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Bumble Inc. - Quarter Report: 2021 March (Form 10-Q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-40054

 

Bumble Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-3604367

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1105 West 41st Street

Austin, Texas

78756

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (512) 696-1409

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.01 per share

 

BMBL

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

☒`

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of April 30, 2021, Bumble Inc. had 119,799,036 shares of Class A common stock, par value $0.01 per share, outstanding and 20 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 

 


 

SPECIAL NOTE REGARDING Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this Quarterly Report, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the current views of management of Bumble Inc. with respect to, among other things, its operations, its financial performance, its industry and the impact of the Coronavirus Disease 2019 (“COVID-19”) on its business. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believe(s),” “expect(s),” “potential,” “continue(s),” “may,” “will,” “should,” “could,” “would,” “seek(s),” “predict(s),” “intend(s),” “trends,” “plan(s),” “estimate(s),” “anticipates,” “projection,” “will likely result” and or the negative version of these words or other comparable words of a future or forward-looking nature. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include, but are not limited to, the following:

 

our ability to retain existing users or attract new users and to convert users to paying users

 

competition and changes in the competitive landscape of our market

 

our ability to distribute our dating products through third parties, such as Apple App Store or Google Play Store, and offset related fees

 

the impact of data security breaches or cyber attacks on our systems and the costs of remediation related to any such incidents

 

the continued development and upgrading of our technology platform and our ability to adapt to rapid technological developments and changes in a timely and cost-effective manner

 

our ability to obtain, maintain, protect and enforce intellectual property rights and successfully defend against claims of infringement, misappropriation or other violations of third-party intellectual property

 

our ability to comply with complex and evolving U.S. and international laws and regulations relating to our business, including data privacy laws

 

foreign currency exchange rate fluctuations

 

risks relating to certain of our international operations, including successful expansion into new markets

 

control of us by affiliates of The Blackstone Group Inc. (“Blackstone”) and our Founder

 

the outsized voting rights of affiliates of Blackstone and our Founder

 

the inability to attract hire and retain a highly qualified and diverse workforce, or maintain our corporate culture

 

changes in business or macroeconomic conditions, including the impact of COVID-19 (and other widespread health emergencies or pandemics) and measures taken in response, lower consumer confidence in our business or in the online dating industry generally, recessionary conditions, increased unemployment rates, stagnant or declining wages, political unrest, armed conflicts or natural disasters

For more information regarding these and other risks and uncertainties that we face, see Part I, “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020. These factors should not be construed as exhaustive and we caution you that the important factors referenced above may not contain all of the factors that are important to you. Bumble Inc. undertakes no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

Website and Social Media Disclosure

We use our websites (www.bumble.com and ir.bumble.com) and at times our corporate Twitter account (@bumble) to distribute company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, filings with the Securities and Exchange Commission (“SEC”) and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Bumble when you enroll your e-mail address by visiting the “E-mail Alerts” section of our website at ir.bumble.com. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

i


Certain Definitions

As used in this Quarterly Report, unless otherwise noted or the context requires otherwise:

 

 

“Badoo App and Other Average Revenue per Paying User” is a metric calculated based on Badoo App and Other Revenue in any measurement period, excluding any revenue generated from advertising and partnerships or affiliates, divided by Badoo App and Other Paying Users in such period divided by the number of months in the period.

 

a “Badoo App and Other Paying User” is a user that has purchased or renewed a subscription plan and/or made an in-app purchase on the Badoo app in a given month (or made a purchase on one of our other apps that we owned and operated in a given month, or purchase on other third-party apps that used our technology in the relevant period). We calculate Badoo App and Other Paying Users as a monthly average, by counting the number of Badoo App and Other Paying Users in each month and then dividing by the number of months in the relevant measurement period.

 

“Badoo App and Other Revenue” is revenue derived from purchases or renewals of a Badoo subscription plan and/or in-app purchases on the Badoo app in the relevant period, purchases on one of our other apps that we owned and operated in the relevant period, purchases on other third party apps that used our technology in the relevant period and advertising, partnerships or affiliates revenue in the relevant period.

 

“Blocker Companies” refer to certain entities that are taxable as corporations for U.S. federal income tax purposes in which the Pre-IPO Shareholders held interests.

 

“Blocker Restructuring” refers to certain restructuring transactions that resulted in the acquisition by Pre-IPO Shareholders of shares of Class A common stock in exchange for their ownership interests in the Blocker Companies and Bumble Inc. acquiring an equal number of outstanding Common Units.

 

“Bumble,” the “Company,” “we,” “us” and “our” refer to Bumble Inc. and its consolidated subsidiaries.

 

“Bumble App Average Revenue per Paying User” is a metric calculated based on Bumble App Revenue in any measurement period, divided by Bumble App Paying Users in such period divided by the number of months in the period.

 

a “Bumble App Paying User” is a user that has purchased or renewed a Bumble subscription plan and/or made an in-app purchase on the Bumble app in a given month. We calculate Bumble App Paying Users as a monthly average, by counting the number of Bumble App Paying Users in each month and then dividing by the number of months in the relevant measurement period.

 

 

“Bumble App Revenue” is revenue derived from purchases or renewals of a Bumble subscription plan and/or in-app purchases on the Bumble app in the relevant period.

 

“Bumble Holdings” refers to Buzz Holdings L.P., a Delaware limited partnership.

 

“Blackstone” or “our Sponsor” refer to investment funds associated with The Blackstone Group Inc.

 

“Class B Units” refers to the interests in Bumble Holdings called “Class B Units” that were outstanding prior to the Reclassification.

 

“Common Units” refers to the new class of units of Bumble Holdings created by the Reclassification and does not include Incentive Units.

 

“Founder” refers to Whitney Wolfe Herd, the founder of Bumble, our Chief Executive Officer and member of our board of directors, together with entities beneficially owned by her.

 

“Incentive Units” refers to the new class of units of Bumble Holdings created by the reclassification of the Class B Units in the Reclassification. The Incentive Units are “profit interests” having economic characteristics similar to stock appreciation rights and having the right to share in any equity value of Bumble Holdings above specified participation thresholds. Vested Incentive Units may be converted to Common Units and be subsequently exchanged for shares of Class A common stock.

