Item 1. Financial Statements (Unaudited).
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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
|
|
|
—
|
|
|
|
—
|
|
|
|
1,510
|
|
|
$
|
1,510
|
|
|
|
$
|
246,259
|
|
|
$
|
1,359
|
|
|
$
|
1,510
|
|
|
$
|
249,128
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent earn-out liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
112,654
|
|
|
$
|
112,654
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
112,654
|
|
|
$
|
112,654
|
|
|
|
December 31, 2020
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Fair
Value
Measurements
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
128,029
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
128,029
|
|
Deposits on credit card
|
|
|
257
|
|
|
|
—
|
|
|
|
—
|
|
|
|
257
|
|
Equity investments
|
|
|
—
|
|
|
|
—
|
|
|
|
1,458
|
|
|
|
1,458
|
|
|
|
$
|
128,286
|
|
|
$
|
—
|
|
|
$
|
1,458
|
|
|
$
|
129,744
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent earn-out liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,700
|
|
|
$
|
40,700
|
|
Derivative liability
|
|
|
—
|
|
|
|
1,586
|
|
|
|
—
|
|
|
|
1,586
|
|
|
|
$
|
—
|
|
|
$
|
1,586
|
|
|
$
|
40,700
|
|
|
$
|
42,286
|
|
There were no transfers between levels between March 31, 2021 and December 31, 2020.
The carrying value of Accounts receivable, Accounts payable, Income tax payable, Accrued expenses and Other payables approximate their fair values due to the short-term maturities of these instruments.
The Company’s contingent earn-out liability that is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). As of March 31, 2021 and December 31, 2020, $112.7 million and $40.7 million are included within “Other Liabilities”. The change in fair value of $72.0 million is included within “General and administrative expense” for the three months ended March 31, 2021.
Contingent Consideration Arrangement
As of March 31, 2021, there is a contingent consideration arrangement, consisting of an earn-out payment to former shareholders of Worldwide Vision Limited of up to $150 million. The Company determined the fair value of the contingent earn-out liability using a closed-form option pricing model to determine the amount of the liability and present valued the amount payable in the future to the current reporting date using an appropriate discount rate. The option pricing model estimate relies on standard inputs such as an
20
estimate of volatility, term, and the risk free rate over such term. The model estimates the probability that the earn-out condition will be met in the future and calculates the expected earn-out payment to the former shareholders.
The fair value of the contingent earn-out liability is sensitive to our equity volatility, discount rates, and our common stock price which is sensitive to changes in the forecasts of earnings and/or the relevant operating metrics. The Company remeasures the fair value of the contingent earn-out liability each reporting period, and changes are recognized in “General and administrative expense” in the accompanying consolidated statements of operations.
Note 10 - Debt
Total debt is comprised of the following (in thousands):
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
Term Loan due January 29, 2027
|
|
$
|
647,533
|
|
|
$
|
845,000
|
|
Less: unamortized debt issuance costs
|
|
|
17,995
|
|
|
|
18,786
|
|
Less: current portion of debt, net
|
|
|
9,996
|
|
|
|
5,338
|
|
Total long-term debt, net
|
|
$
|
619,542
|
|
|
$
|
820,876
|
|
Credit Agreement
On January 29, 2020, the Company and the wholly-owned subsidiaries, Buzz Bidco LLC, Buzz Merger Sub Limited, and Buzz Finco LLC (collectively, the “Borrowers”) entered into a credit agreement (the “Original Credit Agreement”). The Original Credit Agreement permitted the Company to borrow up to $625.0 million through a seven-year $575.0 million term loan (“Initial Term Loan Facility”), as well as a five-year revolving credit facility of $50.0 million (the “Revolving Credit Facility”) and $25.0 million available through letters of credit. In connection with the Original Credit Agreement, the Company incurred and paid debt issuance costs of $16.3 million during the year ended December 31, 2020.
On October 19, 2020, the Company amended the Original Credit Agreement and entered into the First Amendment to the Credit Agreement (the “Amended Credit Agreement”), which provides for incremental borrowing of an aggregate principal amount of $275.0 million (the “Incremental Term Loan Facility”, and, together with the Initial Term Loan Facility, the “Term Loan Facility”; the Term Loan Facility together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”). The terms of the Amended Credit Agreement were unchanged from the Original Credit Agreement, and the sole purpose of the Amendment was to increase the principal available to the Company. In connection with the Amended Credit Agreement, the Company incurred and paid debt issuance costs of $4.8 million during the year ended December 31, 2020.
On March 31, 2021, the Company used proceeds from the IPO to repay outstanding indebtedness on the Incremental Term Loan Facility in an aggregate principal amount of $200.0 million.
Based on the calculation of the applicable consolidated total leverage ratio, the applicable margin for borrowings under the Revolving Credit Facility is between 1.25% to 1.75% with respect to base rate borrowings and between 2.25% and 2.75% with respect to LIBOR rate borrowings under the Term Loan Facility, in addition to a base rate. The interest rates in effect for the Initial Term Loan Facility and the Incremental Term Loan Facility as of March 31, 2021 were 2.95% and 3.75%, respectively. The Term Loan Facility will mature on January 29, 2027 and principal amounts outstanding under the Revolving Credit Facility will be due and payable in full at maturity on January 29, 2025. As of March 31, 2021, and at all times during the period, the Company was in compliance with the financial debt covenants.
