$BMBL Bumble Q4 2025 Earnings Conference Call

Hello everybody and welcome to the Bumble fourth quarter 2025 financial results conference call. My name is Elliot and I'll be your coordinator today. If you would like to register a question during today's event, please press star one on your telephone keypad. I would now like to hand over to Willver investor relations. Please go ahead.

Thank you for joining us to discuss Bumble's fourth quarter and full year 2025 financial results. With me today are Bumble's founder and CEO Whitney Herd and CFO Kevin Cook. Before we begin, I'd like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on the beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today's earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or isolation from our GAAP results. Reconciliations to the most comparable GAAP measures are available in our earnings press release which is available on the investor relations section of our website at ir.bumble.com. With that, I will turn the call over to Whitney.

Thank you, Whitney, and hello everyone. In the fourth quarter, we delivered results at the high end of our guidance ranges. Revenue reflected the expected impact of our trust and safety initiatives and the deliberate reset of the member base. While profitability and cash flow demonstrated the underlying resilience of our model. Over the past year, we've managed the business with discipline, balancing targeted investment and product with careful cost control and a focus on strengthening our financial foundation. I'll walk through our quarterly and full year results before turning to our outlook. Unless otherwise noted, my comments are on a non-GAAP basis, and comparisons are year-over-year. Total revenue for the fourth quarter was $224 million compared to 262 million in the year ago period. Bumble app revenue was 181 million compared to 212 million a year ago. Adjusted EBITDA was 72 million, representing a margin of 32% compared to 73 million and 28% in the prior year period. The quarter reflected what we believe was the most acute top-of-funnel pressure associated with our quality reset actions. For the full year, total revenue was 966 million compared to 1.07 billion in 2024. Adjusted EBITDA was 314 million representing a margin of 32% compared to 304 million and 28% in the prior year. Selling and marketing expense was 161 million representing 17% of revenue compared to 259 million or 24% of revenue reflecting a more focused and efficient approach to member acquisition with greater emphasis on targeted and organic channels. We expect to maintain disciplined marketing spend in 2026 while incrementally increasing investment to support the rollout of our new products and in select member acquisition. Product development expense was 96 million representing 10% of revenue compared to 84 million or 8% of revenue in 2024 consistent with our plans to increase investment in core product innovation AI capabilities and platform modernization. General and administrative expense was 115 million representing 12% of revenue compared to 108 million or 10% of revenue reflecting discipline cost management as we navigate the reset offset by indirect taxes. We believe this balanced approach containing overhead while prioritizing product investment supports both operational efficiency and long-term value creation. I'll now turn to the balance sheet and cash flows. For the full year, we generated 250 million in operating cash flow, 239 million of which converted into free cash flow. As discussed on our last call, we are taking active steps to optimize our capital structure. We completed the buyout of all our outstanding TRA liabilities in the fourth quarter for $186 million in cash. We ended 2025 with 176 million of cash and cash equivalents and have continued to generate substantial cash flow throughout the first quarter. Similarly, we are currently in discussions to refinance our existing debt obligations due January 2027 totaling 588 million as of December 31st. Consistent with our intention to delever the business, we repaid 25 million of our current term loan B in August 2025. In addition to eliminating the full TRA liability from the balance sheet, we expect to repay a portion of our outstanding debt and refinance the balance. Turning to guidance, we believe the most challenging portion of the quality reset is behind us and we have turned from adding incremental friction at the top of our member acquisition funnel to improving the experience with product innovation. We expect a lag between these product improvements and our reported financial performance metrics. As such, the sequential stabilization in our business metrics, including active users and payers, have not yet been reflected in our year-over-year revenue growth. For the first quarter of 2026, we expect total revenue in the range of 209 to 213 million, including Bumble app revenue of 171 to 174 million and adjusted EBITDA of 76 to 80 million, representing a margin of approximately 37%. As we move through 2026, we expect our revenue headwinds to moderate as the impacts of recent trends in our operating metrics flow through the financials. Improvements in revenue will be primarily a function of new product adoption and further retention, payer penetration, and average revenue per paying user gains based on enhanced functionality as well as incremental monetization opportunities. An important contributor to our margin performance will be the continued implementation of alternatives to in-app purchases in the US. In the fourth quarter, direct payments contributed approximately 1 percentage point of year-over-year gross margin expansion, and we currently expect the benefits to increase through 2026, as we are already seeing increased adoption in January and February. We believe this shift in billing methods meaningfully enhances the long-term profitability of the business. In closing, the actions we have taken over the past year have been made to support our financial and operational foundation in light of our transformation work. We are entering this next phase supported by a highly efficient cash generative business model and a cost structure better aligned to our strategic priorities. Operator, we'll now take questions.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.

