Q1 2023 Bumble Inc Earnings Call
The strategic priorities that I outlined in our last earnings call, namely International expansion product innovation and safety by design as well as robust top of funnel demand.
Starting with international expansion, we continued our market momentum with download share gains across both core and new markets across all of our priority regions, including Western Europe , Latin America and India.
This is in spite of very elevated levels of marketing spend that we're seeing from our global competitors.
We're very proud of the results our team has driven in this environment, while maintaining the spend in ROI discipline that we are known for looking at downloads for the full quarter. In Q1 bundled was the most downloaded dating app in the U K in Canada in a virtual tie in Germany, and a strong second place position in the U S France and.
Benelux, we continue to maintain a strong traction in India in our key markets in Latin America and Southeast Asia.
As a reminder, our marketing playbook is focused on building durable organic market positions on the strong foundation of our authentic women led safety first brand.
Our net brand favorability with women in the U S UK and France.
Especially for the critical Gen Z segment is the highest of all major dating apps tracked by warning console the independent brand Research group.
This results in strong download sure that translates into retained active users high levels of engagement customer success and word of mouth and robust revenue growth. We are also on track with bundled exciting product roadmap this year.
While we continue to focus on refinement of our existing products and further optimizations across pricing targeting and user experience.
Delivering new product innovation is critical to our brand strength and long term growth here's a recap of some recent highlights in Q1, we completed the full rollout of complements in all markets. We are seeing revenue contribution continuing to ramp and we're now focused on accelerating adoption of this feature.
Her as well as driving incremental paying user growth.
We are live in several key markets with our best to be as offering as I mentioned earlier, that's offering uses our new AI algorithm to provide a higher level of curation for our members available today and a number of markets in Western Europe . We're excited by the early traction that we're seeing in terms of high levels of user engagement.
And matching we're testing both subscription and consumable based monetization approaches for this and expect to accelerate rollout over the next several months.
We have also seen positive results from enhancements that we've made to our speed dating feature. This enables members to meet and chat in an anonymous more playful and low stakes format first before they're prompted to match, we've been able to increase the frequency of these events without losses in participation while simultaneously exploring <unk>.
<unk> through both sponsorship and ticketed events.
As we always do we are actively experimenting with a number of new user engagement and monetization initiatives. These are generally small scale experiments that let us learn how to improve the health of our business. A. Good example of this is a new product for testing, which is a potential subscription tier price below bumble booth and aimed at Gen Z users.
The emphasis is on offering new services to help our users better express themselves whether that be through additional compatibility assessments stickers virtual gifts and photo effects. We expect to roll. This out later this year and into 2024 and as always we will do all of this but the safety by design approach.
We will continue to take a comprehensive approach across product policy partnerships and people to ensure that our users, especially women continue to feel safe and empowered on our apps.
Now turning to Baidu.
Other revenue totaled $49 million down 13% year over year, we remain confident in baidu as it remains the leader in key markets and a top three app in many countries across Europe , and Latin America, but do continues to be one of the top rated scaled dating apps on the App store and on the go.
Go play store.
While we still have work to do to further stabilize the duo and return it to growth. We are encouraged to see registration and reengage users growing in several key markets. Our focus remains on shoring up retention.
And increasing engagement by focusing on quick authentic and feel good connections, which are the hallmark features of Baidu and what its loyal users love most about the platform. We are currently testing a new baidu experience built around different discovery mechanics, which significantly speeds up the time it takes to get a quality connection.
<unk>.
Finally on fruits the team continues to execute well on their product roadmap demonstrating strong growth in its core French speaking markets. We believe the power of this product with Gen. Z remains a unique differentiator and we're also incorporating lessons learned from it and bumble and Baidu for example, we've leveraged.
Some are fruits Gen Z pricing and targeting strategies and bundle the fruits product roadmap is very exciting drawing on experiences that are gaining traction in social media apps and we believe these innovations will help it drive even greater market share in its home market in Q2 and Q3, Bruce will also be taking its first step.
