Bumble Inc. (BMBL) Earnings Call Transcript & Summary

Okay. I am Cory Carpenter, Internet Analyst at JPMorgan. And joining me this afternoon is Whitney Herd, Founder and CEO of Bumble; and CFO, Anu Subramanian. Bumble operates 2 of the top 5 dating apps globally, Bumble and Badoo in this fresh [indiscernible] IPO, which priced in February. So Whitney and Anu, thank you for joining us today.

Thank you so much for having us. Hi, everybody.

All right. So I'll kick off with questions. If anyone in the audience would like to ask one, you can click on the blue "Ask a Question" button. And if we have time at the end, we'll get to as many as we can. So Whitney, I want to start off with you. You've certainly played a key role in the growth of online dating really over the past decade. So my first question is, what still excites you the most in terms of the opportunity ahead within online dating? And where do you see the room for the most innovation?

Yes. It's a great question. So I think I'll start by framing this in the sense that relationships are so critical and essential to all of us. And having the opportunity over the years to help people along that journey, find their special someone or find that best friend or even meet Bumble babies, it's really been such a remarkable experience. And that's really the #1 thing that excites us is to continue to drive impact for people to help them find healthy and equitable relationships. When you think about the relationships that start on Bumble, they start on safe, empowering terms. Women are making the first move. We have such strict guidelines around the behavior we will and will not tolerate. And so when you think about the health of that ecosystem, it leads to these remarkable outcomes. And so that's something we're really excited about. And when we think about the room for innovation and the room for growth, the global TAM for dating and just dating alone, before we even talk about friend finding and platonic relationships and community building, it's truly massive. And there is this incredible amount of tailwinds that we find very exciting at the moment. There are more and more singles coming into the market every day. As you know or some of you might not know this, but over 40% of couples in the United States are now meeting online. And that is only going to continue to grow. So in addition to this incredibly vast audience, we have the opportunity to really monetize the audience where there is what we believe to be tremendous upside. And we're really early in that growth story. And so when we think about innovation, our priorities as a company are really being laser-focused on continuing to innovate and build this online dating community that has a foundation in safety, accountability and focusing on women. And when you think about the competitive advantage there, this is so authentic to who we are, that everything we do is always with women in mind and always accountability and kindness online at the helm. And so the innovation opportunities are really extensive because we can continue to build our brand and our mission. And that really enables us to grow our user base rapidly and not just in a vertical sense, but horizontally because our brand and the authenticity of the DNA of this company gives us the license to grow outward, to go into platonic relationships, social discovery, professional discovery and then to really find all the other adjacencies within that. So we're very excited.

So maybe more near term, the past year has been challenging, continues to be challenging in a lot of places. What have been some of your key learnings through this all? And what are you seeing in terms of consumer behavior as the economies are starting to reopen?