As the loans are issued with a floating rate of interest, the Company believes that the fair value of the obligations is approximated by the principal amount of the loans as of March 31, 2021. The carrying value of the Term Loan Facility includes the outstanding principal amount, less unamortized debt issuance costs. Therefore, the Company assumes the carrying value of the debt, before any transaction costs, would closely approximate the fair value of the loan obligation with the assumptions above.
21
Future maturities of long-term debt as of March 31, 2021, were as follows (in thousands):
Remainder of 2021
|
|
$
|
11,033
|
|
2022
|
|
|
8,500
|
|
2023
|
|
|
8,500
|
|
2024
|
|
|
8,500
|
|
2025 and thereafter
|
|
|
611,000
|
|
Total
|
|
$
|
647,533
|
|
Note 11 - Shareholders’ Equity
Equity Structure Prior to Initial Public Offering and Reorganization
Limited Partner’s Interest
On January 29, 2020, Bumble Holdings, and the wholly owned indirect subsidiary, Buzz Merger Sub Limited, executed the Merger Agreement with Worldwide Vision Limited whereby Bumble Holdings agreed to purchase all of the outstanding equity interest of Worldwide Vision Limited (see Note 5, Business Combination). In conjunction with the Sponsor Acquisition, the equity that was in existence in the Predecessor periods was settled and no longer outstanding subsequent to January 29, 2020.
Prior to the IPO, Limited Partners' Interest was inclusive of Capital Contribution from the Parent, Additional Paid-in Capital, and Retained Earnings. The capital structure of Bumble Holdings consisted of two different classes of limited partnership interests, Class A and Class B units. Class A units were issued and held by Blackstone, an affiliate of Accel Partners LP., our Founder, and certain members of senior management in exchange for capital contributions (“Class A Units”). Class B units were issued to senior management, select Board members and select employees of Bumble Holdings and represent profit interests of Bumble Holdings which vest subject to certain service and performance conditions.
As of December 31, 2020, 2,453,784,599 Class A Units and 153,273,895 Class B Units were outstanding.
Noncontrolling Interests
Prior to the IPO, the Company’s noncontrolling interests represent a reserve for minority interests’ share of accumulated profits and losses of Huggle App (UK) Limited and Lumen App Limited and pre-Sponsor Acquisition, Bumble Holding Limited and its subsidiaries.
Initial Public Offering
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) in the IPO 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. The Company used a portion of the proceeds from the issuance of 9.0 million shares ($369.6 million) in the IPO to repay $200 million of outstanding indebtedness.
Reorganization
Prior to the completion of the IPO on February 10, 2020, the limited partnership agreement of Bumble Holdings was amended and restated that resulted in the following:
|
•
|
Bumble Inc. became the general partner of Bumble Holdings with 100% of the voting power and control of the management of Bumble Holdings.
|
|
•
|
All outstanding Class A Units were either (1) reclassified into a new class of limited partnership interest referred to as “Common Units”, or (2) directly exchanged for vested shares of Class A common stock of Bumble Inc.
|
|
•
|
All outstanding Class B Units were either reclassified into a new class of limited partner interest referred to as “Incentive Units”, or directly exchanged for vested shares of Class A common stock and restricted shares of Class A common stock of Bumble Inc.
|
|
•
|
Recognition of a noncontrolling interest due to the Pre-IPO Shareholders retaining an economic interest in Bumble Holdings related to Common Units not exchanged for vested shares of Class A common stock.
|
22
As part of the Reorganization Transactions, certain entities that are taxable as corporations for U.S. federal income tax purposes in which certain Pre-IPO Shareholders hold interests (the “Blocker Companies”) entered into certain restructuring transactions that resulted in the Pre-IPO Shareholders acquiring shares of newly issued shares of Class A common stock in exchange for their ownership interests in the Blocker Companies and the Company acquiring an equal number of outstanding Common Units.
Additionally, Bumble Inc. and the holders of all Common Units entered into an exchange agreement in which the holders of the Common Units will have the right on a quarterly basis to exchange their Common Units for shares of Class A common stock of the Company on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications.
Subsequent to the Reorganization Transactions, our Sponsor effected certain exchanges of Common Units for Class A shares that were contemplated to have occurred pursuant to the Blocker Restructuring, with the net change to the capital structure being 4,455,510 Common Units in Bumble Holdings being exchanged on April 1, 2021, on a one-for-one basis, for Class A common stock in the Company. We have given retrospective effect to these transactions when estimating our tax receivable agreement liability, see Note 3 – Income Taxes.
Amendment and Restatement of Certificate of Incorporation
The Company’s amended and restated certificate of incorporation has three classes of ownership interests: 6,000,000,000 shares of Class A common stock, par value $0.01 per share, 1,000,000 shares of Class B common stock, par value $0.01 per share, and 600,000,000 shares of preferred stock, par value $0.01 per share.
