Q3 2023 Bumble Inc Earnings Call
Yeah.
Thank you for standing by.
Thank you for joining my name is Danica I'll be your conference operator today at this time I would like to welcome everyone to the Bumble third quarter 2023 financial.
Resorts.
<unk> conference call.
All lines have been placed on mute to prevent any background noise. After.
The speaker's remarks, there will be a question and answer session. She would like to ask a question. During this time simply.
Please press star followed by the number one on your telephone keypad you would like to withdraw your question Press Star once again, thank you.
I would now like to turn the call over to Cheryl.
That Valens whaler VP of Investor Relations. Please go ahead.
Further financial results with me today are big Woolford, founder and CEO and interim CFO.
Before we begin I'd like to remind everyone that certain statements made on this call today are forward looking statements.
Forward looking statements are subject to various risks uncertainties and reflect our current expectation based on our beliefs assumptions and information currently available to us.
Although we believe these expectations are reasonable we undertake no obligation to revise any statement to reflect changes that occur. After this call descriptions of 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 own.
We'll report on Form 10-K for the year ended December 31, 2022, and our subsequent periodic filings.
During the call. We also refer to certain non gasoline national measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on the Investor Relations section of our website at IR stockpile ball dotcom and with that I'll turn it over to Vicki <unk>.
Thank you Cheryl good afternoon, everyone. Thanks for joining our call today.
Before we dive into our third quarter results I want to spend a moment on the exciting announcement, we made yesterday regarding the future of Bumble Inc's leadership.
<unk> Jones, who currently serves as Chief Executive Officer at flock and it has more than two decades of experience as a product technology and business leader will join Bumble, Inc. As our next CEO effective January <unk> 2024 at that time, I will transition to the role of executive chair.
This announcement is a monumental moment and bumble inks evolution and as the result of a thoughtful and deliberate succession planning process. The board and I have thought hard about what type of leader could ultimately step into the CEO role as a successor to me and help taking help continue to take bumble.
To even greater heights.
We were thrilled to find someone with Lady on his background passion and values to propel bumbles forward, having her leading this next chapter of Bumble, Inc. Is a major win for our company members team and shareholders.
For me the last decade, taking bumble from just an idea to a publicly traded company has been incredibly rewarding and fulfilling I founded this company to empower women to make the first move now after more than a billion first moves and countless success stories.
I am ready and excited to make the next move.
I am stepping forward into the executive chair role, allowing me to get back to my founder Ruth and bring immense passion and focus to this next phase of Bumbles growth.
I believe in bumble inks significant potential today more than ever before and I am incredibly optimistic about the future.
This next chapter we will continue to work towards our North Star, our mission of creating healthy and equitable relationship through kind connection how.
How we do this is with continued focus on our top three priorities customer tax slash AI and brand.
Starting with customer we have always been and will continue to be a customer first company, which means that everything we do is to maximize success for our members.
We are focused on customer pain points, we build on what is working for them and continuously innovate to improve their experience and strive to keep our customers Safe Trust and safety is by design not an afterthought.
Our second focus is on Tac in AI, we leverage data and machine learning Nextgen tax and now increasingly generate of AI to innovate and build for the next horizon of growth and the impact.
Our customer base and the associated unique dataset, we have built up over many years allows us to deliver relevant and value to our customers and unique and meaningful ways.
We are committed to integrating AI, where possible into every every step of the user journey beyond what we've already been doing for years via our algorithms and finally, but very importantly, our brand, it's what drives loyalty and creates the network effects that lead to both top of funnel growth as.
Well as bottom line result, our brand helps us propel our mission and make a positive impact in the world.
By focusing on these priorities I believe we are well positioned for the future of relationships to underscore the confidence we have in our long term business trajectory. We are announcing that our board of directors has increased our existing stock repurchase program authorization from 150 million to 300.
<unk>.
Now moving onto our results in Q3, our continued execution against our strategic objectives delivered strong financial performance across both topline and profitability.
Cross both bumbling Madhu, we gained download share on a global basis, and also saw acceleration and sequential paying users demonstrating our continued ability to grow our footprint across the world.
Total bundle ink revenue this quarter increased 18% year over year to $276 million and adjusted EBITDA reached 75 million, representing an adjusted EBITDA margin of 27%.
Bumble apps Q3 revenue grew 23% to $222 million driven by continued momentum in paying users, which for $2 6 million up 25% year over year.
From Q2 to Q3, we added 147000 pairs and increase from the prior three quarters. Our growth is driven by our sharp focus on the customer we are making great strides on product innovation further international expansion and continued focus on building a trusted and.
Safe brand for women.
Our product shipping velocity is stronger than ever and we are pleased with our progress on this front this year.
Our goal remains to enhance the core experience and explore new discovery and engagement models that are designed to reduce friction and emphasize efficiency safety kindness and compatibility and the matching to meeting process. Our goal is to get people online to go offline.
With respect to new features revenue contribution from newer releases such as complement them best be it continues to ramp as a reminder, complements is our message before match offering that encourages kindness and positive connection.
