BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
BMBL earnings call for the period ending September 30, 2024.
Image source: The Motley Fool.
Bumble (BMBL 4.41%)
Q3 2024 Earnings Call
Nov 06, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, and welcome to the Bumble third quarter 2024 financial results conference call. My name is Elliot, and I’ll be coordinating your call today. [Operator instructions] And I hand over to Cherryl Valenzuela, vice president of investor relations. Please go ahead.
Cherryl Valenzuela — Vice President of Investor Relations
Thank you for joining us to discuss Bumble’s third quarter 2024 financial results. With me today are Bumble’s CEO, Lidiane Jones; and CFO, Anu Subramanian. Before we begin, I’d like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us.
Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of factors and risks that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in today’s earnings press release and our periodic filings with the SEC. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation to the most comparable GAAP measures are available in our earnings press release, which is available on the investor relations section of our website at ir.bumble.com. And with that, I’ll turn it over to Lidiane.
Lidiane Jones — Chief Executive Officer
Thank you, Cherryl, and good afternoon, everyone. In the third quarter, we delivered on our key financial objectives and made good progress on our strategy to deliver sustainable growth for the long term. Total revenue and Bumble app revenue came within our Q3 outlook ranges. While our team’s strong operational focus led to adjusted EBITDA for Q3 that exceeded our outlook.
We’re operating with discipline and generating solid cash flow, which has enabled us to repurchase $120 million in stock since we reported in August. Anu will walk you through more details on the quarter in a moment. In 2024, we embarked on a transformation of Bumble. We’ve gone leaner as a team.
We have attracted top talent to our leadership team and throughout the organization. We’re making better data-driven decisions and we’re increasing the velocity of our execution, including in engineering and product development. We continue to execute on these transformation initiatives in Q3, and I’m really proud of our team and the progress that we’re making. The Bumble transformation is foundational to achieving our goal for reimagining Bumble app.
On our last call, we shared our priorities for how we’re realigning Bumble app to drive our customer success by ensuring they find great connections, and ultimately, there forever matches on Bumble. To achieve this goal, we are executing on a vision to build the next generation of online to real-world connection. The plan started with three key initiatives we laid out on our last call, strengthening the core of our ecosystem, driving innovation in customer experience, and enhancing our revenue strategy to ensure we deliver value at every step of our customers’ journey. We’re off to a strong start in Q3.
First, we have rebalanced the mix of our marketing spend to focus on organic strategies in our top-tier states around the world. Effective organic marketing has always been a Bumble differentiator and we’re reigniting that engine. In parallel to the organic efforts, we are optimizing growth marketing investments to higher quality channels that better target the right kinds of users to our ecosystem. Early tests of this effort are showing encouraging user acquisition results in one of our growing European markets.
In just over a month of testing, we have seen a high single-digit incremental increase in women registration on Bumble, which has resulted in a meaningful increase in app net adds per day. This data validates the importance of a healthier ecosystem in driving more matches. We’re expanding our testing into additional markets in Q4, and we’ll continue to gradually expand to larger markets around the world. Our second progress point in the quarter is in further enhancing our policies and safeguards for our customers who value and trust our platform.
We’re providing our customer support and trust team with optimized products and tools to increase their response success rates. I believe we’re making really good progress here, and I’ll give you a couple of examples. We have greatly increased the precision of our routing machine learning models for safety issues found by our users, driving handling time down to well under one minute. We have also achieved a double-digit percent increase in the precision rate for addressing photo moderation issues by enhancing our detection model.
Finally, I’m excited to note that we are piloting a generative AI-based Bumble customer service agent to further improve our effectiveness and accuracy in case of responses. All of these efforts ultimately support customer experience and satisfaction, and we’ll continue to invest to stay at the forefront of trust and safety. Finally, you may have seen that last week, we delivered a fall product update to our Bumble app deemed “date on your term,” which addresses several key customer requests. These include updates to our matching algorithm, which include a new AI model that better predicts matching probability in a new ranking algorithm that helps customers see the most relevant potential matches.
