All right, good morning, everyone, and good afternoon to the folks on the East Coast. Today, I have Anu Subramanian here with me from Bumble, and I'm Chris Kuntarich, part of the U.S. Internet team. Before we get started here, I'm just gonna read Bumble's safe harbor. So, really quickly, this presentation includes Bumble's comments and answers to questions that may include forward-looking statements. These forward-looking statements are subject to various risks and uncertainties, and reflect Bumble's current expectations based on their beliefs, assumptions, information currently available to them.
Description of these risks and other factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in Bumble's earnings press release, dated November 7, 2023, and their filings with the SEC, including their Annual Form 10-K Report for the year ending December 31, 2022, and their subsequent periodic filings. So with that out of the way, Anu, thank you very much for having me.
Thanks for having me.
Cool. Well, let's just jump right in. You've been CFO for Bumble now for just a little bit over three years. And other than Lidiane obviously joining, and we'll get back to that in a minute, but I guess what has and hasn't changed the most since you started? And I guess, what are you really most excited about at Bumble over the next year?
Yeah, sure. So I think the fundamental thing that everyone joins Bumble for, including myself, is our focus on our mission, right? Which is to create healthy and equitable relationships for all through kind connections. That is the one singular thing that I have seen has not changed, you know, in the 10 years since Whitney founded Bumble, and is certainly not something that is going to change in the foreseeable future. I think the company continues to be energized and excited about fulfilling that mission. And, you know, we spend a lot of time today talking about dating and romantic relationships, 'cause that's where our business is predominantly centered today.
But if you extrapolate that into relationships through every walk of your life, whether it's platonic, whether it's friendships, through your different life cycles, you know, the opportunity is vast, right? Which brings me to the second point that has not changed, which is our belief around how big this opportunity is. Again, both in dating as well as in beyond dating. And our job, and we wake up every day across the company, every employee, to, to fulfill the mission and to get more and more people into using our apps to find the connections that they want. And as I think about next year, I'm most excited for, new and innovative technologies that are in the market now, and we'll talk more about, you know, AI and Gen AI, that can help fulfill that mission for us, and can.
Help unlock a lot of pain points that exist for our customers, for our consumers. The team is very excited to put all of that into motion as we go into next year.
Got it. And as we kind of think about the strategy from here, how should we think about kind of strategic implications associated with the CEO's succession plan?
Sure. So, you know, I'm sure everyone knows by now, but we announced in about a month ago that Lidiane Jones will be joining us as our new CEO. She starts in February, in January of next year, sorry. And I think the important thing to recognize is that the fundamental priorities of the business are going to be unchanged, right? As if you all heard Whitney in the earnings call, she talks a lot about our priorities being customer, AI/technology and brand. And those three are going to be the underpinnings for our business for, you know, the long term. Obviously, you know, Lidiane comes in with a deep background in product and technology.
She has led large product and engineering teams, and so we are all very excited for her to come in and dig into the roadmap that we have for next year, for her to enhance the processes we have in place, for her to sort of supercharge the pace of innovation that the company has had. And we've been very, very good from a product cadence perspective, rollout of new features perspective, right? So this is not about fixing something that is broken. This is about taking something that's already working really well and taking it to the next level. So I think that's where, you know, you'll see Lidiane spend a lot of time. And she's, you know, very, very focused, back to my first point. She's very focused on the long-term mission of the company.
So, when she comes in, I expect that she'll be spending a lot of time talking to our users, talking to our customers, talking to the people in the company that touch various aspects of a customer's journey, in making sure that we are fulfilling that value prop to the maximum possible extent.
Got it. Yeah, that's very helpful. And as we kind of think about, yeah, high-level financial planning framework from here, how should we think about where Bumble is at in its journey on balancing user growth versus monetization versus profitability? Has there been really kind of an outsized focus on maybe, like, one or two of those legs of the stool here in the last year or so? And should we be seeing and thinking about any kind of real shift here over the next 12 months?
