BMBL - NASDAQ

Hello, and thank you for joining Bumble's conference call. [Operator Instructions]. I will now hand the conference over to Cherryl Valenzuela, Vice President of Investor Relations. Please go ahead.

Thank you for joining us to discuss Bumble's Second Quarter Financial Results. With me today are Whitney Herd, Founder and CEO; Tariq Shaukat, President; and Anu Subramanian, CFO of Bumble. Before we begin, I'd like to remind everyone that certain statements made on this call today are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and reflects 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 statements 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 our earnings press release and filings with the SEC including our annual report on Form 10-K for the year ended December 31, 2022, and our subsequent periodic filings. During the call, we'll also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to, and not a substitute for or in isolation from, our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on the Investor Relations section of our website at ir.bumble.com. And with that, I'll turn it over to Whitney.

Thank you, Cherryl, and good afternoon, everyone. Thanks for joining our call today. Our second quarter results demonstrates the strength of our apps and our solid execution on our goals for the year. We delivered a strong quarter with better-than-expected revenue growth, accelerating paying users and robust profitability. Total Bumble Inc. revenue of $260 million was up 18% year-over-year, driven by Bumble app revenue growth of 23%. Our total paying users increased 20% to reach 3.6 million and adjusted EBITDA was $67 million, representing a 26% margin. With loneliness on the rise globally to the point that it's been declared an epidemic in the U.S., there is considerable room for each of our apps to grow and have significant impact on people's lives. We have a well-constructed portfolio of apps to bring people closer together. Within dating, we have an extensive global footprint where we have at least 1 top 3 app by download share in over 50 countries. Our focus is on continuing to drive market share gains, opening additional new markets and driving further depth of engagement and payer penetration. Let me provide an update on each of our apps. I'll start with Bumble app. Q2 revenue grew 23% to $208 million, driven by continued momentum in paying users. From Q1 to Q2, we added 139,000 payers, a significant acceleration from the 98,000 net adds we reported last quarter. The growth in payers was fueled by strength in top of funnel metrics, including new and reengaged users, reflecting the overall health of Bumble's ecosystem and our continued payer optimization efforts. As we've discussed previously, Bumble app's business model is built around generating durable growth. We focus on building preference, particularly with women, for our brand and our product, which in turn, drives strong word-of-mouth, downloads and high engagement. This delivers consistent growth quarter after quarter and is sustainable as we scale. The results are clear. Our core markets continue to grow, fueled both by new registrations and reengaged users. Our newer markets in Western and Southern Europe and key markets in Latin America also continue to perform well. On the product side, I'm proud of how well our team is advancing our vision and road map. Let me begin by updating you on some of the initiatives we've discussed previously. First, Compliment, our message-before-match feature continues to ramp in both usage and revenue contribution. Its unique value proposition has landed well with early adopters. This feature is driving improved brand perception and engagement as Compliment for [indiscernible] are 70% more likely to get a match. We're continuing to invest in the experience to drive greater awareness and adoption. We are also excited with the traction of Best Bees, our new feature that leverages the power of our new AI algorithm to curate mass recommendations for users. We were pleased with our initial test and decided in mid-Q2 to accelerate our rollout. Best Bees was added to our Bumble Premium subscription tier in late May and is now available worldwide. Early indicators have been positive. And after bundling Best Bees into Bumble Premium, we have seen uplift in both new subscribers and renewals. We also see Best Bees improving chat initiation rates. Best Bees also illustrates the practical and powerful ways we are employing AI to improve our customer experience. As I said last quarter, while AI is already core to several initiatives, including the recommendation and personalization experience, as well as our safety efforts, we are now exploring opportunities to bring generative AI into our users' experience. A few examples: Providing interactive advice on improving and curating profile, enhancing the relevancy and compatibility of matches and preventing toxic behavior. Overall, Gen AI will be a catalyst in reducing friction and pain points along the dating journey. At the start of the year, I talked about the foundational engineering work we've done that enables us to be more flexible with our subscription and consumable offerings. Bumble has successfully grown revenue primarily through 2 subscription tiers, Bumble Boost and Bumble Premium, with the majority of our paying users on the higher-priced tier. Two years since the introduction of Premium, as we look at the needs of our users on our service, it is clear that there are opportunities to further expand our subscription offerings on both ends of the pricing spectrum. We are continuing to test a base subscription tier to create a differentiated experience and more affordable offering that will appeal to Gen

