Q1 2022 Bumble Inc Earnings Call

Good day, ladies and gentlemen, and thank you for standing by welcome to the Bumble incorporated first quarter 2022 earnings Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press Star then one on your telephone keypad. If you require any further assistance. Please press Star then zero.

At this time I would like to turn the conference over to MS. Cheryl Valensuela Ma'am you may begin.

Thank you for joining us to discuss first quarter financial results.

Today, our Waco, Volkert, founder and CEO Art Shochet President.

Superman in a bubble.

Four we began I would 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 uncertainties and reflect our current expectations based on our beliefs assumptions and information currently available to us.

Although we believe these expectations are reasonable we undertake no obligation to revise any statement to reflect changes that occur after this call.

Both 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 2021, 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 isolation from our GAAP results Bracken.

A reconciliation of most comparable GAAP measures are available in today's earnings press release, which is available on the Investor Relations section of our website at IR <unk> com, both dot com and.

With that I'll turn it over to Michael.

Thanks, Cheryl good afternoon, and thank you all for taking the time to join our call today, we had an excellent first quarter, achieving total group revenue of 211 million driven by continued strength in bumble out our total paying users exceeded 3 million with bumble app, adding 134000 paying users sequentially. We also deliver.

Profitable revenue growth with adjusted EBITDA of 15 million.

I'm proud of the strong financial results, which are a testament to our team's execution against our long term strategy.

The World has seen heightened macroeconomic concerns this quarter, including the conflict in Ukraine and inflation many areas of the global market continue to struggle with Covid I'm very grateful to our team for navigating through these challenges, including the difficult decision, we made to discontinue our Russia operations as we've seen throughout the pandemic.

The need for love and connection endures through both positive and challenging times and we are laser focused on always being there to support our users.

Countless success stories, we hear around relationships marriages and births is the inspiration that drives us every day and we are excited about the opportunity. This represents.

Let's start with Bumble at Q1 revenue grew 38% year over year to 155 million fueled by growth in both paying users and our people. We saw strong revenue performance in both our traditional markets as well as in our international growth market.

The U S remains a very important region for us in Q1 based on third party data, we expanded our download Sharon strengthened our number two position in the market, we still have substantial opportunity to grow in the U S and our continued pace of our user engagement as a sign of the runway. We believe we have as markets continue to reopen.

And Covid becomes endemic.

Within our international growth markets. We are proud of our continued progress across Western Europe , Southeast Asia, India, and Latin America in Q1, Bumble App became the second most downloaded app in Germany and revenue across the broader Doc region almost doubled year over year.

Our on the ground field marketing oriented approach grounded in our mission generates authentic word of mouth and continues to resonate internationally.

We're seeing the success starts to be replicated in our newer markets such as France.

Whether lens in Mexico as well.

Broad based geographic growth underscores the strength of our business that is focused on engineering womens first experiences and providing our users with safe trusted and accountable environment.

Over the years Bumble App has built a remarkable community of users who are strong advocates for the brand and who actively share their positive experiences on the app with their friends and their social connections bumble apps top of funnel remains healthy and we continue to add a majority of our new users organic.

Additionally throughout the pandemic, we've seen Reengagement drive monthly active user growth on a consistent basis.

When users who had gone dormant on bumble for a variety of reasons, including those that took a break from dating due to COVID-19 return to our App. The strong brand loyalty, we have bring some back when they are ready to resume dating and extends our lifetime value.

We have a robust product development agenda for bubble up this year and are in the process of rolling out a range of innovations globally I want to spend just a few minutes walking you through some highlights.

Fundamentally people joined bumble to find someone that they connect with and a trusted and safe way, we're launching a range of discovery oriented features to make our platform more powerful for both women and men earlier. This week, we rolled out our new complement feature in select markets as a first step in our global rollout.

With complement people are able to send short pre match messages to potential connection to show a little more of their personality and build more of a personal connection. We've also recently launched in these markets pre match audio profile element and a new and improved experience for our non binary user.

Another theme, we are focusing on is hybrid experiences.

The World continues to reopen we want bumble apps become a go to companion for this online and offline hybrid world our product and marketing initiatives are focused on combining the power of bumble app with the excitement of meeting in real life.

We recently launched our BP event access system, which provides QR codes inside of our apps to give you access to unique real world experiences. We are building on this with a major initiative called Bumble I R. L, which we launched last month in partnership with leading brands such as full cycle top golf and.

The James Beard Foundation, we are offering our users across the U S access to a year long slate of in person events, ranging from food and beverage tastings at women owned restaurants to live music sports and volunteer event.

All of these are designed to help our users find and easily connect with other singles who have shared interests.

Additionally, we are expanding our pioneering hunting campus Ambassador program, which now has nearly 600 ambassadors across colleges in the U S.

We will be rolling out new product integrations, just in time for the summer break and the new school year.

Helping college students take connected when they leave campus and then reconnect when they returned almost started on college campuses and we are big believers in the power of these campus communities.

These are just a few examples of what we can do when we combined our unique brand with a distinctive product experience.