<unk> is our AI powered maturation tool showing you the people who are most compatible for you and is currently included in our bundled premium subscription tier.
Yeah.
Q3 marked a meaningful step up in complements revenue with positive user reaction from recent changes designed to drive greater awareness visibility and payer conversion.
We are also seeing improved activity and revenue metrics for battlefield.
As we mentioned last quarter, we are excited to be introducing two new subscription tiers for our members.
This will not only enhance our current offerings, but also enable us to better and more directly serve the needs of our high intent serious dating customer.
And Gen Z users.
Our higher tier, which will be called premium plus aims to elevate our power members dating experience to improve their chances for a match premium plus is actively being tested in several countries with promising initial results. Our lower priced here is also currently in limited testing this terrorist focus.
On helping our younger members expressed their personalities on a deeper level and find connection is fun and social ways.
Our goal is to expand testing and launch both tiers in coming quarters.
As always we augment these new features with under the Hood of optimizations that are meaningful and improving the user experience. In Q3. These included improvements in our machine learning algorithms or recommendation engine, which have all resulted in increases in relevance and metrics with.
With strong positive impact on user experience, especially for women.
In addition to product innovation, a key focus area for Bumble App has been to grow its reach internationally in western Europe, we saw robust user payer and revenue growth. We remained the number two dating app in Germany, and when games download sharing markets, such as Austria, France, Switzerland, and the Netherlands are Latin America and Asia.
<unk> expansion is also performing well demonstrating the broad global appeal of our brand and product.
Now turning to our other app.
Madhu App and other revenue totaled $54 million in Q3 up 3% year over year. This marks two consecutive quarters of year on year revenue growth and sequential net outgrowth for baidu.
Which is an exciting and encouraging milestone. We also continue to see improving trends across many metrics, including global registration monthly active users and engagement.
As we plan for 2024, we are excited to build on this momentum with the brand and identity refresh aimed at improving awareness in key markets, especially among our women users.
We intend to supplement this with targeted market marketing campaigns showcasing the dues vision of becoming the app of confidence in 2024, enabling it's highly loyal user base to express and be their real selves, and a safe untrusted environment.
Outside of Baidu, we continue to be pleased with the performance of fruit.
Its recent launch in the U K is the first step in its expansion into more international markets. Our product focus continues to be around Gen Z engagement and monetization with the recent launch of weekly subscriptions addition of new features behind the paywall and progress of revenue optimization.
Now moving onto the opportunity beyond dating.
Or bumble for friends. The Standalone App has now been rolled out in several markets, including the U S downloads for the Standalone App have been strong and we are excited by the growth that we've seen so far for MAU engagement and retention.
Particularly with Gen Z women as we look ahead, our near term focus areas are on future development in particular around groups and communities and driving greater awareness in Q3, we leveraged our strength in back to school programming to increase U S College student awareness and we intend to continue this in.
Q4, we have partnerships that center and celebrating friends and communities during the holiday season.
In closing, we're making excellent progress on our priorities and building momentum across our business. The execution of our strategy is driving results and is a testament to our team's hard work and dedication, which is enabling us to deliver for our users and shareholders in ways No one else.
Ken.
I'd like to conclude as always by extending my deep gratitude and appreciation to all of our employees and to all of our customers partners and investors for their continued trust and support.
I cannot express how deeply grateful I am to have had the opportunity and privilege to lead as bumble CEO for all of these years and I look forward to stepping forward into this next role as executive chair none of this would be possible without your team bumble so with that.
On words and thank you so much I will now turn it over to Aneel for a discussion of our financial results and outlook.
Thank you Whitney and congratulations on stepping forward into the Exec chair role I look forward to partnering with you on a seamless transition and welcoming libbey Ani to bumble over the next few months.
And good afternoon, everyone. Our third quarter results reflected continued progress on our strategic priorities across our family of apps, we achieved strong revenue growth, while operating with discipline to deliver strong margins and cash flows.
As I walk you through what does all please note that under stated otherwise all growth comparisons are on a year over year basis.
I will discuss Q3 before turning to our outlook for Q4 and full year 2023, and I will conclude with a preliminary view for full year 2024.
Total revenue for Bumble, Inc reached $276 million up 18%.
FX benefit was 2 million lower than what we had assumed at the time of our prior guidance.
Both paying users and our people who contributed to revenue growth with total paying users increasing 16% to $3 8 million and total our people increasing 2% to $23.42.
Revenue from Bumble, App with 222 million up 23%.
Bumble I paying users grew 25% to $2 6 million, adding 147000 net adds sequentially.
Growth in paying users was driven by both strength in monthly active users as well as penetration gains in many key markets.
Bumble apps are people was $28.38 down 2% year over year, but up 1% on a sequential basis the.
The year over year decline was primarily driven by geographic mix shift, partially offset by pricing optimization now.
Now moving on to Baidu App and other.
But doing Baidu app and other revenue was 54 million up 3%, but do app and other paying users excluding fruits and official grew 1% to $1 2 million.