Class A Common Stock
Shares of Class A common stock have both voting and economic rights. Holders of Class A common stock are entitled to one vote for each share of Class A common stock held. Our Founder and affiliates of Blackstone (“Principal Stockholders”) are entitled to outsized voting rights. Each share of Class A common stock held by a Principal Stockholder is entitled to ten votes. Shares of Class A common stock are entitled to dividends and pro rata distribution of remaining available assets upon liquidation. Shares of Class A common stock do not have preemptive, subscription, redemption or conversion rights.
As of March 31, 2021, there were 115,343,526 shares of Class A common stock outstanding.
Class B Common Stock
Shares of Class B common stock have voting but no economic rights. Holders of Class B common stock are entitled to one vote for each Common Unit of Bumble Holdings held. Each Principal Stockholder that holds Class B common stock is entitled to a number of votes equal to 10 times the aggregate number of Common Units held of Bumble Holdings. Shares of Class B common stock do not have any right to receive dividends or distribution upon liquidation.
As of March 31, 2021, there were 20 shares of Class B common stock outstanding.
Preferred Stock
The Company is authorized to issue, without the approval of its stockholders, one or more series of preferred stock. The board of directors may determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or other special rights.
As of March 31, 2021, no preferred stock has been issued.
Treasury Stock
Repurchases of the Company's common stock are included in treasury stock at the cost of shares repurchased. During the three months ended March 31, 2021, the Company used a portion of the proceeds from the issuance of 48.5 million shares in the IPO to redeem shares of Class A common stock from the pre-IPO owners.
Noncontrolling Interests
The Company’s noncontrolling interests represent reserve related to the Common Units held by the pre-IPO Common Unitholders and the Vested Incentive Units held by the continuing incentive unitholders.
23
Note 12 - Earnings (Loss) per Share / Unit
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.
The Company computes earnings per share (“EPS”) of Class A common stock using the two-class method required for participating securities. The Company considers Unvested Restricted Shares and Vested RSUs to be participating securities because holders are entitled to be credited with dividend equivalent payments, upon the payment by the Company of dividends on shares of Common Stock.
Undistributed earnings allocated to participating securities are subtracted from net earnings (loss) attributable to Bumble Inc. in determining net earnings (loss) attributable to common stockholders. Basic EPS is computed by dividing net earnings (loss) attributable to common stockholders / unitholders by the weighted-average number of shares of our Class A Common Stock / Units outstanding.
For the calculation of diluted EPS, net earnings (loss) attributable to common stockholders / unitholders for basic EPS is adjusted by the effect of dilutive securities.
Diluted EPS attributable to common stockholders / unitholders is computed by dividing the resulting net earnings (loss) attributable to common stockholders / unitholders by the weighted-average number of common shares / units outstanding, adjusted to give effect to dilutive elements including Restricted Shares, RSUs, and Options to the extent these are dilutive.
The following table sets forth a reconciliation of the numerators used to compute the Company's basic and diluted earnings (loss) per share / unit for the three months ended March 31, 2021 and the period from January 29 through March 31, 2020
|
|
Three Months
Ended
March 31,
2021
|
|
|
Period from
January 29,
through
March 31,
2020
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
323,442
|
|
|
$
|
(55,809
|
)
|
Net loss attributable to noncontrolling interests
|
|
|
(18,348
|
)
|
|
|
(48
|
)
|
Net earnings (loss) attributable to Bumble Inc. shareholders / Buzz Holdings L.P. owners
|
|
$
|
341,790
|
|
|
$
|
(55,761
|
)
|
24
The following table sets forth the computation of the Company's basic and diluted earnings (loss) per share / unit (in thousands, except share / unit amounts, and per share / unit amounts, unaudited).
