On February 18, Bumble projected its first-quarter revenue to be below analysts' expectations, indicating that its efforts to accelerate growth are progressing more slowly than anticipated. Consequently, the dating app company witnessed a 16% decline in its shares during after-hours trading.
Facing challenges of dwindling user engagement and decreased customer spending, online dating apps are grappling with stagnant features and the financial strains of persistent inflation.
However, Bumble is increasing its investment in marketing campaigns and AI-powered features to engage a younger demographic. The company plans to introduce new safety features such as ID verification and AI-photo detection in its next update, as CEO Lidiane Jones highlighted during the post-earnings call.
In the short term, Bumble anticipates a decrease of 100,000 to 120,000 paying users as it embarks on this transformative phase. It is streamlining its monetization approach by discontinuing smaller dating platforms like Fruitz and Official.
While Bumble experiences challenges with its multi-app strategy and contends with a saturated market, unlike Match Group, which is leveraging its diverse portfolio for success, as explained by Carbon Arc fundamental analyst Jamie Lumley.
Regarding potential revenue streams, Lumley mentioned that Bumble has discussed leveraging the friends and community feature but has yet to realize this opportunity. This initiative could be a game-changer for the company.
Bumble's average revenue per paying user declined to $20.58 from $22.64 year-over-year, with total paying users for the Bumble app standing at 2.8 million, a decrease of 57,000 from the previous quarter.
Earlier this month, Match Group, a major competitor of Bumble that operates dating apps like Tinder, Hinge, and OkCupid, also projected its first-quarter revenue estimates.
Bumble forecasts a revenue range of $242 million to $248 million for the first quarter, falling short of analysts' average projection of $256.9 million, according to data compiled by LSEG.
The Austin, Texas-based company reported a 4.4% decline in fourth-quarter revenue to $261.6 million.