Q2 2021 Bumble Inc Earnings Call

[music].

Thank you for standing by and welcome to the bubble second quarter 2021 financial results. At this time all participants are in a listen only mode Apple.

The speaker's presentation, there will be a question and answer session to ask a question. During today's session you will need to press star one on your telephone if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today really Johnson. Please go ahead.

Thank you for joining us to discuss bundled second quarter 2021 financial results with me today is what you will peg founder and CEO, Derek Shochet, President and a new subramanian CFO of bundle before I begin I'd like to remind everyone that certain statements may be made on this call today that are forward looking statements. These forward looking statements are sub.

Due to various risks and uncertainties and reflect our current expectation based on our beliefs assumptions and information currently available to us although as we meet these expectations are reasonable we entertain 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 vary materially from.

These forward looking statements are discussed in more detail in our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2020, and our subsequent periodic filings during the call. We also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in <unk>.

Alicia lesion from our GAAP results reconciliation to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations section for web site at IR Dot Bumble dot com with that I'll turn it over to Whitney.

Thank you Bradley and thank you all for joining us I hope everyone tuning in today is staying healthy and well Q2 was another excellent quarter for us at the group level for Bumble E. We delivered strong results with total revenue of $186 million up 38% year over year and.

Adjusted EBITDA of $52 million, representing a 28% margin bump.

Bumble App revenue grew 55% year over year to $127 million and Baidu App and other revenue grew 11% to $59 million.

Our average paying users in Q2 increased 20% year over year to $2.9 million.

Our excellent performance demonstrate that the need for love and relationship is more important than ever before after a year and a half of the pandemic more people than ever before now recognize the benefits safety and access that online dating provide when COVID-19 accelerates and loneliness.

Line people turn to us for connections and when markets reopen and the desire to meet new people in real life surgeon Bumble, Inc. Helps people find new relationships quickly and safely.

Despite the challenges that the world is facing with the Delta variant, we are continuing to see positive trends across our platforms. Even in some of the most affected market. For example in Q2, we saw increasing engagement and activity even with the spread of the Delta variant in India, and Bumble App monthly active user.

<unk> grew at over 60% year over year in that market. According to third party sources, we have gained or maintained download share in most of our major markets for both bumble Apple and Madhu App in 2021, and in Q2, including download share gain in the U S for bumble out.

Our results in Q2, and the traction we are seeing in Q3 show that we are able to serve our users effectively as the world Facebook pandemic hubs and also as markets reopen.

While we continue to actively monitor the COVID-19 situation in all of our markets around the world. We are confident in our performance for the rest of 2021 and I'm pleased to say that we are increasing our full year revenue guidance to 750 Q$2.762 million up from our previous high end Guy.

<unk> of 734 million, representing a year on year growth rate of 30% at the midpoint.

This performance is driven by strong execution against our strategic priorities, we outlined earlier this year, including our ongoing monetization efforts rapid international expansion re engagement of users in our core markets and retention and engagement improvements driven by product innovation and data science.

The efforts, we are continuing to expand these efforts, including acceleration of bumble apps global expansion investment in the next generation of our friend finding service Bumblebee F App and rollout of shoe care pricing for the first time on Voodoo starting in Q3.

Let me give you some details on performance by Apple, starting with Bumble and Bumble App had a very strong quarter with revenue growing 55% with growth coming both from paying users and our people on a global basis in Q2 registrations and monthly active users on bubble up through with the fastest.

Your over year rates since the beginning of the pandemic. We also saw a 26% increase in re engaged user and achieved record levels of daily active users in Q2 fueled by registration growth customer reactivation and material improvement in customer engagement and retention.

Our teams continue to innovate to ensure that we are serving our users and the most forward thinking safe and effective way possible.

During the pandemic women's searching for serious relationship was at an all time high so we updated our onboarding process for those looking for more serious relationship, prompting members to create robust and more in depth profiles to really increase the compatibility between two customers. We also partnered with snap.

Bring augmented reality features into our video chat and we extended our night and trivia experience to India with high levels of engagement.

The average time spent on the bumble app increased by 10% in Q2 with time on the platform for women, 24% higher than that for men demonstrating the power of our women first model it really leads to healthier and more balanced ecosystems for all users.

Global expansion continues to be a major driver of bundle apps growth as.

As the UK and Ireland started to reopen in Q2, we saw very rapid growth with us because our revenue growth of over 70% year over year supported by our targeted local marketing efforts.

The dark region continues to be a major driver of growth growing monthly active user.

By over 100% and now representing our fourth highest revenue market with revenue growing at over 200% year on year.

Other parts of Western Europe, including France, and the Benelux region also continue to grow at a very rapid rate as of our presence in southeast Asia and India. We.

We continue to be pleased with the progress we are seeing in our social discovery and friend binding platform Bff, Despite still being a V. One product as of Q2, 10% of our Bumble App monthly active users are using bff. Our teams are hard at work building. The next generation Bff platform and we expect.

Our new product features to start rolling out over the next several months.

