Bumble (BMBL 5.29%) doesn't report financial results for another few weeks, but it's fair to say that analysts might be getting cold feet after rival Match Group (MTCH 2.60%) checked in with a disappointing quarterly update on Tuesday afternoon. Match Group fell short of Wall Street's revenue and profit targets. Guidance was also problematic.
Bumble has tried to set itself apart from its larger competitor, and not just because of its namesake online dating app that is differentiated in that only women can initiate a potential connection. It has historically grown faster than Match Group, but is that enough to separate the two in the eyes of investors that often like to boil things down to sympathy plays?
If it had its druthers, Bumble would demand that Match Group say the words that have ended so many pairings in the past: "It's not you. It's me."
NASDAQ: BMBL
Key Data Points
Sting like a Bumble bee
Tuesday afternoon's report out of Match Group was pretty rough. The app-savvy company might be all about putting two people together, but its financials had a couple of negative twos to deal with. Revenue declined 2%, just short of analysts' top-line target. A 1% drop in paying users and a 1% dip in average revenue per payer combined to account for the 2% slide in revenue. Adjusted operating income also slipped by 2%.
The stronger dollar helped take a bite out of Match Group, which is trying to make its mark with a new CEO. The company behind Tinder, Hinge, Plenty of Fish, and other online dating apps would've clocked in with a 5% year-over-year increase in revenue on a foreign exchange neutral basis. It's still a surprisingly weak single-digit increase in an era in which courting and hook-up applications should be booming. We've largely overcome the pandemic. If we experienced "revenge travel" out of folks that weren't able to vacation through the early stages of the COVID-19 crisis, then clearly "revenge dating" should be a thing. Unfortunately, the social recovery is not making much of a favorable impression on the Match Group business. There were more paying users in the European and Americas markets across all of Match Group's properties a year ago than there are today.
Image source: Getty Images.
Bumble doesn't have to follow in Match Group's footsteps. It has a history of besting the industry leader, grabbing market share along the way. Revenue growth at Bumble has outpaced Match Group in each of the last three years, and that will likely be the case in 2022 once Bumble makes its year-end numbers official.
The disparity is starting to widen. Bumble has generated double-digit top-line growth in every quarter as a public company, while Match Group has fallen short of that mark in back-to-back quarters.
Bumble has been a disappointing investment. It's trading for a little more than half of its IPO price of $43, and it only went public just two years ago. Its debut happened to coincide with the start of a rough time for tech and growth stocks. Even consistent profitability hasn't been enough to save Bumble from being a broken IPO.
Could this be the quarter that Bumble and Match Group go their separate ways? The setting is perfect. Match Group fell short of analysts' revenue and earnings estimates. Guidance calling for flat year-over-year revenue in the current quarter and 5% to 10% growth for all of 2023 also was below Wall Street's consensus. If Bumble wants to break free, it couldn't ask for a better time to do so, later this earnings season with investors starting to embrace growth stocks again.