 

“IPO” refers to the initial public offering.

 

“Offering Transactions” refers to the offering of Class A common stock in the IPO and certain related transactions, as defined in “Item 2―Management’s Discussion and Analysis of Financial Condition and Results of Operations―2021 Developments―Initial Public Offering and Offering Transactions”.

 

“Pre-IPO Common Unitholders” refer to pre-IPO owners that hold Common Units following the Reclassification.

ii


 

 

“pre-IPO owners” refer to our Founder, our Sponsor, an affiliate of Accel Partners LP and management and other equity holders who are the owners of Bumble Holdings immediately prior to the Offering Transactions.

 

“Pre-IPO Shareholders” refer to pre-IPO owners that received shares of Class A common stock of Bumble Inc. pursuant to the Blocker Restructuring.

 

“Principal Stockholders” refers collectively to our Founder and our Sponsor.

 

“Reclassification” refers to the reclassification of the limited partnership interests of Bumble Holdings in connection with the IPO pursuant to which certain outstanding Class A units were reclassified into a new class of limited partnership interests that we refer to as “Common Units” and certain outstanding Class B Units were reclassified into a new class of limited partnership interests that we refer to as “Incentive Units.”.

 

“Reorganization Transactions” refer to certain transactions prior to the completion of the IPO which were accounted as a reorganization of entities under common control.

 

 

“Sponsor Acquisition” refers to the acquisition on January 29, 2020 by our Sponsor of a majority stake in Worldwide Vision Limited and certain transactions related thereto.

 

“Total Average Revenue per Paying User” is a metric calculated based on Total Revenue in any measurement period, excluding any revenue generated from advertising and partnerships or affiliates, divided by the Total Paying Users in such period divided by the number of months in the period.

 

“Total Paying Users” is the sum of Bumble App Paying Users and Badoo App and Other Paying Users.

 

“Total Revenue” is the sum of Bumble App Revenue and Badoo App and Other Revenue.

 

“user” is a user ID, a unique identifier assigned during registration.

 

iii


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations

6

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

7

 

Condensed Consolidated Statements of Changes in Equity (Successor)

8

 

Condensed Consolidated Statements of Changes in Equity (Predecessor)

9

 

Condensed Consolidated Statements of Cash Flows

11

 

Notes to Unaudited Condensed Consolidated Financial Statements

12

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

48

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

50

Item 6.

Exhibits

52

 

Signatures

53

 

 

 

 

iv


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Bumble Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and par value amounts)

 

 

 

(Unaudited)

March 31, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

246,002

 

 

$

128,029

 

Accounts receivable

 

 

62,168

 

 

 

41,595

 

Other current assets

 

 

86,342

 

 

 

81,387

 

Total current assets

 

 

394,512

 

 

 

251,011

 

Right-of-use assets

 

 

10,616

 

 

 

11,711

 

Lease receivable

 

 

1,099

 

 

 

1,069

 

Property and equipment, net

 

 

16,449

 

 

 

16,833

 

Goodwill

 

 

1,540,112

 

 

 

1,540,915

 

Intangible assets, net

 

 

1,788,250

 

 

 

1,812,410

 

Deferred tax assets, net

 

 

14,809

 

 

 

 

Other noncurrent assets

 

 

4,267

 

 

 

3,319

 

Total assets

 

$

3,770,114

 

 

$

3,637,268

 

LIABILITIES AND BUMBLE INC. SHAREHOLDERS’ / BUZZ HOLDINGS L.P. OWNERS’ EQUITY

 

 

 

 

 

 

 

 

Accounts payable

 

$

15,047

 

 

$

23,741

 

Deferred revenue

 

 

33,370

 

 

 

31,269

 

Accrued expenses and other current liabilities

 

 

142,652

 

 

 

180,986

 

Current portion of long-term debt, net

 

 

9,996

 

 

 

5,338

 

Total current liabilities

 

 

201,065

 

 

 

241,334

 

Long-term debt, net

 

 

619,542

 

 

 

820,876

 

Deferred tax liabilities, net

 

 

 

 

 

428,087

 

Tax receivable agreement liability

 

 

356,755

 

 

 

 

Other liabilities

 

 

118,546

 

 

 

62,190

 

Total liabilities

 

$

1,295,908

 

 

$

1,552,487

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

 

Bumble Inc. Shareholders’ / Buzz Holdings L.P. Owners’ Equity:

 

 

 

 

 

 

 

 

Class A common stock (par value $0.01 per share, 6,000,000,000 shares authorized; 140,142,374 shares issued; and 115,343,526 shares outstanding as of March 31, 2021)

 

 

1,401

 

 

 

 

Class B common stock (par value $0.01 per share, 1,000,000 shares authorized; 20 shares issued and outstanding as of March 31, 2021)

 

 

0

 

 

 

 

Preferred stock (par value $0.01; authorized 600,000,000 shares; no shares issued and outstanding as of March 31, 2021)

 

 

 

 

 

 

Limited Partners’ interest    

 

 

 

 

 

1,903,121

 

Additional paid-in capital

 

 

2,259,381

 

 

 

Treasury stock

 

 

(1,018,365

)

 

 

 

Accumulated deficit

 

 

(28,845

)

 

 

 

Accumulated other comprehensive income

 

 

178,672

 

 

 

180,852

 

Total Bumble Inc. shareholders’ / Buzz Holdings L.P. owners’ equity

 

 

1,392,244

 

 

 

2,083,973

 

Noncontrolling interests

 

 

1,081,962

 

 

 

808

 

Total shareholders’ / owners’ equity

 

 

2,474,206

 

 

 

2,084,781

 

Total liabilities and shareholders’ / owners’ equity

 

$

3,770,114

 

 

$

3,637,268

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


Bumble Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share / unit data)

 

 

 

Successor

 

 

 

Predecessor

 

 

 

Three Months

Ended

March 31,

2021

 

 

Period from

January 29,

through

March 31,

2020

 

 

 

Period from

January 1,

through

January 28,

2020

 

Revenue

 

$

170,713

 

 

$

79,145

 

 

 

$

39,990

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

47,747

 

 

 

21,627

 

 

 

 

10,790

 

Selling and marketing expense

 

 

46,838

 