Early results of our tests are encouraging and suggest strong user appetite for these new features that are underdevelopment. For example on the first day of beta testing, our new interest feature on Bff, we signed over 500% increase in users, adding interested a profile, we really look forward to profit providing more.

Update as we continue to advance our launch.

So now, let's turn to you, but you asked and other revenue, which grew 11% year on year in Q2.

<unk> is a global scaled player operating in a large number of markets, including eastern and Western Europe, and Latin America. The pandemic is still a significant challenge to the broader population in many of these areas and in particular to the Baidu user community, which is predominantly in the urban middle class.

And has faced economic pressures from Covid, while according to third party sources, but do have maintained or gained download share in most of the major markets in Q2 and user growth, especially in our legacy web platform.

Has been challenged under these conditions. However, we're pleased to report on many successes that to do this quarter that fueled our double digit growth. The baidu team is focused on improving monetization and user engagement and many of our user engagement metrics are at their highest level in over two years. They won in week, one retention and one of our core.

Our measures of user success, which we called good shop have all increased in Q2, we remain very focused on improving monetization and engagement and are seeing evidence of our efforts taking hold per penetration as well as growing at healthy rates in many of our major markets, including a 40% increase in Brazil, and a 34.

An increase in the United States and we are starting to see user growth on Iowa for the second half of the year. We are focused on re introducing video to users with COVID-19 conditions improve and on launching a range of new features and experiences tailored towards the changes in user behavior that have emerged during this pandemic.

We look forward to continued improvement in baidu as markets and economies recover from the pandemic conditions.

Coming back up to the Bumble, Inc. Level, one of the key elements that makes US who we are is our focus on safety and accountability. This.

This is not just a one time investment or an initiative run out of a special silo. It is embedded in every aspect of our business last week, we announced an industry first.

Our partnership with Chan and Bloom to be the first dating app to provide trauma support to survivors of sexual assault.

Cannot tell you how important is it to me and to our entire team and it is something we hope that the entire dating industry will follow we have been continuing to deploy our machine learning expertise to make the experience on our apps even better.

Even as Facebook Bad actor in Q2, we made a major push with a new set of data analytics and machine learning models to improve the moderation of chats on Baidu and we are very pleased with the result, we now touch more bad actors before our user experiences and issue improving the quality of our experiences.

And reducing potential abuse. This is a continuing focus of ours across all of our brands.

As we think about the future of Bumble, Inc. Our team remains focused on executing against our strategic priorities and long term growth plan.

Our group today consist of Bumble App, the women's birth, App, where women always make the first move and Baidu App, where users can quickly and easily make real connections without pressure.

Both are built on our foundation of engineering excellence and safety accountability and kindness.

We're looking to grow organically by leveraging our shared technology platform to build phase kind and accountable technology for new communities. We also have the opportunity to acquire businesses consistent with our mission and values that can help us expand our present, reaching new geographies and customer demographics.

Bumble, Inc mission of helping communities across the globe by unhealthy inequitable relationships through all stages of their lives.

Fourth a tremendous very long term opportunity one we believe our brand can own.

And with that I want to say thank you. So much for your time today and I will now hand, it over to our CFO onno.

Thanks, Whitney and Hello, everyone. In Q2, we saw continued momentum in our business with higher than expected revenue and adjusted EBITDA performance.

Total revenue in the quarter grew $286 million, an increase of 38% year over year and adjusted EBITDA was 52 million, representing a 28% margin an increase versus 24% in Q2 of last year.

As a reminder, revenue in the second quarter of 2020 was impacted by a 4 million reduction in deferred revenue recorded in purchase accounting.

Q2 revenue growth was driven by strong improvements in total paying users, which grew 20% as well as growth in total our people, which grew to $20.88 an increase of 15% year over year and 4% sequentially from Q1.

Bumble op revenue was $127 million for the quarter.

<unk> strong growth of 55% year over year.

Bumble are paying users increased 36% year over year to $1.5 million. An addition of 120000 versus last quarter.

With me noted the growth in our Bumble App community continues to be robust with strong contributions from North America as well as from our newer international region.

In Q2, we continued our expansion in Europe, with the launch of Austria, Switzerland, Netherlands, and Belgium.

Throughout Western Europe, we saw triple digit paying user growth in Q2, with the dark region being exceptional growing more than 200%.

Bumble apps, our people for the quarter was $28.81, which grew 13% year over year and was up 4% sequentially.

We were especially pleased with the strength in metrics for women with year over year, our people growth rates for women outpacing that of men by more than 100%.

During the quarter, we completed the launch of two tier for Android in our remaining markets and I'm very pleased to say that as of the end of Q2, the adoption rate of the higher tier continues to be more than two thirds of new users.

Within the bundle up we expect our monetization work to continue with the introduction of new consumables and subscription offerings.

For example in June we launched extended spotlight, which provides increased visibility for our super users.

But do App and other revenue was $59 million in Q2, which was up 11% year over year.

Similar to Bumble App, we saw improvements in payer penetration with paying users increasing to $1.5 million up 8% year over year.

User growth came from our core Purdue markets, such as Brazil, Russia, and the United States, which delivered strong results.

Well do App, our people in Q2 increased 4% year over year to $12.85.

