Q4 2021 Bumble Inc Earnings Call
Okay.
Thank you for standing by and welcome to the Bumble fourth quarter and full year 2021 financial results conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
I asked the question at that time. Please press Star then one when you touch tone telephone.
As a reminder, today's conference call is being recorded.
Now I turn the call 50 host Ms. Cheryl Valensuela Ma'am you may begin.
Thank you and thank you all for joining us assemble fourth quarter and full year 2021 financial results.
Today, our Whitney Volcker, its founder and CEO heart shock at present, Eddy and Lea Supermodel CFO assemble.
Before we 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 subject to various risks and uncertainties and reflect our current expectations based on our beliefs.
Samsung and information currently available to us.
Although we believe these expectations are reasonable we undertake no obligation to revise any statement 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 in our earnings press release and filings with the SEC.
Our annual report on Form 10-K for the year ended December 31st place I don't.
And our subsequent periodic filings.
For purposes of today's call comparisons to full year 'twenty 'twenty are based on the company's results for the combined period of January one 'twenty January 'twenty eight 'twenty on January 20th 2020 to December 31st place money.
During the call. We also refer to certain non-GAAP financial measures.
non-GAAP measure should be considered in addition to and not as a substitute for or in isolation from a Catholic health.
Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on the Investor Relations section of our website.
I R that bumble knock on wood.
I'll try to get better.
Thank you Cheryl good afternoon, and thank you all for taking the time to join our call today.
I'd like to start with Russia, and Ukraine I know this is top of mind for everyone.
First and foremost our hearts go out to all who are impacted by this project complex, we hope for a switch rather resolution to the situation. We are a mission driven company given the current circumstances, our presence in Russia is inconsistent with our values as a business. We are therefore discontinuing our operations in <unk>.
Russia, and removing all of our apps in the Apple Appstore, and Google play store in Russia, and Belarus, we.
We do not take this decision lightly and we have been working tirelessly to ensure the safety and wellbeing of our team in the region. However, we believe this is the right decision, reflecting who we are and what we stand for.
Here are the facts about our presence in Russia.
For starters substantially all of our technical workforce, including process development data Science and engineering is based in the U S U K and Spain.
For example, 95% of our dedicated Bumble App software development teams are based in the U K and Spain Sim.
Similarly, our entire cyber security team is based outside of Russia, primarily in the U K.
None of our senior leadership team is based in Russia.
980 local employees only 120 team members are in Russia, while we value all of our team members in Russia, and we're working with each of them on a case by case basis. The skill set of our team in Russia is replicated in our engineering centers outside of Russia.
Additionally, we have made a number of changes since 2020, such as the establishment and scaling up our Barcelona engineering hub the creation of additional EU data center location and the expansion of our U S. Based leadership team all of which gives us great confidence in our ability to make this a smooth transition.
Additionally, we have no employees in Ukraine, Belarus, looking at our operations no part of the due up or bubble up and none of our user data.
Our hosted or stored inside of Russia, we use data centers in the EU and U S to server applications globally. The only user data that lives in Russia as a backup of Russian customer data is required by local law.
In 2021, Russia, Belarus, and Ukraine, together amounted to only about two 8% of total company revenue less than 0.1% of Bumble App revenue was from Russia, Belarus, and Ukraine combines mirror.
Factoring the impact of this situation into our outlook and then you will provide more information about this shortly.
Now, let me turn to our results looking back 2021 it was a very strong aircrafts.
I'm very proud of the strong business that we have built which combines organic growth and engagement at scale with profitability and cash flows.
For full four for full year 2021 group revenue increased 32% year over year to 766 million an acceleration in growth rate from 19% in 2020. This growth was driven by bumble App revenue at 533 million, which grew 48% year over year compared to 31.
In 2020.
We grew our global scale with continued success throughout the Americas, Europe , India, and Southeast Asia, and reached $2 9 million paying users for the year up 16% and average revenue per paying user or people up 15% year over year. All of this was achieved while generating higher profitability.
Our 2021 adjusted EBITDA increased 36% year over year to 207 million, representing a 27% margin versus 26% in 2020 in.
In Q4, we delivered record revenue of two O $8 2 million and adjusted EBITDA $55 million continuing the strong traction we saw all year again this was driven by the strength of Bumble App.
Would you faced some headwinds related to Amazon and FX.
According to third party data sources as of December 2021 did you remains the second most downloaded dating app in the world.
Bumble App is now the third most downloaded data absolutely up from number seven in early 2020.
We were thrilled to welcome fruit, Boston, adding an exciting and rapidly growing dating app targeting Gen Z to our group.
So now let me update you on each of our.
Bumble apps continues to accelerate growth and gain share.
Our brand continues to be a powerful engine of organic growth with Q4 revenue growing 42% to $150 5 million bumbled paying users reached more than one 6 million in Q4 of 29% year over year and up 108000 paying users sequentially.
Both acceleration from the 20% year over year growth and a 60000 net adds we reported in Q3.
This reflects the power of our mission first brands the strong engagement on our platform our international expansion efforts and continuous improvements in our monetization strategy.
I'm, particularly happy to report these results to you on the International Women's day Women's equality, its core to our mission and a driving force for our success.
We are so proud that over 50% of our management team and over 70% of our board members are women.
Bumbles opposite stuff is built on five pillars, our women first brand centered on building safer kind or technology for all product experiences that engage our users in an impactful way, helping them find dates friends and community the pace and momentum of our international expansion along quite sure.
Gain in core markets. They introduce the introduction of new paid experiences in tears and expansion beyond dating.
