Q1 2022 BuzzFeed Inc Earnings Call
Good afternoon, and welcome to Buzzfeed Inc's first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require operator assistance. Please press Star then zero on your telephone keypad as a reminder, this call will be recorded.
I would now like to introduce Buzzfeed SVP of Investor Relations immediate Tom Korea.
Hi, everyone welcome to Buzzfeed Inc's first quarter 2022 earnings conference call I'm upbeat attempt Korea SVP of Investor Relations joining us today are founder and CEO Jonah Peretti M CFO Felicia Fortuna.
Before we get started I would like to take this opportunity to remind you that our remarks. Today will include forward looking statements actual results may differ materially from those contemplated by these forward looking statements.
Factors that could cause these results to differ materially are set forth in today's press release and in our quarterly report on Form 10-Q filed with the SEC.
Any forward looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events.
During this call we may present, both GAAP and non-GAAP financial measures. The use of non-GAAP financial measures allows us to measure the operational strength and performance of our business to establish budgets and to develop operational goals for managing our business.
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 methods used by our management.
A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release.
The press release and an investor presentation are available on our website at investors got Buzzfeed Dot com and now I'll pass the call over to Jonathan.
Hello, everyone and thank you for joining today I'm incredibly proud of all our team has accomplished in the first quarter.
We completed the unification of the sale business and admin teams across Buzzfeed and complex networks.
We demonstrated agility across our editorial video and news team and serving rapidly evolving audience and consumer preferences.
And we delivered Q1 revenue and adjusted EBITDA in line with our March outlook led by robust performance in our content business.
We generated revenue of 92 million representing year over year growth of 26% with.
With the introduction of lightweight video product and the acquisition of complex networks, our content business is stronger than ever and we are achieving immediate monetization of new content formats.
Complex networks is celebrating its <unk> anniversary. This year with this acquisition. We are now offering advertisers a wider range of branded content opportunities, helping them lean into platform shifts and positioning us to drive stronger revenue growth through our content business.
Q1 also marked the one year anniversary of the Huff post acquisition. The business continues to perform incredibly well with Q1 revenues and engagement both growing strongly year over year.
Looking ahead, we expect Q2 revenues to surpass $100 million for the first time in our history. This is nearly double the level of Q2 2020, a significant accomplishment in just two years driven by the efficient integration of our recent acquisition.
Last quarter I spoke about how we are entering another period of evolution in digital media user engagement data from analysts surveys and third party tracking points to the fact that short form vertical video has clearly emerged as the fastest growing content format for young audiences.
With Tic toc rapidly gaining share relative to traditional platforms.
As the major tech companies like meta and Google make investments to compete.
They have reported formats, such as real and shorts are capturing an increasing share of overall audience time spent on their respective platforms at.
As competition for audience and time intensified demand for our content is also rising.
All of the major platforms are seeking culturally relevant vertically optimized video content to serve their audiences.
And we are a trusted partner and providing this content to them at scale.
We have seen this before as new formats emerge demand for our content growth.
Ministers Asian journey starts with branded or exclusive content as a precursor to scaled advertising e-commerce solution.
This is where we excel our diversified business model enables us to drive immediate monetization from branded content on behalf of advertisers our business has proven resilient through such seismic market shifts, we prioritize innovation and operating agility to capitalize on these shifts and lead the industry forward.
Unlike many others in our ecosystem the strength of our diversified business model has only reinforced as the industry faces a range of macroeconomic challenges.
Rising inflation ongoing supply chain disruption geopolitical uncertainty and increased data privacy regulation, we continue to be a trusted one stop shop for advertisers, we're helping brands solve the biggest challenges in the market place today.
These include.
Getting reliable audience data now.
Navigating the world of Influencers and greater.
And leaning into platforms and formats, our audiences are going to next.
To serve rising demand from audiences platforms that advertisers for short form vertical video, we are leveraging our tried and true approach to content creation and distribution are proprietary.
Harry Tech stack and highly scalable content flywheel have enabled us to produce high quality content at massive scale and lower cost with this approach. We can also capture deeper audience insight in two ways first by any means.
