Q4 2022 Bumble Inc Earnings Call
[music].
Great.
[music].
In 2023, I would now like to turn the conference over to Cheryl for Lindsay will Bela.
V P of Investor Relations. Please go ahead.
Thank you for joining us to discuss bundle fourth quarter and full year 2022, and financial results with me today are witnessed won't hurt founder and CEO , Charlie Scharf, and president and a new Superman yen CFO Bumble Bee.
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.
In fact, 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 state and to reflect changes that occur. After this call disc.
A description of factors and 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 reckon.
A 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 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 Q4 was a strong finish to the year with total revenue of $242 million and adjusted EBITDA of 60 million, both exceeding our outlook and 2020 tail, we continued to execute against our strategic priorities and <unk>.
<unk> our mission.
And delivered strong revenue growth and profitability for our shareholders.
Bumble Inc's revenue for the full year reached $904 million up 19% year over year with Bumble App revenue growing 31% driven by a year over year increase of over 500000 paying user.
We also drove strong profitability delivering full year, adjusted EBITDA margin of 25% and free cash flow of 117 million.
These results are a testament to the hard work and execution of our teams around the globe, who continue to execute incredibly well admit geopolitical and macroeconomic uncertainties. These results also demonstrate the enduring power of our mission to create a world in which all relationships are healthy and equitable.
In connection now let me touch briefly on each of our brands Bumble.
Bumble App had a strong fourth quarter with revenue of 191 million up 28% year over year. This strange was broad based with strong revenue growth in both our established markets as well as in growing markets, such as Germany, Spain, France, and India Bumble added over 130000 paying users in the quarter.
Based on third party data sources in Q4, we continued to grow download sharing key markets like the U S and Canada and maintained our position as the number two most downloaded dating app in these markets.
We are also excited to say that as a Valentine's day Bumble App is the most downloaded dating app in our top markets.
The U S, Canada, Australia, the UK and Germany.
Im will apps net promoter scores in the U S. During the fourth quarter led other online dating app, especially in two of our most important audiences women and Gen. Z are 2023 plans extend the momentum we have generated over the last several years.
These are built on four pillars.
One continuing our rapid global expansion to reinforcing our brand and product strength, especially with women three.
Three growing revenue through new monetization experiences and for remaining a leader in safety by design.
Let me describe each in turn first global expansion have been core to bundled growth in recent years and we believe there is still tremendous runway in both existing and new market building depth and expanding into secondary cities are critical components of our growth strategy. For example, we've been in Germany for a couple of years.
Now and it continues to grow rapidly as a push into more cities beyond the original launch markets and is now on track to be our third largest revenue market in 2023.
We'll also be launching a new countries with tier one advantage we have in most markets around the world is a strong baseline level of demand due to the resonance of our brand and our women. Our approach will be building on this foundation with active go to market accurate to further our expansion in western and Central Europe for example, in Italy, Portugal.
<unk> in Poland, as well as major Latin American in Southeast Asia countries.
Second Bumble is where it is today because of our brand strength and loyalty, especially with women and this remains our priority we listened intently to our women customer and we have been steadily launching new features that are most requested by that including our astrology Tuesday off.
During last year and this year, we expect to launch a series of enhancements to the beeline matching experience and rollout new women focused offering we.
We are further investing in our college programs to continue our share gain with Gen Z women.
As we mentioned last quarter, we recently launched a dedicated customer experience for users who are verified college students.
Seen several hundred thousand college students verified on our platform and we believe the dedicated experience isn't resonating. We are also using this fair expectation program to improve targeting of our college bundle and recently launched virtual guests to this group our early tests suggest that virtual gifts lead to <unk>.
Almost 20% higher reciprocation rates, especially with Gen Z and we are optimistic about the future of this initiative machine learning and data science have been strong enabler of bubbles customer experience and grow we see more and more opportunities to integrate AI further into our user journey ranging from.
Helping them better optimize their profile and initiate chat to improving relevant that matching over the last two years, we have been working on rebuilding our recommendation engine with machine learning at the core is tested this new model in several markets in Western Europe over the last six months and saw substantial improvement in voting behavior.
AVR and double digit improvements in match rates.
In Q2.
We expect to leverage this model to begin testing our new paid that's b is offering highlighting highly curated highly compatible people to you. This brings me to our third pillar.
Creating new experiences to grow revenue.
Over the last year, we've been performing foundational engineering work to build more modularity and agility into our monetization platform.
This work was required to enable us to launch our next wave of monetization and says.
Going forward. This enhanced platform will enable the ability to launch new subscription offering traditional bundles and a greater variety of all la carte offering.
It will also enable us to target these offerings and an increasingly precise manner to grow customer lifetime value. We will also use this sophisticated platform to accelerate our highly impactful pricing and promotional optimization initiatives.