Our approach to monetization builds on these efforts by providing value added experiences that users are willing to pay for for example in Q1, we launched a series of enhancements to be like a popular feature in our higher priced bumble premium subscription tier.

The enhanced feline offers better ways to manage inbound activity such as enabling users to sort by the closest connection or the most recent like the redesigned drove significant improvement in Paris and will lay the foundation for further product enhancement and optimization.

As you will recall 2021 with focus on driving adoption of our premium subscription tier while 2022 will be focused on driving further pay our growth by expanding lower price entry points through both subscriptions and consumables.

We began testing virtual goods this quarter in several markets in the U S and these market users now have the option to upgrade their super flight, which lesser connections now that they like that with our guests such as virtual flowers and our initial tests, we have seen strong engagement and virtual goods from our Gen. Z users. This is exciting as it.

It creates a more fun and dynamic experience, while being the basis of our future enough consumable economy. We expect the virtual goods will launch later this year part of a strong monetization roadmap. We had planned for the second half of 2022.

We continue to make strong progress with our friend findings harvest Bumblebee I thought our Northstar would be enhanced bumblebee F up offering is to provide high frequency low stakes ways for people to discover and get to know each other around shared joys and common struggle. The results. So far of our ongoing alphatec had been very positive.

We have found that with limited promotion over 40% of active users are becoming actively engage with new experiences for off price and retention. After one month with upwards of 75% we plan to roll out more features and expand to other user segment in Q2.

Now turning to Baidu App and other revenue for Q1 was 56 million a decrease of 4% year over year.

We've noted, but do you have a sizable presence in central and eastern Europe , and I want to start with an update on the Ukraine complex since our announcement in March we have removed our apps in Russia, and Belarus, and also removed paywall can you price. These decisions coupled with significant FX headwinds are the reasons for the decline.

But do it the high scale valued brand across the world and remains a top three lifestyle app in dozens of countries. We're helping people everywhere find love millions of people connect and build relationships every year on Baidu. For example, just this March we partnered with two of our users Kristina and Antonio to help.

And celebrate their wedding or campaign, featuring them went viral across Spain, and Latin America, driving an increase in organic registrations built.

Building on successes like this we believe that do with room to grow as we navigate the current situation in eastern Europe and as the Covid situation improves we are actively adjusting our marketing approach to reflect the macro environment and we scaled back on Baidu brand marketing substantially in late Q1, as we assess the conflicts impact on our user base more broadly.

As the situation stabilizes, we will be opportunistically looking to expand our marketing activities again, while continuing our strict discipline around ROI and short payback periods from.

From a product standpoint in Q1, we focused on the ongoing optimization of our user experience with them to do we've been experimenting with new ways to boost engagement and user acquisition, including rolling out short form video capabilities on user profiles and streamlining our in our coin economy.

We expect to lean into these areas threat 2022 to provide more reasons for people to use to do when the pandemic recede and users reenter the dating scene bumble.

Bumble, Inc has always been a leader in and Frank Krause and safety and online dating.

Q1, we achieved some important milestones we launched an industry first partnership with Bloom, a remote trauma support service to offer complementary online support globally to users of both Bumble Amadou, who report sexual assault or relationship with you. We continue to invest in technologies, such as machine learning and AI to create.

Places that users can trust by filtering out unwanted content and images.

Parallel we continue to advocate for women's digital safety globally, and we are excited to announce the bumble supported cyber are flashing campaigns have made advances in the U K and the U S, including a bill that was recently passed into law in Virginia.

We are encouraged by the opportunity we see on the horizon.

We have navigated successive waves of the pandemic, serving our users who are looking for love and willing to put themselves out there. We know that there are many who are so cautious about COVID-19, but we also hear from many of them are looking to go out and meet people more actively so while theres a fair bit of macro uncertainty clouding our visibility we are optimistic about the written.

Turn to a more normal environment, we're creating our own tailwind by focusing on product innovation international expansion and operational excellence. So that we can continue to deliver strong results.

In closing I'd like to thank our team for their hard work and unwavering commitment to our mission I'd also like to thank all of our customers partners and investors for their continued trust and support.

And with that I'll turn it over to our new for a more detailed discussion of our financials.

Thank you and good afternoon, everyone as Britney shared we are off to a great start to the year. We delivered strong results in Q1 exceeding our guidance for both revenue and adjusted EBITDA I'll begin with a discussion of our fourth quarter results before turning to our guidance for Q2 and the full year.

Unless stated otherwise the comparisons I will make refer to the first quarter of 2022 versus the first quarter of 2021.

Total revenue in Q1 reached 211 million up 24% driven by strength in bumble out as we mentioned in our previous calls we've continued to see the dollar strengthening against many currencies, including the British pound and euro leading to a 5 million FX headwind in the quarter.

We also saw approximately 2 million negative impact in Baidu from our decision to discontinue operations in Russia combined.

Combined these impacted our Q1 year over year growth rate negatively by four percentage points.

