All right, we'll get started. We have Whitney and Anu from Bumble. Thank you for joining us. We'll kick off with two bigger picture topics, the dating industry and macro. Starting with dating. There's a lot of debate around industry saturation, TAM, you know, I think partly due to the largest brand in the category struggling, also less of a post-COVID recovery for the industry than perhaps expected. Whitney, as someone who's been in the industry for over a decade, how do you think about industry penetration and growth opportunity from here?
I think two things to set the stage. According to this amazing Stanford graph, I don't know how many of you have seen it, but we should find a way for you to see it. It basically shows that almost six in 10 couples are actually meeting online now, and that is up significantly, even just in the last few years. What used to be the first and second way of meeting was restaurants and bars or friends, and those have just fallen off a cliff on the chart. A very close second to online is restaurants and bars. When you look at the fine print, that's actually where the online date goes to meet. That's not actually where they met.
When you think about that, set against the backdrop of more or less, 2 billion singles, I think it's slightly crazy to think that we've reached a ceiling. I think that unless we are really going to say that people don't want to find love and people don't want relationships, then there's really no reason we've reached a ceiling. I think the second thing I would add to that before we get into kind of the comparisons of what we're seeing, we are at epidemic levels of loneliness right now. I mean, the Surgeon General literally last couple of weeks has been putting this out about it being one of the biggest issues that humanity is facing, in our country he's speaking about, but it's actually globally. We are a very rare company that uses technology to actually get you face-to-face.
If you look at a lot of these apps, they're just competing for hours in the day and who's going to use the product longer and be sucked into it longer. When you think about the power of us actually, you know, going more global, which we have not reached, you know, any ceiling on any level, and also penetrating deeper into audience groups in the core markets that you might argue, you know, based on the way the question was framed, have we hit a ceiling there? The answer in our opinion is no. We think that there's huge global runway to really help people find not just love, but all relationships, all connections. We think we're really early in this journey.
I think this question goes hand in hand, which is the swiping feature really transformed the category, brought an entirely new generation online to dating. That was a decade ago. You built onto that with the women's first concept. I think you could argue that otherwise, you know, product innovation has slowed down a bit in the category. There hasn't been that breakthrough product yet. I think my question for you is, do you think swiping is still the primary user interface 5-10 years from now? What do you think has the potential to really be the next transformative product?
I still think we're very early in the bringing the swipe to life opportunity. I think people are too focused on swiping's been here for a decade. What's next? I mean, we've all been using Instagram for a decade, and it's been scrolling for a decade. I think people are too anchored on the actual functionality. What they're not anchored on enough, which is where we're spending a lot of our energy on, is making sure that when you swipe, you see who you want to see, that the swipe is more relevant than ever before, and that we can bring that swipe to life. For the last 10 years, people have been swiping just on a stagnant person, a bio, an image of someone, of a non-natural way of expressing yourself generally.
You know, if you think about it, you see Johnny, they're 36, they've got, you know, they went to Harvard, they have a dog. That's not really how people meet. I think what we're very focused on is how do we bring Johnny to life? How do we help Johnny stand out? What you'll see us do is lean further into AI to do this. We have been using AI for a long time, and I know this is later in our discussion, but really making sure that we deliver the most relevant swipes so that it doesn't feel exhausting, so it doesn't feel tired.
Really using innovation through both the machine learning side and the AI side, but also the forward-facing side. How can we actually build consumer-facing products to layer on top of the swipe that will make it more relevant? How can we get you out the door quicker and better to make eye contact with people instead of just staring at the screen all day long?
We will definitely come back to AI. One quick one on macro. Just we've typically thought of dating as a relevant, a resilient category. I think that's largely held true the last couple of years. You know, last week we heard from a number of realtors suggesting the consumer is perhaps even more pressured at Target, Walmart, et c. Curious what type of impact macro is having on Bumble and how this has trended more recently.
We'll just zoom out for a second. I think the one thing that has really historically always prevailed, regardless of as extreme as war and, you know, financial crisis is there's really this indestructible demand for love. I think love has always prevailed. What is going to go first? That extra nothingness that you don't really need to layer into your house from Target or this desire to end personal loneliness, right? When you start to think about the actual relative value of dating on your phone compared to offline dating, it becomes quite exceptional.
