Bumble (NASDAQ:BMBL) Misses Q3 Revenue Estimates, Stock Drops

Anthony Lee /
2023/11/07 4:15 pm EST

Online dating app Bumble (NASDAQ:BMBL) fell short of analysts' expectations in Q3 FY2023, with revenue up 18.4% year on year to $275.5 million. Next quarter's revenue guidance of $275 million fell short, coming in 3.8% below analysts' estimates. Turning to EPS, Bumble made a GAAP profit of $0.12 per share, down from its profit of $0.14 per share in the same quarter last year.

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Bumble (BMBL) Q3 FY2023 Highlights:

  • Revenue: $275.5 million vs analyst estimates of $277 million (0.5% miss)
  • EPS: $0.12 vs analyst estimates of $0.07 ($0.05 beat)
  • Revenue Guidance for Q4 2023 is $275 million at the midpoint, below analyst estimates of $285.9 million
  • Free Cash Flow of $59 million, up 46.4% from the previous quarter
  • Gross Margin (GAAP): 70.9%, down from 72.2% in the same quarter last year
  • Total Paying Users (inc Bumble and Badoo users): 3.8 million, up 530,200 year on year

“Our business continued to perform well with strong top-line growth and better than expected Adjusted EBITDA in Q3,” said Anu Subramanian, Chief Financial Officer of Bumble.

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

Bumble's revenue growth over the last three years has been strong, averaging 23.9% annually. This quarter, Bumble reported 18.4% year-on-year revenue growth, falling short of analysts' expectations.

Bumble Total Revenue

Guidance for the next quarter indicates Bumble is expecting revenue to grow 13.8% year on year to $275 million, slowing down from the 16.7% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results, analysts covering the company were projecting sales to grow 17.9% over the next 12 months.

The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. See it here.

Usage 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 active buyers, a key performance metric for the company, grew 12.7% annually to 3.8 million. This is decent growth for a consumer internet company.

Bumble Total Paying Users (inc Bumble and Badoo users)

In Q3, Bumble added 530,200 active buyers, translating into 16.1% year-on-year growth.

Key Takeaways from Bumble's Q3 Results

Sporting a market capitalization of $1.8 billion, Bumble is among smaller companies, but its more than $439.2 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.

Although Bumble beat analysts' adjusted EBITDA and EPS expectations this quarter, its revenue slightly missed estimates thanks to weaker-than-expected ARPU growth. Furthermore, its revenue and adjusted EBITDA guidance for the next quarter underwhelmed. Management cited foreign currency headwinds, which is consistent with commentary from its online dating peer, Match Group. Adding to investor discomfort was the recently announced departure of CEO and Founder Whitney Wolfe Herd. Overall, this was a tough quarter for Bumble. The company is down 6.9% on the results and currently trades at $12.5 per share.

Bumble may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here.

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The author has no position in any of the stocks mentioned in this report.