At a group level paying users grew 7%. Despite me over 3 million and our people increased 14% to $22 and 76% primarily driven by mix shift towards bumble app.

We are pleased that both paying users and our people continue to propel our overall revenue growth.

Bumping up continues to perform well with Q1 revenue growing 38% $255 million we.

We saw headwind due to FX of approximately 2 million, which impacted our year over year growth rate negatively by two percentage points.

Revenue growth was driven by an increase in paying users, which was $1 8 million up.

31% year over year.

134000, paying users sequentially up meaningfully from the 108000 be added between Q3 and Q4.

A number of factors contributed to this strong growth in paying users, including robust and May you trend healthy engagement and retention along with several product enhancements in Q1, such as the redesigned feline feature.

But our people increased 5% to $29.18.

Our people decreased 5% sequentially, primarily due to mix shift as a result of international expansion and also the negative impact from FX.

Now moving on to Baidu App and other.

Starting this quarter revenue from fruit, which we acquired in January of this year will be included in this section. However.

However, due to differences in reporting definitions, we have opted to exclude fruits paying users and our people from Baidu App and other kpis at this time.

As the visit adding them once our integration is complete.

But do happen on the revenue in Q1 was 56 million down 4% year over year.

We saw headwinds related to FX and the Ukraine conflict of approximately $5 million, which impacted growth rates negatively by eight percentage points. Additionally.

Additionally, but do app by virtue of the Jupiter ethics, and social demographic profile of its user base continues to be more exposed to macro headwinds, including Colgate and inflation.

We expect these factors to continue to be a challenge in many of them produce core markets in the near term adversely impacting users propensity to pay and overall monetization.

But do app, another paying user declined 15% to $1 2 million, our total paying users decreased 106000 sequentially.

We lost approximately 60000 paying users between Q4 and Q1 in Russia, Ukraine and Belarus.

These three markets had a higher impact on paying users versus revenue due to lower than average our people.

As a reminder, we only saw one month of paying user impact in Q1, and we expect Q2 to reflect a full quarter decline of approximately 120000 230000 paying users across these three markets.

But do App and other are people with $13.51.

6% year over year and up 1% from the previous quarter. The increase in our people was due to geographic mix shift away from Russia, Ukraine, and Belarus offset by FX headwinds.

Now turning to expenses.

Total GAAP operating expenses 192 million for the quarter down 32% year over year, primarily due to IPO related expenses to be incurred in Q1 last year.

Excluding stock based comp and other noncash or one time items, our total non-GAAP operating expenses were 161 million.

Cost of revenue was 56 million and grew 21% the increase was driven by Hyatt.

As revenues have grown.

As a percentage of revenue cost of revenue was 26% compared to 27% last year due to reduced subscription fees on Android, which has dropped from 30% to 15%.

Sales and marketing expenses grew 39% to 58 million, representing 27% of revenue up from 24% last year due to increased marketing spend and head count related expenses.

G&A expenses were 32 million or 15% of revenue and product development expenses were $16 million or 8% of revenue compared to 9% last year.

Q1, net earnings were 24 million compared to net earnings of 323 million last year, which included a one time 442 million tax benefit related to restructuring at IPO.

Q1, adjusted EBITDA was $50 million up, 8% and representing 24% margin.

We ended Q1 with total cash of $309 million. We also generated positive free cash flow of 14 million compared to the negative cash flow of 48 million reported last year.

Now moving on to our financial outlook for Q2 and full year, our outlook represents our current expectations for revenue and adjusted EBITDA based on the visibility we have today, we have factored in.

Two key considerations into our outlook.

First the continued appreciation of the U S dollar versus other currencies, even relative to the rates that we saw in early March when we first shared our full year outlook.

Based on the movement, we've seen since our last earnings call, we expect to see incremental headwinds from FX on both bumble and Purdue.

Second incremental enough piece, we expect to pay as a result of adoption of Google play billing, which took effect on April 1st and will be fully enforced on June 1st.

As a result for Q2, we expect total revenue between $218 million and 221 million, representing a growth rate of 17% to 19%.

Our Q2 outlook is impacted by FX headwinds of $9 million, which is 2 million incremental to what we had estimated in March.

Outlook also assumes approximately $6 million of headwinds related to the conflict in Ukraine, primarily in <unk>.

Without the impact of FX, and the Ukraine conflict or total revenue growth would have been 25% to 27%.

We expect bumping up revenue between $167 million, and 169 million, representing a growth rate of 31% to 33% supported by accelerating net adds this.

This is a negative impact of 5 million from FX, which is 1 million higher than what we had estimated in March excluding FX headwinds our growth rate would be 35% to 36%.

We estimate adjusted EBITDA between 51 million and $53 million, representing 24% margin at the midpoint of the range. This includes additional fees as a result of adoption of Google play, which is approximately a two percentage point headwind to our margin.

For full year 2022 we are maintaining our revenue outlook of 934 to 944 million consistent with the outlook we shared in March.

Which contemplated approximately $20 million of headwinds related to FX and 20 million related to the conflict in Ukraine.

