Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BuzzFeed Inc (BZFD, Financial) reported a 5% increase in audience time spent with their content in Q2 compared to Q1, highlighting strong engagement.
- The company saw a 3% year-over-year growth in programmatic advertising revenue, marking the first growth in this segment since Q1 2022.
- Affiliate commerce revenue grew by 9% year-over-year, driven by strong retail partnerships and successful initiatives like the AI-powered shopping assistant, Shoppy.
- BuzzFeed Inc (BZFD) achieved $2.7 million in Q2 adjusted EBITDA, a $5 million improvement year-over-year, exceeding their May profit outlook.
- The company has successfully reduced its debt and cost structure, improved its cash position, and returned two of its largest and highest margin revenue lines to growth.
Negative Points
- Overall Q2 revenues declined 24% year-over-year to $46.9 million, reflecting ongoing challenges in the digital media landscape.
- Advertising revenues decreased by 19% year-over-year due to pressure on the direct sales channel and a strategic shift towards high-margin revenue lines.
- Content revenues fell by 40% year-over-year, driven by reduced emphasis on lower-margin branded content business.
- Q2 time spent as reported by Comscore declined 5% year-over-year to 71 million hours, indicating a drop in referral traffic from third-party platforms.
- The company experienced a significant cash burn of $16 million from Q1 to Q2, although this was attributed to one-time expenditures.
Q & A Highlights
BuzzFeed Inc (BZFD) Q2 2024 Earnings Call Highlights
Q: Jonah, can you share more about how AI is helping move some of these content launches forward? Is there a way to quantify the cost benefit of rolling out content that utilizes some of the new AI capabilities?
A: Jonah Peretti, CEO: We've done significant upfront work over the last year and a half to build a platform that accelerates our AI initiatives. For example, our AI-powered content generators allow our audience to create hundreds or thousands of pieces of content, shifting from a single post model to a more interactive and personalized content creation process. This has increased content output and audience engagement. Additionally, AI is helping us streamline business operations, detect trends, and personalize content, pointing to exciting future opportunities.
Q: What are the expectations for the impact of the upcoming election on traffic and advertising revenue?
A: Jonah Peretti, CEO: We are already seeing significant interest in the election on both BuzzFeed and HuffPost. BuzzFeed covers the cultural impact, while HuffPost provides reliable election news. We expect ad spend to increase later in the cycle, particularly in Q4, as campaigns ramp up efforts to drive turnout and registration.
Q: The Q3 guidance shows a significant step up in revenue versus Q2. What is driving that increase?
A: Matthew Omer, CFO: We expect continued positive trends in programmatic and affiliate revenues, driven by deeper audience engagement from new content launches and a revamped homepage. We also had our best Prime Day ever, contributing to significant momentum. Additionally, we anticipate stabilization in direct sold content and improvements in operating leverage due to cost-saving actions.
Q: Can you share your latest thinking around the company's debt and the impending option available for lenders in December?
A: Matthew Omer, CFO: We are focused on executing our strategy and improving our financial fundamentals. We have a collaborative relationship with our noteholders and are evaluating strategic changes, including divestitures and restructuring, to pay down debt. We also have an increased ATM program for additional liquidity if needed.
Q: Jonah, can you shed light on the new activist shareholders entering BuzzFeed's stock?
A: Jonah Peretti, CEO: BuzzFeed is a well-known brand with significant future potential. I am open to hearing from shareholders and exploring new ideas to unlock more value. We are focused on our long-term strategy to create the defining media company for the AI era.
Q: The company burned about $16 million in cash from Q1 to Q2. Is that indicative of the expected cash burn rate going forward?
A: Matthew Omer, CFO: The Q2 cash burn is not indicative of future rates. We had several one-time expenditures, including severance and compensation charges, working capital optimization, and a biannual interest payment. These will not repeat in Q3, and we expect more stability in our cash balance moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