Thank you, Whitney, and good afternoon, everyone. Our second quarter results demonstrate the unique appeal of our app and the strong execution of our team. Total revenue growth was robust, driven by product initiatives and international expansion at Bumble app and continued progress towards stabilization of Badoo. On the expense side, we continue to operate with discipline around spend driving strong free cash flow while investing in the long-term strength of our app. I'll walk you through our second quarter results before turning to our outlook for Q3 and full year 2023. Unless stated otherwise, all comparisons are on a year-over-year basis. Total Bumble Inc. revenue in Q2 was $260 million, up 18% year-over-year and above our outlook. Total paying users reached 3.6 million, up 20% with both Bumble and Badoo payers showing sequential and year-over-year growth. Total ARPU was $23.23 down 1%. Revenue from Bumble app was $208 million, up 23%. Bumble app revenue growth was primarily driven by a 28% increase in paying users to $2.5 million. On a sequential basis, we added 139,000 paying users in Q2. Paying user growth was driven by strength in active users and solid improvements in payer penetration. Bumble app's ARPU was $28.21, down 3% year-over-year and up 1% sequentially. The year-over-year decline was primarily driven by geographic mix shift. Now moving on to Badoo app and Other. Badoo app and other revenue was $52 million, up 2% year-over-year. Badoo app and Other paying users, excluding Fruitz, grew 7% to $1.2 million. On a sequential basis, paying users grew 34,000 in Q2. Badoo app and Other ARPU excluding Fruitz declined 5% to $12.83 primarily due to pricing optimization and geographic mix shift. Turning now to expenses. We continue to operate with discipline and efficiency. While we are focused on investing in our apps to bring our brands to market around the world, we are also managing incremental spending in headcount carefully, and we remain committed to expanding margins for this fiscal year and beyond. Total GAAP costs and expenses were $239 million for the quarter. On a non-GAAP basis, excluding stock-based compensation and other noncash or onetime items, our total non-GAAP costs and expenses were $193 million, up 17%. Cost of revenue was $76 million and grew 25%. As a percentage of revenue, cost of revenue was 29% versus 28% in the year ago period. We have now largely lapsed our compliance with the Google Play store mandate, which began in April 2022. Sales and marketing expenses grew 12% to $64 million. This represents 25% of revenue versus 26% in the year ago period. We remain diligent in our allocation of marketing spend and continue to see opportunities for leverage in particular from our brand marketing piece. G&A expenses were $29 million or 11% of revenue compared to $29 million or 13% of revenue last year. Product development expenses were $24 million or 9% of revenue versus $17 million or 8% in the year ago period. Investment in product and technology is a critical driver of our growth, but we maintain a high bar for net headcount additions. Q2 GAAP net earnings were $9 million compared to a net loss of $5 million in the year ago period. Q2 adjusted EBITDA was $67 million, up 23% and above the high end of our outlook range and represented a 26% adjusted EBITDA margin. Now turning to the balance sheet. Our cash position remained strong as we drove free cash flow of $40 million in Q2. We ended the quarter with a cash and cash equivalent balance of $381 million. Our total debt position was $623 million, of which the $6 million is due over the next 12 months. Our strong cash flow has enabled us to return excess capital to shareholders. Last quarter, we announced that our Board authorized $150 million share repurchase program. And in Q2, we repurchased 1.3 million shares for a total of $21 million. Now moving on to our financial outlook for Q3 and full year 2023. We are pleased with the results we achieved in the first half of the year and remain confident in our ability to deliver within the previous full year outlook ranges for revenue and adjusted EBITDA. For Q3, we expect the following: total revenue between $274 million and $280 million representing a growth rate of 19% at the midpoint of the range. We expect Bumble app revenue to be between $221 million and $225 million, representing a growth rate between 22% and 25%. Our Bumble app revenue outlook includes expectations for sequential net adds of approximately 140,000 to 150,000 in Q3. We are pleased with the turnaround we have seen with respect to Badoo in the past quarter. We expect Badoo sequential net adds to be slightly positive in Q3 similar to Q2 levels. We estimate adjusted EBITDA will be between $71 million and $73 million, representing 26% at the midpoint of the range. With the first half behind us, we are now narrowing our outlook for full year 2023. We estimate total Bumble Inc. revenue of between $1.055 billion and $1.072 billion, representing a growth rate of 17% to 19%. We expect Bumble app revenue to be between $852 million and $863 million, representing a growth rate between 23% and 24%. Our Bumble app revenue outlook includes expectations for full year net adds of approximately 510,000 to 525,000. For adjusted EBITDA, we maintain our expectation of at least 100 basis points of year-over-year margin expansion. In closing, we believe our business remains as strong as ever, and we continue to see momentum across our apps. The authentic focus on kind connections which is a hallmark of our offerings differentiates us in the marketplace and is demonstrated in our financial results. Our team is operating with discipline and purpose, to deliver value for our users while capturing the tremendous opportunity that we envision for our brand. Thank you for your continued support. And with that, operator, we can open it up for Q&A.