<unk> on the learnings from the launch of bundled premium we will be rolling out to tier pricing for Madhu later in Q3.

We expect to launch first in the U S on both iOS and Android with the remaining markets to follow closely in Q4.

In addition, as we mentioned in the prior quarter our work on our next generation of consumable products on Baidu is also ongoing as we work on providing a low entry point for members to convert into paying users.

Turning now to expenses.

We'll discuss these on an adjusted basis, excluding the impact of stock based compensation and onetime transaction costs.

Cost of revenue was $50 million up 36% compared to Q2 of last year on account of higher aggregator fees, which grew in line with revenue.

As a percentage of revenue this was flat year over year at 27%.

Sales and marketing expenses in the quarter with 47 million up 20% year over year.

As a percentage of revenue it was 25% down from 29% in Q2 last year and slightly up from 24% of revenue in Q1 this year.

Some markets opened up at the beginning of the summer we leaned into reopening campaigns in the U S, France, Germany, Netherlands, and the U K.

We will continue to be nimble and investing in marketing next quarter around reopening efforts, including market expansion initiatives in Asia and on campus and field marketing efforts as colleges come back in session.

G&A spend was 21 million or 11% of revenue in line with our spend in absolute dollars in Q1 of this year, but higher than Q2 last year, mainly driven by increased head count and public company costs.

Second quarter, adjusted EBITDA grew to $52 million, an increase of 60% over the prior year.

Presenting adjusted EBITDA margins of 28%.

As our top line revenue has shown rapid growth, we are continuing to demonstrate operating leverage in our business.

Our stock based compensation expense was $30 million for the quarter, which was up from $3 million in Q2 of last year, primarily due to the modification of equity awards at IPO.

We generated a net loss of $11 million for the quarter and we ended Q2 with 252 million of cash.

Turning to our outlook.

We are confident that our momentum on bumble App, we continue into the second half of the year.

While we do have shown itself to be resilient through the pandemic reduce exposure to COVID-19 is more prominent than bumble app, given its geographic and demographic footprint and hence we expect that Q3 from Purdue may see some impact from desktop.

But as these markets come up on the vaccine curb we feel confident in our ability to continue our momentum through the end of beer and this is captured in our increased full year outlook.

With that we are pleased to raise our full year guidance for both revenue and EBITDA.

Looking ahead to Q3, we expect total revenue in the range of $1.95 to 198 million, representing a growth rate of 21% at the midpoint of the range.

We expect adjusted EBITDA to be in the range of $48 million to $50 million, which represents a margin of 25% at the midpoint.

For the full year, we expect revenue in the range of 752 to 762 million a growth rate of 30% at the midpoint of the range.

But adjusted EBITDA, We expect 195 to 200 million, which represents an EBITDA margin of 26% at the midpoint.

To close out we had a very strong first half performance, we demonstrated our ability to scale our business grow revenue, while staying disciplined and improving profitability. Our increased guidance reflects our confidence in the momentum in our business and our ability to execute on our strategic direction.

And with that we will now be happy to take your questions.

Okay.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound Kate please standby, while we compile the Q&A roster.

Our first question comes from.

Cory Carpenter with.

With J P. Morgan your line is now open.

Hey, thanks for the questions.

I think first one for Terry you touched on this a bit in your opening comments, but hoping you could expand on the impact youre seeing from the latest surge of Covid cases, any evidence at all of slowing momentum in markets such as the U S. And then for <unk> could you expand a bit on just kind of some of the drivers of the upside that you saw him.

For revenue in <unk> and some of your key assumptions in the guidance. Thanks.

Sure.

Laurie this is tarik. Thanks for the question.

So I'll start with the first piece on a bumble app in particular, we're not seeing any material impact from COVID-19 from the Delta Varian spread in the U S. I think that the U S markets are continuing to perform very well for us on bundle that is generally true on the bumble app.

Worldwide, even in markets that are experiencing this resurgence of delta as we mentioned, but <unk> seen a little bit more impact, particularly in some of the international markets where.

There is more COVID-19 impact, but in general I'm unbundle like I said no no real sign of an impact engagement is at pre.

Pre pandemic highs on both bumble and by doing so we're feeling as Aneel said very confident about this quarter.

Sure and Corey just to your second question or growth in Q2 really has been a function of strong growth across the board for paying users and our people for both bumble and Purdue and like I said in my comments you know.

We've been very pleased on the gumbo side with the momentum we've seen with our growth not only in our existing markets, but also in a lot of our new market, which is obviously very exciting as we look at our international expansion and a lot of the work that we've been doing around a two tier pricing has really paid out.

As we think about our people growth.

As we thought about guidance on you know if you take all of this we've been Super pleased with the strong first half growth, we've had so far and with revenue up 38% in Q2 with bumble growing at 55% and we would do at 11%.

Overall, the business is just showing very strong healthy engagement and momentum in many of our markets and so we are super confident about raising our full year guidance at 30% at the midpoint of the range and our Q3 guidance assumes revenue will grow at 21% at the midpoint and if you sort of break it down.

