Thank you for standing by. My name is Sydney and I will be your conference operator today. At this time, I would like to welcome everyone to the Bumble Q1 2023 earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I now pass it over to Cherryl Valenzuela.

Thank you, operator and thank you all for joining us to discuss Bumble first quarter 2023 financial results. With me today are Whitney Herd, Founder and CEO; Tariq Shaukat, President; and Anu Subramanian, CFO of Bumble. Before we begin, I'd like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current 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 statements 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 annual report on Form 10-K for the year ended December 31st, 2021, and our subsequent periodic filings. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. 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.bumble.com. And with that, I'll turn it over to Whitney.

Thank you, Cherryl and good afternoon everyone. Thanks for joining. We are off to a great start to the year, delivering strong revenue growth and paying user additions in Q1. Total Bumble Inc. revenue of $243 million, grew 16% year-over-year and was at the high end of our guidance range. Revenue growth was fueled by both payers and ARPPU. Total paying users increased 15% to reach 3.5 million and ARPPU grew to $22.83. We achieved strong profitability with adjusted EBITDA of $59 million, representing a 24% margin, which exceeded our expectations. Our results demonstrate that online dating remains a healthy, attractive and high growth markets driven by powerful secular trends on an increasingly global scale. According to a Stanford study, which was updated recently, online dating has surpassed more traditional mechanisms to become the top way for heterosexual adults in the US to meet their romantic partners. This trend continues to grow in the US as well as around the world, driven by advances in technology, digital-first demographics, and shifting cultural norms. We at Bumble see this trend every day and we feel very fortunate to be a rare technology business that brings people together in real life. Earlier this week, the Surgeon General issued an advisory calling attention to the devastating impact of the epidemic of loneliness isolation, and lack of connection in the United States. In the face of this public health crisis, our work is more critical and more important than ever before. Just the other day, the team and I had the chance to dig through overflowing boxes of engagement, wedding, and baby shower invitations that have been sent by successful Bumble users to our headquarters in Austin. It is so rewarding to see the impact on the community that our products, team, and our mission…

Thank you, Whitney and good afternoon everyone. I'll 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. Total Bumble Inc. 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 war in Ukraine, impacted our growth rate negatively by five percentage points. Total Bumble Inc. revenue was driven by paying user growth 15%, primarily from Bumble App and ARPPU growth of 1%. Revenue from Bumble App was above the high end of our guidance range at $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 a sequential basis, we added 98,000 paying users resulting from strong growth in monthly active users, as well as increases in payer penetration. Bumble ARPPU was $27.93, down 4% year-over-year. This was primarily driven by FX headwinds and impact from country mix. Now, moving on to Badoo App and Other. Badoo App and Other revenue was $49 million, down 13%. In aggregate, FX headwinds and the Ukraine conflict impacted our growth rate negatively by nine percentage points. Badoo App and Other paying users, excluding Fruitz, declined 7% to 1.1 million. Excluding the impact of our exit from Russia and Belarus, Badoo paying users would have grown over 2%. As Whitney mentioned, we believe we are making progress in stabilizing Badoo. On a sequential basis, paying users dropped 47,000 in Q1. Badoo App and Other ARPPU, excluding Fruitz, declined 7% to $12.47, primarily due to FX. Turning now to expenses. We are more…

Thank you. [Operator Instructions] Our first question comes from Alexandra Steiger.

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 as existing regions for the remainder of 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 Tariq. Thanks so much for the question and I'll 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 international markets. I think it continues, 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've launched in Latin America, in India, and in Southeast Asia. We are seeing that our focus on what we internally refer to as durable growth, meaning this this notion of let's build an organic base in these countries, let's make sure that we do that in a way that generates the word-of-mouth and virality that we need in these countries so that you build resilience into the and 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 are 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. There's a couple of more countries in Western…

Great. Thank you.

Thank you.

Your next question comes from Cory Carpenter.

Thanks for the questions. On the Bumble App 2023 outlook, Anu, could you just talk about your latest thinking around expected contribution of net ads versus ARPU. I think you previously talked about a 450,000 to 500,000 range as well as the cadence of that through the year. And then non-financial related, one of your competitors is raising prices, and they're losing some subscribers as a result. Curious if you view this as an opportunity to take share, or know, maybe if there is evidence already that perhaps you are some of those users are moving over to Bumble? Thank you.