[Operator Instructions]. Our first question will come from the line of Alexander Steiger with Goldman Sachs.

So maybe 1for Whitney and 1 for Anu, given your recent acquisition of Official and the launch of Bumbe for Friends, could you dive a little deeper into your long-term vision of Bumble evolving into in ecosystem of loss? And what that could mean in terms of like future payer growth, conversion opportunities and retention dynamics? And then for Anu, I know it's too early to talk about '24, but how should we think about kind of like a normalized growth rate beyond '23?

Yes, hi, I'll start. Thank you so much for the question. So as we've said from day 1, Bumble has always been about kind connections at large. We obviously put a huge focus on romantic relationships and dating. But when you look at a person's life of relationships, dating is just 1 part of that. And we really want to be there with someone on their entire relationship journey. And so if you really look at this relationship spectrum, we want to be with you not just when you meet your partner, but then as you go off of the dating app and you then have a new relationship, we want to stay with you through that whole journey. And when you look at these relationships from a romantic [indiscernible], we're just talking about Official right now, they are cyclical. Most of these relationships in your 20s and in your 30s and even beyond, they don't last forever and always. And so we're with you when you find love and then as you build that relationship together, and then it really does turn into a cycle to come back into the dating ecosystem, whether that be Bumble or Badoo or [indiscernible]. Great. Thank you. So I'm not entirely sure where we dropped, but just to reiterate, and I'll keep this brief. Our lives are made up of multiple relationships. And Bumble has done a phenomenal job of really integrating kinder connections and a safer ecosystem into people's love lives. But what we have seen is extraordinary demand for what Bumble offers as a brand, as an ecosystem as a product in the friendship category and we have been hard at work to really launch a stand-alone product. And how we see this really building LTV and really retaining customers over the long term is you might find something romantic and then you move to Official. And then you're not in the market for love, but you are in the market for friendship and community because you've moved to a new city with that new relationship that you've just started. And so we are really here to help people find all components of their relationships. And we really believe that over the long term, we can be the company for love. And that does not mean just romantic love. That means keeping all of your relationships healthy and equitable. We do believe that there is a lot of opportunity to extend the LTV, as I said, of the customer journey and to really keep people engaged with our brand and our family of products over the long term versus just having them a short period of time as they seek a romantic partner. So this is really the long-term horizon, and we're really excited about what we're seeing in Bumble for Friends so far.

Yes. And Alex, to your question about what does this mean for us in terms of 2024, you're right, I think it's a little bit early to be talking about what growth rates look like. What I will say though is we are very excited about the fact that we have a very well-diversified portfolio. Obviously, within dating, we have Bumble, Badoo, which is doing really well now. Bumble is continuing to have momentum. And Fruitz is now also starting to launch in many countries. BFF is going to be exciting for us next year. And now we have Official in the mix as well. So we're excited about what this means for us in the coming years. Obviously, we'll provide more information in the coming quarters about what that means in terms of actual growth rates, et cetera.