<unk> into global expansion again, emphasizing the organic growth model that leads to a durable market position and favorable economics.
In closing.
Our mission today remains the same as it was when I founded bubble up in 2014 to.
To make relationships better more equitable and healthier for women in an effort to make relationships better for everyone. I firmly believe that we are making progress towards that mission every day on a global scale the demand for love and connection is stronger now than ever before.
We believe our products deliver for this demand and a unique safe kind and differentiated way with strong customer loyalty.
I am fully committed to this vision over the long term I have never been more excited about the future of our business.
Deep gratitude and thanks to team Bumble, Inc. As always for your dedication and hard work and to our customers partners and investors for your continued trust and support with that I will now turn it over to a new for a discussion on our financial results and outlook.
Thank you Whitney and good afternoon, everyone I will begin with a discussion of our first quarter results before turning to our outlook for Q2 and full year 2023.
Unless stated otherwise all comparisons are on a year over year basis.
Hello, Bumble ink revenue in Q1 was $243 million up 16% and at the high end of our guidance.
FX was the 7 million headwind for the quarter and combined with headwinds from the water new clean impact our growth rates negatively by five percentage points.
Total bumbling revenue was driven by paying user growth of 15% primarily from bumble app and our people growth of 1%.
Revenue from Bumble App was above the high end of our guidance range of 194 million up 26%.
FX headwinds negatively impacted growth by three percentage points.
Bumble App revenue growth was driven by a 31% increase in paying users to $2 3 million on.
On a sequential basis, we added 98000 paying users, resulting from strong growth in monthly active users as well as increases in payer penetration bump.
Bumble apps are people with $27 93.
Down 4% year over year.
This was primarily driven by FX headwinds and impact from country mix.
Now moving on to Baidu, App and other Baidu App and other revenue was 49 million down 13%.
In aggregate FX headwinds and the Ukraine conflict impacted our growth rates negatively by nine percentage points.
But do happen other paying users excluding flu declined 7% to $1 1 million.
Excluding the impact of our exit from Russia, and Belarus, but.
But do paying users would have grown over 2%.
As Vicki mentioned, we believe we are making progress in stabilizing to do.
On a sequential basis paying users dropped 47000 in Q1.
But do App and other are people, excluding fruit declined 7% to $12 47.
Primarily due to FX.
Turning now to expenses.
We are more focused than ever on managing the business profitably with a high bar for incremental spend and head count.
We are pleased with the progress we have made in the fourth quarter towards our margin goals for the year, while also achieving our top line objectives.
We continue to believe we have room for further leverage in our business and remain committed to expanding margins in the long term.
Total GAAP operating costs and expenses were $234 million for the quarter.
On a non-GAAP basis, excluding stock based compensation and other noncash or one time item, our total non-GAAP operating expenses by $184 million up 15%.
Cost of revenue was $69 million and grew 27% the.
The increase was primarily driven by higher App store fees as revenues have grown as well as shift away from third party billing to Google play on Android.
As a percentage of revenue cost of revenue was 29% versus 26% in the year ago period.
Sales and marketing expenses grew 3% to $60 million. This represents 25% of revenue versus 28% in the year ago period, as we focused on efficiency and marketing spend during the quarter and stayed disciplined on ROI thresholds across all campaigns.
G&A expenses were $32 million or 13% of revenue compared to $30 million or 14% of revenue last year.
Product development expenses were $23 million or 9% of revenue versus $18 million up 9% in the year ago period.
Q1, GAAP net loss was 2 million compared to net income of $24 million in the year ago period.
Q1, adjusted EBITDA was 59 million up 19% and represented a 24% adjusted EBITDA margin.
We ended the quarter with a cash and cash equivalent balance of approximately 389 million down from Q4, primarily due to timing of receipts now.
Now moving on to our financial outlook for Q2 and full year 2023.
For Q2, we expect the following total revenue between $254 million and $258 million, representing a growth rate of 17% year over year at the midpoint to five range.
