Q4 2020 Bumble Inc Earnings Call Mar 11, 2021 (Thomson StreetEvents) — Edited Transcript of Bumble Inc earnings conference call or presentation Wednesday, March 10, 2021 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Anuradha B. Subramanian Bumble Inc. – CFO * Tariq M. Shaukat Bumble Inc. – President * Whitney Wolfe Herd Bumble Inc. – CEO ================================================================================ Conference Call Participants ================================================================================ * Andrew Jordan Marok Raymond James & Associates, Inc., Research Division – Analyst * Brent John Thill Jefferies LLC, Research Division – Equity Analyst * Cory Alan Carpenter JPMorgan Chase & Co, Research Division – Analyst * Daniel Salmon BMO Capital Markets Equity Research – Analyst * John Peter Egbert Stifel, Nicolaus & Company, Incorporated, Research Division – Associate * John Ryan Blackledge Cowen and Company, LLC, Research Division – Head of Internet Research, MD & Senior Research Analyst * Lauren Elizabeth Cassel Schenk Morgan Stanley, Research Division – Equity Analyst * Michael Ng Goldman Sachs Group, Inc., Research Division – Research Analyst * Nicholas Freeman Jones Citigroup Inc., Research Division – VP & Analyst * Steven Richard Koenig SMBC Nikko Securities America, Inc., Research Division – Analyst * Brinlea C. Johnson The Blueshirt Group, LLC – MD ================================================================================ Presentation ——————————————————————————– Operator  ——————————————————————————– Ladies and gentlemen, thank you for standing by, and welcome to the Bumble Q4 and Year-End Earnings Conference Call. (Operator Instructions) Please be advised that today’s conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Brinlea Johnson, from The Blueshirt Group. Thank you, please go ahead, ma’am. ——————————————————————————– Brinlea C. Johnson, The Blueshirt Group, LLC – MD  ——————————————————————————– Thank you for joining us to discuss Bumble’s fourth quarter and full year 2020 financial results. With me today is Whitney Wolfe Herd, Founder and CEO; Tariq Shaukat, President; and Anu Subramanian, CFO of Bumble. Before we begin, I would 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 our beliefs, assumptions and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Descriptions of these factors and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the prospectus for our initial public offering filed with the SEC on February 12, 2021 and our subsequent periodic filings such as our upcoming annual report on Form 10-K for the year ended December 31, 2020. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not a substitute for or in analyzing for any GAAP results. Reconciliations to the most comparable GAAP measures are available in today’s earnings press release, which is available on our Investor Relations website at ir.bumble.com. With that, I’ll turn it over to Whitney. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Thank you, Brinlea. And thank you all for joining Bumble’s first earnings call. We are so excited about advancing our mission and our leadership position in the online dating and connection space as we strive to create a world where all relationships are healthy and equitable. As we celebrate International Women’s Day and Women’s History Month, I want to take a moment to honor and thank all of the incredible women leaders that have come before me and have paved the way for more women to be in the same seat that I am in today. I’m proud to say that over 70% of our Board and over 50% of our senior management team are women. We’ve shown that when you prioritize women in business, you can be a part of positive change and simultaneously fuel shareholder value. Now let’s shift gears to our earnings. We achieved strong fourth quarter results, closing out a great 2020. Our fourth quarter revenue increased 31% year-over-year to $166 million driven by a significant increase in paying users across both Bumble and the Badoo app. For the full year 2020, revenue increased 19% year-over-year to $582 million. Fourth quarter adjusted EBITDA was $44 million, and full year adjusted EBITDA was $152 million. We ended 2020 with over 2.5 million paying users, up 22% year-over-year, demonstrating the power of our brands and our success in continuing to attract new customers. Before sharing some highlights from Q4 and outlining our priorities for 2021, for those new to the story, I want to share some background on Bumble. Bumble Inc. is the umbrella brand of Bumble and Badoo, the 2 apps. I founded Bumble in 2014 as the solution to what I believe was broken in relationships. From my time working at the forefront of the rise in mobile dating and from my personal experiences, I had firsthand insight into both what works and even more importantly, what could be improved upon for women and dating and the relationship. I was able to identify immense white space, recognizing that the products on the market were focused on only the male experience. There was a clear need for a woman-first online dating platform, a product with the women’s experience in mind. In order to build the product technology and platform for women, I had to start by fixing what I thought is broken for them. First, for too long, women around the globe have been told not to go first. They’ve been told to wait. And second, the Internet is not accountable. It doesn’t encourage good behavior, and it doesn’t have guardrails to protect women. When you layer these 2 issues, the gender and equity becomes exacerbated. So I set out to address these 2 fundamental issues in relationships with the creation of Bumble. Bumble app is the women’s first dating and relationship platform. We put women’s wants, needs and safety at the core of everything, from product and engineering, to marketing. On Bumble, women must always make the first move and send the first message. This helps recalibrate gender norms by giving women control at the start of the relationship from that very first message. This makes connections better for everyone. This does not alienate or isolate men. In fact, it makes their experience better and makes relationships better and more meaningful for all. So when I founded Bumble, I did so in partnership with Badoo and their global team. I did this to leverage their years of technology infrastructure, their product resources and their vast international scale. I identified a massive market opportunity and knew we had a differentiated approach. The total addressable market for dating is enormous. And the other ancillary verticals for relationships online are even bigger. Given our brand and our relentless focus on product leadership, we are uniquely positioned to capitalize on this opportunity. But this is just the beginning. We want to build the preeminent global women’s brand and to be there through the women’s entire life cycle. This is so much bigger than just our apps alone. Through our mission, we’re building a movement and a brand that connects deeply with people around the world. Our platform