Hello, and welcome to the Bumble First Quarter 2024 Financial Results Conference Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to Cherryl Valenzuela, VP of Investor Relations. The floor is yours. Please go ahead.

Thank you for joining us to discuss Bumble's First Quarter 2024 Financial Results. With me today are Lidiane Jones, CEO; 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 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 annual report on Form 10-K for the year ended December 31, 2023, 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 Lidiane.

Thank you, Cherryl, and good afternoon, everyone. We have had a very productive start to 2024. Bumble is where women make the first move, and it continues today. As I complete my first 100 days as Bumble CEO, I'm even more energized by Bumble's unique position to help the world create healthy and equitable connections throughout people's lives, focused on women's experiences. That's what Bumble has always been about and our mission, coupled with our product-led approach to meeting customers where they are, makes Bumble more relevant than ever. We kicked off the year with discipline and speed and delivered solid Q1 performance while also executing on our exciting plans for Bumble app. We launched the first stage of this journey last week. I've been very impressed with our team's energy and pace of innovation and there's a lot more to come over the course of the year. I will detail what's new with a Bumble app in a moment. But first, let me recap the financial results. Our first quarter performance was solid across our key metrics. Total revenue in Q1 reached $268 million, up 10% year-over-year, driven by Bumble App revenue of $216 million, which was up 11%. Both Bumble and Badoo App grew paying users year-over-year and sequentially with Bumble App net adds of 42,000 in this quarter. Based on third-party data, Bumble App's worldwide downloads on an absolute basis through year-over-year and sequentially in Q1. We also continue to expand our global download share fueled by international markets in Western Europe and Latin America. These results, combined with continued financial discipline, enabled us to deliver a significant improvement in our margin. Adjusted EBITDA in Q1 reached $74 million or 28% of revenue. We also returned $84 million of capital to our shareholders throughout our stock repurchase…

Thank you, Lidiane, and good afternoon, everyone. I'll walk you through our first quarter results and then share more about our outlook for the second quarter and full year 2024. Unless stated otherwise, all comparisons are on a year-over-year basis. Total Bumble Inc. revenue in Q1 increased 10% to $268 million, in line with the high end of our outlook. Total paying users increased 16% to 4 million, and ARPPU for the quarter was $21.84, down 4%. Revenue from Bumble App increased 11% to $216 million, exceeding the high end of our outlook. The revenue growth was driven by growth in paying users, which increased 18% to 2.7 million. On a sequential basis, we added 42,000 paying users slightly above our expectations. Bumble App's ARPPU declined 6% to $26.34, primarily due to geographic mix shift. We continue to see year-over-year ARPPU improvement within many of our individual markets, including the U.S., driven by pricing optimization. Badoo App and Other revenue grew 7% to $52 million. Q1 marks 4 consecutive quarters of year-over-year positive revenue growth for Badoo, an exciting milestone in the turnaround of this brand. Badoo App and Other paying users grew 13% to 1.3 million and increased 13,000 sequentially. Badoo App and Other ARPPU declined 1% to $12.35. As a reminder, we began including contributions from Fruitz in Badoo App and Other KPIs in Q4 2023. Turning now to expenses. Consistent with previous quarters, we've remained diligent in our spend across all areas of the business while continuing to drive revenue growth. Total GAAP costs and expenses were $219 million for the quarter, down 6% year-over-year and Q1 net earnings were $34 million compared to a loss of $2 million in the year ago period. The decline in cost was largely driven by a decrease in stock-based compensation…

[Operator Instructions] Our first question comes from Justin Patterson with KeyBanc.

This is Miles Jakubiak on for Justin. Just first on marketing. It seems like you guys are talking a little bit more about your college strategy around marketing, around the relaunch and I saw some of your brand campaigns launched over the last few weeks. So just curious around your guys' marketing strategy around the relaunch and how you plan to measure performance against that? And then on pricing optimizations, curious if you've seen any early impacts from that? And if you guys expect that to affect ARPPU this year in any direction?