By App for Bumble up because of the growth that we've seen in Q2 and as we look at the progress. So far in Q3, we have seen very strong growth rates across all of our major markets and we are expecting growth in both paying users and our people and.

And we expect that sequentially that will continue between Q2 and Q3.

We are very positive about like I said markets that we're in today like North America, and UK with vaccination dates at high and also in the market that we are expanding including Western Europe dock et cetera for.

For our people we finished the rollout of two tier like I said, but we do expect this to continue to see the benefits of that as more new users continue to come into the higher priced here. So.

So that is very positive news for us as we think about growth in our people in Q3, and Q4 and interestingly inhibition in recent months, we've actually seen that adoption of the higher price here has been more than the two thirds that we've been talking about so in some markets, we've actually seen growth of upwards of <unk>.

70% adoption of upwards of 70% again very very positive signals as we think about what the rest of the year looks like and for Baidu App. So as I mentioned, but who has a large scale based today and its users RMB urban middle class and it also has a large geographic footprint wed.

They have experienced a higher impact from COVID-19.

So we do expect to see some impact to users and paying user growth, but as we move into Q4.

Very excited about the rollout of two tier for Baidu, and which we think would be very beneficial from a monetization perspective. So if you put all of this together, we feel very confident about raising our full year guidance.

Thank you.

Thank you.

Our next question comes from Nick Jones with Citi. Your line is now open.

Great. Thanks for the questions I guess first on.

New product features increasing users how should we think about any additional features throughout the rest of the year and.

What the potential impact could be.

<unk>.

Do you think Theres. Some features that can still kind of move the needle meaningfully there and then I guess, maybe could you tell a little bit on the snap partnership to bring features on board.

Okay.

Sure Hey, Nick So this is.

A great question, let me talk about bumble and but due in turn I think that.

A lot of what we're focusing on.

Bumble side is really these features that are helping to engage our.

Our users and their preferences have shifted from a relationship standpoint, when you mentioned more focus on serious relationships. We're seeing a lot more focus on what we're calling intentional dating or we think of it as intentional data, meaning people are much clearer coming into the daily market about what they're looking for from a relationship and we are really trying to give them.

The tools to do that and make the experience better for the the more serious and intentional types of relationships that are that our users are talking about so a lot of what we've done in Q2 as well as the plan for Q3 and Q4 is really focused on.

Activities like that in addition to new monetization features.

And what I referenced last quarter some of the consumable.

Experiments that we're doing in different parts over the world and.

And we do have a very active innovation program that is building on top of what I just talked about it as the more optimization part of what we're doing and that is really active exploration of some of the features that we talked about with augmented reality with snap. Some video features areas like that is probably too early to go into a lot of depth about those pieces.

But.

But a lot of work.

Work and testing going on in those areas as well on the produce side.

Kind of a similar story, we are very focused on how do we help people as they start to come out of the pandemic, it's a little bit of a lag from what we're seeing unbundle largely because of the geographic footprint, but again the same themes around intentional dating more robustness in the in the.

Profile element better matching features algorithmic updates across both bumble and Baidu all of those are kind of coming together for us in the second half of this year.

Great. Thanks for the questions.

Thank you. Thank you.

Our next question comes from Mike King with Goldman Sachs. Your line is open.

Hey, good afternoon. Thank you very much for the question I just had one on bumble up or people who it was.

Really strong in the quarter I was wondering if you could help to.

Quantify some of the contributors to the year over year acceleration in growth.

How much was really the two tiered pricing rollout of iOS and Android as well as some of the innovation and the Ala Carte products. Thank you very much.

Sure. Thanks, Mike.

So you know.

When we talked about monetization for bumble, we've always said that we've been really focused on moving more people into the subscription tier when we started this work last year and if you recall.

The number of bundle of users that were also subscribers number of bump of paying users, but also subscribe with wasn't around the 90% range that number has actually gone up now we had actually closer to 93% in terms of the number of paying users that also subscribe to one of our products and that has largely been due to two tier because.

Two tier now actually includes consumables in the package as law, which was not the case prior to that obviously, we launched mumbled premium and the roll out obviously is now complete and like I said when I was answering the prior question. We are starting to see adoption pick up for the higher price here.

In many markets, we had upwards of 70% and we still actually have.

A small on a long tail of users that are still on the old pricing system and they will continue to sort of migrate as they turn out and they start to reenter the system, so that still needs to move into the new price here, but you know two tier really has been a huge part of why you've seen the growth in our people, which is obviously very.

Are important to us, especially as we think about taking the learnings from bumble apt to Baidu as we think about the rest of the year and going forward.

We are continuing to review pricing in every market and you will see us continue to adjust and iterate ought to be.

<unk> in every market that we're in but also to make sure that you know them.

All the work that we're doing around price elasticity on subscriptions.

It manifests itself into real improvements in our people. So that's very exciting for US we are working on additional product features in the form of consumables I'd mentioned in my prepared remarks that we launched extended spotlight in June.

It is a consumable that provides increased visibility if you're a power user so that helps to improve our people as well and we have a few other ah interesting consumables that we are testing that are in the works that you won't hear us talk about them in the next few quarters.

