Bumble Inc.

CEO, Vidyani Jones, and CFO, Anu Subramanian. Before we begin, I'd like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today's earnings press release and our periodic filings with the SEC. During the call, we also referred to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliation for the most comparable GAAP measures are available in our earnings press release, which is available on the investor information section of our website at ir.bumble.com. And with that, I'll turn it over to Lydianne.

Thank you, Cheryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. while our team's strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook. We're operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. I know we'll walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We've gotten leaner as a team. We have attracted top talent to our leadership team and throughout the organization. We're making better data-driven decisions, and we're increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I'm really proud of our team and the progress that we're making. The bubble transformation is foundational to achieving our goals for reimagining Bumble apps. On our last call, we shared our priorities for how we're realigning Bumble app to drive our customer success by ensuring they find great connections and ultimately their forever matches on Bumble. To achieve this goal, we're executing on a vision to build the next generation of online to real world connection. The plan started with three key initiatives we laid out on our last call. Strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customer's journey. We're off to a strong start in Q3. First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top tier cities around the world. Effective organic marketing has always been a bumble differentiator and we're reigniting that engine. In parallel to the organic efforts, we're optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets. In just over a month of testing, we have seen a high single-digit incremental increase in women's registration on Bumble, which has resulted in a meaningful increase in yes votes per day. This data validates the importance of a healthier ecosystem in driving more matches. We're expanding our testing into additional markets in Q4 and will continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform. We're providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we're making really good progress here, and I'll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues fought by our users. driving handling time down to well under one minute. We have also achieved a double digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model. Finally, I'm excited to note that we're piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case responses. All of these efforts ultimately support customer experience and satisfaction, and will continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week we delivered a fall product update to our Bumble app-themed date on your terms, which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability and a new ranking algorithm that helps customers see the most relevant potential matches. Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based moves. This release demonstrates our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for BumbleDate. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better. Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we're determined for Bumble to lead this change. We do this by delivering a technology-enabled platform that excels at fostering online to real-world connection, helping people find love, friendship, and community in their offline lives. As a brand that defined the core principles of authenticity and trust and empowerment for women, we believe we're the best positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting roadmap and will be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product roadmap. The release will be focused on authentic connections, and we introduce several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contacts to get feedback and gain confidence in their choices, AI-powered photo selection for easier and more authentic profile creation, and a few more surprises that we'll share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps towards delivering dating and connection experiences that are joyful, memorable, and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability. While we execute on our ecosystem work and product roadmap, we'll continue to make pricing and paywall optimization to support conversion and revenue. Longer term, we're focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current paywall. As we make these improvements to our revenue strategy, we'll clearly communicate the value of our offerings to our customers to drive higher satisfaction and ultimately lifetime value. We're excited about our path ahead. We're confident in our direction and our ability to execute. We also know that it would take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation, and ultimately drive revenue growth. We value the support of our investment community on this journey, and we're committed to helping you see and measure progress along the way. Now, let me move to Badoo and our other apps. Badoo's brand awareness continues to improve since the relaunch earlier this year, and the revenue re-architecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learning that we're applying to Bumble app. We're also modestly rebalancing some of our marketing investments and we're optimistic about Badoo's potential. Beyond dating, we're actively working on our product roadmap for friendships and community. I'm delighted to report that Geneva is now live and we're gradually increasing awareness and adoption consistent with our prior stated plans to launch this fall. Geneva, as well as BSS, are important to our overall vision of helping more people connect, including non-romantic relationships. We'll have more to share in our plans and progress as we move into the next year. Wrapping up, we're finishing up 2024 highly confident in our transformation path. 2025 is an important year. We're executing diligently on our marketing, customer experience, and product plans. all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to lead to the reinvigoration of our category. Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution, and a healthy financial position, gives us the robust footing on which to build the next generation of online to real-world connections. When I mention our powerful brand, it's important to emphasize that we'll never let up in living the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA champion New York Liberty this season, and we're excited to see the market increasingly embrace women's sports. We have also been very humbled to partner with an amazing group of people in raising the profile of the important documentary, Swarovski v. Texas, which brings much needed visibility to women's healthcare, a fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remains strong in brand sentiment relative to our peers and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I'm grateful to our team for staying committed to our mission and values and for rallying around the important work we're doing. I'd like to thank our shareholders, partners, and above all, all of our customers for the trust and support you've given Bumble. Now, here's Anu to cover the quarterly results.

Thank you, Lidyanne, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working towards setting the foundation for sustainable growth and building towards the vision that Lidyanne just shared. While we still have work to do over the coming year, we are confident in our direction and encouraged by the early progress we are making. I'll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total BumbleLink revenue was $274 million, down 1%, including an unfavorable impact from FX of approximately $1 million. Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total RP pool to $21.17. Bumble app revenue declined 1% to 220 million with an unfavorable impact from FX of approximately 1 million. Bumble app paying users grew 10% to 2.9 million. On a sequential basis, we added 52,000 paying users. The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly, excluding FX impact. Badoo and other paying users grew 14% to $1.4 million, and as Lidiani noted, we began to see the early benefits of Badoo's revenue re-architecture driving improved payer conversions. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net ads, which came in at $65,000. Badoo and other R people declined 6% to $12.03. Turning now to expenses. Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a non-cash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors, primarily as a result of a sustained decline in the company's market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other non-cash or non-recurring items, total costs and expenses declined 5% to 191 million. As a result, Q3 adjusted EBITDA increased 10% to $83 million, or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the headcount restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was 79 million, or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to 63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower headcount costs from the reductions we announced earlier this year. G&A expenses declined 17% to 27 million, representing 10% of revenue, down from 33 million or 12% in the year-ago period. The decrease was due to lower headcount costs as well as lower overheads as we continue to be disciplined about our spend. Product development expenses were 22 million, representing 8% of revenue, flat year-over-year. Turning now to our balance sheet, we ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program, and since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4. Year-to-date through Q3, we have returned approximately 140% of our free cash flow by our share repurchases. Now moving on to our outlook. For full year 2024, we expect... Total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook. We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. An adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range. We expect Q4 2024 Bumble app payer net ads to decline $70,000 to $80,000. This implies full-year Bumble app net ads of approximately 285,000 at the midpoint in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble app strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience, and ultimately drive revenue aligned with the value we are delivering. As Liliani noted, full realization of our work will take multiple quarters. We are making thoughtful investments in marketing, people, and technology to support our roadmap and position us for long-term growth. These investments and our ecosystem initiatives, including product releases, will take time to translate to meaningful revenue growth. And we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections, and robust product vision uniquely position us to lead the re-imagination of the dating app category. While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I'll turn it over to the operator for Q&A.