In budding, small hydras, complete with tentacles, grow on the side of the larger hydra. They then break off to form a new animal. But hydras reproduce sexually as well. Some are female, while others are male. Females produce eggs from ovaries that look like bulges on their thin bodies.
Males produce sperm from testes that also look like bulges on their bodies.
Sperm are released into the water near a female. Fertilized eggs become embryos that stay attached to the side of the female until the tentacles and mouth are developed. The newly formed hydra then separate from the female parent. Hydra produced by embryos seem to be hardier than hydras produced by budding. More of them survive the cold winter waters.