We believe that one of bundles corn unique strength is how well the brand resonate with both women and men globally. We've seen this with our success in markets as varied as the U S, Indonesia, India, Germany, and Mexico. Our brand is our moat and we continue to invest in that through wide range of channels, including.
Organic and digital marketing, our college ambassador programs and our user safety initiatives.
We continue to be a leader in advocating for new laws and regulations to curb online abuse and harassment we.
We believe in driving trust kindness and accountability on the Internet.
We believe this was a critical initiatives that we are so proud to be leading we loved the charge in Texas several years ago to criminalize, sending unsolicited lewd images.
Inactivity, we call cyber flashing.
And we have seen the campaign a dam.
In several other states in the U S as well as the U K.
On the product side, we were excited to see our efforts recognized by Apple who named US one of their top 15 apps of the year for 2020 one as a reminder, our product development strategy is always to help users find the most relevant match it quickly and safely. This is the key to achieving our mission of healthy and equitable relief.
Yes.
We do this through continuous optimization of the user experience.
A strong discipline of 80 testing and sophisticated machine learning and data science, driven personalization as well as new and engaging features.
This approach continues to pay off with our key engagement metrics continuing to increase year over year in Q4.
We've been very active product development calendar our plan for 2022, our focus has moved from post match experience at which were important to our success at the height of the Covid depends on match to pre match discovery experience.
We are listening to our users' request for more tools to express themselves and are innovating our video and audio features providing more opportunities to use bubbles connecting the lights and more ways to find people.
He will have the same interests and passions with them.
We are actively developing and testing a range of new features and experiences that will improve the product for college students LGBTQ I E plus users and women users on our platform just to name a few you'll start seeing these features deployed at scale in Q2 and Q3 just in time for the peak summer season.
In terms of international expansion, we continue to see tremendous success outside of the U S.
Active user growth in many markets in Western Europe , including Germany, Netherlands, and Switzerland continue to grow at high double digit rates year over year. These countries are also monetizing at a strong pace with robin revenue more than doubling year over year, our expansion into other parts of Europe Lat am India.
South East Asia also continued to strengthen our organic brand driven approach to international expansion is a unique asset of our company and it's proving itself around the world.
As we said before.
Our goal is to have a broad range of people and bumble I become a paying customer.
By creating a menu of experiences that add substantial value to each of them today approximately 10% of our users pay for any service on bumble and we know there's substantial room to grow that number our approach to this in 'twenty 'twenty and 2021 was to introduce a premium tier on top of ours.
Listing booth boost here with additional new features that are additive to the user experience.
More than 75% of paying users are now opting for bumble premium when they subscribe, which is a great sign of the value that it provides our two tier model has resulted in substantial improvement in our people and this past year with 2021 are people of $29 $61 up 13% Europe .
Over here.
In 2022 we are broadening our approach this quarter, we're testing both virtual goods and new consumable we expect wider rollout in Q2 and Q3. We also expect to rollout segments specific subscription offerings. Later this year. We believe these initiatives will increase rather meal by enabling us to target additional.
<unk> price points and user segments.
We're excited by all of these initiatives not just because of their revenue impact, but because we believe that they'll add a lot of value fun and excitement to the bumble experience for our customers.
Lastly beyond dating.
We are excited about the improvements that we've made to our current via a friend finding products, including the on boarding and discovery flow and including the product around interest and passion.
As a result of these initial changes be our fastest growing strongly with almost 15% of total bumble users now using bumblebee at that up from about 10% a year ago.
This increasing engagement continues to drive stickiness and lifetime value of our user and serves as a great on ramp to dating and back again.
We are innovating quickly here in Q4, we launched our next generation features and testing with users in Canada, and we're very pleased with the market reception. We have seen building on the popular existing use case of creating direct one to one connection. The next generation takes into account that many great friendships are often born out of small.
All group interactions. We're building out these new capabilities that will allow groups of people to really build community and meet each other based on shared interests Joyce and struggle.
We're now scaling the tests and adding new features including larger group Connection's in audio and video capability.
Our focus for 2022 continues to be on scaling and refining the user experience. So that we can roll this out to a broader customer base.
We grow more and more excited about the runway for PFS and the importance of it to our overall bundle brand mission and growth strategy.
Now turning to but do you App and other Q4 revenue was down 3% year over year to $58 million.
Could you paying users totaled $1 3 million in Q4, a sequential increase of 5000 paying users largely driven by stabilization post the Android payment issues that we discussed in Q3.
But due to results in Q4 were negatively impacted by several factors, including all macrame, especially in late Q4, as well as greater than expected FX headwinds in the quarter.
I would like to remind everyone of some of the dynamics that play here.
But do you as a scaled product the second most downloaded dating app in the world and a top grossing lifestyle app in over 90 countries. It caters to a middle class Beckman and virtually every market that it operates in and it's designed to thrive in a world of quick connections with its significant feature of being an instant can.
<unk> service called talk to someone Covid.
Covid has caused significant disruption to this user base, putting increased stress on their finances and their available free time.
So the focus on quick connections is also less appealing during COVID-19 Burgess such as with Amazon in late December and early Q1, leading to new registrations being challenged to be clear. This impact has been limited to what do we do not see any notable impact on bumble app due to geographic and demographic difference dip.
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Our download share has generally been stable throughout the pandemic. Our goal is to lean into this large global audience through product initiative that give people more tools to express themselves and have fun in the process for example by continuing to roll out our video offerings more broadly.
And increasingly leveraging the virtual acquaintance ecosystem that we've had in place for many years to drive increasing monetization.
