There’s a lot more in the works from a product perspective that is to come as we look at the rest of the year. What’s also important to note is that these product moments will also be accompanied by strong brand moments that will allow us to keep Bumble top of mind for our users, and that is built into our marketing road map for the rest of the year as well. So there’s a lot of work and enthusiasm around what is to come, that is giving us a lot of confidence about the reacceleration of trends in the second half of the year. And as you can imagine, there is a lot of work that we are doing around testing these new product features and the learnings from those are also incorporated into how we are thinking about where we are guiding to. So all in, I think I would classify this as things are progressing exactly how we want them to be.
And we are feeling excited about the momentum that this creates for us. The one thing I would call out, which I said in my prepared remarks, is that we are seeing FX trends be more unfavorable since we last guided in Feb. So we could see at least 50 basis points of headwind if current rates continue. So we just wanted to make sure we call that out as well as we thought about revenue for the rest of the year.
Nathan Feather: Okay. Great. That’s really helpful. And then one more, if I may. Thinking about the share buyback in the quarter, I guess, can you give any more color on your high-level buyback strategy and any cadence that investors should think of as we move through the year and next year?
Anuradha Subramanian: Sure. So I’ll maybe expand a little bit and just talk more broadly about our capital allocation strategy. And just to remind everyone, and we’ve said this consistently in the past, we feel fortunate to be in the position that we are in with a very strong balance sheet. We have a lot of free cash flow that we generate every quarter, and we have a strong cash position. So that gives us certainly options in terms of how we think about capital allocation. First and foremost, for us, investing in our business is the most important thing for us. And we want to invest in top line revenue growth. We want to invest in product capabilities and we want to invest in our talent. So all of that is the first thing that we are looking to do, and it’s built into the margin assumptions that we have for the company for the year as well.
The second thing that I would highlight as being a priority for us is to look at inorganic growth. We want to use M&A as opportunistically as we can to help accelerate the growth vectors that we have for our business. As we have new product leadership and tech leadership coming into our business, we are setting an even higher bar for what M&A looks like and the goals that we have from an inorganic acquisition, but that’s definitely something that we are taking a look at. And the last thing from a capital allocation perspective that I would point to is obviously our commitment to the buyback program. We certainly believe that investing in ourselves is a very good use of our cash, and that’s certainly what you’ve seen us do. Again, from a buyback perspective, we want to be opportunistic.
So we have several levers at our disposal in terms of how we deploy the authorization that we have in place. And over the course of this past year, you’ve seen us use multiple strategies in terms of directly buying from the market as well as buying directly from Blackstone. We will continue to be opportunistic in terms of thinking about the best ways to deploy our buyback program as well. But again, we are pleased with the options that we have on the table.
Operator: We now turn to John Blackledge with TD Cowen.
John Blackledge: Two questions. On the relaunch, do you expect it to act more of a driver for top of funnel growth and/or for payer conversion as we kind of get through the year? And then on Gen AI, just curious how you’re using it or planning to use it in the apps for Bumble users? And then how you’re using it internally across departments and on the latter, on the internal use, just curious any efficiency gains to call out?
Lidiane Jones: John, you asked a lot of questions, so please remind me if I miss any of them. So let’s start with the relaunch. First and foremost, our #1 job is to help our customers find connections in all of the women’s experience. So we are taking a very customer-led approach to how we’re innovating and how we’re leading sustainable growth to our business. So the metrics that we’ve been closely watching are the engagement metrics that I mentioned earlier. Our customers having healthy meaningful conversations. Yes, we certainly have seen an increase of that. Our customers embracing opening move is that facilitating and enhancing women’s experience. We’ve seen rapid adoption of that and positive feedback from women who is the target audience for this product update.
And certainly, looking at matching — and the increase of matching in the first week has been a very positive sign for us. At a high level, from our business, as you know, our core KPIs remain the same. We look at paying users and ARPPU because we continue to be the best markers of revenue. Underneath all of these major metrics there’s a number of additional metrics that helps us really detail near-term and long-term health and sustainability of our business. So at a high level, there’s 3 major categories that we look at. Top of funnel, as you mentioned. So we certainly look at registration. That really gives us quite immediate signal at the health of our launch and marketing campaign. The second is the engagement, which I just mentioned. For this release, they’ve been very clear and a core focus for us because we’re really aiming to gain customer love.
And then third is the conversion to payers, which really allow us to understand the effectiveness of our product in the long term. Are we effectively building value-add across the subscription tiers? Is our pricing being the right pricing across different markets? So these three major categories that again roll up to paying users and ARPPU allows us to really think about how to prioritize our product and customer efforts as well as our marketing investments to ensure, again, near-term growth and long-term growth. So overall, we feel really good about the start of this release. It certainly is still just a week in, but it is, as Anu mentioned, just as we expected. Now moving on to generative AI. I mentioned a few categories. I’m certainly excited about not only the infrastructure, the talent, the data and now the senior leadership that we have across our product and technology teams that really allow us to look at generative AI strategically.
Now we really believe that our job is not to build AI for the sake of AI. Our job is to help our customers be successful in their journey to find connections. And what I really believe with generative AI is that for experiences like the one I mentioned earlier, profile creation that we can make it easier and simpler for customers to build beautiful profiles by giving us easier signals that have less friction for them. And with those signals, we can use standard AI models, but also generative AI and conversational experiences and data and photo analytics that generative AI has become so good at to build profile creation and evolve that profile as we get more signal in that dating experience. Now when I look at the value that we bring to our customers, we have really optimized for matching over the course of the last several years.
