Bumble(BMBL) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Bumble Inc.'s unaudited condensed consolidated financial statements, highlighting $259.7 million in quarterly revenue, $9.3 million net income, and $3.69 billion in total assets Condensed Consolidated Balance Sheets The balance sheet details $3.69 billion in total assets, $1.25 billion in liabilities, and $2.45 billion in shareholders' equity as of June 30, 2023 Condensed Consolidated Balance Sheet Data (in thousands of USD) | Balance Sheet Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $3,692,297 | $3,692,621 | | Cash and cash equivalents | $381,019 | $402,559 | | Goodwill | $1,585,281 | $1,579,770 | | Intangible assets, net | $1,508,036 | $1,524,428 | | Total Liabilities | $1,245,965 | $1,239,042 | | Long-term debt, net | $617,189 | $619,223 | | Payable to related parties (TRA) | $416,754 | $385,486 | | Total Shareholders' Equity | $2,446,332 | $2,453,579 | Condensed Consolidated Statements of Operations Q2 2023 saw total revenue of $259.7 million, a net income of $9.3 million, and diluted EPS of $0.05, reversing a prior-year loss Statement of Operations Highlights (in thousands of USD, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total Revenue | $259,735 | $219,206 | | Operating earnings (loss) | $21,171 | $(2,768) | | Net earnings (loss) | $9,349 | $(5,031) | | Diluted earnings (loss) per share | $0.05 | $(0.03) | Six-Month Performance (in thousands of USD, except per share data) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total Revenue | $502,683 | $429,236 | | Operating earnings | $30,235 | $16,251 | | Net earnings | $7,020 | $18,717 | | Diluted earnings per share | $0.04 | $0.10 | Condensed Consolidated Statements of Cash Flows Net cash from operations increased to $56.1 million, while investing cash outflow decreased to $19.1 million, and financing cash outflow rose to $54.7 million Cash Flow Summary (in thousands of USD) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $56,100 | $44,767 | | Net cash used in investing activities | $(19,087) | $(77,769) | | Net cash used in financing activities | $(54,700) | $(9,069) | | Net decrease in cash | $(22,223) | $(34,530) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, $416.8 million TRA liability, $10.0 million Newel acquisition, $629.9 million debt, and significant legal contingencies - Revenue primarily derives from recurring subscriptions and in-app purchases, recognized over the subscription term or estimated twelve-month period for lifetime subscriptions[53][54] - The company acquired Newel Corporation for approximately $10.0 million in cash on April 26, 2023, recognizing $4.7 million in goodwill[65] - A Tax Receivable Agreement (TRA) with pre-IPO owners resulted in a $416.8 million liability as of June 30, 2023[62] - In March 2023, the company settled a shareholder class action lawsuit for $18 million related to its September 2021 SPO, without admitting wrongdoing[122] - Approximately 15,500 arbitration demands were received starting June 2023, alleging Unruh Civil Rights Act violations due to the 'women message first' feature, with mediation agreed upon[122] - The Board approved a $150.0 million share repurchase program in May 2023, with 1.3 million shares repurchased for $20.9 million during the quarter[45] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2023 financial results, highlighting 18.5% revenue growth to $259.7 million, driven by user increases, and an Adjusted EBITDA of $67.3 million Key Operating and Financial Metrics Key metrics show Total Paying Users increased to 3.63 million in Q2 2023, led by Bumble App, despite a slight decline in Total ARPPU to $23.23 Key Operating Metrics (Users in thousands, except ARPPU in USD) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Bumble App Paying Users | 2,457.8 | 1,924.5 | | Badoo App and Other Paying Users | 1,175.5 | 1,096.2 | | Total Paying Users | 3,633.3 | 3,020.7 | | Bumble App ARPPU | $28.21 | $29.18 | | Badoo App and Other ARPPU | $12.83 | $13.56 | | Total ARPPU | $23.23 | $23.51 | Results of Operations Q2 2023 total revenue grew 18.5% to $259.7 million, driven by Bumble App, resulting in $21.2 million operating earnings despite increased costs - Bumble App revenue grew 23.5% year-over-year in Q2 2023 to $208.0 million, driven by a 27.7% increase in paying users[165] - Badoo App and Other revenue increased 2.0% year-over-year in Q2 2023 to $51.8 million, driven by a 7.2% increase in paying users[165] - Cost of revenue increased 24.8% in Q2 2023, primarily due to higher in-app purchase fees and increased content moderation costs[167] - General and administrative expense decreased 11.5% in Q2 2023, mainly due to a $13.6 million favorable change in contingent earn-out liabilities[170] - Depreciation and amortization expense decreased 37.5% in Q2 2023, as the legacy Badoo user base intangible asset was fully amortized in July 2022[170] Non-GAAP Financial Measures Non-GAAP measures show Q2 2023 Adjusted EBITDA at $67.3 million (25.9% margin) and H1 2023 Free Cash Flow at $46.9 million Adjusted EBITDA Reconciliation (in thousands of USD) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net earnings (loss) | $9,349 | $(5,031) | | Adjustments (Interest, Tax, D&A, etc.) | $57,906 | $59,803 | | Adjusted EBITDA | $67,255 | $54,772 | | Net earnings (loss) margin | 3.6% | (2.3)% | | Adjusted EBITDA margin | 25.9% | 25.0% | Free Cash Flow (in thousands of USD) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $56,100 | $44,767 | | Less: Capital expenditures | $(9,210) | $(8,049) | | Free cash flow | $46,890 | $36,718 | Liquidity and Capital Resources The company held $381.0 million in cash, with $20.9 million used for share repurchases and $629.9 million in long-term debt as of June 30, 2023 - The Board approved a $150.0 million share repurchase program, with 1.3 million shares repurchased for $20.9 million in H1 2023[184] - Net cash from operating activities was $56.1 million for H1 2023, driven by net earnings adjusted for non-cash items including $62.1 million in stock-based compensation[186] - A commitment of $12.0 million for third-party cloud services over 18 months has $11.5 million remaining as of June 30, 2023[194] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency and interest rates, with 42.2% of H1 2023 revenue from outside North America and variable-rate debt partially hedged - For H1 2023, 42.2% of revenue was generated outside North America; a 10% currency change would impact revenue by $5.5 million[197][198] - With $622.9 million in debt, a 1% interest rate increase would raise Q2 2023 interest expense by $0.7 million, mitigated by $350 million in interest rate swaps[201] - The company transitioned its benchmark interest rate from LIBOR to SOFR in March 2023, amending interest rate swaps in April 2023[201] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded the company's disclosure controls and procedures were effective as of June 30, 2023[202] - No material changes to internal control over financial reporting were identified during the most recent fiscal quarter[203] PART II. OTHER INFORMATION Legal Proceedings The company faces BIPA class actions, an $18 million settled shareholder lawsuit, and 15,500 arbitration demands regarding its 'women message first' feature - The company faces four putative class action lawsuits in Illinois alleging Biometric Information Privacy Act (BIPA) violations related to facial geometry scans[120] - A shareholder class action lawsuit related to the September 2021 SPO was settled for $18 million in March 2023[122] - Approximately 15,500 individual arbitration demands were received regarding the 'women message first' feature, alleging Unruh Civil Rights Act violations, with mediation agreed upon[122] Risk Factors This section refers to risk factors detailed in the company's 2022 Form 10-K, with no new significant risks disclosed in this report - The report refers to Part I, Item 1A of the company's 2022 Form 10-K for a discussion of risk factors[207] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company repurchased 1,320,372 shares for $20.9 million in Q2 2023 under a $150.0 million program, with $129.1 million remaining Issuer Purchases of Equity Securities (Q2 2023, in USD) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Value Remaining for Repurchase | | :--- | :--- | :--- | :--- | | May 1 - May 31, 2023 | 600,000 | $15.36 | $140,781,240 | | June 1 - June 30, 2023 | 720,372 | $16.20 | $129,110,016 | | Total | 1,320,372 | $15.82 | $129,110,016 | Exhibits This section lists all exhibits filed with the quarterly report, including governance documents, equity award notices, and CEO/CFO certifications - The report includes exhibits such as Restricted Stock Unit Grant Notices, Director Compensation summaries, and CEO/CFO certifications[212]