We expect bumble op revenue to be between $205 million, and 208 million, representing a growth rate of 23% year over year at the midpoint.
Our bumble App revenue guidance includes expectations for sequential net adds of approximately 120000 230000 in Q2.
We expect to produce sequential net adds to be flat to slightly positive in Q2.
We estimate adjusted EBITDA will be between $62 million and 64 million, representing 25% margin at the midpoint of the range.
For full year 2023, our view on full year expectations.
Has not changed since our last earnings call.
We maintain our estimate for total bumble ink revenue to grow between 16% to 19% year over year.
We are pleased with the performance of Bumble App, so far and we maintain our expectations for revenue growth rate of between 22% to 25%.
With regards to full year adjusted EBITDA, we expect at least 100 basis points a year over year margin expansion.
Today, we announced that our board of directors has authorized a share repurchase program for up to $150 million of our outstanding class a common stock.
We have a strong liquidity position with low net leverage and continue to generate free cash flow.
Our priorities from a capital allocation perspective remain to invest in growing the business organically as well as in pursuing M&A opportunistically.
Beyond these investment opportunities the share buyback program provides us flexibility and allows us to return capital back to shareholders.
To summarize we achieved strong topline growth this past quarter, while staying disciplined without expenses.
We believe we are in a good position to continue gaining market share.
Midst of dynamic and competitive environment and we are excited about our product roadmap for the year. We plan to carry forward. This business momentum we have built in the first quarter through the rest of the year.
And with that operator, we can open it up for Q&A.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Our first question comes from Alexandra Steger.
Thank you for taking my questions could you maybe dive a little deeper into the progress you're making in the various international markets developed versus emerging given the elevated competitive marketing spending you mentioned and how should we think about the pace and cadence of new market launches versus prioritizing existing regions for the room.
During the year and then maybe second can you just remind us of your philosophy around pricing increases our optimizations is there a room to optimize pricing in this type of environment. Thank you so much.
Hey, Alex it's dark thanks, so much for the question.
Ill try and tackle both of those I think as it relates to international expansion, we remain very.
Pleased with the progress that we're making in our <unk>.
International markets are there any continuous excuse me to be a source of strength for the business and we are seeing as Whitney mentioned, we're seeing continued traction from a download share standpoint, as well as just continued absolute levels of growth really throughout western Europe throughout the markets, We launched it in Latin America and India.
And in Southeast Asia, we are seeing.
That are focused on what we internally refer to as durable growth, meaning. This this notion of let's build on an organic basis in these countries, let's make sure that we do that in a way that generates the word of mouth and morality that we need in these countries. So that you build.
Resilience into the robustness into the growth model that that model really does work and continues to work really well. It has made us we think quite resilient in the face of very elevated levels of marketing spend that a number of our competitors are putting into market and what we've seen is even when.
You do see those elevated levels of spend it's not really.
Diminishing the trajectory that bumble has in those markets. So we feel very good about our position.
And again, our focus is very much on getting the downloads and converting those users into active users who are willing to engage at a high quality level and our.
Eventually willing to monetize.
So we're very pleased with that in terms of the cadence.
We are pleased with the progress we've made in western Europe as a couple of more countries in Western Europe , where we've got some more work to do we launched Spain later in the year last year, we're continuing to focus there.
Italy, the Nordics and some parts of Central Europe are a real focus this year, but I do want to iterate that the job is only just getting started when we launched into a market and it really is about building depth in that market and that's where that's the million dollar question. If you will and so we're really focusing on.
That you'll see US continue the focus we have on parts of Latin America, and southeast Asia, as well, but really the primary emphasis is as western Europe .
In terms of pricing.
We.
I think we mentioned this in the last call, but one of the real core strength that we probably haven't.
All that much about is the data analytic foundation that we've got inside of the company. We've got just an amazing platform that we've been overhauling over the last couple of years that allows us to do a level of personalization elite level up.
