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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of the financial condition and results of operations of Buzz Holdings L.P. (“Bumble Holdings” or the “Successor”) and Worldwide Vision Limited (the “Predecessor”), the accounting predecessor of Buzz Holdings L.P., in conjunction with our consolidated financial statements and the related notes included in Part II, “Item 8—Financial Statements and Supplementary Data" of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include without limitation those discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and those identified in Part I, “Item 1A—Risk Factors."

Overview

Today, Bumble operates two apps, Bumble and Badoo. We are a leader in the fast-growing online dating space, which has become increasingly popular over the last decade. We launched the Bumble app in 2014 to address antiquated gender norms and a lack of kindness and accountability on the internet. By placing women at the center – where women make the first move – we are building a platform that is designed to be safe and empowering for women, and in turn, provide a better environment for everyone. The Badoo app, launched in 2006, was one of the pioneers of web and mobile free-to-use dating products. Badoo’s mantra of “Date Honestly” extends our focus on building meaningful connections to everyone.

How We Generate Revenue

We monetize both the Bumble and Badoo apps via a freemium model where the use of our service is free and a subset of our users pay for subscriptions or in-app purchases to access premium features. These features maximize the probability of developing meaningful connections, improving their experience and saving them valuable time.

On the Bumble app, our subscription offerings are called Bumble Boost and Bumble Premium. These subscription plan offerings currently include 1-day, 7-day, 1-month, 3-month, 6-month, or lifetime packages. Bumble users, both subscribers and non-subscribing users, can also access additional features through in-app purchases. On the Badoo app, our subscription offering is called Badoo Premium. Badoo Premium subscription plan offerings currently include 1-day, 7-day, 1-month, 3-month, 6-month, or lifetime packages. In addition, Badoo users, both subscribers and non-subscribing users, can also purchase Badoo Credits which they can use to acquire in-app features such as one-off popularity boosts. We also selectively monetize through video and banner advertising.

Overview of Financial Results

For the period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and the year ended December 31, 2019, we generated:

Key Operating Metrics

We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. We believe these operational measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with GAAP. Refer to the section “Certain Definitions” at the beginning of this Annual Report for the definitions of our Key Operating Metrics.

Key Operating Metrics

Bumble App Average Revenue per Paying User $ 26.30 $ 26.84 $ 23.57

Badoo App and Other Average Revenue per Paying User $ 12.69 $ 13.77 $ 11.80

Total Average Revenue per Paying User $ 18.89 $ 19.22 $ 15.37

Key Factors Affecting our Performance

Our results of operations and financial condition have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, “Item 1A—Risk Factors”.

Growth in Users

We acquire new users through investments in marketing and brand as well as through word of mouth from existing users and others. We convert these users to Paying Users by introducing premium features which maximize the probability of developing meaningful connections and improving their experience.

As we scale and our community grows larger, we are able to facilitate more meaningful connections as a result of the wider selection of potential matches. This in turn increases our brand awareness and increases conversion to one of our premium products.

Our revenue growth primarily depends on Paying Users. While we believe we are in the early days of our opportunity, at some point we may face challenges increasing our Paying Users, including competition from alternative products and a lack of appealing product features. We may also at some point find that growth in Paying Users slows due to saturation of the online dating market.

Expansion into New Geographic Markets

We are focused on growing our platform globally, including through entering new markets and investing in under-penetrated markets. As we introduce the Bumble app to new markets throughout Europe, Asia, and Latin America we can leverage the local insights, scale, and infrastructure of Badoo’s existing global footprint to efficiently enter new markets. The Badoo app can also leverage Bumble’s marketing expertise and strength in North America to support growth in that market.

Expanding into new geographies will require increased costs related to marketing, as well as localization of product features and services. Potential risks to our expansion into new geographies will include competition and compliance with foreign laws and regulations.

As we expand into certain new geographies, we may see an increase in users who prefer to access premium features through our in-app purchase options rather than through our subscription packages which could impact our ARPPU. We may also see a lower propensity to pay as we enter certain new markets.

Growth in Monetization

We continually develop new monetization features and improve existing features in order to increase adoption of in-app purchases and our subscription programs striking a balance between the number of Paying Users and ARPPU. We also test new pricing strategies, including different pricing tiers and user segmentation and share those insights across our apps to optimize monetization.

Many variables will impact our ARPPU, including the number of Paying Users and mix of monetization offerings on our platform, as well as the effect of demographic shifts and geographic differences on all of these variables. Our pricing is in local currency and may vary between markets. As foreign currency exchange rates change, translation of the statements of operations into U.S. dollars could negatively impact revenue and distort year-over-year comparability of operating results.

To the extent our ARPPU growth slows, our revenue growth will become increasingly dependent on our ability to increase our Paying Users. In addition, changes in mobile app store policies, including the recently announced change to Google Play’s in-app billing system policy, may adversely affect our results of operations over time.

Investing in Growth While Driving Long-Term Profitability

Our mission-first strategy ensures that values guide our business decisions and our business performance enables us to drive impact through investment in technology, marketing and product innovation, balancing growth with long-term margins.

We expect to continue to invest in technology, marketing and product innovation, while balancing driving growth with long-term margins. Key investment areas for our platform include machine learning capabilities, including continually improving our matching technology; features that prioritize security and privacy; and new premium offerings that add incremental value to Paying Users.

Attracting and Retaining Talent

Our business relies on our ability to attract and retain our talent, including engineers, data scientists, product designers and product developers. We believe that people want to work at a company that has purpose and aligns with their personal values, and therefore our ability to recruit talent is aided by our mission and brand reputation. We compete for talent within the technology industry.

Seasonality

We experience seasonality in user growth, user engagement, Paying User growth, and monetization on our platform. Historically, we see an increase in all of these metrics in the first quarter and during the Northern Hemisphere summer of the calendar year, and a slowdown in the rest of the calendar year. Our activity is also elevated in key seasonal calendar highs such as the January and February lead up to Valentine’s Day and the lead up to major holidays.

Impact of COVID-19

In March 2020, the World Health Organization declared the COVID-19 a global pandemic. The COVID-19 outbreak has reached across the globe, resulting in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans intended to control the spread of the virus. While some of these measures have been relaxed in certain parts of the world, ongoing social distancing measures, and future prevention and mitigation measures, as well as the potential for some of these measures to be reinstituted in the event of repeat waves or mutations of the virus, are likely to have an adverse impact on global economic conditions and consumer confidence and spending, and could materially adversely affect demand, or users’ ability to pay, for our products and services.

In response to the COVID-19 outbreak, we have taken several precautions that may adversely impact employee productivity, such as requiring employees to work remotely, imposing travel restrictions, and temporarily closing office locations. We continue to monitor the rapidly-evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities, and there may be developments outside our control requiring us to adjust our operating plan. As such, given the unprecedented uncertainty around the duration and severity of the impact on market conditions and the business environment, we cannot reasonably estimate the full impacts of the COVID-19 pandemic on our operating results in the future.

For additional information, see “Item 1A―Risk Factors—General Risk Factors—Our business and results of operations” may be materially adversely affected by the recent COVID-19 outbreak or other similar outbreaks

Factors Affecting the Comparability of Our Results of Operations

As a result of a number of factors, our historical results of operations may not be comparable from period to period or going forward. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

The Sponsor Acquisition

On January 29, 2020, we completed the Sponsor Acquisition, pursuant to which, among other things, Bumble Holdings acquired Worldwide Vision Limited and its consolidated subsidiaries. For additional information, see Note 1, Organization and Basis of Preparation, within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

The Sponsor Acquisition was accounted for as a business combination under Accounting Standards Codification 805, Business Combinations. The purchase consideration was allocated to the identifiable assets and liabilities of Worldwide Vision Limited measured at their fair value as of the effective date of the Sponsor Acquisition. Any excess of the purchase consideration over the fair value of the identifiable assets and liabilities of Worldwide Vision Limited was recognized as goodwill in our consolidated financial statements. In addition, we have recorded an increase in depreciation and amortization.

In connection with the Sponsor Acquisition, in January 2020, we entered into a 7-year senior secured term loan facility in an original aggregate principal amount of $575.0 million (the “Initial Term Loan Facility”) and a 5-year senior secured revolving credit facility in an aggregate principal amount of up to $50.0 million (the “Revolving Credit Facility”). The borrower under the Initial Term Loan Facility and the Revolving Credit Facility is a wholly owned subsidiary of Bumble Holdings, Buzz Finco L.L.C. Accordingly, in periods after the Sponsor Acquisition, we have recorded an increase in interest expense.

Concurrent with the Sponsor Acquisition, the Company also decided to no longer actively maintain and market certain platforms, including Chappy, Lumen and Huggle (“Inactive Platforms”). The decision to do so was based on the Company’s greater focus on, and decision to use its resources for strengthening, its brands Bumble and Badoo. During the period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and the years ended December 31, 2019 and 2018, the revenue associated with the Inactive Platforms is deemed immaterial.