|
|
Three Months
Ended
March 31,
2021
|
|
|
Period from
January 29,
through
March 31,
2020
|
|
Basic earnings (loss) per share / unit attributable to common stockholders / unitholders
|
|
|
|
|
|
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
Allocation of net earnings (loss) attributable to Bumble Inc. shareholders / Buzz Holdings L.P. owners
|
|
$
|
201,142
|
|
|
$
|
(55,761
|
)
|
Less: net earnings (loss) attributable to participating securities
|
|
|
627
|
|
|
|
—
|
|
Net earnings (loss) attributable to common stockholders / unitholders
|
|
$
|
200,515
|
|
|
$
|
(55,761
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average number of shares of Class A common stock / units outstanding
|
|
|
115,230,399
|
|
|
|
2,454,232,753
|
|
Basic earnings (loss) per share / unit attributable to common stockholders / unitholders
|
|
$
|
1.74
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share / unit attributable to common stockholders / unitholders
|
|
|
|
|
|
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
Allocation of net earnings (loss) attributable to Bumble Inc. shareholders / Buzz Holdings L.P. owners
|
|
$
|
201,142
|
|
|
$
|
(55,761
|
)
|
Increase in net earnings (loss) attributable to common shareholders upon conversion of potentially dilutive Common Units
|
|
|
121,326
|
|
|
|
—
|
|
Net earnings (loss) attributable to common stockholders / unitholders
|
|
$
|
322,468
|
|
|
$
|
(55,761
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
Number of shares / units used in basic computation
|
|
|
115,230,399
|
|
|
|
2,454,232,753
|
|
Add: weighted-average effect of dilutive securities
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
190,508
|
|
|
|
|
|
RSUs
|
|
|
1,238,363
|
|
|
|
—
|
|
Options
|
|
|
11,820
|
|
|
|
—
|
|
Common Units to Convert to Class A Common Stock
|
|
|
74,417,632
|
|
|
|
—
|
|
Weighted average shares of Class A common stock / units outstanding used to calculate diluted earnings (loss) per share / unit
|
|
|
191,088,722
|
|
|
|
2,454,232,753
|
|
Diluted earnings (loss) per share / unit attributable to common stockholders / unitholders
|
|
$
|
1.69
|
|
|
$
|
(0.02
|
)
|
Note 13 - Stock-based Compensation
Total stock-based compensation cost was as follows:
|
|
Successor
|
|
|
|
Predecessor
|
|
(in thousands)
|
|
Three Months
Ended
March 31,
2021
|
|
|
Period from
January 29,
through
March 31,
2020
|
|
|
|
Period from
January 1,
through
January 28,
2020
|
|
Cost of revenue
|
|
$
|
1,607
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Selling and marketing expense
|
|
|
5,141
|
|
|
|
—
|
|
|
|
|
75
|
|
General and administrative expense
|
|
|
19,908
|
|
|
|
1,420
|
|
|
|
|
3,997
|
|
Product development expense
|
|
|
19,167
|
|
|
|
—
|
|
|
|
|
84
|
|
Total stock-based compensation expense
|
|
$
|
45,823
|
|
|
$
|
1,420
|
|
|
|
$
|
4,156
|
|
Predecessor Plans
Prior to the Sponsor Acquisition, Worldwide Vision Limited operated a share option plan and a growth share plan, and Bumble Holding Limited, a subsidiary of Worldwide Vision Limited, had issued phantom stock.
25
In connection with the Sponsor Acquisition, Worldwide Vision Limited’s stock-based compensation plans were terminated and the phantom stock awards issued by Bumble Holding Limited were settled, including $4.0 million that was recognized as stock-based compensation expense in “General and administrative expense” in the period from January 1, 2020 to January 28, 2020.
Successor Plans
Prior to the IPO, Bumble Holdings had three active plans under which awards had been granted to various employees of the Company, including key management personnel, based on their management grade.
In connection with the Sponsor Acquisition, Bumble Holdings and Buzz Management Aggregator L.P., an interest holder in Bumble Holdings, adopted two new Incentive Plans for the employees’ performance and retention purposes, namely the Employee Incentive Plan (“Non-US Plan”) and the Equity Incentive Plan (“US Plan”). The participants of the Non-US Plan and US Plan are selected employees of the Company and the subsidiaries. Bumble Holdings and Buzz Management Aggregator L.P. also adopted one incentive plan for Whitney Wolfe Herd (the “Founder Plan”). Awards granted under the Founder Plan and US Plan were in the form of Class B Units in Bumble Holdings and Class B Units in Buzz Management Aggregator L.P, respectively (collectively, the “Class B Units”). Under the Non-US Plan, participants receive phantom awards of Class B Units in Buzz Management Aggregator L.P. (the “Phantom Class B Units”) that are settled in cash equal to the notional value of the Buzz Management Aggregator Class B Units at the settlement date.
The Class B Units under the Founder Plan and US Plan and the Phantom Class B Units under the Non-US Plan comprise:
|
●
|
Time-Vesting Class B Units and Time-Vesting Phantom Class B Units (60% of the Class B Units and Phantom Class B Units granted) that generally vest over a five-year service period and for which expense is recognized under a graded expense attribution model; and
|
|
●
|
Exit-Vesting Class B Units and Exit-Vesting Phantom Class B Units (40% of the Class B Units and Phantom Class B Units granted). Vesting for these awards is based on a liquidity event in which affiliates of The Blackstone Group Inc. receive cash proceeds in respect of its Class A units in the Company prior to the termination of the participant. Further, the portion of the Exit-Vesting Class B Units and Exit-Vesting Phantom Class B Units that vest is based on certain Multiple on Invested Capital (“MOIC”) and Internal Rate of Return (“IRR”) hurdles associated with a liquidity event. The MOIC and IRR hurdles impact the fair value of the awards. As the vesting of these units is contingent upon a specified liquidity event, no expense was required to be recorded prior to the occurrence of a liquidity event.
|
Time-Vesting Class B Units and Exit-Vesting Class B Units
Expense for the Time-Vesting Class B Units and Exit-Vesting Class B Units was based on the grant date fair value of the Class B Units. The grant date fair value was measured using a Monte Carlo model, which incorporates various assumptions noted in the following table. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated based on the observed equity volatility for comparable companies. The expected time to liquidity event was based on management’s estimate of time to an expected liquidity event. The dividend yield was based on the Company’s expected dividend rate. The risk-free interest rate was based on U.S. Treasury zero-coupon issues. Forfeitures were accounted for as they occurred.