So the good news is, I think all of those levers still are very much in play as we think about growth for the foreseeable future. Even back to when we started as a public company, we had said we expect our growth vectors to be continuing to grow users, monetizing those users, and then continuing to improve profitability, right? So you know, we've been very consistent in being able to expand on all of these three vectors in the last three years. And you'll see a lot of similar things next year as well. We fundamentally believe that, you know, there are a lot more people that are yet to use dating apps than are using dating apps in the ecosystem today.
So how do we continue to show up for them in a way that's most relevant, I think is a big area of focus for us. At the end of the day, we are a two-sided marketplace. We are a company that is about connecting people, right? So having a strong top of the funnel is critical to our success. We are also reaching pretty healthy user base sizes in a lot of our markets that we've been operating in now for a while. So how do you create features that drive payer penetration for those users is a constant area of focus. And a lot of the product features that we have, whether it's launch of some of our newer tiers, Best Bees, Compliments, all of those are geared with an eye to ensuring that we continue to drive payer penetration.
And then lastly, you know, we've shown ourselves to be very efficient as a company. We're very disciplined from a cost perspective, and as we've scaled, we've seen operating leverage in the business. You know, this year, 2023, we committed to expanding EBITDA by 100 basis points. And our initial guide for next year has us expanding margin by 50-100 basis points. So you'll see us. We wanna continue. We know there is a lot of top-line growth to be had, so we want to make sure that we continue to invest in the business, but at the same time, we've always said we are publicly committed to also expanding margins.
Got it. And you kind of touched on it a bit there, but I just kind of wanna double-click on the theme of. It's really a conversation we have pretty regularly with investors, is that dating is saturated at this point. I guess my question for you is really: How do you think about kind of the key growth drivers here within the dating industry?
Sure. So again, you know, back to what I just said, right? I think if you compare even in a market like the U.S., which is arguably, the farthest along in terms of dating app usage, the number of people that are using dating apps versus the number of singles, that are in the market, is still pretty low, right? And, a lot of it comes down to solving the user pain points that exist for the dating users, that want to find relationship, right? The thing that has not changed and is never going to change is people's desire to find relationships, right? And it's not like we are going through a phase where everyone wants to be single for the rest of their life, right? There's none of that is happening.
People still want to find companionship, people still want to find relationships, and even those that don't use dating apps today, and when we do a lot of customer research, they will tell us that they recognize that dating apps are the most efficient and effective way to help them find those relationships, right? So I think from our perspective, the piece that we need to solve for is, and we need to do, to be better at, is how do you solve the user pain points that exist through a customer's journey, right? So from the time somebody downloads the app to they create a profile, they pick the pictures that they want, they progress to matching with someone, to having a conversation with someone, and then getting off the app to meeting someone in real life.
That is the user journey, and at every point of this user journey, a user faces pain points. It may be lack of confidence, it may be not knowing what to say to someone, it may be, not getting the most relevant match, whatever the case might be. Our job is to make sure we solve each of those pain points, right? So that's what we are focused on as a company. And, it is through better and more relevant algorithms, it is through, better onboarding journeys and processes, it is through better CRM, better messaging, and it's through use of GenAI tools that will make this process even better for customers.
So we are very bullish on the trajectory of, us being able to unlock the growth that we know exists. And then the last thing I will say is, you know, be...
I touched on this briefly. Beyond dating is an area that obviously we've been talking about now for a while. We fundamentally believe that relationships outside of romantic relationships, as a category, as an industry, is where dating was 10, 12 years ago, right? If you look at every macro research that you read about consumers, it'll say that people are more isolated than they were ever before. People are lonelier than they were ever before. If you ask a lot of young people today, they will say they don't know how to make friends, they don't know how to find friendships, right? The old ways of you met someone at work and you became friends and, you know, it just doesn't exist anymore, right?
So people are increasingly turning to apps like ours to solve that problem, and so we are very excited about what that can also mean for us from a growth trajectory perspective.
Got it. And maybe before we transition to more Bumble-specific questions, just sticking with the macro theme, can you just talk a bit of kind of about the health of consumer at this point, either on a geographic basis, I think you guys have talked about it, on an age cohort basis, and maybe how this has progressed in the four Q at this point?
