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Bumble Announces Job Cuts and Disappointing Revenue Forecast

Bumble announces plans to cut around 350 roles as it grapples with a slowdown in user spending. The company expects to incur one-time charges of $20 million to $25 million related to the job cuts. Bumble faces competition from Match Group and aims to reignite ARPU growth and expand globally.

Bumble, the popular online dating company, has revealed plans to cut approximately 350 roles in a significant move by its new CEO, Lidiane Jones. The decision comes as the company faces a slowdown in user spending, leading to a forecast of weak first-quarter revenue.


Following the announcement, Bumble's shares, which are traded in Austin, Texas, experienced a decline of over 7% in extended trading. The company, known for its dating apps such as Bumble, Badoo, and Fruitz, is now grappling with the challenges posed by reduced user activity.


As a result of the job cuts, Bumble expects to incur one-time charges amounting to around $20 million to $25 million. The majority of these charges will be recognised in the first two quarters of 2024.


Bumble faces stiff competition from Match Group, its larger rival, which is aggressively targeting younger users through extensive marketing initiatives. The impact of inflation and high borrowing costs on non-essential purchases has further added to Bumble's challenges. Last month, Match Group forecasted revenue for the current quarter that fell below expectations.


In response to the situation, Bumble plans to relaunch its eponymous app and revamp its premium plus offering. CEO Lidiane Jones emphasised the company's focus on reigniting Average Revenue Per User (ARPU) growth and expanding its market globally.


Industry analysts have weighed in on Bumble's outlook. Jamie Lumley, an analyst at Third Bridge, highlighted the need for Bumble to drive further market expansion and reignite ARPU growth as its core markets, like the United States, mature. However, according to LSEG data, Bumble's projected annual revenue growth of 8% to 11% falls short of the estimated 13.3% growth.


Citi analysts expressed their lack of surprise at the slowing growth of Bumble and noted that the company's fiscal 2024 outlook represents a significant step down in growth.


For the current quarter, Bumble expects revenue in the range of $262 million to $268 million, which is lower than analysts' average estimate of $277.9 million.


Despite the challenges, Bumble saw an increase in total paying users across its apps, reaching 4 million in the fourth quarter of 2023, compared to 3.4 million in the same period the previous year.


However, Bumble's fourth-quarter revenue of $273.6 million fell short of analysts' expectations of $275.3 million. Additionally, the company reported an unexpected loss per share of 19 cents, while analysts had anticipated a profit of 12 cents per share.

 
  • Bumble announces plans to cut around 350 roles as it grapples with a slowdown in user spending.

  • The company expects to incur one-time charges of $20 million to $25 million related to the job cuts.

  • Bumble faces competition from Match Group and aims to reignite ARPU growth and expand globally.


Source: REUTERS

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