Other improvements included the introduction of new interest filters and expanded tools to enable richer interactions for opening moves, including multiple types of opening moves and image-based move. This will demonstrate our commitment to customer success into operating on a regular product release cadence that continually enhance the experience and ultimately drive engagement. Our initial results give us confidence as we execute on our bigger product vision for Bumblebee. We see this moment as a rare and powerful opportunity for Bumble to shape the future of online dating for the better.
Over the last decade, dating apps have been vital to helping customers around the world find love and connection. In that time, customer preferences and needs have evolved. That means our category needs to change, and we determined for Bumble to lead to this change. We do this by delivering a technology-enabled platform that excels is fostering online to real-world connection, helping people find love, friendship and community in their offline lives.
As a brand that defines the core principles of authenticity, and trust and empowerment for women, we believe we’re the best-positioned company to serve the new generation of customers. To deliver on our vision, we have aligned on an exciting road map, and we’ll be providing more details on our execution plan starting next quarter. I can share today that we have planned for a more expansive winter product release in Q1 that will kick off an ambitious year for our product road map. The release will be focused on authentic connection, and we introduced several new features to enable our customers to more easily find authentic and safe connections, including ID verification across the platform, the ability to share my date with trusted contact to get feedback and gain confidence in their choices.
AI-powered photo selection for easier and more authentic profile creation and a few more surprises that we will share when the release is launched. Looking out beyond Q1, we are establishing a consistent cadence for product releases. In subsequent releases, you would see us take bigger and bolder steps toward delivering dating and connection experiences that are joyful, memorable and successful. Building a healthier ecosystem and delivering innovative customer experiences are necessary building blocks to driving renewed revenue growth and long-term profitability.
While we execute on our ecosystem work and product road map, we will continue to make pricing and payroll optimization to support conversion and revenue. Longer term, we’re focused on achieving the right balance of free users who enrich the ecosystem while better aligning subscription value with customer success. We see significant opportunities to deliver positive incentives that entice more customers to try our paid offerings while removing friction points in our current pay walls. As we make these improvements to our revenue strategy, we’ll clearly communicate the value of our offerings to our customers to drive higher satisfaction, and ultimately, lifetime value.
We’re excited about our path ahead. We’re confident in our direction and our ability to execute. We also know that it will take multiple quarters to achieve our goals as we continue our ecosystem work, roll out our marketing strategies, deliver product innovation and ultimately drive revenue growth. We value the support of our investment community on this journey, and we’re committed to helping you see a measure of progress along the way.
Now let me move to Badoo and our other apps. Badoo’s brand awareness continues to improve since the relaunch earlier this year, and the revenue rearchitecture focused on delivering clear customer value is leading to improved payer conversion. This provides important learnings that we are applying to Bumble app. We’re also modestly rebalancing some of our marketing investments, and we’re optimistic about Badoo’s potential.
Beyond dating, we are actively working on our product road map for friendships and community. I’m delighted to report that Geneva is now live, and we’re gradually increasing awareness and adoption, consistent with our prior stated plans to launch this fall. Geneva, as well as BFF, are important to our overall vision of helping more people connect, including non-romantic relationships. We’ll have more to share on our plans and progress as we move into the next year.
Wrapping up, we’re finishing up 2024 highly confident in our transformation path. 2025 was an important year. We’re executing diligently on our marketing, customer experience and product plans, all of which require investment and necessarily take time to translate into revenue. This is a multi-quarter process, but one we feel is necessary to get right in order to position Bumble for what we believe is an exciting opportunity to reinvigoration of our category.
Our powerful brand and what it stands for, combined with our scale, technical infrastructure, improved cadence of execution in a healthy financial position gives us the robust footing on which to build the next generation of online to real-world connection. When I mention our powerful brand, it’s important to emphasize that we’ll never let up in raising the values of Bumble and remaining highly visible as a positive force for women. We were a very proud sponsor of our new WNBA Champion New York Liberty this season, and we’re excited to see the market increasingly embrace women’s sports. We have also been very humble to partner with an amazing group of people in raising the profile of the important documentary Zurawski v Texas, which brings much needed visibility to women’s healthcare.