Your next question comes from the line of Ygal Arounian with Citigroup.

I want to maybe focus on the comments, Line, around expanding the subscription offering to hire her lower tier. Maybe can you expand on that a little bit? I think on the lower tier, it might be similar to what you've talked about with Gen

Yes, thank you so much for the question. So we really look at monetization as a barbell, right? And if you look at the current offering, we really are primarily these 2 subscription offerings of boost and premium. But when you look at the very wide variety of customers, and user bases that we have, we really want to ensure that we are providing offerings that really cater to their unique needs. And these customers are not all just looking for 1 tier or 1 offering. And so let's start with the lower price tier, and then we'll move to the higher price tier. The lower price here is really about building an experience that's extremely native for particularly Gen

Okay. And maybe just a follow-up. I'll go to the ecosystem idea on keeping people in the ecosystem. You guys talked a little bit about leverage and brand marketing and your key competitors out there spending a little bit more on marketing. Within this new strategy, can you talk a little bit about how you expect to kind of build the marketing message around products outside of the core traditional dating use case and what that might look like?

Yes, of course. So we actually believe that there's strong benefit to the dating category even when we go out and start to market Bumble for Friends. I'll just give you a very quick example. We hear time and time again that people that thinks they're not interested in dating, but are interested in finding friends, they're joining Bumble for Friends with no intention to date. They then end up on Bumble for Friends. They change their mind very shortly after, and now they're already in the Bumble ecosystem. So it is a natural thing for them to choose Bumble dating as just a tail to them being in the friendship ecosystem. As we think about marketing more generally, and we'll kind of start at the Bumble app level, we have such a differentiated brand. It's extremely unique, and it's distinguished. It's particularly a favorite among women and Gen

Your next question comes from the line of Shweta Khajuria with Evercore ISI.

The first 1 is on Compliment and even the potential impact. So just could you please frame the magnitude of the impact that -- to the extent you can that's baked into the guidance? And then how we should be thinking about it next year? And then in terms of the margin expansion, under your comments, I just want to double-click on that. Your confidence in reiterating this year's guide, but also in your -- you're targeting ongoing margin expansion. It sounds like that's how you're managing your business for years ahead. So could you please talk about that as well, how you think about it? And that's it.

Great. Thanks, rate, for the question. So in terms of complements and best speeds, I think I'll sort of go back to what we said at the beginning of the year, right? The way we think about what's included in our revenue guide, obviously, we look at the data coming out of testing for all of these products. And then depending on how they land, depending on how they are doing as we globally roll them out, we make reasonable assumptions about what these would look like. Compliments is pacing to what we had hoped it would do at the beginning of the year. So we haven't really changed anything in terms of our assumptions around what that means for our revenue guide for the full year. That piece is an interesting one. If you remember, when we first launched Best Bees, we had said we hadn't fully figured out whether we wanted to have it be a stand-alone consumable product or have it be a subscription product. One of the things that we noticed after we rolled out was it was actually leading to really good conversion rate, our engagement rates were going up. So we made the decision to actually move Best Bees as a feature in our premium tier. And we've seen increase in people's adoption of the premiums here as a result of that. So that's definitely been a driver of payers for us this quarter as well. So as we continue to optimize this over the course of this year and next year, I think you'll see us continue to ramp up contribution for both of these products and for some of the other ones that Whitney talked about. In terms of margins, you are right. I think we've consistently been saying this. Our goal is to continue to expand margins, both in the short term as well as in the medium term. Obviously, our second quarter results show that we are able to get the revenue growth that we want to while still being very, very efficient with our spend. We came in higher than what we had expected from an EBITDA perspective because we just -- we were able to find leverage in areas of marketing spend and we just didn't feel like we needed to spend into the user growth that we were seeing. So that's great news for us. I think you'll see us continue to be diligent in how we think about spend for the rest of the year, we would always want the optionality to spend if we felt like that really positioned us well for growth into Q1. But again, if we didn't feel like the ROI was there, we will be very efficient and diligent about dropping it to the bottom line. So again, I think it's the same theme that you hear us talk about. Nothing has changed in terms of how we think about it.

