Bumble Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; compared with the three months ended March 31, 2021. Unaudited consolidated results include Fruitz from its January 31, 2022 acquisition. Unless stated otherwise, amounts are U.S. dollars.
Financial performance
| Metric | Q1 2022 | Q1 2021 | Change / context |
|---|---|---|---|
| Revenue | $211.2 million | $170.7 million | Up 23.7% |
| Operating earnings (loss) | $19.0 million | $(112.4) million | Operating margin 9.0%, versus (65.8)% |
| Net earnings | $23.9 million | $323.4 million | Q1 2021 included a $441.5 million tax benefit from international restructuring |
| Net earnings attributable to Bumble Inc. shareholders / Buzz Holdings owners | $16.4 million; $0.13 per share/unit | $341.8 million; $1.74 per share/unit | Prior-period figure also reflects the tax benefit |
| Adjusted EBITDA (non-GAAP) | $49.8 million | $46.1 million | Margin 23.6%, versus 27.0% |
| Operating cash flow | $19.4 million | $(45.6) million | Improved year over year |
| Free cash flow (non-GAAP) | $14.4 million | $(48.3) million | After capital expenditures of $5.0 million |
- Revenue drivers: Bumble App revenue rose 38.0% to $155.4 million, with paying users up 31% to 1.8 million and average revenue per paying user up 5.2% to $29.18. Badoo App and Other revenue fell 4.0% to $55.8 million; paying users declined 15% to 1.2 million, partly offset by average revenue per paying user rising 5.9% to $13.51. Fruitz revenue is included in Badoo App and Other but excluded from the disclosed operating metrics.
- Costs and margins: Cost of revenue was $56.8 million, or 26.9% of revenue, compared with 28.0%. Selling and marketing was $56.8 million; general and administrative was $26.4 million; product development was $25.2 million. General and administrative expense fell sharply from $126.5 million, substantially reflecting a smaller fair-value charge for contingent earn-out liabilities, lower stock compensation and fewer IPO-related costs.
- Cash and liquidity: Cash and cash equivalents were $308.8 million at March 31, down from $369.2 million at year-end. Current assets were $413.8 million and current liabilities $166.2 million. Investing cash outflow was $74.7 million, mainly the $69.7 million net cash cost of the Fruitz acquisition.
- Debt: Debt carrying value, including current maturities, was $622.3 million; principal outstanding was $637.1 million. The term loans mature in January 2027. The company reported compliance with financial debt covenants throughout the quarter. It had $350 million of interest-rate swaps fixing the variable-rate element through June 2024.
Material changes, outlook and risks
- Bumble acquired Fruitz for approximately $75.4 million, including contingent consideration, to expand its offering to Gen Z users. The acquisition added approximately $41.9 million of goodwill and $42.9 million of identifiable intangible assets.
- The company began exiting Russia and removed its apps from the Apple App Store and Google Play Store in Russia and Belarus. Approximately 120 employees were affected; estimated restructuring charges are $1.3–$3.0 million, of which $1.3 million was recorded in Q1. Management expects to substantially exit Russia by year-end 2022. Revenue from Russia, Belarus and Ukraine combined was approximately 1.9% of Q1 revenue.
- Management expects the factors affecting Badoo paying users—including COVID-19, macroeconomic conditions and the Russia/Belarus app removals—to continue adversely affecting Badoo App and Other Paying Users in Q2 2022. The filing provides no formal consolidated revenue or earnings guidance.
- Management expects Google Play billing-system adoption to increase cost of revenue as a share of revenue by approximately 2% over the remainder of 2022. It also cites foreign-exchange exposure, inflation and uncertain consumer demand as risks. The company says it believes available resources are sufficient for its activities and plans over the next twelve months.
- Profit comparisons are affected by unusual items: Q1 2021 included a $441.5 million tax benefit from reversal of deferred tax liabilities and a $72.0 million contingent earn-out fair-value expense; Q1 2022 included a $20.7 million fair-value gain on contingent earn-out liabilities and a $10.8 million gain on interest-rate swaps. Adjusted EBITDA is a company-defined non-GAAP measure and excludes specified costs and gains.
- Legal matters include a settled California Unruh Act class action, early-stage biometric privacy and California privacy cases, and securities and derivative actions related to the September 2021 secondary offering. The company recorded $7.8 million of provisions for litigation at quarter-end; it says potential liability in certain newer cases cannot currently be reasonably estimated.
Important facts for investors to verify
- Whether Bumble App user and revenue growth continues, and whether Badoo user declines stabilize after the Russia/Belarus exit.
- How much of revenue growth and reported Badoo performance reflects Fruitz, foreign exchange and changes in geographic mix; Fruitz is excluded from key user metrics.
- Whether Adjusted EBITDA and cash conversion remain sound after considering recurring stock compensation, capital needs, debt service and acquisition-related spending.
- The actual effect of Google Play billing fees, foreign-exchange movements and macroeconomic conditions on margins and user monetization.
- Future cash obligations under the tax receivable agreement: the recorded liability was $389.0 million, and estimated future payments related to the offering transactions could total $660.3 million if the company realizes the relevant tax benefits; actual amounts may differ materially.
- Developments and potential costs in the pending litigation, contingent earn-outs, and the Russia restructuring.