Bumble Inc. Q3 FY2025 Earnings Call

Hello, everyone, and welcome to the Bumble Third Quarter 2025 Financial Results Conference Call. My name is Elliot, and I will be coordinating the call today. I would now like to turn it over to Will Taveras from Investor Relations. Please proceed.

Thank you for joining us to discuss Bumble's Third Quarter 2025 Financial Results. With me today are Bumble's Founder and CEO, Whitney Wolfe Herd, and CFO, Kevin Cook. Before we begin, I'd like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today's earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliations to the most comparable GAAP measures are available in our earnings press release, which is available on the Investor Relations section of our website at ir.bumble.com. With that, I will turn the call over to Whitney.

Hello, everyone, and thank you for joining us today. Helping people find love has been Bumble's focus since day one. What made Bumble successful from the start was simple but powerful. We built trust with women. That trust became our moat. It created a healthier, more balanced member base that drove engagement, retention, growth, and a global brand. Historically, most dating products skewed male, leading to an uneven experience where women often felt overwhelmed and disengaged. Bumble changed that by putting women in control, creating trust, balance, and a higher quality member base that produces better outcomes for everyone. Today, we have a brand long identified with putting women first and a deep understanding of what women want from love and connection. This brand identification is perhaps our biggest strategic asset. That's why we've returned to that core, winning with women, because we believe that when women feel safe, respected, and confident, and when they meet quality matches, everything else improves. Connection becomes more meaningful, engagement more genuine, and the business more sustainable. When I returned as CEO in March, the first thing we did was listen deeply and intentionally to women. What we heard across markets was consistent. People want to trust who they're meeting. They want better quality matches, and they want more authenticity. Those insights became the foundation of the quality over quantity reset I've been talking about over the past two quarters. Every step we have taken since our product updates, investments in AI, and every marketing move ties back to one goal: making Bumble a better experience for women, because when women are happy, the entire ecosystem thrives. That is the focus driving our transformation into the love company, expanding beyond dating to build the global platform for meaningful relationships, romantic and platonic. At its heart, what women seek on Bumble is love, and we are building the product, the technology, and the brand to deliver it. Since our last call, we've executed this reset with real focus and urgency while also delivering on our financial commitments. For the third quarter, our results are near the high end of our guidance range for both revenue and adjusted EBITDA. We are also seeing the expected short-term effects of prioritizing quality over quantity. Member registrations are lower in the near term, but we believe that the foundation of the business is getting stronger. Early indicators suggest that retention is improving and ARPPU is growing. The entire team is heads down, laser-focused on executing this plan. The early signs we're seeing just months into our reset reinforce our confidence in our strategy, and we look forward to sharing more details as we progress further and have more data and visibility into trends. We are working aggressively to improve the mix of engaged approved members on our platform, reduce the noise and build a higher quality community. Our Beehive Fit framework is how we are measuring our progress against these goals. We are emphasizing members who are verified, thoughtful and focused on finding love and connection while filtering out low intent profiles and bad actors. This transformation isn't about growth for growth's sake. It's about growing right. We're deliberately trading near-term volume for quality because that's what we believe builds long-term trust, stronger engagement, and sustainable growth. Consistent with this goal, in August, we launched a major update to Bumble Date focused on trust and safety. This was more than a feature release. It was a foundational step forward. These updates were built directly from what we heard from members. Men told us they weren't getting enough meaningful interactions. Women told us the profiles they were seeing didn't give them the context that they needed to take action confidently. So we've built tools to close the gap. We introduced richer profiles that let people show more of who they are. We added stronger verification features like phone number verification and selfie video verification to increase confidence. And we launched our new coaching hub filled with content from relationship experts and a help hub to reduce the time it takes to get our members to resolutions for any problems on the app. These are not cosmetic changes. They are designed to create trust to make dating more rewarding because when women feel safe and inspired to show up as their full selves, connection becomes easier for everyone. The problem we're solving for isn't a demand problem. The desire for love and relationships is universal. To deliver on that desire, we have built a product road map that is defined by fixing