Sure. Hey, Cory. Thanks for the question. So, I think 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 our net adds expectations, so we still expect the 450,000 to 500,000 net adds for the full year that we had guided to. For Q1, we had said we would do between 90,000 to 95,000. We're very happy that we came in just a little bit higher that bad at 98,000. We are expecting for Q2, we will be between 120,000 to 130,000. And then Q3, we expect we will be above that. And then from a seasonal perspective, Q4. As you all know we will be slightly lower than where we end up in Q3. So, that's the cadence of what we are expecting. Again, this is very similar to what we had talked about in our previous earnings calls, and nothing really has changed. I think we've been very happy with how the business was performed and excited about the product roadmap that that Whitney talked about earlier. So, we'll obviously share more. In terms of ARPPU, again, I think for the full year, we are expecting that ARPPU will come in maybe slightly lower than the 2022 average ARPPU that you saw. But as we always say, on a practical basis, our goal is always to make sure that we are maximizing payers and our people for each product that we put out based on what is relevant and what's important for that product experience to look like. So, obviously, there are always puts and takes between payers and ARPPU to some extent. But largely, I think, what I just talked about should very much hold true. And then maybe I just also mentioned for Badoo, what -- from a net add perspective, we had guided to about negative 50,000 for Q1, we came in at negative 47,000. We feel pretty good that we will be in sort of stable to positive territory in terms of net adds for Badoo. So, we are sort of pleased with how the business there has been performing. We definitely have work to do there. But we definitely feel like it's on the right path. So, yes, that's the update on your first question. I'll pass it over to Tariq to talk about the--

Sure. In terms of some of the competitor price increases, I think what we are -- what we fundamentally believe is people decide whether to pay on Bumble based on how happy they are with the Bumble experience. Certainly as it becomes potentially less attractive from a pricing standpoint to spend on a competitor, I suppose that could be positive for us -- still too early to tell. That's the case, what we do feel very good about is that, as Whitney mentioned, the net favorability, which is how many people are favor -- have a favorable impression of Bumble versus have an unfavorable impression of Bumble is the highest let's say, in the US of any of the major dating apps, track by Morning Consult. So, we think we're set up well to be -- to continue to be a preferred platform for people who want to participate in dating apps and who want to pay. And in fact, if you looked at Q1, as our net adds numbers suggest, our new subscriptions and our payer penetration rates remain healthy and we're actually increasing towards the end of Q1 or throughout Q1 and so we do think that there are some nice tailwinds in the business.

Your next question comes from Shweta Khajuria.

Thank you for taking my questions. Could you please comment on the demand trends that you're seeing? Your competitor recently mentioned there's some headwind on their à la carte 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 talk about greater focus on operating efficiencies, could you, Anu, please talk about what exactly you are focused on, what is -- what drove the EBITDA upside and where it 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 turn it over to Anu. So, we are really seeing quite nice top of funnel demand in general, I think, across Bumble and Badoo, towards the end of the quarter again, Badoo was seeing a very nice level of registrations, 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 -- payer 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 a is a good sign. Our renewal rates for ongoing subscribers, meaning people who have been subscribers for multiple months, remains healthy and also saw modest improvements throughout Q1 and in April. So, generally speaking, seeing pretty healthy demand trends. The exception, I would say, is if you look at this at a segmented level -- and by the way, to your question, that was -- those were sort of global trends. I think you saw that in the US, 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, meaning, there are some people who do want to be a subscriber, they'll use it for the month, and then they'll choose not to renew because they're economically stretched. That is 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 picture. On the consumable side, we're also seeing very strong demand there. Actually, our larger consumable packs are actually doing probably the best of all the consumables that we offer. So, I think we're seeing quite a different trend there than what others may be seeing.