I'd like to now touch on how we're building out our scale with our first acquisition I'm thrilled to welcome fruits to Bumble, Inc. Family of apps I have long admired the approached fruits have taken to encourage honesty and transparency and getting which is so important to us and aligns with our mission.
Due to the fast growing dating app with a gen Z focus any strong and rapidly Brian footprint in Western Europe and Canada.
Since it was founded 40 years ago, it's captured a sizable user base.
75%, which are generally.
And in Q1 fruits as the second most downloaded app in its home country of France.
It's built on the principle that from users very first interaction they must select a profile fruit badge of this metaphor to clearly signaled their dating and attention.
Gen Z is an incredibly important audience for us they are the future. The 2 billion. Gen. Z generation is estimated to account for $3 four trillion of global spend and it's rapidly aging into dating app usage with this very distinct set of needs and preferences and while bumble app.
To drive significant user growth with Gen Z.
We know that people have multiple dating apps on their phone and we're so excited to build fruits into a strong accompaniment to bumble on Gen Z devices globally.
There is great product market fit overall, and we just really believe that combining that with our integrated technology data science safety and marketing platforms will really help them reach their full potential more quickly and efficiently.
In closing.
The World leaves me love more than ever before.
We are so proud to be in the business absorbing this critical human need.
About 2022 I'm very optimistic about the state of our business and the opportunities ahead for us.
So with that let me turn it over to Aneel for a run through of our financial and operational results.
Thanks, Whitney and Hello, everyone.
I will first talk about our fourth quarter results and full year 2021 performance and then I will provide our outlook for Q1 and full year 2022.
Close out the year with strong performance in Q4 total revenue for the quarter with $208 2 million up.
26% year over here please.
We saw stronger than expected headwinds from FX, especially in late Q4, which impacted revenue negatively by approximately $1 5 million year over here.
But I've got a new $150 5 million for the quarter, which was up 42% year over year and acceleration from the 39% year over year growth rate in Q3.
Top paying users reached one 6 million in Q4 up 29% from last year with broad based contributions across geographic regions.
Initiatives with me described earlier have not only helped drive engagement, but also translated into payer penetration improvement.
Yeah.
On a sequential basis, we added 108000 paying users due to product improvement such as the change in the placement of beeline pad optimization initiatives and the reversal of Android payment change.
I'm going to ask our people was $30 57 in Q4 up 10% year over year due to two tier geo segmentation pricing and the extended spotlight consumable launched in Q T.
Our people declined 1% on a sequential basis, driven mostly by FX and impact of country mix and strong international expansion.
But do you have another revenue was $58 million in Q4, which was down 3% year over here.
It was a 1.2 million year over year negative impact due to FX headwinds.
As Vicki mentioned, but do as monetization continues to be more impacted by COVID-19 .
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But do paying users were $1 3 million in Q4 and went down 6% year over year.
On a sequential basis, we added 5000 paying users and saw steady recovery and the Android payments issue we saw in Q3.
But there are people, who grew 2% year over year to $13 and 38 days a decrease of 10% on a sequential basis largely on account of FX headwinds in Q4.
Turning now to Q4 expenses.
Total operating expenses grew 14% year over year comp.
Revenue, excluding stock based compensation was 54 million and grew 22% year over year, primarily due to increase in an effort to be on account of higher revenue.
This represented 26% of total revenue.
Sales and marketing expenses, excluding stock based comp total 57 million or 28% of revenue in line with 28% we spent last year.
G&A expenses, excluding stock based comp was 37 million and product development expenses, excluding stock based comp totaled 14 million or 7% of everything.
Attracting and investing in World Class Tech talent continues to be a top priority for us.
For adjusted EBITDA grew 24% to 55 million representing 26% margin.
Probably a 2021 bumbling revenue was up 32% to 766 million and adjusted EBITDA was 207 million with adjusted EBITDA margins growing to 27% from 26% in 2020, we continue to demonstrate that we have operating leverage in our business.
Simultaneously investing in key areas.
Technology and marketing.
Our net income for 2020 , one that's 287 million compared to a net loss of $143 million. In 2020. This includes a one time 442 million tax benefit in Q1 related to the release of our net deferred tax liability.
I'll say from a restructuring of our international operations that can be completed in connection with the IPO.
And cash and cash equivalents totaled 369 million up from 128 million last year.
Generated free cash flow of 91 million in 2021 more than double the 41 million we reported in 2020.
Now moving on to our financial outlook for 2022.
As we look ahead, we are very excited by the overall growth runway that is ahead of us.
For full year 'twenty two.
After the current conflict in Russia, and Ukraine, we expected revenue to be in the range of 954 to 964 million, which represented 25% year over year growth.
At the midpoint.
Earlier from with me, we have decided to remove all our apps from the Apple and Google App stores in Russia and Belarus.
We estimate that this represents a loss of about 20 million of revenue for the year predominantly impacting but do you revenue.
Revenue directly from these countries accounted for less than 1% of bundle up revenue in 2021 and hence we do not anticipate any impact.
2022 outlet.
As a result of this decision.
White's revenue outlook for 2022 is now 934 to 944 million, which is a year over year growth rate of 23% at the midpoint or 26% when compared to full year 2020 revenue, excluding Russia, Ukraine and Belarus.
This also includes approximately 20 million of estimated FX headwind year over year due to the appreciation of the U S dollar against many global currencies.
We expect to have another strong year growing between 34 and 36%.
We are excited about the credit trajectory of international expansion and the product innovation that will be the driver.
We expect to do another revenue, which will include two what's going forward to be down year over year, primarily driven by the current conflict and ongoing impact from Covid.