Yeah. So we historically, when we've seen big macro conditions through COVID, through the war that we saw in Europe, in Ukraine, energy prices in Europe, we've generally seen our cohort of consumers, we proved resilient, from a price perspective, from a usage perspective. And that continues to today. You know, till today, I think our, you know, Bumble consumer tends to be a little more college-educated, affluent, more purchasing power. And, you know, we're definitely seeing those trends continue. What we called out at earnings was we are seeing a little bit of impact on our younger cohort, specifically in the Bumble Boost category.
A majority of our revenue comes from Bumble Premium, and Bumble Boost is a smaller percentage of our total revenue base, and amongst that, we've seen some impact on the younger users. We are just sort of keeping a close eye on that. It's, you know, it seems to coincide quite closely with the start of the student loan payments in the U.S., and this seems to be a U.S.-centric issue. It's not something that we see outside the U.S. We're keeping a close eye on it. Obviously, we'll continue to keep an eye and, you know, provide more details when we come back in at the time of Q4 earnings.
Understood. Maybe just moving on to the initial thoughts that you guys have given around next year. You guys are talking to revenue growth of at least low teens, and just how should we be thinking about kind of the key growth levers here that Bumble's gonna really be pulling on here to execute on that?
Sure. So, you know, we haven't given specifics around, you know, contribution from payers and, and ARPPU and stuff like that, but I'll just maybe talk about it at a high level. You know, we—Bumble app will be obviously a strong driver of growth. We said at the time of earnings that we think it'll grow, you know, slightly higher than the, the company level, so low- to mid-teens growth. We're excited and most of the Bumble app growth, you know, a lot of it will still be coming from growth in payers. So I think you'll still hear us talk about, payers as a big, pillar of where revenue growth comes from next year. We are very excited about Badoo, and its contribution to revenue, next, in 2024.
The last 12-18 months have been about stabilizing Badoo, and, you know, the recent results have shown that we've started to get Badoo off to a good path, so we're excited about that, starting to become a strong contributor to revenue. And then, you know, we have assumed some minimal contributions from things like BFF, which are going to be much more of a user growth driver next year. But we will be testing monetization as well. And then, you know, we'll also see nice contributions from things like Fruitz, et cetera. So overall, I think it's a strong portfolio of assets that will contribute to the growth that we have next year.
Okay, got it. And that at least low teens, there's no, no, macro backdrop changes that we should be thinking about in there?
Yeah, we assume, you know, current state that we see will continue. Yeah.
Got it. Maybe just shifting to pricing, I know you said that that's gonna be your ARPPU is gonna be less of a driver here, but maybe just to kind of up-level it here, I guess, just how do you see the opportunity set to increase price in 2024 versus what you guys were able to execute on in 2023?
So I think from a pricing perspective, it's important to understand that we are always thinking about price optimization. It's an always-on lever for us. We are not looking at doing step change increases in pricing in the near term. What we do is, at any point in time, we are running, you know, hundreds of tests on price elasticity across the different geographic markets that we are in. And you'll see that could mean that in some markets, we increase prices. That could equally mean in some markets, we drop prices, and that leads to an increase in payer conversion. We've said this before, but we always try to maximize for revenue. That's really our North Star, and growth in payers and growth in our ARPPU is a function of what's happening in a certain market at a specific time.
And also the ARPPU that you see at an app level is a function of everything from pricing at a country level, to geographic mix shift, to how different products are contributing to payer penetration or ARPPU, right? So it's very hard to fully, you know, explain the ARPPU trajectory because you have a lot of these nuances that impact the ultimate number that you see. But our goal is, you know, we still think from a price elasticity perspective that, you know, we have room to increase prices. In many countries, we still have a one-size-fits-all approach to pricing, where we know that we have a lot of high-income people that are willing to pay a lot more than they pay today. So I think you'll see us slowly but steadily continue to work on pricing. It's an always-on lever, like I said.
Understood. And then maybe just, shifting to the margin side, that 50-100 basis points of EBITDA margin leverage versus the 100 basis points of leverage that you guys are looking to deliver for this year. How should we think about the puts and takes around the marketing versus product investment and versus, yeah, really more growth coming outside of, from outside the Bumble app?