Thank you, Miles, for the question. Let me start with the marketing. Last week was a big milestone for our company, and I'm very proud of our team for the Bumble App relaunch. It was an important moment for us to recapture Bumble as a culture-defining brand, and we certainly experienced that with the response -- to a very positive response from our customers. We are taking a very broad approach to our marketing strategy, not only an out-of-home digital, but also, as you mentioned, are -- engaging with our large ambassador program in colleges as well as our influencer network. This multichannel approach just gives us enough flexibility to reach our very broad customer base from all ages, but certainly allows us to be more relevant aiming the conversation for our younger users and we certainly achieved that last week. We received a lot of different feedback, reactions, press releases and so much more. So we look at a couple of different metrics from a marketing perspective. We look at top of funnel impressions, sentiment analysis, along with the full funnel transformation, how a customer is going from experiencing our apps downloads and so forth. And we're pleased with the first week since the relaunch. But most importantly, I am incredibly amazed at the passion that customers expressed for our brand during the launch campaign. It is not only a great opportunity for us to enter the conversation, but it also allowed us to see that Gen Z customers are looking for Bumble to be the brand that engages with them. In terms of pricing, we look at pricing broadly as well. So we have a very early journey still from a monetization perspective across the company. We feel convicted that our subscription tiers are going to set us up for great growth in the long term. As we talked about in our prepared remarks, Premium+ is our newest subscription tier introduced only a few months ago, and we believe that adding more value differentiation over time will allow us to accelerate future revenue across all of these subscriptions. Last week, we introduced a couple of important capabilities for Premium+ including profile photo analysis, along with more curated matches and improvements to our For You algorithm. These improvements are very much focused on helping our customers get their matches the fastest way possible. That clear value proposition is really aimed at helping increase conversion and ARPPU across our tiers.

We now turn to Andrew Marok with Raymond James.

On the relaunch, again, you've mentioned that it's a continuous process, and I'm sure there's plenty more interesting in the pipeline. But what about these specific features that you've launched to date made them the ones that you wanted to lead with and kind of create that new brand message around?

Thank you, Andrew. One important aspect for us is reinvigorating and reaffirming to our customers that bumble stands for women. Make The First Move has been our signature product experience and remains the signature experience today. Our goal is to evolve with our customers. And based on months of engaging with women and understanding how equality matters for them, not only in terms of their experience, but also what it means for them today? What does it mean to be an empowered women today? And we learned that control and autonomy are key aspects of how women want to feel empowered. So we've expanded make the first move to give women exactly that, more control in how they make the first move, and we received a lot of positive reactions from our customers because we have helped those shape what that experience really looks like. So this first relaunch was really important, a first chapter of the evolution that we see the pace of innovation of the company and the product over the course of this year. But we introduced a number of other capabilities as well, profile experience improvement. We enhanced the algorithm for For You broadly. We added additional safety capabilities and increased the minimum number of photos so that customers are self-expressing more. All of that aimed at helping our customers be successful in our app. And that's going to be, as you mentioned, Andrew, just to the beginning of a continual process. This year, we want to have some big moments in the market where customers not only get to add value and see the value that we're adding for them, finding connections, but that they really understand what differentiates us and set us apart. So I'm excited by the engagement that we're seeing. We certainly have seen a few key positive engagements in the first week. First, our customers are engaging in conversations and chat at an increased rate. We also have seen half of our new users already adopt opening moves in its first week, which is a great sign. And most importantly, we are really looking to help customers find match and matches have increased since the relaunch. All of those are positive signs that we are in the right direction in supporting our customers, reengaging them and making dating a joyful experience again.

Very helpful detail. And maybe if I can squeeze in a quick one on Badoo. Now we're in a year's worth of quarters where Badoo has grown users, but the tone has kind of felt like it's been pretty consistently one of cautious optimism. Is it safe to say that we finally can say we've turned a corner there? And I guess what does success look like for that business over the near and medium term?