Yes. So what's really exciting about our business during, before and after the pandemic, and I think this might be where people are not understanding fully perhaps. This is not a pandemic-only business and this is not a post pandemic-only business. This is the way people meet. This is how people meet during the pandemic, after pandemic and the one thing that will not change irrespective of the pandemic or irrespective of the state of the world is this core fundamental need to connect, this fundamental desire on a global level to find love, companionship and community. And what we've seen during the pandemic is actually quite remarkable shifts that now we're watching evolve even more on this reopening, which I'll speak to here. So let's start with pandemic. During the pandemic, a couple of really interesting things took place. I would say there were things we were expecting to happen, but they happened a lot sooner due to the pandemic, i.e., we had introduced video chats far prior to the pandemic. And this was a very bullish bet that we had that video dating would be the future, that people should ultimately get to know each other on video before they go out into the world to meet somebody. And it just wasn't -- it wasn't like seeing the adoption that we had hoped it would, then the pandemic hit. All of a sudden, people are forming full-blown serious relationships all from video inside of Bumble. On average, the short end of average was 30-minute video chats were taking place. And people were having these robust interactions. So now let's talk about this kind of coming out of lockdown post-pandemic shift. Because of the ease and the benefit of being able to see someone through video versus just see a few profile photos, that is now here to stay and that is now part of the reopening for a lot of these daters as they decide, "Oh, I do want to go meet that person in a bar or I do want to go see them in the park," they're having these, short even 5 to 10-minute video dates before they agreed to go to each other in real life. And again, this just reemphasizes the power of our brand and of our emphasis on safety and security, it's so foundational to who we are. So that's another really interesting trend. But moving into another fascinating user behavior that we've noticed is this shift to slow dating. So people, historically, prior to the pandemic, we noticed a lot of, call it, speed dating, in the sense that they would match with somebody, they would exchange information and off they would go into the real world. This slow dating is here to stay. And what we mean by that is a bit of what I alluded to before, which is match with someone, communicate with them, have a video, maybe have another video and really dive their way into this real-life interaction, which when you think about it simplistically, that makes a lot of sense from a safety and accountability standpoint. And so this slow dating thing is really here to stay. And what's -- I would say, the most exciting trend we're seeing about reopening is the intention behind dating. So the community has now said, and they've shown us through a lot of their behaviors by putting certain filters or interest into place. There is clear intention around who they're trying to meet and why. So prior to the pandemic, you would have a lot of people join the product and kind of say, I don't know what I'm looking for and that has changed fundamentally. People are looking for meaningful relationships, not just something for a fleeting moment. And so we've really seen this trend to something intentional and serious really start to emerge, and we are baking that into all of our roadmaps and being really methodical about catering to that audience.

Great. That's helpful. And then maybe let's focus a bit on the Bumble app specifically, which is the second-largest dating app globally, it's about 2/3 of your revenue today. A bunch of questions. But maybe to start, could you just help us with your top 2, 3 strategic priorities as CEO for Bumble this year?

Yes, absolutely. So just to give everybody a little context because I don't want to assume that everyone is up to speed on this. So Bumble was founded with the intention and mission to be the first-ever social product or connection product, starting with dating and moving into platonic friendships that really put women first. So if you think about the broader dating landscape offline and online, it was really always engineered around the male experience. And there was so much white space to go and build it in experience for women first, which ultimately makes a better experience for everyone. And so just to reiterate that mission today, that is our driving force at Bumble app. Accountability, women first, safety, it's in everything we do. It is not a side investment. This is so foundational and it is what drives our flywheel of registrations, of returning customers, it builds that loyalty because we've always put our customer first and always focused on that women experience. And so that will stay foundational as we take on these core priorities this year. So let's talk a little bit about our key priorities. First and foremost, as I just said, safety is the cornerstone of our business. It is the non-negotiable checklist in every product roadmap, marketing roadmap, engineering roadmap, anything we do as a business, has mission, values, safety at the root of it and that's ultimately what really sets us apart. So from key priorities, it's always -- we're always focused on growing our customer base, improving our product offering and then improving our monetization. So the way we hope to do that this year and in the coming quarters as key priorities is international expansion. We are growing rapidly in a lot of new markets, and we're very excited about the early traction. Something that is really remarkable is that the metrics are so healthy. They look so similarly to the metrics of our very successful market. So when you look at the women's propensity to make the first move in a market like Germany or Indonesia, these are very different cultures in very different markets, but the effect is very similar, which just goes to show the demand of women globally to have a product that puts them in control, that gives them the experience they deserve. It treats them with respect. It has their back. So international expansion is a very big priority. The next priority is also further expanding and optimizing our core markets to make sure that we are leaning into those core audiences that have been the foundation of our success to date to give them product enhancements. So really optimizing our product for both a recurring COVID world or a post COVID world, really leaning into the future of dating. And we believe the future of dating is this product being a part of your dating journey, irrespective of COVID, meaning this is how you will build your plans. This is how you will decide where to go. This is how you will socialize. This is the tool to get you out the door, it's also the tool to get you connected if you're forced to stay home. So really, really leaning into product innovation, optimizing our product from every different standpoint and then also really optimizing our monetization journey and expanding that, which we can talk to you a little later on in this session.