Personalized data analytics and as a result price optimization at a very very fine tune level. This is something that has really fueled the company historically and it's something that we are constantly working on and we think that it's a large part of the story to date that you've seen in bumble and Baidu and it will continue to be.
A large part of the story moving forward as well.
Great. Thank you.
Thank you.
Okay.
Your next question comes from Cory Carpenter.
Thanks for the questions.
On the bundle up 2023 outlook, our new could you just talk about your latest thinking around expected contribution of net adds versus <unk> I think you've previously talked about a $4 50 to 500000 range as.
As well as the cadence of that through the year.
And then nonfinancial related what are your competitors is raising prices and they're losing some subscribers. As a result I was curious if you view this as an opportunity to take share or maybe if there is evidence already that perhaps you are some of those users are moving over to bumble. Thank you.
Sure Hey, Corey Thanks for the question so.
I think as.
As I said in my prepared remarks, we are.
For bumble app, maintaining our full year.
Revenue cadence of 22% to 25%.
That also translates to a net as expectations, but we still expect the $450 to 500000 net ads for the full year that we had guided to for.
For Q1, we had said we would do between 90% to 95000, we're very happy that became in just a little bit higher than that at 98000.
We are expecting for Q2, we will be between 120 to 130000.
And then choose.
Q3, we expect to be will be above that and then from a seasonal perspective Q4 as you. All know we will be slightly lower than where we ended up in Q3. So that's the.
The cadence of what we are expecting again this is.
Very similar to what.
What we had talked about in our previous earnings call. So nothing really has changed I think we've been very happy with with how.
The business has performed and.
Excited about the product roadmap that I couldnt be talked about earlier, so, we'll obviously share more in terms of our people.
Again, I think for the full year, we are expecting that our people will come in may be slightly lower than the 2022 average or people that yourself, but as we always say on a practical basis. Our goal is always to.
To make sure that we are maximizing our payers and our people for each product that we put out based on.
What are the development of this important product experience to look like so obviously there are always puts and takes between payers and our people to some extent, but largely I think you know what I just talked about should very much holds true and then.
Maybe I'll just also mentioned for Purdue.
We from a net adds perspective, we had guided to about negative 50000 for Q1, we came in at negative 47000.
We feel pretty good with that.
We will be in a sort of stable to positive territory in terms of net adds overdue.
So we are sort of pleased with with how.
The business that has been performing we definitely have work to do that but we definitely feel like it's on the it's on the right path. So yes.
Update on <unk>.
The first question and I'll pass it over to Tarek to talk about that.
Sure.
In terms of some of the competitor price increases I think where we are.
We fundamentally believe as people decide whether to pay on bumble based on how happy they are with the bundle experience.
Certainly as it becomes potentially less attractive from a pricing standpoint to spend on a competitive I suppose that could be positive course still too early to tell if thats. The case, but we do feel very good about is that when.
When you mentioned the net favorability, which is yes, how many people are favorite will have a favorable impression of bumble versus have an unfavourable impression and bumble is the highest so let's say in the U S or any other major dating abstract Brian good morning console. So we think we're set up well too.
To continue to be a preferred platform for people, who want to participate in dating apps and who wants to pay and in fact, if you looked at Q1 as our as our net.
<unk> net adds numbers suggest our new subscriptions and our payer penetration rates remain healthy we're actually increasing towards the end of Q1 or throughout Q1, and so we do think that there is some some nice tailwind in the business.
Okay.
Your next question Kevin.
Yes. Your next question comes from Schrader, which area.
Thank you for taking my questions.
Could you please comment on the demand trends that you're seeing your competitor recently mentioned there.
There is some headwind on they're all our cards because of macro headwinds what are you seeing and specifically in North America versus international markets.
And then the second question is what.
When you when you talk about a greater focus on.
Operating efficiencies could you please.
Talk about what exactly you were focused on what is what drove the EBITDA upside and where could be potential efficiency gains to be had when we think about EBITDA and margins. Thanks a lot.
Sure I'll start with the demand question, and then turn it over to a new.