Our outlook assumes no revenue from Bumblebee S. As in 2022, we continue to take a similar approach with the FX that we took with bumblebee.
So I think the user experience.
For turning to monetization.
We will test multiple monetization strategies.
Advertising and sponsorship, but have not assumed any contribution from those in our plan.
Got it.
Now onto full year margin, excluding the impact of Usher in Ukraine, We expect plenty out adjusted EBITDA margin to expand by 100 basis points in 2022.
That is up from the 27% we delivered for full year 2021.
This outlook includes the savings from reduction of Google's subscription fees from 30% to 15%.
Now, including the flow through impact of the loss of $20 million revenue from the conflict and also including modest dilution from truth as we invest in it and integration in Brazil. We now expect that our EBITDA margins were 22 will be in the range of 26.5% to 27%.
We may also need to incur additional costs associated with discontinuing our muscle operation given the rapidly changing nature of the situation, we are still affecting the scope of it.
Our EBITDA outlook also assumes current export policy and does not include the impact of additional space, we could pay Google could be a mandate Google tabling starting in April 2022, if that were to happen, we would see additional cost of approximately $16 million, but the rest of the year.
We continue to track developments for both Apple and Google App store fees closely as such we have not factored any additional savings into our outlook from any further changes that may impact us favorably.
But we believe that we are well positioned to capitalize on any upside opportunities that may come our way.
Now moving onto Q went out so Q1, we expect total revenues to be in the range of two of $7 million to $210 million, which represents a growth rate of 22% at the midpoint.
I'll take estimates approximately $5 million up year over year FX headwind.
Our outlook also includes approximately 2 million of negative revenue impact from the current Ukraine, Russia situation.
Again this impact the impact is expected to be mostly in baidu, but immaterial impact to bundle that.
We expect bundled off revenue to be in the range of 152 million to 153 million, which represents 35% year over year growth.
It makes sense.
Q1, adjusted EBITDA, we expect to be in the range of 47 million to $49 million, which is an adjusted EBITDA margin of 23% at the midpoint.
Conclusion, we are very proud of our first year as a public company and I'm increasingly excited about the significant opportunity that is ahead of us.
With that I wanted to say, thank you and now we can turn to Q&A.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press Star then one on your Touchtone telephone.
Again I'd like to ask a question. Please press Star then one.
Our first question comes from Sweden or hurt.
Of Evercore ISI your line is open.
Okay. Thank you let me try two please.
Can you please expand on your full year outlook specifically.
Specifically, how should we think about the tail winds that you may be expecting from Ami crime, Oh Me Cross in fact, as we go through the year, if you could frame that and any commentary on if you expect net ads in the full year of bumble net adds to be greater than.
In our fiscal year 'twenty, one and what are going to be the driver for this growth were a bumble app.
That's question one and then question two Ah thanks for the.
The color on Russia, and Ukraine them back.
Possible to get a Europe .
Your thoughts on potential impact in rest of Europe , and some of your major countries. If you're seeing any distraction just from the war and if that is baked into the guidance. Thanks a lot.
Yeah, sure Hey, first I'm happy to.
So you know as I mentioned, if you look at the guidance for the full year. We are expecting revenue of 934 to 944 million and that as we said includes the negative impact of 20 million that is related to Ukraine and Russia.
So if you break it down by App, that's sort of a bundle that we are guiding to a revenue growth rate of 34% to 36% year over yet and we expect that that growth will be very strongly supported by growth in paying users also the year alongside stable our people performance and we expect that the growth in paying users.
From two areas one.
On international expansion plans I expect it to be a huge driver of it.
Both in the markets that we launched last year, such as Western Europe , but also in newer markets. If we are intending to launch in the second half of gifts yet in in regions such as that so we're very excited about that we are also excited about the product roadmap that we have in 2022 that we believed would be a big driver for increase in penetration.
And as a result improvements and paying user score bump it up.
Hum like.
Like I mentioned this is going to institute tooth going forward, we are guiding to be slightly down on a full year basis. As a result of both impact from COVID-19 as well as FX headwinds and as well as removing revenue from Ukraine and Russia. So as a result, we are expecting that we will see.
Near term negative impact on both paying users and our people as a result of it and our goal is to continue to maintain the focus on engagement. So we can continue to provide our users with the best experience possible. So that when they come out of Covid. They are in the best possible. If they have the best possible experience and then they can continue to become a paying user.
No.
He has a question on outlook, we haven't currently in the guidance assume any major changes in terms of user behavior from what we are seeing today.
As you said, we know there is pent up demand amongst the users, but we are not yet assuming any huge changes to how people are going to be socializing and how people are going to be.
Mingling with other people come spring and summer so if that have to happen, but we certainly think that that would be upside to our bundle outlook.
I'll turn it over to Paul I could talk about some trends from Oh, yeah and in terms of the other countries as it relates to the conflict as well as I'm kind of well we are seeing of course, the majority of the impact is on what do we as a new said, we're not seeing any impact on.
Bumble App, resulting from the conflict so far.
What you see is the the decrease in activity in Ukraine and of course the actions. We're taking now in Russia, you see them very modest level of distraction.
Distraction is probably the best way to describe it in countries immediately bordering Ukraine.
That is something that we see in terms of slightly decreased engagement metrics and things like that at the moment situation is very fluid. We don't expect to see any evidence that these will be long lived trends, but of course, it's a challenging time and people have been a little distracted over the last couple of weeks.
Okay. Thanks, I know thank.
Thank you Derek.
Thanks sure.