 

 

27,287

 

 

 

 

11,157

 

General and administrative expense

 

 

126,524

 

 

 

60,034

 

 

 

 

44,907

 

Product development expense

 

 

35,045

 

 

 

6,945

 

 

 

 

4,087

 

Depreciation and amortization expense

 

 

26,955

 

 

 

16,313

 

 

 

 

408

 

Total operating costs and expenses

 

 

283,109

 

 

 

132,206

 

 

 

 

71,349

 

Operating loss

 

 

(112,396

)

 

 

(53,061

)

 

 

 

(31,359

)

Interest (expense) income

 

 

(7,729

)

 

 

(4,539

)

 

 

 

50

 

Other income (expense), net

 

 

6,991

 

 

 

612

 

 

 

 

(882

)

Loss before tax

 

 

(113,134

)

 

 

(56,988

)

 

 

 

(32,191

)

Income tax benefit (provision)

 

 

436,576

 

 

 

1,179

 

 

 

 

(365

)

Net earnings (loss)

 

 

323,442

 

 

 

(55,809

)

 

 

 

(32,556

)

Net (loss) earnings attributable to noncontrolling interests

 

 

(18,348

)

 

 

(48

)

 

 

 

1,917

 

Net earnings (loss) attributable to Bumble Inc. shareholders / Buzz Holdings L.P. owners

 

$

341,790

 

 

$

(55,761

)

 

 

$

(34,473

)

Net earnings (loss) per share / unit attributable to Bumble Inc.

   shareholders / Buzz Holdings L.P. owners

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share / unit

 

$

1.74

 

 

$

(0.02

)

 

 

 

 

 

Diluted earnings (loss) per share / unit

 

$

1.69

 

 

$

(0.02

)

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


Bumble Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Operations

(in thousands)

 

 

 

Successor

 

 

 

Predecessor

 

 

 

Three Months

Ended

March 31,

2021

 

 

Period from

January 29,

through

March 31,

2020

 

 

 

Period from

January 1,

through

January 28,

2020

 

Net earnings (loss)

 

$

323,442

 

 

$

(55,809

)

 

 

$

(32,556

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

(3,567

)

 

 

(88,078

)

 

 

 

(774

)

Total other comprehensive loss, net of tax

 

 

(3,567

)

 

 

(88,078

)

 

 

 

(774

)

Comprehensive income (loss)

 

 

319,875

 

 

 

(143,887

)

 

 

 

(33,330

)

Comprehensive (loss) income attributable to noncontrolling interests

 

 

(19,735

)

 

 

(48

)

 

 

 

1,917

 

Comprehensive income (loss) attributable to Bumble Inc.

   shareholders / Buzz Holdings L.P. owners

 

$

339,610

 

 

$

(143,839

)

 

 

$

(35,247

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

7


 

Bumble Inc.

Unaudited Condensed Consolidated Statements of Changes in Equity (Successor)

 

 

Limited

Partners'

 

 

Class A

Common Stock

 

 

Class B

Common Stock

 

 

Additional

Paid-in

 

 

Treasury

Stock

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Noncontrolling

 

 

Total

Shareholders’/ owners'

 

 

 

Equity

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Deficit

 

 

Income

 

 

Interests

 

 

Equity

 

 

 

 

 

 

 

(in thousands, except share amount)

 

Balance as of

   January 1, 2021

 

 

1,903,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

180,852

 

 

 

808

 

 

 

2,084,781

 

Acquisition of

   noncontrolling

   interests

 

 

808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(808

)

 

 

 

Net earnings prior to

   Reorganization

   Transactions

 

 

370,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

370,635

 

Stock-based

   compensation expense

 

 

11,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,587

 

Effect of the

   Reorganization

   Transactions

 

 

(2,286,151

)

 

 

82,642,374

 

 

 

826

 

 

 

 

 

 

 

 

 

979,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,306,050

 

 

 

 

Issuance of Class A

   common stock

   sold in the initial

   public offering, net

   of offering costs

 

 

 

 

 

57,500,000

 

 

 

575

 

 

 

20

 

 

0

 

 

 

2,236,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121,009

 

 

 

2,358,371

 

'Purchase of Class A

    Common Stock

    in the initial

    public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,798,848

 

 

 

(1,018,365

)

 

 

 

 

 

 

 

 

 

 

 

(1,018,365

)

Purchase of

    Common Units from

    Pre-IPO  Common

    Unitholders in the

    initial public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(609,489

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(363,800

)

 

 

(973,289

)

Vested Incentive Units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,067

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,067

 

 

 

 

Issuance of Founder

   loan common units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,371

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,371

 

 

 

 

Equity plan modification

   from liability to equity

   settled due to

   Reorganization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,107

 

Tax receivable

   agreement liability

   from Reorganization

   Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(356,755

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(356,755

)

Stock-based

   compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,894

 

Net loss subsequent

   to Reorganization

   Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,845

)

 

 

 

 

 

(18,348

)

 

 

(47,193

)

Other comprehensive

   loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,180

)

 

 

(1,387

)

 

 

(3,567

)

Balance as of

   March 31, 2021

 

 

 

 

 

140,142,374

 

 

 

1,401

 

 

 

20

 

 

0

 

 

 

2,259,381

 

 

 

24,798,848

 

 

 

(1,018,365

)

 

 

(28,845

)

 

 

178,672

 

 

 

1,081,962

 

 

 

2,474,206

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8


Bumble Inc.

Unaudited Condensed Consolidated Statements of Changes in Equity / Deficit (Predecessor)

 

 

 

Issued Share Capital

 

 

Treasury Stock

 

 

Additional

Paid-in

 

 

Retained

Earnings

(Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Predecessor

Shareholders’

 

 

Noncontrolling

 

 

Total

Shareholders’

 

 

 

Units

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Income (Loss)

 

 

Equity (Deficit)

 

 

Interests

 

 

Equity (Deficit)

 

 

 

(in thousands)

 

Balance as of January 1, 2020

 

 

108,431

 

 

$

11

 

 

 

6,940

 

 

$

(3,788

)

 

$

3,449

 

 

$

23,352

 

 

$

644

 

 

$

23,668

 

 

$

6,014

 

 

$

29,682

 

Net (loss) earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,473

)

 

 

 

 

 

(34,473

)

 

 

1,917

 

 

 

(32,556

)

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

336

 

 

 

 

 

 

 

 

 

336

 

 

 

 

 

 

336

 

Other comprehensive loss,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(774

)

 

 

(774

)

 

 

 

 

 

(774

)

Balance as of January 28, 2020

 

 

108,431

 

 

$

11

 

 

 

6,940

 

 

$

(3,788

)

 

$

3,785

 

 

$

(11,121

)

 

$

(130

)

 

$

(11,243

)

 

$

7,931

 

 

$

(3,312

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

 

 

 

 

9


 

Bumble Inc.

