Q3 2022 Bumble Inc Earnings Call

November 9, 2022

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Good day, and thank you for standing by and welcome to the bump <unk> third quarter 2022 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 to ask a question. During the session you will need to press star one.

One one on your telephone you will then hear an automated message advising your hands. Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Cheryl Valensuela Vice President of Investor Relations. Please go ahead.

Thank you operator, and thank you all for joining us to discuss third quarter financial results.

With me today are local wolford, founder and CEO Howard.

Socket President and CFO .

CFO bumble.

Before we begin I'd like to remind everyone that certain statements made on this call. Today are forward looking statements. These forward looking statements are subject to various risks uncertainties and reflect our current expectation 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 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.

Including our annual report on Form 10-K for the year ended December 31, 2021, and our subsequent periodic filings.

During the call. We also refer to certain non-GAAP financial measure.

These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results 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 at IR <unk> com, both dot com and with that I'll turn it over to Whitney.

Thank you Sheryl and thank you all for joining US today, our Q3 results demonstrate the strength and resilience of our brands and our business amidst a challenging global operating environment I want to lead by restating that love is universal and fundamental human need how we deliver for this global need evolve.

But we are well positioned to deliver for our members that scale.

In the third quarter we.

We delivered solid top line growth of 17% year over year, driven by 28% growth for Bumble I adjusted for both FX and the Ukraine complex Bumble ink revenue growth would have been 10 points higher and bumble app revenue growth would've been five points higher we maintained a strong focus on cash flow and profitability.

<unk> delivering record adjusted EBITDA of $62 million in the third quarter, surpassing our outlook.

We will continue.

Continued its momentum in Q3 gaming downloads share in both core and international expansion markets, while exceeding our expectations for both new user growth and re engaged user monetization was also strong as paying user has accelerated for the fourth consecutive quarter to a record 100.

64000 sequential net adds.

International expansion continued to propel bundle apps growth with strong increases in users and payers across Western Europe Asia Pacific and Latin America.

Our strategy, our new management structure for Baidu are starting to deliver and we have made progress in stabilizing baidu sequential net adds increased for the first time since Q4 2021, and we achieved positive revenue growth after adjusting for the impact of FX and the conflict in Ukraine.

We achieved these results against the backdrop of a very uncertain geopolitical and macroeconomic environment. While these results are strong our third quarter revenue adjusted for FX headwinds came in just shy of our previous expectations. There are two factors that drove that.

Which will also impact Q4, now let me provide more context for each.

In Q3, we encountered some design and user engagement issues related to new product launches on our our core profile page as a result, we made the decision to delay these launches, including monetize complement that's our message before a match feature.

We have addressed the issues and these features have started rolling out eight to 10 weeks behind plan, notably fully monetize complement is now live in Australia, Germany, Canada and parts of the U S, including New York and New England, We anticipate completing the U S rollout and progressed.

Two our remaining markets throughout Q4 and into early 2023. Our results were also impacted by the increasingly challenging macroeconomic environment in late Q3, and Q4 user engagement and new user growth are strong in both our core markets and our.

National expansion market.

Fortunately, we have seen no impact on new subscriptions. However, some of our user segments are facing greater pressure on disposable income and these segments are renewing their subscriptions at a modestly lower rates.

We are actively adjusting our marketing approach to ensure that we highlight the comparative value of our offerings to other dating alternatives and modifying our merchandising and payer retention strategy. Notwithstanding these items our business remains strong bumble app revenue grew to $181 million in Q3.

28% year over year paying user growth remains strong in Q3 with sequential net adds accelerating to 164000, we continue to grow download share in both core and international expansion markets with gap with share gains across all of our major regions and strong year over year performance in the U S.

Canada, UK and Australia, notably we are continuing to see strength in our Gen Z user growth in both our core and our international growth markets. According to the research group morning, Commvault Bumble has the highest net brand favorability and net promoter promoter scores with the 18 to 29.

And 30% to 44 year old segment, the major gating brands that they track in the U S.

This speaks to the unique strength of our brands, which is the foundation for the strong performance that we have delivered all year International expansion continues to be a critical growth driver for bumble App in Western Europe , we saw robust user growth and even faster revenue growth. We remain the number two dating app in Germany close.

<unk> the gap significantly with the number one player and we gained to download share in Austria, France, Switzerland, Belgium, and the Netherlands, Spain as our most recent launch in the region and we have seen significant growth in registrations Mou and revenue since early July .

Our Latin America, and Asia expansion of our performing well, India remains a notable highlight and revenue in India more than doubled year over year again, demonstrating the broad global appeal of our brand and product.

Now and the end of 2023, we will we will build on our proven playbook to continue to actively expand internationally, we expect to complete our major launches in Europe and critically to continue to deepen our presence in each of our recently launched market. In addition, we expect to continue our rollout in Asia and Latin America.

Outside of the products already noted Q3 was a very active product launch period for us better serving the wide range of audiences on bundle has been a key focus we launched improved experiences for users who want to celebrate their cultural heritage and we improve the experience for our LGBTQ AA plus audience with.

I apology Tuesday offerings, which drove strong engagement with 18 to 30 year old women in particular, we expect to continue building on this platform. We've also been focusing on developing an improved experience for our college and recent graduate community and we are rolling out student only experiences are verified college students.

Our first college monetization monetization offering launched in late August and we are pleased with the initial results.

In Q3, we also introduced our speed dating feature in select cities around the world. We utilize the product functionality to launch our partnership with Emmy Award winning comedy Ted LIFO with fans her life by Bumble, we are bringing the fictitious dating app feature on the show to life, creating an.

Innovative and fun way to grow and further engage bumble users in our core English speaking markets banned her life takes place on Thursdays each week through the remainder of the year. We are pleased with the initial participation results that we've seen and we're excited by the new engagement model that this product represents.

Now looking forward to 2023, we expect to continue our rapid pace of product development or product focus will include enhancing the college and rethink rat experience continuing to build on the complement and speed dating platforms that we've launched leaning into social features such as our recently launched recommend to a friend feature and build.

Out new monetization platform at both the low end and high end now turning to Baidu and other products, including fruit, but do you in other revenue totaled $52 million in Q3 down 10% year on year on a reported basis that includes 21 points of combined negative impact from FX.

And the conflict in Ukraine, we have made progress towards stabilizing produce performance the sequential increase in paying users was driven by product improvements, including an enhanced talk to someone experienced.

And a new one day consumable aimed at driving payer conversion for the more economically sensitive baidu user over the next several quarters, we will build on these successes with additional product releases and a continued disciplined marketing approach.

Let me turn next to fruit adoption continues to grow quickly in France, Belgium, the Netherlands and parts of Canada, and we are actively working on its broader international expansion strategy for 2023 since acquiring the company in January we have integrated a significant amount of our safety capability and throughout Q3, we then bring.

Our monetization expertise to that team at the same time, we are leveraging fruit as a learning platform to better serve Gen Z.

Finally, I would like to spotlight a couple of safety initiatives.

<unk> powerful reflections of our mission and our commitment to creating kind connections first California signed a cyber clashing bill in September that makes the spending of unwanted lunar images illegal building. Upon similar legislation that we also championed in Texas, Virginia and the U K.

More recently, we open source, our private detector machine learning model to bring improved user trust and safety to the social media industry at large.

I am so proud of how our teams market shaping our global industry for the better and I'm looking forward to more I will now turn it over to <unk> for discussion of our financials and outlook. Thank you so much.

Thank you Whitney and good afternoon, everyone I'll begin with a discussion of our third quarter trends and results before turning to our outlook for Q4 and the full year.

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

Total bummer linked revenue in Q3 was $233 million up 17% driven by growth in Bumble App.

FX was a $14 million headwind at the topline 2 million worse than we had expected at the time of our guidance.

In aggregate FX headwinds and the Ukraine conflict impacted our Q3 growth negatively by 10 percentage points.

At a group level revenue growth was driven primarily by growth in paying users, which increased 15% to $3 3 million.

Our people increased by 1%.

Revenue from Bumble App grew 28% to 181 million FX.

FX was a $7 million, yet already had headwinds, which negatively impacted growth by five percentage points.

<unk> had been with 1 million more than we had previously expected.

Bundle up revenue growth was driven by a strong 36% increase in paying users to $2 1 million.

On a sequential basis, we added 164000 paying users marking the fourth consecutive quarter, we've increased net add.

The strong growth in paying users was driven by a number of factors, including active user growth some higher engagement rates successful international expansion and product enhancements that drove paid conversion.

Bumble apps are people was $28 84 down 6% year over year and 1% sequentially.

Primarily due to country mix and FX impacts, partially offset by pricing optimization initiatives.

So moving on to Baidu App and other.

But do App and other revenue declined 10% in Q3 to $52 million.

Sex and the Ukraine conflict represented a $12 million headwind zero linear which negatively impacted growth rates by 21 percentage points.

FX headwind was $1 million worse than we had expected.

Absent these headwinds, but do another revenue grew double digit year over year.

But do happen other paying users declined 10% year over year to $1 $2 million, but grew sequentially by 106000.

Well do happen other our people declined 7% year over year to $12 75, due to FX and country mix, partially offset by pricing optimization work.

