Your line is now open.
Thank you Whitney Theres been a lot of conversation around.
At work and the friendship element of your business and I think many are asking when do you think that this becomes more material to the revenue and secondarily do you believe there is a new monetization model outside subscription I think we can all sit in dream as potential product managers of things.
You can do.
And in that outside subscription is that something you're open to you are not adding.
Quick follow up for a new.
Yeah, great. Thanks for the question. So you're right. There is a lot of opportunity ahead, and we are incredibly happy.
Excited about the friendship category in the professional category I think it's important to note that one of our strength as a management team is our ability to have laser focus and we recognize that.
<unk> opportunity ahead of us that still remains in dating both vertically and horizontally.
From a from a feature offering Ana and paid feature offering and from.
Engagement standpoint user acquisition standpoint international standpoint, so there's so much exciting growth ahead for dating while in the meantime, we are planning and strategizing starting with desktop. So what you will see from US is a very strong commitment to become from scale.
Scaled international player from a data standpoint and to reinvest further into our core markets to further accelerate growth in our core markets from a data standpoint, both geographical are you from.
Reinvesting in these geographies more granularly and also in different groups of individuals but at the same time, we are planning for our proper relaunch.
Yes.
That will be our first foray into platonic and other something other than dating.
And as far as monetization opportunities you should not expect monetization from bumble bff until 2022 and beyond but we are very excited about the coming years when it does come to the opportunity to monetize.
And to lean into both subscription and otherwise from a platonic and professional standpoint, you see the Tam for these industries outside of our business alone and when you stack that on top of dating the opportunity to become incredibly low.
Great. Thanks.
Just on premium I know you said, you're pleased is there any more detail in terms of what you've seen from booster premium any way you can quantify it or is it just stay tuned and we're pleased but we're we're not going to give any more details on it.
Yeah, I mean listen it's just been a quarter since we launched and we.
We just finished the <unk>.
So, let's rollout and Android is very much.
The process of being rolled out so I think are well well well definitely be providing more information about it as we go along but the one thing I would like to add just a little more semantically is.
People want more ways to connect they want more features they want more options. We're hearing from our customers every day, which gives us an amazing roadmap of opportunities that can become monetization features as well both in this subscription tier that we've launched and potentially others down the road. So we're watching that close.
We're very excited but that's all we can share for now.
Great. Thanks.
Thank you. Our next question comes from the line of Dan Salmon with BMO capital markets. Your line is now open.
Great. Thanks, and good afternoon, everyone.
I'm going to return to the complementary businesses as well and my question is do you think it's important that the non dating businesses are still based in human connections.
Chronic and business networking or do you see broader branded opportunities as well and then sort of all the way back down to Earth. The near term investment in BFS for either you or auto or chart.
What level of spend do you expect in BSF over the next year or so and how do you think about the balance of that versus other priorities. Thanks.
Great Yeah, So arnaud and I worked together, we are very bullish on relationships beyond dating and all of the ancillary ancillary touch points that come with that so I think it's very important to note that we are not just our romantic relationships at humans Ann.
And because we've been so intentional with our brands we have permission to go far beyond.
The current offering that we have our brand has really been rooted in safety and accountability and womens first and it's given us permission and we believe that's also a very a competitive advantage to the per site as well and so from an investment standpoint on it was going to jump in and tell you about how we.
Think about the split from dating too.
Platonic relationships and beyond and then I'll jump back in Toric has somebody sorry did you say I just want to emphasize one point and what you said and then I will turn into on your on the on the numbers piece I think if you looked at what are our.
Members are actually asking for it is not just what.
But we would think that those relationships, but it is the mission of the company is around creating a world where all relationships are healthy inequitable and what we hear from our users is they think of that in many ways from a financial services standpoint or from a healthcare standpoint are these areas, where where the relationships. If you will or those those aspects of their life.
Inclusive has not been as as equitable or as healthy as they can be or could be and so we think that theres permission. There, we're very disciplined about which opportunities we pursue but I do think that permission is quite broad.