I mean, the fact that you at the highest level right now on Bumble spend nearly $50 for an unlimited supply of interesting people around you, and you don't even have to leave your house, compared to how much it would cost us to go out in Boston right now and buy a round of drinks. Like, that is your entire month on the app. Our numbers, as we stated in the Q1 earnings, any of the slight signs that we saw, whether in Gen Z or on Badoo, things have stabilized. We still believe that love is durable even in challenging environments.
Moving on to Bumble app. Ever since the IPO, there's been this debate around, you know, the threat to Bumble from Hinge, the potential risk of losing share there. Since then, we've seen Bumble and Hinge both been share gainers. In fact, you grew at almost identical 26%, 27% rate in 1Q. You know, Tinder has struggled on the other hand. Whitney, I'd be curious just to hear your views on how the competitive dynamics in the industry and Bumble's positioning have evolved over the years, and maybe some of the lessons learned from the challenges we're seeing at some of the brands that are struggling.
I think, you know, it's also worth noting that, and everybody here knows this, but, you know, the scale of Bumble is a lot bigger than Hinge. To have those growth rates, that kind of speaks for itself. We continue to see share gain. We continue to see preference for us over some of our peers with women and Gen Z, these two categories that are so absolutely critical to us. I would attribute that to a few things. I think first and foremost, it's the brand that we have engineered. We have been very strategic about this for almost nine years now. We were the first people to actually raise our hands and say, "Hey, women also matter in dating." Making sure women are not being harassed and abused and treated poorly.
Like, this is not how you gain share around the world by allowing women to suffer through technology. We said that really early on, and we built a product to actually encourage a safer, kinder ecosystem. When you do that, it pays off, because when women join the product and they have a good experience, they tell their friends, and then the person on the other side has a good experience, and they tell their friends.
This has been a flywheel of organic growth for us. I would say, you know, we have scaled globally at this point, not to our potential, but we've started to really roll out in so many different markets and the brand is resonating. That brand creates loyalty. Not only that, also we have seen that the spend that our peers have been or our competitors have been ramping has not caused issues for us. We're not seeing that come at the expense of us. It really proves just how durable we are, even in an environment of increased competitor spending.
Just getting into the Bumble product roadmap, maybe we'll start with Compliments. You started testing Compliments about one year ago. You said a few weeks ago that you plan to market the product outside the app this summer. It seems like you're happy with the early response. Whitney, could you expand on the engagement you're seeing with Compliments and then, you know, maybe for Anu or Whitney, perhaps talk about where you're at in terms of monetization and the potential impact on revenue.
Yeah. Just to remind everybody on how Compliments works. Compliments is really our first foray into the message before match space. Historically, you would have to wait for two people to swipe right on one another to create a mutual match. Then you would have to wait for a woman, if it was a heterosexual match, for a woman to make the first move. As great as that model is and as amazing as that has been for us as a business, there's quite a bit of friction involved. Allowing our customers to signal interest or to say something kind or to catch someone's attention straight from the interaction screen of the swipe has been really exciting from an engagement standpoint.
As we, you know, really expand the monetization offering, we feel that this is step one in that broader ecosystem of monetizing the message before match space. Right now you see Compliments, but down the road it could be a bevy of different engagement models. We've been pretty stealth about how we're talking about it and how we're tweaking it and how we're making sure it's functioning at the best of its ability and rolling it out to a lot of different markets. Now we're feeling really confident about, you know, being really loud about it and going out and really starting to up the consumer awareness of this feature. Would you like to add anything?
Yeah. I think in terms of monetization, the goal to Whitney's earlier point has really been on making sure that people are adopting it. You know, we had said in our earnings that almost 15% of our total user base is using Compliments, so we're very excited about that. That number is growing. In Q1, a lot of the people that paid for Compliments were existing payers, so Compliments was more of an RPPU driver. The goal for the rest of the year, to your question, Cory, is to really educate the consumers about what Compliments stands for, get usage up, and then start to get non-payers starting to pay for Compliments. We're very excited about that. We've made some reasonable assumptions about that in our guidance for the year as well.