As a reminder, we currently include truths revenue within Baidu, App and other revenue, but exclude fluids paying users from Baidu app and other paying users.

Turning now to expenses, we continue to remain very focused on managing our business profitably, especially in light of the current geopolitical and macroeconomic environment.

Total GAAP operating costs and expenses were $204 million for the quarter down 1% year over year.

On a non-GAAP basis, excluding stock based comp and other noncash or one time items I would note the following.

Our total non-GAAP operating expenses were 171 million up 18%.

Cost of revenue was $64 million and grew 17% year over year the.

The increase was primarily driven by higher App store fees as revenues have grown as.

As a percentage of revenue cost of revenue was 27% flat versus the year ago period.

Sales and marketing expenses grew 16% year over year to $61 million.

This represents 26% of revenue flat versus the year ago period.

G&A expenses were $30 million or 13% of revenue compared to $24 million or 12% of revenue last year.

Product development expenses were $16 million or 7% of revenue flat versus the year ago period.

Q3, GAAP net earnings were $26 million compared to a net loss of $10 million in the year ago period.

In Q3, adjusted EBITDA was $62 million up 13% year over year and represented a 27% margin.

We generated $34 million of free cash flow this quarter.

We have a strong cash position and ended Q3 with total cash of $365 million.

We continue to maintain strong financial discipline with regards to potential uses of cash.

Moving onto our outlook.

We expect the following for Q4.

Total revenue between $232 million and $237 million, representing a growth rate of 12% to 14% year over year.

Our outlook is $16 million of year over year FX headwind.

6 million more than we had previously estimated.

Outlook also assumes approximately $5 million up year over year headwinds related to the conflict in Ukraine.

Primarily in <unk>.

Excluding the impact of FX and the Ukraine conflict or total revenue growth outlook would have been 22% to 25% year over year.

We expect bumble app revenue to be between $184 million and $187 million, representing a growth rate of 23% to 25% year over year.

The revenue outlook assumes a negative impact from FX of approximately $9 million 4 million more than we had anticipated originally.

Excluding FX headwinds our guidance for bundled revenue growth would be 29% to 31% year over year.

We estimate adjusted EBITDA will be between $57 million and $59 million, representing 25% at the midpoint of the range.

Our Q4 expectations are based on three considerations.

First we expect FX to continue to be a headwind across all our apps.

Second while bundle up its continuing to demonstrate strong user engagement product delay and macro issues will weigh on Q4 results.

And lastly on Baidu and other we expect continued macro pressure along with lower demand for advertising this holiday season.

On a full year 2022 basis, we expect total revenue growth rate of 17% to 18% year over there.

This is the only $44 million of vehicle Videoed, FX headwinds and excluding the impact of FX and the Ukraine conflict or guidance for total revenue growth would've been 26% year over year.

We expect bundle up revenue growth rate to be 30% to 31% year over year.

The new outlook assumes a negative impact from FX of $23 million excluding.

Excluding FX headwinds our guidance for bundled revenue growth would be 34% to 35% year over year.

We estimate adjusted EBITDA will be between 223 and $225 million, representing 25% margin at the midpoint of the range.

We are currently in the middle of our annual planning cycle.

And while we typically provide full year guidance on our Q4 earnings call.

Given macro uncertainty we wanted to share some preliminary expectations for full year 2023 today.

While the operating environment continues to evolve.

Based on our current visibility on our product roadmap and market expansion effort.

We expect the bumble ink revenue will grow between mid to high teens next year.

This is your 300 basis points of FX headwinds at current rates adjust.

Adjusted for that we expect our total company revenue growth will be high teens to low 20% on a year over year basis next year.

We are also committed to expanding adjusted EBITDA margins in 2020 by at least 100 basis points on a full year basis.

This will be achieved by ensuring that we remain laser focused on spend while continuing to invest in our growth priority.

In closing, we remain as focused as ever on balanced execution, we will continue delivering best in class experiences for our users and we will do this without sacrificing on our goals of sustainable and profitable growth for our shareholders.

And with that operator, we can open it up for Q&A.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone. Please wait for your name to be announced please standby, while we compile the Q&A roster.

Our first question comes from Andrew Morocco, with Raymond James Your line is now open.

Hi, Thanks for taking my question wanted to talk a little bit about the preliminary outlook for 'twenty three I.

I guess, what assumptions for macro rfps are baked into that a consistent outlook or any worsening involved and is there any contribution baked into that from non dating properties.

Yeah sure Hi, I can take that so again like I said in my prepared remarks I wanted to mention that we are still very much in our planning stages for next year and so the teams are actively working on what 2023 will look like.

But again like I said, given the larger macro uncertainties. We wanted to just provide everyone. A preliminary estimate based again on our best guess around 2023.

So like I said our range currently is in the high teens to low twenties adjusted for about three points of FX headwinds.

We are assuming here that bumble app will continue to be.

Primarily the growth driver for our business next year and the growth levers are largely be similar to what we saw in 2022 in terms of we still expect paying users to drive growth across both our core and international markets.

We've obviously made some reasonable assumptions around what.

What the growth vectors look like across the different geographies based on the data that we have from historical market expansion.

And we've also made some high level assumptions about product contribution, but again these are the.

Roadmaps are still being built and so we will have more detail to share when we come back in Q4 from a macro perspective again, we've assumed that the current states continues into 2023, we've not assumed any material degradation in terms of what we are seeing but obviously this is something that we will be looking at very closely.

We know and <unk>.

Q1, when we come back.

To provide guidance.

Again, the goal was to provide a high level numbers, but we will provide specific drivers of revenue when we come back.

Great. Thank you and one more if I could and this type of environment I know you've talked a little bit about your marketing philosophy and your prepared remarks, but in this type of environment could you pull back on marketing spend or will you need to spend through it to defend your position I guess is there any differences in your outlook on marketing channels.

Shifts toward campus, influencer or lower cost channels or anything like that.

Sure I'll take that this is tarik.

So we've always had a very disciplined approach on marketing and it's always been very.

Hawaii centric, even our brand marketing spend not just our performance in paid marketing spend.

A lot of the success, we see on the marketing side as both off.

The brand based on some of the stats that Whitney said about the love for our brand and the favorability that we have for our brands. So at the moment as as conditions.

Tougher in Q3 and then.

First several weeks of Q4, we haven't seen a need to change our marketing approach per se from a channel standpoint, or anything like that where we are doing is adjusting the messaging and the merchandising to make sure that we're able to really speak to our users in the context of the current environment a lot of our messaging is working one of our <unk>.

Platforms.

Youll recall is it started on bumble, which is really about celebrating the success that our users have in our platform. We are dialing up some of the comparative value messaging the Whitney mentioned about.

Bundle, we believe being one of the best ways to have our first date defined the first stage compared to cost of drinks bars could cost of other things that you might do so you will see more messaging around that as well.

And again I don't think were going to be seeing any substantial change in spend.

Alright, great.

Yeah, and I just wanted to clarify I think I missed answering your question about non dating businesses, our 2023 11.

Our revenue assumptions don't include any major contributions from our non dating business.

Our goal is to test monetization strategies for our non dating business next year, but right now we're not baking in any big revenue contributions from that.

Thank you.

Thank you one moment for our next question.

Okay.

Our next question comes from Mark Kelley with Stifel. Your line is now open.

Great. Thank you very much.

I was wondering if there's a way for you to maybe quantify a bit more of that.

One week away that you highlighted at the outset of the prepared remarks, maybe just.

So it impacted Q3, and then how you think that.

<unk> Q4, maybe into next year.

And then would love your thoughts on just expectations for App store fees.

Next year and beyond.

Given the margin outlook you gave.

You are not taking any improvement.

Into your estimates at this point, but any just high level thoughts there would be great. Thank you.

Sure why don't I start with the margin question, and then I'll hand it over.

On the App store fees, we haven't assumed.

Any relief.

Coming in in 2023, so we've assumed largely current state of affairs, obviously, we'll have to see what next year will bring in terms of changes through this month, but no EBITDA.

EBITDA 100 basis points expansion doesn't assume any additional benefits coming out of that.

And in terms of the product delays as we mentioned it was some of our products, we had a very robust product.

Launch.

So if you will in Q3, there was a handful of our products that did get delayed that had monetization implications. Most notable is complements in the paid version of complements that is now.

So it really is that eight to 10 week delay.

And a number of those features were.

We're not providing specific breakdown between them by macro and the product delays are.

Give or take.

We're roughly even in the Q4 calculus.

Calculus.

Okay. Thank you very much.

Thank you one moment for our next question. Please.

Our next question comes from Cory Carpenter with Jpmorgan. Your line is now open.

Thanks for the questions, maybe one more on the product delays tower company, you could expand a bit.

On what exactly the issues were.

The delay.

And then also what you did see in testing with complementary college bundles and what your expectations are on the monetization side.

And then for you just hoping you could expand on the four key bumble up guide.

Color you can provide on what your expectations are in terms of payer growth versus Barclays will be helpful. Thank you.

Great Jonathan I'm going to try and.

And so the question Corey without going into too much of the details of the product, but the so essentially.