So we are.
Really seeing quite nice.
Top of funnel demand in general I think across bumble and and Purdue.
Towards the end of the.
Quarter again, but do we're seeing a very nice.
Level of registration and that continued into April and Bumble has been quite strong from a registration standpoint as I just mentioned as you.
Look at paying trends, what we basically see is that new subscriptions are continuing to be strong for us higher penetration continues to be strong.
I'll speak about bumble App here for a second and actually modestly improved throughout Q1, So I think that is.
Is a good sign our renewal rates for ongoing subscribers, meaning people, who have been subscribers for multiple months remains healthy and also some modest improvement throughout Q1 and in April So generally speaking seeing pretty healthy demand trends.
Exception I would say is if you look at the sort of at a segmented level by.
By the way to your question that was those were sort of global trends I think you saw that in the U S. You also saw it in our other major markets as you look at the more.
Segment level, we are still seeing pockets that are economically challenged and that.
Particularly if you looked at our Gen Z segment you'd see.
Some level of economic challenge there so that is still leading to some challenges on that first time renewal rate, meaning there are some people who do want to be a subscriber they will use it for the month and then they will choose not to renew because they're economically stressed.
That is.
So it's something we're keeping an eye on and continuing to work on with some of the value messaging and things like that but again overall, we're seeing quite a nice demand.
The demand picture on the consumable side. We're also seeing very strong demand. There actually are larger consumable packs are actually doing probably the best of all the consumables that we offer. So we're I think we're seeing quite a different trend there than what others might be seeing.
Yeah and in terms of your question about EBITDA I think for Q1, I would say the majority of the outperformance that you that you saw was really us being very disciplined on both marketing spend as well as in head count.
On the marketing side, we've been.
Constantly reviewing all of our campaigns looking at all of the associated returns in every market.
Trimming budget based on that we obviously based on the top line numbers at this point, we haven't seen any loss of efficiency. So all of this is just us getting better and better.
In getting the tons that we want.
We would definitely like to see we can spend some of the marketing dollars that we saved in Q1 and Q2 and.
And Thats why we Havent increased our full year guidance for EBITDA, yes.
It's definitely something that we'll continue to look at on an ongoing basis, but we feel very confident in being able to get to the at least 100 basis points of margin expansion.
We are guiding to for the full year.
One of the pet count.
I'll also mention that over the last few years, we've had an ongoing cadence of continuously reviewing.
Reviewing different parts of our organization in terms of how much we are funding each of those groups.
Then turning to this shift over the last few years in terms of how much we've grown through the pandemic and in the last couple of years. So this isn't something that we are just doing for the first time this year.
Definitely something that we've always been very good at doing internally and I think I mentioned this the last time as well our teams have been told that the bar for incremental head count is very high.
And some critical areas are definitely being funded.
Areas like.
Obviously, we can talk a lot about AI, so augmenting our engineering teams to make sure that we have that I still set it on some of the things that we want to build and develop we are definitely looking at funding.
But otherwise.
I set the bar for how you're thinking about incremental head count is.
Pretty high and again this is something that we are going to continue to keep a very close eye on because we want to make sure that and investing in.
But I think to maximize our top line.
Okay. Thank you Tariq Thank you Arnaud.
Thank you.
Your next call comes from Laurence Schenck.
Great. Thank you two if I can I think relative to what we know you're running through the end of February and in an 8-K that you put out it seems like March accelerated really nicely is there anything from a specific product feature geography monetization that drove that acceleration or just sort of broad based.
And then secondly, just on the EBITDA margin guide for the second quarter, a little bit I think below where the street was expecting is that just a shift of marketing from monkey to kick you anything else to call out there. Thanks.
Yes, I think maybe to start with the second question first.
Nothing.
Specific to call out on Q2, I think we've said before our first half tends to be just seasonally.
Hi, Ed highest quarter in terms of marketing spend now we've said this in Q1 as well and eventually we were able to spend less and still achieve the top end efficiency that we want it.
