Bumble Inc. (NASDAQ: BMBL) has reported weaker-than-expected results for the fourth quarter of 2021. Its reported loss per share was worse than the Street consensus of breakeven earnings ($0.00 per share). Revenues also lagged the consensus estimate by 0.7%.
Despite the disappointing results, shares of Bumble increased 19.6% in the extended trading session on Tuesday, closing at $19.92. Solid year-over-year growth in revenues, total paying users, and average revenue per paying user (ARPPU), along with impressive projections for 2022, seem to have lifted investors’ sentiments.
Bumble provides an online dating platform, via applications and websites, for a wide customer base in Europe, North America, and other countries worldwide. Its popular apps include Badoo, Fruitz, and Bumble. It is headquartered in Austin, TX.
Quarterly Highlights
Bumble’s loss in the reported quarter increased to $0.08 per share from a loss of $0.01 per share in the year-ago quarter. The impacts of higher revenues in the quarter were more than offset by an increase in costs and expenses.
The company’s revenues stood at $208.2 million, below the consensus estimate of $209.6 million. However, the top line increased 25.7% from the year-ago quarter on the back of a 42.2% increase in Bumble App revenues, partially offset by a decline of 3.5% in Badoo App and other revenue.
Total paying users during the quarter stood at 3 million, up 10.6% from 2.7 million in the year-ago quarter. Total ARPPU increased to $22.83 from the year-ago figure of $20.02.
Total operating costs and expenses grew 14.2% year-over-year to $212.8 million. This cost head included the impact of a 22.7% increase in the cost of revenue in the quarter. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) were $54.8 million, up 24.1% year-over-year, and the adjusted EBITDA margin was at 26.3%.
Annual Highlights
In 2021, Bumble’s earnings were $1.48 per share. Revenues at $765.7 million reflected an increase of 31.5% from the previous year.
Exiting the fourth quarter, Bumble had cash and cash equivalents of $369.2 million, up 188.4% year-over-year. Long-term debt, net of current portions, stood at $620.4 million, down 24.4% from the year-ago quarter.
In 2021, the company’s net cash flow from operating activities was $104.8 million and capital expenditure was $13.7 million. Free cash flow in the year was $91.2 million.
Official Comment
The company’s Founder and CEO, Whitney Wolfe Herd, said, “We are pleased to deliver another quarter of strong revenue and adjusted EBITDA growth and are excited to add Fruitz to our family of global, market-leading apps.”
Also, Bumble’s CFO, Anu Subramanian, said, “We expect Bumble App to have another strong year in 2022 and grow revenue 34% to 36% year over year, driven by continued international expansion and product innovation.”
Impacts of Ukraine-Russia Conflict
As a result of the ongoing conflict, Bumble has discontinued its Russian operations. It has removed its apps from Google Play Store and Apple App Store in Belarus and Russia.
The company communicated that it sourced 2.8% of its 2021 revenues from operations in Belarus, Russia, and Ukraine. The majority of these sales are part of the Badoo App and other revenue.
A loss in revenues to the tune of $2 million in the first quarter and $20 million in 2022 is expected from the discontinued operations in Belarus, Russia, and Ukraine.
Projections for Q1 and 2022
For the first quarter of 2022, Bumble anticipates revenues to be $207-$210 million and adjusted EBITDA to be within the $47-$49 million range.
For 2022, the company anticipates revenues to be within the $934-$944 million range. Bumble App revenues are predicted to grow 34%-36% year-over-year. Forex woes are likely to hurt revenues by $20 million. The adjusted EBITDA margin is expected to be 26.5%-27% in the year.
Capital Deployment
In 2021, Bumble used $1,018 million for the purchase and retirement of shares and $206.4 million to repay term loans. Notably, the company refrained from distributing dividends in 2021, compared with $360 million in 2020.
Wall Street’s Take
Recently, an analyst at Jefferies, Brent Thill, reiterated a Buy rating on Bumble with the price target set at $36 (116.09% upside potential).
The Street is cautiously optimistic on Bumble and has a Moderate Buy consensus rating based on 6 Buys and 4 Holds. The average Bumble price target is $43.70, suggesting 162.3% upside potential from current levels. Over the past year, shares of Bumble have lost 73.7%.
Risk Analysis
According to the TipRanks Risk Factors tool, Bumble is at risk mainly from two factors: Finance & Corporate, and Tech & Innovation. While the Finance & Corporate risk category contributes 23 risks to the total 60 risks identified for the stock, Tech & Innovation accounts for 10 risks.
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