Thanks for taking the question and congrats on the quarter. I guess first thinking through talking through a pretty ambitious product roadmap over the course of 2026. I guess first when you say registrations and active users have stabilized, you know, as we look out over the course of the next year, what's the path to get those to start to accelerate and really improve? And of all of these kind of changes you're talking about, help us think through the timing of when that might potentially happen. And then on the profitability side, Q1 margin is showing a really nice step up quarter over quarter. Can you help us think through what are the puts and takes that are leading to that improvement? Thank you.

Thanks Whitney. Hey Nathan. So on profitability for Q1, we continue to be committed to operating discipline. So we're pleased to see continued adjusted EBITDA margin expansion. I will say Q1 is probably slightly elevated. We are expecting, as Whitney's highlighted and you heard from our prepared remarks, beginning in Q2 we are expecting to launch significant new product in market. So you'll see a slight increase in marketing to support new product innovation and some very specific product marketing around new enhancements to product. And you'll also see product development costs increase midyear slightly in order to support 2.1, 2.2 and the fast follows that Whitney was describing earlier. I do believe that structurally our margin profile is higher than it has been historically. We are much more efficient today than the business has been in the past. We're not guiding the year here obviously, but we do see the opportunity for sustained very high adjusted EBITDA margin throughout the year and obviously to the extent that we inflect growth in the business, there is enormous operating leverage in the model.

We now turn to Schwa Kajeria with Wolf Research. Your line is open. Please go ahead.

Okay, thank you for taking my questions. First is on these the product revamp. So Whitney, how are you thinking about measuring progress and what will be some of your milestones as you track that this revamp is going well in how you measure it? And is there something different that you plan to share with us in terms of metrics whether it is either top of the funnel or some internal metric that you guys are following that would help us get a sense of how it's going. That's one because we may not see the impact on monetization just yet but if the engagement is improving that would be a good sign. The second is on investment on the tech replatforming. So is there additional in it doesn't sound like it but just want to clarify the backend changes that you are making to make your platform better from legacy to the new tech replatforming is there additional investments that you are expecting or how should we think about that? Thank you.

Yes.

All right. And hello SATA. You had a question I think about the tech stack and sort of the investment required on the tech stack. So recognize 2025 was an investment year from a product development point of view and we're continuing with that investment in 2026. Over the course of 2025 we built a new, modern AI-oriented engineering organization primarily in Austin, Texas. And so much of that investment is behind us, including both on product and on the platform. And you'll see some additional investment throughout 2026. Of course, the things to recognize: there's a lot of efficiency in our engineering efforts currently. We're benefiting substantially from the application of AI, not surprisingly, in our product development. And in terms of appreciating the level of investment required platform and product, there is some infrastructure costs based on the existing set of offerings, primarily data center costs that we continue to maintain while at the same time we're building this cloud-native AI-tech stack that you've heard a lot about already. And so there's some duplication of costs for a portion of 2026 in that respect. And then you'll see a continued, longer term, continued modest level of product development expense increase tied to revenue just to continue to produce the sort of innovation that we're expecting. But you should see some efficiency, some operating leverage in that line once we've got the duplicate costs taken out of the system.

Okay, thanks Sydney. Thanks.

