contrary to Match group (NASDAQ: MTCH), which has a portfolio of several dating apps, buzz (NASDAQ: BMBL) is best known for its namesake application. However, many investors would be surprised to learn that Bumble also owns the Badoo app, which is popular outside of the US and actually has more active users than the Bumble app.
In this video from Focus on industry Podcast recorded on February 17, Luis Sanchez, Motley Fool contributor, and Nick Sciple, Industry Focus host, discuss Match Group, Bumble and the online dating industry.
Nick Sciple: One thing we haven’t talked about that is worth mentioning is that Bumble is the primary app for this North American dominant company that really generates a significant portion of the revenue, which we can can. -be talking about it. But there’s this other part of the business, Badoo, which is more internationally focused, actually bigger, and based on a monthly active user. What should we know about Badoo’s place in Bumble’s overall story, Luis?
Luis Sanchez: Yes. As you mentioned, Badoo is more of a dating app focused on Europe and Latin America. It doesn’t really have a lot of traction in the United States. Surprisingly, we hear a lot about Bumble, obviously the company is called Bumble, but Badoo actually has more users than Bumble. Indeed, Badoo had 28 million monthly active users, according to S-1, while Bumble only had 12 million monthly active users, more than double. Interestingly though, if you look at the underlying financial data, Bumble users are actually more monetized. The Bumble app still accounts for the majority of the company’s revenue despite fewer users. Bumble’s user base and Bumble’s revenue base is growing 10 times faster than Badoo business. It’s interesting to see this dynamic, and if you have to take a look at assets and think about value, it’s pretty clear that the real value of this business is Bumble and Bumble’s future growth. Although Badoo is a nice balancing asset, as it gives the company some exposure to international markets and potentially other demographics that it won’t touch but Bumble. One of the cool things going back to the story is actually that there is a certain synergy between the two apps. They share some common back office, like overhead and technology expenses. In fact, I’ve read that Bumble, in many ways, relies on this Badoo infrastructure. Having that Badoo asset has certainly contributed to Bumble’s very rapid growth rate.
Nick Sciple: Yeah, sure. You mentioned Bumble culturally. There’s a big emphasis on women, this big emphasis on safety. They call a lot of security features on the platform. Badoo has been around a lot longer, a different founder, a different story. Now that Badoo is under that umbrella with Bumble, it’s possible Bumble will instill some of his culture into what’s going on at Badoo, give him some of the security features, things like that, clean up what’s going on on this plate. -form. So there is room for expansion, but that’s largely the story Bumble is driving today. When you look at the performance of the company, there has obviously been this impact of the pandemic. What are we seeing in regards to the company’s performance over the past year during the pandemic?
Luis Sanchez: Yeah, absolutely. From 2018 to 2019, Bumble’s overall business grew by around 35%. Digging a little deeper, the Bumble app itself grew by 70% and the Badoo app only increased by 7%, making reference to Bumble’s much faster growth than Badoo. But in 2020, the pandemic did not help online dating apps, and revenue growth slowed significantly. We have the data for the first 3/4 of 2020 and overall revenue growth has fallen to around 15%, so it’s halved from 35% to 15%. Bumble went from a 70% growth rate in 2019 to a 25% growth rate in the first three months of 2020. Logically, that makes sense. If people are careful when meeting new people, they are likely to spend less time and less money on online dating apps. It makes sense that income growth has slowed. In a sense, this could actually be an interesting reopening piece as we look at what happens after the pandemic.
Nick Sciple: Yes. I think this is one of the interesting dynamics of these online dating platforms. In your opinion, Luis, maybe there’s no incentive to pick up your pace of matches at a time when, look, I’m not going to meet anyone I match with because it’s during a pandemic. . But there is an incentive to be present on these online platforms, so maybe I’ll have a date every time the world gets back to normal, whether it’s on Bumble or one of those others. platforms, which I’m sure we’ll talk about.
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