Thank you. Our next question comes from Alexander of Seger of Goldman Sachs. Your line is open.
Thank you so much for taking my questions. Two if I can so just as a follow up on bumble paying user growth how should we think about the cadence of matters as we go through the year and then maybe in that context.
Could you maybe elaborate on on your Bumble App International expansion priorities from here and then second I just wanted to touch on unlike the foods acquisition.
And if you can just elaborate a little bit on the rationale behind that acquisition and also your appetite for additional M&A going forward. Thank you so much.
Sure why don't I take the paying user growth and then I'll turn it over to with me to talk about food and M&A. So if you think about Q4, we had excellent paying user growth in a quarter that is usually a seasonally low quarter for that.
And thank.
If you think about growth in paying users for us it's largely a function of two areas. One is causing overall user since we had obviously a premium app and that means that as we continue to grow our user base, we will continue to.
Can you talk about the second one is improvements in payer penetration that are both a function of you know.
Biggest product enhancements that we do as well as constant under the Hood optimization that we are going to be doing all through the year. So if you think about the cadence of paying users you have to sort of take that into a kind of a so you'll see us do constant improvement every quarter and then you will have some step change functions in terms of product launches that we have.
During the course of the year.
And then as you think about I just overall.
Improving international parents like I mentioned, we are very excited about continuing to penetrate invest in Europe . We are also very excited about the markets in that time, that's being what would be a big markets for us starting in the second half of the year.
Oh, hi, there. So this is whitney and I will jump in on the fruits rationale and plan more broadly with the M&A. So I want to start by saying that we are very financially rigorous and strategic about M&A and how we think about that as it pertains to fruits directly before I go into the <unk>.
Strategy, which candidly has not changed from the last time, which we've spoken.
To reiterate fruth as one of the fastest growing dating apps in Europe , and as I said in our prepared remarks, it's a very focused on Genesee and so this popular app really aligns with our mission of creating healthy inequitable relationships, but beyond how we plan to tie this into bumble inks wider.
Land is over the last year as you've seen from our prepared remarks, we've seen very strong growth in France, Benelux and German speaking countries in Western Europe , and so this acquisition of fruit is really part of our continued investment in that region and fruits gives us a stronger foothold in western Europe , and Canada as well, but also serves.
Its great potential for expansion more globally with a great team that is eager and ready to scale with our platform capabilities and resources and the great thing about fruits is it does not compete with either of our other leading brands our app bumble them to do this acquisition really just.
Our product offerings for consumers, which are very in line with our focus on empowering relationships with Gen Z.
And we're very excited about this priority of integrating fruits and their team into our broader ecosystem in our culture, and we really enjoyed getting to know them and working with them and explore exploring all of these growth opportunities as we talk about M&A more generally I want to be clear that we have not departed from that earn.
<unk> commitment to being the branded house, we have a north star our mission remains very oriented around driving a world around healthy and equitable relationship, but all relationships all being the key word we want to reach as many people as we can and because we have this really unique.
Chaired resource of the group, which allows us to build this trusted and safe technology features where progressive on the stance that we can find opportunities with new audiences through M&A.
And so we when we really view the analytical process and we take this financial rigor around both fruits and anything in the future. It's all about checking the boxes of fast growing companies with strong brands.
Are they at a stage, where it can be leveraged in all of the way as I mentioned earlier and is it complementary to the markets that we serve today or want to reach in the future. So the final point is their founder led they're mission driven and we're really really excited for 2022.
Very helpful. Thank you.
Thank you. Our next question comes from Cory Carpenter of Jpmorgan. Your line is open.
Thanks for the questions first one on Russia, just hoping you could talk a bit about you know what the wind down of operations in Russia could look like practically speaking.
And in the meantime, you know how should we think about any operational risks if any related to the Russian operations.
And then on bundle up.
I think you said bumble I gained share since 2022 from 7% to three globally, just curious any comments or anything you're seeing around share trends and some of your more mature markets like the U S and Europe . Thank you.
Hey, Cory Thanks for the question, let me start by talking about Russia, and I'll turn it over to west to talk about the share trends.
So as we noted we are we have over the last couple of years since really since 2020 been really diversifying our operations. We have stood up a for Asbury Major Engineering center in Barcelona, We have strengthened our engineering center in the UK and we have.
Added technical resources in the U S as well and so this is all been part of our of our strategy of really making sure we were operating very resilient and robust business globally.
What that means practically speaking.
Is that as we noted the skill sets of the team in Russia, while valuable our skill sets that we have in other places in the company. So that's the most important piece to start with we are very sensitive to and prioritizing the well being and safety of our team in Russia and and of course, you know this is something that we take.
Very seriously so we will be working very methodically with them over the next couple of weeks to ensure that we.
Our transitioning the critical knowledge that we have in side of that team in some cases you.
You know how do we maintain connection with some of our team members, who may want to not stay in the countries that they're currently in and then how do we build up our capabilities in other countries. So so the reality is of course, there's a lot of work to do over the next couple of weeks as we go through the next steps, but we feel pretty good that our.
But the actions we've been taking over the last couple of years have put us in a pretty good place on this.
More to come as the conflict evolves, but again, we feel very fortunate to be in this position, where we will turn it over to you.
So quick a click.
Quick update on where we are with market share.
So just to reiterate bundle continues to grow in our core markets.
And expand rapidly and in our international markets as well and through all of that monetize at a high rate. So just to reiterate on being the number three most downloaded dating app in the world that's up from number seven at the start of the pandemic in 2020.