As a result of the Sponsor Acquisition, the Company incurred significant transaction costs such as legal, accounting, consulting, shadow equity and other expenses. These were incurred both in the period from January 1, 2020 to January 28, 2020 and the period from January 29, 2020 to December 31, 2020 and resulted primarily in an increase in general and administrative expense.

The Distribution Financing Transaction

In October 2020, we entered into an incremental senior secured term loan facility (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”) with the same maturity as the Initial Term Loan Facility in an original aggregate principal amount of $275.0 million. The Incremental Term Loan provides for additional senior secured term loans with substantially identical terms as the Initial Term Loan Facility (other than the applicable margin). The borrower under the Incremental Term Loan Facility is a wholly owned subsidiary of Bumble Holdings, Buzz Finco L.L.C.

Bumble Holdings used the proceeds from the incremental borrowings under the Incremental Term Loan Facility, together with available cash, to declare a distribution of $360.0 million, of which approximately $334.3 million was paid to our pre-IPO owners on October 28, 2020 and $25.6 million was used to partially repay the loan to our Founder, and to pay related fees and expenses in connection therewith.

Initial Public Offering and Offering Transactions

On February 10, 2021, our registration statement on Form S-1 relating to our initial public offering (“IPO”) was declared effective by the SEC, and our Class A common stock began trading on the NASDAQ on February 11, 2021. Our IPO closed on February 16, 2021. For additional information, see Note 1, Organization and Basis of Preparation, to our consolidated financial statements included in Part II, "Item 8—Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Bumble Inc. issued and sold 57.5 million shares of its Class A common stock in the IPO, including 7.5 million shares sold pursuant to the exercise in full by the underwriters of their option to purchase additional shares. Bumble Inc. used the proceeds (net of underwriting discounts) from the issuance of 9 million shares ($369.6 million) to acquire an equivalent number of newly-issued Common Units from Buzz Holdings L.P, which Buzz Holdings L.P. will in turn use to repay outstanding indebtedness under our Term Loan Facility totaling approximately $200.0 million in aggregate principal amount and approximately $148.3 million for general corporate purposes, and to bear all of the expenses of the IPO. Bumble Inc. used the proceeds (net of underwriting discounts) from the issuance of 48.5 million shares ($1,991.6 million) to purchase or redeem an equivalent aggregate number of shares of Class A common stock and Common Units from our pre-IPO owners. We refer to the foregoing transactions as the “Offering Transactions”.

Reorganization Transactions

Prior to the completion of the IPO, we undertook certain reorganization transactions (the “Reorganization Transactions”) such that Bumble Inc. is now a holding company, and its sole material asset is a controlling equity interest in Bumble Holdings. As the general partner of Bumble Holdings, Bumble Inc. now operates and controls all of the business and affairs of Bumble Holdings, has the obligation to absorb losses and receive benefits from Bumble Holdings and, through Bumble Holdings and its subsidiaries, conduct our business. The Reorganization Transactions were accounted for as a reorganization of entities under common control. As a result, the consolidated financial statements of Bumble Inc. will recognize the assets and liabilities received in the Reorganization Transactions at their historical carrying amounts, as reflected in the historical financial statements of Bumble Holdings, the accounting predecessor. Bumble Inc. will consolidate Bumble Holdings on its consolidated financial statements and record a non-controlling interest, related to the Common Units and the Incentive Units held by our pre-IPO owners, on its consolidated balance sheet and statement of operations.

Bumble Inc. is a corporation for U.S. federal and state income tax purposes. Each of Bumble Inc.’s accounting predecessor, Bumble Holdings, and Bumble Holdings’ accounting predecessor, Worldwide Vision Limited, is, and has been since the Sponsor Acquisition, treated as a flow-through entity for U.S. federal income tax purposes, and as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, the historical results of operations and other financial information set forth in this Annual Report do not include any material provisions for U.S. federal income tax. Following our initial public offering, Bumble Inc. pays U.S. federal and state income taxes as a corporation on its share of Bumble Holdings’ taxable income.

In addition, in connection with the Reorganizations Transactions and our IPO, we entered into the tax receivable agreement as described under “Item 13―Certain Relationships and Related Transactions, and Director Independence―Tax Receivable Agreement”.

Public Company Costs

In preparation for our IPO, we incurred significant one-off costs such as legal, accounting, consulting, investor relations and other expenses. Accordingly, in the period from January 29, 2020 to December 31, 2020, we have recorded an increase in general and administrative expense.

As a result of becoming a public company, we expect to incur additional costs such as personnel, legal, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company.

Components of Results of Operations

Our business is organized into a single reportable segment.

Revenue

We monetize both the Bumble and Badoo apps via a freemium model where the use of our service is free and a subset of our users pay for subscriptions or in-app purchases to access premium features. 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.

We also earn revenue from online advertising and partnerships, which are not a significant part of our business. Online advertising revenue is recognized when an advertisement is displayed. Revenue from partnerships is recognized according to the contractual terms of the partnership.

Cost of revenue

Cost of revenue consists primarily of in-app purchase fees due on payments processed through the Apple App Store and Google Play Store. Purchases on Android, mobile web and desktop have additional payment methods, such as credit card or via telecom providers. These purchases incur fees which vary depending on payment method. Purchase fees are deferred and expensed over the same period as revenue.

Cost of revenue also includes data center expenses such as rent, power and bandwidth for running servers and associated employee costs. Expenses relating to customer care functions such as customer service, moderators and other auxiliary costs associated with providing services to customers such as fraud prevention are also included within cost of revenue.

Selling and marketing expense

Selling and marketing expense consists primarily of brand marketing, digital and social media spend, field marketing and compensation expense (including stock-based compensation) and other employee-related costs for personnel engaged in sales and marketing functions.

General and administrative expense

General and administrative expense consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in executive management, finance, legal, tax and human resources. General and administrative expense also consists of transaction costs, changes in fair value of contingent earn-out liability, expenses associated with facilities, information technology, external professional services, legal costs and settlement of legal claims and other administrative expenses.

Product development expense

Product development expense consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in the design, development, testing and enhancement of product offerings and related technology.

Depreciation and amortization expense

Depreciation and amortization expense is primarily related to computer equipment, leasehold improvements, furniture and fixtures, developed technology, user base, white label contracts, trademarks and other definite-lived intangible assets.

Interest (expense) income

Interest (expense) income consists of interest income received on related party loans receivables and interest expense incurred in connection with our long-term debt.

Other expense, net

Other expense, net consists of insurance reimbursement proceeds, fair value changes in derivatives and equity investments and impacts from foreign exchange transactions.

Income tax provision

Income tax provision represents the income tax expense associated with our operations based on the tax laws of the jurisdictions in which we operate. These foreign jurisdictions have different statutory tax rates than the United States. Our effective tax rates will vary depending on the relative proportion of foreign to domestic income, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Results of Operations

The following table sets forth our consolidated statement of operations information for the periods presented:

Successor Predecessor

Operating costs and expenses:

The following table sets forth our consolidated statement of operations information as a percentage of revenue for the periods presented:

Successor Predecessor

Operating costs and expenses:

Product development expense 8.7 % 10.2 % 8.0 % 10.4 %

Depreciation and amortization expense 16.9 % 1.0 % 1.4 % 1.7 %

Operating (loss) income (13.7 )% (78.4 )% 19.1 % (4.5 )%

Interest (expense) income (4.1 )% 0.1 % 0.0 % 0.0 %

Other expense, net (1.0 )% (2.2 )% (0.3 )% (1.2 )%

(Loss) earnings before tax (18.8 )% (80.5 )% 18.8 % (5.7 )%

Income tax provision (1.5 )% (0.9 )% (1.3 )% (0.8 )%

The following table sets forth the stock-based compensation expense included in operating costs and expenses:

Successor Predecessor

Cost of revenue $ 615 $ — $ — $ —

Comparison of the Period from January 29, 2020 to December 31, 2020 (Successor), the Period from January 1, 2020 to January 28, 2020 (Predecessor) and Year Ended December 31, 2019 (Predecessor)

Revenue

Successor Predecessor

Revenue was $542.2 million for the period from January 29, 2020 to December 31, 2020, $40.0 million for the period from January 1, 2020 to January 28, 2020, and $488.9 million for the year ended December 31, 2019. Revenue in the period from January 29, 2020 to December 31, 2020 was impacted by a reduction in deferred revenue of $15.0 million recorded in purchase accounting.

Bumble App Revenue was $337.2 million for the period from January 29, 2020 to December 31, 2020, $23.3 million for the period from January 1, 2020 to January 28, 2020, and $275.5 million for the year ended December 31, 2019. This change was primarily driven by a 33.5% increase in the number of Bumble App Paying Users to 1.1 million.

Badoo App and Other Revenue was $205.0 million for the period from January 29, 2020 to December 31, 2020, $16.7 million for the period from January 1, 2020 to January 28, 2020, and $213.4 million for the year ended December 31, 2019. This change was primarily driven by a 14.1% increase in the number of Badoo App and Other Paying Users to 1.4 million for the year ended December 31, 2020.