The weighted-average assumptions the Company used in the Monte Carlo model for 2020 are as follows:
Dividend yield
|
|
|
—
|
|
Expected volatility
|
|
|
58%
|
|
Risk-free interest rate
|
|
|
0.86%
|
|
Expected time to liquidity event (years)
|
|
|
4.7
|
|
Post-IPO Award Reclassification
In connection with the Company’s IPO, awards under the Founder Plan, US Plan, and Non-US Plan were reclassified as follows:
|
●
|
The Time-Vesting and Exit-Vesting Class B Units in Bumble Holdings under the Founder Plan and granted to senior management under the US Plan were reclassified to vested Incentive Units (in the case of Vested Class B Units) and unvested Incentive Units (in the case of unvested Class B Units) in Bumble Holdings.
|
|
●
|
The Time-Vesting and Exit-Vesting Class B Units in Bumble Holdings (other than those granted to senior management) were reclassified to Class A common stock (in the case of vested Class B Units) and Restricted Shares of Class A common stock (in the case of unvested Class B Units) in the Company.
|
26
|
●
|
The Time-Vesting and Exit-Vesting Phantom Class B Units in Bumble Holdings were reclassified into vested RSUs (in the case of vested Class B Phantom Units) and unvested RSUs (in the case of unvested Class B Phantom Units) in the Company.
|
In all cases of respective reclassifications, the Post-IPO awards retained the same terms and conditions (including applicable vesting requirement). Each Post-IPO award was converted to reflect the $43.00 share price contemplated in the Company’s IPO while retaining the same economic value in the Company.
At the IPO date, we concluded that our public offering represents a qualifying liquidity event that would cause the Exit-Vesting awards’ performance conditions to be probable of occurring. As such, we have begun to recognize stock-based compensation expense in relation to the Exit-Vesting awards. As of March 31, 2021, total recognized compensation cost related to the reclassified Exit-Vesting awards is $11.3 million.
Time-Vesting and Exit-Vesting Class B Units Reclassified to Incentive Units in Bumble Holdings or Restricted Shares of Class A Common Stock in Bumble Inc.
The following table summarizes the information about Time-Vesting and Exit-Vesting Class B Units in Bumble Holdings that were reclassified to Incentive Units in Bumble Holdings or Restricted Shares of Class A Common Stock in the Company:
|
|
March 31, 2021
|
|
|
|
Time-Vesting Class B Units
|
|
|
Exit-Vesting Class B Units
|
|
|
|
Number of
Awards
|
|
|
Weighted-
Average
Grant Date
Fair
Value
|
|
|
Number of
Awards
|
|
|
Weighted-
Average
Grant Date
Fair
Value
|
|
Unvested as of beginning of period
|
|
|
91,910,366
|
|
|
$
|
0.55
|
|
|
|
61,273,583
|
|
|
$
|
0.43
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(12,260,439
|
)
|
|
|
0.38
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
(281,304
|
)
|
|
|
0.36
|
|
|
|
(234,420
|
)
|
|
|
0.25
|
|
Effect of Reorganization and IPO
|
|
|
(91,629,062
|
)
|
|
|
0.55
|
|
|
|
(61,039,163
|
)
|
|
|
0.43
|
|
Outstanding at end of period
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Time-Vesting and Exit-Vesting Phantom Class B Units Converted to RSUs
The following table summarizes the information about Time-Vesting and Exit-Vesting Class Phantom B Units that were converted to RSUs in the Company:
|
|
March 31, 2021
|
|
|
|
Time-Vesting Phantom Class B Units
|
Exit-Vesting Phantom Class B Units
|
|
|
|
Number of
Awards
|
|
|
Number of
Awards
|
|
Unvested as of beginning of period
|
|
|
39,456,172
|
|
|
|
26,304,120
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(7,151,666
|
)
|
|
|
—
|
|
Forfeited
|
|
|
(101,891
|
)
|
|
|
(69,781
|
)
|
Effect of Reorganization and IPO
|
|
|
(39,354,281
|
)
|
|
|
(26,234,339
|
)
|
Outstanding at end of period
|
|
|
—
|
|
|
|
—
|
|
2021 Omnibus Plan
In connection with the IPO, the Company adopted the 2021 Omnibus Plan, which became effective on the date immediately prior to the effective date of the IPO. The 2021 Omnibus Plan provides the Company with flexibility to use various equity-based incentive awards as compensation tools to motivate and retain the Company’s workforce. The Company has initially reserved 30,000,000 shares of our common stock for the issuance of awards under the 2021 Omnibus Plan.
27
The fair value of Time-Vesting Awards granted or modified at the time of the IPO was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit:
Volatility
|
|
55%-60%
|
|
Expected Life
|
|
0.5 - 7.4 years
|
|
Risk-free rate
|
|
0.1%-0.8%
|
|
Fair value per unit
|
|
$43.00
|
|
Dividend yield
|
|
|
0.0
|
%
|
Discount for lack of marketability(1)
|
|
15% - 25%
|
|
The fair value of Exit-Vesting Awards granted or modified at the time of the IPO was determined using a Monte Carlo simulation approach in an option pricing framework, where the common stock price of the Company was evolved using a Geometric Brownian Motion over a period from the Valuation Date to the date of Management's expected exit date - a date at which MOIC and IRR realized by the Sponsor can be calculated ("Sponsor Exit"), with the following assumption ranges and fair value per unit:
Volatility
|
|
|
55
|
%
|
Expected Life
|
|
1.8 years
|
|
Risk-free rate
|
|
|
0.1
|
%
|
Fair value per unit
|
|
$43.00
|
|
Dividend yield
|
|
|
0.0
|
%
|
Discount for lack of marketability(1)
|
|
|
15
|
%
|
(1) Discount for lack of marketability for Time-Vesting Awards and Exit-Vesting Awards is only applicable for Incentive Units granted in Bumble Holdings at the time of the IPO.