One feature of the new platform has enabled is our message before match feature complement which is now fully rolled out with monetization in our major markets. We are seeing strong initial user response in markets, where we've launched or we have seen complements the 70% more likely to result in match than a typical ecmo.
We are now starting to rollout the corresponding marketing plan complements is our first major feature and the message perform ACH space and we are excited to build upon that with new offerings throughout the rest of the year in.
In addition to compliment and back to be as offerings.
I'm also excited about the potential for our speed dating experience.
In Q4, we transitioned from a branded partnership version of vacating and launch it as a standalone unbranded experience a number of our major markets, including the U S, Germany, and India. We are actively testing monetization approaches, including making the experience of ticketed events.
Lastly.
We know that our users, particularly those in their 20th are looking for more ways to express themselves and their personality with a high level of office.
In Q2, and Q3, we will be experimenting with a range of new paint experience is leaning into the desire for self expression. This will include expanding our virtual gift offering as well as creating the ability to have thicker with imports and photo effects to their profiles in China just to name a few example.
Our last pillar is safety by design and mission by design safety is not an afterthought or a marketing campaign for US we remain fiercely committed to our mission and we are working relentlessly to create kind of connections.
Our approach at Bumble has always been to build safety into our product at the outset and to continue to build new safety capabilities as we see these products in the field. We are also deploying an increasing amount of machine learning into our safety efforts, our in house content and photo moderation models continuously monitor our experience.
To prevent harassment toxicity and we are experimenting with GPT three and other large language model services to further augment our already strong approach.
Now turning to Bumblebee Ambac, we remain the only scaled dating App Cabot successful fund finding offering due to our strong and unique brands. We believe the market opportunity around online friendship advisable, given the prevalence of loneliness with the U S surgeon general sharing in 2018 to 2020 survey that revealed 60 per.
Your son of American struggle with loneliness that figure climbed to 75% among younger people to reflect the significant opportunity. We are increasingly managing bumblebee FF as a separate brand. We continue to be excited by the user traction on behalf with MAU growth of 26% year over year in Q4.
Alongside strong global appeal, we have a very important set of product and marketing initiatives, we expect to launch around midyear, which we believe will unlock further user growth and look forward to sharing music.
Sure.
In summary, we have a lot of exciting initiatives planned for bumble App in 2023, and we are off to a strong start to the year.
Now turning to Baidu.
We made solid progress in stabilizing the deal that can have a 2022, despite facing some macroeconomic challenges Madhu continues to have a large user base was ranked among the top three dating apps by downloads in 48 countries, including Brazil, Italy, Mexico, Spain and France.
Madhu and other revenue also grew year over year, when adjusted for FX and the impact of the conflict in Ukraine.
We've focused recent product efforts on amplifying, what the dues loyal and long tenured user base appreciates most about the platform how it creates quick and easy authentic connections, which has had a positive impact on user engagement and retention.
A monetization platform enhancements that I mentioned earlier also apply to Madhu illustrating the power of our shared platform model a lot of our focus in 2023 is on continued optimization of our experience using these platform enhancements. For example, we now have a much greater ability on video offer promotional bundle.
And new consumable and we'll be focusing on to drive increasing payer penetration.
In addition, we have a number of exciting new product feature launching all designed to lean into the chat based experience I'm Madhu and drives faster time to quality connection.
While we still have work to do to fully stabilize Madhu. We believe that we are on the right path lastly, I'd like to share an update on fruit as we celebrate the one year anniversary of its acquisition over the past year. Its revenue contribution has steadily grown and its integration with our shared platform has proceeded smoothly and French speaking markets.
Where its organic growth has been most concentrated fruit enjoys strong download share and Gen Z brand entity.
I have never been more excited about the tremendous opportunities for our brands our business and our mission we.
We have solid user momentum and our apps have significant runway for growth.
We also have a strong product roadmap and the team to advance it we continue to be true to our mission of providing safe and kind connections by design and as always we will operate with financial discipline and a focus on execution.
Q2 team Bumble. Thank you for everyone's hard work, we succeeded only because of your dedication and contribution.
I'd like to thank our customers partners and investors for <unk>.
And your trust and support and with that I will turn it over to Aneel for a discussion of our financial results and outlook.
Thank you Whitney and good afternoon, everyone I'll begin with a discussion of our fourth quarter and full year 2022 does though before turning to our outlook for Q1 and full year 2023.
Understated otherwise the comparisons I will make a third to the fourth quarter of 2022 versus the fourth quarter of 2021.
Total bumble ink revenue in Q4 was $242 million above the high end of our guidance and up 17% year over year, driven primarily by growth in bumble.
FX was a 13 million headwind to top line 3 million better than we had expected at the time of our guidance.
In aggregate FX headwind and the Ukraine conflict impact around growth rate negatively by eight percentage points.
At a group level revenue growth was driven primarily by growth in paying users, which increased 14% to $3 4 million and average revenue per paying user increase by 1%.