I want to stick with international that you talked about. Maybe if you could just kind of level set with us your international footprint today. What are your biggest markets outside the U.S.? And really, what you're seeing in some of these non-English-speaking markets that is giving you confidence in the growth opportunity?

Yes. Absolutely. Does anyone hear, there's some type of noise coming somewhere, but maybe I'm imagining that. Hopefully, you can hear me still. So yes, international, let's talk about that. So I just want to reiterate our very strong footprint in the U.S. and there is still massive opportunity to continue to expand into more hyper local markets, both here in the United States, but also in our core markets, like the U.K. and Australia and Canada. We're seeing -- and I promise I'll get to your question, but I just want to reinforce the strategy also in our core markets instead of only focusing on international. We are seeing a lot of strengthening engagement in people who have been out of the market for a while in the United States, for example. So high reengagement levels. We've seen a lot of strengthening in daily activity, which suggests that these markets are coming back online. We're also seeing strong segment growth. So Gen X is growing very well. Our LGBTQ audiences are growing faster than most of any other segment. And outside of the U.S., let's talk international. It's very important to note and this is so exciting that we're just at the very early stages of our international growth story. So we've got these great existing communities in our other English-speaking markets, like the U.K., Australia, Canada, as I mentioned. But in the last 1.5 years, we have made a lot of progress in a lot of diverse non-English-speaking markets. Few examples: Mexico, India, Germany, they've all shown very strong growth rates. Western Europe, in particular, has been a standout in 2021. We've seen our MAU grow triple-digit percentages in markets such as Germany this past year. And we just relaunched a campaign in France couple of weeks ago. We're seeing very positive results coming out of that. We're also seeing a lot of strong organic growth in markets such as Israel, Indonesia and the Philippines. And again, we're seeing the LatAm market starting to really pick up. Again, they're in a very different place right now in terms of COVID, but we are still seeing a lot of metrics over there, but we have really not fully invested in these markets yet. And so once we can deploy our Bumble strategy that we have done really well within our existing markets, when we can roll that out with the full product enhancements and all the things coming, we're very bullish on our future of international growth.

What does -- maybe could you -- what does your launch strategy look like when you enter a new market? I know you've been hampered in your ability to do that over the last year, just given you usually do a lot of out-of-home brand campaign and whatnot. Can you just kind of help us walk through what your strategy is when you enter into a new market?

Yes, of course. And I think what really sets us apart is when you look across the landscape of online dating, it can be quite crowded in terms of the offerings in the App store. We have such a unique offering and one that serves pretty much any population where women are. And I think we all know that that's quite fast, right? Women are -- they're dating around the world. And so first and foremost, we cement our brand in our narrative in our strategy, right? This is unique to us. It's our moat. It's our DNA. It's our authentic approach. So we take that and then we replicate the strategy, but nuanced to culture that we're speaking to. So there is no market to date that has not responded to the strategy when we've gone and rolled it out, meaning we identify women who are empowered, they're the embodiment of Bumble's brand. They're connected. They're savvy. They have great networks. We identify these women, we hire these women, we inspire these women. We equip them with our very wide toolbox of marketing and content, but then we really localize. So they're given the permission and freedom to take on their own spirit of make the first move in that culture, right? You cannot just say, make the first move and directly translate it on Google into 60 different languages and expect that to work. So we're very strategic about that. We test it extensively. We do a lot of user research. We send a lot of our team members into the field to talk to women to hear what women are struggling with in their dating journeys. And then we really put together our content and our distribution strategy, and they go out into their markets and they start growing it the same way we've done in our markets domestically, and it works. It works, and it's a unique selling point. It's not just, oh, the new dating app that does this. This is something that's unique. It's a brand they want to be a part of. And so something that we've really seen take shape and feels quite remarkable is that in the first time in history, we've got a group of sophisticated women regardless of where they live, whether they live in Germany or in somewhere in the United States that want to wear our sweatshirts and our sweaters and our hats and our T-shirts. That's more than a dating app. That's a brand. That's a mission. That's something people are connecting with. And we fundamentally believe that this propels that word-of-mouth flywheel, and it really helps all of the metrics across the Board.

