Bumble Inc.’s stock price was down as much as 39% on Thursday morning following the release of its Q2 earnings report on Wednesday. Even as the company, which is known for dating apps like Bumble and Badoo, focuses on a new strategy, analysts see a rocky road ahead and competition from dating apps like Hinge.
Bumble's stock, which trades under the BMBL tickle, cratered after the the company’s revenue for the quarter and guidance for Q3 came in below estimates. The company’s total revenue in Q2 was $269 million, up 3% from the same last year, but below Wall Street’s estimate of $273.2. The revenue for Bumble App—which bills itself as a safer and more empowering experience for women—increased 11.1% to $215.8 million. Badoo, a more general dating app, saw revenue decline 2% year over year.
In Q3, Bumble Inc. expects total revenue in the range of $269 million to $275 million. However, that is below the average analyst consensus of $292.9 for Q3, according to LSEG data. And the company revised its guidance expecting 2024 revenue growth in the range of 1% to 2%. That’s well below the range of 8% to 11% the company announced in Q1.
"We are downgrading Bumble from Buy to Underperform given a significant cut to FY24 guide and very limited visibility on when BMBL revs return to growth.," Bank of America analysts Curtis Nagle and Nafeesa Gupta wrote in a note on Thursday morning.
Whitney Wolfe Herd founded Bumble Inc. in 2014. Its signature namesake women-first dating app, Bumble, traditionally let women make the first move. But in April the company announced a new format, called Opening Moves, where women can create prompts to their profiles that men can respond to. For non-binary and same-gender connections, either person can set and respond to an Opening Move. The company also updated its brand identity including a new design of the site with bolder fonts, refreshed colors and illustrations, and created a new logo.
Lidiane Jones, formerly CEO at Slack, a Salesforce company, began her tenure as CEO at Bumble in January, succeeding Herd. “Our first chapter of the Bumble App launch delivered better women’s experiences and improved engagement,” Jones said in a statement on Wednesday. But it is “evident that to reignite the user growth engine for Bumble Inc. in the long term, we need to take a firm stance towards delivering customer value that goes beyond this launch.”
On the earnings call, Jones discusses a strategy that includes raising the bar for profile creation, product innovation and new AI features, and rebalancing Bumble’s subscription tier and expanding the premium plus subscription.
“While Bumble is now operating under a leaner and more streamlined cost structure, the current strategy for returning to growth appears to be very much in flux,” according to BOA. “We also see potential headwinds as competitor Match is further along in its own restructuring efforts that appear to be gaining momentum.”
‘A rocket ship’
The competition that exists in online dating is just as tough when it comes to the business of owning an online dating company. The Dallas-based tech company Match Group, Inc. owns online dating services such as Tinder, Hinge, and Match.com.
“Hinge is a rocket ship, expanding rapidly,” Match Group CEO Bernard Kim said during the company’s Q2 earnings call last week. Hinge grew direct revenue of 48% year-over-year in Q2. The dating app, which appeals to millennials and GenZers, uses an algorithm to help users find potential matches.
New product features like “Your Turn Limits” are driving higher quality conversations, and It “continues to rapidly grow its share of downloads in most of its markets,” Kim said. AI-enabled Top Photo and Photo Finder are improving the user journey.
Meanwhile, Tinder’s direct revenue was up just 1%. Match Group’s total revenue for the quarter was $864 million, up 4.2% year over year.