Its capacity to new platforms, a format second by applying our learnings to maximize engagement across platforms.
Despite the challenges that individual platforms are facing overall digital media consumption is growing and we are not betting on a single platform to win instead, we are investing in audience driven strategies, where we see the highest potential for long term growth and monetization.
We meet our audiences wherever they are across our owned and operated properties and on traditional and emerging platforms.
Our track record shows we can successfully evolved to reach young audiences wherever they choose to go not.
This enables us to grow audience reach and engagement and generate growing and sustainable financial returns over time.
With this as a backdrop I'm excited to share progress we have made in three key strategic area for.
First introducing new vertical video product for advertisers second unifying our creator program and third expanding our best in class first party data services.
Starting with vertical video.
Last month at Buzzfeed, Inc. First ever upfront in New York, We announced the launch of Upshot lightweight branded video product for advertisers developed exclusively for vertical format, including real tick tock short and our own sites and apps.
Each platform has made investments in their own vertical video format, but importantly, upshot is the most comprehensive platform agnostic solution designed to help advertisers achieve influence at scale.
With tons of original short form video content from our major brands and on behalf of client distributed across our network. We have already developed strong audience signal around vertical video.
Combined these learning with the power of our category, leading brands cross platform scale and create or infrastructure and doing so we are removing the friction for advertisers, making it easier to develop creator lad vertical optimize campaigns that cut across platforms.
The early feedback from clients has been very positive.
We look forward to working with our advertising partners to scale up shop cross platforms, including our own and drive robot robust advertising revenue growth over future quarters.
We have also expanded our existing relationships with the large tech company we.
We are creating original content for meal on Facebook and Instagram shorts on Youtube and Tic Toc.
And just one example, our innovation theory, the land of bogs has seen exponential viewership broke on Youtube shorts in recent months with daily views regularly passing $10 million.
With this approach we are growing audience reach regardless of where young people choose to spend their time and we are helping the major platform scale adoption of their own short form video solutions and maximize returns on their investments.
We are also making selective investments in our kickoff channels, where engagement with our original video content continues to grow robustly.
Our present time Tictoc is anchored in our major brands such as complex networks Hot ones interview show.
Already logged on Youtube, we are introducing re cut hot ones content on Tictoc. Meanwhile, Casey has gained incredible momentum on tick tock with video views and engagement in the month of April alone, surpassing Q1 totals.
Tictoc is also right for rapid iteration some of our most successful ticked off channels are built around needed at a nascent a direct result of lehman's powerful audience signals on the platform.
These are just a few examples of how we are capitalizing on the emergence of new content formats to expand the reach of our brands to entirely new audiences.
With tons of original content across our brands that is vertical optimized. We can also offer advertisers access to hard to reach consumers in a frictionless way from lightweight product placement to editorial sponsorships that are tightly integrated with our vertical video content.
Must be continuously strive to be at the forefront of audience shift.
Leaning into our distinct advantage, a two way connection with our audience. Our largest brands were built around identity and engagement, we know how to harness the power of shared identity to maximize audience engagement. We've also been a creator led publisher from the start with deep expertise in creating compelling first person narrative.
That resonated with online generation.
Shared identity and first person storytelling are powerful forces in the rise of short form vertical video and as you can see we are bringing our expertise in these areas to the advertising clients and platform partners further strengthening our position as a one stop shop for advertisers and helping the major platforms.
To maximize their own investment and vertical video.
Turning to our second strategic area of investment, we introduced a unified greater program across Buzzfeed and complex networks known as catalyst catalyst brings together category, leading brands a diverse roster of talent and best in class greater tools and services from both companies.
Some of the biggest careers in media and culture have started at about beating complex as part of the integration.
We unified the Buzzfeed and complex networks greater programs under a single brand name known catalysts catalysts serves our combined network with more than 100 creators with a comprehensive set of technology product resources and tools to power their entire content creation and monetization engine.