Incentive Units in Bumble Holdings:
The following table summarizes information around Incentive Units in Bumble Holdings. These include grants of Class B Units that were reclassified into Incentive Units as described above, as well as Incentive Units issued to new recipients. The Incentive Units granted as a result of the reclassification of Class B Units retain the vesting attributes (including original service period vesting start date) of the Class B Units. The Company did not recognize any incremental fair value due to the reclassification of awards as the fair value per award was the same immediately prior to and after the Reclassification. The newly granted Incentive Units contain the same vesting attributes as Incentive Units granted as a result of the Reclassification.
|
|
March 31, 2021
|
|
|
|
Time-Vesting Incentive Units
|
|
|
Exit-Vesting Incentive Units
|
|
|
|
Number of
Awards
|
|
|
Weighted-
Average
Participation
Threshold
|
|
|
Number of
Awards
|
|
|
Weighted-
Average
Participation
Threshold
|
|
Effect of Reorganization and IPO
|
|
|
6,353,868
|
|
|
$
|
12.36
|
|
|
|
4,235,912
|
|
|
$
|
12.36
|
|
Granted
|
|
|
303,433
|
|
|
|
43.00
|
|
|
|
202,287
|
|
|
|
43.00
|
|
Vested
|
|
|
(845,184
|
)
|
|
|
11.64
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unvested as of March 31, 2021
|
|
|
5,812,117
|
|
|
$
|
14.07
|
|
|
|
4,438,199
|
|
|
$
|
13.76
|
|
As of March 31, 2021, total unrecognized compensation cost related to the Time-Vesting Incentive Units is $33.9 million, which is expected to be recognized over a weighted-average period of 2.4 years. Total unrecognized compensation cost related to the Exit-Vesting Incentive Units is $22.5 million, which will be recognized over a weighted average period of 3.8 years.
Restricted Shares of Class A Common Stock in Bumble Inc.:
The following table summarizes information around Restricted Shares in the Company. The Restricted Shares granted as a result of the reclassification of Class B Units retain the vesting attributes (including original service period vesting start date) of the Class B Units. The Company did not recognize any incremental fair value due to the reclassification of awards as the fair value per award was the same immediately prior to and after the Reclassification.
28
|
|
March 31, 2021
|
|
|
|
Time-Vesting Restricted Shares of Class A Common Stock
|
|
|
Exit-Vesting Restricted Shares of Class A Common Stock
|
|
|
|
Number of
Awards
|
|
|
Number of
Awards
|
|
Effect of Reorganization and IPO
|
|
|
248,593
|
|
|
|
163,154
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(38,466
|
)
|
|
|
—
|
|
Forfeited
|
|
|
(7,308
|
)
|
|
|
(6,090
|
)
|
Unvested as of March 31, 2021
|
|
|
202,819
|
|
|
|
157,064
|
|
As of March 31, 2021, total unrecognized compensation cost related to the Time-Vesting Restricted Shares is $1.7 million, which is expected to be recognized over a weighted-average period of 2.4 years. Total unrecognized compensation cost related to the Exit-Vesting Restricted Shares is $0.8 million, which will be recognized over a weighted average period of 3.8 years. As the fair value of the awards reclassified from Class B Units to Restricted Shares was identical upon reclassification, the $2.5 million of future share-based compensation relates to the aggregate grant date fair value of the Class B Units determined in prior periods. As such, the disclosure of the weighted-average grant date fair value of the Restricted Shares is not meaningful.
RSUs in Bumble Inc.:
The following table summarizes information around RSUs in the Company. These include grants of Phantom Class B Units that were reclassified into RSUs as described above, as well as Promised RSUs issued to new recipients. The RSUs granted as a result of the reclassification of Phantom Class B Units retain the vesting attributes (including original service period vesting start date) of the Phantom Class B Units. As the Phantom Class B Units were legally settled in cash and the RSUs will be settled with equity, this represents a liability-to-equity modification. The Company reclassified any outstanding liabilities to equity and recognized expense in accordance with the appropriate pattern using the modification date fair value.