In addition, Badoo App and Other Revenue includes advertising and partnership revenue of $13.0 million, $1.2 million, and $16.0 million for the period from January 29, 2020 to December 31, 2020, for the period from January 1, 2020 to January 28, 2020, and for the year ended December 31, 2019, respectively.

Cost of revenue

Successor Predecessor

Cost of revenue was $146.6 million for the period from January 29, 2020 to December 31, 2020, $10.8 million for the period from January 1, 2020 to January 28, 2020, and $139.8 million for the year ended December 31, 2019. This change was primarily driven by growth in in-app purchase fees due to increasing revenue.

Selling and marketing expense

Successor Predecessor

Selling and marketing expense was $152.6 million for the period from January 29, 2020 to December 31, 2020, $11.2 million for the period from January 1, 2020 to January 28, 2020, and $142.9 million for the year ended December 31, 2019. This change was primarily due to an increase in digital and social media marketing costs. In addition, selling and marketing expense also increased due to stock-based compensation which was $2.1 million in the period from January 29, 2020 to December 31, 2020, compared to $0.1 million in the period from January 1, 2020 to January 28, 2020 and $0.4 million for the year ended December 31, 2019.

General and administrative expense

Successor Predecessor

General and administrative expense was $178.6 million for the period from January 29, 2020 to December 31, 2020, $44.9 million for the period from January 1, 2020 to January 28, 2020, and $67.1 million for the year ended December 31, 2019. The change was primarily due to transaction costs of $66.3 million and $40.3 million in the period from January 29, 2020 to December 31, 2020 and the periodfrom January 1, 2020 to January 28, 2020, respectively. The increase in the Successor Period was also driven by a $27.8 million change in the fair value of the contingent earn-out liability, increased personnel-related expense driven by headcount and stock-based compensation, which was $17.3 million in the period from January 29, 2020 to December 31, 2020, $4.0 million in the period from January 1, 2020 to January 28, 2020 driven by the shadow equity awards of $3.8 million in connection with the Sponsor Acquisition and $1.2 million in the year ended December 31, 2019.

Product development expense

Successor Predecessor

Percentage of revenue 8.7 % 10.2 % 8.0 %

Product development expense was $47.0 million for the period from January 29, 2020 to December 31, 2020, $4.1 million for the period from January 1, 2020 to January 28, 2020, and $39.2 million for the year ended December 31, 2019. The change was primarily due to increased personnel-related expense as a result of higher employee headcount in product development functions and stock-based compensation, which was $7.5 million in the period from January 29, 2020 to December 31, 2020, $0.1 million in the period from January 1, 2020 to January 28, 2020 and $0.5 million in the year ended December 31, 2019.

Depreciation and amortization expense

Successor Predecessor

Percentage of revenue 16.9 % 1.0 % 1.4 %

Depreciation and amortization expense was $91.8 million for the period from January 29, 2020 to December 31, 2020, $0.4 million for the period from January 1, 2020 to January 28, 2020, and $6.7 million for the year ended December 31, 2019. The increase was primarily due to increased expense in the period from January 29, 2020 to December 31, 2020 related to the amortization of finite-lived intangible assets recognized in connection with the Sponsor Acquisition.

Interest (expense) income

Successor Predecessor

Percentage of revenue (4.1 )% 0.1 % 0.0 %

Interest (expense) income was $(22.1) million for the period from January 29, 2020 to December 31, 2020, $0.1 million for the period from January 1, 2020 to January 28, 2020 and $0.2 million for the year ended December 31, 2019. The change was primarily due to interest expense and amortization of deferred financing fees on our long-term debt obligation in connection with the Sponsor Acquisition.

Other expense, net

Successor Predecessor

Percentage of revenue 1.0 % 2.2 % 0.3 %

Other expense, net was $5.5 million for the period from January 29, 2020 to December 31, 2020, $0.9 million for the period from January 1, 2020 to January 28, 2020, and $1.5 million for the year ended December 31, 2019. The change was primarily due to net foreign exchange losses, which were $14.2 million in the period from January 29, 2020 to December 31, 2020, $0.5 million in the period from January 1, 2020 to January 28, 2020 and $1.2 million in the years ended December 31, 2019, $1.6 million of fair value loss on derivatives during the period from January 29, 2020 to December 31, 2020 and partially offset by a $9.3 million insurance reimbursement related to the putative class action lawsuit in the period from January 29, 2020 to December 31, 2020.

Income tax provision

Successor Predecessor

Effective income tax rate (8.0 )% (1.1 )% 6.7 %

For further detail of income tax matters, see Note 4, Income Taxes, within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Income tax provision was $8.1 million for the period from January 29, 2020 to December 31, 2020, $0.4 million for the period from January 1, 2020 to January 28, 2020, and $6.1 million for the year ended December 31, 2019. The increase in income tax provision was primarily driven by the results of operations, nondeductible expenses incurred, including those incurred in connection with the Sponsor Acquisition, and incremental tax expense incurred as a result of tax rate increase from 17% to 19% in the United Kingdom.

For a comparative discussion of our results of operations for the years ended December 31, 2019 and December 31, 2018, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations―Results of Operations” in our Prospectus, dated February 10, 2021, filed with the SEC pursuant to Rule 424(b)(4) on February 12, 2021.

Non-GAAP Financial Measures

We report our financial results in accordance with GAAP, however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain expenses, including income tax provision, interest (income) expense, depreciation and amortization, stock-based compensation expense, foreign exchange loss (gain), changes in fair value of contingent earn-out liability and interest rate swaps, transaction costs and one-time litigation costs, as management does not believe these expenses are representative of our core earnings. We also provide Adjusted EBITDA Margin, which is calculated as Adjusted EBITDA divided by revenue. In addition to Adjusted EBITDA and Adjusted EBITDA Margin, we believe Free Cash Flow and Free Cash Flow Conversion provide useful information regarding how cash provided by operating activities compares to the capital expenditures required to maintain and grow our business, and our available liquidity, after funding such capital expenditures, to service our debt, fund strategic initiatives and strengthen our balance sheet, as well as our ability to convert our earnings to cash. Additionally, we believe such metrics are widely used by investors, securities analysis, ratings agencies and other parties in evaluating liquidity and debt-service capabilities. We calculate Free Cash Flow and Free Cash Flow Conversion using methodologies that we believe can provide useful supplemental information to help investors better understand underlying trends in our business.

Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies, have limitations as analytical tools and should not be considered in isolation, or as substitutes for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP financial measures as superior to, or a substitute for, the equivalent measures calculated and presented in accordance with GAAP. Some of the limitations are:

Adjusted EBITDA is not a liquidity measure and should not be considered as discretionary cash available to us to reinvest in the growth of our business or to distribute to stockholders or as a measure of cash that will be available to us to meet our obligations.

To properly and prudently evaluate our business, we encourage you to review the financial statements included elsewhere in this Annual Report, and not rely on a single financial measure to evaluate our business. We also strongly urge you to review the reconciliation of net earnings (loss) to Adjusted EBITDA, the computation of Adjusted EBITDA Margin as compared to net (loss) earnings margin which is net earnings as a percentage of revenue, the reconciliation of net cash provided by (used in) operating

activities to Free Cash Flow, and the computation of Free Cash Flow Conversion as compared to Operating Cash Flow Conversion, which is net cash provided by operating activities as a percentage of net earnings (loss) in each case set forth below.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net earnings (loss) excluding income tax provision, interest (income) expense, depreciation and amortization, stock-based compensation expense, foreign exchange loss (gain), changes in fair value of contingent earn-out liability, loss on fair value of interest rate swaps, transaction costs and one-time litigation costs. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenue. The following table reconciles net earnings (loss) and net earnings (loss) margin, the most comparable GAAP financial measures, to Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented:

Successor Predecessor

Add back:

Litigation costs (recoveries), net of insurance proceeds(1) (6,008 ) — — 75,738

Changes in fair value of interest rate swaps(3) 1,586 — — —

Changes in fair value of contingent earn-out liability 27,800 — — —

Net (loss) earnings margin (20.3 )% (81.4 )% 17.6 % (6.6 )%

(2) Represents foreign exchange loss due to foreign currency transactions.

(3) Represents fair value loss on interest rate swaps.

Free Cash Flow and Free Cash Flow Conversion

We define Free Cash Flow as net cash provided by (used in) operating activities less capital expenditures. Free Cash Flow Conversion represents Free Cash Flow as a percentage of Adjusted EBITDA. The following table reconciles net cash provided by (used in) operating activities, the most comparable GAAP financial measure, to Free Cash Flow for the periods presented:

Successor Predecessor

Less:

Liquidity and Capital Resources

Overview

The Company’s principal sources of liquidity are our cash and cash equivalents and cash generated from operations. Our primary uses of liquidity are operating expenses and capital expenditures. As of December 31, 2020, we had $128.0 million of cash and cash equivalents, an increase of $70.6 million from December 31, 2019.