Great question. Badoo has a large and very loyal customer base. And the product relaunch and marketing -- targeted marketing campaign has been newly aimed at helping users feel confident dating. And that message is in product capabilities tied to that mission has really been resonating with customers. Our focus is to continue to fine-tune the product road map based on customer feedback that we really are helping them find their matches and enjoy the confidence that they're building while they're looking for dating. We are going to continue to learn from Badoo. Badoo is a very international market. The positive thing for us and our company is that we really can take learning from Badoo added to Bumble, take learnings from the Bumble App we launched and added to Badoo with great agility. And that allows us to not only expand on our growth in one product and one region, it allows us to be very strategic in how we think about product capabilities across our entire portfolio and with our international expansion efforts. So I love what Badoo adds not only again to the customer base that we have, but also the learnings that we can have to bring to the Bumble App.

We now turn to Ygal Arounian with Citi.

Lidiane, you hit on this a little bit, but I want to see if you can elaborate on it a little bit more. Talk about the first chapter in the Bumble evolution and you mentioned the launch of new products coming out over the course of the year. Can you talk about what the Bumble evolution is and what it means to you and what that might mean product-wise? For renew -- in the 2Q guidance, at least, is there any expectation of a positive impact or lift from the app relaunch? Or is it still too early to think about in 2Q.

Great. I'll get started on this one. I hope the market can see that the last 4 months is a showcase that we are just operating at a different pace and speed of innovation of the company. This gives me a lot of confidence about our future for the rest of the year. The other thing is that Bumble has a very strong technology platform and has 4 years used AI to innovate on the product and safety. We also have a lot of flexibility in our technology infrastructure with a mix of first-party infrastructure and cloud that allows us to accelerate the compute capacity so that we can embrace additional AI capabilities without increasing our costs. All of this to tell you that we have the right tool and the right foundation to accelerate product innovation. And I'm personally very excited about what AI more broadly and generative AI will allow us to do for our customers this year. And for us, our focus is helping customers find healthy and equitable connections throughout their lives with a focus on women's experience. So there's a few key areas that we're deeply looking at. First is the profile experience and creation that allows us to really understand the users and for them to feel proud and inspired to express themselves. The second is regularly understand the dynamic of their intent evolution over time, as we know and someone starts their dating journey, what they are looking for and what their intent might be will evolve as that journey progresses. We want to use AI to be learning in real time. And thirdly, ensuring that with that learning, we can match and bring compatibility to a whole different level of capabilities. This is really about helping customers find real human connections and be successful in their reach to find laws. So this year, we are certainly aiming to create some big moments in the market. So I'm going to reserve the right to hold on detail because we certainly want to continue to drive a drum beat that surprises and elevates our customers. The last thing I'll leave you with before passing to Anu is that we are attracting an exciting caliber of senior leadership from product and technology from the best companies in the tech industry. Our CPO and CTO combined are bringing decades of experience on cloud computing, AI, viral product-led growth, all of which are setting us up to execute incredibly well throughout the rest of the year. But with that, I will pass to Anu to speak a little bit about guidance.

Ygal, so specific to your question on Q2, maybe I'll just take a second to elaborate on how we thought about guidance. So if you think about our Q1 performance we feel really good. We were largely in line with our expectations, and I'm pleased that we're off to a good start. If you recall some of the comments that we made in Feb, International growth has been very strong for us, continues to be a huge area of growth across many markets, strong download growth, share gains. You can see all of that in third-party data as well as the numbers that we are seeing internally. In the U.S., we did see some slowness in top of the funnel trends as we've called out before. And we definitely are seeing that continue into Q2 as well. So as we think about Q2 guidance, we are assuming that these trends effectively will largely continue throughout Q2. Now we are very excited about the relaunch as we've talked about quite extensively, but it's still early days, and we want to make sure that the teams have some time to iterate on the product and make sure that we continue to make the user experience the best it possibly can be. So I would think about this as an acceleration in the second half and Q2 is where we are closely watching the work that we are doing and making tweaks to the product.

And maybe just one quick follow-up. And I may have misunderstood, but it sounds like the strategy around BFF and how it fits into the portfolio might be shifting a little bit. Can you just expand on that a little bit more?