A number of products that we were launching this quarter like complement that has to be integrated into the core profile experience and that profile experience.

The homepage on on the web.

<unk> required to solve that.

To serve everybody who uses our apps right as we do personalization, but it's largely a.

Yes.

A single experience.

And a single homepage, if you will for the App a number of features built on top of that.

As we rolled into testing we started to see that.

There were some impacts from a design and user experience standpoint, primarily on the power user segment that.

We then interact most frequently with that App and it was causing some kind of unexpected behavior in that segment such an important segment for us in such a sensitive area, we decided to hit pause.

Make sure we really understood it and tweak some of the design elements and some of the mechanics underneath the hood. So for a complimentary as an example, exactly how where it sits on the page exactly how you interact with it there are elements like that.

There were good broadly speaking, but not good for specific segments like that power user segment that we're talking about.

And we wanted to get it right we have a high bar I don't want to run the risk of alienating any of our users.

That said it has been live now in.

In Germany and Australia.

Yes.

Those were our test markets, we rolled it in late October in the Canada and then more recently in November into New England, New York, New Jersey couple of other places in the U S. We're seeing strong adoption.

People are sending complements its a different experience as we've said, it's not something that we've done before so theres a little bit of a learning curve associated with it but we do have people sending we have people opening we see that it is leading to better matches and really critically we are seeing that people are willing to pay for the experienced the monetize version.

We have rolled out is really leaning into at the moment of consumables experience, where you pay to ascend.

Beyond your free quota that you get for a day and so that is all working.

Working well, we see excitement because it is a new interaction model in in the App and so we're very pleased with that we're going to continue rolling it out as we said.

College bundles.

A big.

Topic in August and we have mentioned then from a go to market standpoint, we were delaying it did go live on our revised schedule in August and September as students came back on the campus.

And.

Just as a reminder of the strategy oncology. It really is all about finding these segments specific opportunities that we can target and dive into largely areas.

We've kind of missed from our overall broad based monetization strategy. So college students being in under monetize segment that we that we have.

We rolled out a number of different <unk>.

College monetization offerings, one of them was labeled as student bundle. There is some others. These are all available on a targeted basis, we saw in the segments we targeted.

A meaningful uplift in <unk>.

We are now working on how do we expand the distribution of those and the evolution.

We had talked previously about adding virtual goods. For example later in this year and early next year that is still our plan and we think will drive further uplift. We're also rolling out this college verification program, which will enable us to expand verified distributions. So we don't accidentally offer these packages too.

Somebody who is not who shouldnt be getting it.

Yes.

Cory just to answer your question about.

Pacific on Q4 outlook, so just to contextualize this.

Compared to our previous guidance.

Our overall guidance by about $20 million six of that relates to incremental FX headwinds. So we're really talking about a $14 million.

Difference about nine of that is on bumble and five of that is on Baidu.

$9 million for Bumble is largely because of the two factors we've already talked about in terms of the the product delay and and macro.

In terms of how I expect bumble up.

Kpis to come out in Q4, our goal for the year in terms of getting to 500000 net ads.

Still has not changed so we are still hoping to get to that number by the end of the year.

Given FX and given the fact that complements which would have been in our people driver are delayed and I'm not going to contribute as much in Q4, we will we will see year over year decline in our people in Q4 for Bumble App.

So that's the composition of how I expect bumble app to come out in Q4 and for Baidu, the $5 million largely.

Right now we are taking again, a cautious approach on what macro looks like obviously as we've said before the baidu consumer is more sensitive to some of the macro condition. So we are just taking a cautious.

Approach to.

Where do we think Q4 will end.

That $5 million also includes.

Weakness that we're seeing in advertising again similar to a lot of other companies. So we are expecting to be about a million lower than last year in terms of that as well. So those are the high level components of how.

The Q4 outlook breaks out.

Very helpful. Thank you.

One moment for our next question.

Our next question comes from Switzer cautionary with Evercore ISI. Your line is open.

Okay. Thank you for taking my questions.

Could you please provide more detail on what has to happen I understand it's a very high level.

Were you planning, but as of now assuming that macro was steady what has to happen to get to high loads I guess high teens next year.

<unk> low 20% growth rate.

What is the assumption baked in that range as of now.

And I guess the second question is.

Could you talk about sensitivity of low disposable income consumers my understanding was that at a high level you've got Ya.

Skew towards the demographic, that's more resilient, but could you touch on that and where youre seeing that sensitivity. Thank you.

Yeah.

Hey, Sean.

I'll start with that second one maybe and then turn it over to a new on the outlook question.

So yes. It is true that historically <unk> has had.

A more resilient user base and we think we are still seeing that resilience in the majority of our user base as we've grown both globally and just.

In our core markets. We have for example have been rapidly adding gen Z users NZ users make up a large amount of the growth that youre seeing in downloads.

And bumble is really becoming as the number two most downloaded dating app in the world.

And particularly in these core markets that we're talking about a broad based product and so we are seeing a little bit of that price sensitivity creep in it is primarily the gen Z. The younger demographics at the moment. There is a couple of other pockets of price sensitive users I think I'll I'll hit on a point there with said.

Earlier that what we're seeing is really.

This thinking twice about a purchase type of dynamic the initial subscription rates, including in these price sensitive segments, we're not seeing any decline.

In that so this is really.

Put it bluntly at what point do you run out of money and start thinking about wanting to do.

You keep going or not and that is impacting these renewal rates. It's a very isolated phenomenon in certain pockets of the user base not not anything that is broad based.

Okay. Thanks, Eric.

Yes.

So I will expect that like you said I think again, we are very much.

In preliminary stages of.

Providing outlook, but at a high level, if you think about it.

Like target was saying we are seeing in some pockets of our business.

Macro start that he had his head we've assumed that that continues.

And then if you even if you compare between September to October and November while we saw a lot of that impact in September we haven't seen the trends worsen in October and November yet.

So we've sort of assumed steady state in terms of that for next year now obviously, if things got worse from a macro perspective, you would you would see us flight to the lower end of that guidance and on the higher end of the guidance again.

He made.

Our best guess estimate in terms of.

International markets, we want to get into where some of the products. We think we are.

Really wanted to focus on next year will land at the timing of all of those are still being worked out but again, depending on how many of those and what the probability of each of those products ends up being that is what would push us to the high end.

Our guidance and obviously, we are also <unk> as we think about it we are excited about.

Products like fruits.

Obviously, you don't just see it has been very much.

Our focus on integration, but next year, we had et cetera about groups starting to monetize so that our assumptions baked into what that looks like.

As well as you know we are excited about stabilizing baidu, obviously, we saw that in Q3.

What we also know that macro is.

It is potentially going to come in the way of that so again lots of plans being made in terms of all the products that we have so we are.

Right now very confident about this range again, we'll put a finer point on this when we when we come back in a few months.

Okay, Thanks, and if I may.

Hello, Thank you Darren.

Go ahead, certainly last year.

Yes, sorry about that.

Just a follow up you said October and November to date with stable. So your guidance does that assume any deterioration from now.

Now to the end of the year going forward or.

Q4 guidance assumes what you see now.

To stay the same thank you.

Yeah. So Q4, our guidance is what we are seeing now which is again to remember lower than what we had seen back in July and August So we've assumed that that phase.

But.

We'll obviously keep a pretty close eye on it but right now we feel pretty good based on the numbers that we're seeing.

For October and November in terms of where we are with respect to guidance.

Okay. Thanks, a lot. Thanks Arnaud thanks Tarik.

Thanks Robert.

Thank you one moment for our next question.

Our next question comes from Alexandra <unk> with Goldman Sachs. Your line is now open.

Thank you so much for taking my question. So maybe one for you and your prepared remark you mentioned that you're addressing some of these macro headwinds that youre seeing by changing some of the product and marketing can you just elaborate on these product changes have little more and how fast do you think these changes could affect some of the impact you're seeing.

And then second maybe just unlike the produce segment what is the new management team most focused on from a product perspective.

And what gives you confidence that we can see revenue reacceleration into into 'twenty three from that segment. Thank you.

Yeah, great. Thank you so much for your question I think I would love to start with both pieces of my remarks around changing product, but also marketing tactics around this.

So if you think about the relative cost of our product.

<unk> two alternative gating option for example.

What I was saying is very strong. So for example, our weekly boost subscription cost less than a beer out of New York City bar and the expensive going on multiple dates and a weak really adds up quickly. So we're leaning into that both from a product and marketing perspective, so from a product marketing hybrid we are going to be really showing our customers. The.

Relative value of using a subscription on our product versus going out and dating in the real world. This resonates very well. We are also going to be really adjusting the way that we.

We offer these experiences to our customers to be more in line with their needs as they evolve. So maybe instead of a longer term subscription may be shorter shorter opportunities shorter consumables. So really just being nuance to the demands of these segments now I want to reinforce this is not a blanket approach.

There is still a segment that really wants high end offerings. There is a segment that wants more curated experience as a more premium offerings and so we can do this on a very targeted basis with these new capabilities that we've built you saw these capabilities land with college bundle I think this is an important.