Unaudited Condensed Consolidated Statements of Changes in Equity

(Successor)

 

 

Class A

Common Stock

 

 

Class B

Common Stock

 

 

Limited

Partners Interest

 

 

Additional

Paid-in

 

 

Treasury

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Bumble

Inc.

Owners’ /

Shareholders’

 

 

Noncontrolling

 

 

Total

Shareholders’

/ Owners’

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Units

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Loss

 

 

Equity

 

 

Interests

 

 

Equity

 

 

(in thousands, except shares amount)

 

Balance as of January 29, 2020

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Net loss from January 29, 2020 to March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,761

)

 

 

(48

)

 

 

(55,809

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,420

 

 

 

 

 

 

1,420

 

Issuance of Limited Partners' Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

2,453,233

 

 

 

2,334,233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,334,233

 

 

 

 

 

 

2,334,233

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(88,078

)

 

 

(88,078

)

 

 

 

 

 

(88,078

)

Balance as of March 31, 2020

 

 

 

$

 

 

 

 

 

$

 

 

 

2,453,233

 

 

$

2,334,233

 

 

$

 

 

$

 

 

$

 

 

$

(88,078

)

 

$

2,191,814

 

 

$

(48

)

 

$

2,191,766

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

 

 

 

10


 

 

Bumble Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Successor

 

 

 

Predecessor

 

 

 

Three Months

Ended

March 31,

2021

 

 

Period from

January 29,

through

March 31,

2020

 

 

 

Period from

January 1,

through

January 28,

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

323,442

 

 

$

(55,809

)

 

 

$

(32,556

)

Adjustments to reconcile net earnings (loss) to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

26,955

 

 

 

16,313

 

 

 

 

408

 

Changes in fair value of interest rate swaps

 

 

(2,944

)

 

 

 

 

 

 

 

Changes in fair value of contingent consideration

 

 

71,954

 

 

 

 

 

 

 

 

Deferred income tax

 

 

(441,682

)

 

 

(517

)

 

 

 

26

 

Stock-based compensation expense

 

 

45,823

 

 

 

1,420

 

 

 

 

4,156

 

Net foreign exchange difference

 

 

(2,307

)

 

 

6,331

 

 

 

 

(198

)

Other, net

 

 

2,719

 

 

 

(255

)

 

 

 

(195

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(21,075

)

 

 

2,749

 

 

 

 

(17,599

)

Other current assets

 

 

(7,234

)

 

 

(17,803

)

 

 

 

(2,175

)

Accounts payable

 

 

(9,194

)

 

 

(12,639

)

 

 

 

12,984

 

Deferred revenue

 

 

2,101

 

 

 

8,078

 

 

 

 

289

 

Legal liabilities

 

 

(30,243

)

 

 

(2,587

)

 

 

 

(521

)

Accrued expenses and other current liabilities

 

 

(4,410

)

 

 

(2,018

)

 

 

 

32,075

 

Other, net

 

 

513

 

 

 

(865

)

 

 

 

 

Net cash used in operating activities

 

 

(45,582

)

 

 

(57,602

)

 

 

 

(3,306

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,712

)

 

 

(921

)

 

 

 

(1,045

)

Acquisition of business, net of cash acquired

 

 

 

 

 

(2,801,262

)

 

 

 

 

Other, net

 

 

(31

)

 

 

(73

)

 

 

 

16

 

Net cash used in investing activities

 

 

(2,743

)

 

 

(2,802,256

)

 

 

 

(1,029

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of Class A common stock sold in initial public offering, net of offering costs

 

 

2,358,371

 

 

 

 

 

 

 

 

Purchase of Class A Common Stock in the initial public offering

 

 

(1,018,365

)

 

 

 

 

 

 

 

Purchase of Common Units from Pre-IPO Common Unitholders in the initial public offering

 

 

(973,289

)

 

 

 

 

 

 

 

Proceeds from repayments of loans to related companies

 

 

 

 

 

41,929

 

 

 

 

 

 

Debt issuance costs

 

 

 

 

 

(16,281

)

 

 

 

 

Limited Partners’ interest

 

 

 

 

 

2,334,233

 

 

 

 

 

Proceeds from term loan

 

 

 

 

 

575,000

 

 

 

 

 

Repayment of term loan

 

 

(200,000

)

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

166,717

 

 

 

2,934,881

 

 

 

 

 

Effects of exchange rate changes on cash and cash equivalents

 

 

(162

)

 

 

(7,715

)

 

 

 

813

 

Net increase (decrease) in cash and cash equivalents

 

 

118,230

 

 

 

67,308

 

 

 

 

(3,522

)

Cash and cash equivalents, beginning of the period

 

 

128,029

 

 

 

53,669

 

 

 

 

57,449

 

Cash and cash equivalents and restricted cash, end of the period

 

 

246,259

 

 

 

120,977

 

 

 

 

53,927

 

Less restricted cash

 

 

257

 

 

 

258

 

 

 

 

258

 

Cash and cash equivalents, end of the period

 

$

246,002

 

 

$

120,719

 

 

 

$

53,669

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

11


 

 

 

 

Bumble Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Note 1 - Organization and Background

 

Description of Business

 

The Company provides online dating and social networking platforms through subscription and credit-based dating products servicing North America, Europe and various other countries around the world. The Company provides these services through websites and applications that it owns and operates.

 

Organization and Initial Public Offering

 

Bumble Inc. was incorporated as a Delaware corporation on October 5, 2020 for the purpose of facilitating an initial public offering (“IPO”) and other related transactions in order to operate the business of Buzz Holdings L.P. (“Bumble Holdings”) and its subsidiaries.