Your next question comes from the line of Cory Carpenter with JPMorgan.

It looks like you've increased prices on certain Bumble app offerings in recent months. Could you just talk about the rationale in the type of response you're seeing from users? And then Anu, could you explain on the trends you're seeing that led you to raise your Bumble app net guide by 40,000 at the midpoint?

Yes. Sure, Cory. I can take a stab at both of those. So in terms of pricing, right, I think what's important to understand is we have a very sophisticated pricing architecture that we operate around. And the goals that our pricing team have are not just to increase prices in every market, but it's really to optimize for the value that we are offering our users. And this is something that isn't -- this isn't the first time we are doing this. This is something that we've been doing for a long time. And it's a continuous exercise we undertake in every market that we are in as we expand. And we also do this as we bring new products and features to market. We are constantly optimizing in making sure that our pricing looks right. So effectively, that means that in some markets, we increase prices, and we may equally lower prices in some markets if we feel like it's revenue accretive and it's going to lead to improvement in payer penetration. You'll see that in some international markets, especially as we see a lot of those markets come to scale. We actually drop prices because that really allows us to get more payers into the ecosystem, and that's ultimately the better outcome for us as a company. And when we think about pricing, we are -- we do extensive testing around what does price elasticity look like in different geographic markets around the world. And as we've said before, even in a country, different cities behave very differently. So we make sure that all of that is sort of taken into account. And we know that there are cohorts of people that are comfortable paying higher price points for a service that helps them connect with the people that they want, right? And so you heard Whitney talk about the higher price tier. All of the thinking is really coming around, again, are we offering the right value for our users. Going to your question about net adds. We've been very pleased with our payer performance all through the year. Our top of the funnel has been very strong. We've been optimizing really well, and that's led to higher payer penetration. So that's 1 of the reasons why we have confidence in our net add numbers. I made the point about how our international markets are doing well. And so we're definitely seeing strong payer growth come out of that. And the last thing I would point to is -- and I alluded to this briefly in my prior remarks. As some of these newer features are landing, we are really starting to get a better sense for whether these ARPU drivers are payer conversion drivers. And that, again, we are seeing strength in some of these towards payers, and that's why we feel very, very comfortable about raising our net add guide to the numbers that we just put out.

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

On Badoo, we're seeing some encouraging signs there. I know in the past, these markets have been more subject to impacts from COVID and economic disruption. What do you think we need to see in terms of the combination of overall market conditions and products to get back on a sustainable growth trajectory?

Andrew, it's Tariq. I'll start with that and Whitney may chime in as well. I think with Badoo, you're right, there's been a lot of macro effects that have hit Badoo over the years, both geopolitical and macro effects. I think 1 of the things that we have learned is that the part of Badoo that is resonating really well in this post-pandemic environment is the instant experience. The fact you have to wait less to connect with someone, the fact that there's more immediacy to that experience, and that, we think, is what is driving the top of funnel results that we're seeing. So this is not just a story here. We're getting better at pricing or anything like that here. I think 1 of the key indicators that we look at internally is are we actually seeing stronger top of funnel? Are we seeing stronger user engagement? And then, of course, are we able to monetize it? And so I think that we feel very good about how the product has evolved to really focus on that immediacy element. The brand refresh that Whitney mentioned that we're talking about will kind of without -- this won't be a huge marketing campaign per se, but it will start to just emphasize those points more and more. And we think that, that will continue to show a pretty broad-based top of funnel impact for us, which we're very good at converting.

Great. And then a quick follow-up, if I could. From some of the work that you've done and your surveys of users, et cetera, do you have a view on which of the lower price or the higher-priced tier could be bigger from a revenue perspective?

Yes. I think it's too early to sort of quantify the impact of some of these things. I think what I would just say is we have a pretty large user base of people that are using our product and a small portion of them pay for our product, right? So this is really a mechanism for us to provide features for the spectrum of users that are already on our product and then create value for them, right? So that's really how I would think about it. And then there are a lot of people that may not be using dating apps today, but they really want to date. And so this is also a mechanism for us to get more people into the dating ecosystem as a whole. So we're very excited about what this means for us. Obviously, we still have a little bit of work to do, and we'll provide more updates by the end of the year.