As an advertiser it can be difficult to navigate the world of Influencers and creators by partnering with US advertisers have access to a trusted network of talent, we help them identify creative partners that are ideally suited to represent their brand, while leveraging our relationships and infrastructure to execute their campaign effectively and efficiently.
Right.
With a lots of catalysts, we are further cementing our leadership position in attracting and retaining the next generation of Internet creators, we expect to more than double the size of our creator network. This year and we are solving an important challenge for advertisers looking to tap into highly lucrative influencer led marketing opportunities across <unk>.
<unk> platforms.
And finally all of these solutions are powered by our expanded first party data offering and the absence of individual targeting capabilities advertisers are prioritizing access to rich first party data cross platform inside and contextual alignment.
Data has always been key to buzzfeed, the ability to create content and brands that scale.
Last year, we rolled that data into a single offering for advertisers known as lighthouse are.
Our proprietary first party data solution that allows advertisers to tap into a rich audience and platform insights to optimize the effectiveness of their AD campaign.
With an expanded portfolio of category, leading brands, including Buzzfeed Tasty complex network Huffpost and Busby news our clients can now tap into our proprietary insights across an audience of more than 150 million people. According to comscore.
Our audience spans food lovers sneaker had young parents luxury shoppers you name it.
And that's the number one destination for Gen Z and millennial audiences, we can offer advertisers access to highly reliable data around consumer preferences to achieve influence at scale.
This is the reason we continue to attract the biggest advertisers in every category.
Our clients include major CPG retailers like target and Walmart, leaving entertainment brands like Disney and Paramount and some of the largest banks and financial institutions.
By extending Buzzfeed lighthouse capabilities to the complex networks family of brands, we have a best in class first party data offering to support our advertising partners and a cookie less future.
Through focused investments in these three strategic areas vertical video first party data and creator program as well as the rapid integration of complex networks into the company, we are increasingly well positioned to serve the growing demand for our brands they culturally relevant content.
Deepen our competitive moats.
And helped to shape the next generation of the Internet.
Importantly, these three areas of investment are synergistic and aligned to become more than the sum of their parts with a cross platform creator first approach to vertical video powered by our rich first party data, we are able to offer our partners a comprehensive solution to the biggest challenges they face in the marketplace today.
Hey.
As a result, we are poised to deliver another successful quarter, we expect Q2 revenues to surpass $100 million for the first time and drive strong profitability and with ongoing execution of our investment priority I'm confident we can continue to lead the industry forward in scaling and monetizing new content formats across it.
This theme and emerging platforms.
I am grateful for our talented network of creators journalists and producers who inspire young audiences everyday with original food news and entertainment content and to our shareholders and partners for their continued support as we execute on our vision to make the internet better play.
With that I will turn the call over to our CFO Felicia della Fortuna, who will take you through our financial results and outlook.
Thank you Jenna.
To walk you through our financial herself today, our investments in audience driven strategies with the highest potential for long term growth and monetization are yielding excellent myself and we believe we are increasingly well positioned to deliver attractive return on these investments.
We delivered first quarter results in line with our March outlook for both revenue and adjusted EBITDA Revs.
Revenues grew 26% year over year to 91, 6 million driven by robust double digit growth in our content.
Reported revenue growth was at the low end of our guidance range of approximately 30% driven by a change from gross to net revenue accounting for the complex creator program.
With this change the accounting treatment for creator revenues across Buzzfeed and complex are now consistent.
Without this change year over year revenue growth would have been 30%.
As a complimentary revenue reporting we also measure audience time spent across our owned and operated properties and third party pipelines overall time spent declined 4% year over year in the first quarter as expected.
This was driven primarily by declines from third party platform audience consumption patterns continue to paper short form vertical video format. That's a quick walk in real which are not captured in our time spent metric.
Time spent on our owned and operated properties was also impacted as these platforms, capturing an increasing share of the audience.
As a reminder, this metric reflects constant on our owned and operated websites and apps Youtube and Apple news as reported by Comscore and Facebook as reported by Facebook.