our members' pain points. Let me spend a moment on exactly how we think about this. It starts with strengthening the foundation. When you ask members what their number one complaint is with dating apps, it's really wanting more trust, safety, and authenticity. The August update landed this first piece. We're building tools that guide members to put their best selves forward and engage with confidence. Between now and the spring, we'll maintain a steady drumbeat of releases, tangible improvements that reflect what we're hearing from our community. Individually, the tools and features we introduced may not sound game-changing, but taken together, they are the critical building blocks for addressing members' pain points. The second largest complaint members have is that they're not seeing who they want to see. This is about the fundamental technology that any dating app has to get right. A major portion of the work we are doing on the UI side is building better signal capturing so that we can supercharge our matching and recommendation engine. Right now is an incredible time in technology to be doing this. AI makes so much more possible. It unlocks the ability to reinforce and enhance our matching engine in ways we could never before. These AI-driven improvements won't necessarily be visible to members, but they will deliver what they want: more quality matches. How does that work? To get good matches, you need great signals. Great signals come from stronger profiles, which is why we are starting at this foundation. More robust dynamic profiles give both sides of the marketplace more info to react to. This gives our matching engine the high-grade fuel it needs to deliver the best possible experience and outcomes faster. As we get these pieces right, you will see more member-facing innovation. More social tools, for instance, which are coming next year, and behind the scenes, better customer service. We've already made a lot of improvements in response times and problem resolution through automation over the past year. We believe there's a lot more to accomplish here. Together, all of these components drive the experience of our members today and those yet to join our platform. We're being really thoughtful about how we're sequencing our work and what we're putting out there and when, which brings me to the final pain point. Members want all of the above, and they want the outcomes faster. Our AI-first cloud-native platform, which we expect to launch in mid-2026, will become the engine of Bumble's future, helping us personalize at scale, enhance safety further, and continuously improve the experience for our members. This new platform is expected to give us the innovation speed and flexibility to adapt faster than ever before. It's how we'll turn insights from member behavior into meaningful real-time improvement. We see this new platform as the unlock to restoring long-term product-led growth. In parallel, we're building something entirely new, a stand-alone AI product that will become part of our portfolio. We believe it will be unlike anything else in the market, powered by our deep understanding of human connection and supported by the robust data, brand, and infrastructure that already set Bumble apart. We have begun internal testing as well as getting direct feedback on the concept to ensure we get this right. While we continue to enhance Bumble Date, we're also broadening our ecosystem through Bumble BFF. Built on our modern Geneva platform, the new BFF app combines friend matching with group management and event planning. It's the next step in transforming Bumble from a dating app into a full platform for connection, and it is already performing well with increased retention compared to the old app. Our primary audience in the near term is Gen Z and millennial women, the same demographic that powers Bumble Date. In 2026, we will expand this even further, adding group and community discovery so people can more easily find their people and form real friendships offline. BFF is both a growth opportunity and a launchpad for new social experiences that we can apply across our portfolio, further strengthening Bumble's position as the place women choose for friendship, love, and belonging. In Q3, we introduced our For the Love of Love campaign, a celebration of real success stories and real connections. It's a reminder of why people come to Bumble in the first place: to find love in all of its forms. The reaction has been encouraging, with a 4 percentage point improvement in awareness among single women in the U.S. aged 22 to 45. Our goal is simple: to be the most trusted, highest quality women-first platform in the world, the brand people turn to when they're ready for something real. Across Bumble Date, Badoo, and BFF, with our differentiated and AI-driven innovation, we are building a connected portfolio of love. We believe the work we are doing today is strengthening our business and setting the stage for durable, profitable growth. We are proud of the progress we are making, confident in our strategy, and focused on execution. We have conviction in where we're headed, and we are so excited for the quarters ahead. Thank you so much for your continued support. And now I will turn it over to our new CFO, Kevin Cook, who I am happy to introduce to you all today. Kevin has already brought fresh perspective and strong operational discipline to the company, and I am so excited to have him here to round out our outstanding new senior leadership team.