Point College bundle is not just about the college audience. It's about how we can actually bundle, our monetization offerings and our product offerings to enhance the experience for our core demographics. So if you see a demographic that might have left disposable income how can we give them consumables and subscription offering that.

Meet their needs versus someone on the other end of the barbell that might be looking for a more premium experience. So this is really something we would say, it's a hybrid product marketing effort that we I would not extrapolate from one another and really leaning into that relative value and I think it's just very important to end on this point.

With our deep conviction for the confidence in the demand for love and for dating our topline numbers have shown in our registration numbers are shown there is not disintegration in demand for this product and so I just wanted to reinforce that and I believe the second question was about.

To do so we're really excited about the new focus around the leadership team essentially we've assigned a single threaded owner to Baidu, which has been remarkable for the efficiencies and for really understanding the customer and delivering for their needs delivering for who that customer really is and so.

While we are very encouraged by but do with improving performance in Q3 as we've laid out we know that we still have work to do in terms of that reacceleration.

Re acceleration, but we also anticipate the produce more economically sensitive user base will remain affected by these uncertain macroeconomic challenges. So for the year ahead, we're really just focused on driving monetization, adding new product features that serve that audience and then this includes a new discover feature that will be.

Providing daily compatible suggestions that we really plan to introduce before the end of this year. So all of this being said, it's really ultimately the design of a tightened focus team and led by that really excellent new general manager. So overall, we're pleased with the progress and we are maintaining our product focus.

To continue the positive momentum.

Great. Thank you.

Thank you.

One moment for our next question.

Our next question comes from Laura Champine with loop capital. Your line is open.

Thanks for taking my question on the guide for or the initial outlook for next year's revenues to grow in sort of a teens range.

How does that compare to your thoughts on the long term opportunity for Bumble, Inc. Total company revenue growth.

Maybe I'll start with that and then others can chime in I think we.

Do think we have talked in the past about the Tam and both online dating but really in that kind of social connection spaces. We're defining it as we think about DFS.

There's other areas like that I think that if you look at the bumble App growth rate. We do think that there is a lot of reason to believe that both international expansion and the continued expansion of the market opportunities.

Well, we'll continue to keep <unk> growing in the future.

And and then you layer on top of that both the opportunity we have with some of our other apps like Baidu foods, others that we may incubate overtime and of course bff, but we do think there's a tremendous amount of runway and online dating and the connection space we are not.

Really focusing on what could 2026 look like R&D, So we're not going to.

Speculate on that but we do think there is tremendous headroom both on.

On a secular basis and given the performance that we've had in terms of gaining market share.

Just one on more bundle apps space that I think what's really exciting and remarkable and youre seeing very early indicators of that as a compliment you look at the historic nature of how the product works given the powerful brands.

<unk> and core user proposition.

Women, making the first move. This is this is the foundation of our business and this is so strong and core to our future, but we've never had any really interesting forms of engagement pre match and so when you think about the product unlock in the year ahead in the years ahead, there's there's exciting opportunities there as well.

Got it thank you.

Thanks.

One moment for our next question.

And our next question comes from Benjamin Black with Deutsche Bank. Your line is now open.

Great. Thanks for the questions.

It'd be great to hear your perspective on how bumble.

Trends in some of your newer international markets.

How should we be thinking about the timing of new international launches from here and secondly, Whitney you spoke a bit about the product roadmap for bumble up next year could you just dig a little bit deeper into what we should expect in 2023 and how much. It's one of the newer products suite.

<unk> the models will be drive results conversion or should have a bigger impact on our people. Thank you.

Okay.

Sure I'll start with the international growth piece, and then turn it to wait for that.

Product piece.

I'll focus on Western Europe happy to talk about some of our other markets, but just to make it specific what we are.

While we are really seeing as we go into these markets is that we are able to establish the brand the brand.

Favorability as Whitney was talking about really lays the foundation for strong organic growth in all of our international markets. We actually see that there is really a core.

Organic growth that we build on top of as opposed to just coming in and.

Laying tons of marketing into a market, we really try and lay that organic foundation and then the market with our marketing on top of it tends to to build into this healthy virtuous cycle. So if you looked at what that what that means in a market like this.

Germany as an example, you would see.

To start with.

Strong and growing brand preference you would see that leading to strong organic growth.

And then you would really see that the that the ecosystem is continuing to grow we talk a lot about new registrations, new registrations continue to be very high you can see this in the third party data around download share where we are continuing even in the face of a lot of competitive spend to game download share in that market and as Rodney said closed.

And on the number one position in that market you see it in terms of Reengagement rates, where if people find a relationship. They go off the app for a little while they come back they are doing that at a very high rate as well. So you build that preference we're seeing in our retention rates and then monetization and the payer dynamics builds over time.

Because you need that critical mass to make the payment options worthwhile. So so that's a well worn path that we have you see this in that region you see it in France, you see it as we'd mentioned emerging in Spain, where we just launched in July and we think that that playbook is one that we can use pretty quickly.

One different markets, we have a lot of organic if you looked at markets that we quote unquote haven't launched in you would actually see in most of these markets.

Healthy level of organic demand. That's there that is something we nurtured through the localization of the product and through the brand kind of a global brand work that we do and it makes it relatively straightforward for us to go into a market like Spain, and really amplify what's already there and so we do have as we mentioned our plans to complete our <unk>.

Western European launches next year, we've been moving very quickly through our Latin America in the major markets in Latin America, and Southeast Asia, and Theres, a couple of others that we're taking a very close look at and we will come back as we get into it.

Q1 with more definitive plans on that.

So now turning to bundled product strategy. So we've had a exciting year to date for product launches and innovation and looking ahead, we feel great about our roadmap. So in 2022 to recap we spent a lot of time advancing our offerings specifically as it relates to leveraging technology such as <unk>.

She and learning and AI to deliver product experiences that drive safety and trust and relevant so as we've looked in the year ahead, we're really taking a two pronged approach to product development.

Want to underpin that by saying, we do not carve out safety in women first initiatives as a lane or as a <unk>.

Here are our strategy is the underpinnings of everything we do so as I talk you through the two pronged approach. Please note that women first.

Safety and time connections is baked into this entire strategy. So that said, we are going to be focusing on one driving engagement and to increasing monetization. Both of these things will just increase the overall health of the ecosystem. So on engagement 2023 is all about building.

Ex that cater to our user demographics specific wants and needs, stating is not one size fits all and we have active and rapid growing user bases and so many different cohorts in segments. So we are prioritizing experiences that are particularly focused on delivering these unique and engaging experiences that really rather.

Nate with these cohorts and stuff.

Specificity. So Gen Z users for example, they socialize and they engage much differently than millennials do that doesn't mean, they don't use our product don't want two subsidiaries nuance in how they do it and what the intentions are behind it therefore, we're going to be giving them product that really resonates and create virality with.

In their group, we will continue to innovate for our millennial users as well of course, there are still huge demand and upside for that segment and they want things like curated offerings and we see this opportunity to really continue to engage with that group around those offerings and to further expand those so now.

Turning to monetization, we are taking a barbell approach. So when we look at higher tier and longer duration products for a more affluent customer.

We can still think about this shorter duration and lower tier offering in consumables for users, but limited or more limited spending power than than that first group. So for example, complements is live in New York and New England as we speak we'll be continuing to roll. These out to the rest of the U S, but with nuance.

With engagement and monetization at the front and center of this product roadmap, we will really just continue to lean into great experiences premier experiences.

Believe that this approach will position us to advance our lead with Gen Z users, which is so important while driving monetization in the year ahead with both categories.

Okay, great. Thank you.

Thank you.

Hi.

Our next question comes from.

Lauren.

Chuck Your line with Morgan Stanley . Your line is now open.

Okay, great. Thank you maybe just following up on a couple of the earlier questions.

The initial 23 outlook, what's the underlying assumption in terms of bumble App revenue growth for 'twenty, three and then just coming back to marketing as you think about some of your largest competitors sort of.

Increasing their spend and being more present in the marketing backdrop next year. How are you thinking about drove your marketing spend on a year over year basis. Thanks, so much.

Yes, so we are not right now going to.

I'm going to sort of breakout specific numbers for bumble App will obviously give that when we when we provide formal guidance like I had said.

Lauren I think bumble apples to would be the major driver for <unk>.

Next year, so that is expected and again paying users within mobile app will be will be a large function of where the growth comes from with respect to.

Our spend philosophy like I said, we do want to and be.

We have committed.

Since we've been public.

We are committed to expanding our long term margins and you've seen us do that this year.

And next year, we want to expand our margins at least 100 basis points as we think about all areas of spend.

Our philosophy next year, especially given the larger macro environment is going to be and are leaning into areas that are critical for the growth of our business.

If you think about investing areas of product and technology that we really need to beef up bonds, such as you know whether it's AI machine learning data engineering things like that so you'll see us continue to invest in specific pockets of the business.

We want to lean in on the marketing side, obviously international growth like Toric with just saying is still a huge pillar and a big driver of revenue for us. So you will see us spend money there, but we are also taking a very hard look at every area of spend within marketing to make sure that.

Each dollar that we spend is meeting the high thresholds, we have Florida auto why it turns utilized etcetera etcetera. So this is definitely a line item that we want to see leverage on next year, but it's also a line item, where you will see us.