The current FX environment remains highly volatile and if the current rates continue through the rest of the year. We estimate we will see an additional 8 million of FX headwinds not anticipated during our prior calls, bringing total FX headwinds for the year to 28 million.

As a result, if current conditions persist, we would expect reported revenue to come in at the lower end of our guidance range.

Excluding the impact of FX and the conflict.

A new growth rate would be 28%.

For Bumble App, we expect to be at our previous guide of 34% to 36%, which includes approximately 15 million of FX headwind.

4 million higher than what we had originally estimated extra.

Excluding FX, our growth rate would be 37% to 39%.

With respect to adjusted EBITDA margin, our full year outlook is between 24.5% to 25%.

This now includes the previously communicated 16 million of fees as a result of enforcement of Google play really which is approximately a two percentage point negative impact to our margin.

Moving forward, we remain very focused on executing on our long term growth strategy with strong financial discipline.

And with that thank you and we can open it up for Q&A.

Yeah.

Okay.

Ladies and gentlemen, if you have a question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue simply press the pound key.

Again, if you have a question or comment. Please press Star then one on your telephone keypad.

Our first question or comment comes from the line of Cory Carpenter from J P. Morgan Your line is open.

Mr. Carpenter, you may need a mute your phone.

Operator, I think we can really move to the next.

Our next question or comment comes from the line of Alexandra Stagger from Goldman Sachs. Your line is open.

Thank you so much for taking my questions, maybe first of all on bumble paying user growth could you maybe unpack what drove the nice acceleration in Q1 and how the different markets have contributed to the nice acceleration here and then second on the full year revenue guide could you maybe share your assumptions in <unk>.

Spectation in terms of like the various macro factors that are impacting the revenue growth guide here and then also any revenue contributions from the new features that you rolled out and that you're planning to roll out in the next few quarters. Thank you so much.

Sure Hi, Alexandra I'm happy to take that.

So in terms of the Q2 net add as we see.

<unk> said before our goal is always to first focus on maximizing revenue and from a product perspective, we had always aiming to create a set of experiences in a broad range of people who are finding value in it and in 2020, one we focused on our existing payers by creating.

The two tiered product for bumble up and the focus for 2022 is really on broadening our monetization approach. So we can increase their penetration across our user base and we said this before and I'll.

Pride earnings call as well and the way we've done this in Q1 and you'll see us the pizza strategy throughout the course of the year is by introducing new.

New subscription bundles, new consumables as well as parts were good and in addition to these specific launches like we have your remarks with certain times of the year. We had also heavily focused on what we call all of these on product optimization, but capture a pretty use it at the right moment and better user experience and then convert them.

Through a pair so for example in Q1, we redesigned the language as we've talked about it's a popular entry points.

And in addition to the actual redesign we also heavily focused on marketing.

The redesign to date like Valentine's day, because that's a that drove strong people paying users and then finally on Boulder Canyon.

And net adds also came from growing our overall user base. We are obviously, a freemium up and still growing our top of the funnel is a key focus area for us.

<unk> seen strong increases in both our core markets such as the U S. As well as we've seen strong traction from a lot of our newer international markets like the dark region, but again would need to referred to in her prepared remarks, and so as you look at the cadence through the rest of the year.

What we've built into our outlook is from a product perspective, a lot of the same themes.

I think about Q2 and Q3, we we do expect to accelerate net adds both in Q2 as well as in Q3 as we as we lap some of the the big part of the initiatives, we have and we've talked about creating lower tiered bundles, we've talked a lot about potentially having student bundle in relation to become.

And passed the program that we that we are focused on for Q3 and then we're also excited about launching some of the new consumables and virtual goods that we are currently testing. So all of those are you know.

Included in how we think about the road map.

And revenue guide for the rest of the year.

Great. Thank you.

Thank you our next question or comment comes from a lot of Schwartz.

<unk> from Evercore ISI your line is open.

Okay. Thank you let me try two please one is on the market share shifts Whitney you addressed this a little bit but could you. Please give a little bit more detail on what you saw in terms of the market share gains in the U S as well as in Europe , and what really drove the the shifts that you were seeing in particular and then the second question is.

Any any way you could frame the impact of contribution from the perhaps the different pricing tiers, the student pricing tier and virtual goods that you expect to see in the back half of this year. Thank you.

Oh Hi, Thank you for your question. So as we said, we're very happy with our performance in particular versus our competition. This quarter. As noted we continue to see very strong brand residents and performance, including what third party data sources indicate as the highest net.

Promoter scores in the industry we.

We saw a download share in the critical U S market expand in Q1, and the download gap between us and the number three player in the market widened we have seen this momentum continue into April . We're also very excited by the active product launch cycle that we have planned for late Q2, and the second half of the year.

<unk> kind of asked what are new just said and we believe that will continue to reinforce our women's first positioning and competitive differentiation.

And then shortly this is hard so to your second question.

We are seeing.

