Good evening. Thank you for attending the Bumble Second Quarter 2025 Financial Results Conference Call. My name is Megan, and I'll be your moderator for today. [Operator Instructions] I would now like to pass the conference over to Will Taveras, Bumble's Investor Relations. Please go ahead.

Thank you for joining us to discuss Bumble's second quarter 2025 financial results. With me today are Bumble's Founder and CEO, Whitney Wolfe Herd; and Interim CFO, Ron Fior. Before we begin, I'd like to remind everyone that certain statements made on the 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. Reconciliations 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. With that, I will turn the call over to Whitney.

Hello, everyone, and thank you for joining us for our Q2 earnings call. Four months ago, I returned as CEO of Bumble and reset our strategy for quality over quantity across the whole business, including how we operate, our revenue and payers and importantly, our member base. We have taken decisive actions over the last quarter. We've removed over $100 million from our cost base by streamlining operations, restructuring head count and shifting to a more efficient organic marketing engine. These changes have sharpened our operational discipline and positioned us for a return to growth. We've reorganized for speed and focus, rebalancing engineering to the U.S., unifying our product road map and bringing in exceptional leadership, all while building a leaner, higher-performing team. These efforts contributed to record EBITDA margins in Q2. And while this level of performance shouldn't be viewed as a steady state baseline, profitability, margin expansion and cash flow will remain core priorities even as we redeploy some of our cost base savings into selective high-impact investments across product, AI, UX and trust and safety. We believe we can do both, run a healthy, efficient business and strategically invest in the long-term future of Bumble with discipline, intention and a relentless focus on quality. That quality extends to the type of revenue and payers we are prioritizing. The majority of this quarter's payer decline came from the phase out of a legacy strategy related to promotions, which were skewed towards certain of our lower monetizing noncore markets. As of late April, we have been reemphasizing our core of sustainable full-price subscriptions. Encouragingly, our full-price payer base increased quarter-over-quarter and subscriptions now represent approximately 80% of total payers, up from 70% in Q1. This is reflected in our ARPPU increases. We believe this may be an encouraging signal…

Thank you, Whitney, and good afternoon, everyone. As Whitney mentioned, Q2 reflects early results of the decisive steps we've taken to recenter Bumble around quality and to deliver the best member experience possible. Reshaping Bumble to prioritize quality and the member experience has, by design, weighed on our revenue and paying user count, while also improving ARPPU. We are making this trade-off intentionally in order to prioritize high-quality, relevant matches and a better member experience to drive Bumble's organic, sustainable growth in the years ahead.. Today, I will share updates on how our member base improvement strategy may influence our performance near term, but I will start with a summary of our second quarter financial results. Our Q2 performance exceeded the company's late June upwardly revised expectations. Bumble Inc. Q2 revenue was $248 million, including a favorable impact from foreign exchange of approximately $2 million. Bumble app revenue was $201 million, including a foreign exchange tailwind of approximately $1 million. This brings year-to-date total revenue to $495 million. Total paying users in the quarter were $3.8 million, and Bumble app paying users were $2.5 million. Venue app and other revenue was $47 million, including a $1 million foreign exchange tailwind during the quarter and benefited from Fruitz and official revenue of approximately $3 million in total. Before each was sold and shut down, respectively. Badoo App and Other paying users totaled $1.3 million. Turning now to expenses. Total Q2 GAAP operating costs were $587 million, and we reported GAAP net loss of $367 million, primarily driven by an impairment loss of $405 million. On a non-GAAP basis, which excludes stock-based compensation and other noncash or nonrecurring items, operating expenses were $154 million. The year-over-year decline of approximately 21%, was primarily driven by reduced marketing expenditure and lower headcount as a…

[Operator Instructions] Our first question goes to the line of Shweta Khajuria with Wolfe Research.

This is Andrew on for Shweta. I want to follow up on the alternative payments comment. I guess could you please provide updates on kind of where you are in terms of the alternative payment options? What apps specifically are you testing? And I guess what kind of range of discounts are you offering? And then what you're seeing towards the adoption rates?

