Bumble(BMBL) - 2023 Q3 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents Bumble Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and comprehensive notes on key accounting areas Condensed Consolidated Balance Sheet Data (as of September 30, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Total Assets | $3,733,193 | | Total Liabilities | $1,253,034 | | Total Shareholders' Equity | $2,480,159 | | Cash and cash equivalents | $439,184 | Condensed Consolidated Statements of Operations Data | Metric | Three Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2023 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $275,510 | $778,193 | | Operating Earnings | $30,000 | $60,235 | | Net Earnings | $23,124 | $30,144 | | Net Earnings Attributable to Bumble Inc. Shareholders | $16,671 | $21,813 | Condensed Consolidated Statements of Cash Flows Data (Nine Months Ended Sep 30, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Net cash provided by operating activities | $118,669 | | Net cash used in investing activities | $(22,589) | | Net cash used in financing activities | $(58,355) | Note 2 - Revenue Recognition This note details the company's revenue recognition policies, primarily for recurring subscriptions and in-app purchases - Revenue is primarily from recurring subscriptions and in-app purchases, recognized straight-line over subscription periods or based on usage[38] Revenue by App (in thousands) | App | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Bumble App | $221,785 | $180,641 | $624,039 | $503,482 | | Badoo App and Other | $53,725 | $51,998 | $154,154 | $158,393 | | Total Revenue | $275,510 | $232,639 | $778,193 | $661,875 | Note 6 - Goodwill and Intangible Assets This note provides details on the company's goodwill and intangible assets, including changes due to acquisitions and asset composition - Goodwill increased by $4.6 million in 2023 to $1.58 billion as of September 30, 2023, primarily due to the Newel Corporation acquisition[98][75] - Net intangible assets totaled $1.50 billion as of September 30, 2023, with indefinite-lived brands like Bumble and Badoo comprising $1.37 billion[76] Note 9 - Debt This note outlines the company's debt structure and recent amendments to its credit agreement - Total long-term debt, net of current portion and unamortized costs, was $616.2 million as of September 30, 2023[130] - The company amended its credit agreement in March 2023, transitioning the benchmark interest rate from LIBOR to SOFR[82] Note 11 - Stock-based Compensation This note details the company's stock-based compensation expenses and unrecognized compensation costs Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Cost of revenue | $542 | $2,800 | | Selling and marketing | $2,469 | $7,191 | | General and administrative | $10,352 | $44,029 | | Product development | $8,165 | $29,640 | | Total | $21,528 | $83,660 | - Total unrecognized compensation cost for Time-Vesting RSUs was $86.2 million as of September 30, 2023, expected to be recognized over 2.9 years[121] Note 14 - Commitments and Contingencies This note describes the company's significant commitments and contingencies, including legal settlements and ongoing arbitration demands - The company reached an $18 million settlement in March 2023 for a class action lawsuit related to its September 2021 secondary public offering[177] - Over 15,000 individual arbitration demands regarding the "women message first" feature led to settlement offers after mediation, with $14.0 million in related costs recorded in Q3 2023[178] Management's Discussion and Analysis (MD&A) Management discusses the company's financial performance, highlighting 18.4% YoY revenue growth in Q3 2023 to $275.5 million, driven by Bumble App user growth, and noting increased G&A expenses Key Operating and Financial Metrics This section presents key operating metrics, including total paying users and average revenue per paying user (ARPPU) for Bumble and Badoo apps Key Operating Metrics | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Total Paying Users (in thousands) | 3,820.5 | 3,290.3 | | - Bumble App Paying Users | 2,604.9 | 2,088.1 | | - Badoo App and Other Paying Users | 1,215.6 | 1,202.2 | | Total ARPPU | $23.42 | $22.96 | | - Bumble App ARPPU | $28.38 | $28.84 | | - Badoo App and Other ARPPU | $12.79 | $12.75 | Results of Operations This section provides a detailed analysis of the company's revenue and expense trends, highlighting key drivers and significant changes - Q3 2023 Bumble App revenue grew 22.8% YoY to $221.8 million, driven by a 24.7% increase in paying users, despite a 1.6% decline in ARPPU[229] - Q3 2023 Badoo App and Other revenue increased 3.3% YoY to $53.7 million, driven by modest increases in paying users and ARPPU[230] - General and administrative expense for Q3 2023 rose 78.2% YoY to $48.6 million, primarily due to a smaller gain from contingent earn-out liabilities and a $15.2 million increase in legal fees[210][260] - Depreciation and amortization expense decreased 13.3% YoY in Q3 2023, primarily due to the full amortization of the legacy Badoo user base intangible asset[235] Non-GAAP Financial Measures This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow, to their most comparable GAAP measures Reconciliation of Net Earnings to Adjusted EBITDA (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings (loss) | $23,124 | $26,405 | $30,144 | $45,122 | | Adjusted EBITDA | $75,281 | $61,837 | $201,862 | $166,421 | | Net Earnings Margin | 8.4% | 11.4% | 3.9% | 6.8% | | Adjusted EBITDA Margin | 27.3% | 26.6% | 25.9% | 25.1% | Reconciliation of Net Cash from Operating Activities to Free Cash Flow (in thousands) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $118,669 | $81,769 | | Less: Capital expenditures | $(12,769) | $(11,311) | | Free cash flow | $105,900 | $70,458 | Liquidity and Capital Resources This section discusses the company's cash position, primary liquidity sources, and share repurchase program - As of September 30, 2023, the company had $439.2 million in cash and cash equivalents, with liquidity primarily from cash on hand and operations[268] - The Board approved a share repurchase program, initially $150.0 million and later increased to $300.0 million, with 1.3 million shares repurchased for $20.9 million during the nine months ended September 30, 2023[268] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency fluctuations and interest rate changes, with 43.8% of Q3 2023 revenue from outside North America, mitigated by interest rate swaps - Revenue from outside North America accounted for 43.8% of combined revenue in Q3 2023, an increase from 39.0% in Q3 2022, with a hypothetical 10% change in British Pound and Euro impacting revenue by $6.1 million for the first nine months of 2023[1] - The company mitigates interest rate risk on its variable-rate debt through two interest rate swaps with a total notional amount of $350 million, effectively fixing the variable rate element on that portion of the debt[276] Controls and Procedures Management evaluated disclosure controls and procedures as effective, with no material changes to internal control over financial reporting during the quarter - There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[3] Part II. Other Information Legal Proceedings The company is involved in various legal proceedings, including class action lawsuits, a settled secondary public offering case, and mass arbitration demands related to product features - The company is subject to various legal proceedings, including claims related to general commercial matters, product liability, intellectual property, and employment, with specific trademark proceedings ongoing for the BUMBLE, BADOO, and FRUITZ marks[4] Issuer Purchases of Equity Securities The Board authorized a share repurchase program, initially $150.0 million and later increased to $300.0 million, with $129.1 million remaining available as of September 30, 2023 - The Board of Directors approved a share repurchase program of up to $150.0 million in May 2023, which was increased to $300.0 million on November 7, 2023[254] Issuer Purchases of Equity Securities (Three Months Ended Sep 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | July 2023 | 0 | N/A | $129,110,016 | | August 2023 | 0 | N/A | $129,110,016 | | September 2023 | 0 | N/A | $129,110,016 | | Total | 0 | N/A | $129,110,016 | Exhibits This section lists all exhibits filed with the quarterly report, including certifications from the Principal Executive and Financial Officers - The report includes various exhibits, such as certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[256][289]