Seeing a lot of momentum from the existing products that we have in the market as Andy mentioned, we are seeing increases in both RP pool and payer penetration coming from those products and then the test that we are doing on things like virtual goods some of the consumable offering and some of the unbundling the lower bundle lower tiered bundles are.

Hmm.

Showing quite nice results in the testing so we're not going to break out the specific contribution, but we're kind of equally excited about both elements.

<unk> traction.

Current products as well as some of the new product launches we've got Tito.

Okay. Thanks, Whitney Thanks Tarik.

Thank you.

Our next question or comment.

Again, Mr. Cory Carpenter from J P. Morgan Your line is open.

Okay, sorry about that can you all hear me now.

Okay.

Okay. Good I'll ask what the App store just could you talk about the transition to Google play payments you made in the quarter that had any impact on your operations. We know the financial impact, but just curious did that did you see any incremental friction in the sign ups and then also kind of around the one day subscription offerings that you have.

Are you.

Hey, Kartik short.

So just to remind everyone. The Google play billing mandate went into effect on April 1st they provided some grace period with some conditions with no strings attached for about two months.

And during that time, if youre not compliant you, they're not going to remove you from the store, but you just can't update the app. So there was a little bit of wiggle room, what we ended up doing as you'll recall, we did a lot of testing on this in Q3 of 2021 learned a lot and so that informed a lot of what we are doing now on bumble.

100% compliant globally, we are seeing revenue continue to prefer them to perform well the payer mix shift.

And that we anticipated this happening we have an increase in seven day subscription a reduction in one day subscriptions, but we are expecting even in light of all of this robust paying user growth in Q2 and in Q3 as I've just mentioned so I think on bumble, we're feeling very.

Good about the changes they are live in every market that we operate in.

No no real surprises from what we learned in the test.

And but do.

As a result of the test we actually in Q3, we did a number of we developed a number of mitigation. We are not compliant in all of our markets, yes, but do we are taking a slow ramp up approach to make sure that these compliance are in fact, having the the impact that we.

Expect to have so far we are.

We're very encouraged by the rollout that we already have underway. The mitigation include introductory offers for higher tier subscription offerings. They include the one day.

Consumable offering that we've talked about in the past. They talk they include some changes to the payer that we have and I would say in general we are.

Happy with the results that we're seeing there and we think that we will be able to mitigate the issues that we saw in Q3 of last year Theres a couple of areas I wouldn't call them exactly friction points, but just a couple of areas. We're continuing to work pretty closely with Google on as an example, and these are all micro areas, but if you look at Argentina, Argentina is a.

It's a reasonable market for for Baidu, we have a number of paying users in Argentina, Google play billing does not support transactions in Argentine pesos and so they will require people when we switch over to paid in euros and we are concerned that that is not a great experience for users and so we are.

Like I say working with Google to figure out what can be done to make sure that our Argentine users are.

Treated accordingly, but I would say these are all on the margin as opposed to core to the producers.

Okay very helpful. Thank you.

Thank you.

Thank you. Our next question or comment comes from the line of Dan Salmon from BMO capital markets. Your line is open.

Great Good afternoon, everyone.

Two questions.

First just to follow up on the international expansion for Bumble, obviously, a lot of focus on Western Europe right now could we just spend a little bit more time on emerging markets.

I know, there's a handful that are just starting to get up and running but.

How you see trends and obviously the expansion moving into those markets more overtime and when that may become.

Rest of your international expansion.

And then.

Okay.

Call in a row.

Follow up on.

Your advertising plans with me I know you've talked about.

We'll do that more in BFS.

Would love to hear about your latest thoughts on what the potential is there. Thank you.

Sure I'll start with the international expansion and then turn it over to Wendy on the advertising side.

So and bumble we are.

As we mentioned very happy with the reception that we've seen in western Europe , which you're alluding to but we also have highlighted in the past and continue to be very excited about our traction.

In India, which is for us growing at a very rapid clip continuing to grow at a very rapid clip.

South East Asia, So Indonesia in the Philippines, as we mentioned before these are all markets that we've seen traction in 2021, continuing into 2022 I'd say the big push this year is to continue that traction.

South and southeast Asia.

Kyle.

While really pushing into Latin America, Mexico has been a market that we we made some entry points into in 'twenty 'twenty I think at once and then because of the Covid situation, we actually pause we've gone back into Mexico back into Brazil in a fairly significant way.

Are seeing very good traction there in terms of both user growth and revenue growth.

And we are continuing a what I'd call a systematic rollout in Latin America, We launched Chile as an example, a couple of weeks ago, maybe a month or two ago now and we're continuing to go market by market.

They're so so we're very encouraged by that I think what I would say looking forward as you should expect to see us continue to.

To systematically increase penetration in Latin America, you should expect to see actually a lot of.

Continuing in Western Europe , there is entire countries like in southern Europe , Spain, Italy, et cetera, as well as the Nordic. So we have not done a very harden to date. So you should expect to see that and then I think as we get closer to 2023 looking at how we.

Redouble, our efforts in Asia, starting with Southeast Asia, and then moving North is probably what I anticipate.