On a sequential basis, but do paying users increased by 40000.
But do App and other are people, excluding foods and official was flat at $12 and 79 seven.
Turning now to expenses total GAAP costs and expenses were 246 million for the quarter up 20%.
On a non-GAAP basis, excluding stock based comp and other noncash or nonrecurring items, our total non-GAAP costs and expenses were 200 million up 17%.
Cost of revenue was 79 million and grew 25% as.
As a percentage of revenue cost of revenue was 29% versus 27% in the year ago period, mostly due to higher App store fees as a result of compliance with the Google play mandate.
Sales and marketing expenses grew 10% to $66 million. This.
This represents 24% of revenue versus 26% in the year ago period.
G&A expenses were $33 million or 12% of revenue compared to 29 million or 12% of revenue last year.
Development expenses were 22 million or 8% of revenue versus $18 million or 8% in the year ago period.
We reported Q3 GAAP net earnings of 23 million compared to 26 million last year.
We delivered adjusted EBITDA of 75 million up 22% and representing a 27% adjusted EBITDA margin.
This exceeded our guidance of 71 to 73 million and reflects our ongoing commitment to financial discipline.
While we continue to invest in growing our app, we remain disciplined on costs and are pleased with the progress towards our margin target for the full year.
Turning now to the balance sheet.
Q3 cash position remains healthy as we generated positive free cash flow of $59 million.
We ended the quarter with cash and cash equivalents of $439 million.
Our total debt position was 622 million of which only 6 million is due over the next 12 months.
Due to the leadership search in Q3, we did not buyback any shares during the quarter Approx.
Approximately 129 million remains on our previously authorized share repurchase program and today, we announced an incremental authorization upon it and $50 million, bringing the total buyback off that I used to date to 300 million with 279 million remaining in aggregate.
We are committed to resuming our buyback program program and returning capital to our shareholders.
Now moving on to our financial outlook for Q4 and full year 2023.
Why do we continue to see strong trends in usage and monetization in general as we look to the rest of the year. We're monitoring the current macroeconomic backdrop, including the water in the middle East and the resumption of students longer payment.
Additionally, we are also seeing unfavorable trends on FX compared to our prior outlook.
As a result for Q4, we now expect the following total revenue between $272 million and 278 million, representing a growth rate of 14% at the midpoint of the range our outlook assumes FX impacts to be 6 million worse than what we had assumed at the time of our prior guidance.
Outlook also assumes $1 million of impact from the ongoing conflict in the middle East mostly in Bumble App.
Bumble out revenue between.
$221 million and $225 million, representing a growth rate between 16, and 18% our outlook assumes FX impact to be 4 million worse than what we had assumed at the time of our prior guidance. In addition to the impact from the conflict in Israel.
With respect to paying users, we expect full year Bumble net adds of approximately 510 to 515000, which implies approximately 75000 sequential net adds for <unk> at the midpoint of the range.
We expect produce sequential net adds to be flat to slightly positive in Q4.
We expect Q4, adjusted EBITDA between 72 million and 75 million, representing 27% margin at the midpoint of the range.
So our full year 2023. This translates to total revenue between 1.05 billion and 1.056 billion, representing a growth rate of 16% to 17%. This.
This assumes an aggregate a 9 million impact from worsening FX versus our prior guidance and the Israel conflict.
Bumble off revenue to be between 845 million and 849 million, representing a growth rate of 22%.
This is an aggregate is 6 million total impact from worsening FX versus our prior guidance and the Israel conflict, but.
But adjusted EBITDA, we maintain our expectation of at least 100 basis points of year over year margin expansion.
As we look ahead to 2024, our fundamental strategy remains unchanged and we are very excited about the future of our business.
We have an exceptional brand that is loved and used by nearly 4 million paying users around the globe and growing.
We have a strong product pipeline that leverages innovative technologies wildfire authorizing safety for our users.
We are just beginning to realize the potential of our apps and we see tremendous opportunity to continue to expand our reach in more countries.
As we've worked to refine our planning for next year, we expect another year of solid growth for our family of apps.
At the same time, our preliminary outlook also takes into consideration the early stage of our planning process, our leadership succession plan and the trends we are seeing an expected headwind from FX.
As such our initial assumptions for 2024 or four total bumbling year over year revenue growth rate to be at least in the low teens.
This is approximately 150 basis points of estimated year over year headwinds from FX.
On an FX adjusted basis, this would translate to a growth rate of approximately 15%.
As we finalize our investment priorities for next year, we will continue being disciplined on our spend.
We expect full year adjusted EBITDA margin to expand between 50 to 100 basis points next year.
We will share a more comprehensive outlook in our next earnings call. When we discuss Q4 results.
Before I end I'd like to Echo Whitney Thanks to all our teams for their hard work in driving our business forward 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.
We will pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Alexandra Stagger with Goldman Sachs. Please go ahead.
Great. Thank you so much for taking my questions and congrats with me on your new role maybe two questions on the transition here.