A fundamental human right that is critical to so many of our customers. Initiatives like these are why Bumble remain strong in brand sentiment relative to our peers, and are also helping to drive improved awareness and social sentiment, particularly with Gen Z women. I’m grateful to our team for staying committed to our mission and values and for rallying around the important work we’re doing. I’d like to thank our shareholders, partners, and above all, all of our customers for the trust and support you’ve given Bumble.
Now here’s Anu to cover the quarterly results.
Anu Subramanian — Chief Financial Officer
Thank you, Lidiane, and good afternoon, everyone. We delivered third quarter revenue within our outlook ranges while exceeding our expectations for adjusted EBITDA. During the quarter, we executed the discipline to achieve near-term results while also working toward setting the foundation for sustainable growth and building toward the vision that Lidiane just shared. While we still have work to do over the coming years, we are confident in our direction and encouraged by the early progress we are making.
I’ll walk you through our third quarter results in detail and then share our outlook for the fourth quarter. Unless stated otherwise, all comparisons are on a year-over-year basis. In Q3, total Bumble Inc. revenue was $274 million, down 1% including an unfavorable impact from FX of approximately $1 million.
Total paying users grew 11% to $4.3 million, which was offset by a 10% decline in total ARPPU to $21.17. Bumble app revenue declined 1% to $220 million with an unfavorable impact from FX of approximately $1 million. Bumble app paying users grew 10% to $2.9 million. On a sequential basis, we added 52,000 paying users.
The increase in payers was offset by a 10% year-over-year decline in our people to $25.58. The decline was primarily due to geographic mix shift to international. Badoo app and other revenue of $53 million was 1% lower in Q3, but up slightly excluding FX impact. Badoo and other paying users grew 14% to $1.4 million.
And as Lidiane noted, we began to see the early benefits of Badoo’s revenue rearchitecture driving improved payer conversion. On a sequential basis, we reported our sixth consecutive quarter of positive Badoo and other payer net adds, which came in at 65,000. Badoo and other ARPPU declined 6% to $12.03. Turning now to expenses.
Total GAAP operating costs and expenses were $1.1 billion, and we reported a GAAP net loss of $849 million. The loss was mainly on account of a noncash impairment charge of $892 million that was recorded related to our intangible assets and goodwill. The impairment was triggered by several factors primarily as a result of a sustained decline in the company’s market cap during the three months ended September 30th. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, total costs and expenses declined 5% to $191 million.
As a result, Q3 adjusted EBITDA increased 10% to $83 million or 30% margin, up 290 basis points from the year-ago period. This reflects lower costs from the head count restructuring program we announced earlier this year, as well as a timing benefit from several planned marketing campaigns being shifted from Q3 to Q4 to better coincide with our October product release. Cost of revenue was $79 million or 29% of revenue, flat year over year. Selling and marketing expenses declined 5% to $63 million, representing 23% of revenue and down from 24% in the year-ago period due to lower brand spend and lower head count costs from the reductions we announced earlier this year.
G&A expenses declined 17% to $27 million, representing 10% of revenue, down from $33 million or 12% in the year-ago period. The decrease was due to lower head count costs, as well as lower overhead as we continue to be disciplined about our spend. Product development expenses were $22 million, representing 8% of revenue, flat year over year. Turning now to our balance sheet.
We ended Q3 with $252 million in cash and cash equivalents, and we generated free cash flow of $92 million in the quarter. Our strong balance sheet and profitability enabled us to continue to return significant amounts of cash to our shareholders this quarter. We remain committed to our buyback program. And since the inception of our $450 million stock repurchase authorization, we have returned $361 million to shareholders including $90 million that we repurchased in Q3 and $30 million repurchased in Q4.