Send money on especially in areas that we want to grow and invest in it.

And largely and then finally, we built up obviously.

Our infrastructure since we've gone public so we feel pretty good about being largely built out we still have a few pockets, where we need to invest in but as you think about G&A. That's also another area, where we are looking to create leverage next year.

And the final thing I will say is obviously given what's happening in the world the.

The bar for growing head count next year until funding anything within the company is going to be very very high.

And we expect that our growth in head count will be much lower than what we've seen in the past I mean, we are still very much focused on investing in the right areas, but again the bar that we are applying to the company into ourselves that's going to be very very high. So again I look forward to providing more specific information.

In a few months.

And then maybe on the marketing side real quick I think the yes.

We have been we have a very unique marketing approach that is not something that you see in the industry typically a lot of focus on the micro and the brand elements of this we've seen even in Q3.

And in Q2, a fairly considerable amount of competitive spend and we have continued to gain share without just bye bye.

<unk> on our historical differentiated marketing approach, we feel pretty confident we can continue to do that.

Yeah.

Thank you.

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

The conference will begin shortly.

As Johan during Q&A, you can dial one one.

Hmm.

Yes.

Okay.

Yes.

Okay.

Yes.

Hmm.

Okay.

Hmm.

Yes.

Okay.

Yes.

[music].

Okay.

Yes.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Yes.

[music].

Okay.

Yeah.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Sure.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

<unk>.

Okay.

Yes.

Okay.

Yes.

Sure.

Yes.

[music].

Yes.

Okay.

Thanks.

Okay.

Thanks.

Yes.

Okay.

Sure.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Sure.

Yes.

Okay.

Yes.

Sure.

Yes.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

Right.

Hum.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Hum.

Yes.

Okay.

Yes.

Sure.

Okay.

Thanks.

Okay.

<unk>.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yes.

Okay.

Thank you.

Yes.

Good day, and thank you for standing by and welcome to the bump <unk> third quarter 2022 conference call. At this time all participants are in a listen only mode.

The speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is Reyes. Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speak today, Cheryl Valensuela Vice President of <unk>.

Relations. Please go ahead.

Okay. Thank you operator, and thank you all for joining us to discuss bumble third quarter financial results.

With me today are <unk>, founder and CEO part socket, President and a new subramanian CFO of bumble.

Before we begin I'd like to remind everyone that certain statements made on this call. Today are forward looking statements. These forward looking statements are subject to various risks and uncertainties and reflect our current expectation 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 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, including our annual report on Form 10-K for the year ended.

December 31, 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 reconciliation 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 at <unk>.

IR dot bumble dot com and with that I'll turn it over to Whitney.

Thank you Sheryl and thank you all for joining US today, our Q3 results demonstrate the strength and resilience of our brands and our business amidst a challenging global operating environment I want to lead by restating that love as a universal and fundamental human need how we deliver for this global need evolve.

But we are well positioned to deliver for our members that scale.

In the third quarter.

We delivered solid top line growth of 17% year over year, driven by 28% growth for bumble apps adjusted for both FX and the Ukraine complex Bumble ink revenue growth would have been 10 points higher and bumble app revenue growth would've been five points higher we maintained a strong focus on cash flow and profitability.

<unk> delivering record adjusted EBITDA of $62 million in the third quarter, surpassing our outlook.

Bumble App continued its momentum in Q3 gaming download share in both core and international expansion market, while exceeding our expectations for both new user growth and re engaged user monetization was also strong as paying user has accelerated for the fourth consecutive quarter to a record.

<unk> 164000 sequential net adds.

International expansion continued to propel bundle apps growth with strong increases in users and payers across Western Europe Asia Pacific and Latin America.

Our strategy and new management structure for Baidu are starting to deliver and we have made progress in stabilizing baidu sequential net adds increased for the first time since Q4 2021, and we achieved positive revenue growth after adjusting for the impact of FX and the conflict in Ukraine we.

Which will also impact Q4, now let me provide more context for each.

We have addressed the issue and these features have started rolling out eight to 10 weeks behind plan, notably fully monetize complement is now live in Australia, Germany, Canada and parts of the U S, including New York and New England, We anticipate completing the U S rollout and progressed.

To our remaining markets throughout Q4 and into early 2023.

Our results were also impacted by the increasingly challenging macroeconomic environment in late Q3, and Q4 user engagement and new user growth are strong in both our core markets and our international expansion markets Importantly, we have seen no impact on new subscriptions.

However, some of our user segments are facing greater pressure on disposable income and these segments are renewing their subscriptions at a modestly lower rates.

We are actively adjusting our marketing approach to ensure that we highlight the comparative value of our offering to other dating alternatives and modifying our merchandising and payer retention strategies. Notwithstanding these items our business remains strong bumble app revenue grew to $181 million in Q3 up.

28% year over year paying user growth remains strong in Q3 with sequential net adds accelerating to 164000, we continue to grow download share in both core and international expansion market with gap with share gains across all of our major regions and strong year over year performance in the U S.

And 30% to 44 year old segment, the major gating brands that they track in the U S.

This speaks to the unique strength of our brand, which is the foundation for the strong performance that we have delivered all year International expansion continues to be a critical growth driver for bumble App in Western Europe , we saw robust user growth and even faster revenue growth. We remain the number two dating app in Germany close.

The gap significantly with the number one player and we gained to download share in Austria, France, Switzerland, Belgium, and the Netherlands.

Spain is our most recent launch in the region and we have seen significant growth in registrations Mou and revenue since early July .

Our Latin America, and Asia expansion are performing well, India remains a notable highlight and revenue in India more than doubled year over year again, demonstrating the broad global appeal of our brand and products.

<unk> now and the end of 2023, we will build on our proven playbook to continue to actively expand internationally, we expect to complete our major launches in Europe and critically to continue to deepen our presence in each of our recently launched market. In addition, we expect to continue our rollout in Asia and Latin America.

Outside of the product already noted Q3 was a very active product launch period for us better serving the wide range of audiences on bundle has been a key focus we launched improved experiences for users who want to celebrate our cultural heritage and we improve the experience for our LGBTQ AA plus audience with.

Our allergy Tuesday offerings, which drove strong engagement with 18 to 30 year old women in particular, we expect to continue building on this platform. We've also been focusing on developing an improved experience for our college and recent graduate community and we are rolling out student only experiences are verified college students.

Our first college monetization monetization offering launched in late August and we are pleased with the initial results.

In Q3, we also introduced our speed dating feature in select cities around the world. We utilize the product functionality to launch our partnership with Emmy Award winning comedy Tad Lafoe with fans her life by Bumble, we're bringing the fictitious dating app feature on the show to life, creating an.

Innovative and fun way to grow and further engage bumble users in our core English speaking market banter live takes place on Thursdays each week through the remainder of the year. We are pleased with the initial participation results that we've seen and we're excited by the new engagement model that this product represents.

Now looking forward to 2023, we expect to continue our rapid pace of product development or product focus will include enhancing the college and recent product variance continuing to build on the complement and speed dating platforms that we've launched leaning into social features such as our recently launched recommend to a friend feature and build.

Our new monetization platform at both the low end and high end now turning to Baidu and other products, including fruit with you and other revenue totaled $52 million in Q3 down 10% year on year on a reported basis that includes 21 points of combined negative impact from FX.

And a new one day consumable aimed at driving payer conversion for the more economically sensitive baidu user over the next several quarter. We will build on these successes with additional product releases and a continued disciplined marketing approach.

Let me turn next to Bruce adoption continues to grow quickly in France, Belgium, the Netherlands and parts of Canada, and we are actively working on its broader international expansion strategy for 2023 since acquiring the company in January we have integrated a significant amount of our safety capability and throughout Q3, we have been <unk>.

Our monetization expertise to that team at the same time, we are leveraging fruit of the learning platform to better serve Gen Z.

Finally, I would like to spotlight a couple of safety initiatives.

<unk> powerful reflections of our mission and our commitment to creating kind connection first California signed a cyber clashing bill in September that makes the spending of unwanted lewd images illegal building upon similar legislation that we also championed in Texas, Virginia and the U K.

More recently, we open source, our private detector machine learning model to bring improved user trust and safety to the social media industry at large.

I am so proud of how our teams market shaping our global industry for the better and I am looking forward to more.

I will now turn it over to Aneel for discussion of our financials and outlook. Thank you so much.

Thank you Whitney and good afternoon, everyone I will begin with a discussion of our third quarter trends and results before turning to our outlook for Q4 and the full year.

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

Total bundled ink revenue in Q3 was $233 million up 17% driven by growth in Bumble App.

FX was a $14 million headwind to top line 2 million worse than we had expected at the time of our guidance in.

In aggregate FX headwinds and the Ukraine conflict impacted our Q3 growth rate negatively by 10 percentage points.

At a group level revenue growth was driven primarily by growth in game users, which increased 15% to $3 3 million, but our people increased by 1%.

Revenue from Bumble App grew 28% to $181 million.

<unk> was a $7 million, yet already had headwinds, which negatively impacted growth by five percentage points.