Revenue from Bumble App was $191 million up 28%.
FX was a $7 million year over year headwind, which negatively impacted growth by five percentage points.
The headwind from FX was 2 million lower than we had previously anticipated.
Bumble App revenue growth was driven by a strong 35% increase in paying users to $2 2 million and on a sequential basis, we added 133000 paying users.
The strong growth in paying users was driven by a number of factors, including strong registration and Reengagement trade successful international expansion and product improvements that drove payer penetration.
Apps are people $20.64 down 6% year over year, and 1% sequentially, primarily due to country mix and FX impact, partially offset by pricing optimization initiatives.
Now moving on to Baidu App and other.
Our new App and other revenue was $51 million in Q4, representing a 12% year over year decline on a reported basis.
In aggregate FX headwind and the Ukraine conflict impact around fraud rate negatively by 17 percentage points.
It happened other paying users declined 11% year over year to $1 2 million.
The impact of our exit from Russia, and Belarus, roughly a 12% negative impact to grow.
Baidu App and other are people declined 6% year over year to $12 48.
Primarily due to FX and country mix, partially offset by ongoing pricing optimization work. As a reminder, we currently include fruit revenue within Baidu App and other revenue, but exclude truth paying users from Baidu app and other paying users.
Turning now to expenses.
We remain very focused on managing our business profitably taking into consideration the dynamic macro environment.
Total GAAP operating costs and expenses were 389 million for the quarter.
On a non-GAAP basis, excluding stock based comp and other noncash or one time items. Our total non-GAAP operating expenses were $182 million up 19%.
Cost of revenue was 67 million and grew 26% year over year.
The increase was primarily driven by higher App store fees, resulting from revenue growth and mix shift between iOS and Android.
As a percentage of revenue cost of revenue was 28% versus 26% in the year ago period.
Sales and marketing expenses grew 14% year over year to $65 million. This represents 27% of revenue versus 28% in the year ago period, as we focused on efficiency and marketing spend during the quarter.
G&A expenses were $34 million or 14% of revenue compared to $28 million or 14% of revenue last year.
Product development expenses were $16 million or 7% of revenue versus $14 million or 7% in the year ago period.
Q4, GAAP net loss was 159 million compared to a net loss of $14 million in the year ago period.
This included an impairment charge of $141 million related to <unk> as a result of loss of expected revenue.
From our business position to seize operation in Russia in Belgium, as well as the larger macro environment.
Q4, adjusted EBITDA was $60 million up 10% year over year and represented a 25% adjusted EBITDA margin.
For full year 2022, total bumble ink revenue grew 19% year over year to $904 million.
In aggregate FX headwinds and the Ukraine conflict impacted our growth rate negatively by eight percentage points.
Revenue from Bumble, App grew 31% to $694 million driven by paying user growth of 34% 2 million leading to more than half a million net add Julien.
FX headwinds impacted our growth rate negatively by four percentage points.
Adjusted EBITDA was 227 million representing 25% margin.
Our GAAP net loss for the full year 2022, with $114 million compared to net earnings of $282 million in 2021.
We continued to generate healthy cash flow free cash flow of $117 million for the year.
We end the year in a strong cash position with total cash and cash equivalents totaling $403 million.
$369 million last year.
Now moving onto our 2023 financial outlook as Whitney noted, we expect another period of strong profitable growth the year ahead.
Full year 2020, we estimate total bumble ink revenue to grow between 16% to 19% year over year.
We expect bumble apt to have another strong year based on the momentum we are seeing so far our geo expansion plans as well as the exciting product roadmap rehab, we expect revenue growth rate between 22% and 25%.
While we believe that Baidu and other revenue is on a path to recovery our outlook assumes continued macroeconomic pressure on the baidu user.
Long with ongoing pressure on advertising revenue.
We estimate adjusted EBITDA margin will be 26%, representing a 100 basis points of year over year margin expansion.
Our Q1, we expect the following total revenue between $238 million and $243 million.
Presenting a growth rate of 15% year over year at the midpoint to five H, our outlook assumes approximately $10 million of year over year headwinds related to FX and the conflict in Ukraine, primarily in Dubuque.
Excluding the impact of this our total revenue growth outlook would have been 19% at the midpoint.
We expect bumble app revenue to be between $190 million and $193 million.
Presenting a growth rate of 24% year over year at the midpoint.
Excluding FX headwinds on guidance for bundled revenue growth rate would be 27%.
We estimate adjusted EBITDA will be between $53 million and 56 million.
Presenting 23% margin at the midpoint of the range.
Q1 margins reflect the typical high level of marketing spend we see at the beginning of the year.
We remain hyper focused and efficient around spending and have put in place several measures internally to ensure that we stayed disciplined around our investment priorities.
We are very confident in our ability to achieve our full year adjusted EBITDA margin target of 26% and also remain committed to healthy long term margin expansion.
