TechDogs-"BuzzFeed, Inc. Announces Second Quarter 2023 Financial Results"

Media and Entertainment

BuzzFeed, Inc. Announces Second Quarter 2023 Financial Results

By Business Wire

Business Wire
Overall Rating

Delivered Q2 Results in line with May outlook

NEW YORK--(BUSINESS WIRE)--BuzzFeed, Inc. (“BuzzFeed” or the “Company”) (Nasdaq: BZFD), a premier digital media company for the most diverse, most online, and most socially engaged generations the world has ever seen, today announced financial results for the second quarter ended June 30, 2023.

“The strategic and organizational changes we discussed at our Investor Day in May have been fully executed, putting our rich library of IP and scaled, owned-and-operated properties at the center of our operating model to create innovative, audience-driven content,” said Jonah Peretti, BuzzFeed Founder & CEO.

Peretti continued, “In response to consolidation and share gains across the major platforms that continue to impact audience traffic to our content, we are laser focused on our strategy to drive traffic directly to our owned-and-operated properties. We have introduced new AI-assisted content formats to increase engagement and offer innovative advertising opportunities to our clients, rapidly expanded our creator network to participate in the rise of vertical video, and prioritized destination news content to grow our HuffPost front page audience.”

Second Quarter 2023 Financial and Operational Highlights

  • BuzzFeed delivered Q2 revenues of $77.9 million, declining 27% compared to the second quarter of 2022
    • Advertising revenue declined 33% year-over-year to $35.4 million
    • Content revenue declined 22% year-over-year to $31.5 million
    • Commerce and other revenues declined 17% year-over-year to $11.0 million
  • Net loss was $27.8 million, compared to a net loss of $23.6 million in the second quarter of 2022
  • Adjusted EBITDA1 loss was $0.1 million, compared to Adjusted EBITDA of $2.1 million in the second quarter of 2022
  • Time Spent decreased 9% year-over-year to 96 million hours2
  • BuzzFeed ended the period with cash and cash equivalents of approximately $41 million

_________________________
1 Adjusted EBITDA is a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” below for a description of how it is calculated and the tables at the back of this earnings release for a reconciliation of our GAAP and non-GAAP results.
2 Excludes Facebook; see below.

Third Quarter 2023 Financial Outlook

For the third quarter of 2023:

  • We expect overall revenues in the range of $73 to $78 million
  • We expect Adjusted EBITDA in the range of $1 million in losses to $4 million in profits

These statements are forward-looking and actual results may differ materially as a result of many factors. Refer to “Forward-Looking Statements” below for information on factors that could cause our actual results to differ materially from these forward-looking statements.

Please see “Non-GAAP Financial Measures” below for a description of how Adjusted EBITDA is calculated. While Adjusted EBITDA is a non-GAAP financial measure, we have not provided guidance for the most directly comparable GAAP financial measure — net loss — due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary to forecast such measure. Accordingly, a reconciliation of non-GAAP guidance for Adjusted EBITDA to the corresponding GAAP measure is not available.

Quarterly Conference Call

BuzzFeed’s management team will hold a conference call to discuss our second quarter 2023 results today, August 8, at 5PM ET. The call will be available via webcast at investors.buzzfeed.com under the heading News and Events, and parties interested in participating must register in advance by clicking on this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique PIN that can be used to access the call. While it is not required, it is recommended you join 10 minutes prior to the event start time. A replay of the call will be made available at the same URL.

We have used, and intend to continue to use, the Investor Relations section of our website at investors.buzzfeed.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.

Definitions

BuzzFeed reports revenues across three primary business lines: Advertising, Content and Commerce and other. The definition of “Time Spent” is also set forth below.

  • Advertising revenues are primarily generated from advertisers for ads distributed against our editorial and news content, including display, pre-roll and mid-roll video products sold directly to brands and also programmatically. We distribute these ad products across our owned and operated sites as well as third-party platforms, primarily YouTube and Apple News.
  • Content revenues are primarily generated from clients for custom assets, including both long-form and short-form content, from branded quizzes to Instagram takeovers to sponsored content and content licensing. Revenues for film and TV projects are also included here.
  • Commerce and other revenues consist primarily of affiliate commissions earned on transactions initiated from our editorial shopping content. Revenues from our product licensing businesses are also included here. Additionally, we generate other revenues from the production of live and virtual events such as ComplexCon and ComplexLand.
  • Time Spent captures the time audiences spend engaging with our content across our owned and operated sites, as well as YouTube and Apple News, as measured by Comscore. This metric excludes time spent with our content on platforms for which we have minimal advertising capabilities that contribute to our Advertising revenues, including Instagram, TikTok, Facebook, Snapchat and Twitter. There are inherent challenges in measuring the total actual number of hours spent with our content across all platforms; however, we consider the data reported by Comscore to represent industry-standard estimates of the time actually spent on our largest distribution platforms with our most significant monetization opportunities. Effective January 1, 2023, we exclude time spent on Facebook from our measure of Time Spent as our monetization strategy is increasingly focused on advertising on our owned and operated properties, and Facebook now contributes an immaterial amount of advertising revenue. Time Spent on Facebook, as reported by Facebook, was approximately 15 million hours and 48 million hours for the three months ended June 30, 2023 and 2022, respectively, and 37 million hours and 120 million hours for the six months ended June 30, 2023 and 2022, respectively, which is not included in Time Spent discussed above.