And fits with our overall mission of the company.
Hopefully with that go ahead on them in terms of investment.
Again, the the did each of our P&L structure is that we are effectively leveraging our existing product and tech teams to be building out DFS, COVID-19, obviously, making incremental investment, but we're not building up a team from scratch. So we really.
Thinking.
Two.
High single digits in terms of investments.
Yeah, and even that is going to be really part about very close to me. It is not free and money for the sake of spending money, we wouldn't be very methodical about them.
Getting the products out seeing how it works and then.
Any marketing dollars, if we need to.
Towards it right and I think it's really important just to further on this point.
The current offering bumblebee up half was really built as a derivative to what our customers were asking for a wanted this feature we built it for them and the fact that we have around 9% of our data is using DFS organically and authentically without it being a name feature.
It's still call. It in test mode, not just goes to show the opportunity ahead. Once we do have the product in a standpoint, we're proud of and it's up to Bumble standard you can imagine the conversion opportunity in the LTV opportunity and then you can see all the adjacent from there. So we're very excited.
That's great. Thank you everyone that was very helpful.
Thank you.
Our final question comes from the line of Steve Conic with F. N B C. Your line is now open.
Hi, Whitney talking on here, Thanks for taking my questions squeezing me in.
Just two quick ones. If you don't mind, one is you've talked a little bit about the positive trends on payer penetration and your focus.
In recent quarters on paying users more so than monthly active users.
So I assume that's growing faster than and I use but can you give us some color on kind of those trends and will you be focusing more on an active users will that get more focus as the pandemic ebbs and then just lastly from my last question.
You know your points of differentiation are very well articulated I wonder if you could give us a little color on how you think about competition and how that differentiation place with respect to the other apps in the market. That's all I have thanks a lot.
Great. So I'll take the first one and I'll hand over to Whitney on the competition piece I think.
What we don't want to do is be spending marketing dollars against.
Users, who are not going to be enthusiastic users of our of our products and so to date, particularly during the pandemic. We've been very focused on those segments that have shown an interest in being active in the dating pool and active in that.
As things open up we are quite optimistic about.
The potential for registration growth and monthly active user growth for sure I think again the timing is.
Is.
Just.
Little bit unclear we are still.
We had healthy growth in monthly active users on Bumble for example, and particularly as I mentioned in many parts of the world, where where we have been smaller and are growing quite rapidly. So so we think that those trends will accelerate once theres a full reopening we're just not prepared to call. It a day for example, and when that reopening is going to have.
<unk> per se.
When they go home, yes, sure so as it pertains to <unk>.
The addition of our unique offering so we have been very particular from day, one about solving for the women's relationship struggles and when you create a healthy safe inviting ecosystem for women. This miraculous thing happens where it becomes better for everyone.
Everybody wants to be and so we have really built our entire brand and product and business around this and we've been so.
Often pick and true to that throughout the year that we continue we get to continuously reinvest in that brand brand story and brand.
Brand kind of competitive advantage and when we think about.
The competitive landscape, we've been really particular about building a product that has multiple offerings.
So we are not heavily reliant on an outside acquisition, meaning we don't have to rely on M&A. We don't have to rely on other pre existing products in order to scale. We can scale within we have this unique ability to offer you.
Through this set of features meaning you can come to bumble for marriage, you can come to bumble for something casual you can come to the do for multiple offerings you can come to bumble for our friends. The brand invite you to do that the product feels that it was enabled and built to do that and so that's really our core.
Core competitive advantage is that we are a women first brand.
For everyone and there is such an opportunity both from an LTV opportunity but.
We really can offer more than just one thing and so that's something we're really excited about leaning into heavily.
Terrific. Thank you and congratulations on your Q4 as well.
Thank you so much.
Thank you.
There are no further questions ladies and gentlemen. This concludes today's conference call. We thank you for your participation you may now disconnect.
Okay.
Okay.
[music].