 

Prior to the IPO and the Reorganization Transactions, Bumble Holdings, a Delaware limited partnership, was formed primarily as a vehicle to finance the acquisition (the “Sponsor Acquisition”) of a majority stake in Worldwide Vision Limited by a group of investment funds managed by The Blackstone Group Inc. (“Blackstone”). As Bumble Holdings did not have any previous operations, Worldwide Vision Limited, a Bermuda exempted limited company, is viewed as the predecessor to Bumble Holdings and its consolidated subsidiaries. Accordingly, these consolidated financial statements include certain historical consolidated financial and other data for Worldwide Vision Limited for periods prior to the completion of the business combination.

 

On February 16, 2021, the Company completed its IPO of 57.5 million shares of Class A common stock at an offering price of $43 per share. The Company received net proceeds of $2,361.2 million after deducting underwriting discounts and commissions. The Company used the proceeds from the issuance of 48.5 million shares ($1,991.6 million) to redeem shares of Class A common stock and purchase Common Units from our Sponsor, at a price per share / Common Unit equal to the IPO price, net of underwriting discounts and commissions.

 

In connection with the IPO, the organizational structure was converted to an umbrella partnership-C-Corporation with Bumble Inc. becoming the general partner of Bumble Holdings. The Reorganization Transactions were accounted for as a transaction between entities under common control. As a result, the financial statements for periods subsequent to the Sponsor Acquisition and prior to the IPO and the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. As the general partner, Bumble Inc. operates and controls all of the business and affairs, and through Bumble Holdings and its subsidiaries, conducts the business. Bumble Inc. consolidates Bumble Holdings in its consolidated financial statements and reports a noncontrolling interest related to the common units held by the Pre-IPO Common Unitholders and the incentive units held by the continuing incentive unitholders in the unaudited condensed consolidated financial statements.

 

Assuming the exchange of all outstanding Common Units for shares of Class A common stock on a one-for-one basis under the exchange agreement entered into by holders of Common Units, there would be 187,865,523 shares of Class A common stock outstanding (which does not reflect any shares of Class A common stock issuable in exchange for as-converted Incentive Units or upon settlement of certain other interests).

 

Basis of Presentation and Consolidation

 

The unaudited condensed consolidated financial statements that accompany these notes include the financial statements of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. Intercompany transactions and balances have been eliminated. The unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated statements and notes thereto included in the 2020 Form 10-K.

 

As a result of the Sponsor Acquisition as further discussed in Note 5, Business Combination, periods prior to January 28, 2020 reflect the financial statements of Worldwide Vision Limited (referred to herein as the “Predecessor”). Periods subsequent to the Sponsor Acquisition and prior to the IPO, reflect the financial statements of Bumble Holdings with the assets and liabilities adjusted to fair value on the closing date of the business combination. Periods subsequent to the IPO and the Reorganization Transactions, reflect the financial statements of Bumble Inc., general partner of Bumble Holdings, and successor to Bumble Holdings, for accounting and

12


 

reporting purposes. All periods subsequent to the Sponsor Acquisition have been presented as the financial statements of Bumble Inc. (referred to herein as the “Successor”). Due to the change in the basis of accounting, the consolidated financial statements for the Predecessor and the Successor are not necessarily comparable. Where applicable, a black line separates the Successor and Predecessor periods to highlight the lack of comparability.

 

All references to the “Company”, “we”, “our” or “us” in this report are to Bumble Inc.

 

Note 2 - Summary of Selected Significant Accounting Policies

 

Included below are selected significant accounting policies including those that were added or modified during the three months ended March 31, 2021 as a result of new transactions entered into or the adoption of new accounting policies. Refer to Note 2, Summary of Selected Significant Accounting Policies, within the annual consolidated financial statements in our 2020 Form 10-K for the full list of our significant accounting policies.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make certain judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses. The Company’s significant estimates relate to current and deferred income taxes (including valuation allowance for deferred income tax assets), amounts payable under the tax receivable agreement, the fair value and useful lives of assets acquired and liabilities assumed in the Sponsor Acquisition, the recoverability of long-lived assets and goodwill, potential obligations associated with legal contingencies, the fair value of contingent consideration, derivatives and stock-based compensation and recognition of performance-based stock-based compensation.

 

These estimates are based on management’s best estimates and judgment. Actual results may differ from these estimates. Estimates, judgments and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions, judgments and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Revenue Recognition

The Company recognizes revenue from services in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when or as the Company’s performance obligations are satisfied by transferring control of the promised services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps as prescribed by ASC 606:

 

(i)

identify the contract(s) with a customer;

 

(ii)

identify the performance obligations in the contract;

 

(iii)

determine the transaction price;

 

(iv)

allocate the transaction price to the performance obligations in the contract; and

 

(v)

recognize revenue when (or as) the entity satisfies performance obligations.

The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Revenue is primarily derived in the form of recurring subscriptions and in-app purchases. Subscription revenue is presented net of taxes, refunds and credit card chargebacks. This revenue is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period. Revenue from lifetime subscriptions is deferred over the average estimated expected period of the subscriber relationship, which is currently estimated to be twelve months. Revenue from the purchase of in-app features is recognized based on usage. Unused in-app purchase fees expire and are recognized as revenue after six months. The Company also earns revenue from online advertising and partnerships. Online advertising revenue is recognized when an advertisement is displayed. Revenue from partnerships is recognized according to the contractual terms of the partnership.

13


 

As permitted under the practical expedient available under ASC 606, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts for which the Company recognizes revenue at the amount which it has the right to invoice for services performed.

During the three months ended March 31, 2021, the period from January 29, 2020 to March 31, 2020, and the period from January 1, 2020 to January 28, 2020, there were no customers representing greater than 10% of total revenue.