In closing our focus this year is on strong and disciplined execution against our strategic priorities.
Believe we have an exciting opportunity ahead of us and we are very confident that we can deliver strong revenue growth and profitability for our shareholders.
And with that operator, we can open it up for Q&A.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
Here are three told prompt acknowledging your request.
And your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press the star followed by the two.
If you are using a speakerphone please lift the handset before pressing any keys one moment. Please.
For your first question.
Your first question comes from Justin Patterson with Keybanc.
Please go ahead.
Great. Thank you very much and good afternoon I wanted to just go a little deeper into some of your assumptions on guidance for the year Whitney you outlined a lot of product initiatives and geographic expansion. It sounds like it rolls out over the course of the year.
<unk> could you kind of talk about how you embedded the impacts of that into the forecast and.
Just getting a better sense of what's in the forecast and what could potentially be surprised over the course of the year. Thank you.
Yeah, Hey, Justin I'm happy to take that this is a new.
So as I said in my prepared remarks.
For Bumble App we.
Have given a total revenue guidance range of 22% to 25%.
We think.
This will from a quarterly cadence perspective be fairly stable.
Every quarter, we are not expecting any big peak quarters.
You know we are starting Q1 off.
With good momentum so we feel good about that and then we feel good about what's assumed for the rest of the year.
Similar to 'twenty, two we think.
The revenue growth comes from.
The growth in paying user so.
So we are estimating net adds next year will be around the 450 500, Mark that's what we are projecting and.
And that would effectively imply that our people is largely flat to 'twenty two numbers may be slightly lowered again, depending on.
Whereas some of our product initiatives land now.
Now as a reminder.
You know we've always said this in the past we are always focused on maximizing revenue versus just maximizing payers that our people. So again, depending on how some of these product initiatives land you know these.
These numbers can shift a little bit up or down, but we feel pretty good about that it adds numbers, we feel very confident about the revenue range that we've given you in terms of initiatives a lot of the revenue improvement that you see next year largely comes from.
Growth in our user base as well as a lot of the optimization work that we're doing from a product perspective, as well as from a pricing perspective.
Again this is something that we had very very good at doing we've done historically, so we feel very very good about the assumptions that we've made there.
With respect to the product roadmap and new product initiatives that we have.
Like always we.
Model out what we think a lot of these product initiatives will look like through the course of the year. There are some products that complement that with me talked about that are you now.
Have already landed in the market, we have real data coming from different markets. So we've made.
Assumptions based on that and complements will be a sizable contributor to revenue in 2023, but then there are certain other product initiatives later in the year. When we haven't yet landed those who we've made some modest contribution assumptions and then there are certain other product initiatives that we have not been included.
In our guidance ranges because again those are too far down so.
You know that.
Roughly how the bumble op guidance sort of falls out.
That's very helpful. Thank you.
Your next question comes from.
<unk> GA.
Please go ahead.
Okay. Thank you for taking my questions could you. Please talk about the share gains that you.
We're implying as a Valentine's day on your App downloads to the question is what drove that was there a marketing effort that you had in Q1, specifically and how sustainable do you think are these share gains that you're seeing across the different countries and then the second question.
And could you talk about your confidence in margin expansion you you sound confident in delivering at least 100 bps of margin expansion help us think through your marketing efforts for the year. Thank you.
Thanks, Richard It's Tarek I'll start with the share gain question and then turn it over to renew so we've been.
And as you noted as we noted I'm very pleased to see the traction that we've had on downloads. Both in Q4, where we continue to gain share and then in Q1, where we've seen a nice acceleration.
Cut to the choices, we have not been spending to achieve that acceleration theres not an outsized marketing spin that.
There is anything out of the ordinary that has helped us achieve that we think really what's going on is a couple of different things one is.
We are we think continuing to build momentum around the.
Value proposition.
The narrative around Bumble Apple success stories, and really fostering the word of mouth. So we think that a lot of the programs like it started on bumble, which we've talked about before are really starting to.
Two.
Have a cumulative effect that's number one number two is there is a lot of work that our teams are doing around.
Kind of harvesting demand that's already out there so think about the app stores and how you are.
Capturing demand that sits on the App store, what's called App store optimization and things like that there is a parallel in the search engine world as well, we think that we've just continued to get better and better at at that demand capture.
Demand, whether that's bundled specific demand or whether that is industry demand.
And then that's paying off and then we were fortunate in particularly in February late January to receive a lot of just very nice placement and promotions, we announced a partnership with Netflix as an example that resulted in a lot of activity in the play store and in the App store itself or things like that.
So it's not spend based on where we're buying the traffic, but I think it's a combination of a lot of the investments that we have been making.
You can spend that we don't but people can spend to achieve market share gains I think that it's a particularly the download sure. So we're happy with where we are today. We are happier just with the underlying trends that we have and we're going to keep focusing on that as opposed to who's number one and two.