Yes, I would just add 1 thing, that our brand is so uniquely positioned for this higher and lower tier offering. We have so many people that come to us and say, we want to use Bumble, but we want something more premium, more curated, we would be on this, we would pay more. And we're not just talking a handful. So we really feel that there's a huge opportunity to really cater to the folks that are looking for something much more premium than what we can offer today.

Your next question comes from the line of Bin Glass with Deutsche Bank.

This is Jeff on for Ben. Can you talk a little bit about how the international launches are failing? Are any of your competitors marketing effort age, having any discernible impact on Bumble's growth internationally. Also, can you give us just a little more sense of the product road map over the next 6 to 12 months? I know you talked about higher price tier largely this year, but any more color on what we should be focusing over the next 6 to 12 months would be helpful.

Yes, sure. So growth in our international markets really for Bumble continues to be a strong source strength for us. So we're seeing not only this and download data, but also in MAU and payer growth. We continue to see really positive absolute downloads in markets like Germany where we've maintained our #2 spot. So in Q2, we also successfully expanded our marketing efforts and our launches in some newer markets like Italy and Portugal, which really continued our European expansion following our Spain launch last year. And our recent launches in places like Chile, Argentina, Colombia, throughout Latin America, these are also really continuing to gain traction. And so some of these markets such as France and Germany, they have become more competitive due to these elevated marketing spends from some industry players, but we're very pleased with our overall performance. And candidly, the loyalty we're seeing from women and Gen

Your next question comes from the line of John Blackledge with TD Cowen.

It's Logan on for John. First question on AI and some of these Gen AI features. Do you plan to monetize some of these tools going forward here? Will they be more focused on just the broader user experience? And then secondly, just on capital allocation, could you discuss the buyback levels in 2Q and then how we should think about those looking forward to the back half of the year?

Yes, thanks for the question. I'll take the first one. So I just want to kind of set the stage on AI for a second, and say even though this is a big trend, that we're hearing about everywhere, Bumble has been leveraging AI into our products for years across not just our recommendation engine, but safety and our content moderation efforts, and so much more. But as these new tools protect, particularly this generative AI front that have come forward, we're really excited about how they can actually be integrated into the business not just from a product standpoint, but really across everything top to bottom in the company. If you do just look at the user journey, we look at an opportunity that can be both freemium but also part of subscription bundles, right? So as we go higher tier, AI can be a big part of those offerings and candidly on the lower price offerings as well. Just a few random applications that I can pull top of mind right now for you to start thinking about, how do we further leverage AI-generated compatibility, right, in the encounter profiles? How do we really look at AI-generated support on guiding good bios and choosing the best photos and really getting good feedback on this connections journey. First move, right, huge opportunity in first moves and really driving engagement all through the funnel. So that's the way I would think about it at this time.

Yes. And just quickly on capital allocation. I think we've sort of consistently said this before, we have a capital allocation strategy that takes into account what we are doing from an organic growth perspective, what is our -- what is our plan around our future sort of M&A strategy. And then we are in the fortunate position of being able to return capital back to our shareholders, and that's what you saw us do. These are decisions that we make on a daily basis as we operate our business. So nothing really to call out yet. Obviously, we'll keep you posted every quarter in terms of what that means.

Your next question comes from the line of Mark Kelley with Stifel.

I was hoping you could touch on back-to-school a little bit. If I remember correctly, I think some of the product and marketing decisions from last year were kind of moved from Q3 to Q4 based on some of the feedback from your campus ambassadors. Is that something we can expect again this year, more like a Q4 event, if you will? And then second, not to keep talking about generative AI, but curious if we can expect that to be -- to impact margins or just kind of listening to your last answer, maybe it's margin neutral. Any color there would be great.