In connection with our IPO, we used the proceeds (net of underwriting discounts) from the issuance of 9 million shares of Class A common stock ($369.6 million) in the IPO to purchase an equivalent number of newly issued Common Units from Bumble Holdings, which Bumble Holdings in turn will use to repay outstanding indebtedness under our Term Loan Facility totaling approximately $200.0 million in aggregate principal amount and approximately $148.3 million for general corporate purposes, and to bear all of the expenses of the IPO. We expect that our future principal uses of cash will also include funding our debt service obligations, paying income taxes and obligations under our tax receivable agreement. Based on current conditions, we believe that we have sufficient financial resources to fund our activities and execute our business plans during the next twelve months.

Cash Flow Information

The following table summarizes our consolidated cash flow information for the periods presented:

Successor Predecessor

Net cash provided by (used in):

Operating activities

Net cash provided by (used in) operating activities was $56.3 million in the Successor Period, $(3.3) million for the period from January 1, 2020 to January 28, 2020, and $101.4 million for the year ended December 31, 2019. The decrease in the Successor Period and the period from January 1, 2020 to January 28, 2020 compared to the year ended December 31, 2019 was primarily due to net loss of $(110.2) million and $(32.6) million in the Successor Period and from January 1, 2020 to January 28, 2020, respectively compared to net earnings of $85.8 million in the year ended December 31, 2019. Net loss in the period from January 29, 2020 to December 31, 2020 and in the period from January 1, 2020 to January 28, 2020 were impacted by transaction costs of $66.3 million and $40.3 million, respectively, and by depreciation and amortization of $91.8 million in the period from January 29, 2020 to December 31, 2020, $0.4 million in the period from January 1, 2020 to January 28, 2020 and $6.7 million in the year ended December 31, 2019, as well as changes in assets and liabilities, which were $9.4 million, $25.1 million and $7.1 million in the period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and the year ended December 31, 2019, respectively.

Investing activities

Net cash used in investing activities was $2,850.7 million for the period from January 29, 2020 to December 31, 2020, $1.0 million for the period from January 1, 2020 to January 28, 2020, and $11.4 million for the year ended December 31, 2019. The change in the Successor Period was primarily due to acquisition of the business (net of cash acquired) of $2,837.7 million in the period from January 29, 2020 to December 31, 2020.

Financing activities

Net cash provided by (used in) financing activities was $2,866.2 million for the period from January 29, 2020 to December 31, 2020, nil for the period from January 1, 2020 to January 28, 2020, and $(65.2) million for the year ended December 31, 2019. The Company received cash of $2,360.4 million in relation to limited partners’ interest, net proceeds from external debt of $828.9 million, proceeds from the repayment of loan from the Founder of $25.6 million and proceeds from the repayment of loans to related companies of $41.9 million in the period from January 29, 2020 to December 31, 2020, offset by cash payments of $360.0 million in dividends and repayment of long-term debt principal of $5.0 million in the period from January 29, 2020 to December 31, 2020.

Indebtedness

Senior Secured Credit Facilities

In connection with the Sponsor Acquisition, in January 2020, we entered into the Initial Term Loan Facility in an original aggregate principal amount of $575.0 million and the Revolving Credit Facility in an aggregate principal amount of up to $50.0 million. In connection with the Distribution Financing Transaction, in October 2020, we entered into the Incremental Term Loan Facility in an original aggregate principal amount of$275.0 million. The borrower under the Senior Secured Credit Facilities is a wholly owned subsidiary of Bumble Holdings, Buzz Finco L.L.C. (the “Borrower”).

Borrowings under the Senior Secured Credit Facilities bear interest at a rate equal to, at the Borrower’s option, either (i) LIBOR for the relevant interest period, adjusted for statutory reserve requirements (subject to a floor of 0.0% on the Initial Term Loan and 0.50% on the Incremental Term Loan), plus an applicable margin or (ii) a base rate equal to the highest of (a) the rate of interest in effect as last quoted by the Wall Street Journal as the “Prime Rate” in the United States, (b) the federal funds effective rate plus 0.50% and (c) adjusted LIBOR for an interest period of one month plus 1.00% (subject to a floor of 0.00% per annum), in each case, plus an applicable margin. The applicable margin for loans under the Revolving Credit Facility is subject to adjustment based upon the consolidated first lien net leverage ratio of the Borrower and its restricted subsidiaries and is subject to reduction after the consummation of our initial public offering.

In addition to paying interest on the outstanding principal under the Senior Secured Credit Facilities, the Borrower is required to pay a commitment fee of 0.50% per annum (which is subject to a decrease to 0.375% per annum based upon the consolidated first lien net leverage ratio of the Borrower and its restricted subsidiaries) to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The Borrower must also pay customary letter of credit fees and an annual administrative agency fee.

The Initial Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount of the Initial Term Loan Facility outstanding as of the date of the closing of the Initial Term Loan Facility, with the balance being payable at maturity on January 29, 2027. The Incremental Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount of the Incremental Term Loan Facility outstanding as of the date of the closing of the Incremental Term Loan Facility, with the balance being payable at maturity on January 29, 2027. Principal amounts outstanding under the Revolving Credit Facility are due and payable in full at maturity on January 29, 2025.

In October 2020, we entered into an incremental Senior Secured Term Loan Facility (the “Incremental Term Loan Facility”) in an original aggregate principal amount of $275.0 million. The Incremental Term Loan provides for additional senior secured term loans with substantially identical terms as the Initial Term Loan Facility (other than the applicable margin). We plan to use a portion of the net proceeds from the initial public offering to repay $200 million aggregate principal amount of our outstanding indebtedness under our Term Loan Facility. The Senior Secured Credit Facilities contain affirmative and negative covenants and customary events of default.

Tax Receivable Agreement

In connection with the IPO, in February 2021, 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 initial public offering 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 initial public offering, and assuming all vested Incentive Units were converted to Common Units and subsequently exchanged for shares of Class A common stock at the initial public offering price of $43.00 per share of Class A common stock) is approximately $2,562.0 million, which includes Bumble Inc.’s allocable share of existing tax basis acquired in this IPO, which we have determined to be approximately $1,675.2 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 will occur

following 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.

Contractual Obligations and Contingencies

The following table summarizes our contractual obligations as of December 31, 2020:

Payments due by period

Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total

(in thousands)

The payments that we may be required to make under the Tax Receivable Agreement to the pre-IPO owners may be significant and are not reflected in the contractual obligations table set forth above as they are dependent upon future taxable income. Assuming no material changes in the relevant tax law, and that we earn sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreement, we expect future payments under the tax receivable agreement related to the Offering Transactions to aggregate $520.9 million and to range over the next 15 years from approximately $15.8 million to $47.6 million per year and decline thereafter. In determining these estimated future payments, we have given retrospective effect to certain exchanges of Common Units for Class A shares that will occur following the IPO that were contemplated to have occurred pursuant to the Blocker Restructuring. The foregoing numbers are merely estimates, and the actual payments could differ materially. See “― Tax Receivable Agreement” in this section and “Item 13―Certain Relationships and Related Transactions, and Director Independence―Tax Receivable Agreement”.

In connection with the Sponsor Acquisition in January 2020, we entered into a contingent consideration arrangement, consisting of an earn-out payment to the former shareholders of Worldwide Vision Limited of up to $150 million. The timing and amount of such payment, that we may be required to make, is not reflected in the contractual obligations table set forth above as it is dependent upon our Sponsor achieving a specified return on invested capital. See Note 5, Business Combination, for additional information.

Off-Balance Sheet Arrangements

Other than the items described above, we have no significant off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with GAAP, which often require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. Our estimates are based on historical experience, current conditions and various other assumptions that we believe to be reasonable under the circumstances. We evaluate our critical estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

The critical accounting estimates, assumptions, and judgments that we believe to have the most significant impact on our consolidated financial statements are described below. This discussion is provided to supplement the descriptions of our accounting policies contained in Note 2, Summary of Selected Significant Accounting Policies, within the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Business Combination

We estimate the fair value of assets acquired and liabilities assumed in a business combination. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates.

Goodwill is tested for impairment at a minimum on an annual basis, as well as upon an indicator of impairment. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then quantitative assessment is performed to compare the reporting unit’s carrying value to its fair value. Alternatively, we are permitted to bypass the qualitative assessment and proceed directly to performing the quantitative assessment. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The fair value of the reporting unit is based on a discounted cash flow model involving several assumptions.

Contingent consideration arrangements are recognized at their acquisition date fair value and included as part of purchase price at the acquisition date. These contingent consideration arrangements are classified as liabilities and are remeasured to fair value at each reporting period, with any change in fair value being recognized in “General and administrative expense” in the consolidated statement of operations. The estimated fair value of the contingent consideration is based primarily on estimates of meeting the applicable contingency conditions as per the terms of the applicable agreements.

