Anuradha Subramanian: Before I touch on macro, I wanted to follow up on Lidiane’s comments about Badoo because we didn’t talk about it in the context of guidance. We’ve been very pleased with Badoo’s performance. As we’ve said, it’s performing well. It has stable growth. And in many of its top markets, we’re seeing strong growth across several metrics. So, we’ve not made any overall changes to our assumptions from when we had last provided our guidance to now in terms of how Badoo and other performed. So, we continue to be very pleased about it. As you’ve seen from a net adds perspective as well, Badoo is starting to turn positive. And all throughout this year, we expect to see Badoo being flat to positive in terms of net adds every quarter.
So, again, very pleased with the performance there. In terms of how we’ve thought about macro in our guidance. As I’ve mentioned earlier, we are seeing some slowness in our top-of-the-funnel trends in primarily the US, where obviously the macro impact is probably more pronounced. We are seeing it, as we’ve said before, with our younger customers as well. So, we do think that there is an element of macro playing into some of the softness that we are seeing. So, we’ve made assumptions around how we think it progresses through the rest of the year in terms of what we are seeing today. And then the goal is that, when the product relaunch happens in the second half of the year, the product starts to really resonate with our customers, and we are able to turn the dial up in terms of payer penetration and ARPPU and ultimately revenue because, to Lidiane’s point, the core job to be done from Bumble App’s perspective is in making sure that we give the customers the best possible experience.
And that’s what we are heavily focused on and that what you’ll see us talk about all through this year.
Operator: We now turn to Benjamin Black with Deutsche Bank.
Benjamin Black: Great. Thank you for taking my questions. First, Lidiane, a bigger picture question for you on just the online dating market in general. There’s obviously concerns approaching maturity, even saturation. So, when you were contemplating taking on the role of CEO at Bumble, what did you see specifically that gave you confidence that the end market growth is still very attractive? Perhaps one for Anu too. It would be just great to hear sort of a capital allocation policy update, just given the broader changes in leadership here. Are you potentially open to taking a little bit more leverage to sort of fund some of your initiatives? I’d be curious to hear about that.
Lidiane Jones: Certainly, I had read a lot of reports about the category as I was considering the role. But I find if you look at the data yourselves as well that it’s an interesting disconnect. The demand for connection and love continues to be really strong, 2 billion single people around the globe. Yet the products that are bearing the set of experiences to create those connections are not serving users the way that they want to. That actual disconnect was what got most excited about taking this job, especially here at Bumble where I felt so compelled to the mission and the fundamentals of the company, the brand and the financial strength are so positive. I believe when Apple launched the iPhone, people are also talking about why it was someone entering a mature smartphone category.
It is innovation and detail to the polished experience of our users that drive change. So, I’m excited to bring a fresh perspective to the category. But, certainly, we’re focused on our customers and our company, and we believe we can really meet the needs of the users that are currently there. The demand is there. We just have to meet it. So, truly excited about being here.
Anuradha Subramanian: Ben, just quickly on capital allocation opportunity. Obviously, Lidiane and I’ve been spending a lot of time since she started reviewing our capital allocation policy. At a high level, the themes that we have given you all in the past are still very much the themes that we are focused on, which is, number one, focusing on the organic growth of our business. We continue to be opportunistic in terms of thinking about M&A. Again, the bar for M&A is very high for us. And lastly, our commitment to returning cash back to shareholders continues to be very high, as you’ve seen. We did the transaction in Q4, where we bought shares directly from Blackstone, and we’ve continued to buy into 2024 as well. So, our commitment around returning cash continues to be high.
Obviously, we are continuing to see where the markets are in terms of interest rates. We have the benefit of being fully accretive from a cash perspective, and we feel like we have a very strong balance sheet. So, we are reviewing all the options, and we’ll provide more updates as we go through the year.
Operator: Our next question comes from Ken Gawrelski with Wells Fargo.
Ken Gawrelski: First, maybe for Lidiane. When you talk about applying AI and the opportunities there, could you just, bigger picture, give us a sense of the capabilities that you have inhouse, what you need to build versus potentially partner? How are you going to accomplish what you’re setting out to do? Maybe the second one, a little bit more tactically is, when you talk about the softness in 1Q, Match, your competitor, has indicated a step-up in Tinder marketing. Are you seeing any impact from additional Tinder marketing in 1Q on the top of funnel, especially in the US?
Lidiane Jones: Let’s start with the first question related to AI. As I mentioned earlier, this is the most exciting part of untapped potential for us, is that we have an immense amount of data related to users’ preferences, behaviors, what drives positive success for our customers. So, just a tremendous, tremendous amount of insight inhouse, which has been amazing to see. Separately, AI hasn’t been new to Bumble. Bumble has been innovating in AI for a really long time. It launched a lot of capabilities in photo and detection of fake accounts that we recently launched and there’s so much more. So, we have an amazing foundation of AI and ML capabilities that exist today that we can already lean on as well. So, what we want to do is not only lean on the set of data and capabilities that we have, but we can also partner, and we have been in early pilots with several large language model vendors to really advance what we believe will help users through this augmented co-chain set of experiences.