Thank you, Whitney, and good afternoon, everyone. In my first months at Bumble, I've been impressed by the strength of our brand, the capability of our teams, and the clarity of our vision. As Whitney mentioned, our third quarter results reflect our quality-first prioritization and ongoing strategic reset. We remain focused on improving member experience, strengthening the foundation of the business, and maintaining financial discipline. While some of these actions create near-term headwinds, they are designed to position Bumble for healthier growth and stronger monetization over time. Together with continued product innovation and market expansion, we believe this is the path to durable long-term revenue growth. I will focus my comments on our third quarter performance before sharing guidance for the fourth quarter. Our third quarter results came in ahead of our expectations, but also were heavily impacted by our transformational work. So I think it's useful to start with context on the status of this work and the related puts and takes into what we are reporting today as well as our outlook for Q4. First, with respect to revenue, during Q3, we launched our August product updates focused on trust and safety. As Whitney has explained, we are committed to improving member base quality, and we expected these updates to result in increased attrition of targeted member segments over the near term. That attrition is reflected in our monthly active user counts with the associated reduction in paying users creating a headwind to revenue this quarter. Since the trust and safety rollout occurred relatively late in the third quarter, results for Q4 will reflect a comparatively larger full quarter impact, both from a paying user count and revenue perspective. The second factor is marketing. We discussed last quarter how we largely paused marketing spend and, in particular, stopped most performance marketing as we shifted our marketing posture to align to product launches and highly targeted user acquisition. Overall, this shift drove a significant year-over-year reduction in marketing expense and a corresponding benefit to adjusted EBITDA. This reduction is inclusive of the cost of our For the Love of Love brand campaign launched in August. At the same time, the reduction in marketing substantially contributed to the decline in registrations, active members, and payers. The current performance marketing strategy has begun to show encouraging results with targeted audiences, attracting more approved-ready members into the ecosystem. While marketing spend is not expected to return to pre-transformation levels as we are focused on efficiency, we do expect some spend to return moving forward. The third factor to discuss relates to personnel. At the end of the second quarter, we restructured our headcount to align with our product and marketing strategies. We noted at the time that we expected to reinvest much of the savings from headcount reductions, and we are already making selective headcount additions primarily in AI, product, and engineering roles that support further innovation. As a result, we saw modest benefits to our Q3 expenses related to headcount. Consistent with the tech and product-led organization, this controlled hiring will continue into Q4 and beyond. Hopefully, this discussion is helpful in shaping everyone's understanding of our performance as we execute on our strategic priorities. I'll now take you through the numbers. Unless stated otherwise, results are presented on a GAAP basis and all comparisons are year-over-year. Total revenue for the third quarter was $246 million, a 10% decline from a year ago. Foreign currency exchange rates contributed $4 million to revenue in the quarter. Bumble App revenue was $199 million, also down 10% year-over-year. Badoo App and Other revenue declined 11% to $47 million. Total expenses for Q3 were $183 million. On a non-GAAP basis, which excludes stock-based compensation and other non-cash and nonrecurring items, operating expenses were $163 million, a decline of 15%, driven primarily by a decrease in marketing activity as well as the headcount restructuring previously discussed. Turning quickly to our key expense categories, which we report on a non-GAAP basis. Cost of revenue was $69 million, representing 28% of revenue, down approximately 1 percentage point year-over-year, with incremental improvements due in part to early testing of direct billing initiatives. Product development expense was $25 million, an increase of 14% year-over-year. Sales and marketing expense was $32 million, down 50% year-over-year. G&A was $37 million, an increase of 38% year-over-year, driven primarily by the cumulative adjustments for certain indirect tax obligations related to prior periods. Net income was $52 million. Adjusted EBITDA for the quarter was $83 million, up 1%, representing a margin of 34%, up from 30% in the year-ago period. Please note that included within adjusted EBITDA is a negative impact of $12 million related to prior period indirect tax obligations. Nonetheless, adjusted EBITDA margin is temporarily elevated due to the factors I described, including the cadence of both marketing spend and our organizational realignment. We expect our margin to revert closer to historical norms as we complete technical and specialized hiring, reinstitute brand and targeted user acquisition spend, and invest in updated products and our new tech platform. Q3 cash flow from operations was $77 million compared to $93 million in the year-ago period, and we ended the quarter with $308 million in cash and equivalents. As planned, we repaid $25 million of our term loan in the third quarter. Looking ahead to the fourth quarter, as previously contemplated, our outlook reflects our expectation for continued attrition in active and paying members as we maintain higher quality standards across the platform with a full quarter of impact planned from the initiatives implemented in August. While Q4 will be challenging, we currently anticipate that the rate of sequential paying user declines will improve beginning in early 2026 as we largely complete our trust and authenticity work. As Whitney highlighted, it is early, but these measures are showing signs of improving retention and increasing average revenue per paying user. The thesis continues to be that a better member experience will result in higher retention and drive members' perception of value, leading to increasing revenue. For Q4, we expect total revenue in the range of $216 million to $224 million, representing a year-over-year decline of approximately 17% to 14%. We expect Bumble App revenue in the range of $176 million to $182 million, representing a year-over-year decline of approximately 17% to 14%. Direct billing tests continue to progress, and nearly all members in the U.S. now have some form of direct billing available. We expect to continue to refine our direct billing offerings in Q4. We expect adjusted EBITDA in the fourth quarter of $61 million to $65 million, representing a margin of approximately 28% to 29%. Before wrapping up, I want to call your attention to additional information we reported today in our earnings press release and accompanying 8-K pertaining to our tax receivable agreement that was created in connection with our IPO. A special committee of our Board has agreed to a transaction whereby the company will purchase all parties' outstanding TRA rights for approximately $186 million. The transaction eliminates the company's TRA liability in full. We believe the transaction is a positive development for Bumble and our shareholders. It removes a large liability from our balance sheet at favorable terms, thus simplifying and creating a more efficient capital structure. By terminating payment obligations under the TRA, the transaction also improves future cash flows. And finally, it greatly improves the company's strategic flexibility moving forward as we work to create shareholder value. I'd also like to note that we are funding the termination agreement with available cash given our solid balance sheet and cash-generative business. As a result of the TRA transaction, which substantially reduces our liabilities and deleverages the business, we no longer plan to pay down $25 million of our term loan as discussed last quarter. In closing, there's a lot of work ahead, but early indicators suggest that we're on the path to reshaping the core business and positioning the company for future revenue growth. From a financial perspective, we're prioritizing disciplined expense management, solid cash flows, and the flexibility to invest in our strategic priorities while preserving profitability. We believe we're setting the foundation for a healthier, higher-quality business that will monetize more effectively over time.