Fantastic that's really helpful. Thank you Bonnie.

Thank you. Our next question comes from Brad Erickson with RBC. Your line is open.

Yeah.

Thanks, I guess I'll just follow on to that last comment I'm, just curious what's the cadence by which you guys expect to sort of roll out those some of those new products and like the consumables. For example that you just mentioned is that going to be sort of like an every year thing.

Alongside <unk>.

Potential new tiers or is it maybe a little bit less frequent than that.

Yeah, I think Brian the.

We have kind of a multistep launch process.

We are very active testing learners and one of the one of the advantages of the footprint that we've got geographically and from a from a demographic from a segmentation standpoint is we can test a lot of things and build confidence in the impact and and the engagement and the value before we roll it out and so we have dozens if not hundreds of.

Experiments going on at any given time, when we find something that really add material value to the user we actually roll those out I'm pretty continuously.

That is generally for enhancements to the user experience. We always wanted to provide the best experience possible to our users as it comes to monetization we try to bundle. These together a little bit more but certainly on a frequency that is more.

More than the annual that you're that you were talking about so we would expect several times a year of course it depends on how big the the changes or it might be a little lumpy from year to year, but generally speaking we believe in launching.

Frequently and and really driving you know trying to drive the innovation.

Experience that our users have.

Thanks, that's helpful to understand the philosophy and then I guess just a follow up just you know what kind of have you seen lately.

The competitive landscape.

Inscape for Bumble brand just curious if you could share a bit.

Particularly about how are you feeling sort of your diversification wise beyond some of the major Msas, where I think some of your competitors have also shown some strength lately just an update there would be great. Thanks.

Yeah sure Hi. This is <unk> speaking so we are continuing to see very rapid growth on bumble App and as we mentioned.

Briefly earlier according to third party data sources that we're looking at and the majority of scaled markets that we operate in including the U S of course, we are holding or gaining download sure. So when you look across the landscape. Some competitors are growing some are declining, but we do not see any scaled player who in the last six months is.

Gaining any material share at the expense of Bumble I think it's very important to note that we.

We continuously invest not just in our product innovation and our technology innovation and our machine learning, but we also continue to invest in our brand, which gives us competitive advantage and really allows us to reinvest in that mode that has been such a big part of our success to date and we're very.

And that will carry us in the.

For decades to come so I think it's also important to turn to Baidu App for a quick second well the markets that it's operating in are slightly more challenged from a COVID-19 standpoint I'm. The same point really holds we're gaining or holding share while most of those markets are dealing with the pandemic. So of course, we're always focused and paying attention to our.

Competition, but we are obsessive focus on our users and the most important point I can make here is that we continue to listen to the customer and we build for the customer we optimized for the customer you continue to do that we are very confident that by providing the very best experience for what they want and we will continue to be.

Successful and competition will not be a risk.

I think just to build on that for one second in terms of the Msas, specifically and the geographies in the U S. We have a strong presence in the larger cities and we are continuing to build our geographic expansion not just internationally, but in the U S as well focusing on other tier one cities and tier two cities and in particular as you know.

And where would he mentioned with college towns and areas like that so we do see opportunities even in our established markets like the U S and U K to really continue to geographically diversify in addition to the work we're doing in Western Europe, and Southeast Asia, Yeah, and the final point I want to make not to overdo. This point is is really it.

The brand is so strong and if we just continue to stay focused on the machine learning the algorithm and the continuous improvements and that we're very confident that competition is not an issue for us.

That's great. Thanks.

Thanks, Brett Thank you.

Our next question comes from Sweater could Georgia with Evercore. Your line is open.

Okay. Thank you two questions for me. Please can you. Please talk about engagement trends you called out India in particular.

Was there anything in particular that you would like to call out that drove engagement I think you mentioned trivia and any other geographies, where you saw outsized engagement and the reasons why and then the second question is how is bff trending are you planning to rollout new features over the next few months, which to US implies that you are.

Seeing some strength in engagement there. So could you please talk about what youre seeing with bff. Thanks.

Sure.

Okay, great. Thank you so much for the question so, let's let's start on P. F.

It's important to set the stage for the X the exceptional Tam that exists within bff. So the friend finding opportunity. The platonic relationship opportunity has only progressed and become even more important and in demand throughout the pandemic people have had their loneliest times and this really does.

Exist across the friend finding category and so the fact that we had 10% of our bumble users also using bff today tells us that we have immense permission to be a much broader.

Brand forefront, finding and ultimately a broader like a women's lifestyle brands. So when we look to how we are improving this in the future. Our focus in 2021 is really fundamentally on product development and getting the product to be a in a in a very strong position and certainly beyond what it is today.

Which is very much a minimum viable product and when you look at the experiment data that's coming out of these early innovations in early product development. We are actually seeing that our new onboarding flow has led to an over 200% increase in the daily active users that are already using both the F N b.

In those test markets, where it's live currently and this continues to validate the opportunity ahead for both engagement and monetization and we have seen historically that the ARPA for BFS and data together the users that use both is 30% higher than the date, only customer, which really signals huge growth for us in the future.