Okay, great. So I'll give you an overview on the advertising question, but before we do that I just wanted to give you a quick update on Bff's. So we continue to make great progress on our Platonic friend finding service.

We continue to see strong levels of engagement on the core product following on the U F changes that we made late last year.

And our Alpha test of new functionality continue to go very well users are responding incredibly positively to the changes that we are introducing and we're seeing a high level of engagement with our major new features and critically over 75% retention. After the first month. So this is a great sign.

The traction we're hoping to achieve I'm actually a quick note yesterday, we significantly expanded the alpha test to include almost five acts more user and assuming that that continues to go well, we'll be looking to roll out to new markets. Starting this summer.

So just just as a final point on behalf of before we talked about I think we're planning a broader consumer facing announcement in Q3. So everyone. Please stay tuned for more details there as it pertains to advertising as we've always said in the past there.

They are a major revenue opportunity is ahead for BFR, but.

They should not be expected in the immediate future that was never part of the 2022 Road map.

We are very focused on the product building the ecosystem the community and really going into this.

New group format and testing the functionality that we've been hard at work building as we look to revenue in the future from BFS. There are really multiple pillars of opportunity and one of them would be advertising. So this year. We have continued to see high demand from partners. This is a very.

Interesting audience to a lot of partners to a lot of advertisers. So we will be looking at baking and functionality has to be creator economy efficient or advertising.

Advertising ready for the future, but but not to expect any near term revenue from that.

Very helpful detail. Thank you both.

Okay.

Thank you. Our next question or comment comes from the line of Benjamin Black from Deutsche Bank. Your line is open.

Yes.

Andrew We can't hear you.

Describe demand for online dating services in regions that are.

And I don't can you guys hear me.

Yeah, we can now.

Can you repeat your question, though.

And apologies.

Sure can you repeat your question I was just asking about the reopening and if you could describe it.

Yes.

We can hear you Ben how.

How would you describe the demand for online dating services in the region.

Sure. So I think the question Alright, I'll try it again.

Right.

Or would you describe the demand for data services and regions that are fully reopened.

How does that compare to sort of pre pandemic trends.

And then perhaps one for I know you know when you're looking at the full year margin guide how should we be thinking about the cadence of margins throughout the year and what are some of the swing factors that could potentially drive upside.

Sure why don't I I'll start with the demand question, and then I'll turn it over to others.

I think it's fair to say, we haven't yet seen any markets we would consider.

Considered to be fully reopened so what I'm going to say, it's more about markets that are reopening in some way or in markets that are fully reopened as we look at mobility indexes and restaurant reservations and things like that we think the markets are still recovering to pre pandemic levels. However, what we are seeing in general is that that demand for <unk>.

Data services, particularly if I just take bundle as an example demand for bumble is incredibly resilient we are seeing.

Seeing that people are <unk>.

Very eager to continue meeting other people in that what was the work we've done in the last couple of years to really strengthen the offering inside of bumble and an IRL context in real life context, or what we call a hybrid dating experience is really starting to pay off so what we see in these markets.

Is that you have a higher willingness to get people who've been standing on the sidelines to come into the online dating world again. These are early trends as opposed to a full reopening that we're seeing in any particular market, but you see people more willing to come off the sidelines and start saving so there's some level of pent up demand that we've.

Talk about in the past what you see is that if I look at bumble as an example, even as markets have gotten better engagement inside of Bumble and insider Badu has actually remained high our retention rates are actually improving quarter over quarter, our payer penetration on both apps is improving quarter over quarter things like that and so.

We are seeing a continued level of engagement and a lot of the work that we're doing from a product standpoint, and a marketing standpoint. What you mentioned is focusing on use cases that that help users in that hybrid world. So things like the bumble Iroh campaign that we have going and we've got going on right now with.

The partnerships with soul cycle, and James Beard Foundation, and live music venues and things like that that is all focused on helping you connect with other single people in the real world facilitated by the Bumble happen. So we do think that we are starting to see that transition and that the trends are very much a point.

<unk> two <unk>.

US being a companion.

In real life hybrid experience as opposed to it being a binary either or type of situation.

Yeah, Yeah yeah.

Question about margin, so and you know as we've said in our guidance, we expect Q2 to be around 24% at the midpoint I'm. Obviously this includes the additional 4 million that we expect to pay for Google play a billing.

Our guidance for Q2 assumes that we will be spending more on marketing ahead off the summer, which had obviously very important months for us.

Especially you know a gift.

As it relates to what part was just talking about in terms of people meeting in real life, but we are definitely getting up for that we also have some newer launch markets such as Chile that we launched in April that we wanted to spend money on just on creating some boats.

Our goal is to be very disciplined and if we feel like we don't see the ROI in any market odd if we feel like our market isn't ready for out of some of our bigger brand campaigns, we will definitely pulled back. So it's definitely something that we are very good and disciplined in doing and you'll see us doing that throughout the course of the year.

Obviously, we had good flow through in our business as we go through the rest of the year, especially in our second half our marketing spend as a percentage of revenue will be lower than where we are today and so we feel.