First question comes from Nathan Feather with Morgan Stanley.

Two from me. First, Whitney, now that you've gotten back in the CEO seat and are really starting to make some real product changes, if we zoom forward 2, 3 years, what's your key vision for how Bumble will really work differently from today and be able to drive the successful outcomes? And then a little bit more short-term, but what visibility do you have into the timing and magnitude of when revenue growth might bottom and then hopefully start to improve, especially given the talk of potentially paying user growth bottoming in the first?

Thank you for your questions. I appreciate it. Let's begin with the 2- to 3-year outlook. There's a misconception about the dating industry, where people think dissatisfaction stems from swipes or certain functionalities. The truth is, our product roadmap focuses on addressing pain points, especially those of women. This is what has set Bumble apart from other dating products. A balanced dating ecosystem, particularly in heteronormative scenarios, requires a space where women feel comfortable. Bumble has embodied that for years. Looking ahead, it's not about reinventing the wheel; it works, and the demand has remained consistent throughout history. People want love and relationships, which are essential for survival. Our delivery must keep pace with modern expectations and technology. What's exciting now is the potential of AI. It allows us to understand our members' needs better, especially women, and to provide them with a dating product that resonates with their desires. This modern tech framework enables us to implement these changes quickly, hopefully in days to weeks instead of months, whereas historically it took years for companies to make similar advancements. We have an advantage because we listen to women and have their support globally, which presents opportunities for market expansion and scaling once we solidify our quality approach. We're very much in the early stages of this transformation. Since I returned in March, our new executive team has been making great strides, and we are committed to creating the highest quality platform. Our goal is for anyone to come to Bumble and find exactly what they are looking for quickly, ultimately leading them to love. In terms of our 2- to 3-year strategy, we're focused on building for the demand and addressing the needs of the global dating market. AI will play a significant role in this. As for when we might see a return to revenue growth, I know this topic can be tricky to track during earnings calls. We need to complete our reset and focus on trust and safety, which has impacted recent Q4 numbers and contributed to the decline in payers as well as our pullback in performance marketing. However, we've developed strategies to focus on targeted performance marketing that attracts high-quality members. We can approach this in a precise and measured way. Overall, we see a promising outlook and are fully committed to our goals. Kevin, do you have anything to add?