For the periods presented, revenue across apps was as follows (in thousands):

 

 

 

Successor

 

 

 

Predecessor

 

 

 

Three Months Ended

March 31,

2021

 

 

Period from

January 29,

through

March 31,

2020

 

 

 

Period from

January 1,

through

January 28,

2020

 

Bumble App

 

$

112,637

 

 

$

46,652

 

 

 

$

23,256

 

Badoo App and Other

 

 

58,076

 

 

 

32,493

 

 

 

 

16,734

 

Total Revenue

 

$

170,713

 

 

$

79,145

 

 

 

$

39,990

 

 

Deferred Revenue

Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company's performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of each reporting period. The Company classifies deferred revenue as current when the term of the applicable subscription period or expected completion of the performance obligation is one year or less. The deferred revenue balance is $33.4 million and $31.3 million as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, the period from January 29, 2020 to March 31, 2020, and the period from January 1, 2020 to January 28, 2020, the Company recognized revenue of $21.9 million, $5.9 million, and $10.6 million, respectively, that was included in the deferred revenue balance at the beginning of each period.

 

Income Taxes

 

The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We recognize deferred tax assets to the extent we believe these assets are more likely than not to be realized. In making such a determination, we consider all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. A valuation allowance is provided if it is determined that it is more likely than not that the deferred tax asset will not be realized.

 

The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained. The Company records interest (and penalties where applicable), net of any applicable related income tax benefit, on potential income tax contingencies as a component of income tax provision.

 

 

Tax Receivable Agreement

 

In connection with our IPO, the Company entered into a tax receivable agreement with certain pre-IPO owners whereby the Company agreed to pay to such pre-IPO owners 85% of the benefits that the Company realizes, or is deemed to realize, as a result of our allocable share of existing tax basis acquired in the IPO, increases in our share of existing tax basis and adjustments to the tax basis of the assets of Bumble Holdings as a result of sales or exchanges of Common Units (including Common Units issued upon conversion of vested Incentive Units), and our utilization of certain tax attributes of the Blocker Companies (including the Blocker Companies’ allocable share of existing tax basis) and certain other tax benefits related to entering into the tax receivable agreement.

14


 

 

Actual tax benefits realized by the Company may differ from tax benefits calculated under the tax receivable agreement as a result of the use of certain assumptions in the tax receivable agreement, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. Payments to be made under the tax receivable agreement will depend upon a number of factors, including the timing and amount of our future income.

 

The Company accounts for amounts payable under the tax receivable agreement in accordance with ASC Topic 450, Contingencies. As such, subsequent changes in the fair value of the tax receivable agreement liability between reporting periods are recognized in the statement of operations. See Note 4, Tax Receivable Agreement, for additional information on the tax receivable agreement.

 

Fair Value Measurements

 

The Company follows ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The Company uses the fair value hierarchy to categorize the financial instruments measured at fair value based on the available inputs to the valuation and the degree to which they are observable or not observable in the market.

 

The three levels of the fair value hierarchy are as follows:

 

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

 

Level 2 - Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

 

 

Level 3 - Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available.

Stock-Based Compensation

The Company issues stock-based awards to employees that are generally in the form of stock options, restricted shares, incentive units, or restricted stock units (“RSUs”). Compensation cost for equity awards is measured at their grant-date fair value, and in the case of restricted shares and RSUs is estimated based on the fair value of the Company’s underlying common stock. The grant date fair value of stock options is estimated using the Black-Scholes option pricing model, which requires management to make assumptions with respect to the fair value of the Company’s common stock on the grant date, including the expected term of the award, the expected volatility of the Company’s stock calculated based on a period of time generally commensurate with the expected term of the award, risk-free interest rates and expected dividend yields of the Company’s stock. For time-vesting awards, compensation cost is recognized over the requisite service period, which is generally the vesting period, using the graded attribution method. For performance-based stock awards, compensation expense is recognized over the requisite service period on a straight-line basis when achievement is probable. At the IPO date, we concluded that our public offering represents a qualifying liquidity event that would cause the performance conditions to be probable of occurring.

 

For periods prior to the Company’s IPO, the grant date fair value of stock-based compensation awards and the underlying equity were determined on each grant date using a Monte Carlo model. As the Company's equity was not publicly traded, there was no history of market prices for the Company's equity. Thus, estimating grant date fair value required the Company to make assumptions, including the value of the Company's equity, expected time to liquidity, and expected volatility.

 

See Note 13, Stock-based Compensation, for addition information on the Company’s stock-based compensation plans and awards.

 

Earnings (Loss) per Share / Unit

Basic earnings (loss) per share / unit is computed by dividing net earnings (loss) attributable to the Company by the weighted average number of common shares / units outstanding during the period. Diluted earnings (loss) per share / unit is computed by dividing net earnings (loss) attributable to the Company by the weighted-average share / units outstanding during the period after adjusting for the impact of securities that would have a dilutive effect on earnings (loss) per share / unit.

 

All earnings (loss) for the Predecessor period from January 1, 2020 to January 28, 2020 were entirely allocable to Predecessor shareholders and non-controlling interest. Additionally, due to the impact of the Sponsor Acquisition, the Company’s capital structure for the Predecessor and Successor periods is not comparable. As a result, the presentation of earnings (loss) per share / unit for the periods prior to such transaction is not meaningful and only earnings (loss) per share / unit for periods subsequent to the Sponsor Acquisition are presented herein.

15


 

 

See Note 12, Earnings (Loss) per Share / Unit, for additional information on dilutive securities.

Recently Issued Pronouncements Not Yet Adopted

In January of 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, that refined the scope of Topic 848 and clarified some of its provisions. The amendments permit entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by the discounting transition. The Company is evaluating the impact of the ASU as it relates to arrangements that reference London Inter-Bank Offered Rate (“LIBOR”).

Note 3 - Income Taxes

The Company is subject to U.S. federal and state income taxes and will file consolidated income tax returns for U.S. federal and certain jurisdictions with respect to its allocable share of any net taxable income of Buzz Holdings L.P. A provision for these taxes has been recorded accordingly. The differences between our effective tax rate and the U.S. federal statutory tax rate of 21% generally result from various factors, including the geographical distribution of taxable income, state and foreign taxes, tax credits, contingency reserves for uncertain tax positions and permanent differences between the book and tax treatment of certain items. Additionally, the amount of income taxes is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. For the three months ended March 31, 2021, our effective tax rate is lower than the U.S. federal statutory tax rate of 21% primarily due to the geographical distribution of our earnings, nondeductible permanent differences, nondeductible stock-based compensation and the inability to record a benefit for certain tax losses and benefits generated in the current year.