About BuzzFeed, Inc.

BuzzFeed, Inc. is home to the best of the Internet. Across pop culture, entertainment, shopping, food and news, our brands drive conversation and inspire what audiences watch, read, and buy now — and into the future. Born on the Internet in 2006, BuzzFeed is committed to making it better: providing trusted, quality, brand-safe news and entertainment to hundreds of millions of people; making content on the Internet more inclusive, empathetic, and creative; and inspiring our audience to live better lives.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and represent key metrics used by management and our board of directors to measure the operational strength and performance of our business, to establish budgets, and to develop operational goals for managing our business. We define Adjusted EBITDA as net loss, excluding the impact of net income (loss) attributable to noncontrolling interests, income tax (benefit) provision, interest expense, net, other expense, net, depreciation and amortization, stock-based compensation, change in fair value of warrant liabilities, change in fair value of derivative liability, restructuring costs, transaction-related costs, certain litigation costs, public company readiness costs, and other non-cash and non-recurring items that management believes are not indicative of ongoing operations. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue for the same period.

We believe Adjusted EBITDA and Adjusted EBITDA margin are relevant and useful information for investors because they allow investors to view performance in a manner similar to the method used by our management. There are limitations to the use of Adjusted EBITDA and Adjusted EBITDA margin and our Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Adjusted EBITDA and Adjusted EBITDA margin should not be considered a substitute for measures prepared in accordance with GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data.

Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Our forward-looking statements include, but are not limited to, statements regarding our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts (including our outlook for Q3 and FY 2023) or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “affect,” “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about: (1) anticipated trends, growth rates, and challenges in our business and in the markets in which we operate; (2) demand for products and services and changes in traffic; (3) changes in the business and competitive environment in which we operate; (4) developments and projections relating to our competitors and the digital media industry; (5) the impact of national and local economic and other conditions and developments in technology, each of which could influence the levels (rate and volume) of our advertising, the growth of our business and the implementation of our strategic initiatives; (6) poor quality broadband infrastructure in certain markets; (7) technological developments including artificial intelligence; (8) our success in retaining or recruiting, or changes required in, officers, key employees or directors; (9) our business, operations and financial performance, including expectations with respect to our financial and business performance and the benefits of our restructuring, including financial projections and business metrics and any underlying assumptions thereunder and future business plans and initiatives and growth opportunities; (10) our future capital requirements and sources and uses of cash, including, but not limited to, our ability to obtain additional capital in the future, any impacts of bank failures or issues in the broader United States financial system, any restrictions imposed by our debt facilities, and any restrictions on our ability to access our cash and cash equivalents; (11) expectations regarding future acquisitions, partnerships or other relationships with third parties; (12) developments in the law and government regulation, including, but not limited to, revised foreign content and ownership regulations; (13) the anticipated impacts of current global supply chain disruptions, further escalation of tensions between Russia and Western countries and the related sanctions and geopolitical tensions, as well as further escalation of trade tensions between the United States and China; the inflationary environment; the tight labor market; the continued impact of the COVID-19 pandemic and evolving strains of COVID-19; and other macroeconomic factors on our business and the actions we may take in the future in response thereto; and (14) our ability to maintain the listing of our Class A common stock and warrants on the Nasdaq Stock Market LLC.