Yes, Nathan, it's Kevin. Thanks, Whitney. While we are not forecasting revenue beyond Q4, I can provide some insights into our current trajectory. The decline in payers during Q3 was mainly due to two intentional strategies aimed at enhancing the quality of our member base and improving member experience. You may already be aware of some of these, but let me reiterate for clarity. Our focus on trust and safety along with a reduction in marketing spend together accounted for about 80% of the year-over-year decrease in paying users. It's crucial to note that we managed these reductions largely on purpose, aligning with the reset Whitney described. Regarding our progress in implementing this strategy, as Whitney pointed out, it’s still quite early—only about a quarter in—but we are beginning to see positive signs. For instance, there was a modest improvement in retention this quarter, as mentioned in our prepared remarks, along with an 11% increase in ARPPU for Bumble. We also experienced strong growth in brand awareness and perception among women, largely due to our brand campaign. Additionally, we are making strides with the Beehive Fit framework, working to move members from what we label as the improved category to the approved category, and all categories are showing positive movement. This incremental progress, while it will take time, is encouraging. It's important to remember that approved members are significantly more engaged and monetize at more than twice the rate of improved members. Beyond just understanding the ecosystem, having high-quality members as approved members clearly impacts business performance. I'll stop there, Will, and see what questions we have or if Nathan has a follow-up.

We now turn to Andrew Marok with Raymond James.

Maybe digging into that last point that Kevin made there on the improved bucket. I know that was going to be a major initiative in kind of bringing along the improved members to ARPPU. And I understand it's probably a pretty wide spectrum, but is there anything specific that you're seeing out of those improved members that are giving you signs for encouragement or perhaps caution? Or anything else that you'd like to call out within those that you think would be important for us to look for as we go into 4Q and beyond?

Thanks for the question. So I'll take that. And if Kevin wants to add on, we'll do that after. So I think it's really important to understand that a lot of folks have the capability to be what we would call approved members in just a couple of tweaks. So I'll give you a quick example. You might have a great person who is looking for love, but they have no clue how to write a bio. They only have one photo. So while they could be going out on lots of dates and getting a lot of interaction, because they have limited knowledge of how to set up a dating app or how to show up at their best self, they actually get stuck in what we call this improved category. And so, what we're really seeing is the more profiles photos someone adds going through just a couple of these quick steps with the trust and the safety tooling that we've introduced, they get more matches. They get more right swipes, they get more engagement. An approved member has better outcomes. And as Kevin just stated, they have higher retention rates. They monetize much better. And frankly, it just improves that entire flywheel, and it really gives people more to operate with. And so, when we focus on improving the improved, not to be redundant there, there's huge opportunity here because the vast middle is somewhere stuck in the middle. And so, this is what we're focused on with this roadmap that we keep talking about. Building an exceptional product experience doesn't have to be some fancy flashy new feature. It's frankly, 'Hey, how do we get onboarding tools in the hands of our members so that they can set up a remarkably robust and authentic and great profile in a really short amount of time, and then they're out in the dating pool.' And so, these are just a couple of examples of how really just enabling the system to provide easier tooling to get out there and to move into the approved category, it pulls the tide up for everyone, and it really enhances the experience for everyone. So while we're early and while the metrics at math aren't suggesting this huge monumental moment, bearing with us and having some patience is critical here because this is the strategy that wins in dating. And I believe that I can speak to this with a lot of conviction. I've been at the forefront of this industry, frankly, on the front lines of modern dating technology since I was 22 years old. And I have seen this front and center when you have a healthy balance of women on a product, when people fill out their profiles with high-quality information, when they are not flooded with removed profiles, and they see who they want to see. They get good matches, they get into great chats, they go on dates, and that's why I meet Bumble babies every day when I go out into the world. This works, and this changes lives. We just need to land the strategy with returning to quality, and then we will reaccelerate on all of our growth opportunities in new markets and core markets, and we're here for it. We're very excited.