Year-to-date through Q3, we have returned approximately 140% of our free cash flow via share repurchases. Now moving on to our outlook. For full year 2024, we expect total revenue of $1.066 billion to $1.072 billion, representing growth of 1.6% at the midpoint, in line with our previous outlook. Bumble app revenue of $861 million to $865 million, which represents growth of 2% at the midpoint, also consistent with our prior outlook.
We continue to spend with discipline and expect at least 200 basis points of expansion for our full year adjusted EBITDA margin. For Q4, this implies total revenue between $256 million and $262 million, representing a 5% year-over-year decline at the midpoint of the range. Bumble app revenue to be between $207 million and $211 million, representing a year-over-year decline of 5% at the midpoint of the range. And adjusted EBITDA of between $70 million and $73 million, representing 28% margin at the midpoint of the range.
We expect Q4 2024 Bumble app payer net adds to decline 70,000 to 80,000. This implies full year Bumble app net adds of approximately 285,000 at the midpoint, in line with our prior expectations. Looking further ahead, while we are making good early progress with Bumble apps strategic repositioning, we remain in the early innings of the work we are undertaking to strengthen our foundation, reimagine the user experience and ultimately drive revenue aligned with the value we are delivering. As Lidiane noted, full realization of our work will take multiple quarters.
We are making thoughtful investments in marketing, people and technology to support our road map and position us for long-term growth. These investments and our ecosystem initiatives, including product releases will take time to translate to meaningful revenue growth, and we expect to provide more details on our outlook and plans on our next earnings call. We have strong conviction that the work we are doing will enable us to realize the powerful opportunity in front of us. Our well-loved brand, millions of members, authentic focus on meaningful connections and robust product vision uniquely position us to lead the reimagination of the dating app category.
While we have just begun that work, we see tremendous potential in the future that lies ahead. And our team is laser focused on delivering the experiences that will delight our customers around the world. And with that, I’ll turn it over to the operator for Q&A.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Ygal Arounian with Citigroup. Your line is open. Please go ahead.
Ygal Arounian — Analyst
Hey, good afternoon, everyone. Maybe first, understanding we’re not getting 2025 guidance here. But also as we think about the progress that you guys have seen so far, which is nice to see trying to balance that out with the comments around how it will take time to play out in multiple quarters. Just any more help in how to think about the products that are contributing the kind of curve of the contribution and how — any other kind of benchmarks that we should be thinking about or looking to as we make the progress here?
Lidiane Jones — Chief Executive Officer
Thank you for the question. When we look at our investments, as I outlined last quarter and emphasized again this year, we really focused on three primary areas, strengthening our ecosystem. As I mentioned today, we’re really excited about the early progress that we’re seeing on the test market. That means ensuring that we have the most engaged customers across the ecosystem that we play in, and we are seeing really positive signs that our investments are moving in the right direction from engagement and growth of customers.
The second is ensuring customer success. And we’re focused on success end-to-end from customer support, to safety, to innovative experiences on our product. So the fall road map is very anchored fall release that we just launched last week, very anchored on customer success. Our winter release is going to take even bolder steps at innovating.
And aligned to that is the third major initiative, which is really imagining and evolving our revenue strategy to ensure across every one of our subscription tiers, we are offering value to our customers, and they feel really good about the value that they’re getting across each one of them. So we’re looking at all of that. We’re really optimistic from the progress that we’ve seen in Q1, we’re expanding the markets that we’re doing the marketing balance and customer acquisition balance, and we will be providing more in the quarters ahead, but definitely confident that we are on the right track.
Ygal Arounian — Analyst
And maybe just to follow up on — maybe this is more for Anu. But on the buybacks at 140% of free cash flow this year, you’ve sets it up. It looks like that’s continued here in the early part of 4Q, balancing with margin expansion and investments that you think are needed to kind of move the product in the right direction. Just philosophically, how you’re thinking about that?
Anu Subramanian — Chief Financial Officer
Yeah, sure. Happy to Ygal. So I think if you think about our capital allocation philosophy, as we’ve always said, we think about it in sort of three broad buckets. The first one is around investing in our organic growth and making sure that we are continuing to invest for the revenue growth that we know we have ahead of us.