And so, we think there is just a tremendous amount of near-term opportunities with partners in the space. Now, with a longer-term vision, we believe there is – because of our safety principles, we will be continuing to innovate in AI for a long time. I think there’s a lot of unique value to creating a set of principles that should lead to healthy and equitable relationships in relationships and communities and so forth. So, you will see a lot of innovation from us there. Now, in terms of competitive pressure, we have been in a competitive environment always. That’s always been the case. Our focus is to really prioritize our customers. I think strong companies are the ones that focus on customers, first and foremost. So, our focus right now is investing in our marketing, our product, and our overall set of customer experiences across our key markets to meet what is differentiated for Bumble, again, which is women’s experience, safety, and so forth.
So, we certainly feel that it’s fully in our control to help our customers meet our experiences.
Operator: We now turn to Curtis Nagle with Bank of America.
Curtis Nagle: First one, just wanted to quickly go back to Premium+. I understand the point of, I guess, not being enough differentiation to justify the tier to a broad enough audience. Lidiane, what are you like envisioning adding to this tier to make it, I guess, more appealing? Just a quick follow-up for Anu. Just what drove the ARPPU weakness? Was that mostly a mix shift in brand or anything else going on?
Lidiane Jones: Let me start with our Premium+. There’s two dynamics with higher-end tiers that are very interesting for us. The first is users want more of everything on limited capabilities when they take a higher-end tier. So, that’s certainly dynamics that we’re really looking at, what drives the most important set of customer experiences, is that’s number of swipes, super swipes, highlights. So, we really want to expand the set of capabilities that gives customers that confidence that they’re getting the best possible set of services from us. The second piece is differentiated experiences. And we believe there are some opportunities for us with AI insights about what might drive higher success for users. We know a lot of our users want to have more information about what’s resonating with people that are seeing their profile.
So, that’s one category of investments that we’re looking at, higher differentiation for Premium+. We’re going to be looking at these two streams to ensure that we’re creating – not only there’s great value across the entire app, but certainly differentiated set of capabilities as well.
Anuradha Subramanian: On the ARPPU question, like I said in my prepared remarks, it’s largely a function of mix shift between different geographies that is leading to overall ARPPU being negative. But like I said, in an individual market, we continue to be focused on increasing ARPPU, we continue to be doing pricing optimization work. And as we see higher attach rates for existing users from additional offerings like consumables, you also see ARPPU go up. So, that’s really what you’re seeing reflected in the overall ARPPU for Bumble App.
Operator: Our final question today comes from Chris Kuntarich with UBS.
Chris Kuntarich: Just on the reinvestment, the $15 million of the $55 million restructuring savings, can you just talk a bit about what you would need to see to accelerate the amount that you’re reinvesting in the business?
Lidiane Jones: Let me unpack the – at a high level, we’ve talked about reinvestment from a safety, AI data, but let me tell you more specifically what we’re going to do there. Our goal is to higher end – as Anu said, from a capital allocation, you want to really focus on organic growth in the near term, but we’re going to be flexible in terms of evaluating talent or technology assets that will accelerate our vision from a dating and AI perspective. So, we want to really invest on AI innovation. As I mentioned earlier, there are some pilots that we have already started to ensure that we really learn what makes the AI humanly exciting for users. We want to invest in AI to help our users be more human and better themselves.
We are now building AI for the sake of AI here. So, our investments and our pilots are very much about fine-tuning that. So, if there is the ability to actually hire some resources to accelerate that, we certainly will consider that. But to Anu’s point, we want to be super methodical and have a high bar because customer experience is going to be the paramount principle behind any evaluation like that. The second piece of reinvestment that I mentioned is accelerating the ability of helping our customers gain value for more than just one of our offerings. So, we are focused on building a user platform that’s going to allow us to provide more recommendations for what else might be interesting for users to get from Bumble. So, if you are on a Bumble date and you go on a date, we may recommend for you to try Official, and you are going to carry that experience for you seamlessly.
And as we expand into – as we focus on Bubble For Friends, that allows us to really bring our customer base seamlessly to Bumble For Friends. So, we’re really excited about this set of reinvestment. That means hiring great talented people that have a lot of AI, data, and safety experience to our teams, and certainly, we’ll do that in the fastest possible way.
Operator: Ladies and gentlemen, this concludes our Q&A and today’s Bumble fourth quarter 2023 financial results conference call. We’d like to thank you for your participation. You may now disconnect your lines.