Yes. And in terms of your question about EBITDA, I think, for Q1, I would say the majority of y performance that you saw was really us being very disciplined on both marketing spend as well as in headcount. On the marketing side, we've been compensate of viewing all our campaigns, looking at all these little data returns in every market and trimming budgets based on that. We obviously, based on the topline numbers that you see, we haven't seen any loss of efficiency. So, all of this is just us getting better and better in getting the returns that we want. We would definitely like to see if we can spend some of the marketing dollars that we saved in Q1 and Q2. And that's why we haven't increased full year guidance for EBITDA yet, but 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 that we are guiding to for the full year. And in terms of headcount, I'll also mention that over the last few years, we've had an ongoing cadence of continuously reviewing different parts of our organization in terms of how much we are funding each of those groups. We've been pretty judicious 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're just doing for the first time this year. This is 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 certain critical areas are definitely being funded. Areas like, obviously, Whitney talked a lot about AI, so augmenting our engineering teams to make sure that we have the right skill set around some of the things that we want to build and develop. We are definitely looking at funding, but otherwise, like I said, the bar for how you're thinking about incremental headcount 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 we're investing in the right things to maximize our top line.

Okay. Thank you, Tariq. Thank you, Anu.

Your next call comes from Lauren Schenk.

Great, thank you. Two, if I can. I think relative to what we know you're running through end of February and an AK 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 improvement? 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 1Q to 2Q? Anything else to call out there? Thanks.

Yes, I think I'll maybe start with the second question first. Nothing, specific to call out on 2Q. I think we've said before, our first half tends to be just seasonally, a higher quarter in terms of marketing spend. Now, this in Q1 as well, and eventually we were able to spend less and still achieve the top end efficiency that we wanted. We are earmarking certain funds for certain campaigns in Q2. But again, like I said, I think our goal would definitely be to try and maximize efficiency wherever we can. It doesn't change the trajectory that we have for the full year. It's just purely a function of timing of how some of our campaigns are landing. And I think in terms of the pair cadence for Q1, I think it's important to remember that the net ad number has a lot of things that can impact that. So, it's not always easy to sort of just draw a correlation between the months. If you look at the year-over-year sort of growth rate, January was slightly lighter than you would have normally expected, but Feb and March did very well. It was in line with how we had planned our product cadence. 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 top of the funnel user growth as well. And also the payer optimization work that we had planned for the quarter. So this was definitely something that we were expecting. And obviously, when we guided to the numbers, we were very confident that that's the number that we would end up in. And we came in slightly higher than that. So nothing specific to call out other than, what had been sort of planned from a user growth and product perspective.

Okay, great. Thank you so much.

Your next call comes from Benjamin Black.

Hi, thank you for taking our question. This is Ishant Goel on for Ben. It would be great to hear your thoughts on the recent developments within App Store fee. And do you sense that App Store fee really could be a 2024 event? 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 talked about before, we are pleased to be in the user choice billing program at Google as just one example of the efforts that we're taking. I would say at the moment, we are quite 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 a good thing. So we're very positive on the user experience side and on the -- the payer side, if you will, on that front. In terms of the fees themselves, I would say 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, this is all 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 have to pay as opposed to lowering the fees. So I think it's a very murky picture and there's a lot of detail that needs to be worked through by all the different platforms.

Thank you very much.

Thank you.

Your next question comes from Justin Patterson.

Great, thank you. Good afternoon. Whitney, I was hoping you could touch a little bit more on just marketing toward Gen Z. It seems like something that, many companies have been struggling with. So I would love to hear a little bit more about how you're positioning that potential new product to really attract that demographic more. And perhaps as a follow-up to that, I 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. I'd be curious to hear about how you're thinking about just the broader user experience within there and making sure that you're not sacrificing the health of the product in order to drive revenue growth? Thank you.