Yes. So what we're doing on -- we've done some testing, and it's been very limited at this point in time. And we're looking at different discount rates. And one of the things that we had seen very early on in this testing is that we tested a reasonable group of opportunity in people in that Apple iOS system and giving them a discount. And we found that the take-up on direct billing was actually 30%, which is very, very solid. We are continuing to do testing on that at different discount rates. And we've included a little bit of that in our guidance for the rest of this year or for Q3, but we are looking at -- if we -- there is an opportunity for upside in our numbers if we continue to do that through the whole rest of the year.

Our next question comes from the line of Andrew Marok with Raymond James.

Wanted to touch on ARPPU growth at Bumble App really quickly. So was the growth there solely driven by that promotional strategy, the exit that you had mentioned? Was there anything going on with maybe the underlying ARPPU growth that's worth calling out? And then I have a follow-up after.

Yes. So on ARPPU growth, I mean, I think it was a result of some deliberate changes that we have made in the monetization and some pricing optimization. It's an early signal of some of the impact of the changes that we're making, as we focus on providing fewer, better, deeper relationships. I guess I would remind you that it's really just an output. It's really not a number that we're managing to at this point in time.

Appreciate it. And then maybe on the user front, Whitney talked about the 3 buckets of users, the approve, improve and remove. You mentioned that improve was the largest, but can you give any guardrails or quantitative sense on the relative size of the buckets? And how many of those improve users actually want to improve?

Yes. Thanks so much for the question. So improve does make up a vast majority of the member base. And perhaps reassuring to hear, remove actually accounts for under 10% of the member base. So here's the thesis. What we're really excited about is that we see real data and real green shoots with approved members. They have higher yes votes, they place higher yes votes, better retention. They get more matches. They have a double willingness to pay. So if you take this strategy which I said in the prepared remarks, which is to essentially move as many of those improved up to approve, you can imagine the output and the results that this has on the overall ecosystem and member base. And so this is exactly what we're focused on. Our product road map and our recommendation engine is very focused on making sure that approved, see the approved and that we are giving the tools through coaching, through AI, through other product functionality to move that improved base up because when you do that, everything improves across the board, and you are left with a much higher quality member base, and this is exactly the strategy of quality over quantity.

Our next question comes from the line of Nathan Feather with Morgan Stanley.

As you work through the turnaround, do want to know what metrics you're tracking internally as you make this push for quality and for investors looking in from the outside, what do you think the best way to track your progress given the noise in terms of the reported KPIs?

I appreciate the question. I'll take that. So you can imagine that with this reset, to quality first. I have been extremely obsessed and the team has been extremely obsessed with tracking deeper signals, deeper member inputs. What are the inputs across the board to get our members to success? If you think about why people are here? They come to the product, to find real high-quality interactions that lead to real quality date. So every single thing that we are watching is all in the effort of getting our members to high-quality compatible relevant matches as quickly, efficiently, safely and effectively as possible. And so while we're not willing to share those deeper metrics or those deeper signals with the Street right now, rest assured that the team is very focused on this. And we will keep everybody posted as we expand our metrics in the future.

Great. That's helpful. And then on the reinvestments you're making, just any way to think about the timing of those reinvestments and especially given some of the usual costs and AI talent associated if those might be rolled in over a longer time frame?

Yes. Thanks. That's also a great question. So we're being extremely precise and surgical with reinvestments. We are not cutting costs to just spend again. As I said in the prepared remarks, every single dollar that is being spent at this company is being rigorously evaluated through the lens of is it a must-have for the quality strategy? Is this helping get our members closer to offline durable love? And is this going to make us the leader in the space as rapidly, effectively as safely as possible? So as we evaluate that, we are putting every headcount member, every new headcount through that lens, every technology update through that lens, and we are only spending where absolutely necessary. Some of that spend will start hitting here in the near term. And some of it will be deferred to longer lead when we do things like strategic brand marketing around product launches. So just rest assured that we are being extremely diligent and we are managing to have an incredibly efficient cash flow positive and healthy business. At the same time, we are running this for the long term and optimizing for long-term success.

Our next question comes from the line of Eric Sheridan with Goldman Sachs.

