Bumble’s decline is due to increased expenses and worries about competition from Tinder.
Bumble's decline is due to increased expenses and worries about competition from Tinder.
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Dating app giant Bumble saw its shares drop 4% after releasing its third-quarter revenue forecast, which fell short of expectations. The company also reported an increase in expenses, leading to concerns that competition with rival app Tinder was impacting its business.
Bumble, the owner of popular dating apps Badoo and Fruitz, experienced a more than 7% rise in operating costs during the June quarter due to higher spending on product development and marketing efforts. Analyst Nicholas Cauley from research firm Third Bridge pointed out that as Tinder increases its marketing budget, it will be interesting to see if Bumble experiences a spike in user acquisition costs.
Tinder’s parent company, Match, also recently released its third-quarter revenue forecast, which exceeded Wall Street estimates. Match expects stronger marketing initiatives to drive user growth. Despite the fierce competition, Bumble managed to achieve strong user growth during the quarter. This can be attributed to the fact that people are willing to invest in finding love and companionship, even amidst inflationary pressures.
In the second quarter, Bumble’s app revenue grew by an impressive 23.4% to $208 million compared to the previous year. The company’s total revenue also witnessed a substantial increase of 18.5% to $259.7 million. CEO Whitney Wolfe Herd proudly mentioned that Bumble attracted a record number of paying users and successfully launched BFF as a standalone offering, which further stabilized their flagship app Badoo.
However, Bumble’s third-quarter revenue forecast of $274 million to $280 million was marginally higher than Wall Street’s expectations of $275.6 million. This indicates that Bumble anticipates modest growth in the coming months. Despite this, the company saw an increase in their total paying users from 3 million to 3.6 million year-on-year. Additionally, the average revenue per paying user (ARPPU) slightly decreased from $23.51 to $23.23.
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On a positive note, Bumble’s net earnings for the second quarter amounted to $9.3 million, a significant improvement compared to the $5 million net loss sustained in the previous year.
Overall, while Bumble faces tough competition from Tinder, it has managed to maintain its strong user base and even achieve growth in certain areas. As the dating app industry continues to evolve, it will be interesting to see how Bumble adapts to changing market dynamics and leverages its unique offerings to stay ahead.