Yeah, Andrew I think to your question about margins.
Like I like I said.
I'm very very confident about our ability to.
Get to the 100 basis points margin expansion and I said this in our last earnings call as well.
As far as marketing spend goes which again is one of our bigger line items.
On 2023, we have a very high bar for how we think about marketing spend.
Growing market share as tonic was just talking about expanding into international markets. All of those are still big priorities for us. So we will definitely be spending money on building our brand, but we are taking a very hard look at every area of spend even in new markets as well as existing markets to make sure of that.
All of those areas of spend of meeting the high thresholds that we've set for Ottawa tons et cetera, et cetera. So you will definitely see that line item.
Gabe leverage through the course of the year.
Now as I said Q1.
Always has elevated spends in marketing as you think about.
Date Sunday and Valentine's day, So we do tend to defend hired in Q1. It was very similar to what we did last year as well our Q1 margin was our lowest quarter.
The entirety of it and then our EBITA margin picks up quite a.
Significantly as the yoga with bi.
So I wouldn't.
Read too much into the Q1 EBITDA guide.
Again, a lot of the spend that we have during the year is very much in our control. So we feel that anybody confident about it.
The next big area of spend for US is again head count.
As we've said again previously we are leading into areas of the business that are very critical to our growth. So you heard with me talk a lot about AI and machine learning and data engineering. So those are definitely areas that we want to continue to invest in as far as people and head count resources are concerned.
But.
We have a high bar for spend in other areas. So.
That's why again I feel very good about the target that we've set forth and you know you'll see us continue to sort of reiterate that message as we go through the year.
Okay wonderful. Thank you Derek Thank you Arnaud.
Thanks, Brian .
Your next question comes from Cory Carpenter with Jpmorgan. Please go ahead.
Great. Thanks for the questions I wanted to come back to the best offering.
Teased a little earlier could you expand on that a bit is that something that would be and perhaps like a new premium subscription package. It sounded like a more of an ala carte offering.
And then secondly, just on macro you've previously talked about a step down in late September early October .
Has that trended since then in terms of impact on renewal rates and consumables. Thank you.
Hey, Corey Whitney.
So we're really excited about <unk> because this is a paid offering.
And I'll just give you a little background on how the feature works and then we can talk about how we're testing it from a monetization standpoint. So this is really a very exciting opportunity for all of our members to get access to a highly curated and really compatible set of people. So this is why we're calling it best fees and so.
It is really going to be tailored to that specific user and we think it's going to be really rather than it across the board geographies gender age groups et cetera, with the machine learning, there's a huge opportunity to provide.
More content based nudges and so anyway, all to say, we're very excited about this how this will work on.
It is going to be a premium offering we are going to be testing. Both you know different different versions of that consumable subscription and we will provide more updates with.
The rollout of that.
The next question on macro so.
I think it's very important to note that we're feeling very.
Very confident about the dating industry and about our results the top of the funnel and engagement metrics continue to be strong. So overall, we were growing our paying users at a healthy clip new subscriptions remains strong and we're seeing good growth in consumable purchases, where we did see some macro related impact last summer.
<unk> was really around the subscription renewal rates for the more price sensitive user groups. This was really gen Z, but renewal rates Hudson stabilized at that lower level and we've not seen further deterioration since last earnings and we believe the strength of the business reflects the resonance of the brand the resiliency of.
The majority of our bumble, a user base and a lot of our recent product pricing and marketing efforts.
Great. Thank you.
Your next question comes from Alexandra Staiger with Goldman Sachs. Please go ahead.
Thank you so much for taking my questions. So wouldn't you discussed virtual gifts as part of like the college bundle. How do you think about the monetization potential of virtual goods as a standalone product and then also thanks for providing an update on BFS.
How should we think about potential monetization avenues and the timing of that thank you.
Thank you so I'll take BFS and then part is going to jump in so I just want to reiterate that <unk> remains a important priority for us in 2023.
And the market opportunity with Platonic friendship, we feel it's going to be equally as important as finding love.
I just want to reiterate this post pandemic loneliness has become even a bigger concern. So I want to just reiterate that this is a high priority for us as far as monetization growth goes.
Goes we are not factoring this into our guide for 2023, but we are really excited to be.
Testing some product initiatives around monetization as far as models go later in the year. So we'll update you as the time comes and park you can jump in yeah.
Virtual gifts. We are we just launched virtual gifts to the college population that Whitney talked about and we're seeing a very nice.
Reception from that from that group.
High conversion rates when we are presenting opportunities. So we do think that we're onto something here with.
With virtual gifts. We are in fact also seeing a much higher reciprocation right, meaning if you send the virtual gift you're much more likely to get a response and so it's adding to the overall health of the ecosystem and the.
The value that we're creating for our users inside of the App. So so we do think that there is something here. We're excited about what we're doing on the college side and I think our basic premise.
