Bumble Layoffs: Falling Revenue a Bad Match With Labor Costs

Breaking up is hard to do, especially for the approximately 350 employees that dating app Bumble will lay off as it works to reverse declining revenues. But as the woman-led company seeks new magic to send both hearts and business aflutter, it must devise new customer experiences that can stimulate sagging use rates, which are also showing up at rivals like Tinder.

Austin-based Bumble faces the challenge of many relatively young businesses and post-IPO startups, as early successful client and revenue growth plateaus or shrinks as their novelty fades. In the dating app’s case, that market maturation arrived in its 2023 fourth quarter results, which showed a $32 million net loss on revenue of $273.6 million. While those results were better than the same period the previous year, they came in below analysts’ expectations, and led Bumble to forecast first-quarter revenues below $269 million.

Investors ghosted the company’s stock, which fell around 10 percent on the news. But that share price slide was somewhat surprising, given Wall Street’s habit of right-swiping companies that announce layoffs. And Bumble did just that. 

In an email to employees, CEO Lidiane Jones explained the 30 percent staff reduction as necessary for a company no longer the “right size or structure we need to be to meet the opportunity ahead.” By running “a leaner, more agile, and more efficient” organization, she said, Bumble “can accelerate how quickly we innovate and go to market” with a revamp capable of sparking renewed growth. That won’t be easy, since other dating apps are seeing similar slowdowns to Bumble, showing a softening of in what in 2022 was valued as a $4.94 billion market.

Evidence suggests users just aren’t that into dating apps anymore. That’s especially true with younger potential users, who are viewed as key to future profits. After steadily rising in popularity from 2012 to 2020, downloads of dating apps have dropped from their pandemic pinnacle–a collective shrinkage of about 16 percent over the past three years. Meanwhile, user activity has evolved, and not in a good way for business.

Payments for access to premium services have slid, undercutting revenues. And a recent Pew Research Center poll indicated fewer customers are using the apps for high volume-generating hookups, with nearly half now saying their objective is to find a long-term partner.

Well gee, people could almost do that in person.

As a result, Tinder has already said it is focusing efforts on potential Gen Z clients, nearly 40 percent of whom are prioritizing enduring relationships in dating app use. Bumble is expected to make that adjustment as well, and says it wants to create new kinds of premium add-ons clients will be willing to pay for over longer use periods.

But even success in that may produce other problems for the business. 

The Match Group, owner of Tinder, Hinge, and the League, is now battling a class action suit. Filed by several clients, the case claims the apps are deftly conceived traps to ensnare the lonely heart set in indefinite dependency. The company “intentionally designs the Platforms with addictive, game-like design features, which lock users into a perpetual pay-to-play loop that prioritizes corporate profits over its marketing promises and customers’ relationship goals,” the suit states. Plaintiffs are seeking damages for “the purposely addictive” state they say they were left in.

Whether judges side with those customers in ruling the apps guilty as accused remains to be seen. But with downloads and revenues continuing to decline, it’s likely Bumble, Tinder, and its competitors wouldn’t mind seeing a lot more current and new users getting similarly hooked, albeit in far less litigious ways.