We are earmarking certain funds, but doesn't campaigns in Q2, but again like I said I think envelope would definitely be to try and.
Maximize efficiency wherever we can it doesn't change the trajectory that we have for the full year, that's purely a function of timing of how some of our campaigns are landing.
And I think in terms of the the.
The pair cadence for Q1, I think it's important to remember that the net add number.
Has a lot of things that.
It can impact that.
So it's not always easy.
Easy to sort of just draw a correlation between the months.
If you look at the year over year growth rate.
January was slightly lighter.
Then you would have normally expected, but fab in March did very well it was in line with how we had planned our product cadence. It was in line with what we were planning for in terms of the funnel user growth as well and also the payer optimization work that we have planned for the quarter. So this is definitely something that would be would expecting and obviously when we guide.
To the numbers, we were very confident of that.
The number that we would be would end up and then we came in slightly higher than that so nothing specific to call out other than.
What had been sort of planned from our user growth and product per se.
Okay, great. Thank you so much.
Your next call comes from Benjamin Black.
Okay.
Hi, Thank you for taking our questions. This is Sean Boyd on for Ben.
It would be great to hear your thoughts on the recent developments within App store fees.
But perhaps conceivably it could be a 2024 it you bet. Thank you.
Hey, sure. So we are certainly paying a lot of.
Close attention to this and both what Apple and Google are doing and as we've said as we've talked about before we are.
I'm pleased to be in the user choice billing program at Google is just one example of the efforts that we're taking I would say at the moment we are.
Positive on the impact on users, we do have increasing evidence as these different programs are rolled out that users do want choice in how they are able to pay for our services and as we offer them more forms of payment you see people opting for those other forms of payment and that generally speaking is.
It is a good thing so we're very positive on the user experience side and on the.
The payer side, if you will on.
On that front in terms of the fees themselves I would say it's not.
It's not a clear picture at the moment, we're not anticipating frankly any major apps for relief this year.
And next year I think.
<unk>.
Hard to say the net effect of some of the changes being proposed by Apple and Google could actually be to raise.
The fees that you.
I have to pay as opposed to lowering the fee. So I think it's a very murky picture, there's a lot of detail that needs to be worked through bye.
By all the different platforms.
Oh, Thank you very much.
Thank you. Your next question comes from Justin Patterson.
Great. Thank you good afternoon.
I was hoping you could touch a little bit more on just marketing towards Gen Z. It seems like something that.
Many companies have been struggling with so would love to hear a little bit more about how you're positioning that potential new product to really attract that demographic more.
And then perhaps as a follow up to that.
Would love to hear you just elaborate a little bit more about the testing features within bumble I know some companies just optimize for revenue growth.
You hear about how you're thinking about just the broader user experience with them, there and making sure that youre not sacrifice thing.
With the product in order to drive.
Revenue growth. Thank you.
Yeah, hi, thanks, so much for the question so.
To start with Gen Z I think it's important to note that a significant driver of our success. In these recent quarter has been the steady growth that we're seeing in our Gen Z user base and Thats, particularly in the U S and so as you can imagine this is very exciting.
We are successfully acquiring this user base of the future.
The Bumble App also led other dating app in terms of NPS scores among U S. Gen Z in Q4, so that's another proof point that our appeal to this very important market is.
It's really resonating and we have recently began to build products designed to engage our Guernsey user.
So the fact that we're performing so well with this generation without really optimizing the platform yet for them. It's a positive I'll talk about that in a second.
Just want to take a second and double click on our unique understanding of the college audience and how this is not new this is something we have been so focused on since I started the company in 2014. So we have this scaled program with what we call hunting ambassadors and <unk>.
We have consistently and constantly evolve that and stay current with that where we don't age with that necessarily we're always bringing in the freshmen and sophomores and juniors and seniors along with us.
We've really invested in this audience and we can really relate to them in a number of ways. So not only from the product side, which will be consisting of things like <unk> and <unk>.