 

Our effective tax rate for the three months ended March 31, 2021 also includes the discrete impact of the Company’s restructuring activities that occurred on January 1, 2021. Deferred tax liabilities of $448.2 million recorded at Maltese and UK entities related to relevant intangible property were written off in the first quarter of 2021, offset by $6.7 million of deferred tax assets recorded in Malta for related tax basis in transferred intangible property resulting in a net income tax benefit of $441.5 million during the period . In addition, the tax benefit for the three months ended March 31, 2021 reflects the impact of our assessment that we will not be able to record the benefit of certain current year deferred tax assets for which a valuation allowance is recorded.

 

Note 4 – Tax Receivable Agreement

In connection with the Reorganization Transactions and our IPO, we entered into a tax receivable agreement with certain of our pre-IPO owners that provides for the payment by Bumble, Inc. to such pre-IPO owners of 85% of the benefits, that Bumble Inc. realizes, or is deemed to realize, as a result of Bumble Inc.’s allocable share of existing tax basis acquired in our IPO and other tax benefits related to entering into the tax receivable agreement.

We estimate the amount of existing tax basis with respect to which our pre-IPO owners will be entitled to receive payments under the tax receivable agreement (assuming all Pre-IPO Common Unitholders exchanged their Common Units for shares of Class A common stock on the date of the IPO, and assuming all vested Incentive Units were converted to Common Units and immediately exchanged for shares of Class A common stock at the IPO prices of $43.00 per share of Class A common stock) is approximately $2,603 million which includes Bumble Inc.’s allocable share of existing tax basis acquired in the IPO, which we have determined to be approximately $1,728 million. In determining Bumble Inc.’s allocable share of existing tax basis acquired in the IPO, we have given retrospective effect to certain exchanges of Common Units for Class A shares that occurred after the IPO that were contemplated to have occurred pursuant to the Blocker Restructuring. The payments under the tax receivable agreement are not conditioned upon continued ownership of the Company by the pre-IPO owners.

 

We have determined that it is more likely than not that we will be unable to realize tax benefits related to certain basis adjustments and acquired net operating losses that were received in connection with the Reorganization Transactions and our IPO. As a result of this determination, we have not recorded the benefit of these deferred tax assets as of March 31, 2021. The realizability of the deferred tax assets is evaluated based on all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. We will assess the realizability of the deferred tax assets at each reporting period, and a change in our estimate of our liability associated with the tax receivable agreement may result as additional information becomes available, including results of operations in future periods. At the time of the Sponsor Acquisition, the assets and liabilities of Bumble Holdings were adjusted to fair value on the closing date of the business combination for both financial reporting and income tax purposes. As a result of the IPO transaction, we inherited certain tax benefits associated with this stepped-up basis (“Common Basis”) created when certain pre-IPO owners acquired their interests in Bumble Holdings in the Sponsor Acquisition. This Common Basis entitles us to the depreciation and amortization deductions previously allocable to the pre-IPO owners. Based on current projections, we anticipate having sufficient taxable income to be able to realize the benefit of this

16


 

Common Basis and have recorded a tax receivable agreement liability of $356.8 million related to these benefits. To the extent that we determine that we are able to realize the tax benefits associated with the basis adjustments and net operating losses, we would record an additional liability of $171.0 million for a total liability of $527.8 million. If, in the future, we are not able to utilize the Common Basis, we would record a reduction in the tax receivable agreement liability that would result in a benefit recorded within our consolidated statement of operations.

Note 5 - Business Combination

On January 29, 2020, Bumble Holdings, and the wholly owned indirect subsidiary, Buzz Merger Sub Limited, executed an Agreement and Plan of Merger (the “Merger Agreement”) with Worldwide Vision Limited whereby Bumble Holdings agreed to purchase all of the outstanding equity interest of Worldwide Vision Limited, for a purchase price of approximately $2.9 billion, as detailed below. The Sponsor Acquisition was accounted for using the acquisition method of accounting which required that the assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date (based on Level 3 measurements).

The following tables summarize the purchase consideration and the purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed (in thousands):

 

Cash paid to former owners of Worldwide Vision Limited

 

$

2,239,827

 

Issued ownership interest in the Company

 

 

349,992

 

Cash paid to related party

 

 

125,000

 

Settlement of amounts owed to Worldwide Vision Limited by

   former owners

 

 

42,075

 

Buyout of minority shareholders of a subsidiary

 

 

44,750

 

Consideration related to holdback settlement

 

 

36,418

 

Fair value of contingent earn-out liability

 

 

12,900

 

Total purchase consideration

 

$

2,850,962

 

 

Purchase price allocation

 

$

2,850,962

 

Less fair value of net assets acquired:

 

 

 

 

Cash and cash equivalents

 

 

53,927

 

Other current assets

 

 

127,464

 

Property and equipment

 

 

14,241

 

Intangible assets

 

 

1,785,000

 

Other noncurrent assets

 

 

17,826

 

Deferred revenue

 

 

(9,600

)

Other current liabilities

 

 

(143,293

)

Deferred income taxes

 

 

(398,688

)

Other long-term liabilities

 

 

(51,878

)

Net assets acquired

 

 

1,394,999

 

Goodwill

 

$

1,455,963

 

 

Goodwill was primarily attributable to assembled workforce, expected synergies and other factors.

The fair values of the identifiable intangible assets acquired at the date of Sponsor Acquisition were as follows (in thousands):

 

 

 

Acquisition

Date Fair

Value

 

 

Weighted-

Average

Useful Life

(Years)

 

Brands

 

$

1,430,000

 

 

Indefinite

 

Developed technology

 

 

220,000

 

 

 

5

 

User base

 

 

105,000

 

 

 

2.5

 

White label contracts

 

 

30,000

 

 

 

8

 

Total identifiable intangible assets acquired

 

$

1,785,000

 

 

 

 

 

 

The Company has white label contracts, whereby the Company's platform technology is licensed to other dating apps and websites. These contracts provide on-going revenue and value to the Company.

17


 

The fair values of brands and developed technology were determined using relief of royalty methodology. The fair values of user base and white label contracts were determined using excess earnings methodology. The valuations of intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows.