Does not capture time spent on Peacock, Instagram Snapchat or Twitter.
Although we are not yet able to leverage industry standard reporting to measure audience on newer formats like pick truck and rail we monetize this consumption for our content.
Advertisers a wide range of products to reach consumers natively on each platform.
The best look at our progress in this transition we will continue to share both quantitative metrics, including revenues generated through our content business and qualitative updates around audience engagement on emerging platforms.
Turning to our Q1 results by business advertising revenues grew 26% year over year to $48 7 million led by growth on our owned and operated properties, primarily driven by the acquisition of complex networks, which closed in December 2021 advertising revenue generated on third party platforms with lower year over year consistent with the <unk>.
And trained.
Content revenues grew 65% year over year to 32.3 million driven primarily by the acquisition of complex networks with a complex acquisition and the introduction of lately video products that feed our content business is stronger than ever enabling us to grow in a rapidly shifting market.
Commerce revenues declined 27% year over year as expected keep 10.6 million against outsized growth rates in the year ago period. Additionally, as discussed last quarter, because our commerce business is still emerging the majority of audience traffic to a commerce content is generated through Facebook as a result, our commerce.
These are also impacted by the shift in audience consumption patterns discussed earlier.
In terms of adjusted EBITDA, we generated losses of $16 8 million in the first quarter as expected.
Reflects the typical seasonality of our business.
We have historically generated losses in Q1, our smallest revenue quarter with an improving sequential profitability profile as our operating leverage improved through the year when.
When compared to the first quarter of 2021, our adjusted EBITDA reflects higher content revenue mix as well as opex increases relating to public company operating costs.
We also encourage charges that did not impact adjusted EBITDA, including $8 million of depreciation and amortization with the year over year increase attributable to the recognition of intangible assets associated with our acquisition of complex network.
5 million of interest expense largely related to our convertible note financing.
5 million relating to the revaluation of our convertible note financing and warrant liability and 4 million in stock based compensation, which is driven primarily by stock based compensation granted to employees as part of our annual long term incentive program.
We ended the quarter with cash and cash equivalents of approximately $74 5 million.
Before I discuss our outlook for the second quarter, Let me first share some of the current trends, we're seeing across the business in order to provide context for the financial health.
Starting with China.
As discussed critical video formats are capturing an increasing share of audience train pressuring consumption on traditional platforms and because the fastest growing vertical video platform, including tick tock and Instagram are not currently captured in our time spent metric we continue to expect similar year over year declines in in report.
Good time cents as compared to Q1.
However, we continue to make great progress in growing audience engagement and vertical video a cross platform and we will continue to share more here in the absence of industry standard reporting across platform.
On revenue.
In our advertising business, we expect to see year over year revenue growth rate to soften somewhat as compared to Q1 driven by various factors.
Many of our largest advertising partners continue to face macroeconomic challenges our tech clients continue to be challenged by supply chain constraints CPG and retail are battling similar challenges. While also navigating rising inflation as a result, some advertisers are pulling back or delaying spending.
Further these market wide issues are dampening the typical seasonal lift in pricing, we would expect from Q1 Q2, presenting some headwinds to programmatic advertising revenue.
That being said after a slower start in Q1, we have seen strong momentum on direct sales and recently winning large deals across multiple categories, including entertainment auto MTG. This momentum highlights the strength of our diversified revenue model with scaled advertising businesses across both programmatic and direct sales.
We have the ability to navigate market dynamics around engagement and pricing and to do so profitably.
And with a unified go to market strategy across breastfeed P C Huffpost and complex.
We see the opportunity to achieve greater scale and drive stronger margin contribution through our direct sales model overtime.
Living to content, we expect another quarter of robust revenue growth with the acquisition of complex networks. We are now able to offer advertisers a wider range of solutions.
Include branded content editorial and theory sponsorship custom affiliate posts and a long foreign film and TV content.
And as you heard we have now added a short form vertical video series since our product portfolio with up shop.
With this breadth of products, we are helping clients lean into platform shifts positioning us to drive stronger revenue growth through our content per car.
