Bumble (NASDAQ:BMBL) Posts Q4 Sales In Line With Estimates But Stock Drops 13.4%

Online dating app Bumble (NASDAQ:BMBL) met Wall Street’s revenue expectations in Q4 CY2024, but sales fell by 4.4% year on year to $261.6 million. On the other hand, next quarter’s revenue guidance of $245 million was less impressive, coming in 4.6% below analysts’ estimates.

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“Over the past year, we have established a strong foundation for Bumble, building a robust innovation pipeline and instilling a high-performance culture and capabilities to drive results,” said Lidiane Jones, CEO of Bumble Inc.

Company Overview

Founded by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ:BMBL) is a leading dating app built with women at the center.

Consumer Subscription

Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Bumble’s sales grew at a decent 12.1% compounded annual growth rate over the last three years. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.

This quarter, Bumble reported a rather uninspiring 4.4% year-on-year revenue decline to $261.6 million of revenue, in line with Wall Street’s estimates. Company management is currently guiding for a 8.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 2.8% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

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Paying Users

Buyer Growth

As a subscription-based app, Bumble generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.

Over the last two years, Bumble’s paying users, a key performance metric for the company, increased by 14.3% annually to 4.18 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

In Q4, Bumble added 209,700 paying users, leading to 5.3% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating buyer growth just yet.

Revenue Per Buyer

Average revenue per buyer (ARPB) is a critical metric to track for consumer subscription businesses like Bumble because it measures how much the average buyer spends. ARPB is also a key indicator of how valuable its buyers are (and can be over time).

Bumble’s ARPB fell over the last two years, averaging 3.9% annual declines. This isn’t great, but the increase in paying users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Bumble tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether buyers can continue growing at the current pace.

This quarter, Bumble’s ARPB clocked in at $20.58. It declined 9.1% year on year, worse than the change in its paying users.

Key Takeaways from Bumble’s Q4 Results

It was good to see Bumble narrowly top analysts’ EBITDA expectations this quarter. On the other hand, its revenue missed Wall Street's estimates along with its revenue and EBITDA guidance for next quarter. Overall, this was a weaker quarter. The stock traded down 13.4% to $7.01 immediately after reporting.

Bumble underperformed this quarter, but does that create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.