So -- and I definitely want to get to a bunch of the nondating initiatives you're working on. Maybe one more on the Bumble dating app, maybe kind of a 2-parter Whitney and also one for you, Anu, but just on Bumble Premium, so your second subscription tier, you're in the process of rolling it out. Maybe Whitney, if you could tell us your key learnings thus far and how adoption has been? And then new, I think a question we get on the financial side is just how we should think about the potential ARPPU uplift? I think you said before that about 2/3 of new subs are opting in.

Yes. So that is right. 2/3 of users are opting for higher-priced tier. So Bumble Premium is very exciting, in the sense that it's still important to highlight we're very early in our monetization journey at Bumble. When you think about the dating wallet, people spend money on the quest -- in the quest for love and for relationships. And the opportunity to build more robust products is really exciting. So again, we're very early in this monetization journey. We did launch Bumble Premium. That's our second higher price tier. We did that last year. And to reiterate what you said, we're fully launched in IOS. We're in the process of rolling out Android. We hope that will be fully rolled out by the end of Q2, early Q3. But as we talked about earlier, the users that have been exposed to both tiers, we are seeing very strong adoption with, as you've said, more than 2/3 of our users opting for that higher price tier. So we really feel that our strong differentiation is our brand, the core product features that are part of that premium offering. The examples of this are Incognito Mode, which I actually want to talk to you about for a quick second. And this overall emphasis on safety and trust is really what drives adoption. So let's actually talk about Incognito Mode for a quick second. And I want to give you all a peek under the hood of how we roll out these features and how we come up with these features that we announced. We were hearing from women across the board, women that have been divorced, women that are high profiled, women that were shy, they wanted to be on Bumble. But they did not want people to see them unless they granted them access. They almost -- one woman actually said, I wish I could have like a magic cape where I would just disappear until I like someone. So we went and built that feature. It's called Incognito. This is part of the higher-priced tier. This gives women more control over the experience. So now they get to basically be in the restaurant in the invisible mode and if they see someone they like, they -- it's a virtual tap on the shoulder and boom, they appear. So again, I just wanted to give everybody a little bit of context into how we continuously grow our offering through the lens of women, their real wants, their real needs. And that's just one of dozens of examples of things women have asked for and things women will pay for, not just women, but of course, everyone. But I do want to just double down on something here. We are by definition, when you're talking about our dating products, dating apps where women pay, that's unheard of. So the propensity for women to pay on a dating product is just something that was never conceivable until now. Again, it's the power of the brand. It's the power of our commitment to safety, accountability and a kinder experience.

And just to quickly talk about the ARPPU side. We've said this before, when we launched Bumble Premium, our immediate focus was on exposing Bumble Premium to existing payers and to increase ARPPU as a function of that. And based on the numbers you've seen in Q4 and Q1, Bumble ARPPU was up 12%, for example, for the quarter. And so we have seen that adoption with, obviously, 2/3 of our subscribers on the new higher-priced tiers. We expect to finish the rollout, like Whitney was saying, during the rest of Q2, Q3, so we should continue to see increases in ARPPU during that time period as well. And then our real focus will shift then towards using the lower price tier that we have now introduced to increase payer penetration across our platform. That is not something we've really leaned into yet. But that was absolutely the intent of why we started launching multiple price tiers. And our work on monetization and ARPPU is by no means done here. We will continue to test more products and ideas over the coming quarters.

Okay. Maybe let's shift a little bit to some of your nondating initiatives, I guess, this point not what you called in. But Whitney, I think recently, you said last quarter, you believe the friendship space is the next social growth horizon, if I got that right. So could you just level set the opportunity to see beyond dating and why you think Bumble is well positioned here?