Our commerce business continues to face headwinds similar to those discussed broadly across the e-commerce sector, including our largest retail partners and we will again face the comparison against the elevated growth rates experienced in the second quarter of last year as the results. We expect Q2 revenue trends in the range of what we saw in Q1.
In terms of adjusted EBITDA, we expect to be profitable in the second quarter.
Hi, Michelle improvement is driven by the typical revenue seasonality in our business as well as initial efficiencies from the unification of the Buzzfeed and complex sales business and admin tool.
Our outlook does not assume any further near term M&A activity.
With that I will turn to our financial outlook for Q2, 'twenty 'twenty. Two we expect overall revenues to grow by a low twenties percentage year over year, we expect adjusted EBITDA in the range of two to 7 million and we expect stock based compensation expenses in the range of 11 to 13 million.
Before I wrap up I want to reiterate that I am proud of what we accomplished in our first full quarter as a combined company.
Following the integration of the sales business and admin teams across that speed and complex. We are now going to market with a combined portfolio of category leading brands. We are also capitalizing on the highly complementary offering of both businesses to further strengthen our best in class tools and services for both advertisers and creators.
We continue to execute against our investment strategy, we are increasingly well positioned to lead the industry forward.
I am confident we have prioritized the right investments focused on audience driven strategies with the highest potential for long term growth and monetization and by maintaining operational focus and cost rigor, we are able to maximize our returns on these investments.
Thank you and I'll now turn the call over to the operator, so we can take your question.
Thank you ladies and gentlemen, if you have a question. Please press Star then one on your telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
And our first question comes from the line of John Blackledge with Cowen.
Oh, great. Thanks, two questions first.
Felicia just kind of touched on it but could you talk.
About the advertising environment that youre seeing thus far in the second quarter, you'll given the different macro crosscurrents, and maybe like which industry verticals are kind of leading you pulled.
Pull back or pause in spend and then second question on on the vertical video initiative any way to kind of frame potential revenue contribution from that emerging segment in 2022, and how are the margins for short form video relative to kind of other forms of content creation that Buzzfeed does thank you.
Thanks, John So I would say on our advertising business as you know it's comprised of both direct sales and programmatic revenues and it is the scaled advertising business on the direct sales side. Our team has really done a great job of navigating the current market.
Travel and financial services were two areas, where we saw strength in Q1, and then all those CPG and retail were slower to start we have seen trends improve in both categories into Q2. We have also seen a lot of momentum in Q2 in entertainment and auto and then obviously the flip side for US has been tech.
Where our partners are being impacted by the broader supply chain disruption.
On the programmatic business, we are seeing more of an impact from macro factors.
Especially.
Given kind of the seasonal uplift that we would tend to see from Q1 to Q2 being dampened.
However, we do have the benefit of being cross platform and having a diversified advertising model across both programmatic and direct the other area I would add for Q2 is with the unified go to market strategy across Buzzfeed tasty Huffpost and complex, we do see the opportunity to achieve greater scale and hopefully drive stronger margin contribution.
And over time.
Yeah.
On your.
On your second question.
As it relates to vertical video I would say that it's one of the products that are considered in our content revenue line and so what we do see which is one of the trends that you're seeing in Q1 is that each one will continued to be pressured by the mixed shift toward content away from commerce.
We do however, expect H two to show margin improvement from the cost synergies that we announced in Q1 as a result of the integration of the complex.
Business sales and admin teams and that we also expect to easing comps in the back half of the year. So we are expecting seasonal improvement.
<unk>.
Sequentially as we move through the quarters as a result of the improving operating leverage and relate.
Related to our fixed cost infrastructure.
Okay.
Just one quick quick note on short form video it is advantageous in the sense that it is not a <unk>.
Eight minute 12 minute video like what you might produce on on Youtube.
So it is less expensive to make branded content and short form vertical video that's still reaches large audiences and has a big impact.
So.
Of course, it's an emerging area than the emerging platform Reals.
Let me tick tock in Reals and shorts are relatively new.