We now turn to Steven Ju with UBS. Your line is open. Please go ahead.

Hi, this is more Roblay in for Steven. Thank you for taking my question. I appreciate the color on direct billing and I was just curious if you could frame how big of a potential this could be for you all this year given how much of a contributor this is to the EBITDA guide and understand there you know some trade-offs between efficiency and causing user friction. And then a second question: how should we expect the new product initiatives to be rolled out globally across the Bumble affiliated apps and additionally do you see any opportunities with respect to international expansion? Thanks.

It's Kevin, why don't I take the direct billing question. So you're right, we saw in Q4 a full percentage point of gross margin expansion as a result of alternative billing. In Q4, we implemented our Apple Pay program and what we've seen is very very rapid adoption by users of Apple Pay. In fact, as of today, quarter to date, we've already got more than half of our US iOS payments being made through Apple Pay. So it is a very substantial cost benefit or improvement to gross margin. We believe it is mostly sustainable based on our understanding of the various cases and settlements to date. There as you know there are some changes that are occurring in that regard. So we haven't built all of the long-term benefit into our model. And I mean, clearly for Q1, we're far enough into the quarter that we have great confidence in our adjusted EBITDA guide there. But as I think about the year, we have hedged that number slightly. We have not seen, by the way, any friction. When we built plans we did think that there could be some impact on revenue. There has not been to date and we're about 3 months into the program. And we have noted too that there seems to be an improvement in renewals as a consequence of using these alternative billing methods which was somewhat unexpected but obviously welcome.

Thank you.

We now turn to Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.

Thanks so much for taking the questions. Maybe two that build on some of the answers so far and just trying to take it a little bit further. When you look at the current competitive landscape of sort of investments against growth and investments against product that you see across the dating horizon, how are you thinking about positioning yourself competitively in a 2.0 world of where you think the biggest opportunity for both incremental growth of new users or re-engagement of existing users or legacy users sits for the company. When you think about that competitive landscape and then second question would be and maybe it's qualitative more than quantitative at this point but how are you thinking about the incremental margin structure of the company in a fully deployed 2.0 world relative to 1.0 on the other side of the sort of investment cycle. Thanks so much.

Yeah. Hey Eric, on the operating cost point with respect to the updated platform, I think the way to think about it is we're operating from these very old data centers to today. When we cease reliance on the data center and have a true cloud platform operating, costs will be potentially lower. With respect to innovation, innovation will become much less expensive, more rapid. We'll be able to iterate in a way that isn't possible today. That should unlock — it's a separate question but it should unlock some incremental monetization of revenue opportunity as well. I would say with the modern platform and what is contemplated in terms of new product introduction, you will see a greater reliance on AI. You'll see an offset perhaps in token costs associated there, but there should be a net benefit to operating margin from our move to the modern platform.

Great. Thank you.

We now turn to Corey Carpenter with JP Morgan. Your line is open. Please go ahead.

Hey, good to talk again. Wanted to ask what you alluded to the chapter based structure. Curious if you could elaborate on your vision there and then the role that you see the swipe playing on the 2.0 platform and then just bigger picture once 2.0 is out how radical of a change will users see and how quickly of a change will they see in the app once you roll it out? Thank you.

Awesome. Thank you, Eddie.

We now turn to Robert Corbth with Evercore ISI. Your line is open. Please go ahead.

Great. Thank you very much. I just wanted to ask a follow up on Corey's question. Just to go, as I think there was a second part there about the swipe mechanic. Is that still going to be a core part of the user experience? And then just as you move into these more detailed chapter-oriented profiles, two questions there. What's the strategy for getting existing users to fill those out and engage with a sort of more wholesome profile? And secondarily, is there any tradeoff or impact on paid user conversion versus user retention as you make some of those changes? Does it slow down people's consumption of profiles which historically has been a way that you've driven paid user conversion? Thank you.

That's great. Thank you very much.

As another reminder, if you'd like to ask a question, please press star one on your telephone keypad. Now, ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.