The forward-looking statements contained in this press release are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the sections entitled “Risk Factors” in the Company’s annual and quarterly filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

BUZZFEED, INC.
Financial Highlights
(Unaudited, dollars in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

%Change

2023

2022

%Change

Advertising

$

35,397

$

53,224

(33

)%

$

69,645

$

101,892

(32

)%

Content

31,479

40,284

(22

)%

53,097

72,563

(27

)%

Commerce and other

11,025

13,252

(17

)%

22,312

23,863

(6

)%

Total revenue

$

77,901

$

106,760

(27

)%

$

145,054

$

198,318

(27

)%

Loss from operations

$

(20,087

)

$

(24,888

)

19

%

$

(49,805

)

$

(60,186

)

17

%

Net loss

$

(27,836

)

$

(23,581

)

(18

)%

$

(64,097

)

$

(68,147

)

6

%

Adjusted EBITDA

$

(137

)

$

2,093

(107

)%

$

(20,328

)

$

(14,671

)

(39

)%

BUZZFEED, INC.
Consolidated Balance Sheets
(Unaudited,
dollars and shares in thousands, except per share amounts)

June 30, 2023
(Unaudited)
December 31,
2022
Assets
Current assets
Cash and cash equivalents

$

41,295

$

55,774

Accounts receivable (net of allowance for doubtful accounts of $1,747 as at June 30, 2023 and $1,879 as at December 31, 2022)

70,855

116,460

Prepaid expenses and other current assets

22,244

26,373

Total current assets

134,394

198,607

Property and equipment, net

14,892

17,774

Right-of-use assets

56,537

66,581

Capitalized software costs, net

21,509

19,259

Intangible assets, net

113,737

121,329

Goodwill

91,632

91,632

Prepaid expenses and other assets

13,720

14,790

Total assets

$

446,421

$

529,972

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

37,294

$

29,329

Accrued expenses

16,024

26,357

Deferred revenue

6,355

8,836

Accrued compensation

19,960

31,052

Current lease liabilities

22,016

23,398

Other current liabilities

5,037

3,900

Total current liabilities

106,686

122,872

Noncurrent lease liabilities

49,036

59,315

Debt

155,979

152,253

Derivative liability

60

180

Warrant liabilities

593

395

Other liabilities

440

403

Total liabilities

312,794

335,418

Commitments and contingencies
Stockholders’ equity
Class A Common stock, $0.0001 par value; 700,000 shares authorized; 136,615 and 126,387 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

14

13

Class B Common stock, $0.0001 par value; 20,000 shares authorized; 6,676 and 6,678 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

1

1

Class C Common stock, $0.0001 par value; 10,000 shares authorized; 0 and 6,478 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

-

1

Additional paid-in capital

720,231

716,233

Accumulated deficit

(587,026

)

(523,063

)

Accumulated other comprehensive loss

(2,370

)

(1,968

)

Total BuzzFeed, Inc. stockholders’ equity

130,850

191,217

Noncontrolling interests

2,777

3,337

Total stockholders’ equity

133,627

194,554

Total liabilities and stockholders’ equity

$

446,421

$

529,972

BUZZFEED, INC.
Consolidated Statements of Operations
(Unaudited, dollars and shares in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Revenue

$

77,901

$

106,760

$

145,054

$

198,318

Costs and Expenses
Cost of revenue, excluding depreciation and amortization

50,507

61,529

97,851

122,347

Sales and marketing

14,135

18,688

29,436

36,491

General and administrative

21,356

32,565

43,358

65,127

Research and development

3,960

10,253

7,779

17,445

Depreciation and amortization

8,030

8,613

16,435

17,094

Total costs and expenses

97,988

131,648

194,859

258,504

Loss from operations

(20,087

)

(24,888

)

(49,805

)

(60,186

)

Other expense, net

(3,675

)

(3,440

)

(3,055

)

(2,578

)

Interest expense, net

(5,631

)

(5,032

)

(11,049

)

(9,821

)

Change in fair value of warrant liabilities

395

6,775

(198

)

3,359

Change in fair value of derivative liability

1,125

4,800

120

3,225

Loss before income taxes

(27,873

)

(21,785

)

(63,987

)

(66,001

)

Income tax (benefit) provision

(37

)

1,796

110

2,146

Net loss

(27,836

)

(23,581

)

(64,097

)

(68,147

)

Net income attributable to the redeemable noncontrolling interest

-

-

-

164

Net income (loss) attributable to noncontrolling interests

-

184

(260

)

348

Net loss attributable to BuzzFeed, Inc.