The second one is around M&A. We’ve said in the past that we continue to be opportunistic from an M&A perspective with a pretty high bar for what that looks like. And the third one is to return capital back to shareholders, and we have the buyback program in place. We are always trying to balance each of these priorities, depending on what’s most critical to us.
So I think going forward, you’ll see us continue to take a balanced approach. I think, for next year, having top-line growth is definitely gonna be one of the most important things we are focused on. So you’ll definitely see us focus on that as a company. And then, we, obviously, have our buyback program, which we will continue to be opportunistic about.
Operator
Thank you. We now turn to Shweta Khajuria with Wolfe Research. Your line is open. Please go ahead.
Shweta Khajuria — Analyst
OK. Thank you for taking my questions. Let me try two, please. First is on ecosystem health.
Lidiane, of the three things you talked about, the first one is ecosystem health. It includes profile creation and maybe a shift in marketing strategy and you’ve addressed both of these. So I guess, my question is, could you please provide specific examples of other actions that you have taken in the quarter and/or plan to take in the near term that focuses on rebalancing the health of the platform that you think will be most impactful. That’s question one.
And the next question is on customer experience. How should we think about the headwind on top of the funnel from your safety initiatives, and is it fair to say that you started that initiative mainly in the third quarter this year, so you’ll comp that next year post Q2?
Lidiane Jones — Chief Executive Officer
Yeah. Thank you. On the first part of your question, definitely a marketing rebalance for us to ensure that we’re acquiring the right types of users. And that has been really positive.
In addition to that rebalance, one of the key efforts I mentioned in my prepared remarks is about strengthening organic marketing, especially in our mature markets, which has also shown really positive sign. The other efforts here for us when we think about healthy ecosystem is related to product innovation. We are embarking on this new model of a regular product cadence so that we operationally are constantly innovating for our customers. So what you’re seeing from our fall release for to winter and you’ll see more in 2025 is a regular cadence of innovation.
What that does is ensuring that we are also attracting and retaining great customers that are going to have great experiences with that and success within our portfolio of apps. So we’re really excited about ecosystem, it’s about certainly acquiring, but also retaining our customers. So you’re going to see a lot of that from us in the quarters ahead. When we think about customer experience and safety.
There are many things here related to safety that we look at. And it’s not just you shouldn’t think of safety just as a headwind. It’s also an important tractor for a lot of our customers. So there’s a few key things in — earlier this year, we have already started to improve our modeling to ensure that we are, for photo moderation, for example, as you saw in my prepared remarks, ensures that good customers that are interested in being in our ecosystem are not unfairly blocked.
So that is actually welcoming more customers into our ecosystem that were not getting through because of a modeling issue. So there’s many efforts there. Additionally, capabilities like ID verification that will be optional for our customers, again gives customers a lot more choice and feel the safety that they would like to have on our ecosystem. So we think safety capabilities are both about keeping customers safe, attracting the right customers and retaining in addition to ensuring that we don’t have users that we don’t want in the ecosystem.
So all in all, we are optimistic about those as positive investments for user growth.
Operator
Thank you. Next question comes from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.
Eric Sheridan — Analyst
Thanks so much for taking the question. Just one, if I could. Just sticking on the theme of the potential on the revenue and the user side for Badoo over the longer term, what continued to be key learnings about that as an asset in your portfolio and how it informs key priorities for that part of the business looking out of the medium to long term?
Lidiane Jones — Chief Executive Officer
Thank you, Eric. This year, we took a very customer-centric approach to Badoo because Badoo does serve a customer base that’s complementary to our Bumble customer base. And with the changes that we made on the product, we did a brand relaunch, we’re rebalancing — modestly rebalancing our brand and growth marketing in Badoo. And what we’re seeing is that we are seeing a positive engagement in the customer base, as well as benefits in ARPPU from customers getting the right value from our revenue we architecture.