Yes. 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 quarters has been the steady growth that we're seeing in our Gen Z user base. And that's particularly in the US. And so as you can imagine, this is very exciting as we are successfully acquiring this user base of the future. And I mentioned that Bumble app also led other dating apps in terms of MTF scores among US Gen Z and Q4. So that's another proof point that our appeal to this very important market is -- it's really resonating. And we have recently begun to build products designed to engage our Gen Z users. So the fact that we're performing so well with this generation without really optimizing the platform yet for them is a positive. I'll talk about that in a second. I 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 Honey Ambassadors and because we have consistently and constantly evolved that and stayed current with that, where we don't age with them necessarily. We're always bringing in the freshmen and the sophomores and the juniors and the seniors along with us. We 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 virtual gifts and optimizing speed dating for them and really leaning into that Gen Z women's experience and the deeper focus…

The only thing I would build on top of what Whitney said is, as we look at our experimentation plan as we talk about what we're solving for, of course, at the end of the day, we look at revenue, payers, efficiencies, things like that. But those are all output metrics, right? And those are not actually what our teams sulfur per se. What they solve for are the input metrics, and the input metrics get back to what Whitney is talking about. We know that if we are able to better match you and better get you matches on the platform, you're more likely to be retained on the platform until you find the person that you want to be with and then you leave. And we know that you're more willing to pay if we are helping to generate high relevance for you and that 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 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 that's essentially the philosophy the teams work with.

Great. Thank you both.

Thanks, Justin.

Your next question comes from John Blackledge.

Great. Thanks. Two questions First, could you provide some more color on Compliments, the kind of the usage of the feature, 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 safety and the recommendation engines, etcetera, 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, kind of either in the apps and/or to drive efficiencies across the business and marketing, software coding, etcetera. Thank you.

Thank you so much. So I'll set the stage on AI machine learning. So I think it's very important to note that AI is not some new thing for us at Bumble, our work has been deeply rooted in a lot of machine learning and AI historically. But we are really excited about the way AI can really benefit our business moving forward. So I think, before I get in the in-house or other, I will just talk about how we see this enhancing our business. Really across three main domains. So I would say starting with better products. Using internal tooling or taking this trust and safety and machine learning recommendation engine to the next level by deeper integrating with external large language models and data labeling. And then the second category is really building faster. We think that there's a huge optimization opportunity and productivity opportunity, which really improves engineering and marketing efficiency by adopting AI based code generators and automation frameworks. And then the third category is really new products. And this is enhancing the product experience. 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 say, someone struggles with on the product journey. So, we see this really as an onboarding to your real life date opportunity. This could start with struggling to pick the best photos. This could be helping you write your bio or set up your profile with the touch of a button. There's so many opportunities along the way. We're also a business before we turn to Compliments 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…

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 benchmarked them against externally available long large language models from the usual suspects. And in most content areas, they benchmark actually better. It's really a reflection of the fact that it's tuned to our data. 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.

Good. Thank you.

Thanks.

[Operator Instructions] Our next question comes from Laura Champine.

Thanks for taking my question. It's about Badoo, which I know is only 20% of your business, but 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 in Badoo's revenues?

Yes, thank you so much for the question. So I think it's important to reemphasize that we do 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, Latin America. In late Q1 and continuing into April, we have seen the due return to registration growth. And we've achieved good progress in stabilizing revenue. So these are the first steps in really returning the due to that growth and we continue to execute our strategy to deliver these results. And there's, of course, still work to do. Badoo was very challenged, had a series of challenging events between COVID and the war in Ukraine, we still remain confident in Badoo's long-term opportunity and that value proposition. So turning to the product side, we've shared this in the past, but Badoo's most loyal customers care about this instant connection and spontaneity that this product uniquely delivers, and we're really continuing to lean into that. We attribute the return to more positive numbers to this strategy and to really listening to the customers and building for them. So really that paired with enhanced monetization offerings to really offer promotional bundles and new consumables we're feeling better about the Badoo's story. And we have delivered several revenue and ecosystem experiments. Throughout Q1, and those resulted in improved revenue trajectories in key markets. So we expect to be active internationally with market expansion efforts in APAC and continued investment in LatAm and Eastern Europe. So with that, I think Anu you want to make a comment?

Yes. And I think in terms of when we expect Badoo to be positive year-over-year based on our guidance, you can see what the goal for 2023 is for the Badoo and other line items to start to stabilize. We are still not expecting that. It will be in positive territory this year, but the goal definitely 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 a path that we are on for Q2. Like I said earlier, we know -- we recognize we still have a little bit more work to do there, but we definitely feel like we're on the right path.

Understood. Thank you.

Thanks, Laura.

There are no further questions at this time. This concludes today's conference call. You may now disconnect.