And ultimately just to go into what this feature what this product will do it's really providing users with the ability to source to connect Platonic Lee to lean into this opportunity to find groups of friends to find community. It's not just a one to one experience and we are very.

Cited to update you more on that the next earnings call.

And turning to answer to your first part of your question around engagement I think Theres a couple of things that we would call out I think one of them is what I mentioned earlier around just the optimization efforts that we do we have teams that are really just focused on improving the onboarding experience improving the retention experience et cetera, and it's hard.

To overstate how important those efforts are and continuing to boost engagement for us. So that is certainly one piece of it I think the second is that we have been investing very heavily in algorithmic changes around <unk>.

Sure.

What we think of as our people recommendation our people connection algorithm right. How do we actually identify who you are most likely to want to match with and we've seen some really significant improvements in our ability to.

Two to do those do that matching and we have actually invested a lot in capabilities to give us more data such as asking people to express their interest we have about 40% of people on bumble app at the moment, who are telling us not just the profile information, but what are they interested in and we use that as part of the matchmaking algorithm. So that is certainly the second.

And then some of these elements that you referenced like night and if we look at India. In particular, India is a combination of the first two pieces I just mentioned plus India has probably had the best response of all the markets that we've seen so far for the night and trivia future. It was quite widely adopted from people who use video.

<unk> and are engaged postmatch in side of India, and that's all despite obviously the catastrophe that was happening during Q2 in India. So I think it really did provide an outlet for people.

Ability for them to connect outside of your in this virtual world outside of what was going on in the real world.

Okay. Thanks, Sidney Thanks, Eric.

Thank you. Thank you.

Thank you. Our next question comes from John Blackledge with Cowen Your line is open.

Great. Thanks, two questions first one any updated thoughts on potential app store leaf and timing.

Then secondly, very solid EBITDA be.

The strong incremental margins with the guide the implied margins in the back half are stepping down a couple hundred bps from first half levels. So just curious about investments in the second half driving the slight margin compression. Thank you.

Sure Hey, John.

You know obviously, there's a ton of regulatory scrutiny around app store fees, we are watching all of it very closely as you can imagine.

So we know we'll be we'll be waiting to see what happens.

Those conversations.

Our current EBITDA guidance for the second half assumes minimal impact from Google play and we are having conversations with them about what this means for 2022.

<unk> been great partners to us our discussions with them are still ongoing and as we have more information about what that means for us we will definitely share them.

With all of you.

With respect to your question about EBITDA I mean, you're right I think we are planning.

Planning as far as our second half is concerned incremental investment with respect to things like marketing and we've always said that we want to be nimble and we want to be opportunistic about continuing to invest in our business as the opportunities present themselves. So our goal is.

That's what we've guided to in terms of planning for Q3, and Q4 is to continue making that investment in marketing is one of the biggest areas, where you will see us do it obviously, we have to see what happens with respect to.

The world reopening in markets reopening so we will adjust our marketing plans based on that but the one thing that we've done really well over the last 12 to 18 months is take our on the field on the ground grassroots marketing and we've transitioned that to digital marketing and a very effective way. So we will make sure.

That we are super efficient in terms of how we deploy that capital. So that's what's built into our guidance as you think about a step down from Q2.

So yeah.

Thank you.

Thank you our.

Our next question comes from Andrew Moreau.

From Raymond James Your line is open.

Hi, Thanks for taking my question, how should we be thinking about the size or the magnitude of the opportunity in the two tiered pricing and the effect that it could have for the Baidu app versus the bumble Apple given the differences in customer demographics and payer penetration rates between the two apps.

Yeah.

Sure So I can take that.

So.

Obviously, the benefit of us launching two tier after having spent the last few quarters launching bundled premium is we have a ton of learnings from all of the markets that we have launched a bundle in and you're absolutely right. I mean, there are differences.

In terms of how ever do customer behaves and.

Their propensity to pay is versus what you would see for bumble one of the things that we will be doing differently. As we launched two tier is we expect to launch the lower tier at the same price as where bumble custom baidu customers are today.

With the higher tier, including additional consumables with a slightly different strategy than how we launched bundle premium we've been doing many tests in many markets.

Already and that makes us very confident that we will see strong our people lapse as we start the launch. So we look forward again to giving you more updates once the launch happens starting in the end of Q3. Another thing you will see US do is we are planning a much faster rollout.

Two tier again, because we have the benefit of having all the learnings from bumble and so you'll see us accelerate the rollout towards the end of the for Baidu.

Great. Thank you.

Okay.

Thank you.

Our next question comes from Lauren Chung from Morgan Stanley. Your line is open.

Great. Thanks for taking my question just on the the implied fourth quarter guide it looks like you're expecting sort of acceleration in the fourth quarter on on tougher comps last year. Just just wondering what the driver is behind that maybe it's just the do you know bringing them back to buy by Delta in the third quarter and they're not in.

Fourth quarter, but any color there would be helpful. And then secondly, just any impact that you're seeing from idea Fay on your marketing efficiency broadly. Thank so much.

Sure I'll take the first part and toric.

