Bumble Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report; it does not provide a standalone fourth-quarter income statement summary. Unless noted, amounts are U.S. dollars.
Business context
Bumble operates freemium dating and social connection apps: Bumble, Badoo and, following its January 2022 acquisition, Fruitz. Revenue primarily comes from subscriptions and in-app purchases. The company reports one operating segment.
Financial and operating results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $903.5 million | $760.9 million |
| Operating loss | $102.8 million | $134.7 million |
| Net earnings (loss) | $(114.1) million | $281.7 million |
| Adjusted EBITDA (non-GAAP) | $226.9 million | $207.2 million |
| Adjusted EBITDA margin (non-GAAP) | 25.1% | 27.2% |
| Net cash from operating activities | $132.9 million | $104.8 million |
| Capital expenditures | $16.3 million | $13.7 million |
| Free cash flow (non-GAAP) | $116.6 million | $91.2 million |
- Revenue rose 18.7%. Bumble App revenue increased to $694.3 million; Badoo App and Other revenue declined to $209.2 million. FY2022 other revenue included $24.3 million, primarily from Fruitz.
- Average paying users, excluding Fruitz, were 3.18 million, up from 2.89 million. Bumble App paying users grew 34% to 2.00 million, while Badoo App and Other paying users fell 15% to 1.18 million.
- Average revenue per paying user was $23.03 overall, versus $21.55; Bumble App ARPPU decreased 2% to $28.90 and Badoo App and Other ARPPU decreased 1% to $13.06.
- Cost of revenue was 27.6% of revenue, implying a 72.4% gross margin; operating margin was negative 11.4%. Adjusted EBITDA margin declined 2.1 percentage points.
- FY2022 net loss included $145.4 million of impairment charges, including a $141.0 million impairment of the Badoo brand. FY2021 net income included a $441.5 million deferred-tax benefit related to international restructuring, making the year-over-year net-income comparison unusual.
- Cash and cash equivalents were $402.6 million at year-end, including $4.5 million of restricted cash reported separately. Total current assets were $501.4 million and current liabilities were $211.7 million.
- Debt principal outstanding was $632.8 million ($625.0 million carrying value, net of issuance costs), primarily term loans due January 2027. The company reported compliance with debt covenants. Its $50 million revolving facility was available subject to facility terms; the filing does not state an amount drawn.
Material changes and unusual items
- Bumble App growth was partly offset by weaker Badoo results. The company attributed Badoo paying-user and revenue declines partly to removing its apps from Russia and Belarus app stores in March 2022, as well as ongoing pandemic and macroeconomic effects.
- Cost of revenue increased partly because of Google Play billing requirements in more markets. Management noted that these requirements could weigh on revenue, margins and paying users, particularly in markets with lower-value subscriptions and more Android users.
- General and administrative expense included the Badoo brand impairment and a $4.4 million impairment of the Moscow office right-of-use asset. The Russia exit generated approximately $5.9 million of restructuring charges; a lease termination also produced a $2.2 million gain.
- Interest expense was $24.1 million. Variable-rate debt creates exposure to higher borrowing costs; $350 million of debt was covered by interest-rate swaps through June 2024.
- Cash flow from operations increased to $132.9 million and free cash flow to $116.6 million. The company cautions that free cash flow is non-GAAP and does not represent cash available after debt principal payments or other contractual commitments.
Outlook, risks and contingencies
- No specific revenue or earnings guidance is provided in the filing. Management expects macroeconomic conditions to continue adversely affecting Badoo paying users in 2023 and said U.S. dollar strength may continue to pressure revenue and earnings.
- Management expects continued investment in technology, marketing, product innovation, personalization, and trust and safety, while aiming to improve margins over the long term. Results are subject to seasonal patterns, including stronger user activity generally in the first and third quarters.
- Key risks include user retention and conversion, intense competition and low switching costs, app-store distribution and payment policies, privacy and data-protection regulation, cybersecurity, foreign exchange, consumer spending, and substantial indebtedness with variable interest rates.
- Russia-related exit costs and lost users, and potential disruption in the broader region, remain risks. The company reported Russia, Belarus and Ukraine revenue combined at approximately 0.8% of FY2022 revenue.
- The company recorded a $20.5 million provision for probable litigation obligations, including an estimated probable loss related to a securities class action concerning the September 2021 secondary offering. It cannot estimate potential liability in four Illinois biometric-information cases and cannot predict the outcome of the securities matters; it has also received an SEC inquiry related to the offering disclosures.
- The tax receivable agreement requires payment to certain pre-IPO owners of 85% of specified realized or deemed tax benefits. The recorded liability was $394.3 million; estimated future payments related to the offering transactions were $672.8 million if sufficient taxable income allows realization of the benefits. These estimates are uncertain and payments may affect liquidity.
- Prior-period financial information was revised for immaterial errors involving debt issuance costs and third-party aggregator refunds. Management and the auditor concluded internal control over financial reporting was effective at year-end; the filing says the identified prior-period control weakness was remediated. The auditor issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Whether Bumble App user and revenue growth can offset continued declines in Badoo paying users, and how Fruitz contributes to growth and profitability.
- Whether the Badoo brand impairment assumptions and future brand performance are consistent with operating trends.
- Cash generation after debt service, future interest-rate exposure, and the company’s ability to meet debt and tax receivable agreement obligations.
- Developments in the secondary-offering securities litigation, Illinois biometric cases, and related SEC inquiry, including any changes to the $20.5 million provision.
- Effects of app-store billing policies, foreign exchange, consumer spending and privacy regulation on paying-user conversion, margins and 2023 results.