So we’re optimistic about Badoo. I think, Badoo in the right investments with the right placement within our portfolio can have a greater potential in the medium to longer term. So definitely optimistic about the role Badoo can play for us.
Operator
We now turn to Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.
Nathan Feather — Analyst
Hey, everyone, thanks for taking the question. Two on my end. First, are you seeing any green shoots with Gen Z either from the product or marketing changes you’ve made so far or any difference whether it’s in engagement with the platform, signed up, etc. And then, second, thinking about elections in the past, did you see any impact on engagement either before or after? And how do you think about that when guiding to 4Q?
Lidiane Jones — Chief Executive Officer
Thank you, Nathan. In terms of engagement, positive engagement, this Q3 has been a really positive one for us from a marketing perspective. With our shift toward reigniting organic marketing for Bumble, which has always been part of our DNA has always been a differentiator. That has been an incredibly positive set of outcomes for us from our Gen Z women in the top cities that we’ve activated that kind of balanced strategy.
We have seen positive gains in NPS. We’ve seen positive gains in followship in our social channels, as well as positive sentiment. So all in all, our marketing rebalance is being positive results for us in targeting and gaining more support from Gen Z women. We are also spending a lot of time with our younger users to understand their needs in this category, and why we feel excited about the role that Bumble can play and truly reimagining the category.
There’s a lot of really great insight about what our customers want. So from a product feature perspective, a lot of our customers’ voice is being incorporated into that, certainly, a lot of Gen Z women’s voice. So that truly excited to be working for many great customers. In terms of the election, well, historically, we haven’t seen significant shifts in our customer base and business, but what we do expect at this moment in time is that our mission and what we have seen from our customers, our mission, our values have remained incredibly critical for customers not only over the last decade, but we definitely believe it is critical now that we stay strong in supporting women and women’s experience.
So that’s gonna be a key part of how we support customers and their needs.
Anu Subramanian — Chief Financial Officer
And Nathan, in terms of impact to the way we thought about Q4, we don’t really think that there’s been a big impact in terms of what we’ve seen leading up to the election. So we are guiding to a revenue outlook that is largely consistent with what we guided to in our Q2 earnings. So not much to report on that.
Operator
Thank you. Our next question comes from Benjamin Black with Deutsche Bank. Your line is open. Please go ahead.
Benjamin Black — Analyst
Thank you for taking the questions. In the past, you’ve, obviously, spoken about the free experience and how you think that may need to evolve in effort to help the ecosystem. So I’m curious how do you expect the free experience to change over the next coming quarters, if not years? And then, maybe as we think ahead to 2025, I understood that we are not getting any guidance, but if you think about the product release plans toward the end of the year, generally speaking, how should we think about the composition of growth? Is it sort of between payers and ARPPU as we head into the new year?
Lidiane Jones — Chief Executive Officer
Great, Benjamin. Let me start with the free experience first. We recognize that this is a really important moment for the company to get right. And a key part of our revenue evolution is ensuring that we’re getting the fundamentals right for our customers and their experience.
So we are taking a step back and looking at the entire journey from top of funnel all the way to the most optimized subscription tier that we have, which is Premium Plus. And so, of course, in that journey comes the free experience. We really believe that a great free experience for all of our customers should also be one that helps people see the value of Bumble right from the get-go, and that will positively entice them to want to pay to get greater value. So in that regard, we see greater opportunities in the near term to increase our conversion rate from free to pay with some of the initiatives that we’re going to drive in the next few quarters.
So we are quite bullish and excited about that. Secondly is that as we are innovating our product rhythm and the cadence and the regularity and the velocity of our innovation. I think, a big part what I’ve been talking about in the last couple of earnings has been the company transformation we are undergoing. It’s really ensuring that we’re innovating in a test base, that we are attracting the best talent in the industry.
And that’s going to really help us bring a greater degree of innovation that will increase the value creation for higher tiers. So really a lot of segment for us in terms of the value of our subscription tiers and the rearchitecture of our value balancing for our customers. But I’ll take it on to Anu to talk a little bit more about the second part of your question.