The Company recognized approximately $47.1 million of transaction costs in the period from January 29, 2020 to March 31, 2020. Transaction costs incurred by the Predecessor associated with the Sponsor Acquisition were approximately $40.3 million and were included as an assumed liability by the Company at closing. These costs are recorded in “General and administrative expense” in the Successor and Predecessor consolidated statements of operations.

Concurrent with and related to the Sponsor Acquisition, the Company sold an app that it did not intend to continue operating to one of the sellers for an amount of $25.2 million, which reduced the purchase price disclosed above by the same amount.

Note 6 - Property and Equipment, net

A summary of the Company’s property and equipment, net is as follows (in thousands):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Computer equipment

 

$

19,841

 

 

$

18,423

 

Leasehold improvements

 

 

5,497

 

 

 

5,318

 

Furniture and fixtures

 

 

890

 

 

 

861

 

Total property and equipment, gross

 

$

26,228

 

 

$

24,602

 

Accumulated depreciation

 

 

(9,779

)

 

 

(7,769

)

Total property and equipment, net

 

$

16,449

 

 

$

16,833

 

 

Depreciation expense related to property and equipment, net for the three months ended March 31, 2021, the period from January 29, 2020 to March 31, 2020, and the period from January 1, 2020 to January 28, 2020, was $2.4 million, $1.4 million, and $0.4 million, respectively.

Note 7 - Goodwill and Intangible Assets, net

Goodwill

The changes in the carrying amount of goodwill for the periods presented is as follows:

 

 

 

March 31, 2021

 

Balance as of December 31, 2020

 

$

1,540,915

 

Goodwill adjustment, net (1)

 

 

(803

)

Balance as of March 31, 2021

 

$

1,540,112

 

(1) Relates to the impact of $0.8 million of deferred income taxes.

Intangible Assets, net

A summary of the Company’s intangible assets, net is as follows (in thousands):

 

 

 

March 31, 2021

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Weighted-

Average

Remaining

Useful

Life (Years)

 

Brands

 

$

1,511,755

 

 

$

 

 

$

1,511,755

 

 

Indefinite

 

Developed technology

 

 

244,813

 

 

 

(57,124

)

 

 

187,689

 

 

 

3.8

 

User base

 

 

112,695

 

 

 

(52,591

)

 

 

60,104

 

 

 

1.3

 

White label contracts

 

 

33,384

 

 

 

(4,869

)

 

 

28,515

 

 

 

6.8

 

Other

 

 

675

 

 

 

(488

)

 

 

187

 

 

 

0.8

 

Total intangible assets, net

 

$

1,903,322

 

 

$

(115,072

)

 

$

1,788,250

 

 

 

 

 

18


 

 

 

 

 

December 31, 2020

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Weighted-

Average

Remaining

Useful

Life (Years)

 

Brands

 

$

1,511,269

 

 

$

 

 

$

1,511,269

 

 

Indefinite

 

Developed technology

 

 

244,813

 

 

 

(44,884

)

 

 

199,929

 

 

 

4.1

 

User base

 

 

112,695

 

 

 

(41,322

)

 

 

71,373

 

 

 

1.6

 

White label contracts

 

 

33,384

 

 

 

(3,826

)

 

 

29,558

 

 

 

7.1

 

Other

 

 

352

 

 

 

(71

)

 

 

281

 

 

 

4.0

 

Total intangible assets, net

 

$

1,902,513

 

 

$

(90,103

)

 

$

1,812,410

 

 

 

 

 

 

Amortization expense related to intangible assets, net for the three months ended March 31, 2021, the period from January 29, 2020 to March 31, 2020 and the period from January 1, 2020 to January 28, 2020, was $24.6 million, $14.9 million, and $0.0 million, respectively.

As of March 31, 2021, amortization of intangible assets with definite lives is estimated to be as follows (in thousands):

 

Remainder of 2021

 

$

73,706

 

2022

 

 

79,491

 

2023

 

 

53,197

 

2024

 

 

53,150

 

2025 and thereafter

 

 

16,951

 

Total

 

$

276,495

 

 

 

Note 8 - Other Financial Data

 

Consolidated Balance Sheets Information

 

Other current assets are comprised of the following balances (in thousands):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Capitalized aggregator fees

 

$

6,565

 

 

$

5,533

 

Prepayments

 

 

17,412

 

 

 

6,435

 

Income tax receivable

 

 

57,085

 

 

 

59,364

 

Capitalized initial public offering costs (1)

 

 

 

 

 

3,033

 

Other receivables

 

 

5,280

 

 

 

7,022

 

Total other current assets

 

$

86,342

 

 

$

81,387

 

 

 

(1) Upon completion of the IPO, the capitalized IPO costs were offset against the proceeds raised from the IPO as a reduction of additional paid-in capital and noncontrolling interests.

 

Accrued expenses and other current liabilities are comprised of the following balances (in thousands):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Legal liabilities

 

$

24,077

 

 

$

55,144

 

Accrued expenses

 

 

28,183

 

 

 

36,184

 

Lease liabilities

 

 

4,199

 

 

 

4,933

 

Income tax payable

 

 

73,562

 

 

 

71,324

 

Other payables

 

 

12,631

 

 

 

13,401

 

Total accrued expenses and other current liabilities

 

$

142,652

 

 

$

180,986

 

 

19


 

 

Other non-current liabilities are comprised of the following balances (in thousands):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Lease liabilities

 

$

5,571

 

 

$

5,831

 

Contingent earn-out liability

 

 

112,654

 

 

 

40,700

 

Stock-based compensation liabilities

 

 

 

 

 

13,765

 

Other liabilities

 

 

321

 

 

 

1,894

 

Total other liabilities

 

$

118,546

 

 

$

62,190

 

 

Note 9 - Fair Value Measurements

 

The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis (in thousands):

 

 

 

March 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total Fair

Value

Measurements

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

246,002

 

 

$

 

 

$

 

 

$

246,002

 

Derivative asset

 

 

 

 

 

1,359

 

 

 

 

 

 

1,359

 

Deposits on credit card

 

 

257

 

 

 

 

 

 

 

 

 

257

 

Equity investments