I'll hand, it over to you in terms of uptick in Q4. There are two things. If you think about bumble App. We are very excited about continuing the rollout of our international markets. So you'll see.

More growth coming from some of the markets, we've already launched such that such as Western Europe Dock et cetera, and we're also excited about launching newer markets some of them in Asia Latam. So that's part of some of the uptick we expect to see.

From an our people perspective for Bumble again, we expect to see a healthy growth coming from benefits of two tier as well as launch of new products that we have planned in the pipeline and as we think about Baidu two tier for Baidu is a big.

A part of how we think about our growth income.

Leasing in Q4 like I was just telling them.

The test results that have come out of the tests that we've already done and show us that our people will see.

C.

Nice growth. So we're excited about that as we think about the Q4 growth.

Alright, and Loren on the idea of a questions or we are seeing essentially flat to even slightly down GP is.

Even through the idea of first I'm actually very proud of our marketing team and how we've been able to navigate through that to date are one of the things that I would remind everyone of is that we only rely on performance marketing for about 20% or so of our new customer acquisitions, and we have a very strong organic channel and so that certainly has helped to help.

This in general, but the CPI are pretty stable for us as we've navigated through this the team is currently working through how do we continue to the scale that even further and it's.

It's something that theyre working through it but so far I think it's been generally good news.

And in terms of the things we've done.

Okay. Thank you so much.

Thank you.

Thank you. Our next question comes from Brent Thill with Jefferies. Your line is open.

Whitney I know you mentioned to us.

You don't get excited in our models about PFS in the short term, but as you look longer term.

Do you think there are different revenue models you can attach.

We're tightening business. For example was was barely up year on year I'm curious if you think you could open up a much bigger advertising segment of the business or are there other ways youre creatively thinking through the monetization of DFS and at work overtime.

Hi, Thanks, so much for the question or topic I'm very excited about so we cannot give you specifics, but the short answer is absolutely. There are major monetization opportunities ahead of us we would probably categorize that in three ways number one subscription obviously different from the ones, you're saying today and.

<unk>. These are very different use cases right looking for love interest is different than looking for a friend. So of course the way we went back into the subscription model will be different but we are very bullish.

Bullish on the opportunity around subscription in the future. The second category is advertising. This is an advertising a megawatt opportunity down the road and you know I don't want to spend the time on today's earnings call talking about the way, we would approach that but the third category would be the creator economy. This is a really exciting opportunity.

One that we know our audience.

It's prime core and we are very excited about all three of those categories as we look to the future and again as we just talk more broadly about the back half opportunity. You know if you were to go back to 2012, when we were launching one of the first mainstream products with Tinder. This this is an exploding category from finding kind of like.

What dating was a several years ago and so we're very excited about the growth horizon.

And maybe just a quick follow up for new just on the Geos was there a territory that you would consider that surprised you in terms of the bounce back or one that really stood out I know you mentioned there were a couple but if you had the card.

Take the strongest kind of bounce back how would you characterize the one or two reasons that you were you were most excited about.

Sure I think I said this in my comments we've seen.

Doc region.

Do really well from a user growth perspective, but we've started to see really impressive growth from a revenue perspective and from a penetration perspective as well. So a Doc is you know a top region for us from a total revenue perspective, that's been exciting.

Like Tom mentioned earlier, we were surprised by the level of engagement that we saw in markets like India, Obviously, India was pretty hard hit in Q2 with Covid, but we did lose a ton of features and I think that really helped to keep the market.

Pretty strong as well.

Thank you.

Thank you.

And our next question comes from Dan Salmon with BMO capital markets. Your line is open.

Good afternoon, everyone.

Within <unk> I think maybe could you just expand a bit more on your M&A priorities right now certain features certain markets.

And maybe your latest views on whether it makes sense to grow your portfolio.

And Whitney.

It probably does it makes sense to go into the entire advertising opportunity on this call right now, but maybe one or two more lines on what might make a megawatt opportunity and the differentiation on what you see down the road. Thanks.

Sure.

You can look for the question so I'll kick off on the M&A topic for us. So I think I'd like to begin by saying we're in this incredibly fortunate position, where M&A is not a requirement for us to maintain and accelerate our growth at the group level Bumble App has tremendous potential in and of itself, which is very untapped.

For the extensibility opportunities and we believe that the Tam for them to do when you look at that customer as a scaled player is also incredibly significant but that said, we love growth and we love growth Horizons, and we are very open to M&A. If the opportunity is right. So we have a very disciplined approach to that.

With a lot of both operational and financial rigor. So essentially we're looking at a few questions. When we look at M&A, how can we reach more audiences in a deeper way how can we take our pre existing members and help them find more tailored ways to connect and how can we leverage our scale technology.

Marketing safety and monetization platform and infrastructure and leverage that for other brands that have huge growth opportunity. So all of this is just aligned and ultimately reinforcing our mission of helping people safely build healthy and equitable relationships and every opportunity is looked out through <unk>.

A make or buy criteria, we're going to be building, our way into new opportunities as well and we will supplement that with acquisitions as and when it makes financial and operational sense. We have a foundation of engineering excellence that gives us a lot of strategic flexibility here. The other thing to note is we have a shared model.