In the U S over the last 12 months. According to third party data sources Bumble apps downloads has increased meaningfully compared to the number one player in the market and we have also maintained our lead versus the third player in the market.
And it's worth noting that that the number three player is also taking share from the number one player not from US people are we've said this before people have to dating apps on their phone typically and well the second app is changing from one of our competitors to another we are continuing to see bundles position.
Grow.
So why in a couple of factors contributing to that is just to keep it short.
Our brand moat and our women first orientation are a key source source of strength. So according to morning consult the market research firm across the dating apps that they track Bumble has the highest net favorability score among those aware of each brand with women and Gen Z. So this is a key.
<unk> of our continued expansion and that playbook that is leading the success for us around the world. So that brand, let organic approach to building. The business is incredibly critical and there's no shortcut right, which is a great competitive advantage for us a lot of players even large players if they try to buy market share.
You'll see spikes, you'll see you'll see some virality for a short period of time caused primarily.
Primarily by marketing spend but you do not see user of sticking around and using the product long term and our approach has always been to ensure that we're building that organic flywheel and then adding to it with performance marketing spend not the other way around.
Yeah.
Next question.
Okay. Thanks for that.
And as a reminder, please ask that you. Please limit yourself to one question and then he may join the queue rejoin the queue. Our next question comes from Andrew <unk> of Raymond James Your line is open.
Hi, Thanks for taking my questions a couple for a new.
But do segment. So I guess could you go into a little depth on the moving pieces of Purdue our people growth and <unk> things like tailwind from two tiered pricing versus FX impacts versus anything else that was that was going on there and then also in the Baidu and other segments can you help us.
Our heads around a little bit the impact of the addition of fruits and the subtraction of Russia, and Ukraine on things like paying users in our peer group. Thank you.
Sure I'm happy to take that so if you think about.
Q4 rfps to deal.
<unk> was heavily impacted by the FX headwinds that we saw so if you ignore the impact of that and then you ignore the impact of the changes from our country mix perspective, the underlying our people deal with still there now as it relates to two tier we are you know obviously, we've rolled it across.
Many countries, we are starting to see in some markets where adoption has been good and we had also starting to see underlying improvement in court. Our people I think we have realized that we still have a little bit more work to do in terms of pricing optimization and a lot of these markets.
To both optimize for higher adoption of two tier as well as to improve the underlying our people would each of those markets. So that is work that is ongoing as we think about Q1 and that has to be as well obviously the the the headwinds from Covid and FX are muddying the pitch of.
He will Florida, what are people looks like they do on a clean one for one comparison and as.
As you think about as you think about your second question. So we are not going to break out the impact of foods and and just what the core underlying but do it going forward like I said it is a $20 million headwind as it relates to Russia and Ukraine.
Assumed in our guidance.
The impact to paying users is higher.
The impacts that we had somewhat of a new basis. If you think about it would be done lowered our two markets compared to what our people market compared to some other produce markets and so I think we will see a about you know mid teens impact on paying users are likely as we go through the year.
Sure.
But the revenue impact will be will be lower as a result of it we'll do that.
Great. Thank you.
Okay.
Thank you. Our next question comes from Lauren Shake of Morgan Stanley . Your line is open.
Great. Thanks, I, just want to ask a little bit about about App store fees I guess, what what do you make of the fact that we haven't heard anything from Google on the on the March 31st expiration quite yet and you know sort of assuming that you didn't put into your guidance is your assumption that it may not happen just any thoughts there and then is the reduction from the 30%.
15% in year, one is that benefit in the guide already.
I'll take the first part of that learn and thanks for the question. So we are you know.
We are following this very closely as you would expect.
You know Google has continued to signal that they are marching towards their deadlines. We are somewhat cautious on this given the experience we saw this summer where the.
The situation changed quite you know near the deadline as those approach, we're taking very much a wait and see approach we have.
Both the technical teams ready when we are required to but we're not going to go any earlier than we're required to on any of the changes that are being put in place. So we're just watching closely and Google will do what what theyre going to do.
And and we'll be ready when that happens.
And go on to your question, Yes, we have built in.
The savings from the <unk> piece of the Google subscription going from 30% to 15% in the the EBITDA margin.
Provided and you know just to call that most of the bundled revenue today, a big chunk of it really goes to apples to the benefit that we have for them. This is more than what you would normally expect and that is included in all of them.
Great. Thank you.
Thanks Helane.
Yeah.
Thank you. Our next question comes from John Blackledge with Cowen Your line is open.
Oh, great. Thank you I'll be expansion into the non English speaking markets. Just curious if you could discuss kind of which markets are doing better or worse than expected. What are the key drivers and then just curious also if you could frame the <unk> exit run rate for the.
The bubble up.
Expansion.
Markets just to give us a sense of kind of core versus.
Expanded markets. Thank you.
Sure. Thanks for the question John .
So we are as we noted very very pleased with what's happening in the non English speaking markets. We have been expanding in in Western Europe , we've been expanding in Latin America, India, South East Asia and pretty much across the board, we were really gratified to see what's happening.
Organic flywheel that we always want to have turning which is really based on the brand. The mission. The women's first orientation of the App is really taking hold in markets that that frankly, a lot of naysayers said it would never working and that we.
Are really prioritizing and so that's very much true in Western Europe , but it's also true in Latin America countries, like Mexico, and Brazil, very much true in Indonesia in the Philippines, as we talked about very much true in in India, and so we really think this is a broad based.
Movement at this point and we are.
Country by country being very very deliberate on the product side a lot of what drives. This is the localization efforts that we do making sure that we have the right nuances of the language right. How we're communicating our key value propositions like we would make the first move in in the right way, that's locally relevant and culturally relevant and linguistically relevant.