Optimizing speed dating for them and really leaning into that Jonathan women's experience in the deeper focus of this audience specific content messaging, but we're really good at marketing to that so we have this unique hub and with the influential college students. This is something.
<unk> can't can't go and just acquire this is something we've built over the years with the deep ingrained network effect and so that is really paying paying off for us because of those routes that we planted over the years and then.
One thing I'd like to touch on.
Is this low tier offering that is going to be paired with kind of the college bundle that we've talked about which we're pleased with those results with those initiatives to date, but.
A big priority for this college age group is to really have a range of different features that target. This particular audience.
As I said earlier adopters for <unk>.
And if it could be even new experiences that are.
Very social ways to engage the sticker OTO effect for other ways to express themselves. So that is in its very early stages of testing and we do not expect to have any.
Any material contributions of this in 2003, but we're very excited about the prospect for that given that growing and robust.
User base before I hand, it to target I, just want to double click on user Joy. So this is something we are obsessed with I want to reinforce that while we are really good at delivering our numbers and staying really.
Incredibly efficient we operate for the long term. This is a long term committed business and without customer joy and satisfaction, that's impossible and so that is always front and center at every product roadmap at every strategy meeting and this is absolutely mission critical with Gen Z and <unk>.
She currently women. So I think you see that through our results and.
So I just I just want to reinforce that while we're great at pricing and optimizing revenue. It's never ask expense of customer Joy safety satisfaction with that chart I'd like to add anything I'll kick it kind of the only.
The only thing I would build on top of what when he said is as we.
Look at our experimentation plan as we've talked about what we're solving for of course at the end of the day, we look at revenue Payors efficiencies things like that but those are all output metrics right and those are not actually what our team's sulfur per se what they solve for or the input metrics any input metrics gets back to what.
When he is talking about we know that if we are able to better match you.
Better get your matches on the platform Youre more likely to be retained on the platform until you find the person that you want to.
B with and then you leave and we know that you are more willing to pay.
We are helping to generate high relevance for you and and then we're able to do that in a safe and respectful way and so.
Our teams from an experimentation standpoint are really looking at that customer journey at the dynamics of the ecosystem and and we kind of know that when we are able to make that ecosystem really work well it leads to more paying users more revenue more EBITDA for us so thats essentially the.
Philosophy the team shortly.
Great. Thank you both.
Thanks Ross.
Your next question comes from John Blackledge.
Oh, great. Thanks, two questions first could.
Could you provide some more color on complement the kind of the usage of the future and how it's driving monetization and payer conversion and then second area on AI and machine learning is the AI that you use kind of across the CP and the recommendation engines et cetera, all from kind of internally developed.
Capabilities in house, and then kind of going forward would you expect to partner with any of these emerging Gen AI companies to drive improvements either in the ops and or to drive efficiencies across the business and marketing and software coding et cetera. Thank you.
Thank you so much so I'll set the stage on AI and machine learning. So I think it's very important to note that AI is not some new thing for us at Bumble are work has been deeply rooted in a lot of machine learning and AI <unk>.
Historically, but we are really excited about the way AI can really benefits our business moving forward. So I think.
Before I before I get into the in house or other.
Other I will just talk about how we see this enhancing our business really across three main domain. So I would say is starting with our products.
Using internal tooling or taking the trust and safety.
And that machine learning recommendation engine to the next level by deeper integrating with external large language model of at data labeling and then the second category is really building faster, we think that theres, a huge optimization opportunity and product productivity opportunity, which really improved engineering and marketing.
<unk> by adopting AI based co generators and automation framework and then the third category is really new products.
<unk>. This is enhancing the product experience and what I mean by enhancing the product experience that might be adding something new that doesn't exist yet or it could be an optimization of something that space amongst struggled with on the product journey. So we see that as really as an onboarding to your real life stage opportunity. This could start with struggling to pick the best.
So that this could be helping you right or bio or set up your profile with the touch of a button.