Anu Subramanian — Chief Financial Officer
Ben, so as you can imagine, we are deep in the middle of planning for next year, and this encompasses the work that we are doing around the three pillars that Lidiane talked about, which is customer experience, ecosystem work, as well as reimagining of the revenue and subscription experiences. And this will impact how we think about our key KPIs in terms of user growth, payer growth, revenue growth, etc. And we’ve talked today a little bit about some of the tests that we are running and the early results that we’re seeing from all of these, which have been quite encouraging. I think, it’s a little bit early to talk about specific puts and takes around how this translates into some of the metrics that we look at, but we look forward to providing more details on our next earnings call for sure.
Operator
Our next question comes from Robert Coolbrith with Evercore ISI. Your line is open. Please go ahead.
Robert Coolbrith — Analyst
Great, good afternoon. Thank you for taking our questions. I wanted to ask if you could go back to the marketing tests that you’ve done in Europe and the related uplift or improvements in ecosystem balance that driving there. Anything more you could tell us about the changes in channel mix or messaging and the plan to expand that strategy? And then also, I understand that you’re more focused on organic in the more established markets, but just wondering if there are any learnings from the targeted marketing that you can apply to some of the more established, more mature markets to maybe accelerate the drive toward ecosystem health and demographic balance?
Lidiane Jones — Chief Executive Officer
Yeah, Robert, great question. So for emerging markets, there is both a balance of brand expansion and awareness, as well as a very tailored marketing channel mix. And so, one of the greatest things that I’m excited about in Q3 is how rapidly we are assuring our marketing insights and operations to allow us that effectively. And what we have seen is, in this particular market, we have balanced for greater investment on acquiring the right users, for particular demographic, especially women in this case, and we were very effective at that acquisition with the right ROI.
So that’s very positive in such a short amount of time. For more mature markets, what we have done, as you noted, is balancing with organic because the brand awareness is already there, and it’s really about delivering a set of broader experiences for our users. New York is a great example of a market that we put a lot of effort and saw really positive results in a single quarter. And the great thing about holding an organic event in New York, like sponsoring the WNBA and having events where our customers can be a really big part of that is that it also amplifies digitally through our social channels, through customers that are telling their own stories.
So there is a positive scaling of that as well that we are excited about. So the key message here is that we are being very thoughtful and deliberate about our marketing strategies based on our presence, as well as the brand awareness of the markets that we’re in. The exciting thing from my perspective is from an international expansion, Bumble is a fairly young company, still in many markets. And so, we have a great opportunity to drive international expansion and growth over the quarters ahead.
Operator
Thank you. [Operator instructions] We now turn to Laura Champine with Loop Capital. Your line is open. Please go ahead.
Laura Champine — Analyst
Thanks for taking my question. If I work through your outlook, there’s certainly a scenario for sequentially lower margins in Q4, would that come from higher advertising spend? Or is there something else there that I might be missing?
Anu Subramanian — Chief Financial Officer
Laura, so if you look at our full year EBITDA margin outlook, we’ve maintained what we had said previously, which is to expand our margin by at least 200 basis points. So there’s no change to our full year outlook. In Q3, we came in ahead of where we had expected to be from a margin perspective, and it was primarily because we shifted some marketing spend from Q3 to Q4, the sort of better coincide with the fall release that we just had in October. So that’s why you see Q4 margin being lower.
And as you said, it will be because of higher marketing spend. But in aggregate our plans in terms of what we intend to do for the full year has not changed. It’s just a shift to spend between Q3 and Q4.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Cherryl Valenzuela — Vice President of Investor Relations
Lidiane Jones — Chief Executive Officer
Anu Subramanian — Chief Financial Officer
Ygal Arounian — Analyst
Shweta Khajuria — Analyst
Eric Sheridan — Analyst
Nathan Feather — Analyst
Benjamin Black — Analyst
Robert Coolbrith — Analyst
Laura Champine — Analyst