Very good about hitting our overall, our overall guidance range and you know are on a on a from a long term perspective, we've always said that our goal is to continue expanding our margins and nothing has changed as it relates to that we are very committed to being disciplined in terms of how we how we spend money and <unk>.

Again, just to remind everyone. The shared cost nature of our business allows us to to share.

Shared infrastructure sharing knowledge across that App, which is a big benefit for us in the long term that automatically leads leads the leverage for us. So we are we are excited about our investment plans, but at the same time I think we've demonstrated in the past and we will continue to demonstrate in the future that we will show financial discipline.

We continued to grow.

Great. Thank you.

Thank you. Our next question or comment comes from the line of Lauren shrink from Morgan Stanley . Your line is open.

Great. Thanks, I just wanted to put a finer point on the earlier question around Google play billing them, what would second quarter Bumble brand ads have been higher if not for the mandate or or you've seen no impact and it's just purely a mix shift from one day to seven day and then my second question is just on the complement feature I guess does that allow men to effectively.

Message women first maybe just talk a little bit more about how that works and how it's impacted conversion or matching rates. Thanks.

Sure I'll take the first one.

I think we are.

I think generally I am bumbling, but do we think that we have largely mitigated the issues both of them are paying user standpoint, as well as from a revenue standpoint, as we say we normally we were solving for revenue growth as opposed to any particular sub metric underneath it. So there may be a little bit of.

Given take in there simply based on the normal optimization that we do in the personalization that we do but that would be very much again on the margins weren't I think for the most part we feel like we're not.

Mitigated.

Our way through the changes, particularly on bumble and I'd say its still rolling it out, but very very pleased with what we're seeing on the producer.

Yeah and.

As far as complements go I think it's important to.

To step back and look at how the product works today we.

We launched very intentionally with putting women and control to give women and a more empowering experience over there, they're dating lives and their relationships and ultimately to remove a lot of rejection that men suffer from when historically dating online or even in the real world.

World and it's obviously proven to be a very empowering experience, but also very successful business model.

That said there is a lot of room for opportunity in the discovery side of the product, meaning pre match. So what we mean by pre matches right now in order for a heterosexual connection to take place for a man and a woman to connect there has to be a mutual like so that in our <unk>.

Since as a swipe right from both parties and then the woman must initiate this creates a certain layer of friction for a man who expressed himself to showcase its personality or two perhaps very respectfully capture the attention of a prospective matched therefore complements really give.

The opportunity to stand out we expect this to have a profound impact on the pre match experience. This really leans into discovery and so this is just one of many examples of how we can further accelerate engagement and a more robust experience before that match takes place.

And we're very excited about it.

Yeah.

Thank you.

Okay.

Thank you. Our next question or comment comes from the line of James <unk> from Jefferies. Your line is open.

Great. Thank you for taking my questions. It would be great. If you could just hone in a little bit more on the growth that youre seeing both in payers and <unk>.

<unk> just in the U S alone curious to hear more about that market.

Then my second question is around how you are thinking strategically about marketing expenses.

Just talk about some of the Geos, where youre seeing really strong ROI on that brand spend and where you think you can lean in more heavily and maybe then just talk about some of the markets, where you would pull back and where the the rois aren't there yet thanks.

Yeah sure happy to so we're not obviously breaking out.

Pair and our people numbers by market, but you know just if you think about it U S. Still continues to be one of our largest markets.

And you know we have we have a pretty large ami you here.

And as you think about penetration, there's still tons of room for us to grow in terms of getting more of these premium users into our paid funnel. So that is definitely something that is a focus area for US with me was just talking about new features such as complement that absolutely are going to be a.

A big driver of that.

And as we think about our people as well, we're constantly optimizing pricing in different markets not just between countries, but even within the U S. The U S is obviously, a very large country and and as we think about a propensity to pay it differs between if you're in New York horses, if you're on a different states. So we are constantly looking to make sure that.

We are looking at a local geographic trends both flawed.

Both based on geography also based on segments of the population so again.

We've talked a lot about subscription bundles flawed.

Are stored and packed for student college students as an example that will be something that'll be more of a.

Payer penetration impact unless up on our people impact, but we could equally be thinking about.

Our subscription bundles for a higher price tier for example, so there are lots of things that we have on our product roadmap that we believe will absolutely be.

Improving payer penetration as well as our people in the U S and the longer.

And as we think about marketing I think our philosophy on marketing hasn't changed we've always said.

Most of our majority of our users today.

Today I have always come from what we call our organic marketing, which is really based on our brand. It's on the field marketing. It is the vitality that happens as we entered a new market and so our strategy for entering a new market is still very very consistent with respect to how we started.

Back in the early days of Bumble in the U S. So that really hasn't changed and B.

The beauty of that approach is you build a brand from ground up in every market and then one the brand.

Starts to resonate in a micro city level then the flywheel takes effect and then the growth really starts to happen and that is truly our secret sauce and we've been excellent at it in the past and.

It's something that you'll see us continue to do.