Recoverability of Intangible Assets with Definite Lives and Other Long-Lived Assets

We evaluate definite-lived intangible assets and other long-lived assets whenever events or changes of circumstance indicate that the carrying amounts may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset group to future undiscounted net cash flows expected to be generated. We group assets for purposes of such review at the lowest level for which identifiable cash flows of the asset group are largely independent of the cash flows of the other groups of assets and liabilities. If this comparison indicates impairment, the amount of impairment to be recognized is calculated as the difference between the carrying value and the fair value of the asset group.

Unforeseen events, changes in circumstances and market conditions and material differences in estimates of future cash flows could adversely affect the fair value of our assets and could result in an impairment charge. Fair value can be estimated utilizing a number of techniques including quoted market prices, prices for comparable assets, or other valuation processes involving estimates of cash flows, multiples of earnings or revenues, and we may make various assumptions and estimates when performing our impairment assessments, particularly as it relates to cash flow projections. Cash flow estimates are by their nature subjective and include assumptions regarding factors such as recent and forecasted operating performance, revenue trends and operating margins.These estimates could also be adversely impacted by changes in federal, state, or local regulations, economic downturns or developments, or other market conditions affecting our industry.

Internally Developed Software

We incur costs to develop software to be used solely to meet internal needs and applications used to deliver our services. These software development costs meet the criteria for capitalization once the preliminary project stage is complete and it is probable that the project will be completed, and the software will be used to perform the function intended. Development costs that meet the criteria for capitalization were not material to date.

Stock-based Compensation

Prior to the Sponsor Acquisition

Prior to the Sponsor Acquisition, Worldwide Vision Limited granted stock-based awards consisting primarily of share options and restricted stock units (“WVL RSUs”) to employees and certain non-employee advisors. Outstanding share options generally vested over four years or upon the achievement of certain performance conditions, such as revenue growth. Outstanding WVL RSUs generally vested over 4 years and participated in dividends once gross dividend payments to ordinary shareholders exceeded $150 million and in an exit event. No WVL RSUs were granted in 2018 and 2019, and the expense arising from WVL RSUs was not material for the periods presented.

Between 2015 and 2018, Bumble Holdings Limited issued shadow equity to employees and non-employee to provide a bonus to be paid upon an exit event of Bumble Holdings Limited, with the bonus amount to vary based on the exit value. Certain of the awards were payable in the event of an exit of Bumble Holdings Limited only, while one award was payable in the event of an exit event within the group. As the payment was contingent upon the achievement of a liquidity event, no compensation expense was recognized in connection with these awards during the years ended December 31, 2018 and 2019. These awards issued by Bumble Holdings Limited were settled in connection with the Acquisition, including $3.8 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.

We measured share options based on their estimated grant date fair values and recognized stock-based compensation expense over the requisite service period (the “vesting period”). Stock-based compensation expense reflected our best estimate of the number of equity instruments that will ultimately vest, including the impact of estimated forfeitures.

The fair value of each share option was estimated on the date of grant using a Monte Carlo model, which is impacted by a number of variables, including the fair value of our underlying shares, our expected share pricevolatility over the term of the share option, the expected life of the option, risk-free interest rates, and theexpected dividend yield of our shares.

The predecessor stock-based compensation plans were terminated in connection with the Sponsor Acquisition.

Subsequent to the Sponsor Acquisition

From the time of the Sponsor Acquisition until our IPO, we had three active plans under which awards were granted to various employees and other service providers of the Company, including key management personnel, based on their management grade. For the Successor Period, total stock-based compensation expense recognized was $27.5 million. The three active plans include the Employee Incentive Plan (“Non-US Plan”), the Equity Incentive Plan (“US Plan”), and the incentive plan adopted 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 Buzz Holdings L.P. and Class B Units held by Buzz Management Aggregator L.P., respectively (collectively, the “Class B Units”). Under the Non-US Plan, participants received phantom awards of Class B Units in Buzz Management Aggregator L.P. (the “Phantom Class B Units”) that were liability-classified and settled in cash equal to the notional value of the Buzz Management Aggregator Class B Units at the settlement date.

Awards under all three plans were comprised of Time-Vesting and Exit-Vesting awards. Time-Vesting awards were based upon service-based conditions and generally vested over a period of five years, while Exit-Vesting awards were based on certain performance conditions 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. The performance conditions were not considered probable as of December 31, 2020 and therefore no expense has been recognized for the Exit-Vesting awards. In connection with the IPO, these awards were all converted into awards under our 2021 Omnibus Incentive Plan as described under “Item 11―Executive Compensation―Conversion of Class B Units and Phantom Class B Units”.

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.

Assumptions by Grant Date December 31, 2020

Dividend yield (%) —

Expected volatility (%) 55

Risk-free interest rate (%) 0.30

Expected time to liquidity (years) 4.1

The valuations for awards granted in January 2020 and June 2020 were based on the purchase price from the Sponsor Acquisition of $2.9 billion as the estimated equity value as of these dates and, therefore, did not rely on establishing an estimated equity value based on an income or market multiple approach. The implied multiple based on the purchase price was 19.2x.

As of December 31, 2020, unrecognized stock-based compensation expense related to Time-Vesting and Exit-Vesting Class B Units was $63.6 million.

Time-Vesting Phantom Class B Units and Exit-Vesting Phantom Class B Units

As of December 31, 2020, unrecognized stock-based compensation expense related to Time-Vesting and Exit-Vesting Phantom Class B Units was $52.5 million.

For additional information around the Company’s stock-based compensation plans, refer to Note 13, Stock-based Compensation, within the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Income Taxes

We are subject to income tax in most of the jurisdictions in which we operate. Management is required to exercise significant judgment in determining our provision for income taxes. The provision for income taxes is determined by taking into account guidance related to uncertain tax positions. Judgment is required in assessing the timing and amounts of deductible and taxable items. Deferred tax assets are amounts available to reduce income taxes payable on taxable income in future years and are initially recognized at enacted tax rates. To the extent deferred tax assets are not expected to be realized, we record a valuation allowance. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized upon settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and results of operations.

Accounting Pronouncements Not Yet Adopted

Recently-issued accounting pronouncements that may be relevant to our operations but have not yet been adopted are outlined in Note 2, Summary of Selected Significant Accounting Policies, within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange Risk

We conduct business in certain foreign markets, primarily in the United Kingdom and the European Union. For the period from January 29, 2020 to December 31, 2020, for the period from January 1, 2020 to January 28, 2020, for the year ended December 31, 2019, and for the year ended December 31, 2018, international revenue accounted for 44.3%, 47.5%, 47.3%, and 53.8% of combined revenue, respectively. Our primary exposure to foreign currency exchange risk is the underlying user’s functional currency other than the U.S. Dollar, primarily the British Pound and Euro. As foreign currency exchange rates change, translation of the statements of operations of our international businesses into U.S. dollars affects year-over-year comparability of operating results. The average Euro versus the U.S. Dollar exchange rate was 2% higher in the year ended December 31, 2020 than in the year ended December 31, 2019.

Historically, we have not hedged any foreign currency exposures. Our continued international expansion increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

Interest Rate Risk

At December 31, 2020, we had long-term debt outstanding with a carrying value of $826.2 million. A hypothetical interest rate increase or decrease of 1% would have increased or decreased interest expense for the period from January 29, 2020 to December 31, 2020 by $5.3 million based upon the outstanding balance and rate in effect at December 31, 2020. See Note 10, Debt, within the audited consolidated financial statements included elsewhere in this Annual Report. Borrowings under our Senior Secured Credit Facilities bear interest at a variable market rate. In order to reduce the financial impact of increases in interest rates, the Company entered into two interest rate swaps for a total notional amount of $350 million on June 22, 2020. The effective date for the interest rate swaps is June 30, 2020 and final maturity date is June 30, 2024. The financial impact of the interest rate swaps is to fix the variable interest rate element on $350 million of the long-term debt at a rate of 0.4008%. We did not have any long-term debt outstanding at December 31, 2019.

In July 2017, the UK’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. The expected discontinuation, reform or replacement of LIBOR may result in fluctuating interest rates, or higher interest rates, which could have a material adverse effect on our interest expense.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

Audited Balance Sheets of Bumble Inc.

Report of Independent Registered Public Accounting Firm 71

Notes to Balance Sheets 73

Audited Consolidated Financial Statements of Buzz Holdings L.P.

Report of Independent Registered Public Accounting Firm 75

Notes to the Consolidated Financial Statements 83

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of Bumble Inc.

Opinion on the Financial Statement

We have audited the accompanying balance sheets of Bumble Inc. (the “Corporation”) as of October 5, 2020 and December 31, 2020 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Bumble Inc. at October 5, 2020 and December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Corporation’s auditor since 2020.

Austin, TX

March 15, 2021

Bumble Inc.

Balance Sheets

Assets

Cash $ 1 $ 1

Total Assets $ 1 $ 1

Commitments and contingencies

Stockholders' Equity

Total Stockholders' Equity $ 1 $ 1

The accompanying notes are an integral part of these balance sheets.