So many opportunities along the way we're also a business before we turn to complement based on women, making the first move and this has been such a driver of our success and it continues to be but we believe we can lean into the optimization of that make it easier for women make it safer faster and more tie it more enjoyable overall and so there's <unk>.
Tons of opportunity here to really drive performance improvements across the board.
And before I kick it to try to double down on integration strategy on AI I will just touch on compliments briefly so compliments.
By way of update complements was really our first foray into the message before match category.
We have continued to expand the complement feature and we are growing adoption and increasing retention both things we have been very committed on the queue.
In Q1, our focus is really on growing adoption and we are seeing promising results. So thus far nearly 15% of our bundled monthly active users has been accomplished and we're very confident in our ability to grow that penetration over time through things like continuous product design improvements and strip.
T J placement and high intent scenarios and broader future education and also marketing the product.
Outside of the App, which you can expect to see this summer and we've also prioritized ensuring a strong and user experience as we scale. This feature and roll it out more broadly. So we are working on the receiver.
And tandem so given that given this recent rollout complements revenue contribution is fairly modest today, but it is building momentum. So we're very excited about the potential and we expect revenue from complements to ramp over the year <unk> would you like to add anything on AI.
John the only thing I would so the models that we've been using historically are internally built models. They work really well, we've actually benchmark them against.
Externally available large language models from the usual suspects and in most content areas.
A benchmark actually better it's really a reflection of the fact that it's tuned to our data and and at the moment that tuning beats out the sort of power of the other models we are experimenting exploring.
How do we have a best of both worlds type of model, where we use our internal capabilities and supplement that in areas that were weaker with some of the external models, we're pretty happy with some of the kind of offline experiments. We've done on this so far and I think we'll be doing more in that area before.
Thank you.
As a reminder, if you'd like to ask a question Press Star then the number one on your telephone keypad.
Our next question comes from Laura Champine.
Thanks for taking my question, it's about Baidu, which I know it was only 20% of your business, but I.
I think we keep waiting for it to stabilize revenues from that unit still down double digits. This quarter, what are the signs of stabilization that you're seeing and when do you think we could see a positive turn embodies revenues.
Yes. Thank you so much for the question. So I think it's important to reemphasize that would you have maintained its strong position. So but do really continues to be a leader in its key markets and it's still a top three dating app in a number of countries across Europe Asia Africa, and Latin America in late.
Q1, and continuing into April we have seen the deal returns registration growth and we've achieved good progress in stabilizing revenue. So these are the first steps in really returning but due to that growth and we continue to execute our strategy to deliver these results and there is of course still work to do but it was very challenged we had a.
Areas of challenging events between Covid and the war and Ukraine, we still remain confident and reduce long term opportunity and that value proposition so turning to the product side.
We've shared this in the past, but produce most loyal customer care about.
This instant connection and spontaneity, but its products uniquely deliver and we're really continuing to lean into that we attribute the return to a more positive numbers on two to this strategy and really listening to the customer and building for that and so really that paired with enhanced monetization offerings to really offer.
Promotional bundles and new consumables, we're feeling you know we're.
Feeling better about the Baidu story, and we have delivered several revenue an ecosystem experiment throughout Q1 and those results had an improved revenue trajectory in key markets. So we expect to be active internationally with.
Market expansion effort in APAC and continued investment in Latam and in eastern Europe . So with that thank you want to make a comment and I think in terms of you know.
When we expect to produce to be positive year over year.
Based on our guidance you can see our goal for 2020 threes for the for doing other line items start to stabilize we are still not expecting that it will be in positive territory, but the goal is to get it to be stable and then get to positive I think the first step towards that is getting a sequential net adds to be positive which is a P.
That would be around for Q2.
As I said earlier you know we don't we recognize we still have another cohort to do there, but we definitely feel like that.
Understood. Thank you.
Thanks, Laura.
There are no further questions at this time. This concludes today's conference call you may now disconnect.
Thank you. Thank you everyone.
Okay.
Yeah.
Okay.
Yeah.