As we enter new markets.

Great next question please.

Our next question or comment comes from the line of John Blackledge from Cowen Your line is open.

Great. Thanks, two questions first thanks.

Thanks for the color on the paying user growth acceleration of bumble.

And through Q3, Q I'm just curious does this guidance assume kind of a pre homochrome level of opening or or does it assume kind of a pre pre COVID-19 or pre pandemic level of opening and then the second question.

Would you do what you might have just answered it a little bit on expansion in non English speaking markets.

It seems like it's going well, what's kind of working in terms of ramping the brand awareness and paying users. Thank you.

Yeah with respect to the first question, we are not assuming any big bounce back to pre pandemic levels, yet I think our guidance is young what we are seeing today in terms of people wanting to engage we also recognize that some folks are still cautious about.

Wanting to to meet in person. So really you know you could say it assumes the omnicom level, but it doesn't really is young be the summer of love that a lot of us have been waiting for a lot of it it hasn't really materialized, obviously, if that happens we feel well prepared in every market that we had and that they can take it.

Vantage a bit, but we haven't seen that yet and so we have not yet predicting that apart. So hi. This is lightning I'll I'll take the second part of the question. So as it pertains to our international markets I think it's really important to just note that women globally resonate with.

Our product with our brand with our offering and this is something that we have proven time and time again now that women, regardless of where they are there is a fundamental need for respectful safe trusted and women first connections and relationships and so that's.

And our strategy and our approach from day, one and it's so authentic to who we are across the board and so within these international markets. We're very proud of the continued progress, particularly across Western Europe , and Southeast Asia, India Latin America in Q1 as mentioned Bumble I became the second most downloaded dating.

In Germany, and revenue really across the broader Doc region almost doubled year over year. So this is attributed a bit to what our newest just think two are on the ground field marketing approach, which is so grounded and rooted in our mission and that's the most important piece here is that this is so foundational to how.

We are how we build not just our marketing strategy, but our product through and through and we are excellent at localizing for these markets. So as we venture into a new.

New territories cities in end markets that are non English speaking would take such a localized approach, but it all has that same thread and DNA of women first trusted.

And and that this is this is really what has driven that word of mouth and another note here is that we drive success when two people connect on our product and they find success, whether that romantic relationship or friendship that becomes our strongest marketing vehicle that is the flywheel for further acts.

Celebration and their networks. So theres. So many network effects, taking place, which really is is replicated in all of these new markets and that's that's how we're thinking about them really engineering that in all of these new territories.

Thank you.

Thank you our next question or comment comes from the line of Deepak <unk>.

From Wolfe Research your line is open.

Great. Thanks for taking the questions just a couple ones. So first a big picture question on the App store generally your competitor is taking a different approach with Google you guys have chosen to make be updates on the app to comply to just curious are you happy with this fee arrangement with the App stores, how should we think about your position.

More broadly with.

Google and Apple and then maybe a question for Anna who can you clarify on your raw guidance, sorry, if I misheard. This I think you've said at current FX levels, we should expect revenues for full year to be coming in.

Lower end of the range did I hear that correct and what does that mean for the core bumble full year revenue guidance. Thank you so much.

Sure So maybe I'll start with the App stores.

I think I will say this in the context of Google and Apple are.

Very good partners of ours, we are very happy with the level of partnership we have even if we have disagreements on different parts of the business if I look at.

Some of the moves that have been made were of course thrilled about Google reducing the.

Right on subscription revenues from 30% to 15% recall that was a very good step in the right direction. We are also we're very encouraged by seeing the user choice program that they are piloting with Spotify at the same time, we are disappointed that it was such a restricted pilot Brian and of course, we believe we've got a <unk>.

<unk> track record both on the trust and safety side as well as on the third party third party payments.

And so we are they have said that they are taking applications for people who would.

I want to be Ness, and the pilot we are actively in discussion with them about participating in something like that whether they choose to do it and how quickly is really up to them.

But we definitely have the ups and downs in the relationship both with Google and Apple, but in general we are partners and we were going to keep working with them in a partnership way too.

To further our business though.

Yeah.

Our other question. So yes, so if you recall.

Our earnings call in March when we gave our full year guidance, we had estimated FX headwinds of about 20 million. Obviously the dollar has strengthened in the last eight weeks since we since we gave earnings guidance and we have we are calling out an additional 8 million of FX.

Headwinds on top of the 20 million that we already called out and so assuming that those FX rates persist. We now expect to be at the lower end of the of the guidance range and you know if obviously if the FX environment right now is extremely volatile and we have not attempting to predict what I think will look like but right now based on what we have.

And we expect that that $8 million.

Will it be an incremental headwind if that would not materialize, we would effectively be doing better than we thought we would do back in March and our bumble app.

<unk> guidance has not changed we still expect to be in the 34% to 36%.

Our guidance range that we gave that.

Got it okay. Thank you.

Thank you, ladies and gentlemen that will conclude the Q&A session at this time thank.

Thank you for your participation in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

Hmm.

Mhm.

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