I'll start with back to school and then I'm sure Anu will talk about the margin impact of gen AI. So we are paying a lot of attention to the kind of seasonality patterns that you see post COVID. One of the things in 2021, a lot of people, even though they were back in school, they weren't really in school. They weren't able to socialize they weren't able to do the things that people normally do when they first show up on a college campus. We are -- we saw that change last year and that was some of the feedback that we got. We are expecting the same here that when when you first show up on campus, your priority is meeting your new roommate and figuring out who do you want to happen to live in the same storm as you and things like that. And so from a marketing and a product launch standpoint anything specifically targeting that college community, we would not look to do in the first week or 2 or 3 of a new school year. It's not to say it will be delayed months, but we're just try to be very thoughtful about the timing. And I think given most back school timings this year, that would be late September, October, similar to what happened last year. So we're expecting that it's really a reflection we think of the sort of revised back to normal seasonality trends that we're seeing.

Yes. And just quickly on your question around impact of gen AI on margins, I think, obviously, we're very excited about what this means from a consumer and user experience perspective. So that's definitely an area that we are exploring quite strongly. But equally, on the operations side, and I'm talking more internal operations, gen AI has tremendous use cases in terms of being able to improve efficiencies, productivity, et cetera, et cetera. So those are all areas that we are definitely exploring. I think they are early days in terms of what areas you're talking about in the area of software development. Obviously, that's 1 that has the most amount of thought that people have already put into it. So our teams are taking a close look at how they can take some of those use cases and apply it. But there are lots of other areas, whether it's marketing, whether it's the creative side, things like that, where gen AI can be a huge sort of improvement in productivity and efficiency, which obviously hopefully will also have an impact on bottom line. Again, I think it's too early to to sort of call out exactly what that means in terms of margins, but it's definitely an area that we are exploring.

Your final question will come from the line of Lauren Schenk with Morgan Stanley.

This is Nathan Feather on for Lauren. Just two quick ones for me. First for Bumble app, how should we think about the balance of payer RPP growth as we exit the year and understand I think it's really how that trends you think in fiscal '24? And then more broadly, for singles that haven't tried online dating before, what do you think are the key unlocks you're working towards that could bring more of those pieces into the funnel?

Yes, sure. So I'll start with the second question, thank you. I think it's a handful of things. Number one is really being able to deliver something that they feel has the same intention of them. So there's a lot of people that have not tried online dating because they have an idea about it that it might be too casual or it might be something that won't actually deliver them a real relationship. So I think really the way we're approaching this is going through really methodically with focus groups of folks who do not use dating apps that are very single and understanding what are the biggest pain points, what are the things keeping them off of the app. And then this is exactly how we're backing into our new product offerings. This is exactly how we are determining not only the products that we're going to be releasing into the world, but what is the marketing strategy and how are we going to actually capture this TAM. The second thing is really trust safety discretion. We rank very high on this. I think in the category, we have made this our front and center focus from day 1. That is what I built the original kind of founding and mission of this business on is a safer, more trusted experience, but really being able to improve upon that from a product standpoint in these offerings. So these are just a couple of examples, but I will say it's quite fascinating when you do look at the single market. When you extrapolate who's actually on a dating app, it's really quite low. And so the great news here is there's a lot of TAM out there. There's a lot of folks to bring on. The last comment here before I turn to Anu is this hybrid of IRL and online. So what we have seen is there is some type of a mental block for some folks that they don't want to say or they don't want to kind of admit to that they have met someone online. And so we have been so focused on a lot of this IRL efforts for our marketing where you kind of start offline at 1 of our events, and then you come online. And so taking a hybrid approach has been very important to us. So what I would leave you with is we are very focused on this. We solve problems and stay tuned.

Yes. And Nathan, just quickly to talk about the sort of payer and ARPU cadence. Obviously, we've given the guidance for Q3 net adds between 140 and 150. You can extrapolate what that means in terms of Q4. We see a seasonal dip in Q4 usually. So you'll see that similar to what we've seen in the prior quarters. And then from an ARPU perspective, if you remember, when we started the year, we said that we expect our people to be flat to slightly negative. I think our revenue outlook hasn't changed since the beginning of the year. And so we are still pretty much tracking to that. So probably negative 1% to 2% in terms of our people is likely where we will end up for the year. That's how we're thinking about it.