Okay, back to AI. Best Bees, a product you're testing in Western Europe, it leverages your new AI algorithm, providing more curated matches. Early results show a 5x higher match rate for women, which pretty big deal. Whitney, my question for you is, what have these results shown you in terms of the potential impact AI could have on the category? Anu, could you just talk about where you're at with the rollout and how you're thinking about monetization for this product?
Okay, a few things about AI. We will start with Best Bees, and then we'll go into the broader use case of AI. Yes, those results are extremely exciting. It's a suspicion we've had for a long time that when you really supercharge the algorithm and you lean into AI as a mechanism to essentially engineer relevance and compatibility, it becomes a really, really exciting flywheel for us, not just for growth, but for everyone using our product. I mean, our goal at Bumble is to find you real, trusted, kind people to connect with as quickly as possible, people that you want to meet so that you will then go offline and build these great, healthy and equitable relationships.
Best Bees is a first step in really leveraging AI to deliver people we know will be exactly what you're looking for or closer to exactly what you're looking for. We're really excited about the early results. Let's zoom out for a second, and then if you wanna double-click on Best Bees, that's fine. AI becomes extremely exciting from several different lenses. I think first and foremost, the product as it exists today still has a lot of screens or points of frustration. There are areas of friction that exist along the user journey. Let's start with just picking your photos. That's extremely stressful. Most people that are single say they're single because they don't think they're good at dating. They don't know how to date.
If we can leverage AI through building, you know, features of ease and relieving pressure and tension and helping people be more confident in their quest to have relationships through all of these different touch points along the journey, whether that is literally helping you pick better photos or helping you reconfigure your bio or express yourself differently, all while being authentic and true to yourself. We don't want you know, being a fake comedian through AI and then showing up at the bar and being an entirely different person, but really just helping you shine and enhance yourself through these opportunities of, you know, reducing friction. You can think about all those touch points across the journey, even our core feature of women making the first move.
Imagine what happens when we supercharge that and rethink that through the lens of AI and helping conversations get going quicker, better, faster, more relevant. We can really reduce friction across this entire user journey. Something we are obsessed with is listening to the customer. What do women not like? What is stressing people out? What is causing people to feel that they're not getting the most out of this? Make a list and start tackling those line by line through AI. It becomes a really interesting opportunity. That's not even to mention all of the innovative AI opportunities, whether it's, you know, replacing the matchmaker with AI and really helping you connect in so many more engaging, interesting ways. I think we're at the very early stages of what AI can do to love.
I think one thing that is very important for everyone to remember is a lot of categories are going to get negatively disrupted by AI. Lots of core use cases of companies and features and products are going to probably evaporate or change. What's exciting for us is that you cannot replace the need for human connection. You just can't. If we can, we're in bigger trouble than just at Bumble. Like, this is a much bigger issue. We're very confident that the need for human connection will never go away. How can we help accelerate it to be healthier, better, kinder, more relevant through the power of AI?
I think, to your question about Best Bees, currently, we have Best Bees live in a small handful of countries. We are still in the process of testing monetization. We've been looking at options for Best Bees to be a consumable. We are also looking at options for it to potentially live within a subscription package. All of those are being tested. Some, you know, more to come on what that looks like for the rest of the year in terms of, you know, contribution.
Okay. Right now, you have two subscription tiers. You're testing a new lower tier package aimed at Gen Z users. Whitney, I don't know if we have any Gen Z users in the room, maybe help educate us on how this tier will differ from your current offering. Could you talk about when and how we could expect this to roll out?
I think, you know, a lot of us get anchored on Gen Z or Millennial or Gen X. It's really more about stage of life. What happens to be the Gen Z stage of life right now happens to be the group of folks that don't have a ton of disposable income, and they're also not looking for their forever person at 18 years old, unless you're from Salt Lake City like I am, where they're definitely doing that. We'll have a Salt Lake City subscription for that. We really are paying attention to what the customer wants at different touch points in their relationship quest and journey.
