Bumble (BMBL +1.05%) and Match Group (MTCH +0.96%) can be considered the David and Goliath, respectively, of the online dating market. Bumble owns just three apps (Bumble, Badoo, and Fruitz), while Match owns Tinder and over a dozen others.
The two companies have a complicated relationship. Bumble's founder, Whitney Wolfe Herd, was previously a co-founder at Tinder before being stripped of the title following an acrimonious split with the company. Match and Bumble subsequently sued each other for years over patent infringement allegations before finally settling all of those claims in 2020.
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Today, Bumble's eponymous, female-oriented app is Tinder's closest competitor in the U.S. Between 2017 and 2020, Bumble's share of the U.S. dating app market nearly doubled from 10% to 19%, according to Sensor Tower, as Tinder's share dipped from 43% to 40%. Badoo, an older app that's more popular in Europe and Latin America, is still the second most downloaded dating app in the world behind Tinder.
Yet Bumble is still a lot smaller than Match. Its $5.3 billion market cap is less than a fifth of Match's at almost $30 billion. So could this underdog of the dating industry eventually catch up to its larger rival?
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Key Data Points
Bumble would need to grow a lot faster
Bumble is the faster growing company but only by a small margin. Its revenue rose 32% to $766 million in 2021, and management is guiding for 23% growth (at the midpoint) this year. Match grew revenue 25% to $2.98 billion in 2021 with about 18% growth expected for 2022.
As for users, Bumble reported 2.9 million of them, up 16% last year, with the total consisting of 1.5 million Bumble users (up 31%) and 1.4 million Badoo users (up 2%). It will also add Fruitz, a smaller Gen-Z-oriented European app, to its "Badoo and others" segment later this year.
Match ended 2021 with 16.2 million paying users, up 15%, as Tinder led the pack with paying users increasing 18% to 10.6 million.
Based on revenue and user metrics, Bumble needs to grow a lot faster if it wants to catch up to Match in the online dating market. The most straightforward approach would be to acquire more dating apps to expand its geographic reach and carve out more niche categories for itself.
But will Bumble replicate Match's growth strategy?
However, it's unclear if Bumble actually wants to follow in Match's footsteps as the latter has added apps like Hinge, Chispa, and BLK to its portfolio.
Buying or launching more apps could dilute Bumble's brand, which is tightly tethered to its namesake offering and female-first approach. Bumble has been heavily promoting its brand with a restaurant in New York City and an online apparel store, so it seems much more interested in expanding its core app instead of adding smaller ones to its portfolio.
Bumble's other apps also seem secondary to its main service. Bumble only inherited Badoo from Wolfe Herd's initial partnership with the Russian entrepreneur Andrey Andreev, and its recent acquisition of Fruitz mainly seems aimed at offsetting Badoo's decline in Europe.
The Bumble app generated more than twice as much average revenue per paying user (ARPPU) than Badoo in the fourth quarter. On its own, Bumble generated an ARPPU of $30.57, but including Badoo, that figure fell to $22.83. Therefore, it could be counterproductive for Bumble to further reduce that metric by buying other low-ARPPU apps.
Match, which blends together higher-value and lower-value services, generated just $16.16 in its comparable revenue per payer (RPP) in its latest quarter. Therefore, Bumble might have acquired Fruitz to reach more Gen Z users, but that doesn't indicate it will go on a shopping spree like Match -- especially when it still has more debt than cash on its balance sheet.
Different plans for the future
Bumble probably won't expand and evolve into the next Match. Instead, it will focus on improving its namesake app, expanding the platform with non-dating features like Bumble Bizz for business connections and Bumble BFF for platonic friendships, making its brand synonymous with female-friendly dating and social-networking services.
That long-term strategy would arguably be much smarter than battling it out with Match in frequent bidding wars over new apps. Focusing on Bumble's main app could gradually boost its ARPPU and enable it to generate sustainable growth without spinning too many plates at once.