First one on timing could you maybe elaborate and elaborate a little bit more on the timing of the announcements when you look at some factors inside the company versus outside why do you think this is the right time for you to make that move and then second you know listening to some interviews with did Jani. It appears when she has some very valuable.
Background in terms of AI.
AI in bringing AI features into existing products and services to what extent is this going to be a focus for her bumble and could it possible with some of the AI initiatives you've laid out in the past few quarters. Thank you so much.
Hi, so so great to chat with you. Thank you for the question.
So the short answer was we didn't make this decision based on timing. This was about finding the right successor, the right leader on the board and I have been focused on an extremely thoughtful and very deliberate succession plan for for some time and so finding the right leader.
Was was really the key and you already touched upon just one of many of many on his incredible strengths and we'll get into that in a moment, but I have to say the short answer is with someone as remarkable as Lenny Ani and keeping me engaged as the executive chair focused on.
My strain lean.
Leaning into my superpowers right I think so.
So many of the amazing efforts around our mission our brand our marketing our social impact our.
Our customers those are things that I am deeply passionate about and do extremely well, so allowing me to move beyond the day to day and get into this founder mindset on behalf of Bumble, Inc. You pair of her with me.
It's a remarkable opportunity I don't think people are fully recognizing how powerful that can be so really ultimately it's going to allow us to both innovate but drive growth across the business drive drive you know new products and now moving into your second question, Let's just talk about Lady on it for a moment, so first and foremost.
She is she is incredibly unique she's not omi wildly intelligent and capable she has.
Insane Followership I mean are people that she has led love her that was always going to be critical for our lead her to be my successor, and then when you double click on on her qualities and her experience she's a software engineer. She speaks system. She speaks the language of <unk>.
Technology, she is going to get in there and be not only a technology mind, but an incredible product innovator. She is a customer first product person. If you look at the the products. She has worked on these are products, we love in a door so with with them you know the the note on AI. The short answer is yes.
She is going to show up on day, one we've been doing so much work on the backend of AI already ranging from I would call. It three main buckets, you know tools, where we can integrate different AI tooling to enhance the customer experience to a supercharged. The you know the under the Hood efforts and then also drive efficiencies and drive.
You know our strengths are.
As far as the leadership team and the broader teams go the second bucket is really the non customer facing efforts that she's going to be leaning into this is a you know supercharging our algorithms further enhancing our safety and moderation of FERC I using AI as this underpinning supercharge effort.
To bring the world closer together and to drive healthy relationships and then the third bucket is the customer facing stuff. This is what we're all reading about and thinking about all day. This is regenerative AI comes in she has done. This she knows this is natural and native to her its not something she needs to learn when she arrives shiba.
Show up day, one ready to roll and so we're so excited about the opportunity and what this means for the member journey. The member experience and we think this gives us a massive competitive edge. So with that I hope you can hear it in my voice I am in this to win. This she is so excited and I think we are going to embark on bumbles most exciting.
Chapter yet.
Thank you and all the best again.
Okay. Your next question comes from Cory Carpenter with Jpmorgan. Please go ahead.
Thank you I had two just first hoping you could expand on the macro impact that you're seeing you called out student loan repayments, but where is this impacting the business and most of them are cross bumble work to do in our Cooper's payors.
And then a new thank you for the initial 24 guidance I'm curious at a high level.
But you would put around expected contribution from bumble after Madhu.
Cooper's payers. Thank you.
Yeah.
Hey, Cory sure I can take that so on the macro.
[noise] like you said you know like I said in my prepared remarks, we're largely seeing eight mm around you know are.
Oh younger users are more price sensitive users are those are the users that obviously are going to be impacted by the students laundry payments as well.
We are not seeing it much more broadly. So for example, a bundled premium adoption rates have stayed pretty steady through the quarter, but we are seeing a little bit of impact on the younger users as it relates to bundled boost so again, you know something that we're keeping a close eye on but we think it is largely limited to.
A certain cohort that is more impacted by this obviously this is a U S specific issues that you're seeing just on bumble much more versus on Baidu to a second question just to elaborate a little bit on how we're thinking about 2024 guidance is.
Now obviously is as you can imagine we are still very much in the planning stages for next year.
And there are still a lot of moving parts in terms of how we're thinking about 2024, I will say that there is a ton of excitement around what the product roadmap looks like what our international plans are and the teams are very very.
Deep in the middle of Ah Ah Ah.
Putting all of those on paper and so we so far we are very very excited about what this means for us for next year. We wanted to provide some high level numbers for all if you can have some context going into next year, recognizing that Oh, we have a a CEO transition and succession in place and so we will be evolving our thinking as we get.
Into Q.
Q4 earnings and into 'twenty 'twenty.
24 mm specific guidance.
Right now we are thinking about total ink revenue like I said in at least in the low teens, we do have a one to two point of FX headwind next year. So that's why on an ex FX basis on a like for like basis, you're talking about ink level growth off about 50.
Percent.
That's how we're thinking about total 'twenty 'twenty four guidance, if you look at the components of that.