is purposely designed for us to diversify outside of dating. We’ve always had this in mind. In fact, our friendship and networking offerings, Bumble BFF and Bumble Bizz, are a derivative of our users looking for opportunities to meet new people platonically and professionally through our app. Our performance this past year has proven the durability of our business model. Through the pandemic, our team reacted quickly to the changing landscape, where people became increasingly comfortable with leveraging technology to interact with others. Women engagement, in particular, has increased during COVID, and we’ve continued to see strong paying user growth and user engagement, which will enable us to emerge from the pandemic in an even stronger position, allowing us to continue to grow in the post-COVID environment. Much like Q3, Q4 demonstrated our team’s ability to mobilize during the ongoing pandemic and to provide features across Bumble app and Badoo app in a manner that drove notable growth in users and engagement. On Bumble app, recent launches like our COVID preferences, our improved unmatch process, safety center and our body-shaming policy underscore our commitment to prioritizing safety and accountability to enhance the user experience. For example, the updated unmatch process makes it impossible for a bad actor to unmatch with someone without that user having the option to report any bad behavior to our moderation team. This advance represents another industry first for Bumble and provides added protection for our users. We also launched our second revenue tier, Bumble Premium, with a range of additional value-added features such as incognito mode and travel mode. We are pleased with the results we have seen so far, and we expect the global rollout to be completed in 2021. Additionally, we launched Reactions, which gives users the ability to provide emoji-based feedback on photos and their profile, providing another way for people to discover and match with each other. And we launched our “make the first move” campaign, showcasing the inspiring love stories of the couples that met on Bumble during COVID. This was coupled with a Dating 101 in 2021 guide. On the Badoo app in Q4, we furthered our mission of dating honestly through the rollout of moods and statuses. This new feature allows users to express themselves deeper through emojis and by adding statuses that reflect our current moods, such as ready to chat, message me, looking to meet up and many others. To date, we’ve seen a significant increase in chat activity and chat initiations. Given the user sentiment we have seen in the pandemic in different countries, we shifted our marketing focus on higher ROI campaigns and payer acquisition at the expense of MAU growth. We believe this has been the right trade-off to position the brand for future growth as conditions improve in regions like Brazil and Western Europe. As our momentum continues in 2021 and beyond, we are laser-focused on 3 top priorities: driving scale; increasing monetization; and improving profitability. First, we are driving scale by growing our user base and improving conversion. In our existing markets for both Bumble and Badoo apps, our plans include continued efforts to attract new users through marketing and product innovation. Our users connect deeply with our brands, making them powerful marketing tools which generate word of mouth, virality and powerful network effects, thus driving user growth and strong unit economics. We’re also growing through international expansion. The power of our mission, coupled with our expertise in building local market ecosystems across both Bumble and Badoo apps helps us expand efficiently. For example, Bumble app, we have seen our playbook work well in India, Mexico and Germany, where we’ve seen rapid acceleration of users in the last few quarters. We can draw on these lessons to accelerate expansion into markets such as Western Europe, Southeast Asia and Latin America. Technology is at the core of what differentiates our platform and enables us to remain customer-obsessed. Driving our growth is our continued investment in product features and functionality, built on the foundation of safety and accountability that is so core to everything we do. In particular, we see a real opportunity to build for the post-COVID environment, where we expect our users to continue some of the slow and virtual dating behaviors that they’ve adopted through the pandemic. We expect the future to be a much more robust mix of online and off-line even more so than what we saw pre-pandemic. And we’re also expanding beyond just saving. We’re going into new categories. We see a huge opportunity here, and we’re just at the very early stages. We’ve seen strong engagement from our 2 ancillary products, Bumble BFF, which is for platonic relationships, and Bumble Bizz, which is for professional relationships. And we’re planning to increase our focus on Bumble BFF with an emphasis on enhancing the product beyond the minimum viable product and then driving real user engagement. Next, we are focused on improving monetization. We are still early in our monetization journey. And we expect to increase paying users and ARPPU over time for both Bumble and Badoo apps. We’re developing new monetization features and improving existing features in order to increase adoption of in-app purchases and our subscription programs. We’re also testing new pricing strategies, including different tiers and user segmentation. And finally, we believe that we will be able to improve our profitability as our business continues to scale. Our near-term focus is on making strategic investments in growing our community, our product and our technology to capitalize on the large market opportunity that exists. Our financial model is characterized by a rare combination of growth, scale, strong profitability and cash flow generation, and this positions us well for the long term. Our IPO was a pivotal milestone, but we’re truly just getting started and we’re so excited for the next chapter of our journey. And now more than ever, people all over the world have come to understand the fundamental value of healthy and meaningful relationships in their lives. Looking ahead, we believe that as the world slowly transitions back to a post-pandemic lifestyle, more customers will have identified the value proposition that online dating really truly offers them. And we expect that there’s a lot of pent-up demand from people who have been avoiding in-person dating all together during COVID. So not only have we been hyper-resilient through COVID, we believe we are going to benefit significantly and that we are well positioned in the reopening as well. So in conclusion, Bumble is more than our apps. Our mission is powering a movement. And this approach ensures that our values guide our business decisions and that our business performance enables us to drive impact. Our strategy is anchored by our powerful brand, product leadership, operational excellence and impact initiatives. In 2021, we will focus on driving scale and increasing our active users, improving our monetization and positioning Bumble Inc. for long-term profitability. So before signing off, I want to thank our amazing team who have shown incredible resilience through a very difficult year. Without you, we would not be where we are today. And thank you so much to our partners and to our investors. I look forward to keeping you all updated on our progress. And with that, I will turn it over to Anu to discuss our financial performance. ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– Thanks, Whitney, and hello, everyone. Thank you again for joining us on our first earnings call. I will first talk about our fourth quarter earnings and full year 2020 performance, and then I will provide our outlook for Q1 and full year 2021. Before we dive in, I wanted to recap for everyone some of the key metrics that we use to manage our business. Both the Bumble and Badoo apps monetize via a freemium model, where the use of our service is free and a subset of our users pay to access Premium features, either via subscriptions or in-app purchases. We look at paying users during a given period of time as a key indicator of our ability to convert free users into users that pay for access to these Premium features. We also look at the average revenue generated by these paying users, which we call ARPPU. Now let’s talk about earnings. In the fourth quarter, we continued to build on the strong momentum we saw in Q3 and closed out the year with very strong Q4 performance. Our total revenue for Q4 was $166 million, up 31% year-over-year. Bumble app revenue was $106 million for the quarter, which was up 47% year-over-year. This growth was driven by a combination of increases in paying users as well as ARPPU. Bumble app paying users were up 42% year-over-year, with increases coming from both North America and international markets. The growth in paying users was driven by several monetization and product features that we rolled out all throughout 2020. As Whitney mentioned, we also introduced our second pricing tier in Bumble called Bumble Premium, which we rolled out successfully in Q4. 2 tier subscriptions are now live globally for iOS and are being rolled out country-by-country for Android. Early indications have shown a positive impact on ARPPU in these launch countries. We’ve also continued to iterate around packaging of in-app purchases, such as Spotlight and SuperSwipe. This, combined with other pricing optimization work, has also led to an increase in ARPPU. Bumble app’s ARPPU increased in Q4 by 4% sequentially compared to Q3 and was up 3% year-over-year. Badoo app and other revenue was $60 million in Q4, which was up 10.5% year-over-year. Similar to Bumble, this growth was driven by strong improvements in payer penetration, with paying users up 25% year-over-year in Q4, with strong contributions from countries such as Brazil, Russia and Poland. Badoo app ARPPU increased in Q4 by 1% sequentially compared to Q3. Now moving on to expenses for the quarter. Our cost of revenue was stable through Q4 at 27% of revenue, and our sales and marketing expenses in the quarter were 29% of revenue, a significant improvement compared to 32% in Q4 of 2019. The decrease was mainly driven by efficiencies in marketing campaigns as revenues have scaled. Our G&A spend, excluding stock-based comp and onetime costs, reduced to 11% of revenue compared to 15% in Q4 2019, and this was partially driven by COVID-related savings. We have strong operating leverage in our business, which is driven by our high flow-through rate, efficient marketing strategy and our shared tech platform and infrastructure. All of this translates to a profitable financial model for us. Our adjusted EBITDA of $44 million was up over 100% year-over-year, and the adjusted EBITDA margins in the fourth quarter expanded to 27% from 17% in Q4 2019. On a full year 2020 basis, our revenue was $582 million, up 19% year-over-year. Bumble app revenue was $360 million, which was up 31%, and Badoo app and other revenue was $222 million, which was up 4% year-over-year. Total Paying Users for the year increased 22% to 2.5 million, with Bumble app paying users at 1.1 million and Badoo app and other paying users at 1.4 million for the year. ARPPU for the full year was $18.89, down 2% versus 2019. And this was impacted by a reduction in deferred revenue of $15 million recorded in purchase accounting. Excluding the impact of that, our ARPPU would have been up 1%. Adjusted EBITDA for 2020 was $152 million, with margins growing to 26% from 21% in 2019. Now moving on to our financial outlook for 2021. For Q1, we are expecting revenue to be in the range of $163 million to $165 million. This represents a growth rate of 38% at the midpoint of the range versus Q1 2020. For adjusted EBITDA, we are expecting to be in the range of $41 million to $42 million, which represents an EBITDA margin of 25% at the midpoint and a growth rate of 88% versus Q1 2020. For full year 2021, we’re expecting revenue to be in the range of $716 million to $726 million. This represents a growth rate of 24% at the midpoint of the range. For adjusted EBITDA, we are guiding between $173 million to $178 million, which represents an EBITDA margin of 24% at the midpoint. Our outlook for full year 2021 reflects additional investments in areas of product and technology, potential impact of Google Play starting in Q4 as well as step-up in G&A costs in the areas of finance, legal and compliance. In conclusion, we are proud of the business we’ve built and are very excited for the future. We see a significant opportunity ahead of us, from a user growth, revenue as well as from a profitability perspective. So I just wanted to say thank you, and now we can turn to Q&A. ================================================================================ Questions and Answers ——————————————————————————– Operator  ——————————————————————————– (Operator Instructions) Our first question comes from the line of Nick Jones with Citi. ——————————————————————————– Nicholas Freeman Jones, Citigroup Inc., Research Division – VP & Analyst  ——————————————————————————– 2 for me. I guess, one, I guess, in 4Q and maybe through 1Q so far, what changes or shifts are you seeing in engagement and willingness to pay as vaccines roll out and restrictions loosen? And then the second question really is can you expand a little bit on your international expansion planned for 2021? ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Sure. Hey, this is Tariq. So I’ll try and take those in turn. So from an engagement standpoint, we’re really seeing a continuation of the trends that we’ve really been seeing for most of 2020, which is that engagement itself in terms of daily usage of the app, the stickiness of the app, repeat usage and chat on the app has generally been very strong and increasing throughout the year, even in markets that are, on a relative basis, loosening up from a lockdown standpoint. We’re seeing those engagement gains that we’ve seen this year really hold up quite strong. So we are encouraged by the activity that we are seeing on both Bumble and Badoo and particularly that engagement with existing users. As it relates to international expansion, I think that a lot of the success that we’ve been seeing, if I take the Badoo — the Bumble app, in parts of Western Europe, for example, were very much leaning into those opportunities. This is a bit of a strange year. (technical difficulty) imagine, with vaccine rollouts and lockdown plans, we have a very nimble and agile approach to this, but we are seeing a lot of traction in markets in Western Europe as well as some markets in Southeast Asia. And so we’re continuing to lean in to those markets where we see traction there. On the Badoo app, and we already have quite a global footprint in Badoo and we’re really, again, just being agile, investing where we see those green shoots in these different markets, but really focusing on the existing footprint for Badoo. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Yes. And this is Whitney. I just want to chime in there and say that we’re also seeing the trend continue as it pertains to women really being in control of their narrative and the relationships. And so this woman-first approach is really resonating in our international markets as well. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Mike Ng with Goldman Sachs. ——————————————————————————– Michael Ng, Goldman Sachs Group, Inc., Research Division – Research Analyst  ——————————————————————————– And congratulations on your first earnings call. I was just wondering if you could talk a little bit about how changes in stay-at-home measures might affect engagement with the Bumble app and what you’re assuming for this year. Specifically, do you think there’s going to be pent-up demand that will drive outsized engagement at some point later this year? Or do you expect people to be a little bit more cautious about dating with some lingering concerns around COVID? ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Hey, Mike. Sure. So I think, just building off of what I was saying on the engagement side, certainly, where markets start to reopen, we do see some evidence of that pent-up demand. There’s markets around the world, such as New Zealand as an example, that have had more success controlling COVID than other markets. And we do see, in those places, that you have the engagement gains, as I mentioned earlier, that persist, but more people coming into the market that would otherwise have been sitting it out. So we see that. I think we’re taking a fairly cautious and nimble approach on projecting exactly when that pent-up demand will materialize. And it has not followed an obvious pattern for us, meaning just because one country may lift the lockdown, it doesn’t necessarily change consumer behavior that quickly. And so I would say that we are maintaining a very nimble stance on this. So we invest where we see traction, but we’re not counting on an overly fast spring-back, I guess, as conditions change. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Yes. Just to jump in as well, to further Tariq’s point. This is Whitney speaking. There’s certainly never been a moment in recent history that will present itself with such a demand to meet new people and to date again. So the entire globe has gone through an incredibly lonely period. And while we’ve seen the connection take place and relationship (technical difficulty) that will form digitally, we believe that, that digital-first approach lives on in a post-pandemic world, where people have found the ease and the safety component and the accessibility and the opportunity that they get through meeting on Bumble or on Badoo that has served them so well. And we believe that this digital approach is going to only further our opportunity, meaning they meet digitally, they get to know each other digitally, and then they go meet in the real world. And then that just creates more word of mouth. And that just creates more user acquisition opportunity. And so we are very optimistic about the reopening, and we also believe that people will still rely on the digital-first approach. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Lauren Schenk with Morgan Stanley. ——————————————————————————– Lauren Elizabeth Cassel Schenk, Morgan Stanley, Research Division – Equity Analyst  ——————————————————————————– Great. I was just wondering if you could talk a little bit about geographic performance that you saw in the fourth quarter, if there are any sort of regions or countries, in particular, that may have had an outsized impact on the quarter-over-quarter decline in net adds, maybe some of the lockdown countries. And my second question is just any additional color on the rollout of Bumble Premium, how that’s going in terms of upgrade rates or conversion rates from free users? ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Hey, sure. So in terms of — if I understand the question correctly, on the international side, we certainly — I think probably the most notable piece was a little bit of a bump, and I wouldn’t overstate this. But in the U.K., as they instituted some of their really quite severe lockdown measures that they’ve had in place for a while, we did see particularly some registration slowdown in the U.K. What we typically find with this, when new measures are put in place, is there’s essentially an adjustment period that happens. So we haven’t found these to be permanent reductions from the kind of COVID trend that we had seen before, but you do see this initial reaction of people hunkering down or just trying to figure out what their life is going to be like in lockdown, and then life gets a little bit back to normal. And so, say, I would call it, the U.K., as being possibly the most notable example there. If you look at markets like India, which have had a slightly more success in controlling the virus recently, we do see some slight upticks there as well. But as I mentioned earlier, it’s really hard to draw a straight line between lockdown measures and registration performance because there is, I think, just some consumer psychology that goes into this that’s hard to predict. And then, Anu, why don’t you take the Bumble Premium? ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– Yes. So yes. So in terms of Bumble Premium, like I said in my remarks, so 2 tier subscriptions are now live globally for iOS, and we’re starting to roll it out for Android and that will go through the first half of the year. We’ve seen very positive impact on ARPPU in several of these launch countries. In the beginning of November, for example, in Q4, when we launched in the U.S., we saw bumps up to 6% just in the U.S., for example. So we are very pleased with the results that we’ve seen from Bumble Premium, and we’re looking forward to the Android launch for the rest of the year. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of John Blackledge with Cowen. ——————————————————————————– John Ryan Blackledge, Cowen and Company, LLC, Research Division – Head of Internet Research, MD & Senior Research Analyst  ——————————————————————————– 2 questions. What has worked in markets like Germany, Mexico and India to drive the fast paying — to drive the fast user growth? And can you replicate that in other markets? And then just any color on the adjacent services like BFF and Bizz. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Thank you. So we have a very unique approach at Bumble and we really lean into our organic story, our organic brand narrative, and we have seen this really be the foundation and the flywheel to the growth in these international markets. Namely, we focus on the woman customer. And as we go into different markets, one thing remains the same across the world, women want relationships and they want to be treated with respect and they want to be in control of their relationships. This is a global need. And so we really — we make sure that we are paying attention to the nuances and culture and in the hyper-local areas. And then we deploy our organic growth strategy that has been so successful in our core markets. So we replicate that, but with nuances to be mindful of the culture. And as you’ve seen from our performance split in terms of how we spend organic versus paid, we really lean into these organic channels, really building our brand, really building advocates for our brands, really leaning into our competitive advantage, which is a safe empowering platform that focuses on the woman experience. And this is really foundational to (technical difficulty) a word of mouth. And then we support that through our meaningful distribution channels, either organic or through our supported paid channels as well. So this is a strategy that we have seen work in numerous markets, and we really would attribute that to our unique (technical difficulty) our unique brand approach, and those are really what fuel our growth and give us a competitive edge. And let’s discuss BFF. So there’s a really interesting trend that has been taking place in the connection space, which is this desire to have platonic relationships. You (technical difficulty) on technology just to find love anymore. Now that’s not negating the massive opportunity ahead for dating, which we are very focused on. But this fascinating thing that has taken place with our brand, in particular, over the last few years is the desire and the willingness to use our products for more than just (technical difficulty) particularly on Bumble app. And so we are really leaning into this opportunity, and our brand gives us permission. There is not stigma around finding a friend on Bumble. And so we’re taking advantage of that opportunity, and we are really working on moving from this very early, call it, test phase product that we have had over the last few years (technical difficulty) working on a strategy to really deploy a real resource and allocated approach to BFF. And we think that friendship is going to be a massive opportunity in the future, platonic relationships at large. ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– And John, on the (technical difficulty) to your question on can it be replicated. What we’re seeing, for example, in Germany is, in Q4, about 100 — roughly 150% increase in monthly active users year-over-year. And that has really been a focus of ours, but we’re seeing almost, call it, a spillover effect in countries nearby where we’re seeing very high double-digit growth and in some cases, triple-digit growth in the surrounding markets. So we do think that as we build scale in different regions, you have the — we have the ability to accelerate the pace of rollout. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Cory Carpenter with JPMorgan. ——————————————————————————– Cory Alan Carpenter, JPMorgan Chase & Co, Research Division – Analyst  ——————————————————————————– Hoping you could talk a bit about the product road map this year and your key priorities for the Bumble app, maybe beyond Premium, which I know you’ve discussed. And then I think for Anu, just within the context of your revenue guide, could you talk about how you’re thinking about the relative contribution from payers and ARPPU and then also Bumble app and Badoo? ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Great. Well, why don’t I start, Cory, and then I’ll turn it over to Anu on the second piece. So in terms of the product road map, on both Bumble and Badoo, there’s a couple of key themes. We are definitely preparing and leaning into the reopening theme. Now exactly when it happens, we don’t know, but this notion of, that Whitney mentioned earlier, of we believe people will still be using digital, our apps, to find connections, to make connections, but they’re going to want help in the rest of their dating life, and we believe that’s a sizable opportunity for us. So we’re really thinking through how do we help people, from a product standpoint, take that next step in the real world, make the planning and the organization and the ability to spend really in making the relationship successful, easier. And so that’s certainly one key theme. We’re also very much leaning (technical difficulty) the discovery mechanisms. We think that we have a number of different ways where people can discover and meet each other, but a lot of this really is ripe for innovation, and we are spending a lot of time thinking about how do we ensure that we are doing our job of helping you find and discover people that you really want to meet. And so that’s a big area of focus, both algorithmically, from a machine learning standpoint, as well as from an actual discovery, the mechanisms for swiping through different profiles and things like that. And then lastly, we have a number of areas where we believe that helping you break the ice to start getting to know each other better is really a key area that’s been a gap for dating apps. Historically, we — I have been piloting, as an example, this program we call “Night In,” which is starting with a trivia night, that you and your match can start to get to know each other through games and through other types of mechanisms. This has been piloted in Canada. It actually launches in the U.S. tomorrow, March 11. And we are very optimistic that — about that line on our — of thinking in our product road map because it’s not just about finding that initial connection, it’s about starting to get to know each other in these lower-stakes ways, in these more casual ways. And so we’re very much experimenting and leaning into those areas. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Yes. And this is Whitney. Just to further that with a couple of other topics we’re paying very close attention to, safety and accountability, so really reinvesting and further investing into the safety and the accountability of our community and our ecosystem, really engineering a safer, better, more authentic and more accountable experience across the board. And then the theme that we’re really focused on, on our product road map is community. So when you think about dating products, historically and currently, a lot of it is one-to-one. But the need and desire to both meet that special someone through community or to build community around these one-to-one connections is really important. So we’re really exploring and working through the future of that and being part of bringing people together through community-driven themes, topics, struggles, joys. And that will extend beyond romantic. So you can expect to see this deep focus on community-building and relevant community-building in our relaunch of BFF when that rolls out. And so community is very important, but the underlying theme for everything is safety and accountability. And Anu is going to jump in as well. ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– Yes, hi. So just to answer the question around outlook. So if you think about Q1 just based on what we have seen today, so for Bumble, we are seeing strong growth in payers as well as ARPPU. And that’s really been a function of a lot of the work around monetization that we started in the second half of 2020, that we are still seeing benefits around. So we will continue to see strong growth in payers for Q1 on the Bumble side. And on the ARPPU side as well, on a year-over-year basis, you should expect to see nice growth. On a sequential basis, it will be less because Q4 does take into account quite a large portion of the Bumble Premium increase that we’ve seen. And on the Badoo side as well, the work that we’ve been doing around improving payer penetration (technical difficulty) payers is something that is continuing in Q1 as well. Just for Badoo, just given the global nature of Badoo versus Bumble, COVID is still very much a strong presence in Q1. And so I would say that compared to Bumble Badoo is feeling the effects of that a little bit more, again, just given the geographic (technical difficulty) of how Badoo operates. But that’s largely how we are thinking about the mix of where we think revenue growth comes from for Q1. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of John Egbert with Stifel. ——————————————————————————– John Peter Egbert, Stifel, Nicolaus & Company, Incorporated, Research Division – Associate  ——————————————————————————– 2 kind of related questions. Taking a bigger picture view on the pandemic impact, obviously, lockdown has created challenges for paying user growth in the short term because so many people weren’t going out and meeting people in real life, so there’s less incentive to take advantage of all the paid features available. But with numerous instances of COVID accelerating usage of digital services among later adopters, do you think COVID may have accelerated sign-ups from some of those harder-to-reach demographics at the top of the funnel, which maybe could lead to faster growth in paying users down the road than you might have seen in the absence of the pandemic? And kind of similarly, wondering whether BFF and Bizz might have seen a positive uplift during the pandemic from consumers looking for more platonic connections, whether it’s because they’re isolated or had friends leaving the city. Maybe they themselves are leaving their city or their job. Just curious whether you’ve had any interesting learnings on that front as well. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Yes. Great question. Thanks. So let’s just start at the basics. We, as humans, it doesn’t matter where you live, where you’re from or what life stage you’re in, we need relationships, all of us. It’s a universal truth. Not only do we need relationships, but we need healthy, equitable and respectful relationships, and that is what our business serves. Not only that, but the second truth here is that the planet is (technical difficulty) have been isolated in ways that we’ve never been isolated before. And so I think what — to answer your question, what we have seen is the stigma surrounding online dating that may have still had this overhang before the pandemic, that stigma has really started to dissipate. It started to go away. There was a group of — or a community (technical difficulty) they didn’t want to use dating apps because they wanted to rely on “old-fashioned way,” meeting someone at a bar or a wedding or a social gathering. And when those opportunities just went away, this became their only option. And once they got onto our product, they recognized the benefit of (technical difficulty) “Oh, my gosh, you can get on Bumble, and you can learn more about an individual in 10 seconds than maybe sitting and spending 30 minutes in a coffee shop with a stranger,” and not only that, but the benefit of the safety and this layer of protection between meeting someone you don’t know in the physical world and starting digital. So the answer is we have seen a new group of people that otherwise were hesitant to use our products really warm to the idea [and they have come in]. So we think there is major opportunity for new payers from new audiences that have really come to us because of the pandemic. And then the second answer is, surrounding BFF and Bizz, that same truth remains for the platonic friendship category. People are alienated and isolated from their friends, and they want to meet people to not only go and do things with, but they want to meet people to find support, to find camaraderie, to find community around the tough things they are going through or the celebrations they’re experiencing as well. And so we have seen these micro communities form on Bumble in the sense that people are seeking friendship in ways they would have only done off-line before the pandemic. And so this shift has really taken place, and we think that the propensity to build relationships online has only strengthened due to the pandemic. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Andrew Marok with Raymond James. ——————————————————————————– Andrew Jordan Marok, Raymond James & Associates, Inc., Research Division – Analyst  ——————————————————————————– I had 2. Can you talk a little bit on the lower-priced subscription tier? Any evidence or proof points you’re seeing that, that service is expanding the number of people for whom a subscription is an attractive option, whether it’s people who would only monetize through in-app purchases or maybe nonmonetizing users? And second, on the Badoo side, as we look at the revenue trajectory, can you talk a bit about the relative focus on product innovation versus pricing optimization over the next year? ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– Sure. Why don’t I start with the second one, and then Tariq can jump in with the first one. So as we think about revenue growth for next year, if you really think about our pillars of growth, they really are around improving scale in existing markets, getting users in new international markets that we are not in today and improving monetization of these users, right? And then obviously, the fourth pillar really is focusing on beyond dating in ’21 and beyond. So if you sort of think about the core dating business, we really think about a revenue growth coming from both improvement in users as well as in monetization. And monetization definitely has the levers of additional product features that allow people to move from the sort of freemium user category into paying users. So that’s certainly a big part of our strategy for next year and our paying user growth in Q4 (technical difficulty) of the work that we’ve done in 2020 really to advance that. And then we’ve always said we are in very early stages of our monetization journey. Bumble Premium is really our — the first time we’ve introduced a second tier. And (technical difficulty) of results on that have been great. So the work that we’ll be doing around pricing optimization is definitely something we’re very much looking forward to in 2021. And the plan would be to take all of the learnings that we have from Bumble and also apply to Badoo. Again, the advantage that we have in terms of the shared platform and infrastructure that we have is that we’re able to seamlessly take learnings from Bumble and apply to Badoo and vice versa. So it is definitely a multipronged approach in terms of how we’re thinking about revenue. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– And just to further that, I think it’s also important as we look towards going back to the physical world, the amount of money that people spend on their dating lives in the real world, the dating wallet is immense. It drives a lot of consumer spend. And we really, as Anu said, believe that we’re just at the very beginning of the monetization journey, and we believe that there’s a lot of more levers that we have to lean into in the coming quarters. And we’re very, very excited about that. ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– And just to (technical difficulty) the first question around the lower price — lower-priced tier, absolutely. I think one of the sort of core intentions of introducing a second pricing tier is to have more people move in — that are nonpayers today move into (technical difficulty) right? And so having a lower-priced tier definitely allows us to improve payer penetration from that perspective. So again, that is — there is work that we will be doing around that through the course of 2021. ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Yes, we hear in our user research that one of the biggest challenges that we have in increasing payer penetration is just convincing people to think of us as a paid app (technical difficulty) as free app, and we believe that the more we can to convince them to start along that journey, as Anu says, the more likely it is we can then pretty rapidly up-sell them into these higher-priced tiers. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Brent Thill with Jefferies. ——————————————————————————– Brent John Thill, Jefferies LLC, Research Division – Equity Analyst  ——————————————————————————– Whitney, there’s been a lot of conversation around at work in the friendship element of your business. And I think many are asking when do you think that this becomes more material to the revenue, and secondarily, do you believe there’s a new monetization model outside subscription? I think we can all sit and dream as potential product managers of things you could do in that outside subscription. Is that something you’re open to or not? And I had a quick follow-up for Anu. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Yes. Great. Thanks for the question. So you’re right, there is a lot of opportunity ahead, and we are incredibly (technical difficulty) and excited about the friendship category and the professional category. I think it’s important to note that one of our strengths as a management team is our ability to have laser focus. And we recognize the massive opportunity ahead of us that still remains in dating, both vertically and horizontally, from a feature offering and a paid feature offering and from an engagement standpoint, user acquisition standpoint, international standpoint, so there’s so much exciting growth ahead for dating. While in the meantime, we are planning and strategizing, starting with BFF. So what you will see from us is a very strong commitment to become a scaled international player from a dating standpoint and to reinvest further into our core markets to further accelerate growth in our core markets from a dating standpoint, both geographical, from reinvesting in these geographies more granularly and also in different groups of individuals. But at the same time, we are planning for our proper relaunch of BFF. That will be our first foray into platonic and other — something other than dating. And as far as monetization opportunities, you should not expect monetization from Bumble BFF until 2022 and beyond, but we are very excited about the coming years when it does come to the opportunity to monetize and to lean into both subscription and otherwise, from a platonic and professional standpoint. You see the TAM for these industries outside of our business alone, and when you stack that on top of dating, the opportunity becomes incredibly vast. ——————————————————————————– Brent John Thill, Jefferies LLC, Research Division – Equity Analyst  ——————————————————————————– Great. And just on Premium, Anu, you said you’re pleased. Is there any more detail in terms of what you’ve seen from Boost to Premium? Any way you can quantify it, or it’s just stay tuned and we’re pleased, but we’re not going to get any more details on it? ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– Yes. I mean listen, it’s just been a quarter since we launched. And we just finished the full (technical difficulty) rollout, and Android is very much in the process of being rolled out. So I think we’ll definitely be providing more information about it as we go along. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Right. But the one thing I would like to add just a little more thematically is people want more ways to connect. They want more features. They want more options. We’re hearing (technical difficulty) our customers every day, which gives us an amazing road map of opportunities that can become monetization features as well, both in this subscription tier that we’ve launched and potentially others down the road. So we’re watching this closely. We’re very excited, but that’s all we can share for now. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Dan Salmon with BMO Capital Markets. ——————————————————————————– Daniel Salmon, BMO Capital Markets Equity Research – Analyst  ——————————————————————————– Whitney, I’m going to return to the complementary businesses as well. And my question is, do you think it’s important that the nondating businesses are still based in human connections like platonic and business networking? Or do you see broader branded opportunities as well? And then sort of all the way back down to [Earth,] the near-term investment in BFF, for either you or Anu or Tariq, what level of spend do you expect in BFF over the next year or so? And how do you think about the balance of that versus other priorities? ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Great. Yes. So Anu and I will (technical difficulty) together. We are very bullish on relationships beyond dating and all of the ancillary touch points that come with that. So I think it’s very important to note that we are not just our romantic relationships as humans. And because we have been so intentional with our brands, we have permission to go far beyond the current offering that we have. Our brand has really been rooted in safety and accountability in women-first, that it’s given us permission, and we believe that’s also a very — a competitive advantage to the peer set as well. And so from an investment standpoint, Anu is going to jump in and tell you about how we think about the split from dating to platonic relationships and beyond, and then I’ll jump back in. Tariq has some… ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Sorry, I just want to emphasize one point on what Whitney said, and then I will turn it to Anu on the numbers piece. I think if you look at what our members are actually asking for, it is not just what we would think of as relationships, but it is — the mission of the company is around creating a world where all relationships are healthy and equitable. And what we hear from our users is they think of that in many ways, from a financial services standpoint or from a health care standpoint, or these areas where the relationships, if you will, or those aspects of their lives have not (technical difficulty) has not been as equitable or as healthy as they can be or could be. And so we think that there’s permission there. We’re very disciplined about which opportunities we pursue, but I do think that the permission is quite broad and fits with that overall mission of the company. So with that, go ahead, Anu. ——————————————————————————– Anuradha B. Subramanian, Bumble Inc. – CFO  ——————————————————————————– Yes, and just in terms of investment, I think, again, the advantage of our P&L structure is that we are effectively leveraging our existing products and tech teams to be building out BFF. We’re obviously making incremental investments, but we are not building up a team from scratch. So we’re really thinking mid- to high single digits in terms of investments for this year. And even that is going to be really thought about very closely. It is not we spend money for the sake of spending money. We will be very methodical about getting the product out, seeing how it works and then spending marketing dollars if we need to towards it. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Right. And I think it’s really important to note, just to further Anu’s point, the current offering, Bumble BFF, was really built as a derivative to what our customers were asking for. They wanted this feature. We built it for them. And the fact that we have around 9% of our daters using BFF organically and authentically without a (technical difficulty) and it’s still, call it, in test mode, that just goes to show the opportunity ahead. Once we do have the product in a standpoint we’re proud of and it’s up to Bumble standards, you can imagine the conversion opportunity and the LTV opportunity. And then you can see all the [adjacencies] from there. So we’re very excited. ——————————————————————————– Operator  ——————————————————————————– Our final question comes from the line of Steve Koenig with SMBC. ——————————————————————————– Steven Richard Koenig, SMBC Nikko Securities America, Inc., Research Division – Analyst  ——————————————————————————– Maybe just 2 quick ones, if you don’t mind. One is you have talked a little bit about the positive trends on payer penetration and your focus in recent quarters on paying users more so than monthly active users. So I assume that’s growing faster than MAUs. But can you give us some color on kind of those trends? And will you be refocusing more on active users? Will that get more focus as the pandemic ends? And then just lastly, for my last question, your points of differentiation are very well-articulated. I wonder if you could give us a little color on how you think about competition and how that differentiation plays with respect to the other apps in the market. That’s all I have. ——————————————————————————– Tariq M. Shaukat, Bumble Inc. – President  ——————————————————————————– Great. So I’ll take the first one, and I’ll hand over to Whitney on the competition piece. I think what we don’t want to do is be spending marketing dollars against users who are not going to be the enthusiastic users of our products. And so, to date, particularly during the pandemic, we’ve been very focused on those segments that have shown an interest in being active in the dating pool and active in the (technical difficulty) as things open up, we are quite optimistic about potential for registration growth and monthly active user growth for sure. I think, again, the timing is just a little bit unclear. We are still (technical difficulty) healthy growth in monthly active users on Bumble, for example, and particularly, as I mentioned, in many parts of the world, where we have been smaller and are growing quite rapidly. So we think that those trends will accelerate once there’s a full reopening. We’re just not prepared to, call it — [out a] date, for example, of when that reopening is going to happen per se. Whitney, go ahead. ——————————————————————————– Whitney Wolfe Herd, Bumble Inc. – CEO  ——————————————————————————– Yes. Sure. So as it pertains (technical difficulty) competition and our unique offering, so we have been very particular from day 1 about solving for the woman’s relationship struggles. And when you create a healthy, safe, inviting ecosystem for women, this miraculous thing happens where it becomes better for every (technical difficulty) where everybody wants to be in. So we have really built our entire brand and product and business around this, and we’ve been so authentic and true to that throughout the year that we continue — we get to continuously reinvest in that brand story and brand kind of competitive advantage. And when we think about the competitive landscape, we’ve been really particular about building a product that has multiple offerings. So we are not heavily reliant on outside acquisition, meaning we don’t have to rely on M&A. We don’t have to rely on other preexisting products in order to scale. We can scale within. We have this unique ability to offer you (technical difficulty) through this set of features, meaning you can come to Bumble for marriage. You can come to Bumble for something casual. You can come to Badoo for multiple offerings. You can come to Bumble for a friend. The brand invites you to do that. The product feels that it was enabled and built to do that. And so that’s really our core competitive advantage, is that we are a woman-first brand (technical difficulty) for everyone, and there is such an opportunity, both from an LTV opportunity, but we really can offer more than just one thing. And so that’s something we’re really excited about and leaning into heavily. ——————————————————————————– Operator  ——————————————————————————– There are no further questions. Ladies and gentlemen, this concludes today’s conference call. We thank you for your participation. You may now disconnect.