Maybe following up on that last question and just sticking with this theme of sort of marrying priorities with investments. When you look out over the next 12 to 18 months, what do you see as your biggest priorities to move the needle for the platform? And how should we think about the depth and duration of investments lining up against some of those key priorities, just to put a finer point on some of the messages from the prepared remarks?

Thank you. I appreciate the question. So the main priority is our products and technologies, hands-down. As we said in the prepared remarks, we are actively rebuilding a Bumble 2.0, if you will. This is AI first, cloud native, extremely sophisticated tech infrastructure. This is really meant to enable innovation at speed, at scale and very personalized. And while we do that, we are maintaining a steady state of productivity and support to our members while we continuously make these micro enhancements that really count on the current technology. So for example, over the last quarter, we enhanced our recommendation system and we continue to leverage deep learning and rich profile signals and implicit signals from these in-app actions. And those improvements alone on our legacy system actually drove a greater than 10% increase in women's yes votes. So we are able to continuously move our metrics upstream while we focus on these longer-term swings that will require time focus and reinvestment. So the priorities are really essentially very simple, deliver a quality experience that is both product but tech, recommendations, matching. Our priority is always trust and safety. This is what particularly women, but everyone wants, People want to feel safe. They want to know that who they're meeting, is who they say they are meeting. They want to feel a trust and safety backbone when they're using these products to find friends. Another big priority is Bumble For Friends. I cannot tell you how excited and how convicted we are in the future. So organic demand for Bumble For Friends, particularly from Gen Z women and younger millennial women is extremely exciting. And so we're really putting a lot of time, energy and focus in this modern technology to support front lining and communities. And I think you'll notice that I didn't mention marketing. And I think that is important because our product is going to speak for itself and the marketing that we do from both an investment standpoint but also from a team resourcing standpoint, is there to amplify a great product. There to amplify very innovative, safe quality technology. And so you will see us spread the most important message that we have to offer, which is the amazing success stories we put into the world. So those are really the high-level priorities over the next 12 to 18 months.

Our next question will go to the line of Ygal Arounian with Citi.

So maybe just first, Whitney, on the Bumble users and the 10% or less than 10% in that remove category, talked about some of the improve users that don't want to improve potentially getting down to that remove bucket. Some of the trust and safety features that could cause dislocation, you've also less focused on some of the lower-value users. And so you've kind of like naturally aiming to tear down the user base before you build it up. So I'm just trying to understand what that level might be to the extent that you could help on where we kind of bottom out? And then as you begin to try to build up, you're going to be targeting a smaller base, right, to not track some of these users that you're electing not to bring back. And so how you do that and how you start to build back up and kind of get back to a user base that's higher than your previous peak?

Great question. So I think this is actually slightly different than what meets the eye. You would be surprised by how many phenomenal members we have that technically classify as lower improved. They're not bad people. They're not nefarious members. They have no clue how to build a profile. These could be extraordinary people that when you meet them in real life for like how are you single. But when you look at their Bumble profile, they have one photo, they're wearing a mask, and they have no bio. There's no chance for them on our product in that construct. So this is really not about us needing to remove just the whole member base because everyone is a bad member, absolutely not. Frankly, the quality of our members are really good, but the quality of their profiles are not so good sometimes. And so this is really an effort to really improve the quality of how they show up, how they put themselves out there and how they express themselves so that they can move up that ranking. Now there is a subset of members that does fall into that remove category. And you're right, we will be taking them off of our platform. However, fewer better is always going to win when it comes to connection and relationships. Just more profile. If you were to swipe through 100 people, you never wanted to meet, you would walk away feeling very, very disappointed. But if you were to go through even just 5 or 10 or 15 profiles, of very high-quality profiles, and everyone was actually quite interesting to you. You would feel very, very compelled to return. So this is actually not so much of having to kick everyone out. It's really about just removing that less than 10% of folks that shouldn't be here, they're bots, they're scammers, they have duplicate accounts. They have no intention of behaving well. And then finding those folks that are lingering around the improved category that maybe have no willingness was bring them down within everybody is up or out. I mean, it's amazing to see what happens. When you just help people out a little bit, they really do have a much better experience and then they have positive impact on the member base. So high level, I just don't want anybody to walk out of here thinking this is a onetime strategy. This is always on. We get new members every day, and we will have to consistently sort our profile, improve our profile, and this is an always-on approach, but we are very confident that as this strategy continues to be executed against with speed, with focus that we are going to have an extremely high-quality member base that will create all of the outputs that matter for a great business.