Time-Vesting RSUs that were granted as a result of the Reclassification generally vest in equal annual installments over a five year period, whereas Time-Vesting RSUs that were granted at the time of the Company’s IPO generally vest in equal annual installments over a four year period. Exit-Vesting RSUs that were granted as a result of the Reclassification contain similar vesting requirements to the previously Exit-Vesting Phantom Class B Units.
|
|
March 31, 2021
|
|
|
|
Time-Vesting RSUs
|
|
|
Exit-Vesting RSUs
|
|
|
|
Number of
Awards
|
|
|
Weighted-
Average
Grant-Date
Fair
Value
|
|
|
Number of
Awards
|
|
|
Weighted-
Average
Grant-Date
Fair
Value
|
|
Effect of Reorganization and IPO
|
|
|
2,084,202
|
|
|
$
|
43.00
|
|
|
|
1,389,018
|
|
|
$
|
30.52
|
|
Granted
|
|
|
506,846
|
|
|
|
43.00
|
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(382,349
|
)
|
|
|
43.00
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
(31,329
|
)
|
|
|
43.00
|
|
|
|
(25,290
|
)
|
|
|
30.52
|
|
Unvested as of March 31, 2021
|
|
|
2,177,370
|
|
|
$
|
43.00
|
|
|
|
1,363,728
|
|
|
$
|
30.52
|
|
As of March 31, 2021, total unrecognized compensation cost related to the Time-Vesting RSUs is $71.5 million, which is expected to be recognized over a weighted-average period of 2.3 years. Total unrecognized compensation cost related to the Exit-Vesting RSUs is $34.8 million, which will be recognized over a weighted average period of 3.8 years.
Options
Under the 2021 Omnibus Plan, the Company has granted certain stock options with the underlying equity being shares of the Company’s Class A common stock. These stock options are inclusive of both Time-Vesting stock options and Exit-Vesting stock options. Time-Vesting stock options either vest over a four or a five year period, and weighted-average remaining contractual term has been specified in the table below. Exit-Vesting stock options vest upon satisfaction of a performance condition under which Blackstone and its affiliates receive cash proceeds in respect of certain MOIC and IRR hurdles, subject to the recipient’s continued employment at the time of satisfaction. At the IPO date, we concluded that our public offering represented a qualifying liquidity event that would cause the Exit-Vesting options’ performance conditions to be probable of occurring.
29
The following table summarizes the Company’s option activity as it relates to Time-Vesting stock options as of March 31, 2021:
|
|
March 31, 2021
|
|
|
|
Number of
Options
|
|
|
Weighted-
Average
Exercise
Price Per
Share
|
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Outstanding as of December 31, 2020
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
2,106,618
|
|
|
|
43.00
|
|
|
|
22.27
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
(47,838
|
)
|
|
|
43.00
|
|
|
|
22.28
|
|
Outstanding as of March 31, 2021
|
|
|
2,058,780
|
|
|
$
|
43.00
|
|
|
$
|
22.27
|
|
Exercisable as of March 31, 2021
|
|
|
60,174
|
|
|
|
43.00
|
|
|
|
20.08
|
|
The following table summarizes the Company’s option activity as it relates to Exit-Vesting stock options as of March 31, 2021:
|
|
March 31, 2021
|
|
|
|
Number of
Options
|
|
|
Weighted-
Average
Exercise
Price Per
Share
|
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Outstanding at beginning of period
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
222,424
|
|
|
|
43.00
|
|
|
|
18.10
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding as of March 31, 2021
|
|
|
222,424
|
|
|
$
|
43.00
|
|
|
$
|
18.10
|
|
Exercisable as of March 31, 2021
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
None of the Time-Vesting or Exit-Vesting stock options were exercised during the period ended March 31, 2021. Total unrecognized compensation cost related to the Time-Vesting options is $41.4 million, which is expected to be recognized over a weighted-average period of 2.4 years. Total unrecognized compensation cost related to the Exit-Vesting options is $3.8 million, which will be recognized over a weighted-average period of 2.8 years.
Options have a maximum contractual term of 10 years. The aggregate intrinsic value – assuming all options are expected to vest – and weighted average remaining contractual terms of Time-Vesting and Exit-Vesting options outstanding and options exercisable were as follows as of March 31, 2021.
All options outstanding were issued at the time of the IPO during 2021. No additional options have been issued to date.
In connection with the IPO, on February 10, 2021, Bumble Inc. adopted the 2021 Employee Stock Purchase Plan (the “ESPP”) for the issuance of up to a total of 4,500,000 shares of Class A common stock. The number of shares reserved for issuance under the ESPP will be increased automatically on January 1 of each fiscal year beginning in 2022 by a number of shares of our Class A common stock equal to the lesser of (i) the positive difference between 1% of the shares outstanding on the final day of the immediately preceding fiscal year and the ESPP share reserve on the final day of the immediately preceding fiscal year; and (B) a smaller number of shares as may be determined by the Board. The ESPP allows participants to purchase Class A common stock through contributions of up to 15% of their total compensation. The purchase price of the Class A common stock will be 85% of the lesser of the fair market value of our Class A common stock as determined on the applicable grant date or the applicable purchase period end date (provided that, in no event may the purchase price be less than the par value per share of our Class A common stock). No purchases have been made under the ESPP as of March 31, 2021.
In the ordinary course of operations, the Company enters into transactions with related parties, as discussed below.
On January 29, 2020, the Company recognized a $119.0 million loan to an entity controlled by the Founder, which was recorded as a reduction of “Limited Partners’ Interest” in the accompanying consolidated balance sheets.
