Bumble Costs Rise as It Battles Tinder for Users
Updated: Aug 26
The dating app faces headwinds as rival Tinder ramps up marketing spend, forcing Bumble to up its costs to maintain user growth.
Bumble's share price fell 4% on Tuesday 9th August 2023 after the dating app company forecast underwhelming Q3 revenue and reported a jump in expenses. This sparked concerns that intense competition with rival Match Group's Tinder app was negatively impacting Bumble's business.
Bumble, which operates the Bumble, Badoo and Fruitz dating apps, said its total operating costs rose over 7% in the June quarter as it increased spending on product development and marketing. Analyst Nicholas Cauley of research firm Third Bridge said "As Tinder begins to spend more on marketing efforts, one thing to follow at Bumble will be the increase in user acquisition costs."
Match Group, owner of leading dating app Tinder, also predicted Q3 revenue above Wall Street estimates last week, expecting heightened marketing activity to spur user growth. However, Bumble has also benefited from robust user expansion in the quarter as more individuals continued to pay for services to find relationships and companionship regardless of inflationary pressures.
Bumble's app revenue grew 23.4% to $208 million in Q2 2022, versus $168.5 million a year prior. Total revenue jumped 18.5% to $259.7 million, compared to $219.2 million in Q2 2021. "In addition to attracting a record number of paying users on Bumble, we've successfully launched BFF as a standalone offering, further stabilised Badoo," stated Bumble CEO Whitney Wolfe Herd.
However, Bumble forecast Q3 revenue of $274-280 million, which was only slightly above Wall Street forecasts of $275.6 million per Refinitiv IBES. Bumble said its total paying users in Q2 increased to 3.6 million, versus 3 million a year ago, while average revenue per paying user grew to $23.23, compared to $23.51. Q2 net earnings were $9.3 million, versus a $5 million net loss a year earlier.
Bumble faces revenue headwinds from escalating competition with Match's Tinder app, which is ramping up marketing spend.
This has forced Bumble to increase its own costs to maintain user growth.
However Bumble continues adding paying users, stabilising Badoo and launching new offerings.
Source: Reuters