Great. Really helpful insight. I have a quick question for Kevin. I'm not sure if you've seen the proposed settlement details between Google and Epic today, but I'm curious if you have any thoughts on how that contrasts with your guidance for the cost of revenue line.

I haven't seen the details, so I don't have any insights to share on that. I can briefly comment on our direct billing initiatives. As soon as we were able, we established alternative payment options and have been testing these strategies throughout Q3, and we will continue in Q4. You noticed a significant improvement in our cost of sales in Q3, and we expect to maintain that benefit as we refine our alternative billing strategies in Q4. We anticipate a full quarter effect of cost of revenue benefits.

We now turn to Ygal Arounian with Citi.

I wanted to ask specifically about the stand-alone AI product, Whitney, and sort of your thoughts and visions around that, but something that will sort of always be stand-alone. What's the sort of AI-first dating app experience like? And how does that impact how you view the core Bumble experience and how that overlaps with that vision and strategy?

Thanks for your question. Before I discuss our upcoming stand-alone AI product, I want to touch on two important points regarding AI. First, I'm sure you've noticed the surge in AI-focused dating apps lately. I want to emphasize that throughout my career, I’ve witnessed many dating apps and matchmakers rise and fall. The reason why a few of us maintain a strong global presence is because creating a critical mass and a trusted marketplace is extremely challenging. Our unique advantage lies in our exceptional data and the diverse groups of people around the world who are actively seeking love. We can leverage this moment with AI to offer a modern experience without disrupting the current one. It's essential to differentiate between our current Bumble Date and our stand-alone product, which I believe will be unprecedented and highly unique. Our team is incredibly excited about it. While I can't share specific details about how it will operate, I will say that most dating apps so far have focused on discovery. This new product will introduce a precise search function. Many consumer products we use daily thrive on advanced search and algorithms, and this AI product aims to revolutionize the dating landscape. It can stand alone, but we can also integrate valuable insights and technologies into our existing core products. We’ve already started this with BFF, migrating it to the Geneva tech stack. For instance, we recently received member feedback for BFF and implemented changes within a week, which would typically take months with our current Bumble Date tech stack. We're currently incorporating AI improvements into our existing products to address customer needs. I'm particularly excited about the upcoming 2.0 infrastructure for Bumble Date, set for mid-2026, which will allow us to develop features rapidly, thanks to this new technology. So yes, the new product will be independent, but it will also have crossover functions, similar to what we're doing with BFF, enabling us to learn about group behaviors and build that knowledge into the core dating product. I hope that answers your question; if not, please let me know.

It did and very helpful. And I guess maybe a little bit more near-term, just as you get through to the spring product release and you're talking about kind of the, I guess, steady releases through spring and solving pain points. Are there a few things that you see as being sort of the biggest drivers? I know we're doing all the cleanup work and enhancing the user experience on one side, but in terms of like new products that are coming out, are there a few things that are sort of excite you the most?

Yes, that's a great question. So this might be a slightly unpredicted response that the least exciting features on paper are actually the ones that move the needle the most for us sometimes. So when you go and invest time and energy and optimization, for example, into customer service, that has a meaningful impact on our members' lives. They are feeling heard. They're getting their problems resolved. Now, on paper, that's not some flashy new release. So what we're really focused on right now between the launch of 2.0, and I'm using that as a reference point, 2.0 is the new AI cloud-native tech stack that Bumble will live on in the future, which is the mid-'26 technology. But if you look at everything we're doing between now and then, it's just listening to our members, right? Our product roadmap is our customer pain points. And as I said, you don't ask members, 'Hey, what's not working for you and they say, 'Oh, wow, I really wish you had this flashy crazy feature.' They just say, I want a better profile. I want to be able to see more information about someone. I want a safer experience. I want the algorithm to be more personalized to me. These are at face value quite basic asks, but this is what builds an incredible experience. And frankly, this is what got us to being the great company we are. And yes, the technology has been innovating and iterating over time. And obviously, we have to evolve with where the category is. But ultimately, the strategy doesn't change. Just listen to women and give them what they want. It's very simple, and that's exactly what we're doing, and that's how we win with the category.

We have no further questions. So this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.