Shares in Bumble (BMBL: NASDAQ) were up 25% after the dating app company revealed plans to dump 30% of its workforce - about 240 roles – in an attempt to return to a "start-up mentality".
While the layoffs will result in $13 million to $18 million in charges for the company during the third and fourth quarters of FY25, the Texas-based company expects staff reductions to help the company save $40 million annually.
These savings, which saw the company raise its second-quarter revenue forecast to between $244 million to $249 million (up from $235 million to $243 million previously) are expected to be reinvested in product and technology development.
Revenue is now expected to range from $244 million to $249 million, while adjusted earnings are forecast between $88 million and $93 million. This compares with prior estimates of $235 million to $243 million in revenue and $79 million to $84 million in adjusted earnings.
The market responded positively to the company’s plan to revive growth after witnessing the share price shed over 90% of its US$13 billion value since listing in 2021.
Revival plans coincide with the return of Founder Whitney Wolfe Herd to the CEO role which she stepped down from last year.
Within an internal note to staff, she said Bumble needed to take “decisive action” in order “to restructure to build a company that’s resilient, intentional, and ready for the next decade”.
“We’ve reset our strategy and are going back to a start-up mentality – rooted in an ownership mindset and team structures designed for faster, more meaningful execution,” wrote Herd who became the world's youngest self-made female billionaire when the company debuted on the stock exchange in 2021.
“In recent months, we’ve been rebuilding… But intentional rebuilding requires hard decisions.”
Herd notes that today’s layoff decision was less about individuals and more a response to the pressures facing the company, as the dating industry faces an "inflection point".
It’s understood that investors have soured on the dating sector, which has struggled to convince people to pay up for their services.
Bumble, which also owns Badoo, made its name as an app on which women were responsible for initiating contact.
When the dating app was first launched only female users could make first contact with matched male users, while in same-sex matches each person could send a message first. However, in a bid for stronger growth those rules were changed last year.
At the end of last year, Bumble reported 4.1 million paying users across its apps - up 11% year-on-year. However, the firm's revenues grew by less than 2%.
The dating app's peers, including Match and Tinder, have also faced similar struggles with the former cutting 13% of jobs last month.