FX headwind with 1 million more than we had previously expected.

Bundle App revenue growth was driven by a strong 36% increase in paying users to $2 1 million.

On a sequential basis, we added 164000 paying users marking the fourth consecutive quarter, we've increased net add.

This strong growth in paying users was driven by a number of factors, including active user growth some higher engagement rates.

<unk> international expansion and product enhancements that drove paid conversion.

Bundle apps are people was $28 84.

Down 6% year over year and 1% sequentially.

Primarily due to country mix and FX impacts, partially offset by pricing optimization initiatives.

Now moving on to Baidu App and other.

But do App and other revenue declined 10% in Q3 to $52 million.

Sex and the Ukraine conflict represented a $12 million headwind year over year, which negatively impacted growth rates by 21 percentage points.

FX headwind was $1 million worse than we had expected.

Absent these headwinds, but do another revenue grew double digit year over year.

But do App and other paying users declined 10% year over year to $1 $2 million, but grew sequentially by 106000.

Well do App and other RFP food declined 7% year over year to $12 75.

Due to FX and country mix, partially offset by pricing optimization work.

As a reminder, we currently include truths revenue within Baidu, App and other revenue, but exclude fluids paying users from Baidu app and other paying users.

Turning now to expenses, we continue to remain very focused on managing our business profitably, especially in light of the current geopolitical and macroeconomic environment.

Total GAAP operating costs and expenses were $204 million for the quarter down 1% year over year.

On a non-GAAP basis, excluding stock based comp and other noncash or onetime item I would note the following.

Our total non-GAAP operating expenses were $171 million up 18%.

Cost of revenue was $64 million and grew 17% year over year the.

The increase was primarily driven by higher App store fees as revenues have grown as.

As a percentage of revenue cost of revenue was 27% flat versus the year ago period.

Sales and marketing expenses grew 16% year over year to 61 million.

This represents 26% of revenue flat versus the year ago period.

G&A expenses were $30 million or 13% of revenue compared to $24 million or 12% of revenue last year.

Product development expenses were $16 million or 7% of revenue flat versus the year ago period.

Q3, GAAP net earnings were $26 million compared to a net loss of $10 million in the year ago period.

In Q3, adjusted EBITDA was $62 million up 13% year over year and represented a 27% margin.

We generated $34 million of free cash flow this quarter.

We have a strong cash position and ended Q3 with total cash of $365 million.

We continue to maintain strong financial discipline with regards to potential uses of cash now.

Now moving onto our outlook.

We expect the following for Q4.

Total revenue between $232 million and $237 million, representing a growth rate of 12% to 14% year over year.

Our outlook assumes $16 million of year over year, FX headwind 6 million more than we had previously estimated.

Outlook also assumes approximately $5 million of year over year headwinds related to the conflict in Ukraine.

Similarly in <unk>.

Excluding the impact of FX and the Ukraine conflict or total revenue growth outlook would have been 22% to 25% year over year.

We expect bumble app revenue to be between $184 million and $187 million, representing a growth rate of 23% to 25% year over year.

The revenue outlook assumes a negative impact from FX of approximately 9 million $4 million more than we had anticipated originally.

Excluding FX headwinds our guidance for bundled revenue growth would be 29% to 31% year over year.

We estimate adjusted EBITDA will be between $57 million and $59 million, representing 25% at the midpoint of the range.

Our Q4 expectations are based on three considerations.

First we expect FX to continue to be a headwind across all our app.

Second while bundle Apple continuing to demonstrate strong user engagement product delay and macro issues will weigh on Q4 results.

And lastly on Baidu and other we expect continued macro pressure along with lower demand for advertising this holiday season.

On a full year 2022 basis, we expect total revenue growth rate of 17% to 18% year over year.

This is the <unk> $44 million up year over year, FX headwinds and excluding the impact of FX and the Ukraine conflict on guidance with total revenue growth would've been 26% year over year.

We expect bundle app revenue growth rate to be 30% to 31% year over year.

The revenue outlook assumes a negative impact from FX of $23 million.

Excluding FX headwinds our guidance of a bundle revenue growth would be 34% to 35% year over year.

We estimate adjusted EBITDA will be between 223 and $225 million, representing 25% margin at the midpoint of the range.

We are currently in the middle of our annual planning cycle.

And while we typically provide full year guidance on our Q4 earnings call.

Given macro uncertainty we wanted to share some preliminary expectations for full year 2023 today.

While the operating environment continues to evolve.

Based on our current visibility on our product roadmap and market expansion effort.

We expect the bumble ink revenue will grow between mid to high teens next year.

This is 300 basis points of FX headwinds at current rates adjust.

Adjusted for that we expect our total company revenue growth will be high teen to low 20% on a year over year basis next year.

We are also committed to expanding adjusted EBITDA margin in 2023 by at least 100 basis points on a full year basis.

This will be achieved by ensuring that we remain laser focused on spend while continuing to invest in our growth priority.

And with that operator, we can open it up for Q&A.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone. Please wait for your name to be announced please standby, while we compile the Q&A roster.

Okay.

Our first question comes from Andrew <unk> with Raymond James Your line is now open.

Hi, Thanks for taking my question wanted to talk a little bit about the preliminary outlook for 'twenty three.

I guess, what assumptions for macro are based in our baked into that a consistent outlook or any worsening involved and is there any contribution baked into that from non dating properties.

But again like I said, given the larger macro uncertainties. We wanted to just provide everyone. A preliminary estimate based again on our best guess around 2023.

Like I said our range currently is in the high teens to low twenties.

Adjusted for about three points of FX headwinds.

We are assuming here that bundle app will continue to be primarily the growth driver for our business next year and the growth levers are will largely be similar to what we saw in 2022 in terms of we still expect paying users to drive growth across both our core and international markets.

We've obviously made some reasonable assumptions around what the growth vectors look like across the different geographies based on the data that we have from historical market expansion.

And we've also made some high level assumptions about product contribution, but again these are.

Roadmaps are still being built and so we will have more details to share when we come back in Q4 from a macro perspective again, we've assumed that the current states continues into 2023, we've not assumed any material degradation in terms of what we are seeing but obviously this is something that we will be looking at very closely.

We now and.

Q1, when we come back to.

To provide guidance.

Again, the goal was to provide a high level numbers, but we will provide specific drivers of revenue when we come back.

Great. Thank you and one more if I could and this type of environment I know you've talked a little bit about your marketing philosophy and your prepared remarks, but in this type of environment could you pulled back on marketing spend or will you need to spend through it to defend your position I guess is there any differences in your outlook on marketing channel shifts.

Toward campus, influencer or lower cost channels or anything like that.

Sure I'll take that this is tarik.

So we've always had a very disciplined approach on marketing and it's always been very.

Roy centric, even our brand marketing spend not just our performance in paid marketing spend.

A lot of the success, we see on the marketing side is built off of the brand based on some of the stats that Whitney said about the love for our brand and the favorability that we have for our brands. So at the moment as as conditions.

Tougher in Q3, and then yes.

The first several weeks of Q4, we haven't seen a need to change our marketing approach per se from a channel standpoint or anything like that what we are doing is adjusting the messaging and the merchandising to make sure that we're able to really speak to our users in the context of the current environment a lot of our messaging is working.

Of our big platforms.

I recall is it started on bundle, which is really about celebrating the success that our users have on the platform. We are dialing up some of the comparative value messaging the Whitney mentioned about.

Bundle, we believe being one of the best ways to have our first date defined the first stage compared to cost of drinks at bars could cost of other things that you might do so youll see more messaging around that as well.

And yes, and I don't think were going to be seeing any substantial change in spend.

Alright, great. Thank you.

Yes, and I just wanted to clarify I think I missed answering your question about non dating businesses.

2023.

Revenue assumptions don't include any major contribution from our non dating business.

Our goal is to test monetization strategies for our non dating business next year, but right now we're not baking in.

Did you have any contributions from that.

Thank you.

<unk>.

One moment for our next question.

Okay.

Our next question comes from Mark Kelley with Stifel. Your line is now open.

Great. Thank you very much.

Wonder if there's a way for you to maybe quantify a bit more of that.

10 week delay that you highlighted at the outset of the prepared remarks, maybe just.

How it impacted Q3, and then how you think that.

Impacts Q4, maybe into next year.

And then would love your thoughts on just expectations for App store fees.

Next year and beyond.

Given the the margin outlook you gave.

You are not taking any improvement.

Into your estimates at this point, but any just high level thoughts there would be great. Thank you.

Yes, sure why don't I start with the margin question and then.

Hand it over.

Right on the App store fees, we haven't assumed.

Any relief.

Coming in in 2020, so we've assumed largely current state of affairs.

Obviously, we'll have to see what next year will bring in terms of changes in this front, but thanks Noah.

The 100 basis points expansion doesn't assume any additional benefits coming out of that.

And in terms of the product delays as we mentioned it was some of our products, we had a very robust product.

<unk>.

Hello, If you will in Q3, there was a handful of our products that did get delayed that had monetization implications. Most notable is complements in the paid version of compliments that is now live. So it really is that eight to 10 week delay on.

The number of those features but we're not providing specific breakdown between them, but macro and the product delays are.