Premise on virtual goods is where we know that there is a very strong gen Z opportunity here, we're really looking at how we can put together.
A bundling package of offerings for Gen Z that really leans into this notion of express yourself.
And self expression and so a virtual gift helps you stand now in a different way than you would otherwise there are other things that we can do to let people express themselves authentically. So you should expect to see us grow this into other kind of packages and bundles targeting Gen Z in particular.
Very helpful. Thank you.
Your next question comes from John Blackledge with Cowen. Please go ahead.
I'm sorry. Your next question comes from David.
Mentally now ski with Bank of America. Please go ahead.
Hi, it's David on for Nat Schindler. Thanks for taking the question. So it is possible to dive a little bit more into but there was improvement in the back half of the year.
And maybe just look at what a steady state might look like for the first half of 'twenty or beyond that thank you.
Yes, so do I think it's important to reinforce and hi. Thank you for the question, but do remains a leader in its key markets. So it is a top three app by downloads in dozens of countries across Latin America, Central and Eastern Europe , and Asia and it does have this long tenured and loyal Global Bay.
So we are continuing to operate from a user standpoint with a lot of strength on the revenue side, we made solid progress in stabilizing but due in the second half of 2022 however, we do acknowledge that there's more work to be done to resume reduced growth trajectory and we know that the baidu customer continues to be.
Incentive to inflation and macroeconomic pressures. This really resulted in overall lower propensity to pay so our goal is to meet our baidu customer where they are so in 2023, we're going to tap our enhanced monetization platform to offer promotional bundles and new consumables to better serve these customers with their price point ability.
Yeah, and just to add I think from a what.
We are building into our outlook for the year we.
We do expect that but doing it adds will continue to be negative in 2023.
We definitely think that.
X impact from Russia, but it was et cetera.
The net negative that we saw in 2022.
Will.
And versus what we will see in 2020, they will be better for 2020, So you should definitely get better but.
We still think it will it will have negative net adds Q1 is probably going to be.
The most negative so right now we are projecting about negative 50000.
But do in terms of paying users between Q4, two two in Q1 'twenty three but as the year goes by we should definitely start to see.
That recover.
And we are doing a lot of work from a product perspective is with me said from a pricing and promotional perspective to make sure that.
<unk>.
The path that we have put <unk> continues to.
Deliver well.
Alright, thank you.
Your next question comes from John Blackledge with Cowen. Please go ahead.
Great. Thanks, two questions first on the international expansion.
If you can provide some more color on how those efforts are going and perhaps give us an update on key country launches aren't in the first quarter in 2023, and then second question on the new recommendation engine.
Using in certain European markets do you expect to roll it out in the U S and other key markets and kind of any way to offer some color on the uptick in matches with the with the new wreck and Jim. Thank you.
Sure Hey, John I'll take both of those.
On the international expansion our focus is.
It is really two pronged.
One is continue to expand into new markets, where we see opportunity part two is where we have already expanded they go deeper and deeper and deeper into those markets. The job is not done when we launch.
Country.
On both fronts, we feel very pleased that the playbook that we've got is working and working really well. So if I take the go deeper piece as an example, we're still seeing rapid growth in Germany in the dock region. The German speaking regions in France in other parts of Western Europe that we have launched and we're expanding both of them.
More segments in our core cities and new cities and that's also true in India, where we're seeing very very rapid growth as well and a lot of that is if you will geo expansion inside of India as well as continuing to go deeper in the key cities like Mumbai that we're already in.
So that's a book, we think is working well and is allowing us to continue to gain market share.
And to refresh everyone's memory. The historical focus has been on Western Europe , South and Southeast Asia, Indonesia, Philippines, Singapore, and parts of Latin America, particularly Mexico, and the southern parts of Latin America.
As it comes to new market launches, we're really focusing this at least the first half of this year on.
On the other markets in western and Central Europe that we believe have a strong opportunity so.
I think Whitney mentioned, Poland, Italy.
It should go the Nordics as key markets will be focused on but again. It really is in combination with these go deep efforts that we've got as well.
Moving on to the recommendations engine.
Absolutely I'm expecting this to be a global rollout.
Excuse me recall, we obsessive we test our products to make sure that they work we do that with different segments are in different geographies. So for this machine learning.
<unk> based recommendation engine, we started in certain markets in Western Europe .
Seeing great results, which I'll speak about and so now we are actively training the model in other geographies. So that we can bring it globally as we use it for the best <unk> offering as an example that when you mentioned, we would expect over time that to be a global offering not just a western European offering.
And the results that we're seeing is as you mentioned are really quite substantial we are seeing double digit increases in match rates win.
When you're presented with this sort of super compatible.
Recommendation versus our already very good recommendation engine that we've got in the non machine learning centric model. So we think that we're really.
Adding a lot of incremental value on top of an already strong product.
And Thats, what we think will allow us to monetize this further.
Thank you.