Bumble Inc.

Notes to the Balance Sheets

Note 1 - Organization

Bumble Inc. (the “Corporation”) was incorporated as a Delaware corporation on October 5, 2020. The Corporation’s fiscal year end is December 31. Pursuant to a reorganization into a holding company structure, the Corporation is a holding corporation and the sole material asset is an equity interest in Buzz Holdings L.P., a Delaware limited partnership (“Bumble Holdings”).

As the general partner of Bumble Holdings, Bumble Inc. operates and controls all of the business and affairs of Bumble Holdings, and through Bumble Holdings and its subsidiaries, conducts business. As a result, subsequent to the initial public offering (the “Offering”) in the first quarter of 2021 described in Note 4, Subsequent Events, Bumble Inc. will consolidate Bumble Holdings’ financial results and report a non-controlling 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 consolidated financial statements.

Note 2 - Summary of Significant Accounting Policies

Basis of Accounting

The Balance Sheets have been prepared in accordance with accounting principles generally accepted in the United States of America. Separate statements of operations, comprehensive operations, changes in stockholders’ equity and cash flows have not been presented in the financial statements because there have been no activities in this entity and because the single transaction is fully disclosed below.

These financial statements have been prepared assuming the Corporation will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.

Note 3 - Stockholders’ Equity

The Corporation is authorized to issue 1,000 shares of Class A common stock, par value $0.01 per share (“Class A common stock”), and 1,000 shares of Class B common stock, par value $0.01 per share (“Class B common stock”). Under the Corporation’s certificate of incorporation in effect as of October 5, 2020, all shares of Class A common stock and Class B common stock are identical. In exchange for $1.00, the Corporation has issued 100 shares of Class B common stock, all of which were held by Bumble Holdings as of October 5, 2020 and December 31, 2020.

Note 4 - Subsequent Events

Initial Public Offering and Reorganization

On February 16, 2021, the Corporation completed the Offering of 57.5 million shares of Bumble Inc. Class A Common Stock (including shares issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares) for cash consideration of $41.065 per share (net of underwriting discounts).

Bumble Inc. used the proceeds (net of underwriting discounts) from the issuance of 9.0 million shares ($369.6 million) in the Offering to purchase an equivalent number of newly issued Common Units from Bumble Holdings, which Bumble Holdings will in turn use to repay outstanding indebtedness under Bumble Holdings’ Term Loan Facility totaling approximately $200.0 million in aggregate principal amount and approximately $148.3 million for general corporate purposes, and to bear all of the expenses of the Offering.

Bumble Inc. used the proceeds from the issuance of 48.5 million shares ($1,991.6 million) in the Offering (including shares issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares) to purchase or redeem an equivalent aggregate number of shares of Class A Common Stock and Common Units from certain entities affiliated with The Blackstone Group Inc.

In connection with the Offering, in February 2021, the organizational structure was converted to an umbrella partnership-C-Corporation (“UP-C”) with Bumble Inc., which was incorporated in October 2020, becoming the general partner of Bumble Holdings. As the general partner of Bumble Holdings, Bumble Inc. operates and controls the business and affairs of Bumble Holdings and the subsidiaries and has the obligation to absorb losses and receive benefits from the Company. Bumble Inc. will consolidate in its consolidated financial statements and report a non-controlling 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 consolidated financial statements.

Tax Receivable Agreement

In February, 2021, in connection with the Offering, Bumble Inc. entered into a tax receivable agreement with certain of the 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 the Offering and other tax benefits related to entering into the tax receivable agreement.

The estimated amount of existing tax basis with respect to which the pre-IPO owners will be entitled to receive payments under the tax receivable agreement is approximately $2,562.0 million, which includes Bumble Inc.’s allocable share of existing tax basis acquired in the Offering, which has been determined to be approximately $1,675.2 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 will occur following the IPO that were contemplated to have occurred pursuant to the Blocker Restructuring.

Omnibus Incentive Plan

In connection with the Offering, on February 10, 2021, Bumble Inc. adopted a 2021 Omnibus Incentive Plan. Under the 2021 Omnibus Incentive Plan, certain outstanding awards under Bumble Holdings’ current stock compensation plans were modified as follows:

Founder Plan

All outstanding Time-Vesting and Exit-Vesting Class B Units were converted to Incentive Units in Bumble Holdings.

US Plan

Non-US Plan

All outstanding Time-Vesting and Exit-Vesting Phantom Class B Units were converted into vested restricted stock units (in the case of vested Class B Phantom Units) and unvested restricted stock units (“RSUs”) (in the case of unvested Class B Phantom Units) in Bumble Inc.

Further, under the Omnibus Incentive Plan, Bumble Inc. may grant non-qualified stock options and incentive stock options with terms and conditions determined by the Committee that are consistent with the Omnibus Incentive Plan. The maximum term for stock options granted under the Omnibus Incentive Plan will be ten years from the initial date of grant.

Employee Stock Purchase Plan

In connection with the Offering, on February 10, 2021, Bumble Inc. adopted a 2021 Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, eligible employees may acquire Class A common stock by authorizing the use of contributions to purchase shares of common stock. Contributions must be at a rate of not less than 1% nor more than 15% of the participant’s total compensation (with certain exclusions as set forth in the ESPP or as otherwise determined by the compensation committee).

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Buzz Holdings L.P.

Opinion on the Financial Statements

We have audited the accompanying consolidated financial statements of Buzz Holdings L.P. (the Successor or the Company), which comprise the consolidated balance sheet as of December 31, 2020, the related consolidated statements of operations, comprehensive operations, changes in equity and cash flows for the period from January 29, 2020 to December 31, 2020, and the consolidated statements of operations, comprehensive operations, changes in equity (deficit) and cash flows of Worldwide Vision Limited (Predecessor) for the period from January 1, 2020 to January 28, 2020 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the period from January 29, 2020 to December 31, 2020, and the results of the Predecessor’s operations and its cash flows for the period from January 1, 2020 to January 28, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2020.

Austin, TX

March 15, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Buzz Holdings L.P.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Worldwide Vision Limited and subsidiaries (the “Predecessor Company”) as of December 31, 2019, the related consolidated statements of operations, comprehensive operations, changes in equity and cash flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Predecessor Company at December 31, 2019, and the results of its operations and its cash flows for each of the two years ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Adoption of ASU No. 2016-02

As discussed in Note 2, Summary of Significant Accounting Policies to the consolidated financial statements, the Predecessor Company changed its method of accounting for Leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), and related amendments.

Basis for Opinion

These financial statements are the responsibility of the Predecessor Company's management. Our responsibility is to express an opinion on the Predecessor Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Predecessor Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Predecessor Company's internal control over financial reporting. Accordingly, we express no such opinion.

/s/ Ernst & Young LLP

We have served as the Predecessor Company’s auditor from 2010 to 2020.

Cambridge, UK

October 30, 2020

Buzz Holdings L.P.

Consolidated Balance Sheets

(in thousands, except par value amounts)

Successor Predecessor

ASSETS

Loans to related companies — 42,043

Deferred tax assets, net — 7,055

Accrued expenses and other current liabilities 180,986 88,649

Current portion of long-term debt, net 5,338 —

Deferred tax liabilities 428,087 —

Commitments and contingencies (Note 17)

Buzz Holdings L.P. owners’ / Worldwide Vision Limited shareholders’ equity:

Additional paid-in capital — 3,449

Accumulated other comprehensive income 180,852 644

Retained earnings — 23,352

Total liabilities and owners’ / shareholders’ equity $ 3,637,268 $ 210,298

The accompanying notes are an integral part of theseconsolidated financial statements.

Buzz Holdings L.P.

Consolidated Statements of Operations

(in thousands, except per unit data)

Successor Predecessor

Operating costs and expenses:

Net loss per unit attributable to Buzz Holdings L.P. owners

Basic loss per unit $ (0.05 ) — — —

Diluted loss per unit $ (0.05 ) — — —

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

Buzz Holdings L.P.

Consolidated Statements of Comprehensive Operations

(in thousands)

Successor Predecessor

Other comprehensive income (loss), net of tax:

Total other comprehensive income (loss), net of tax 180,852 (774 ) 152 (171 )

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

Buzz Holdings L.P.

Consolidated Statements of Changes in Equity (Deficit)

(Predecessor)

Issued Share Capital Treasury Stock

(in thousands)

Stock-based compensation expense — — — — 255 — — 255 — 255

Other comprehensive income, net of tax — — — — — (171 ) — (171 ) — (171 )

Stock-based compensation expense — — — — 2,160 — — 2,160 — 2,160

Other comprehensive income, net of tax — — — — — 152 — 152 — 152

Stock-based compensation expense — — — — 336 — — 336 — 336

Other comprehensive loss, net of tax of $4 — — — — — (774 ) — (774 ) — (774 )

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

Buzz Holdings L.P.