And our job, as we look at generative AI is to build a premium dating service level of experience where we are really taking a closer approach to supporting our entire dating journey. So even as we get more signals for our customers once they go in a day, we can again, automatically augment their profile creation without them having to go back. So there’s — just a tremendous. This was just a tiny bit of an example of something that we’re looking at, but we believe there is very transformative experiences that we can lean on because there is a technology. So I’m certainly very excited and optimistic. I think you have one final question, but maybe — no, I think that was it. I think I covered John, your questions, but please let me know if I missed any.
Operator: Let me now turn to Jian Li with Evercore ISI.
Jian Li: So first, I have a follow-up on the M&A opportunities that Anu you mentioned. Can you just talk through your criteria in pursuing inorganic opportunity? Is there any demographic, geography or use cases that you think are better fitted for inorganic growth? I guess one thing that comes to mind for me is just some beyond dating use cases that you already have a couple in your portfolio.
Lidiane Jones: Yes. Thank you for that question. I’ll start as a technologist at heart, I will tell you that our very principled approach that Anu mentioned earlier around M&A is that we can deliver seamless experiences for our customers. So we certainly look not only at the business opportunity that an M&A opportunity may bring, but we look at how do we integrate that technology into our portfolio so that we can create value across our customers’ lives. So we look at the value add of the innovation just as much as we look at the business. So that is a more principled approach to how we’re looking at technology innovation. There is certainly a lot of interesting technology companies across the industry that we’re constantly looking at, but our goal is that we immediately look at does it actually align and accelerate with our long-term mission here.
And so certainly, as Anu mentioned, it is something that we look at regularly. And because of our strong financial stance, we are able to use that as a leverage to accelerate growth as we identify any opportunities in the market. So certainly something that we will continue to consider and we’ll keep you posted as we get further.
Operator: Our next question comes from Benjamin Black with Deutsche Bank.
Benjamin Black: I’d be curious to hear the strategy of offering women more options around who makes the move, how that’s impacted, a, the interaction you’re seeing on the app. But b, perhaps has it had a bigger impact on women or on men and maybe has it also sort of change your brand perception in any noticeable way? And then Anu, can you just help us think through the balance of the year in terms of Bumble App payer net addition trends? Should the relaunch have any sort of impact on typical seasonal trends?
Lidiane Jones: Yes, I’ll get started, and then I’ll pass it on to Anu. I’ll be super clear that at Bumble, women still make the first move. What we have introduced is added control in how they make that first move. Now women will still decide who they want to match with and then they can decide if they want to initiate the conversation or if they are open to the person that they’re matching to that will answer a question that they — the woman will set. So what we have seen, we certainly are, again, optimizing for women’s experience here because women have told us they want more control in how to initiate that conversation. And the target audience here who are the women have responded incredibly positively to this expansion of making the first move.
So that’s been a really positive sign. But this has also been beneficial for men. And that’s the great thing is that our belief when we build great experiences for women, we’re elevating the experience across our entire ecosystem. So what that has meant is that men now can also answer questions as a starting conversation. And that has led to a higher degree of conversation starting that has more interesting I would start than a hey. And so we are really allowing more engaged and healthy discussions, which, as I mentioned earlier, is leading to more matches. So fundamentally, this is an evolution of making the first move that have shown a really positive early signs. As Anil mentioned, we are customer obsessed here. So as we continue to gather more adoption and feedback, we will continue to fine-tune, introduce capabilities as our customers guide us.
But so far, it’s been a really positive start and just the elevation of our company’s commitment to women’s experience.
Anuradha Subramanian: And Ben, just on your question about net adds for Bumble App. For Q2, as you just try to say, we are guiding to between 70,000 and 80,000. Q3 as you know, is seasonally a strong quarter for us, as always, and we should also see the benefits of some of the work that we’re doing with the relaunch come into place. So you will definitely see a step-up in Q3 compared to Q2, and then Q4 should also be strong. But again, from a seasonal perspective, you should expect Q4 will be lower than where Q3 will be, and that should get you to the full year guide that we are reiterating for net adds.
Operator: Our next question comes from Curtis Nagle with Bank of America Merrill Lynch.
Curtis Nagle: That one on the net adds was one of them. So I think I’m all good there. But Anu, just quick modeling question in terms of the SBC expectations for the year. I know there are a lot of moving pieces for the first quarter and net it out to something like 0, but how should we think about that for the remainder of the year? Should it be kind of in the high 20s, 30s, yes, what’s the framework there?
Anuradha Subramanian: Yes. So as you know, in Q1, we had a — to your point, we had a pretty unusual quarter in terms of stock-based comp. The biggest driver of that was in addition to the workforce transformation, which obviously resulted in a reduction. We also had other employee terminations that led to almost a critical stock-based comp number for the quarter. We are in the process of finalizing our workforce transformation. So we will be able to give you better visibility into what the stock-based comp trajectory looks like going forward once we get past the work that we’re doing from a headcount perspective. But for the full year, you should definitely expect that our overall stock-based comp levels will be lower than what you’ve seen historically.
