Bumble: dating app is no Match for Tinder

Online dating app users are more interested in romance than friendship. Bumble has tried to differentiate itself from a crowded market with Bumble BFF, a way to meet new friends. But it does not feature in the company’s revenue breakdown.

Happily, those looking for love are increasingly willing to pay up. Bumble generates most of its money from premium subscriptions. In the first three months of the year, revenue increased nearly a quarter on the previous year to $211mn while operating costs fell almost a third.

Bumble was created with a goal of making dating apps better for women. Lousy experiences elsewhere work in its favour. In about 18 months, paying members have grown from 1.1mn to 3mn. But it remains far smaller than rival Tinder. Bumble was downloaded 100,000 times from Apple’s App Store and Google Play in April, according to Sensor Tower data. Tinder was downloaded 3mn times.

The size of Tinder’s parent company Match casts a shadow over the sector. Its growth and 31 per cent ebitda margin sets an industry standard. Bumble’s margin is slowly catching up. But it has less than half its rival’s audience. Attempts to increase users via acquisition include the recent purchase of quirky French dating app Fruitz, which assigns fruit to various relationship types. But there is nothing for sale that can match Tinder’s notoriety.

Still, there is reason to think Bumble’s $3.5bn enterprise value might climb.

Gay dating app Grindr is planning to join the markets via a Spac deal that will value the company at $2.1bn, including debt. Although Grinder has 11mn users it has just 723,000 subscribers. The deal therefore values each paying user at $2,900. Using the same metric, Bumble’s 3mn paying users might give the company an enterprise value of $8.7bn.

The difference is Grindr’s revenue is rising faster — up 30 per cent last year. It spends little on marketing, relying on users to spread the word. Grindr is also better known for short-term flings than relationships. That may be something dating app users want even more than romance.