When you look at the 18 to, call it 23-year-old, you know, chances are they just wanna go out and meet people and have fun and meet friends and be social and find something casual, and they probably don't wanna spend $50 a month to do this. This is where we're really focusing on a more Gen Z-friendly tier that helps people just express themselves and get out there and meet people in a more relevant way to what they're looking for at a much lower price point. If you flip to the opposite side of that barbell, there's a ton of folks that are looking for their special someone.
To find your forever person for $40, that's ridiculously cheap. When you think about the opportunity to really, you know, go lower but also higher at the same time with these different audiences through these different life cycles of where someone is in their relationship quest, that's where the pair potential becomes a lot more vast than what you see today.
Anything, anything to add, Anu?
I think the only thing maybe I would add as it relates to the lower tier is I would think of it, and the goal is to launch this, you know, by the end of 2023, so think about late Q3, Q4 as potentially when we launch this. You know, we don't expect that this will get monetized this year. We will start to test monetization in 2024, and we'll obviously talk more about that. I would think about it more as bundling of a lot of existing things we've been testing over the course of the last few months. Things like, you know, college verification, virtual stickers, virtual goods are all items we expect will be part of this sort of lower priced tier.
We'll stick on the topic of lower tiers. One of your competitors is significantly raising the price on their lowest tier as we speak. I'd have to think this is good for you, as it either signals more pricing power in the industry or it presents an opportunity to take share at the lower end. Whitney, how do you think about the impact of Tinder price increases on Bumble and the broader industry? Do you view this as an opportunity?
Yeah. We don't monetize based on what our competitors do. We have, on any given moment, hundreds of tests running on our platforms to suggest the best price points for our ecosystem, for our customers, for our users. I think both scenarios that you just outlined would be positive for us, but we certainly won't be making changes based on what a competitor does. I think that's important to reemphasize. We somehow get lumped in with this category of, you know, it's kind of the Match versus Bumble, but from day one we've been building something different. Yes. Are they both in the world of dating? Sure. Dating is a really broad topic, and it's something that matters to every human on Earth at one point or another. The way we approach this is just different.
I think it's probably time at this point for people to start reframing the comparison. It's not as direct as people want to make it. We really do build the best Bumble, and we build what's best for our mission and what's best for our customers, not as a watch what somebody else is doing and react. We really don't do that.
International expansion. When you went public in early 2021, you talked a lot about your core 4 markets. I remember years ago, U.S., U.K., Canada, Australia, I think at the time that accounted for at least 2/3 of your users. There was a lot of debate if the women's first messaging would work in a lot of other markets. Could you talk about Bumble app's international footprint today and in particular what you're seeing, you know, where you're seeing the most success?
Yeah, sure. You're right. I think, you know, 2.5 years ago, people would actively debate us on whether, you know, women make the first move would resonate internationally. I think, you know, I can definitely say based on the success we've seen across, you know, pretty much every type of market, right? Western European markets, conservative markets in Asia and LatAm, that, you know, has not been a barrier at all. We've seen strong growth across the board in all of these regions. The beauty of, you know, being a freemium app is anyone can download the app and start using it right away, right? Even though we may not have actively entered a certain market, doesn't mean that we don't have an organic user base in that market.
We often look at patterns across the board, then, if we see a market that is not on our product roadmap organically grow, then we immediately sort of jump on it and start to market it more actively. In terms of the efforts that we have, Western Europe is definitely, you know, continues to be a huge area of focus. We've talked about markets like Germany, Benelux, the Nordic region, France as being important markets for us. We recently launched Spain in late Q4, that's definitely a market that's coming up the curve in terms of user base.
India continues to be a strong market for us, parts of Southeast Asia, in LatAm, I would say markets like Colombia, Argentina, are all, you know, sort of nice new markets for us, farther down, you know, the curve in terms of where they are, but definitely areas of focus for us. Markets like Germany, which, you know, we've now launched, I would say more than 1 year ago, are also coming up the curve in terms of paid penetration. Not only is the user base growing in a very nice manner, the paid penetration is also growing very strongly. We've been pleased with the progress we're seeing internationally. You know, to Whitney's earlier point, we're still scratching the surface in terms of how much bigger we can get in all of these markets.
