Bumble’s forecasts muted quarter as turnaround takes time

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(Reuters) -Bumble forecast fourth-quarter revenue below analysts’ expectations on Wednesday, as the dating app owner’s ongoing turnaround takes time to drive growth in paying users, sending shares of the firm down 9%.

The Austin, Texas-based matchmaking company is facing a broader slowdown in the online dating industry, as younger users experiencing “swipe fatigue” increasingly seek alternatives to swipe-based apps that once dominated the market.

Bumble, which laid off 30% of its workforce in late June under a new CEO, has overhauled its app and introduced artificial-intelligence-driven trust and safety tools to improve retention.

It has added phone number verification and selfie video authentication to curb fake profiles, but the changes have yet to deliver a clear lift in users or revenue.

On a post-earnings call, Bumble said it expects near-term weakness in paying users and new sign-ups as it prioritizes quality interactions over rapid expansion, adding that cuts in marketing spending contributed to an 8% year-over-year drop in payers.

Bumble’s current market capitalization stands at about $564 million, a significant decline from its post-IPO valuation in 2021.

Tinder-parent Match Group and other niche dating apps have also been contending with sluggish growth in payers, while experimenting with AI-powered matchmaking and subscription tiers aimed at fostering more meaningful connections.

In the third quarter, total paying users fell 16% to 3.6 million from a year earlier.

The company puts fourth-quarter revenue at $216 million to $224 million, with the midpoint below analysts’ estimate of $233.3 million, according to data compiled by LSEG.

Bumble saw its third-quarter revenue decline 10% to $246.2 million, above analysts’ expectations of $244.7 million.

(Reporting by Kritika Lamba in Bengaluru; Editing by Tasim Zahid and Sriraj Kalluvila)