Bumble Catalysts Show Efficiency Gains, But Analyst Flags Growth Risks

Core Viewpoint - Bumble Inc. has shown improved operational efficiency leading to better-than-expected earnings, but faces challenges in user growth and revenue from its app [1][6]. Financial Performance - Bumble reported Q3 revenue of $273.6 million, slightly above analyst expectations of $271.7 million [1] - Adjusted EBITDA was $82.6 million, exceeding projections of $78.8 million, with an adjusted EBITDA margin of 30%, up 290 basis points year-over-year [1][2] - The Bumble app's revenue declined by 1% year-over-year, and Average Revenue Per Paying User (ARPPU) decreased by 10% to $25.58 [1] User Metrics - Badoo, a competitor, saw a 14% year-over-year increase in paying users, with net new users reaching 65,000, significantly above the expected 17,000 [2] - Bumble's guidance for Q4 revenue is set at $259 million, with EBITDA at $72 million, slightly below the Street's expectation of $74 million [3] Stock Buyback and Future Guidance - Bumble repurchased $90 million of its stock during the quarter and an additional $30 million in October, totaling about 140% of free cash flow [3] - The company reaffirmed its fiscal 2024 revenue outlook at $1.069 billion, indicating a 1.6% year-over-year growth [3] Management Insights - Bumble anticipates at least a 200-basis-point improvement in annual EBITDA growth, with plans for new app features and a broader product roadmap for fiscal 2025 [4] - Analyst Curtis Nagle adjusted revenue projections for Q4 to $261 million and for 2024 to $1.071 billion, reflecting a 2% year-over-year increase [5] Market Position and Valuation - Nagle raised the price target for Bumble to $5.75, applying a 4.3 times 2025 EV/EBITDA multiple, which remains at a discount compared to peers [6] - Despite higher margins, concerns about slower user growth trends and high private equity ownership justify the discount [7]