But then also there are some human truths here about quality about everyone wanting to eat healthy and equitable relationships and we really lean into that message. It generally takes a while for us in these new countries to lean into a substantial performance marketing, we want better organic flywheel to start.
Rolling So so badu unbundle I'm, sorry that is very much the story.
Pleased with pretty much all the countries we've talked about all the reasons, we've talked about the performance that we're seeing there.
And maybe to your to the second part of your question, we haven't on the Bumble App, we don't really detect any notable.
The issues from omicron as that has been rolling out the different situations, but do as we noted but bumble. If you look at incidence rates of the disease in Western Europe . For example, you couldn't really see that in the exit velocity or in the run rate that you're seeing in in Germany in Germany, and Switzerland, and the Netherlands et cetera, So we really think.
That the momentum is continuing to build users are continuing to monetize it at an accelerated rate and we've seen that continue into Q1.
Thank you.
Thank you. Our next question comes from Brad Erickson of RBC capital markets. Your line is open.
Hi, Thanks, a couple for me first you know when you think about consumer budgets, maybe being a little bit more pressured you know here going forward across the U S and Europe , how insulated do you think you are there across.
Your your different brands and then second you know with.
The guidance for I guess, roughly stable margins year over year, you know recognize you've got solid investment there around sales and marketing baked in but you know to the degree that you are seeing maybe some positive signal like you've mentioned and some of the international markets talk about your propensity to maybe invest more in the net effects with Nike under that type of a scenario.
Thanks.
Sure.
So consumer budgets.
Again, it's a pretty different story on bumble versus but do bundle tends to have a somewhat more premium audience.
What we've seen really throughout the pandemic as as budgets.
Have been you know.
The economy has been uncertain is that bumble keeps powering through and our users are really quite well.
We are excited to keep engaged with the platform. We've had a premium tier strategy historically that peer continues to perform well for us with 75% of Payors opting for that premium tier and we do think that that will continue so on the bumble app side, we feel pretty good about the resilience of the user base from what we're seeing.
If you look at the produce side as we've noted the user is generally a more economically sensitive user and it's a user who does respond to both the COVID-19 dynamics, but really underlying economic dynamics the bad debt. The Covid presents in many cases as we've noted before their frontline workers they work in hospitality restaurant.
<unk> retail areas like that and so we do think that there is more sensitivity to.
Tightening consumer budget environments, we are certainly seeing that.
That with the.
With omicron and particularly towards the second half of December and into Q1 that would do has been more challenged.
Then we would have liked again bumble continues to move forward quite nicely, but you do see the impact can be doing we're keeping a close eye on that both from a user.
Engagement standpoint, and as we think about the monetization strategy, making sure we can lean into some of these lower price offerings like consumables and the like.
In terms of the marketing question, we really pride ourselves I'm, having a very very disciplined marketing approach. We are very you know this business is driven by peer to peer recommendations as we call. It and you know this is someone is successful on one of our apps. They tell their friends someone goes to a wet.
I have a couple that met on bumble, they tell their friends or their nieces nephews or whatever it is and that form is really the foundation of this organic model that we have as it relates to that incremental marketing spend we are constantly on both bumble and baidu.
Leaning looking globally at where are there opportunities what are the rois that we're seeing we're very fortunate the payback periods tend to be quite short on both bumble and baidu and so it gives us the ability to lean in where we see opportunities. We have they'd be you know we we.
Examples of US doing that for example in Western Europe , when we've seen successes in Germany, we've leaned into those successes from the marketing standpoint, but they generally pay back quite quickly and arent arent margin dilutive.
Got it that's great. Thank you.
Thank you. Thank you.
Next question comes from Brent Thill of Jefferies. Your line is open.
Good afternoon, I know you mentioned that there was no assumption of change of behavior your guidance throughout the year, but I'm just curious in Q1.
So far we're obviously well into the quarter, what what youre seeing from the user behavior through through this quarter. If you could just give us a sense on on whats happening there. Thank you.
Sure maybe I'll.
Take a step back and just talk about Covid behavior in general again, I'll talk about but doing bumble in just a second but what we generally find with Covid and we noted this in past calls as well is that there's there's what the regulations say for lack of a better way of saying it meaning are there lockdowns of stores open our restaurants open.
Of course, the first bar that a consumer looks at and then there's the second piece, which is do you feel comfortable going out do you feel comfortable meeting strangers do you feel like putting yourself out there what we've seen throughout the pandemic with both bumble and Baidu is for those users who've decided you know what I mean, I really wanted to start and I really wanted to.
People are engagement is is really at extraordinarily high levels. We are really fortunate to see more and more people are more and more engagement from those people on our apps. What we do know however is that there are people who are sitting on the sidelines waiting until they feel comfortable putting themselves.
It's out there they feel like it is both safe and there's not going to be a head fake and somebody says Oh just kidding. Two weeks later you have to come back and it's a very emotional and psychological.
Psychological decision.
And and therefore, you don't see the quick action reaction that you would expect when the government lift lockdown orders or wind cases.
Loads go down below a certain level, it's not like a switch gets flipped and so what we see.
But do you is that there's a lot of hesitance in the Baidu user and we do see that has increased during omicron. If you look at the case rates in Western Europe . For example, there are still quite high we don't really see that abating in the first half of Q2, if Q1 I'm sorry.
And and we think it will take more time for that to work its way through the system I think in in Bumble, we haven't seen any negative impact on the user base and we hear the pent up demand when we speak to our users, but as you mentioned, we're not yet.