Your next question comes from Mark Kelley with Stifel. Please go ahead.
Great. Thank you very much.
Or to ask you just about the marketing spend.
Q1 is usually.
That's up to you.
With one of your main competitors.
Commencing a fairly large brand campaign for for one of their <unk>.
Products does that factor into how much you think you need to spend or maybe that maybe that doesn't.
And I would imagine you would argue that.
Maybe that one product and talking about it.
Comp to yours, but any thoughts there would be great and then if I could just on the college focused product is there a way to think about.
How many of those colleges that you've called out incremental as a result of that launch. Thank you.
Sure Mark.
So on the marketing spend piece, we've always taken a number one a very organic approach to our marketing the marketing unbundle App in particular is very focused on the strength of the brand and the mission and all of the work that that we've done since day one of the founding the company in a large amount of our acquisitions come in because of that organic.
That remains core to how we think about marketing.
On the on the sort of more discretionary pieces of the media driven performance driven pieces on top of that we've operated and will continue to operate a very disciplined approach here, we're very ROI centric, you'll recall that we've got payback period on our marketing spend that are very very short, which allows us to.
Really manage this at a pretty fine tuned level. So.
With one or more competitors out there spending a lot we're having to be more nimble and find opportunities to really go out and make sure we're not overpaying for certain types of inventory, but.
Historically when people have spent up we haven't.
<unk> had a big concern about that and we're not we are seeing a spend up in a number of regions and we're not.
Being a big concern as you can see our downloads continue to grow so we feel very good that this disciplined approach and that heightened efficiency, we build into marketing is working.
On the college side.
A lot of the emphasis is.
Being able to speak to college students in a much more targeted way. So it's not really a user acquisition program at its core what it is.
Hey.
We're building the ability to offer a product experience that is different.
And customize and that is.
And a marketing program that is customized as well and so.
With the verification program, we're having that ability to offer say college bundles virtual gifts on a very targeted basis. It is we're finding leading to word of mouth like people like the experience and so that that will lead over time, we think that a strengthening the depth that we've got with college students.
Would you like to add anything.
I just wanted to add that we have such loyalty with the college audience, our Huntington's program.
Has been a standout in our marketing for years and it continues to grow and so our relevance and our authentic residence with college students is something that we feel really cannot be replicated at this point for example, I myself.
Behalf of bundle I'm, starting a college tour.
This Monday, where I'll be speaking directly with a lot of students and so I feel like we have this really unique and authentic approach with Gen Z.
Perfect. Thank you.
Thanks Mark.
Your next question comes from Ben Black with Deutsche Bank. Please go ahead.
Great. Good evening, thanks for the questions just sort of a follow up.
So your competitor the rebranding to better connect with Gen Z I'm curious to hear what is really driving your success across the view the marketing of the product related and how do you feel positioned competitively there and then secondly, I think you are included and Google's user choice drilling program.
So that potentially impact you from a financial perspective, if at all.
And.
How that could potentially help from a product launch or product flexibility standpoint. Thank you.
Hi. This is let me. Thank you for your question I'll start with Gen Z and I'm going to we have women in to that a bit as well. So as I said on my prior response since the inception of Bumble College has been such a huge pillar of our strategy and we have been able to consistently stay hyper relevant with that.
Community and to really reinvent ourselves year over year or quarter after quarter and we have this unique ability to connect with the freshman as much as we do with the seniors. We also have this strong residents to graduate with them right. We've built.
We've built ambassador programs, even beyond college with alumni and so we've also really now taken a super granular lens on building products designed to engage that audience better. So we are performing really well with this audience even prior to these optimizations. So we're feeling really good about.
The potential as we really iterate the product to be even more resonant with them. The one thing I do want to double click on here to as Gen Z cares deeply about.
Brands that are authentic and take a stance and are really mission oriented and so this is something that is working very strongly in our favor. We have been a very mission led very customer first brand for eight years and this is really residents. So one other quick note on the <unk> topic.
Women Gen Z and millennial or otherwise this is our branded mode. We have the brand strength and the identity that we do because we built for women from day, one and we are taking that lens with Gen Z as well. So this is this is.
Not an opportunity for a competitor to just market or speak to women that is.
That is something that cannot be replicated with a marketing strategy. That's something that has to be authentically core to the DNA of our brand and so I will tell you personally. This is something I feel we have a strong way.
A strong moat and I'm really really proud of our team for being able to sustain that.
<unk> would you like our new.
First on user choice billing.
We don't expect.
That to have any impact on margins as you know.
We will still end up paying in aggregate the 15% that we pay to date to Google play and the composition of that is just going to be different so from a margin perspective, we don't.
So that will have any impact at all we are still very much in testing phase of what user choice billing looks like and so.
If we have any particular updates to share on that we will.
In the subsequent quarter.
Great. Thank you very much.
Your next question comes from Deepak much Ivana.