Yes, absolutely. It's a great question. Let's talk a little bit about BFF. As you have heard in previous earnings from us before, we have long believed that Bumble can play a more meaningful role in people's lives beyond dating. We have a brand mission and the equity in the market with our customers that really allows us to play a bigger role in different parts of our customers' lives. And up to this point, we have been looking at BFF with an approach to friendship that looks very similar to our current approach to dating, where we're doing a one-on-one match in our product experience. And that has narrowed our reach even though our customers that are using it today, absolutely love it. It has narrowed the audience for it. So we're taking a step back in a fresh look and approach and how do we embrace this opportunity. And we see it as a strategic path to also embracing what Gen Z customers are looking for, and they have told us, especially since last week's launch. What we are hearing from our young users is that they are feeling lonely and disconnected. So our goal here is to help our customers find groups of people with similar interests that they can meet in real life to make real human connections. So our vision for friendship is to bring this authentic human connections for our customers throughout their lives. And last week's app we launched for Bumble was just a reaffirmation that younger users are looking for Bumble to fulfill that need for them. So that is a bit more about our approach for BFF and how we will move forward in this part of our customers' journey.

Our next question comes from Nathan Feather with Morgan Stanley.

Interested to hear what you saw in the testing about the relaunch that helps give you conviction in that back half acceleration. And is that fully predicated on some of the idiosyncratic improvements you're expecting to the app? Or are there some other factors like the marketing time line or macro that play a role we should be aware of?

Sure. Nate, why don't I take that. So we are -- as Lidiane mentioned, we are very excited about the relaunch that we've unveiled last week. And the early data that we are seeing around things like engagement and adoption of some of our new features has been very promising. Now obviously, it's only been a week since we launched it. So we are monitoring the results very closely. And as I just said, we are keeping a close eye on what the user experience looks like across various markets. So there's still more work that the teams will be doing. But -- as you just heard from Lidiane, this is just step 1 of a series of product changes that we intend to make and launch through the course of the year. And that is going to include additional features not just to enhance users' experience, but also allow for newer ways of onboarding people, better profile creation, adding more features to our subscription tiers like Premium+ as you just heard Lidiane say. There's a lot more in the works from a product perspective that is to come as we look at the rest of the year. What's also important to note is that these product moments will also be accompanied by strong brand moments that will allow us to keep Bumble top of mind for our users, and that is built into our marketing road map for the rest of the year as well. So there's a lot of work and enthusiasm around what is to come, that is giving us a lot of confidence about the reacceleration of trends in the second half of the year. And as you can imagine, there is a lot of work that we are doing around testing these new product features and the learnings from those are also incorporated into how we are thinking about where we are guiding to. So all in, I think I would classify this as things are progressing exactly how we want them to be. And we are feeling excited about the momentum that this creates for us. The one thing I would call out, which I said in my prepared remarks, is that we are seeing FX trends be more unfavorable since we last guided in Feb. So we could see at least 50 basis points of headwind if current rates continue. So we just wanted to make sure we call that out as well as we thought about revenue for the rest of the year.

Okay. Great. That's really helpful. And then one more, if I may. Thinking about the share buyback in the quarter, I guess, can you give any more color on your high-level buyback strategy and any cadence that investors should think of as we move through the year and next year?