Right. We are a hub of sorts. So we have this opportunity to really share resources within our group and not the huge benefit let's turn to advertising for a quick second.

BSI has this remarkable opportunity for us to really lean into people's share enjoy it and also their shared struggle.

When you look at the opportunity to serve them relevant content or.

And then places in the real World. This is very interesting when you look at traditional advertising models online most of it doesn't actually followed the post you know experience. We have this unique model, where we send people offline. If we do our job well, we help them find each other in the real world and there's a huge advertising and partnership opportunities.

They're also use our community to find people with similar needs. There's a huge advertising opportunity there and ultimately this is just great for brand engagement and partnerships are likely not programmatic, but really high quality and if you look back historically from the interests from partnerships and <unk>.

Brands, it's really over indexed towards B S. As people are very very excited about tapping into that audience and so this is something to keep in mind.

Thank you.

Yeah.

Thank you and our next question comes from Steve Koenig with F. N B C. Nico your line is open.

Alright, Thank you very much.

Congratulations bumble on a really good quarter growth guidance range.

I've got one question for Whitney and kind of a housekeeping question here for Anthony why don't I start with a housekeeping item.

I just want to.

Make sure I got your numbers right. So you mentioned that the headwind from the deferred write down was $4 million in Q2.

If I recall correctly, it was $9 million in Q1 so.

Correct in thinking that that headwind diminish by $5 million.

Hum.

So and then when does that turn out to be the minimus, how long will that go on that that's the housekeeping and I'll follow up with one for Whitney.

Sure. So if you looked at our 2020 numbers our total.

The impact from that.

Purchase price accounting was 15 million, so Q1, and Q2 had the most impact in terms of where you would see it. So we just have very little left to go in the second half of the year.

Okay.

Yes.

Thanks for that and then what would be interesting commentary about.

Driving users to encouraging them to fill up more detailed profiles.

In order to cultivate more serious relationships shifts on the bundle up.

Just curious what's driving your efforts here and is that kind of a tweak to the model or is that kind of a little bit of a shift in the center of gravity kind of how should we think about that initiative.

I just want to make sure I understand your question appropriately. So are you talking about moving into more serious stating the the product features we referenced earlier.

Yeah exactly okay, great. Okay, great. So the way we start with that.

How he approaches in Q2 was really ultimately at the Onboarding collecting more information on our customer and helping them meet people that are both looking for the same things that theyre looking for but our people that they actually really want to meet so bumble app updated our we updated our onboarding for those that were actually looking for a serious relationship and this.

It's prompted them to create robust and less superficial profiles and 10% increase in members filling out the about <unk> section was seen in Q2 and 13% increase in members that were connecting their Instagram. There was also a 12% increase in members filling out lifestyle dodges lifestyle about just could be anything from what's your horizon.

Children do.

You do drink do you what's your religion, and then there was a 17% increase in number of spelling out questions and their profile. So ultimately really building a more robust you know kind of DNA on the customer has really helped people find really relevant matches.

And what I'm curious about thanks for the color on that but I'm curious about is.

Kind of what's driving that is it a is it a belief that that will.

Improved user engagement ultimately or.

Kind of argue are you seeing that kind of that part of the market you know opportunity perhaps grow more quickly in the current environment kind of what what's driving your efforts. There really is just a question on the churn as well.

Sure of course, so I would say a few things are driving it all I'll I'll start and then I know toric, we'd love to add some more detail to this as well ultimately this is what the customer has told us they want we constantly and continuously asked our customer what they're looking for we always invest in listening to them go through.

Our data, but also through surveys and we recognize that women wanted more serious relationships more than ever before and that's really led to the feature a rollout.

And I think the biggest.

Neither were trying to solve is to make sure that the experience is right for you for whatever relationship type that you are interested in some ways. When he said there is more people looking for serious relationships, but in general there are more people just being explicit about the types of relationships you are looking for and we're trying to give them. The tools. So that they can state that nobody is surprised.

They can meet with people who are most compatible with them.

And things like that that is one of the biggest changes we've seen in the pandemic as people at the moment seem to know what they're looking for and want to get there as quickly as possible.

Got it great well, thanks very much for the color.

Thank you.

Thank you and our next question comes from Laura Champine from Loop capital. Your line is open.

It's just a quick housekeeping one for <unk>.

Stock based comp came in a little higher than what we expected what are your thoughts for back half of the year on that line.

Sure So our stock based comp.

<unk> was higher this quarter, primarily due to modification of equity awards as well as new grants that we did post IPO. We do expect this number if you see our Q1 number was higher than the $30 million would be posted this quarter. We do expect this number to moderate over the future quarters, but there isn't a.

And uptake.

Post IPO, which is leading to the higher <unk> expense.

And then into next year, we should think of that roughly at the run rate of the back half of this year is that correct.

That's yeah, that's right right.

Thank you.

Thank you.

And at this time I'm showing no further questions in the queue.

Like to thank everyone for attending today's earnings conference call.

Yeah.

This concludes the conference you may now disconnect everyone have a wonderful day.

Oh.

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