We are very very excited that we will see strong contributions from bumble.
As well as Baidu, which is on a on a good path to stabilization bundled BFS will largely be.
Contributor from a user growth perspective, we do have.
Some monetization plans, but a lot of it will still being testing next year and fluids inefficient on also exciting additions to the business.
For Bumble App again, you know more to come on that but you should assume.
That we are looking at revenue growth rates, you know slightly above where the company growth rates are so we had let's say low to mid teens is where we are looking at bumble off guidance.
We'll talk more about the components of what this means in tons of payers versus our people et cetera, but I will just say that you know growing parents will continue to be a big focus for us for next year.
And then but it will also be up to be strong contributor for revenue next year, but do app and other line item.
And then finally on EBITDA, we are very committed to margin expansion as we've been saying now for a while we've given preliminary guidance of expanding margins by about 50 to 100 basis point, we still haven't fully finalized all the areas of investment and so we want to make sure that we are adequately providing.
Providing fraud things that Whitney just talked about in terms of investment in AI investment in data.
Data et cetera, but our commitment to expanding margins hasn't changed. So again, we will provide more specifics, but at a high level. These are sort of the building blocks of how we are thinking about next year.
Thank you very helpful.
Okay. Your next question comes from Eagle a reunion with Citi. Please go ahead.
Yeah.
Hey, good afternoon.
Wanted to see if we can put together.
Hum.
Changes here so.
You talked about in the 'twenty 'twenty four preliminary outlook you.
Building on our leadership plan.
Finalizing your investment priorities.
So upon a focus around product obviously.
And then.
Got it.
Our board and we'll be moving to the chairman.
How you think about them.
Those investments were.
What are the.
Any change in strategy.
Putting things on pause how are you going to make that transition and just help us understand how all of that.
Thank you.
Yeah. So at a high level you know I think our our strategy that we've been following has been largely consistent with what we started out with when we first went public right. As you think about the the building blocks that we have for growth hasn't really changed for us and.
And as Whitney mentioned earlier focus on innovation focus on customers and focus on brands is something that we've been very consistently been doing and we don't expect that that changes next year, either I think obviously with maybe on his background in product and tech, we definitely think that that'll be an area of investment for us we want them and again.
Not dissimilar to what we've been saying for the last few years that is what drives our engine. So I think you'll you'll you'll see us continue to talk about that.
And then obviously you know as she comes in and ramped up on the business you know I am.
I'm sure she'll have a very strong ideas off the things that she wants to do it. So that's why I think some of this will be fluid for us as we get into next year, but as you think about at a high level guidance.
Wanted to make sure that we gave everyone at least guardrails that you can operate with going into 2024, so that was really the attempt.
At giving a very high level guidance for next year.
Thank you.
Yeah.
Okay. Our next question comes from Sri <unk> with Evercore ISI. Please go ahead.
Okay. Thank you for taking my questions. Let me try two please one is just a quick thought on why no repurchases in the quarter and then second is could you provide more color.
Color on the two product subscription tiers. Please the one that's lower priced in terms of the timing the pricing our and the rollout them for for both plants. Please. Thank you.
Yeah sure I'll strip that just quickly on why we didnt buyback any shares we won because we were in the market in the middle of a leadership search we were unable to buy shares just for legal consideration.
The reason why we didn't we weren't able to buy shares.
I'll turn at the Whitney for that part Yeah, Hi, Thanks for the question. So let's talk about the two different subscription tiers I will start out at premium plus we are really excited about premiums boss I want to underpin this by saying that it has actually been largely one of the most requested features.
In and of itself that we have received over you know a long time now because it delivers a more curated more high intent more we could say thoughtful experience right you have a better chance of a match and Theres a lot of other layers that come with this premium.
Plus experience, we've been really pleased with the very early indicators.
Indicators and the early results. We're seeing so you can expect an update in the coming quarter.
Quarter, and then moving to based here. This is this is really focused on the different types of engagement and a more personalized experience that particularly gen Z enjoys so the way call. It 18 to 22 year olds are looking to.
Breath himself on themselves is is actually quite different than the older cohorts, even even their parents just a few years older and we are so good at listening being on the ground and understanding what this age group is really looking for when it comes to meeting people and so that's what based here is all about.
It is in early testing right now and we don't have specific timing or pricing to share publicly today, but I can tell you that it will be a low price point. This is really with the intention of expanding perez and creating a more engaging experience for that next generation. Meanwhile, on the other side of that barbell.
All premium plus will be a much more premium experience than that obviously and more premium to the current premium offering and we believe that the blend of that well you know be.
Protective to ARPA, while expanding Paris.
Okay. Thank you thanks. Thank.
Thank you.
Our next question comes from Justin Patterson with Keybanc capital markets. Please go ahead.
Yeah.
Great. Thank you very much.
That's a little bit on to do with you mentioned doing a brand.
Brendan I know you refreshed with Garten next year, how are you thinking about just the timeline towards that whole thing.
Really restore user growth and revenue growth for the.
The 'twenty 'twenty four thank you.
