Bumble Inc. shares plunged after the dating company sharply slashed its revenue forecast for the year, suggesting that the overhaul of the brand’s flagship app was not enough to revive slowing growth.
Annual sales will increase by 1 to 2 percent compared to the previous year. The company had previously forecast growth of between 8 and 11 percent. According to Bloomberg estimates, Wall Street had expected growth of 8.4 percent.
“We are adjusting our guidance today to reflect the actions we are taking to position Bumble to restart user growth, deliver improved customer value and drive long-term revenue growth,” Bumble said in a statement Wednesday. “We believe our strong balance sheet and cash flow generation give us the flexibility we need to return capital to shareholders while creating lasting value.”
Following the news, the share price fell by as much as 32% in extended trading.
Bumble, which went public in 2021, hit a record low in February after it announced a weaker-than-expected revenue outlook and cut about a third of its workforce. The company’s struggle to grow its user base is emblematic of a broader trend in the U.S. online dating industry, which has yet to recover from the post-pandemic reckoning. But shares of Match Group Inc., which owns Bumble’s biggest rival Tinder, rose the most in nearly two years after the company reported better-than-expected quarterly results last week.
Bumble’s forecast for the third quarter and second quarter results also fell far short of expectations. Bumble expects revenue of $269 million to $275 million for the current period, which is below the $296.1 million forecast by analysts. Adjusted earnings before interest, taxes, depreciation and amortization will be between $77 million and $80 million, the company said. Wall Street had expected $91.5 million.
Revenue for the period ended June 30 rose 3.4% to $268.6 million, below the average analyst estimate of $273.2 million. Bumble’s paid user count – a key metric for investors – rose 14.7% to 2.8 million, in line with Wall Street estimates.
The Austin, Texas-based company has been undergoing an internal leadership transition since founder Whitney Wolfe Herd announced in November that she would step down as CEO. Bumble has since appointed four new executives tasked with revamping the company’s mobile app to make it more appealing to younger users.
The app’s redesign apparently wasn’t enough to appeal to younger users or overcome macroeconomic conditions, said Chandler Willison, a research analyst at data analytics firm M Science.
“I think Bumble is experiencing some of the slowing growth that we’ve seen with Tinder as these companies grow and face increasingly difficult year-over-year comparisons and potentially face some level of saturation,” he added.
Increasing the number of paying users was key to Bumble’s growth strategy, but progress has slowed since late 2021. The app’s more expensive “Premium Plus” subscription was introduced in December but did not deliver the “incremental upside” the company had expected, executives said in February.