Consolidated Statements of Changes in Equity

(Successor)

Units Amount Income Owners’ Equity Interests Equity

(in thousands)

Balance as of January 29, 2020 — $ — $ — $ — $ — $ —

Stock-based compensation expense — — — 13,703 — 13,703

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

Buzz Holdings L.P.

Consolidated Statements of Cash Flows

(in thousands)

Successor Predecessor

Cash flows from operating activities:

Change in fair value of interest rate swap 1,586 — — —

Change in fair value of contingent consideration 27,800 — — —

Research and development tax credit (1,211 ) — (2,374 ) (1,353 )

Changes in assets and liabilities:

Other liabilities 27 — 369 —

Cash flows from investing activities:

Acquisition of business, net of cash acquired (2,837,706 ) — — —

Cash flows from financing activities:

Proceeds from repayments of loans to related companies 41,929 — — —

Debt issuance costs (21,105 ) — — —

Limited Partners’ interest 2,360,412 — — —

Proceeds from term loan 850,000 — — —

Repayment of term loan (5,000 ) — — —

Issuance of loans — — (41,965 ) —

Proceeds from issuance of shares — — 104 —

Other, net — — 24 —

Less restricted cash 257 — — —

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

Buzz Holdings L.P.

Notes to the Consolidated Financial Statements

Note 1 - Organization and Basis of Presentation

Company Overview

Buzz Holdings L.P.’s main operations are providing online dating and social networking platforms through subscription and credit-based dating products servicing North America, Europe and various other countries around the world. Buzz Holdings L.P. provides these services through websites and applications that it owns and operates.

Buzz Holdings L.P., a Delaware limited partnership (the “Company”), 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 Buzz Holdings L.P. did not have any previous operations, Worldwide Vision Limited, a Bermuda exempted limited company, is viewed as the predecessor to the Company 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 January 29, 2020, Worldwide Vision Limited was merged via a solvent transfer of trade and assets into Buzz Merger Sub Limited, a subsidiary of the Company, which carries forward and continues to operate the Worldwide Vision Limited trade as of that date. As a result, on January 29, 2020, Worldwide Vision Limited ceased to exist and Buzz Merger Sub Limited was subsequently renamed Worldwide Vision Limited.

Bumble Inc. was incorporated in October 2020 for the purpose of facilitating an initial public offering and other related transactions in order to carry on Buzz Holding L.P.’s business. On February 16, 2021, Bumble Inc. completed its initial public offering (the “Offering”) of 57.5 million shares of Class A common stock at an offering price of $43 per share. Bumble Inc. received gross proceeds of approximately $2,473 million before deducting underwriting discounts, commissions and offering related transaction costs. The financial statements as of December 31, 2020, including per unit amounts, do not include the effects of the Offering, as it was completed subsequent to December 31, 2020. See Note 18, Subsequent Events.

Subsequent to the Offering, Bumble Inc. is a holding company and the principal asset is a controlling equity interest in Buzz Holdings L.P. As the general partner, Bumble Inc. operates and controls all of the business and affairs, and through Buzz Holdings L.P. and the subsidiaries, conducts the business.

Basis of Presentation and Consolidation

The Company prepares the consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements 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. All intercompany transactions and balances have been eliminated.

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 prior to the business combination (referred to herein as the “Predecessor”). Periods subsequent to January 28, 2020 reflect the financial statements of the Company after the business combination (referred to herein as the “Successor”). The Company’s assets and liabilities were adjusted to fair value on the closing date of the business combination. 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.

The fiscal year end of the Company is December 31.

All references to the “Company”, “we”, “our” or “us” in this report are to Buzz Holdings L.P.

Note 2 - Summary of Selected 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 income taxes, 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, the fair value of derivatives and 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”) 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;

(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.

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 period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and the years ended December 31, 2019 and 2018, 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

Assets Recognized from the Costs to Obtain a Contract with a Customer

The Company has determined that certain costs paid to third party aggregators, primarily mobile app store fees, meet the requirements to be capitalized as a cost of obtaining a contract. These costs are capitalized and amortized over the period of contract performance, typically over the term of the applicable subscription period.

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 $31.3 million and $24.7 million at December 31, 2020 and December 31, 2019, respectively. During the period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and the years ended December 31, 2019 and 2018, the Company recognized revenue of $9.6 million, $10.6 million $23.4 million and $13.4 million, respectively, that was included in the deferred revenue balance at the beginning of each period.

Accounts Receivable

Accounts receivable are recorded net of an allowance for credit losses, potential chargebacks and refunds issued to users. The amount of this allowance is primarily based upon historical experience and future economic expectations. The Company maintains an allowance for expected credit losses to provide for the estimated amount of accounts receivable that will not be collected. The Company determines if an allowance is needed by considering a number of factors, including the Company’s previous loss history, the length of time accounts receivable are past due, the specific customer’s ability to pay the obligation to the Company, reasonable and supportable forecasts of future economic conditions, and the current economic condition of the general economy. No allowance for credit losses was recorded as of December 31, 2020 and December 31, 2019, as all accounts receivable were considered collectible.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are principally maintained with major financial institutions, which management assesses to be of high credit quality, in order to limit exposure of investments. The Company has not experienced any losses on these deposits.

The Company’s accounts receivable balances are predominantly with third-party aggregators and these are subject to normal credit risks which management believes to be not significant. As of December 31, 2020, two third party aggregators accounted for approximately 56% and 14%, respectively, of the Company’s gross accounts receivable. As of December 31, 2019, three third party aggregators accounted for approximately 48%, 12% and 10% of the Company’s gross accounts receivable. As of December 31, 2018, two third party aggregators accounted for approximately 48% and 11% of the Company’s gross accounts receivable.

Advertising Costs

Advertising costs are expensed in the period in which the services are first delivered to the Company. Where media space is purchased in advance, expense is deferred until the advertising service has been received by the Company. Advertising costs represent online marketing, including fees paid to search engines and social media sites, brand marketing such as out of home and television advertising, field marketing and partner-related payments to those who direct traffic to the Company’s platforms. Advertising expense was $138.0 million, $9.8 million, $130.4 million and $84.9 million for the period from January 29, 2020 to December 31, 2020, for the period from January 1, 2020 to January 28, 2020, and for the years ended December 31, 2019 and 2018, respectively.

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. 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 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.

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.

Foreign Currencies

The Company’s consolidated financial statements are presented in U.S. dollars, which is the Company’s functional currency. The financial position and operating results of foreign entities whose primary economic environment is based on their local currency are consolidated using the local currency as the functional currency. These local currency assets and liabilities are translated into U.S. dollars at the rates of exchange as of the balance sheet date, and local currency revenue and expenses of these operations are translated at average rates of exchange during the period. Translation gains and losses are included in accumulated other comprehensive income as a component of shareholders’ equity. Transaction gains and losses resulting from assets and liabilities denominated in a currency other than the functional currency are included in “Other expense, net” in the accompanying consolidated statements of operations. For period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020, and the years ended December 31, 2019 and 2018, a loss of $14.1 million, $0.6 million, $1.2 million, and $4.5 million was recorded, respectively.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks, cash on hand, cash in electronic money accounts and overnight deposits.

Long-lived Assets

Long-lived assets, which consist of property and equipment and right-of-use assets, are reviewed for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived asset exceeds its fair value. The remaining estimated useful lives of property and equipment and right-of-use assets are routinely reviewed and, if the estimate is revised, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life.

Fair Value Measurements

The Company follows ASC 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.

Leases

Company as a lessee

Under ASC 842, Leases, (“ASC 842”), the Company determines whether an arrangement is or contains a lease at contract inception. Right-of-use assets and lease liabilities, which are disclosed on the consolidated balance sheets, are recognized at the commencement date of the lease based on the present value of the lease payments over the lease term using the Company’s incremental borrowing rate on the lease commencement date. If the lease contains an option to extend the lease term, the renewal option is considered in the lease term if it is reasonably certain that the Company will exercise the option. Operating lease expense is recognized on a straight-line basis over the term of the lease. Short-term leases, defined as leases with an initial term of twelve months or less, are not recorded on the consolidated balance sheets.

Company as a lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the Company’s lease receivable. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company’s lease receivable. Rental income from operating leases is recognized on a straight-line basis over the term of the lease.

Business Combination

The purchase price of the Sponsor Acquisition is allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired is allocated to goodwill. These fair value determinations require judgment and involve the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items.

In connection with the Sponsor Acquisition, the Company entered into a contingent earn-out arrangement that was determined to be part of the purchase consideration. The Company classified the arrangement as a liability at the time of the Sponsor Acquisition, as it will be settled in cash, and reflected the change in the liability at its current fair value for each subsequent reporting period thereafter until settled. The changes in the remeasured fair value of the contingent earn-out liability during each reporting period is recognized in “General and administrative expense” in the accompanying consolidated statements of operations. See Note 5, Business Combination, for additional information.