The only thing I would add to that is when we launched in the United States in 2014, I think there was such shock value to the fact that a woman would go first on a product. It was such a flywheel for us. It was like, "Oh my gosh, there's this app where women are speaking first. That's never happened before." We are seeing that on a global basis because of the way equality has started to kind of pick up in terms of the discussion around relationships and healthy relationships. As we see new markets launch, we've almost benefited from the same conversation that happened in 2014 in these more Western, audiences and markets starting to happen in places like Colombia or Argentina, where it's still quite shocking. We really benefit from this, you know, differentiated approach on a global scale.
Anu kind of tying all the products we just discussed international back into the financials for a bit. You beat your Bumble app net adds guide in 1Q. You guided net adds to sequentially increase by a greater amount in 2Q and then a greater amount in 3Q. Hope I got that right. What's driving the higher net adds over the next few quarters? You know, what do you view to be the swing factors in terms of where you could ultimately come out in your $450,000-$500,000?
Yeah.
1,0000 guide?
Yeah. mouthful of a question. Yeah. I think, you know, we've said this before and, it still holds true. We think about growth in payers coming from sort of three big buckets, right? One is growth in top of the funnels, so growing overall users, converting those users into paying users either, just organically, right, as a, as a market grows or via a lot of the optimization work that we do. The third driver of payers is some of the new product features that we are planning to launch. I would say that the first two categories are really where, you know, a lot of the growth this year is coming from. It's something we know how to do really well.
It's something that we've been doing for a long time, and that's why we have a ton of confidence in being able to get to the guidance numbers that we gave out post Q1. We do have assumptions made about contributions from some of the newer features. We talked about Compliments to some extent, things like Best Bees. You know, to the extent we have a lot of testing data and a lot of information about it, we've made, you know, more assumptions. To the extent we haven't tested it yet, we've been more reasonable about what we think the contribution is going to be. Depending on how some of these things go, right, over the course of the next few months, obviously, our numbers might change, but, you know, right now we feel good about the guidance that we've given, and we feel confident.
One more on numbers. You announced a $150 million share buyback at earnings. I think the question is why now? More specifically, one question we often get is, can you use this buyback in the context of a potential sponsor sell down to offset it if you want?
Yeah. The buyback decision really, is a function of what our capital allocation priorities are as a company, right? We obviously, you know, throw out a lot of cash every quarter. We had close to $400 million of cash on our balance sheet. And as we think about the uses of cash, obviously we wanna continue to invest in our business. We wanna continue to be opportunistic when it comes to M&A. Nothing has changed in terms of what, you know, our sort of priorities are from a capital allocation perspective. I think the need to, have the buyback program really was it gives us, you know, flexibility to have one more thing that we can, we can do with our cash.
You know, certainly investing in ourselves is something that we see as a good use of our money, and it gives us the opportunity to return cash to our shareholders if, you know, it made sense. It's really based on the fundamentals of what we think our priorities are. To your second question, there is nothing that prevents us from participating in a follow-on. And we are, you know, legally allowed to buy shares in a secondary offering. Again, if it makes sense for us to do so, if and when such an event happens, I think we'll take a look at it. The two of them are not related in any way. Our decision to do a buyback was independent of, you know, what, our sponsor may or may not do.
One question on Badoo for you, Whitney. It's about 20% of your revenue today. What's your longer-term outlook on the business and just its role within the Bumble portfolio?
Badoo serves a very important need for a very, I would say, overlooked audience and community that is historically targeted on dating apps, if that makes sense. Badoo is the top three player in so many countries around the world. When you look at who really gets value from Badoo, it is folks that are frontline workers. They are working multiple jobs. They are single parents. These folks need connection, and they are strapped for time and money. The more mainstream dating apps, which I don't mean mainstream from scale, I mean mainstream from popularity, these apps don't really serve them all that well. It's very important to us to serve that audience and to scale that and to be this beloved product for these folks.
Our mission really is to combat loneliness through healthy and equitable connections, and that is serving just that on such a wide scale. We also benefit so much from Badoo because it's this incredible test site for us. We have tests running on Badoo all day, every day that are preserving the ecosystem on Bumble. Right now, there's multiple tests of really innovative and exciting, both pricing, testing, but also new feature testing that would be slightly risky to run at random on Bumble.