Give or take.

Roughly even in the Q4.

For us.

Okay. Thank you very much.

Thank you one moment for our next question. Please.

Our next question comes from Cory Carpenter with Jpmorgan. Your line is now open.

Thanks for the question, maybe one more on the on the product delays just tire company you could expand a bit on what exactly the issues were that led to.

The delay in the <unk> and.

And then also what you did see in testing with complementary college bundles and what your expectations are on the monetization side.

For you you just hoping you could expand on the <unk> bundle up guide any color you can provide on what your expectations are in terms of payer growth versus <unk> would be helpful. Thank you.

Great Jonathan I'm going to try and.

I answered the question Corey without going into too much of the details of the product, but the so essentially.

A number of products that we were launching this quarter like complement that has to be integrated into the core profile experience and that profile experience. It's like the homepage on on the web is required to solve.

To serve everybody who uses our apps right as we do personalization, but it's largely a.

A single experience.

In a single homepage, if you will for the App a number of features built on top of that.

As we rolled into testing we started to see that there were some impacts from a design and user experience standpoint, primarily on the power user segment that.

We then interact most frequently with that App and it was causing some kind of unexpected behavior in that segment such an important segment for us in such a sensitive area, we decided to hit pause.

To make sure we really understood it and tweak some of the design elements and some of the mechanics underneath the hood. So for a complement as an example, exactly how where it sits on the page exactly how you interact with it there are elements like that.

There were good broadly speaking, but not good for specific segments like that power user segment that we're talking about.

And we wanted to get it right we have a high bar I don't want to run the risk of alienating any of our users.

That said it has been live now.

In Germany and Australia.

<unk>.

And those who are test markets, we rolled it in late October into Canada, and then more recently in November into New England, New York, New Jersey couple of other places in the U S. We're seeing strong adoption.

And really critically we are seeing that people are willing to pay for the experienced the monetize version we have rolled out is really leaning into.

At the moment of consumables experience, where you pay to send beyond your free quota that you get for a day and so that is all working.

Working well, we see excitement because it is a new interaction model in in the App right and so we're very pleased with that we're going to continue rolling it out as we said.

College bundles.

Big.

Topic in August and we have mentioned then from a go to market standpoint, we were delaying it did go live on our revised schedule in August and September as students came back on the campus and.

And.

Just as a reminder of the strategy oncology. It really is all about finding the segment specific opportunities that we can target and dive into largely areas that we've kind of missed from our overall broad based monetization strategy. So college students being in under monetize segment that we that we have.

We rolled out a number of different <unk>.

<unk> monetization offerings, one of them was labeled as student bundle Theres. Some others. These are all available on a targeted basis, we saw in the segments we targeted.

A meaningful uplift in Arco.

We are now working on how do we expand the distribution of those and the evolution of <unk>.

<unk> talked previously about adding virtual goods. For example later in this year and early next year that is still our plan and we think will drive further uplift. We're also rolling out this college verification program, which will enable us to expand verified distributions. So we don't accidentally offer these packages too.

Somebody who is who.

Shouldnt be getting it.

Yes.

Cory just to answer your question about.

As an example in Q4 outlook so just to contextualize this.

Compared to our previous guidance, we've taken down our overall guidance by about $20 million.

<unk> of that relates to incremental FX headwind, but we're really talking about a $14 million.

Difference.

Nine of that is on bumble and five of that is on Baidu.

The $9 million for Bumble is largely because of the two factors we've already talked about in terms of the the product delay and macro.

In terms of how I expect bundle up.

Kpis to come out in Q4, our goal for the year in terms of getting to 500000 net adds still.

Still has not changed so we are still hoping to get to that number by the end of the year.

Given FX and given the fact that.

<unk> complements which would have been in our people and driver.

Delayed and I'm not going to contribute as much in Q4, we will we will see year over year decline in our people in Q4 for Bumble App. So.

So that's the composition of how I expect bumble app to come out in Q4 and for Baidu the $5 million is largely.

Right now we are taking again, a cautious approach on what macro looks like obviously as we've said before the badu consumer is more sensitive to some of the macro condition. So we are just taking a cautious.

Approach to where do we think Q4 will end that.

That $5 million also includes.

Weakness that we're seeing in advertising again similar to a lot of other companies. So we are expecting to be about $1 million lower than last year in terms of that as well. So those are the high level components of how the.

The Q4 outlook it breaks out.

Very helpful. Thank you.

Thank you one moment for our next question.

Our next question comes from Switzer cautionary with Evercore ISI. Your line is open.

Okay. Thank you for taking my questions.

Could you. Please provide more detail on what has to happen I understand it's a very high level. When you do your planning, but what else.

As of now assuming that macro was steady what has to happen to get to high load I guess high teens next year and low 20% growth rate.

What is your assumption baked in that range as of now.

And I guess the second question is could.

Could you talk about sensitivity of low disposable income consumers my understanding was that at a high level you've got Ya.

Skew towards the demographic, that's more resilient, but could you touch on that and where youre seeing that sensitivity. Thank you.

Okay.

Hey, Sean.

I'll start with that second one maybe and then turn it over to a new on the outlook question.

So yes. It is true that historically <unk> has had.

A more resilient user base and we think we are still seeing that resilience in the majority of our user base as we've grown both globally and just.

In our core markets. We have for example have been rapidly adding gen Z users MZ users make up a large amount of the growth that youre seeing in downloads.

Bundle is really becoming as the number two most downloaded dating app in the world.

Earlier that what we're seeing.

Seeing is really.

This thinking twice about a purchase type of dynamic.

Initial subscription rates, including in these price sensitive segments, we're not seeing any decline in that so this is really.

To put it bluntly at what point do you run out of money and start thinking about wanting to do.

You keep going or not and that is impacting these renewal rate. It's a very isolated phenomenon in certain pockets of the user base not not anything that is broad based.

Okay. Thanks, Eric.

In terms of our Flexpath I'd like you said I think again, we are very much.

In preliminary stages.

Providing outlook, but at a high level, if you think about it.

<unk> was saying we are seeing in some pockets of our business.

Ah macro start that he had his head we've assumed that that continues.

And if you even if you compare between September to October and November while we saw a lot of that impact in September we haven't seen the trends worsen in October and November yet.

So we've sort of assumed a steady state in terms of that for next year now obviously, if things got worse from a macro perspective, you would you would see us flight to the lower end of that guidance and on the high end of the guidance again.

He made.

Our best guess estimate in terms of.

Which international markets, we want to get into where some of the products. We think we are.

I really want to focus on next year will land at the timing of all of those are still being worked out but again, depending on how many of those and what the probability of each of those products ends up being that is what would push us to the high end of.

Our guidance and obviously, we are also <unk> as we think about it we are excited about.

Products like fruits, which obviously this year has been very much.

Our focus on integration, but next year, we had exited about groups starting to monetize so that our assumptions baked into what that looks like.

As well as you know we're excited about stabilizing badu, obviously, we saw that in Q3.

What we also know that macro is.

It is potentially going to come in the way of that so again lots of plans being made in terms of all the products that we have so we are.

Right now very confident about this range again, well, we'll put a finer point on this when we when we come back in a few months.

Okay. Thanks, and then if I may.

Hello, Thank you Darren.

Go ahead, certainly last year that for a second.

Yes, sorry about that.

Just a follow up you said October and November to date with stable. So your guidance does that assume any deterioration from now.

Now to the end of the year going forward or.

Q4 guidance assumes what you see now.

To stay the same thank you.

Yeah. So Q4, our guidance is what we are seeing now which is again the member lower than what we had seen back in July and August So we've assumed that that stays.

But.

We'll obviously keep up truly close eye on it but right now we feel pretty good based on the numbers that we're seeing.

For October and November in terms of where we are with respect to guidance.

Okay. Thanks, a lot thanks, Adam Thanks Tarik.

Thanks, Craig thank.

Thank you one moment for our next question.

Our next question comes from Alexandra <unk> with Goldman Sachs. Your line is now open.

Thank you so much for taking my question. So maybe one for you in your prepared remarks, you mentioned that you're addressing some of these macro headwinds that you are seeing by changing some of the product and marketing can you just elaborate on these product changes had little more and how fast do you think these changes could offset some of the impact you're seeing.

And then second maybe just don't like the produce segment what is the new management team most focused on from a product perspective.

And what gives you confidence that we can see revenue reacceleration into into 'twenty three from that segment. Thank you.

Yeah, great. Thank you so much for your question I think I would love to start with both pieces of my remarks around changing product, but also marketing tactics around that.

So if you think about the relative cost of our product comparatively to alternatives.

<unk> option for example.

Relative value of using a subscription on our product versus going out and dating in the real world. This resonates very well. We are also going to be really adjusting the way that we.

We offer these experiences to our customers to be more in line with their needs as they evolve. So maybe instead of a longer term subscription may be shorter shorter opportunities short or consumables or really just being nuance to the demands of these segments now I want to reinforce this is not a blanket approach.

There is still a segment that really wants high end offering there is a segment that wants more curated experiences and more premium offerings and so we can do this on a very targeted basis with these new capabilities that we've built you saw these capabilities land with college bundle I think this is an important.