Sure. So I'll maybe expand a little bit and just talk more broadly about our capital allocation strategy. And just to remind everyone, and we've said this consistently in the past, we feel fortunate to be in the position that we are in with a very strong balance sheet. We have a lot of free cash flow that we generate every quarter, and we have a strong cash position. So that gives us certainly options in terms of how we think about capital allocation. First and foremost, for us, investing in our business is the most important thing for us. And we want to invest in top line revenue growth. We want to invest in product capabilities and we want to invest in our talent. So all of that is the first thing that we are looking to do, and it's built into the margin assumptions that we have for the company for the year as well. The second thing that I would highlight as being a priority for us is to look at inorganic growth. We want to use M&A as opportunistically as we can to help accelerate the growth vectors that we have for our business. As we have new product leadership and tech leadership coming into our business, we are setting an even higher bar for what M&A looks like and the goals that we have from an inorganic acquisition, but that's definitely something that we are taking a look at. And the last thing from a capital allocation perspective that I would point to is obviously our commitment to the buyback program. We certainly believe that investing in ourselves is a very good use of our cash, and that's certainly what you've seen us do. Again, from a buyback perspective, we want to be opportunistic. So we have several levers at our disposal in terms of how we deploy the authorization that we have in place. And over the course of this past year, you've seen us use multiple strategies in terms of directly buying from the market as well as buying directly from Blackstone. We will continue to be opportunistic in terms of thinking about the best ways to deploy our buyback program as well. But again, we are pleased with the options that we have on the table.

We now turn to John Blackledge with TD Cowen.

Two questions. On the relaunch, do you expect it to act more of a driver for top of funnel growth and/or for payer conversion as we kind of get through the year? And then on Gen AI, just curious how you're using it or planning to use it in the apps for Bumble users? And then how you're using it internally across departments and on the latter, on the internal use, just curious any efficiency gains to call out?

John, you asked a lot of questions, so please remind me if I miss any of them. So let's start with the relaunch. First and foremost, our #1 job is to help our customers find connections in all of the women's experience. So we are taking a very customer-led approach to how we're innovating and how we're leading sustainable growth to our business. So the metrics that we've been closely watching are the engagement metrics that I mentioned earlier. Our customers having healthy meaningful conversations. Yes, we certainly have seen an increase of that. Our customers embracing opening move is that facilitating and enhancing women's experience. We've seen rapid adoption of that and positive feedback from women who is the target audience for this product update. And certainly, looking at matching -- and the increase of matching in the first week has been a very positive sign for us. At a high level, from our business, as you know, our core KPIs remain the same. We look at paying users and ARPPU because we continue to be the best markers of revenue. Underneath all of these major metrics there's a number of additional metrics that helps us really detail near-term and long-term health and sustainability of our business. So at a high level, there's 3 major categories that we look at. Top of funnel, as you mentioned. So we certainly look at registration. That really gives us quite immediate signal at the health of our launch and marketing campaign. The second is the engagement, which I just mentioned. For this release, they've been very clear and a core focus for us because we're really aiming to gain customer love. And then third is the conversion to payers, which really allow us to understand the effectiveness of our product in the…

Let me now turn to Jian Li with Evercore ISI.

So first, I have a follow-up on the M&A opportunities that Anu you mentioned. Can you just talk through your criteria in pursuing inorganic opportunity? Is there any demographic, geography or use cases that you think are better fitted for inorganic growth? I guess one thing that comes to mind for me is just some beyond dating use cases that you already have a couple in your portfolio.

Yes. Thank you for that question. I'll start as a technologist at heart, I will tell you that our very principled approach that Anu mentioned earlier around M&A is that we can deliver seamless experiences for our customers. So we certainly look not only at the business opportunity that an M&A opportunity may bring, but we look at how do we integrate that technology into our portfolio so that we can create value across our customers' lives. So we look at the value add of the innovation just as much as we look at the business. So that is a more principled approach to how we're looking at technology innovation. There is certainly a lot of interesting technology companies across the industry that we're constantly looking at, but our goal is that we immediately look at does it actually align and accelerate with our long-term mission here. And so certainly, as Anu mentioned, it is something that we look at regularly. And because of our strong financial stance, we are able to use that as a leverage to accelerate growth as we identify any opportunities in the market. So certainly something that we will continue to consider and we'll keep you posted as we get further.

Our next question comes from Benjamin Black with Deutsche Bank.

I'd be curious to hear the strategy of offering women more options around who makes the move, how that's impacted, a, the interaction you're seeing on the app. But b, perhaps has it had a bigger impact on women or on men and maybe has it also sort of change your brand perception in any noticeable way? And then Anu, can you just help us think through the balance of the year in terms of Bumble App payer net addition trends? Should the relaunch have any sort of impact on typical seasonal trends?