$

(27,836

)

$

(23,765

)

$

(63,837

)

$

(68,659

)

Net loss per Class A, Class B and Class C common share:
Basic and diluted

$

(0.20

)

$

(0.17

)

$

(0.45

)

$

(0.50

)

Weighted average common shares outstanding:
Basic and diluted

141,950

137,381

141,330

136,906

BUZZFEED, INC.
Consolidated Statements of Cash Flows
(Unaudited, USD in thousands)

Six Months Ended June 30,

2023

2022

Operating activities:
Net loss

$

(64,097

)

$

(68,147

)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

16,435

17,094

Unrealized (gain) loss on foreign currency

(809

)

2,811

Stock based compensation

3,379

15,224

Change in fair value of warrants

198

(3,359

)

Change in fair value of derivative liability

(120

)

(3,225

)

Amortization of debt discount and deferred issuance costs

2,915

2,527

Deferred income tax

341

2,088

Provision for doubtful accounts

(259

)

554

Loss (gain) on investment

3,590

(1,260

)

Gain on disposition of assets

(175

)

-

Non-cash lease expense

10,173

9,727

Changes in operating assets and liabilities:
Accounts receivable

45,871

51,831

Prepaid expenses and other current assets and prepaid expenses and other assets

1,653

(3,216

)

Accounts payable

9,889

(1,167

)

Accrued compensation

(11,102

)

(7,242

)

Accrued expenses, other current liabilities and other liabilities

(11,302

)

(7,733

)

Lease liabilities

(11,822

)

(11,592

)

Deferred revenue

(2,488

)

1,284

Cash used in operating activities

(7,730

)

(3,801

)

Investing activities:
Capital expenditures

(471

)

(2,828

)

Capitalization of internal-use software

(7,676

)

(6,646

)

Proceeds from sale of asset

175

-

Cash used in investing activities

(7,972

)

(9,474

)

Financing activities:
Proceeds from exercise of stock options

29

360

Payment for shares withheld for employee taxes

(220

)

(1,635

)

Borrowings on Revolving Credit Facility

2,128

5,000

Payments on Revolving Credit Facility

(1,317

)

-

Proceeds from the issuance of common stock in connection with at-the-market offering, net of issuance costs

765

-

Deferred reverse recapitalization costs

-

(585

)

Cash provided by financing activities

1,385

3,140

Effect of currency translation on cash and cash equivalents

(162

)

(1,409

)

Net decrease in cash and cash equivalents

(14,479

)

(11,544

)

Cash and cash equivalents at beginning of period

55,774

79,733

Cash and cash equivalents at end of period

$

41,295

$

68,189

BUZZFEED, INC.
Reconciliation of GAAP to Non-GAAP
(Unaudited, USD in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Net loss

(27,836

)

(23,581

)

(64,097

)

(68,147

)

Income tax (benefit) provision

(37

)

1,796

110

2,146

Interest expense, net

5,631

5,032

11,049

9,821

Other expense, net

3,675

3,440

3,055

2,578

Depreciation and amortization

8,030

8,613

16,435

17,094

Stock-based compensation

2,257

11,284

3,379

15,224

Change in fair value of warrant liabilities

(395

)

(6,775

)

198

(3,359

)

Change in fair value of derivative liability

(1,125

)

(4,800

)

(120

)

(3,225

)

Restructuring(1)

9,663

3,476

9,663

5,319

Transaction-related costs(2)

2,177

5,132

Litigation costs(3)

1,224

1,224

Public company readiness costs(4)

207

1,522

Adjusted EBITDA

$

(137

)

$

2,093

$

(20,328

)

$

(14,671

)

Adjusted EBITDA margin

(0.2

)%

2.0

%

(14.0

)%

(7.4

)%

Net loss as a percentage of revenue(5)

(35.7

)%

(22.1

)%

(44.2

)%

(34.4

)%

(1) Refer to Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Quarterly Report on Form 10-Q for the period ended June 30, 2023 for a discussion of the distinct restructuring activities during the three and six months ended June 30, 2023 and 2022. We exclude restructuring expenses from our non-GAAP measures because we believe they do not reflect expected future operating expenses, they are not indicative of our core operating performance, and they are not meaningful in comparisons to our past operating performance.

(2) Reflects transaction-related costs and other items which are either not representative of our underlying operations or are incremental costs that result from an actual or contemplated transaction and include professional fees, integration expenses, and certain costs related to integrating and converging IT systems.

(3) Reflects costs related to litigation that are outside the ordinary course of our business. We believe it is useful to exclude such charges because we do not consider such amounts to be part of the ongoing operations of our business and because of the singular nature of the claims underlying the matter.

(4) Reflects one-time initial set-up costs associated with the establishment of our public company structure and processes.

(5) Net loss as a percentage of revenue is included as the most comparable GAAP measure to Adjusted EBITDA margin, which is a Non-GAAP measure.


Contacts

Media
Carole Robinson, BuzzFeed: carole.robinson@buzzfeed.com

Investor Relations
Amita Tomkoria, BuzzFeed: investors@buzzfeed.com

First published on Wed, Aug 9, 2023

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