Whitney Wolfe Herd’s departure as CEO of Bumble is a sign that Americans are no longer in love with online dating.
The 34-year-old entrepreneur founded the women-centric dating app nearly a decade ago and took the company public in 2021, transforming it into what some describe as the youngest self-made female billionaire. Herd also co-founded the dating app Tinder.
Bumblebee said On Monday, Slack CEO Lidiane Jones will succeed Herd as general manager. Herd will remain with Bumble as executive chairman of the Austin, Texas-based company.
The management shakeup at Bumble coincides with headwinds for the broader dating app industry, as user growth slows and companies struggle to further innovate and monetize matchmaking platforms.
Bumble also has Badoo, Fruitz and Official apps for making friends and networking. The other big player in the sector, publicly traded Match Group, owns Hinge, Tinder and other dating apps.
What sets Bumble apart from its competitors is that women make the first move – a feature designed by Herd to give them more control over their love lives and to help limit unsolicited messages from prospects they’re not interested in.
Bumble remains profitable. Tuesday, the company reported net income of $23.1 million on revenue of $275.5 million for the third quarter, up from $232.6 million a year ago. But the company’s shares fell, closing Monday at $13.42, down about 40% for the year and from $76 when it debuted on the market two years ago.
“With loneliness increasing around the world to the point that it has been declared an epidemic in the United States, there is considerable room for each of our apps to grow and have a significant impact on people’s lives” , Herd said during the company’s earnings conference call.
Are young people avoiding applications?
However, for dating businesses, competition to profit from that solitude has become increasingly fierce amid a proliferation of apps aimed at all kinds of customers and signs that online dating is losing its edge. shine among young Americans.
Tinder said it lost paying users in the third quarter and predicted fourth-quarter revenue below analysts’ expectations. Bumble said it had 3.8 million paying users on its apps in its most recent quarter, up from 3.3 million last year.
“Younger audiences, like Gen Z, don’t use dating apps in the same way. Many use social media, like Instagram and TikTok, to meet people, which is different from swiping right and left, which is a very important feature in online dating,” said Ygal Arounian, an analyst at Citigroup.
Dating apps have struggled to add users in recent quarters, according to a recent study from Morgan Stanley. report.
“Furthering the idea that the industry is simply becoming saturated, mature, or overmonetized, major dating apps have reported slowing revenue growth in 2022 (the industry as a whole reported around 2.6 billion in revenue for the year) and moderate guidance for 2023,” Morgan said. Stanley Analysts.
According to a investigation According to student opinions from Axios and The Generation Lab, almost 80% of respondents said they don’t use dating apps regularly. More than half said they met their partner in person, compared to 15% who said they met on a dating app.
Economic uncertainty is also weighing on singles’ willingness to shell out to subscribe to dating apps, according to industry analysts.
“At an industry level, we are seeing challenges in terms of overall user growth and time spent on online dating apps,” Arounian told CBS MoneyWatch.
Most dating apps allow users to use services for free, but charge extra for an enhanced experience that often promises to increase a user’s chances of meeting high-quality prospects.
At Bumble, Jones will need to prove she can find new avenues for growth to regain the trust of Wall Street.
“The new CEO’s new strategy will be a determining factor in whether people want to invest,” James Heaney, an analyst at Jefferies, told CBS MoneyWatch. “She is still an unknown, and there will be a development period to see how the new CEO thinks about the company.”
This change at Bumble comes after another recent high-level departure from the company, with former president Tariq Shaukat stepping down from the role in May.
“There are certainly a lot of questions about what’s happening in the industry, given the slowdown around Tinder in particular. It’s a big blow to the space,” Heaney added. “But I think the problems at Tinder are unique to them. There’s still a lot of runway left in the online dating space. There’s a lot of room for additional people to pay to use these apps.”