Bumble IPO is less alluring than its profile pic

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Item 1 of 2 Bumble founder and CEO Whitney Wolfe Herd gives an interview in the Manhattan borough of New York City, U.S., January 31, 2019. REUTERS/Caitlin Ochs
[1/2]Bumble founder and CEO Whitney Wolfe Herd gives an interview in the Manhattan borough of New York City, U.S., January 31, 2019. REUTERS/Caitlin Ochs

Covering the wrinkles. Whitney Wolfe Herd knows when to pull the trigger. The founder of match-making app Bumble, which prides itself on letting women make the first move, told Texas Monthly magazine in 2018 that “this settling thing is insane.” In the Austin-based company’s initial public offering prospectus filed on Friday, Herd shows how an aging company can move on.

Bumble, launched in 2014, quickly became the go-to site for women looking for love. It grew rapidly over the past several years, but online dating’s fast-growing popularity slowed when Covid-19 discouraged face-to-face contact. The company’s revenue rose 11% in the 12 months ended in September compared to the previous period, at $543 million, but in fiscal year 2019 it jumped by more than a third.

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Bumble’s valuation still should be much higher than the $3 billion price tag pegged when private equity firm Blackstone took a majority stake in late 2019. Match’s shares have gone up more than 80% since early 2020; since July alone its enterprise-value-to-revenue figure has shot up more than 40% to almost 20 times, according to Refinitiv. That puts Bumble’s equity value at more than $10 billion, after accounting for nearly $400 million in net debt.
Given a steamy IPO market, Bumble’s figures should attract plenty of suitors. And yet the company has baggage. Average revenue per user was 4% less in September than just nine months earlier. In October the company made a $360 million cash payment to its private owners, of which Herd used a portion to repay a $119 million loan that the company had given her. That’s on top of almost $90 million in transaction fees to bankers, lawyers and so on for the Blackstone deal – an extraordinarily high number.
Such insider transactions aren’t unusual, especially in frothy markets, but they can prove regrettable. The dating app business is competitive, and new sites continue to crop up. Over the past several years Match, which is also the parent company of Tinder, has had to acquire Plenty of Fish, Hinge, OKCupid, and others to stay competitive. Bumble may be seeking public funds to deploy a similar strategy. But its days of being fresh meat are over.

Context News

  • Dating app Bumble has filed to go public with the Securities and Exchange Commission, according to a prospectus made public on Jan. 15.
  • In November 2019, Blackstone said it would take a majority stake in MagicLab, the parent of U.S. dating site Bumble, in a deal that valued the firm at $3 billion.

Editing by Pete Sweeney

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Lauren Silva Laughlin was one of the original members of the U.S. Reuters Breakingviews office, which she joined in 2006. Two stints as an investment banker notwithstanding - and one as a high school journalism teacher in Dallas - she rejoined Reuters in 2020 from the Wall Street Journal and is currently US editor. She has written on topics from private equity to the global financial collapse to the hipster bubble, and has spent much time on M&A sagas and activism. Lauren is a graduate of UNC-Chapel Hill and NYU. She was an all-American swimmer and tried out for the U.S. Olympic Swim Team in 1996 and 2000.

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