It's not only a huge win to us from a product launch standpoint, but it serves a really, really important need, and that's what we're committed to. We do feel like our numbers really suggest that what we've said all along, that it's been about stabilizing it through rough times. You know, we had the Ukraine war, and we had COVID that really affected that community. We're starting to see glimmers of hope, and that's very exciting.
Maybe we'll skip Fruitz. We'll come back to it if we have time. I do wanna touch on Official-
Yep.
-our relationship app. I think it's used by over 350,000 couples. Could you talk about your vision here and the rationale behind the acquisition, which was announced last week?
Yeah. Have always really looked at the relationship in terms of not just the hello. We're not just a group of brands that match you with strangers. We are really trying to get to that end game of healthy and equitable relationships. Official is this very natural and incredible next step of what happens when you find someone. I referenced earlier, six in 10 couples nearly are meeting online. Where do they go after that, right?
They might delete the dating app because they found their person, but they should be able to go to both Bumble BFF to find friends and community, they should be able to nurture that relationship with Official. Unfortunately or fortunately, however you wanna look at it, a lot of relationships end. It's this LTV opportunity, a cycle of relationships and love that really kind of solves different components of loneliness along the way and nurtures these relationships along the way. We're really building an ecosystem of relationships that serve not just singles, but folks in relationships as well.
One or two on financials, then we'll end on word association with you, Whitney. I don't wanna miss that. Anu, just on margins, you guided to at least 100 basis points of expansion this year. That puts you right around 26% EBITDA margin. What's driving the leverage this year? Do you see any pressure to ramp marketing spend as, you know, I think spend in the category is increasing quite a bit.
If you look at the different components of expenses that we have, you know, we've sort of reached a, I would say, largely steady state now in terms of things like cost of revenue, right? We expect that that will largely be stable at the levels that we saw in Q1. Sales and marketing is where we expect to see, you know, most of the leverage going forward. You'll definitely see that in 2023, and then going forward in 2024 and beyond as we get to sort of our long-term margin potential. That's why we feel pretty confident. Obviously, in Q1 you saw us pull back on marketing spend even though we exceeded our guidance range for Bumble app, despite, to your point, elevated levels of spending that we saw.
You know, for us, it's, you know, not been about spending just to get that extra registration or download. I think it's about making sure that we are focused on durable growth. To the extent that, you know, we didn't see, you know, the ROI thresholds being met, we didn't see the need to spend that money. You know, we just didn't. That philosophy doesn't change for Q2 or for the rest of the year. I think you'll see us be opportunistic. If we feel like we can capture top line and capture revenue within the envelope that we've set for ourselves, for margins, I think we will spend the money. Otherwise, you know, our goal would be to sort of return that back, to the bottom line. I think that's our philosophy on spend.
Overall, you know, we've, you know, been very disciplined since before we were public. We find ourselves fortunate to not be in the situation of having, you know, massively overhired across departments. You know, we've told our teams this year that the bar for hiring is very high. We are still investing in certain pockets of the business, but, you know, it's not a rampant increase across every area of the business. The teams know the high bar that we've set for expense spend, and, you know, we feel pretty good about where we are.
Last-minute word association. Whitney, I'll give you 10 words one at a time. You tell me the first word that comes to your mind. I'm actually gonna wrap you into this, Anu, as well, because my last question, I think we only have time for a one-word answer, which is maybe a yes or no question. Is there any reason that your margins are, you know, structurally different or any lower than other dating companies?
No.
That's a question we get. Perfect. Okay. Whitney, one-word answers if possible-
Okay.
to my words. We'll start with Gen Z.
Passionate.
AI.
That's a nice way of putting it. Exciting.
Tinder.
Who?
BFF.
Opportunity.
Online dating.
Amazing.
International.
Huge.
Google.
Fees.
Badoo.
Hopeful.
Hinge.
Cool?
In Fruitz.
I don't have one word.
We have-
I was gonna say-
We have 20 seconds, so you can... Oh, no, we're over. Never mind.
Beloved by Gen Z.
Awesome.
That was a few words.
Well, thank you.
Thank you.
Thank you. Awesome. Thanks, everyone.