For the question. So you know what we're really excited about baidu.
We are we have a great team, leading the do and they are really anchored on one key focus build confidence.
So this is a quite remarkable.
Finding if you go and speak to the Baidu audience prior to some of these efforts that we've been leading that have been.
Leading to the results you're seeing that we reported today and what we expect to continue these.
These members say that they want to find someone they're lonely they really have high intent to meet someone but they have super low confidence they don't feel great about themselves when it pertains to dating and how they think they'll be viewed and so the team has anchored 100% around that so you can imagine that will be.
The nucleus of our hero campaign of a brand relaunch. These are coming on throughout the rest of the year. In early 2024, I think you will be pleased to see our you know the efforts ramp here domestically, but also around the world and everything is really working backwards from the customer pain points. So they are solving.
Members issues, which is leading to real tangible results I I actually think Theres an important note here for everyone tuning in.
Demand for love is that all time high demand for our relationships is higher today than ever right, where we're lonely society were super isolated we're super disconnected social media does not introduce us to our our love lives that said.
We see such potential with all of our products and giving the do this real clear intention of solving for confidence has already been proving to be working so stay tuned we're really excited with the early progress and the results should speak for themselves.
Thank you.
Okay.
Okay.
Okay.
Our next question comes from John Blackledge with TD Cowen. Please go ahead.
Great. Thanks, two questions first on boardwalk paying users.
Or kind of the key geographies for bubble up paying user growth in the fourth quarter and next year.
Then on the recent products complement <unk> are they more so.
Diving peer growth or RP pool, or both if you can just provide some more color there that would be great. Thank you.
Yes, sure. So you know as we think about payer growth. Our focus is on making sure that we have you know pay outgrowth across every market. So obviously the U S will continue to be a big focus area for us and we want to make sure that we continue to grow our user base. There. So you'll definitely see us focus extensively on that obviously our international <unk>.
Get the growing really well. So you know you'll see we are hoping again. This is a not just a Q4 statement rate going into 'twenty to 'twenty four as well focusing on.
Accordingly speaking markets like the U K, Australia, Canada outside the U S are important western Europe as we've been saying now for a while has been a very important market for us, especially in countries like Germany, where we are you know the second most download a dating app again those are strong.
<unk> additions for us.
Also markets like Switzerland, Netherlands, France, again markets and messing it up I think it will be important for us.
Asia, especially India is a big market for us so making sure we have a sizable user base of <unk>.
Abusers Theyre, so making sure that we increase the penetration that is something that the team is quite heavily focused on.
Other markets in Asia as well our.
Have you no green shoots that we're looking at and then recently I.
We have launched in Latam there are certain markets in Latam that we are focused on.
Obviously as we always say when we enter a new market. Our focus is on active users growing the user base and then slowly as they get to a sizable user base. We then start to convert them into paying users. So a playbook for how we think about international growth is largely the same we had obviously in the middle of figuring out exactly which countries.
Ah well new countries, we will enter into next year. So when we come back in and said, we'll look forward to sort of providing more details on that and then as it relates to your second question around complements and best fees.
<unk> said this before.
Obviously, depending on how a product is engineered often these can be.
Drivers of pairs drivers of our people who are in many cases, both for both of these products I will say you know we are our goal is to drive both of these metrics right now complements is still.
Very much in our people drive out obviously, we've gotten new payers as a result of that but we are definitely seeing you know high adoption from existing pair so you're seeing that reflected in the our people.
And then on best pieces work best piece I would say, it's still early days, we as you know we said before it's now part of bundled premium.
And so we've seen a strong adoption from people entering bundled premium as a as a entry point from best beef.
But we look forward to it it's becoming a per driver as we continue to build out the product and we continue to find it.
Thank you.
Okay. Our next question comes from Mark Kelley with Stifel. Please go ahead.
Great. Thank you very much I just had two quick ones. The first one is just on the new.
Person tourism.
Bumble up I know you said that they would be protective of our group is a good starting point for 24, just assume kind of flattish or approved for bumble out that's the first one.
And then if I can one completely understand that you're early in the planning phases for 'twenty, four and there's a lot of moving pieces, but.
I guess what line items should we look to for that for operating leverage that you're calling out for next year. Thank you.
Yeah, I can take both of those I think it's it's a little bit too early to be.
I'm talking about the sort of puts and takes of what our people will look like next year I think obviously our people is a function of several things. It includes our international and makes it includes pricing changes that we're doing in different markets. It includes the new products that were launched.
So I'll just say wait for us to provide more details on on exactly what our people looks like next year I'm just at a high level. You know if you think about the different pricing tiers. Our goal is to make sure that we are capturing.
And more to payers across the ecosystem of users that we have and so you know if you think about the higher priced yet it's an opportunity for our existing premium users to potentially upsell and pay more in which case it becomes in our people driver and then overtime our goal would be to get non beta.
<unk> and non bumble users directly into the premium plus ecosystem as well, which then becomes a per driver and then at the beginning on the Lora tier our goal would would largely be for it to be a pad conversion, we have a lot of people on our app today, especially.