But the.
The encouraging part of it is it's a good form of communication that doesn't require massive production in order to make an effective video that reaches millions of people.
Okay that makes sense. Thank you.
Thank you and our next question comes from the line of Jason Crier with Craig Hallum.
Great. Thank you.
<unk> got a lot of content that you discussed at your new fronts. A couple of weeks ago. Just curious if you can highlight the feedback that you've heard from advertisers just as you have conversations coming out of that presentation.
Yes, we heard from a lot of.
A lot of advertisers that were very excited about up shots in the ability to do branded content and vertical video across across multiple platforms.
It was also the the data work with lighthouse was also very well received a lot of a lot of clients are looking for new first party data solutions.
Solutions looking for contextual advertising opportunities.
You know theres, a big reset in the industry.
That is requiring advertisers to work with trusted brands that have first party data. So that that was a great opportunity for us to tell that story and let advertisers know how much we're doing there.
And then the creator trend as it is a big trend in.
One of the pain points for advertisers and clients is.
How to work with a really fragmented field of Influencers and creators and how do you know which ones to work with them.
And so the the expansion of that combined with lighthouse invert and vertical video solutions was really a synergistic combination.
No they can come to us and get vertical video made by creators with really strong data.
And in that.
Combined is something that is more than the sum of its parts. So it was it.
It was a good opportunity and then I would just say more broadly.
<unk> just seen the complex team and the Buzzfeed team on stage together seen them. The way. We're working together has seen the way that tasty and first we feast or launching of food festival together that Theres just a lot. We can do now that we are integrated now we're all one team we've integrated the business in an admin and back back office.
The lighthouse capability across all of our complex properties and the teams together building together, creating together that that was something that I think open the eyes.
Two two a lot of the the advertising community.
You know you read our news article about an acquisition, but seen it in action and as you know a different feeling which was a great milestone for us.
And then you've talked a lot already about this transition to short form video, but I just wanted to take a step back and maybe understand the progress that was made in the quarter.
If you can give any detail on on all of these platforms that you're working with maybe where some of them are a little bit further ahead of the curve, where you're more instrumental in helping them create that path to monetization and then this may be more for Felicia, but.
I think there's going to be a period of time, where the pivot from long form the short form Korea, it's a little bit of a hole that needs to be filled at what point should we start to maybe come out the other side and see more of a return to growth on content as you build up that short form expertise.
Yes, so we really feel like this is history repeating itself. When you. When you look at you know five years ago and the rise of tasty that was built on very short form in feed video when Facebook was launching.
Hum.
Video and that was new on Facebook it was more about growth for them. They didn't really monetize it we had to build content solutions branded content product placement in order to generate revenue there. It feels very similar now with Tic Toc, and then shorts and in Reals on Instagram and Facebook.
They're launching these new products to make sure that tick tock doesn't take share from them or too much share from them. It's more it's less focused on monetization. It's more focused on growth in audience growth that means we need to figure out the monetization ourselves, which is why we launched up shots, which is why the content revenue line is so important for us on new platforms.
New platforms favor branded content and native advertising and we've done that for many years now when we see a new platform that's growing.
Once tick tock Facebook.
Facebook.
Google start to really focus on more scalable advertising solutions, they will bring the Rev share and commerce.
Revenue lines onto those platforms and so for us it's really a matter of how do we how do we navigate the shift in the strategy of these platforms, where right now there are less revenue focused they're also sharing less revenue, we can take control of our business by doing.
Branded content and native advertising and we know we expect in the next six months to two years, it's hard to predict exactly we're going to start seeing the shift towards Rev share and commerce models advertising and commerce models and so we're staying very close to them, we are having high level conversations up and down the organization of these platforms.
And when that shift happens, we will you know.
Likely be in beta partners with them the way we have been in the past in and start building out the advertising and commerce lines.
And that's how it's worked in the past and it seems like we're seeing a lot of pattern recognition on this that it will work that way with them with this new short form vertical video formats.