Point College bundle is not just about the college audience. It's about how we can actually bundle, our monetization offerings and our product offerings to enhance the experience for our core demographics. So if you see a demographic that might have less disposable income how can we give them consumables and subscription offering that.

Meets their needs versus someone on the other end of the barbell that might be looking for a more premium experience. So this is really something we would say is the hybrid product marketing effort that we I would not extrapolate from one another and really leaning into that relative value and I think it's just very important to end on this point.

Madhu. So we're really excited about the new focus around the leadership team essentially we've assigned a single threaded owner to Baidu, which has been remarkable for the efficiencies and for really understanding the customer and delivering for their needs delivering for who that customer really is and so.

While we are very encouraged by Baidu is improving performance in Q3 as we've laid out we know that we still have work to do in terms of that real reacceleration, but we also anticipate that produce more economically sensitive user base will remain affected by these uncertain macroeconomic challenges. So for the year ahead, we're re.

Really just focus on driving monetization, adding new product feature that serve that audience and then this includes a new discover feature that will be providing daily compatible suggestions that we really plan to introduce before the end of this year. So all of this.

<unk> said its really ultimately the design of a tightened focus team and led by that really excellent new general manager. So overall, we're pleased with the progress and we are maintaining our product focus to continue the positive momentum.

Great. Thank you.

Thank you.

One moment for our next question.

Our next question comes from Laura Champine with loop capital. Your line is open.

Thanks for taking my question on the guide for or the initial outlook for next year's revenues to grow in sort of a teens range.

How does that compare to your thoughts on the long term opportunity for Bumble, Inc. Total company revenue growth.

Maybe I'll start with that and the others can chime in I think we.

Do think we have talked in the past about the Tam and both online dating but really in that kind of social connection spaces. We're defining it as we think about DFS.

Well, we'll continue to keep bumble app growing in the future.

And and then you layer on top of that both the opportunity we have with some of our other apps like Baidu foods, others that we may incubate overtime and of course bff.

Do think there is a tremendous amount of runway and online dating and the connection space we are not.

Yes, really focusing on what could 2026 looked like or at least we're not going to.

Speculate on that but we do think there is tremendous headroom both on.

On a secular basis and given the performance that we've had in terms of gaining market share.

Just one more bumble app basis, I think what's really exciting and remarkable and youre seeing very early indicators of that as a compliment you look at the broad nature of how this product works given the powerful brands.

<unk> core user proposition.

Got it thank you.

Yeah.

Thanks.

One moment for our next question.

And our next question comes from Benjamin Black with Deutsche Bank. Your line is now open.

Great. Thank you for the questions.

It'd be great to hear your perspective on how bumble.

<unk> is a trend in some of your newer international markets and how.

<unk> the models will be drive results conversion or should have a bigger impact on our people. Thank you.

Okay.

Sure I'll start with the international growth piece, and then turn it to wait for the product piece.

I'll focus on Western Europe happy to talk about some of our other markets, but just to make it specific what we are.

While we are really seeing as we go into these markets is that we are able to establish the brand the brand.

Favorability as Whitney was talking about really lays the foundation for strong organic growth in all of our international markets. We actually see that there is really a core.

Of organic growth that we build on top of as opposed to just coming in and.

Laying tons of marketing into a market, we really try and lay that organic foundation and then the markets with our marketing on top of it tends to try to build into this healthy virtuous cycle. So if you looked at what that what that means in a market like that.

Germany as an example, you would see.

To start with.

Strong and growing brand preference you would see that leading to strong organic growth.

Then you would really see that the that the ecosystem is continuing to grow we talk a lot about new registrations, new registrations continue to be very high you can see this in the third party data around download share where we are continuing even in the face of a lot of competitive spend to game download share in that market and as witnessed that closing.

Because you need that critical mass to make the payment options worthwhile. So so thats a well worn path that we have you see this in that region you see it in France, you see it as wed mentioned emerging in Spain, where we just launched in July and we think that that playbook is one that we can use pretty quickly around.

Different markets, we have a lot of organic if you looked at markets that we quote unquote haven't launched in you would actually see in most of these markets.

Our western European launches next year, we've been moving very quickly through our Latin America in the major markets in Latin America, and Southeast Asia, and Theres, a couple of others that we're taking a very close look at and we will come back as we get intake.

Q1 with more definitive plans on that.

So now turning to bundled product strategy. So we've had a exciting year to date with product launches and innovation and looking ahead, we feel great about our roadmap. So in 2022 to recap we spent a lot of time advancing our offerings specifically as it relates to leveraging technologies such as machine.

<unk> and AI to deliver product experiences that drive safety and trough and relevant so as we looked in the year ahead, we're really taking a two pronged approach to product development I want to underpin that by saying, we do not carve out safety and women first initiatives as a lane or as a.

Tier of our strategy is the underpinnings of everything we do so as I talk you through the two pronged approach. Please note that women first.

Safety and time connections is baked into this entire strategy. So that said, we are going to be focusing on one driving engagement and <unk>.

Two increasing monetization both of these things well just increase the overall health of the ecosystem. So on engagement 2023 is all about building products that cater to our user demographics specific wants and needs, stating is not one size fits all and we have active and rapid growing user.

And so many different cohorts in the segment. So we're prioritizing experiences that are particularly focused on delivering these unique and engaging experiences that really resonate with these cohorts and specificity. So gen Z users for example, they socialize and they engage much differently the millennials.

That doesn't mean, they don't use our product and don't want to do there is nuances in how they do it and what the intentions are behind it therefore, we're going to be giving them product that really resonates and create virality within their group.

We will continue to innovate for our millennial users as well of course, there are still huge demand and upside for <unk>.

That segment and they want things like curated offerings and we see this opportunity to really continue to engage with that group around those offerings and to further expand those so now turning to monetization. We are taking a barbell approach. So when we look at higher tier and longer duration products for our more affluent.

<unk>.

We can still think about the shorter duration and lower tier offering in consumables for users, but limited or more limited spending power than than that first group. So for example complement is live in New York and New England, SEC, we'll be continuing to roll. These out to the rest of the U S, but with nuance.

And of course, the world, but with nuance for these different groups College bundles are also live and those have been resonating well. So those are two examples of how we can kind of target. These different groups, so with engagement and monetization at the front and center of this product roadmap. We will really just continue to lean into great experiences premier.

Your experiences we believe that this approach will position us to advance our lead with Gen Z users, which is so important while driving monetization in the year ahead with both categories.

Okay, great. Thank you.

Thank you.

Okay.

Our next question comes from Lauren.

Chuck Your line with Morgan Stanley . Your line is now open.

Okay, great. Thank you maybe just following up on a couple of the earlier questions.

And the initial 23 outlook, what sort of the underlying assumption in terms of bumble App revenue growth for 2003, and then just coming back to marketing as you think about.

Some of your largest competitors sort of.

Increasing their spend and being more present in the marketing backdrop next year. How are you thinking about drove your marketing spend on a year over year basis. Thanks, so much.

Yes, so we are not right now going to.

Going to sort of breakout specific numbers for bumble App will obviously give that when we when we provide formal guidance like I said.

Lauren I think bumble apples to be the major driver for growth next year. So that is expected and again paying users within mobile app will be will be a large function of where the growth comes from with respect to.

Our spend philosophy like I said, we do want to and be.

We've committed this since we've been public.

We are committed to expanding our long term margin and you've seen us do that this year.

And next year, we want to expand our margins it piece by 100 basis points as we think about areas of spend.

Our philosophy next year, especially given the larger macro environment is going to be and are leaning into areas that are critical for the growth of our business.

To think about investing areas of product and technology that we really need to beef up bonds, such as whether it's AI and machine learning data engineering things like that so you'll see us continue to invest in specific pockets of the business where.

Where we want to lean in on the marketing side, obviously international growth like Toric was just saying is still a huge pillar and a big driver of revenue for us. So you will see us spend money there, but we are also taking a very hard look at every area of spend within marketing to make sure that.

Each dollar that we spend is meeting the high thresholds, we have board Ottawa turns realized et cetera et cetera. So this is definitely a line item that we want to see leverage on next year, but it's also a line item, where you will see us.

Spend money on especially in areas that we want to grow and invest in and largely and then finally, we've built up obviously.

And the final thing I will say is obviously given what's happening in the world.

Bar for growing head count next year in full funding anything within the company is going to be very very high.

And we expect that our growth in head count will be much lower than what we've seen in the past I mean, we are still very much focused on investing in the right areas, but again the bar that we are applying to the company into ourselves is going to be very very high. So again I look forward to providing more specific information.

In a few months.

And then maybe on the marketing side real quick I think the yes, we have been we have a very unique marketing approach that is not something that you've seen in the industry typically a lot of focus on the micro and the brand elements of this we've seen even in Q3.

And in Q2, a fairly considerable amount of competitive spend and we have continued to gain share without just bye bye.

Lying on our historical differentiated marketing approach, we feel pretty confident we can continue to do that.

Thank you.

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

Q3 2022 Bumble Inc Earnings Call

Request a DemoDemo

BMBL

Bumble

Earnings