And maybe just a follow-up on the investments -- on the investments that you're planning, including marketing. It doesn't sound like you're targeting a specific margin target. But as we think about our models and as marketing comes back in and you start to roll out some of these investments, and any way to help frame the right way for us to think about how margins might flow through next year and beyond and how you think about that?

So maybe I can answer some of that. And I think -- well, I'm not going to go out into next year because we're not giving guidance that far, but I think I can give you some color towards the rest of the balance of this year. And looking essentially on the income statement, starting with the revenue side, we expect that the trust and safety, which we've talked about in our script today, will have an impact, obviously, in Q3, and we'll have a greater impact in Q4 and that includes everything from mandatory phone numbers and self- identification and those kind of things. So that will have a -- it will have a near-term attrition to our payers. From a gross margin point of view, we talked about the alternative billings, the impact of the reduced app store fees from there. And so that will be -- could be a potential upside from a gross margin point of view, but that could also be a little bit of an impact -- negative impact on the revenue because obviously, less revenue. But at the end of the day, we'll end up having a greater margin in dollars at the bottom line. When you look at the marketing, we've talked -- Whitney talked a lot about this already, but we're going to have -- we will have very minimal performance marketing in the second half of this year. What we did say is that we will have more marketing, brand marketing, more organic marketing that will occur in the second half of the year than we incurred in the -- if you think about the second quarter level, it will be at a higher level than that. Again, it's going to be very focused on the organic side. So product and engineering side, again, the head count, we're going to continue to -- we've just done this large workforce reduction. But now what we're going to do is we do have to build up our presence in the United States and not merely in the engineering area. In all other areas, it's going to be very, very limited increase in our headcount. And that's really the key things for the balance.

Yes. The only thing I'd like to layer on to what Ron said is when it comes to marketing, again, I want to be extremely clear, we are not going to market for marketing's sake. We are only going to be doing marketing that amplifies the strength of the quality and the power of our product. And we are only going to be reinvesting into the halo of our brand. I cannot reinforce enough how important our brand is, how it really is a huge strength for us. People choose us over competitors because of the way Bumble makes them feel from the brand perspective. So rest assured extremely measured and precise and surgical when it comes to marketing and only there to enhance the power of the brand.

Our last question will come from the line of John Blackledge with TD Cowen.

It's Logan on for John. As you release new features in the August launch and looking forward, could you talk about how you are appealing to Gen Z users who maybe have grown weary of the traditional online dating experience. And then following up on the CFO appointment. Could you just talk about equality that led to Kevin's hire?

Thanks for the question and good to hear from you. So let's talk about Gen Z. I think there's a bit of a misconception that Gen Z is some completely different species that doesn't think about love and connection the same way most of humanity does. The reality is this Gen Z entered the dating market rather the online dating market at a time where most of these products were already very saturated. So a lot of the exact product solves that we are so maniacally focused on right now are specifically the issues Gen Z has with online data. For example, they don't want to feel like they swipe endlessly through people that are not interested in. They don't want to feel judged. They don't want to feel rejected. They don't want to feel like they're talking to someone that is not actually who they say they are. These are the same issues that everyone has struggled with, with online love. And this is precisely what has driven the strategy back to quality first. When I came back in as CEO, I showed up with a list of 10 of the top customer pain points that I had researched extensively. And I basically came back and said, until we fix all of these problems, we're not going to just roll out random features. Feature fatigue is not solving the problem for anyone. This is about solving the real needs of dating and connection, and that is precisely what we're doing. That's what you'll see in the August launch. It's all about trust and safety. It's all about efficiency. It's all about feeling relevant and compatible again. It's all about helping people enjoy dating again and build confidence back up because that's what made this category special to begin with.…

Thank you. And with that being our last question, we will now conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.