With Wolfe Research. Please go ahead.
Okay.
Thanks, This is zach on for Deepak.
I guess just first.
I'm just price increase potential obviously, we were cutting in and elevated inflation environment.
Several consumer subscription services utilize the price increase lever.
Couple of months, so I'm, just curious how youre kind of thinking about pricing increases philosophically on the core bumper side and if that's the lever that you guys are kind of looking at.
To kind of pull this year and then secondly, just <unk>.
You've outlined a robust product pipeline geographic expansion, how should we think about kind of the head count growth this year.
Okay.
Sure I'll start with them and with the pricing question.
Price, whereas as we think about price optimization.
And pricing analytics and price testing are all core to the DNA of Bumble is that something that we do on bundled with <unk> and <unk>.
Fruits on AR.
Literally daily basis.
And really are constantly trying to understand what is the elasticity a particular user might have and then adjust prices up or down as it maximizes revenue to a news earlier.
And so where we do see opportunities too.
Increase and generate more revenue for them by doing that we will take advantage of that same on the flip side right where.
On pages to decrease I would say at the moment, we're not seeing a material change in appetite to pay or willingness to pay.
Because of inflation and there's a there's I think two sides to that coin that other prices are going up. So you might have some more forgiveness. If you will if you raised but wallet youre getting stretched so it's a very segment by segment analysis that we go through but it's a very active.
Also there we exercise yes.
And I think.
Second question was around head count and how we think about where we.
We expect to invest this year so.
Like I said earlier.
We do want to lean heavily into.
Making sure that our product teams.
Have you know the best.
Talent.
That we need to continue to be an innovator in this space. So.
All of the stuff that you heard earlier around.
What's on our product road map monetization.
Especially as it relates to newer things that we have around AI and machine learning et cetera et cetera.
Those are the areas of head count we want to invest in we.
We have a very sophisticated.
Team already in place.
For things like pricing.
Revenue monetization et cetera, so far that we will be leveraging quite extensively and again remember we operate from a shared platform infrastructure. So once we create.
A sudden.
Product initiatives for bumblebee unable to replicate it quite easily four but do it and also take that learning.
This year, the fruits as well so thats definitely a lot of synergy as you think about knowledge sharing that happens between the product and tech teams for each of these apps.
From a marketing perspective.
We've never been one of those companies that required as you know.
Brand new teams to show up in every market that we go to expand and we are very very nimble about how we think about growing in every market. We we often talk a lot about on the ground field marketing, but that involves us hiring.
<unk>.
The local influenza underground that doesn't require us to go and higher head count and big teams on the ground. So again.
Youll see us continue to be very efficient from a geographic expansion and marketing spend perspective, and lastly, I will say from a corporate infrastructure perspective, I think we have largely you know. This is this is just completed two years of being public we have largely built out we have a couple of pockets here and there that we still have to sort of fully buildup.
But really I think investment in G&A is.
Is largely done and again, you should expect to see leverage as the next.
As this year goes by and obviously in the future as well.
Great. Thank you.
Your next question comes from Steve Koonig with Smbs seat. Please go ahead.
Okay. Thank you Thats pretty close yes.
Hey, Thanks for taking my question.
This one's probably for you with me.
I'm curious.
How do you think about may.
Maybe dating App fatigue in your more mature markets.
How do you how do you position bumble.
Positive contributor to mental health enjoyable and fruitful maybe.
Maybe just your kind of philosophy around that.
Thank you very much.
Yeah. Thank you so much and the high.
So I just wanted to start by saying that.
We are extremely cognizant of the needs around dating and then needs around making it healthier safer Kinder I mean this is our entire focus our tagline as a company is kind of connection so I.
I do want to just reemphasize that people are meeting online.
That graph is only going up people will continue to meet online. This is a resilient industry I've been in this industry for 10 years and I can tell you that the demand.
Remains stronger than I've ever seen that said I am personally taking it on my shoulders to figure out how to make it an even more enjoyable even safer more accountable experience how do we really deliver what women want and by delivering what women want we make it a more enjoyable experience for everyone, but I will.
Tell you that there is no disintegration of the want or need to meet people and actually meeting online is a quicker more time efficient, but also more economically efficient option for so many people for people to get dressed up every night and go out to restaurants and bars, where it's expensive.
It's stressful I mean that is just not the reality and so there is still such a huge opportunity here to take the strong demand for love and connections, which that is that is incredibly durable in and of itself, but to really continuously optimize our already very unique product and just drive exceptional.
Value with <unk>.
Strong engagement growth and as you see record paying user additions I think we offer a very compelling cost effective and really efficient alternative to the.
The big Spooky World of dating in the real World. So we are committed to this and we feel that with our share gain and particularly women in Gen. Z. We are poised to have a great year ahead.
That's great. Thank you so much worthy.
There are no further questions at this time. Please proceed.
Operator, you can just conclude the call. Thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that.