And to add to Joanna I mean in looking at Q1 2022 content was the key driver of our revenue growth that plus the 65% year over year and while the complex networks was a primary driver of that Buzzfeed Standalone had also increased from a year over year perspective, reflecting the change in mix of cars.
Right, which was one of the items, we had discussed in terms of offering more late lightweight native branded products as part of our overall portfolio. So we do feel confident with.
The introduction of complex as well as all of this the Buzzfeed in products that we do have a scale its content business that can offer a wide array of products both from lightweight to premium content to our advertisers and so in Q2, we do expect our content to continue to lead the growth for Q2, which really highlights our diversified.
Business model.
And we do you feel confident in being able to successfully navigate the market shifts we are seeing the only item I will note is that with Q2, we do note that as content revenues do increase as a percentage of total that is our lowest margin and so that will have some impact as it relates to our adjusted EBITDA numbers that are reflected in our.
Q2 guidance.
Thank you one more for you Felicia.
Change in revenue recognition that hit Q1 by about four percentage points should we assume a similar headwind to the Q2 guide that you provided.
Okay.
Q2 should we assume that that that revenue would have been four around 4% better than the low twenty's your guidance.
I would say the way to think about the the gross versus net is that very similar to our traditional advertising seasonality.
We have disclosed previously as it relates to Q1 and its percentage of total revenue that would be a good guide and thinking about the impact that the gross versus net has had on Q2 and we also have disclosed in our Q both the the pro forma as long as the impact at the gross versus net recognition in our filing.
Great. Thank you.
Thank you.
Our next question comes from the line of Brent Navon with Bank of America.
Thanks, and good afternoon, just wanted to circle back to the advertising market and just given the volatility right now whats. The current visibility that you have into into these advertising trends in some of the commentary about the verticals, where it seemed like tech might've gotten tech out worse.
But I think the financials improved.
Anything just from month to month on a consolidated basis on you know how advertising has trended from March to April to May would be helpful.
Yes, so I would say in terms of direct sales you know, we did see recovery as it related to CPG and retail in Q2 with very strong book to dollars and we did see new verticals really are showing increases in overall, we're looking at visibility as it is today in terms of our total book dollars across the.
<unk> the business and.
Feel good in terms of the guidance that we're sharing for Q2 as it relates to the performance of advertising I think the the big headwind, which is also a bit of a tailwind isn't being able to look across the platforms themselves and having a robust program programmatic offering in 2021, there was the seasonal uplift that.
But he saw in terms of advertising C. P M across the market and so we are seeing a softening of those C. P M across the the programmatic space.
Got it that's helpful and.
Just as a follow up.
Yes.
Picture I think one of the strategic rationales of where you're.
Going public was to consolidate some these subscale brands into you know.
Into Buzzfeed, and obviously the market conditions as.
Drastically change from an industry I'm just from a general macro and I'm curious how you guys view your position in the market right now given all these changes.
So hey.
Hey, Brent.
Thanks for the question so I think.
The changes in the market.
Haven't had a huge effect on us in the sense that valuations are relative and Miss.
If the market is down that means there's more attractive acquisition opportunities out there for companies that that are going to be looking for exits, especially.
Especially the subscale digital media companies because they realized that it takes a lot of investment upfront to build our commerce business and events business a programmatic AD Tac all the all the different pieces you need to build a diversified.
Bottle.
And so having that built out already in being able to plug in additional.
Brands into the into that and audiences into that it is something that creates a lot of value and so we can share in that value with that acquisition.
Target.
I think in some cases.
There the fact that some of the private digital music digital media companies are still private and where public it gives us a head start and we can.
Navigate through a choppy market.
Get get in a position where we have.
Our strong platform.
And b be acquisitive, not just this year, but in years to come and be further along than a lot of the competitors in our space.
Got it. Thanks, thanks, so much for the color.
Thank you I'll now turn the call back over to the founder and CEO Jonah Peretti for any closing remarks.
And thanks, everyone for joining the call today, we look forward to seeing you at upcoming investor conferences and events over the next few weeks.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
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