In the on the sort of younger side are off the of the demographic that you use the app for free, but then don't necessarily want to pay for bumblebee booster bundled premium so having a lower priced here allows them to pay for the product in a way and start getting used to the parent feature. So that's one I would say our goal would definitely for beef.
For that to be a paradigm, but again you know as we increase the number of subscription products that we have in our ecosystem. Our goal is to make sure that we are constantly managing them.
The ecosystem in a way that that is it continues to be healthy.
And then on your question around operating leverage.
I think again, if you think about the building blocks for next year. It should it won't be too dissimilar to how we thought about leverage in 2023.
So you will see us.
Continue to invest again very strategically in product and technology I've always said this before in our company knows that the bar for investment is high and so we want to make sure that we continue to to maintain that high bar.
But obviously innovation is what drives growth.
But also you'll see us invest in that we want to continue to show leverage on areas of marketing spend. So building on brand is is always going to be important for us and why we will be spending towards it.
On a on a percentage of revenue basis. Our hope is that we will we will see some leverage that and then you know we always strive to do as we get bigger and as we have more scale, we always strive to get leverage in other areas such as G&A I think cost of Avenue is likely going to be largely.
<unk> steady to what Youre seeing.
Right now.
Again more to come but hopefully that's helpful.
No very helpful. Thanks very much.
Our next question comes from Chris Kuehn to rich with UBS. Please go ahead.
Hi, Thanks for taking my question just maybe one on the 24 revenue guide for at least low teens can you just help us think about kind of the cadence of that throughout the year. Thank you John and got it to about 14% year over year growth at the midpoint for <unk> should we be thinking about it this is a bit of a deceleration.
<unk> from that sort of low end of mid teens down to low double digits or is this going to be a relatively stable level of growth throughout the full year and kind of what youre seeing right now that gives you confidence in that guidance. Thank you.
Yeah sure. So again I think it's a little bit too early to be providing sort of very specific quarterly guidance numbers of how we think the cadence is I think at a high level. If you. If you look at the the growth rate that we're seeing today the way we are.
Thinking about it is we're looking at the growth rate that we're seeing today, we are looking at the product roadmap that we have we're looking at the things that we know we are either already in testing or have already launched and then we will start to become bigger next year.
And you know, we we see a range of outcomes. So again more to come on exactly what the quarterly cadence won't be but we we feel good about the the overall number for the year.
Got it thank you.
Okay.
Our next question comes from Zach Morrissey with Wolfe Research. Please go ahead.
Great. Thanks, I just wanted to ask about the kind of macro impact on the consumable business.
You talked about kind of the lower kind of low income users being affected and we're seeing that through the kind of premium being more stable, but I guess what are you seeing on the consumable side of the business and then secondly.
Just curious you've called out increased kind of competition from tinder, increasing their marketing spend and especially in certain markets. In Europe can you just provide an update kind of what youre seeing in some of those kind of key markets.
In terms of accomplishing on the marketing side. Thanks.
Sure. So on the consumable side, you know was that as you know most of our paying users are also subscribers what products you know we over index on the subscription side of the business as if you. If you think about the composition of revenue.
So consumables is a smaller portion of it within consumables I think we are seeing numbers largely you know hold steady so we're not really seeing.
Any sort of big impact in in what we're looking at them across age groups I think it's largely been steady.
So nothing really to call out yet as something that stands out for us.
And then with me if you want to just.
Talk about marketing and general and competition and just you know what we have seen yet so I.
You know what this is such a big piece of my excitement going into this that forward into the executive chair role I am in my heart and in my skill set I'm I'm, a marketer I'm a brand or.
This is this is such a superpower of ours and the unique brand that we have built up over the years and so we've said this once we'll say it again, we have such a durable moat.
And we really have loyalty with customers with women that has never been seen before in any gating related category. You know you don't really see dating app hats walking around the streets and so the fact that we have a beloved community that want our merchandise they want to integrate us into their wedding, they're proud of us.
Is where we shine and I'm going to put so much love attention and care into this in 2024 take our brand to the next level take our mission to the next level create that evangelize beloved fans.
Fandom around bumble and bumble for friends. Another thing that's worth calling out the connection the emotional connection that women in particular have to bumble for friends is so special our brands symbolizes Trust respect safety when you think about our opportunity to consistently scale of that mess.
<unk> unique to candidly just unique to ourselves.
This is really where I get so excited so that paired with innovation and product.
All of the horizon of AI.
Were right for a very exciting next chapter in and I'm personally not Earth moved concerned about any competitive threat from a brand and marketing standpoint, we've got this.
Okay. Our next question comes from Nate <unk> with Morgan Stanley. Please go ahead.
Hey, everyone. This is nathan for their on Prem Warren Cheng.
I guess thinking about the product roadmap what are the kind of the one or two key features that you are expecting will drive revenue growth and 24, and then given the increased buyback authorization, how should we think the cadence of share buybacks and maybe capital allocation more appropriate going forward. Thanks.