If you look at the buckets of cost that we have, as a percentage of revenue, and I won't talk about App Store fees, but, you know, the, the things that we are able to control, marketing as a percentage of revenue is the highest area of spend that we have. You know, we spend a lot of time and effort on building our brand at the highest level, which has historically been a strong driver of growth for us. It, you know, drives the virality, the network effect. So you'll see us continue to invest in that, but it's definitely an area where we should expect to see leverage similar to what we saw this year.
Product and tech, again, we want to be targeted in the areas of spend, within product and engineering, especially with Lidiane coming in, who comes with that background. I expect that she will want to make sure that we have the right skill sets that we need for the next stage of growth. So you, you'll definitely see us invest in that area, but again, within reason, the bar for investment will be high. And then, you know, we've shown ourselves to be very disciplined in costs as it relates to other areas. So I think we'll continue to chip away at it. And as you know, as we scale, it's definitely an area where you'll see leverage automatically.
Understood. Yeah, just transitioning now to the Bumble app, specifically within North America, and we've kind of touched on it a bit here, but how should we think about growth runway, specifically within North America for the Bumble app? And how should investors think about Bumble's growth on the margin shifting from Tier 1 cities to potentially and universities, more towards Tier 2 and Tier 3 type of cities as we progress through the journey?
Yes. If you go back to what I said about, you know, even in the U.S., we still think there is a lot of growth to be had. It encompasses all the things that you talked about, right? So I think it's not like we are fully tapped out in Tier 1 cities and we have no sort of plan for that. People are always cycling in and out of apps. That's a very sort of normal behavior when it comes to dating apps. So showing up for our consumers in the best way possible, even in some of our strongest markets, is going to be a huge pillar of growth. Our marketing teams, you know, have plans around sort of big, pivotal brand moments next year that I think will be interesting.
Tier 2, Tier 3, I think are definitely areas where I would say we can continue to build brand awareness as an app. That's definitely an area of focus for us next year as well. You know, from an international perspective, we have different markets that are on different sort of curves of growth. So you have some of the coding speaking markets that are very similar to the U.S., and you will follow a similar trajectory and strategy, and you have some newer international markets that now have grown to a very sizable user base, and now you'll start to see us get more aggressive from a Payer Penetration perspective. And there are some markets that are still very early in the top of the funnel user base.
It's a mixed approach and playbook in terms of how we're thinking about growth overall next year.
Okay. You sort of touched on it on the international side, but, I guess just as we're thinking about the international expansion strategy here, like, how much of what you're able to roll out in, in these international markets, like, when you were so successful going out and doing the grassroots approach in the U.S. university, how much of this is kind of a copy-paste approach here versus having to experiment and see what works in these individual markets?
So the fundamental, you know, playbook is not very different in each market, right? We have a very brand-led approach when we enter a new market. We want to find the local influencers on the ground that can become familiar with our brand. They start talking about the brand, they start using the app, and then, you know, it sort of spreads from there. So the brand-led organic word-of-mouth approach is very consistent in a lot of the newer markets that we've been to. And then once we start to see the brand sort of take off in a new market, then we supplement that with paid marketing and, you know, growth marketing spend.
And now, specifically as it relates to the college campuses and universities, obviously, the U.S. is a very specific market when it comes to the way colleges operate. There are other markets outside the U.S., where college campuses have been pretty strong for us. So India is an example where we actually have a pretty strong college presence. We do a lot of events there. And, you know, we do targeted university campaigns in other markets outside the U.S. as well. But the college ambassador program that you see is very unique to the U.S. today. It's not to say that we don't have an opportunity. I think it's not been, you know, as big a focus in some of these other markets as it's been in the U.S.
But we are looking at countries where we can replicate the college campus ambassador program as well, to see if it'll make sense or not.
Got it. So, so as we're thinking about this 24 guide, should we be thinking about international having an outsized contribution to that, at least, at least low teens growth?