Absolutely, yes. Happy to. So it's not just something that I fundamentally believe. It is really proven by the user behavior. So we, in 2016, which is a long time ago, we launched Bumble BFF, which stands for Bumble For Friends. The intention was really more of a response to customer behavior. So as early as 2015, we saw women, in particular, hacking their profile, saying, "I'm married, I'm engaged, I'm in a relationship, I need girlfriends. I don't know anybody to go do Yoga with. I have nobody to go do these activities, but I need a friend. I want to watch Netflix with someone. I want book club." So we listened, we watched the customer behavior. And we built this mode for them. Now the reason why I give you the back story and the reason why I take you so far back is that today, we have over 10% of our daters using BFF Mode. It's still in that same product version. We have not rolled out the updated feature. So I want you to imagine when we relaunch this, the way that will be optimized for what's taking place on the product, which is a vast array of friend finding and community building. And we actually place the discovery modality into the product in a way that it's easier to find. Right now, it's quite cumbersome to find it, to stumble upon it. We fundamentally believe that there is going to be huge upside here. This is not separated from dating. Our relationships are not so segmented. They are all part of the same category, right, the quest for community, the quest for companionship. So we believe we have permission from our customers, not just from the brand standpoint, but we believe that our product has permission to really own this space. We have the brand, we have the product, we have the roadmap, we have the insight. It's already taking place here. So we are certainly not coming out the gate trying to recreate or engineer new product behavior. We don't believe that, that is the approach. The approach is to listen methodically to your customers, they will be your best roadmap, right? And so you watch that data, you pay attention to data and you optimize for them. They want this. They ask for this and for many different use cases. So we're in the midst of rebuilding this feature right now. We're very excited about it. I'm very hands on. We're all very committed to this, and we hope to roll this out in a really robust, seamless relaunched capacity, which we believe is the future of friendship, and we believe that it's also an incredible on-ramp into dating. So let's just look at a couple of quick examples. You have the women that for whatever reason is not into "online dating", right? She doesn't want to be in a dating app, but she'll join from BFF because she wants to be in a book club or she wants to find a group of girlfriends to go do whatever activity with. Now the product thoughtfully tells her about the opportunity to see interesting people nearby if she's single. This is an opportunity to pull people into dating as well and expose them to a dating app for the first time and then convert them to being a paying customer on the dating app. And so we not only believe that there's huge growth opportunity for the customer base and the activity and the engagement on BFF, but we also see a lot of monetization opportunities in the coming years on BFF as well. And so this is something we're very bullish on.

What -- that was actually kind of my next question. I don't know if it's best for you or Anu, but just curious, how should we -- one question we do get a lot of is, I think it's pretty clear you're doing a relaunch, happy for any sneak peeks that you're willing to give us on the BFF relaunch, by the way. But what -- how should we think about like the level of investment that you're spending into it and kind of any potential time line towards monetization?

Sure. So I will let Anu take the monetization piece, but I will give you, without disclosing anything that we can't disclose, I think the way you should think about the relaunch of BFF is it's going to be a lot more inclusive to all the different use cases that have found their way to BFF. So when we launched BFF, I myself at the time was a 26-year old woman looking for new friends as well, and there was a lot of that use case taking place. That has expanded. What people are doing on BFF is remarkable. There are groups of women, 200 wide now that have found each other on BFF, and they've built support communities because all of them have suffered some type of tragedy or loss or grievance. There are groups of women that are going through fertility struggles or menopause struggles. There are men on there that have relocated for work and want to find a soccer buddy or want to find somebody with similar interest. This is not just a college women product, this is incredibly diverse. It's diverse across the gender spectrum. It's diverse across the interest of what they're looking for. Ultimately, you can think about it as the platform to find community around shared struggles and common joys. And this extends age and expands across a gender as well. And we disclosed this on our last earnings call, we saw this -- the use of BFF surge incredibly over the pandemic with men as well, not just women. And so I think you can just think about this as a broader social discovery product that will have a big on-ramp opportunity back to dating as well, not only that, but top of funnel. So now we have an opportunity to really go attract customers that otherwise click pass the opportunity to join a dating app. And so it really just extends our LTV and our TAM.