Thanks, So I'll talk about the product roadmap for a moment. So we're super excited about the entire ecosystem that is going to be built inside and around premium plus we see this as our opportunity to build a more premium brand within the brand that exist today. This is going to extend.
And beyond just a couple of features bundled into our subscription this is going to be an all inclusive experience. We also feel that there is a huge opportunity to leverage this for the adult online to offline opportunity. So people are consistently saying I want to meet people in the real world.
But I can't it's too hard you know you literally have to be at the right place at the right time, it's nearly impossible to meet that special someone in real life. So leveraging premiums losses. This all inclusive gateway to meeting incredible people via Bumble, but also getting you offline. So we're incredibly excited about premium class.
It's not just a revenue driver, but a real growth driver of loyalty driver recapturing share from you know these folks that are looking for something more serious so premium pluses is really exciting. The other thing I would say is leaning into this theme of confidence you will see that translate in its own way back to bumble app as well and using generative AI.
Hi to really be this best friend in your pocket inside a bundle to help you date to build confidence to feel good about it. So that you never delete the app because it didn't make you feel good about yourself. So I think you know, we're really overhauling the entire interface and experience in 2024 and bumble too.
Plano is going to be a product that that goes much higher in terms of of these offerings, but leaning into the other end of the barbell to really capture that college age audience as well new discovery mechanisms and really engaging people for the next decade.
And just quickly to touch on capital allocation Nate.
Nothing has changed.
In terms of thought overall philosophy of how we think about capital allocation, we've sort of always said this before our goal is to invest.
Invest in our business first and foremost we have a ton of organic growth ahead of us and so we want to make sure. We we do that and within the within the envelope of margins that we have set out for ourselves we will be opportunistic to the extent there is something from an M&A perspective that makes sense again the bar for that is.
As we've said before but if there's something interesting for us we'll definitely take a look at that and then you know we've always said the buyback gives us another tool to return capital back to shareholders and that's what you see reflected in the increase in the repurchase authorization from the 150 million that we.
Had a couple of quarters ago to now $300 million, we want to be opportunistic about how we buy back shares so nothing specific to call out in terms of cadence of how we intend to do it but this is definitely something that we are you know very very focused on doing and you'll see us be opportunistic are in <unk>.
Tom's of buying buying back shares.
Accordingly, we will take our final question for today from Ben Black at Deutsche Bank. Please go ahead.
Great. Thanks for sneaking me in here.
I just wanted to double click on AI and with me.
Spoken about potentially supercharge.
Jim.
It's human connection can you just give us some examples of how AI can actually support new innovative product.
Product launches out Bumble and do you also think it could supercharge the velocity of product development as well. Thank you.
Thanks for the question so let's start with the second part of that the short answer is yes, where technology is the nextgen technology and and the AI tooling up both exist internally, but externally velocity is going to be able to ramp.
Exponentially faster, let's talk about how this can actually tangibly supercharge love and connection. So I think the reason why AI can be.
Incredibly value added and business enhancing to our business in particular is because look at what people come here to do they come to our product to meet people. They want to meet people that are compatible to them that will make them feel good about themselves that will have shared passion.
Sure values shared desires dreams and hopes for the future right now.
With our very early innings of AI. If you look at the AI algorithm for Bath piece already.
The ability to say, yes to match to chat is exponentially higher than just the basic algorithm and that is the very baseline of what AI algorithms can do so imagine a world, where and then I'm going to talk about the other facets of this lets just focus on matching for right now imagine a world where you do.
Don't have to swipe through doesn't potentially hundreds of people to find your special someone you don't have to swipe through endless people to find someone to go out for fun Friday night with you can do this seamlessly in just a matter of moments when AI is integrated into this product through all the different technology that currently.
It's available and that we're working on implementing ranging from clip technology reading photos voice all of the different ways to detect relevancy you can deliver someone they're perfect person in such a efficient safe.
You know effective way so much more than what exists today. So while we're already driving you know extremely high rates of compatibility and success stories right.
Many to count. This is just going to be a multiplier of that now let's move to the other facets of this really quickly before we wrap.
Expressing yourself is incredibly important in determining relevance with somebody else the way I AI can help you build profiles understand your personality extrapolate the best from you and then really just condense that into a short form profile. We're at the very very very early innings of what that can do.
You are so so those are just two small pieces in the interest of time of where I think AI on day, one can be extremely value added in the last piece I would say, it's companionship from an AI bot standpoint, we are not here to replace humans with machines. We are not here to replace humans with boss, but what we can do is give you a tailored program.
Bought to be your coach your therapist. Your Pal your wing person your companion, while you navigate the quest for friendship Love business. Whatever you are here looking for so I think we're at the very very early innings of something extremely exciting and I hope it is reflected in the buyback in mind.
Susie as I'm in this brilliant leader joining us how excited we are about the opportunity.
Okay.
Very interesting. Thank you so much for them.
Yeah.
Alright, Thank you ladies and gentlemen that concludes today's call. We appreciate you joining you may now disconnect.