On January 14, 2021, our Founder settled the outstanding balance of the loan plus accrued interest for a total of $95.5 million when Bumble Holdings distributed the loan in redemption of 63,643,425 Class A units held by Beehive Holdings III, LP with a hypothetical fair value equal to $95.5 million (such Class A units, the “Loan Settlement Units”). Since the value of the Loan Settlement Units redeemed by Bumble Holdings, determined using the volume-weighted average price of the Class A Common Stock on Nasdaq during the regular trading session as reported by Bloomberg L.P. for the 30-day period beginning on February 16, 2021 (the “Applicable VWAP”) exceeded the implied value of the Loan Settlement Units on the settlement date for purposes of repaying the loan, Bumble Holdings delivered to Beehive Holdings III, LP 3,252,056 Common Units which are exchangeable for shares of Class A common stock having a value based on the Applicable VWAP equal to such excess amount. The settlement of the Founder loan was recorded as an equity transaction with no net impact to the accompanying consolidated balance sheet.
Blackstone Securities Partners L.P., an affiliate of Blackstone, underwrote 4.1 million of the 57.5 million shares of Class A common stock offered to the market in the IPO, with underwriting discounts and commissions of $1.935 per share paid by the Company.
Redemption of Class A Common Stock and Purchase Common Units in Connection with the IPO
The Company used the proceeds from the issuance of 48.5 million shares ($1,991.6 million) in the IPO 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.
Revenue by major geographic region is based upon the location of the customers who receive the Company’s services. The information below summarizes revenue by geographic area, based on customer location (in thousands):
The United States is the only country with revenues of 10% or more of the Company’s total revenue.
The information below summarizes property and equipment, net by geographic area (in thousands):
United Kingdom, Czech Republic, and United States are the only countries with property and equipment of 10% or more of the Company’s total property and equipment, net.
The Company has entered into indemnification agreements with the Company’s officers and directors for certain events or occurrences. The Company maintains a directors and officers insurance policy to provide coverage in the event of a claim against an officer or director. Historically, the Company has not been obligated to make any payments for indemnification obligations, and no liabilities have been recorded for these obligations as of March 31, 2021 or December 31, 2020.
The Company is involved in certain lawsuits, claims and proceedings that arise in the ordinary course of business. The Company records a liability for these when it is believed to be probable that the Company has incurred a loss and the amount can be reasonably estimated. The Company regularly evaluates current information to determine whether it should adjust a recorded liability or record a new one. If the Company determines that there is a reasonable possibility that a loss may be incurred and the loss or range of loss can be estimated, the possible loss is disclosed in the accompanying notes to the unaudited condensed consolidated financial statements to the extent material.
On April 30, 2018, Match Group Inc (“Match”) filed a lawsuit in the Western district of Texas against Bumble Trading Inc. and Bumble Holding Limited for: (i) infringement of utility patents and a design patent, (ii) trademark infringement, (iii) trademark-related unfair competition (iv) trade dress infringement and (v) trade secret misappropriation. Bumble Trading Inc. and Bumble Holding Limited filed counterclaims against Match and IAC alleging (1) fraud, (2) Negligent Misrepresentation, (3) Unfair Competition, (4) Promissory Estoppel, and (5) Interference with Prospective Business Relations. Match subsequently added Badoo Limited, Badoo Trading Limited, Badoo Software Limited and Badoo Technologies Limited to the lawsuit. Match and Bumble Trading Inc. and Bumble Holding Limited have reached an agreement to settle the lawsuit. The Company recorded an accrual for the loss contingency in relation to this litigation.
On May 29, 2018, a plaintiff filed a class action complaint against Bumble Trading Inc. alleging that Bumble’s “women message first” feature discriminates against men and is therefore unlawful under California’s Unruh Civil Rights Act (the “Unruh Act”) and Cal. Bus & Prof. Code Section 17200. The parties held a mediation on June 23, 2020 and signed a settlement agreement on November 20, 2020, subject to preliminary approval by the court. The Company recorded an accrual for the loss contingency in relation to this litigation.
On November 13, 2018 a class action lawsuit was filed against Bumble Trading Inc. in the Northern District of California. There are two elements to the lawsuit: New York Dating Services Law and California Auto-Renewal Law. The parties held a mediation on April 2, 2020 ultimately resulting in the plaintiffs and Bumble accepting the mediator’s settlement proposal. The settlement received
From time to time, the Company is subject to patent litigations asserted by non-practicing entities. As of March 31, 2021, three such matters were in early stages. The Company continues to assess the Company’s position and estimates the possible loss from two such matters to be in the range of $1 million to $4 million. The Company has recorded an accrual for loss contingencies in relation to these matters. The Company is still assessing its position with regards to the third such matter for which a range of potential loss cannot be estimated at this time.
As of March 31, 2021 and December 31, 2020, we determined that provisions of $24.1 million and $55.1 million, respectively, reflect our best estimate of any probable future obligation, including legal costs incurred to date and expected to be incurred up to completion, for the Company’s litigations. The Company paid $30.2 million to settle litigation matters during the three months ended March 31, 2021. Legal expenses are included in “General and administrative expense” in the accompanying consolidated statements of operations.