Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 4 - Income Taxes

The Company is a corporation for U.S. federal and state income tax purposes. Each of the Company'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 pre-IPO 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 IPO, the Company is subject to U.S. federal and state income tax as a corporation on its share of Bumble Holdings’ taxable income.

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

	Year Ended December 31, 2023			Year Ended December 31, 2022			Year Ended December 31, 2021
U.S.	$	(51,629	)	$	(177,415	)	$	(180,256	)
Foreign		56,931			66,697			24,159
Total	$	5,302		$	(110,718	)	$	(156,097	)

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

	Year Ended December 31, 2023			Year Ended December 31, 2022			Year Ended December 31, 2021
Current income tax (benefit) provision:
Federal	$	426		$	598		$	—
State		285			542			(122	)
Foreign		13,632			7,708			10,680
Current income tax provision	$	14,343		$	8,848		$	10,558
Deferred income tax (benefit) provision:
Federal	$	(344	)	$	(65	)	$	192
State		—			—			—
Foreign		(6,829	)		(5,377	)		(448,587	)
Deferred income tax (benefit) provision		(7,173	)		(5,442	)		(448,395	)
Income tax (benefit) provision	$	7,170		$	3,406		$	(437,837	)

The Company recorded income tax expense of $7.2 million for the year ended December 31, 2023 compared to income tax expense of $3.4 million recorded for the year ended December 31, 2022. Tax expense is higher in 2023 compared to 2022 primarily due to the impact of income tax rate changes on our deferred tax balances recorded in 2022. The income tax benefit of $437.8 million recorded in the year ended December 31, 2021 includes a $441.5 million deferred tax benefit related to the reversal of net deferred tax liabilities recorded at our Maltese and UK entities due to a restructuring of our international operations which occurred on January 1, 2021. In addition, the income tax expense for the years ended December 31, 2023 and December 31, 2022 and the income tax benefit for the year ended December 31, 2021 reflect the impact of our assessment that we will not be able to realize the benefit of certain deferred tax assets arising in the current year for which a valuation allowance has been recorded.

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

	December 31,			December 31,
	2023			2022
Deferred tax assets:
Investment in partnership	$	114,550		$	147,708
Depreciation and amortization		30			12
Net operating loss carryforward		78,073			50,577
Interest expense carryforward		10,434			6,838
Tax receivable agreement		45,281			31,705
Share-based compensation		25,559			22,491
Foreign tax credit carryforward		11,032			6,003
Other		4,001			3,665
Total deferred tax assets		288,960			268,999
Less: Valuation allowance		(256,928	)		(242,152	)
Deferred tax assets, net of valuation allowance	$	32,032		$	26,847
Deferred tax liabilities:
Depreciation and amortization		10,676			10,874
Total deferred tax liabilities		10,676			10,874
Deferred tax (liabilities) assets, net	$	21,356		$	15,973

As of December 31, 2023, the Company had deferred tax assets related to federal, state and foreign net operating loss carryforwards of $68.4 million, $7.3 million and $2.4 million, respectively. Both the federal and foreign net operating losses can be carried forward indefinitely.

We recognize deferred tax assets to the extent we believe these assets are more likely than not to be realized. In making such a determination, we consider all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. A valuation allowance is provided if it is determined that it is more likely than not that the deferred tax asset will not be realized. After consideration of all positive and negative evidence, we have recorded a valuation allowance with respect to our U.S. federal and state deferred tax assets relating to the investment in partnership, net operating loss carryforwards, interest expense carryforwards and the TRA Liability. For the rest of the

deferred tax assets in our foreign jurisdictions, a valuation allowance was not deemed necessary based upon our determination that these deferred tax assets are more likely than not to be realized. At December 31, 2023, our valuation allowance increased by $14.8 million due to an increase in U.S. federal and state deferred tax assets generated during the year to a total of $256.9 million. At December 31, 2022, our valuation allowance increased by $4.4 million to a total of $242.2 million from the valuation allowance of $237.8 million that was recorded as of December 31, 2021. During the period ending December 31, 2021, our valuation allowance increased by $237.8 million as we did not have a valuation allowance recorded prior to 2021 due to U.S. federal and state tax attributes arising from our IPO.

A reconciliation of the statutory federal effective tax rate to the effective tax rate is as follows:

	Year Ended December 31, 2023			Year Ended December 31, 2022			Year Ended December 31, 2021
Income tax provision at the statutory rate		21	%		21	%		21	%
Nondeductible expenses		42	%		(1	)%		(1	)%
State taxes, net of federal benefit		16	%		1	%		1	%
Non-controlling interest		6	%		7	%		(14	)%
Effect of foreign taxes		123	%		(2	)%		(3	)%
Share-based compensation		108	%		(6	)%		(2	)%
Impact of IP realignment(1)		—			—			283	%
Valuation allowance		(186	)%		(22	)%		(4	)%
Other		5	%		(1	)%		(1	)%
Income tax provision		135	%		(3	)%		280	%

(1) The transfer of the intangible property to the US that occurred in 2021 resulted in deferred tax benefit of $441.5 million that is included as “Impact of IP realignment” in the rate reconciliation above.

Uncertain Tax Positions

We file income tax returns in each jurisdiction in which we operate, both domestically and internationally. Due to the complexity involved with certain tax matters, we have considered all relevant facts and circumstances for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. We believe that there are no other jurisdictions in which the outcome of uncertain tax matters is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties.

A rollforward of unrecognized tax benefits, excluding accrued penalties and interest, for the year ended December 31, 2023 is as follows:

(in thousands)	Year Ended December 31, 2023		Year Ended December 31, 2022
Balance, beginning of the period	$	14,601	$	1,500
Additions based on tax positions related to the current year		—		13,101
Additions based on tax positions related to the prior year		291		—
Balance, end of the period	$	14,892	$	14,601

Of the total amount of unrecognized tax benefits as of December 31, 2023 and 2022, $2.4 million and $2.1 million, respectively, would favorably impact our effective tax rate if recognized. We believe that the amount of unrecognized tax benefits disclosed above is reasonably possible to change significantly over the next 12 months.

Interest and penalties related to income tax matters are recognized the amounts within the “Income tax benefit (provision)” on our consolidated statements of operations.

We currently file income tax returns in the U.S. and all foreign jurisdictions in which we have entities, which are periodically under audit by federal, state, and foreign tax authorities. These audits can involve complex matters that may require an extended period of time for resolution. We remain subject to U.S. federal and state income tax examinations for the tax years 2020 through 2023 and in the foreign jurisdictions in which we operate for varying periods from 2018 through 2023. We currently have income tax examinations open for the United Kingdom for 2019, 2020 and 2021.

Although the outcome of open tax audits is uncertain, in management’s opinion, adequate provisions for income taxes have been made. If actual outcomes differ materially from these estimates, they could have a material impact on our financial condition and results of operations. Differences between actual results and assumptions or changes in assumptions in future periods are recorded in the period they become known. To the extent additional information becomes available prior to resolution, such accruals are adjusted to reflect probable outcomes.