Online dating app Bumble (NASDAQ:BMBL) reported results ahead of analysts' expectations in Q2 FY2023, with revenue up 19.1% year on year to $259.7 million. The company also expects next quarter's revenue to be around $277 million, roughly in line with analysts' estimates. Bumble made a GAAP profit of $9.35 million, improving from its loss of $5.22 million in the same quarter last year.
Is now the time to buy Bumble? Find out by accessing our full research report, it's free.
Bumble (BMBL) Q2 FY2023 Highlights:
- Revenue: $259.7 million vs analyst estimates of $256.6 million (1.22% beat)
- EPS: $0.05 vs analyst estimates of $0.03 (44.4% beat)
- Revenue Guidance for Q3 2023 is $277 million at the midpoint, roughly in line with what analysts were expecting
- Free Cash Flow of $40.3 million, up from $6.58 million in the previous quarter
- Gross Margin (GAAP): 70.5%, down from 72.4% in the same quarter last year
- Total Paying Users (inc Bumble and Badoo users): 3.63 million, up 610,000 year on year (beating estimates by 50,000)
Founded by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ: BMBL) is a leading dating app built with women at the center.
Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to or what movie they watch, or finding a date, online consumer businesses today are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have increased usage and stickiness of many online consumer services.
Sales Growth
Bumble's revenue growth over the last three years has been strong, averaging 24.4% annually. This quarter, Bumble reported 19.1% year-on-year revenue growth, in line with analysts' expectations.
Guidance for the next quarter indicates Bumble is expecting revenue to grow 19.1% year on year to $277 million, improving on the 16.8% 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 18.6% over the next 12 months.
While most things went back to how they were before the pandemic, a few consumer habits fundamentally changed. One founder-led company is benefiting massively from this shift and is set to beat the market for years to come. The business has grown astonishingly fast, with 40%+ free cash flow margins, and its fundamentals are undoubtedly best-in-class. Still, its total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.
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 12.2% annually to 3.63 million. This is decent growth for a consumer internet company.
In Q2, Bumble added 0.61 million active buyers, translating into 20.3% year-on-year growth.
Key Takeaways from Bumble's Q2 Results
With a market capitalization of $2.47 billion, Bumble is among smaller companies, but its $381 million cash balance and positive free cash flow over the last 12 months give us confidence that it has the resources needed to pursue a high-growth business strategy.
It was great to see Bumble's strong user growth this quarter. We were also happy that its revenue growth outperformed Wall Street's expectations, even if just narrowly. Zooming out, we think this was a decent quarter, showing that the company is staying on target. The stock is up 2.25% after reporting and currently trades at $18.4 per share.
So should you invest in Bumble 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, it's free.
One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 50% year on year and best-in-class SaaS metrics it should definitely be on your radar.
The author has no position in any of the stocks mentioned in this report.