Bumble's Customer Retention Rate Slips: Is Growth Getting Harder?

Bumble BMBL shares tumbled 8% in after-hours trading following second-quarter 2025 earnings that revealed deepening customer retention challenges, with paying users declining 8.7% to 3.8 million. The dating app operator reported revenues of $248 million, down 7.6% year over year, as the company struggles to maintain user engagement despite significant investments in AI and product overhauls.

The retention crisis extends beyond headline numbers. Total users dropped from approximately 58 million in 2023 to 50 million by mid-2025, while the flagship Bumble app saw paying users fall 11% to 2.5 million. Though average revenue per paying user edged up 1% to $21.69, this modest gain fails to offset the subscriber exodus. Management's strategic pivot toward quality over quantity has yielded mixed results — full-price payers now represent 80% of total subscribers, up from 70% in the first quarter, yet overall user attrition continues accelerating.

Financial resilience masks operational headwinds. Adjusted EBITDA surged 26% to $94.6 million, achieving a 38.1% margin through aggressive cost-cutting that included 30% workforce reductions and $100 million in expense elimination. The company maintains $262 million in cash with $71 million in quarterly cash flow generation.

However, third-quarter guidance projects further deterioration, with revenues expected between $240 million and $248 million, representing a 12% to 9% year-over-year decline. Management declined to provide full-year 2025 guidance, acknowledging that rebuilding momentum requires several quarters.

Rivals Face Similar User Retention Pressures

Match Group MTCH and Grindr GRND face comparable user retention challenges, though with varying degrees of success. Match Group maintains market dominance with more than 16 million paying users across its portfolio, including Tinder, Hinge, and OkCupid, demonstrating greater resilience despite industry-wide headwinds. Match Group's diversified approach across multiple brands provides cushion against single-app volatility, unlike Bumble's concentrated exposure.

Grindr focuses on the LGBTQ+ segment, operating as a publicly traded pure-play dating platform. Grindr's niche positioning potentially insulates it from broader market trends affecting mainstream apps. While Match Group reported stabilizing metrics through diversified revenue streams, Grindr's specialized user base offers different retention dynamics. Both Match Group and Grindr outperform Bumble's 8.7% paying user decline, suggesting strategic positioning matters amid sector transformation.

BMBL’s Share Price Performance, Valuation and Estimates

Shares of Bumble have plunged 21.9% in the year-to-date period against the Zacks Computer and Technology sector’s growth of 12.5% and Zacks Internet - Software industry’s 19.3% return.

BMBL’s YTD Price Performance

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From a valuation standpoint, Bumble trades at a significant discount with a forward P/E of approximately 18.8x, notably below the Zacks Internet - Software industry average of 38.87x.

BMBL Valuation

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The Zacks Consensus Estimate for third-quarter revenues is pegged at $244.56 million, indicating a 10.62% year-over-year decline, with earnings expected to increase 11.43% to 39 cents per share.

Bumble currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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