Yes. And in terms of investment and monetization, our approach to BFF is very similar to how we approach overall investment within the company, right? So we have a very disciplined approach to how we think about funding new products. The advantage that we have is given our shared back end platform in terms of product and tech between Bumble and Badoo, we are able to relaunch BFF with minimal additional resources in terms of engineering, for example, right? So we don't -- we're not spinning up a whole new brand team from scratch in order to be able to launch this product. And that's definitely an advantage as you think about just investment. And once the relaunch happens, the plan is for us to expose the product to our existing large base of date users that we already have. And again, we can do that in an efficient manner without us having to go and spend a ton of marketing dollars trying to get new users, right? And then as we start to see growth in user base, we will start to then invest in marketing to sort of, again, super size the audience base that we will see within BFF. In terms of monetization, we expect this to be a factor in '22 onwards. You'll see us testing several monetization options. And we'll look forward to sharing more details in some of our future updates on how those evolve.

Okay. So I think I got to ask one. I can't let you guys get off without asking about competition. So look, Match hasn't been shy, I think about Hinge's success very recently, I would say. So I think my 2 questions here would be, one, I think Whitney, it would be good to hear your thoughts on the competitive landscape today overall? And then more specifically, are you seeing any noticeable impact from Hinge or any thoughts there would be helpful?

Yes. No, I totally welcome this question. So let's start a little more broadly on competition. So we don't comment much on this topic. But we, of course, monitor all of our competition. And by the way, we don't just see them as our competition. We look at the broader social space, right? There's so many relationships being built on our product that are not just exclusive to the dating category. But what we fundamentally believe and see in our numbers is that we have a very unique woman-first brand. This strong emphasis on safety and accountability is our differentiator, and I want to be clear, it cannot be replicated. No matter the amount of investment or focus, if it's not foundational and it's not the way your customer knows you, it's very hard to change that narrative and to replicate it. And we've seen this over the years. Certain competitors over the years have actually introduced the women make the first move feature only to then turn it off. And people during that time would call me and say, "Oh my gosh, are you panicked about this? And I would say, absolutely not. It's not a feature. It's a brand. It's DNA. These are different things. And so we just feel really, really convicted in our brand, in our moat, and we continuously reinvest in it, right? We're not sitting back and saying, "Oh, we've got this great brand, who cares." We're really reinvesting in it and continuously padding that. But I think it's really important to say that all of that is evidenced by the 44% growth rate in paying user as we saw in Q1. Based on a lot of the market research that we've seen, Bumble has around 30% more female customers and users than any other dating app in North America. And that's not by mistake. That's by design. And it's not by design of a new feature. It's by design of 6-plus years of building this company. Women on our platform, they convert at a higher rate than other platforms. And only 21% of our new customers come from performance marketing, the rest come through our brand and this flywheel of word of mouth that is really part of that authentic brand that we've built. With regards to Hinge, we know that people have 2 dating apps on their phone at any given time. And that's great, right? This is not a winner-takes-all market, and it's actually excellent to have healthy competition. We -- our goal has always been to be one or both of those. And our data shows that we're still growing share. And in Q1, according to even third-party sources, we gain share of downloads in the U.S. So we are increasingly seeing Hinge popup and we respect Hinge and we think they're great. But we really just see ourselves as different products. We have different audience. And some of the great things they're doing, we fundamentally believe our feature offerings in our app they're not they're not risk to our foundation or our DNA, if that makes sense. But with that said, we really were excited and we welcome competition, but we really think we're doing something unique.

Awesome. Well, I have a lot more questions, but I've already been told we're one minute over. So I think we'll have to leave it there. But hopefully, we can do this again another time. So thank you, Whitney, thank you, Anu, both for joining.

Thank you, Cory. Great to see you.

Thanks so much Cory, bye.

Thanks, everyone.

Thank you.

Take care.