Yes, I'll get started, and then I'll pass it on to Anu. I'll be super clear that at Bumble, women still make the first move. What we have introduced is added control in how they make that first move. Now women will still decide who they want to match with and then they can decide if they want to initiate the conversation or if they are open to the person that they're matching to that will answer a question that they -- the woman will set. So what we have seen, we certainly are, again, optimizing for women's experience here because women have told us they want more control in how to initiate that conversation. And the target audience here who are the women have responded incredibly positively to this expansion of making the first move. So that's been a really positive sign. But this has also been beneficial for men. And that's the great thing is that our belief when we build great experiences for women, we're elevating the experience across our entire ecosystem. So what that has meant is that men now can also answer questions as a starting conversation. And that has led to a higher degree of conversation starting that has more interesting I would start than a hey. And so we are really allowing more engaged and healthy discussions, which, as I mentioned earlier, is leading to more matches. So fundamentally, this is an evolution of making the first move that have shown a really positive early signs. As Anil mentioned, we are customer obsessed here. So as we continue to gather more adoption and feedback, we will continue to fine-tune, introduce capabilities as our customers guide us. But so far, it's been a really positive start and just the elevation of our company's commitment to women's experience.

And Ben, just on your question about net adds for Bumble App. For Q2, as you just try to say, we are guiding to between 70,000 and 80,000. Q3 as you know, is seasonally a strong quarter for us, as always, and we should also see the benefits of some of the work that we're doing with the relaunch come into place. So you will definitely see a step-up in Q3 compared to Q2, and then Q4 should also be strong. But again, from a seasonal perspective, you should expect Q4 will be lower than where Q3 will be, and that should get you to the full year guide that we are reiterating for net adds.

Our next question comes from Curtis Nagle with Bank of America.

That one on the net adds was one of them. So I think I'm all good there. But Anu, just quick modeling question in terms of the SBC expectations for the year. I know there are a lot of moving pieces for the first quarter and net it out to something like 0, but how should we think about that for the remainder of the year? Should it be kind of in the high 20s, 30s, yes, what's the framework there?

Yes. So as you know, in Q1, we had a -- to your point, we had a pretty unusual quarter in terms of stock-based comp. The biggest driver of that was in addition to the workforce transformation, which obviously resulted in a reduction. We also had other employee terminations that led to almost a critical stock-based comp number for the quarter. We are in the process of finalizing our workforce transformation. So we will be able to give you better visibility into what the stock-based comp trajectory looks like going forward once we get past the work that we're doing from a headcount perspective. But for the full year, you should definitely expect that our overall stock-based comp levels will be lower than what you've seen historically.

Our final question comes from Laura Champine with Loop Capital.

It's about the shape of the growth for the year because it seems from the implied guidance that you would see a pretty significant step down in revenue growth this current quarter and then it bounced back to something closer to your Q1 growth in the back half of the year. Still a little unclear on what drives that.

Sure, Laura. I can take that. So if you look at the trajectory of the revenue growth, to your point, Q1 for Bumble App was at 11%. We are guiding for Q2 to be slightly lower than that. This is in line with the commentary that we gave around the trends that we are seeing with respect to top of the funnel, especially in the U.S. for younger users. So Q2 is a continuation of some of the trends that we saw in Q1, and that's where we're guiding to as a result of that. In the second half of the year, we are anticipating that we will see improvements in trends as a result of the work that we have done in the relaunch, but also from the work that we will be doing from a product perspective with respect to launching newer features, both from an engagement and conversion perspective but also from a monetization perspective. So you heard Lidiane talk about the future chapters of the Bumble roadmap. That is what gives us confidence about the second half of the year. In addition, from a marketing perspective as well, we've built up a lot of excitement with the relaunch. We intend to continue amplifying the product work that we are doing with strong brand moments that will again continue to keep Bumble top of mind for our users. So all of these things, if you put them together, give you the trajectory that you see in terms of reacceleration of the trends in the second half of the year.

Ladies and gentlemen, this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.