Property and Equipment, net

Property and equipment, net is stated at cost less accumulated depreciation and accumulated impairment, if any. Cost of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

Leasehold improvements — 5 years or remaining lease term

Furniture and fixtures — 4 years

Computer equipment — 3 years

The Company incurs costs to develop software to be used solely to meet internal needs and applications used to deliver its services. These software development costs meet the criteria for capitalization once the preliminary project stage is complete and it is probable that the project will be completed, and the software will be used to perform the function intended. Development costs that meet the criteria for capitalization were not material to date.

Goodwill and Intangible Assets, net

Intangible assets are stated at cost less accumulated amortization and accumulated impairment, if any. Amortization is calculated on a straight-line basis over the estimated useful lives of the definite-lived intangible assets, as follows:

User base — 2.5 years

White label contracts — 8 years

Trademark — 10 years

Domain — 3 years

Developed technology — 5 years

Brand names are indefinite-lived intangible assets and not amortized.

Intangible assets with definite lives are reviewed for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived asset exceeds its fair value. The remaining estimated useful lives of definite-lived intangible assets are routinely reviewed and, if the estimate is revised, the remaining unamortized balance is amortized over the revised estimated useful life.

The Company assesses goodwill on the one reporting unit and indefinite-lived intangible assets for impairment annually as of October, 1, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or the fair value of an indefinite-lived intangible asset below its carrying value.

When the Company elects to perform a qualitative assessment and concludes it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further assessment of that reporting unit’s goodwill is necessary; otherwise, a quantitative assessment is performed and the fair value of the reporting unit is determined. If the carrying value of the reporting unit exceeds its fair value an impairment loss equal to the excess is recorded.

Derivatives

The Company uses interest rate derivative instruments to manage the risk related to fluctuating cash flows from interest rate changes on the debt. These instruments are not designated as hedges for accounting purposes and are recorded in “Other liabilities,” with changes in fair value recognized in “Other expense, net.”

Stock-Based Compensation

Stock-based compensation expense is recognized over the requisite service period for Time-Vesting Awards and, for Exit-Vesting Awards, beginning when the performance condition is probable of achievement. The compensation expense of the Company’s stock-based compensation programs subsequent to the Sponsor Acquisition is calculated by estimating the fair value of the awards on the date of grant. The Company determines the grant date fair value using a Monte Carlo model. As the Company’s equity is not publicly traded, there is no history of market prices for the Company’s equity. Thus, estimating grant date fair value requires 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 a discussion of the Company’s stock-based compensation plans.

Earnings (Loss) per Unit

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

All net earnings (loss) for the Predecessor period from January 1, 2020 to January 28, 2020 and for the years ended December 31, 2019 and 2018 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 for the periods prior to such transaction is not meaningful and only earnings (loss) per unit for periods subsequent to the Sponsor Acquisition are presented herein.

See Note 12, Loss per Unit, for additional information on dilutive securities.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill impairment test, which requires the calculation of the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its individual assets and liabilities. The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit's carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted ASU 2017-04 on January 1, 2020 on a prospective basis. The adoption of ASU 2017-04 did not have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The provisions of ASU No. 2019-12 are effective for reporting periods beginning after December 15, 2020 with early adoption permitted. Most amendments within ASU No. 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Predecessor early adopted ASU No. 2019-12 effective January 1, 2020 on a modified retrospective basis for those amendments that are not applied on a prospective basis. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842), using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients,” which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting under ASC 840.

The adoption of ASC 842 resulted in the recognition of right-of-use assets and related lease liabilities of $17.3 million and $16.2 million, respectively as of January 1, 2019.

See Note 3, Leases, for additional information on the adoption of ASC 842.

On January 1, 2019, the Company adopted ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 aligns the accounting for share-based payment awards issued to employees and non-employees. The adoption did not have a material impact on the consolidated financial statements.

On January 1, 2019, the Company early adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires the measurement and recognition of expected credit losses for financial assets not held at fair value. ASU 2016-13 replaces the previous incurred loss impairment model with a forward-looking expected credit loss model. The adoption did not materially affect the Company’s consolidated financial statements.

Recently Issued Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time through December 31, 2022. The Company is evaluating the impact of the ASU as it relates to arrangements that reference LIBOR.

In August 2020, FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU No. 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments. ASU No. 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. The Company has not yet adopted this standard and are currently evaluating its impact on the consolidated financial statements, including accounting policies, processes, and systems.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. This ASU is effective for annual periods beginning after December 15, 2021. The amendments in this update do not change GAAP, and adoption of this update is not expected to have a material effect on the Company’s consolidated financial statements.

Note 3 - Leases

Company as a lessee

The Company has operating leases for various properties. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Leases of properties generally have lease terms between one and five years.

There were no leases with residual value guarantees or leases not yet commenced to which the Company is committed. The Company combines the lease and non-lease components of lease payments in determining right-of-use assets and related lease liabilities. As permitted under ASC 842, leases with an initial term of twelve-months or less that do not include an option to purchase the underlying asset are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term. Leases meeting this criteria resulted in expenses of $0.3 million, $0.0 million, and $0.5 million for the period from January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and the year ended December 31, 2019, respectively.

Operating lease expense for the year ended December 31, 2018 was $5.9 million.

Components of lease cost are as follows (in thousands):

Successor Predecessor

Expense relating to short-term leases 331 36 467

Income from subleasing right-of-use assets (502 ) (46 ) (559 )

Supplemental cash flow information related to leases is as follows (in thousands):

Successor Predecessor

Right-of-use assets obtained in exchange for lease liabilities 146 — 2,960

Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):

Successor Predecessor

December 31, December 31,

Assets:

Liabilities:

Accrued expenses and other current liabilities $ 4,933 $ 6,224

Total operating lease liabilities $ 10,764 $ 16,021

Weighted average remaining operating lease term (years) 2.9 3.6

Weighted average operating lease discount rate 6.5 % 6.7 %

The Company uses its incremental borrowing rate as the discount rate. As the Company enters into operating leases in multiple jurisdictions and denominated in currencies other than the U.S. dollar, judgment is used to determine the Company’s incremental borrowing rate including (1) conversion of the subordinated borrowing rate (using published yield curves) to an unsubordinated and collateralized rate, (2) adjusting the rate to align with the term of each lease, and (3) adjusting the rate to incorporate the effects of the currency in which the lease is denominated.

Maturities on lease liabilities as of December 31, 2020, are as follows (in thousands):

Years Ended December 31,

Thereafter —

Total lease payments 11,820

Less: imputed interest (1,056 )

Total lease liabilities $ 10,764

Company as a lessor

The Company leases a property which it acquired in 2019. The Company has classified the lease as a finance lease as it is reasonably certain that the lessee will exercise its option to purchase the property at the end of the lease. The lease receivable was recognized during the year ended December 31, 2019 at a loss of $0.3 million.

The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date (in thousands):

Years Ended December 31,

Thereafter —

Total undiscounted lease payment receivable 1,328

Less: Unearned interest income (259 )

Total lease receivable $ 1,069

Sublease considerations

The Company is also a sublessor on two operating leases that expire through 2023. The Company recorded $0.5 million, $0.0 million and $0.6 million in sublease income during the period ended January 29, 2020 to December 31, 2020, the period from January 1, 2020 to January 28, 2020 and during the year ended December 31, 2019 as part of total lease cost.

Note 4 - Income Taxes

Buzz Holdings L.P. is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, the Company is not a tax-paying entity for U.S. federal income tax purposes. Similarly, the Company is not subject to income tax in most states, with some exceptions. A provision for these taxes has been recorded in state income tax accordingly. The Company also operates in multiple foreign jurisdictions and has foreign income tax obligations due to its worldwide footprint.

U.S. and foreign (loss) earnings before income taxes and noncontrolling interests are as follows (in thousands):

Successor Predecessor

The components of the income tax provision are as follows (in thousands):

Successor Predecessor

Current income tax provision:

Deferred income tax provision:

State (91 ) — — —

The tax effects of cumulative temporary differences that give rise to significant deferred tax assets and deferred tax liabilities are presented below (in thousands):

Successor Predecessor

December 31, December 31,

Deferred tax assets:

Depreciation and amortization $ — $ 7,173

Litigation reserve — —

Less: Valuation allowance (8 ) (10,974 )

Deferred tax assets, net of valuation allowance $ 12,918 $ 7,173

Deferred tax liabilities:

Depreciation and amortization $ (441,005 ) $ (118 )

Total deferred tax liabilities (441,005 ) (118 )

Deferred tax (liabilities) assets, net $ (428,087 ) $ 7,055

As of December 31, 2020, 2019, and 2018, the Company had foreign net operating losses (“NOLs”) of $43.6 million, $66.3 million, and $8.3 million, respectively. The NOLs can be carried forward indefinitely.

BMBL US Equity

BMBL · 10-K · period ended 2020-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data

BMBL US Equity☆

BMBL · 10-K · period ended 2020-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data

BMBL US Equity