So I won't comment on the breakup of North America international, but I would definitely say that international continues to be a pillar of strength for us. It continues to be a big area of opportunity for us as we think about growth in the short to medium term. So you'll definitely see us continue to expand our presence in the international market for sure.
Got it. And just moving on to the four tiers that you have. So you have Bumble Boost that we talked a little bit about earlier, and then Premium are already in the market, and then you're testing, planning to launch the new tier below Boost, the Bumble Base, and then you're gonna have the Bumble Premium Plus, the tier above the Bumble Premium. So I guess how is testing coming along, and like what are you looking for really for these for these different tiers to really start scaling here?
Yeah. So we are. You know, when we thought about adding additional tiers, we really thought about it from the point of what the user pain point was, right? And if you think about Premium Plus, we had heard from a lot of our existing premium users that they would be willing to pay a lot more for a curated experience that came in at a higher price point, that allowed them to shorten the length and time from, you know, onboarding to a match, as an example, right? So the goal for Premium Plus is really much more around how do you improve and increase the relevance of the matches that we are giving you and make it much more appealing to that cohort of users.
and I think, you know, we do expect to upsell, you know, users from Bumble Premium to Premium Plus, and that should be a nice RP driver for us. And then on the base tier, the goal was really to say we have a lot of people, especially the younger cohorts, that use the app for free, but are never probably going to pay for Bumble Boost or Bumble Premium right now because they just don't feel the need to. So we said, "Okay, how do you create products that they would be willing to pay for, right? How do you create things that, you know, allow them to be more expressive, right?
Whether it's stickers, emojis, whatever the case might be." So that's how we started to think about the lower tier, and that should be a nice sort of driver of payer penetration, because, again, these are users that are using the app daily, quite actively. It's just about getting them to open up their wallet and pay for something.
Got it. Maybe moving on to Best Bees, I know we're starting to run tight on time here. I guess, this is your AI-powered match curation tool here that, again, available to the premium tier. How do you think about rolling this out to the other tiers, considering the conversion driver that you guys have seen?
Yeah. So, you know, as we are looking at launching the newer tiers, we are taking a look at the revenue architecture across the product, and that is going to involve looking at what features are going to fit within what tiers. Right now, Best Bees is a feature within the Bumble Premium tier, but that doesn't mean to say that that has to stay that way. We are constantly shifting features between tiers. And, you know, you'll hear us talk more about, you know, what does Best Bees looks like in the next iteration of, you know, four tiers, so to speak.
Understood. Maybe we can just wrap here on Badoo. You have the big rebrand in 2024. It's really about focusing on-
Yeah
delivering that message around building confidence. How should we be thinking about this translating to revenue growth? And, yeah, really, what would have to happen for Badoo to see better than mid-single-digit growth next year?
Yeah. So I think, you know, listen, we are very excited about Badoo. We've always said Badoo caters to a group of people that have strong brand resonance with the product. These are people that are very different than what you would find on Bumble, right? These are people that feel like they don't have a product that talks to them in the way Badoo talks to them, right? Often, they come from a income level that is, you know, less affluent than what a Bumble customer might look like. You know, frontline workers, delivery drivers, you know, single moms with multiple jobs. This is the cohort of people that you find on Badoo.
The goal really is, has been from a brand perspective, as well as from a product perspective, has been to go back to basics a little bit, help clean the app up, and then from a brand, and we talked a little bit about a brand refresh that we're intending to do in 2024, is to help these people be confident again, to date again, right? That's really the core tenet of how we're thinking about Badoo. And it's important to remember that we have a very large user base of MAUs that already use Badoo, right? So from a Badoo perspective, the goal is we don't have to go get a new user for the sake of getting a new user.
It's about how do you get your existing user base to use the app more and more, and then how do you get them to then start paying for the app? So that's really our focus from a Badoo perspective. The team is very energized and excited to see the strong growth that we've seen over the last couple of quarters, and I think 2024 will be very exciting, for the Badoo team.
Great. Well, look, look forward to continuing to follow the story.
Yeah.
I think we're over time, so-
Okay.
Really appreciate it, Anu.
Thanks for having me, Chris. Yeah.
Thank you very much.