And there we're seeing any signals that are going to be long lived signaled this kind of pent up demand being released we remain you know.
We are hopeful of that in the future, but we've all gotten the timing wrong on this a number of times and we're not prepared to say when we think that'll happen at this point.
Helpful color. Thank you.
Thank you. Our next question comes from Dan Salmon with BMO capital markets. Your line is open.
Okay, great and good afternoon, everyone.
I wanted to ask briefly share an update of what you've previously called I think a megawatt advertising opportunity.
And some tests this year and we've anecdotally noticed a little bit more too so.
Maybe could you give us an update on how important you think advertising could become over the next few years for the company.
And then maybe just one follow up you talked a lot about obviously fruits and your views on M&A to grow your reach and grow your portfolio.
What your latest views are interested.
Interest in creating new apps organically to grow your reach as well thanks.
Hi, there thanks for the questions.
Tiny bit hard to hear you. So I hope I I hope I got your questions properly if I didn't please correct me.
On the first piece when you talk about advertising you know we are very proud and excited about the runway for further penetration of monetization more generally what we have said as it pertains to overall revenue at the business you know right now we said in our prepared.
Remarks, only 10% of the bundle app customers our payer there is huge runway for that to be penetrated.
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Thank you. Our next question comes from deep pocket rather than of Wolfe Research. Your line is open.
Hey, guys. Thanks for taking the questions just a couple of quick ones that I suppose.
Can you guys give me.
Could it go off though.
Can you hear me okay.
Yes, Sir your line is open.
Okay perfect. Yeah. So just wanted to ask a couple of quick ones first on <unk>. It sounds like there isn't a lot factored into the guidance on revenues, but can you elaborate on the timing of when we should start seeing more of the salary or you don't.
Can you hear me.
Yeah.
Okay.
That's exactly the question, saying Wolfe research.
Go ahead I continue the question.
Go ahead.
Okay, Okay I'll try again.
Just a couple of quick ones first on via Fab. It sounds like there isn't a lot factored into the revenue guidance, but was just curious if you can elaborate on the timeline of when we should start to see you know some other monetization efforts start scaling over the next few quarters and then the second one just.
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Oh, Please continue I'm sorry continue on the second one.
Okay, Yeah, I'll I'll I'll keep this one short to Oh.
And I just wanted to make sure what you are referring to the RP pool for Bumble for 2022 are you expecting it to be flat from current levels or just wanted to make sure we're understanding it.
Thanks for the question and we don't know what happened we got cut off for the last question. So we apologize to everyone listening, but we are back so as far as BFS monetization are we.
We are fully focused on building out the continuum of product feature offerings and investing in our AR in the <unk>.
The expansion of our customer base that is engaging with the product 2022 should not be focused around the asset monetization that does not negate the strong conviction, we have in the long term monetization growth horizon for this product and for this offering but it should not be the.
The focus for 2022 just like we did with dating on bundle we focus on engagement, we focus on ecosystem helps them focus on the innovation of the product offering and building up engagement and peer to peer recommendations and then we turn to monetization focus.
Yeah, and just quickly on our people with the right. Now you know we are not forecasting a huge increases on our people in our outlook. We certainly have in our product road map several of our product offerings that he wants to build towards continuing to increase our people both on the subscription side as well.
On the consumable side.
That's constantly being tested and will be rolled out through the course of the year, we haven't built any upside from that into our model.
Examples of things that we're thinking about our building.
Fiction bundle that makes sense for different cohorts of people that have high monetization high pad penetration potential. So you know I'll just say more to come on that for now you know our focus is on driving high levels of penetration and we have a lot of you have a lot of things in the pipeline to drive improved.
And our people as well, which we see an update to our outlook.
Okay. Thank you very much.
Yeah.
Just one last question. Please. Thank you our last question will come from Steve counted of F. N. B C. Your line is open.
Okay.
I'm Christy Thanks for taking my question I'm wondering if you can give a general update on the beyond dating strategy, where you're at with BSF product viability housing.
How is engagement playing out compared to your expectations.
Thank you.
Thank you so much and so we're very excited about the improvements that we've made to the current b S. A friend finding product.
So as we've said in previous earnings calls the product had not been innovated since 2016 since we rolled it out and so the fact that we've had as.
Many customers are using and engaging with this product that they have and in such a early product offering really just think suggest that strong unlock opportunity and runway ahead of us. So as of Q4 as far as Q4 goes we really are finish some of the discovery flow mechanisms.
And we really worked on anchoring the products round interests and passions and as we said in our prepared remarks are these initial changes really accelerated that fast in terms of the active user base with now around 15% of the bumble users engaging with the ethos, which is up from around 10% of your about.
And so that increasing engagement really continues to drive stickiness and that L. T V and.
Also what it does which is really interesting is it destigmatize. The category. So you bring people onto the product. It's a nice on ramps back and debating it while you bring people onto the product that otherwise were adverse to trying a dating app and so at this rate and it's this rate mechanism and on ramp so as that's for the future.
And where we're going next we are innovating very quickly on this product we have been very very focused on getting the product right and as we said we're very excited about what we're seeing so far in the test cases around engagement around stickiness around all sorts of engagement and and and.
Markers that would suggest that this has the potential that we believe it does.
And as we look to the rest of 2022 it it's really about finalizing our test getting these features rolled out into as many hands as possible and then providing more robust updates as they.
The earnings come.
Perfect. Thank you.
Yeah.
Thank you. Thank you.
Ladies and gentlemen, this does conclude today's conference. Thank you all for participating you may all disconnect have a great day.
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