Q2 2023 BuzzFeed Inc Earnings Call

Okay.

Good day, ladies and gentlemen, thank you for standing by welcome to the Buzzfeed second quarter 2023 earnings Conference call. At this time, all participants on a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star One why don't you tell.

You will then you an automated message advising Johannes Reyes. Please note that today's conference maybe recorded.

I'll now hand, the conference over to you speak a little bit on some cleanup senior Vice President of Investor Relations. Please go ahead.

Hi, everyone welcome to Buzzfeed, Inc. Second quarter 2023 earnings Conference call I'm Here, Tom Korea, Senior Vice President of Investor Relations joining.

Joining me today are founder and CEO , Jonah Peretti, President Marcella, Martin and CFO Felicia della 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, our 2022 annual report on Form 10-K, our Q1 quarterly report on Form 10-Q, and in our Q2 quarterly report on Form 10-Q to be filed tomorrow.

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 present, both GAAP and non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin.

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 method used by our management.

A reconciliation of these GAAP to non-GAAP measures is included in today's earnings press release.

It will take time for these initiatives to translate into scaled monetization, we're making good progress in executing against our transformation plans 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.

<unk> driven content, we are successfully leveraging our trusted brands to attract a growing number of emerging internet creators in order to more rapidly scale, our content output and we have prioritized resources aimed at growing engagement on our owned and operated properties through new AI powered content formats and doing so we are.

Reducing our dependence on the major tech platforms and leaning into our rare combination of voice and scale in a fragmented media environment.

We have strong and differentiated IP across Buzzfeed complex hot ones, Firstly feast, tasty and huffpost, each with a trusted and established brand identity.

For for Buzzfeed pop culture Entertainment and creating the best of the Internet using AI to shifts content delivery and distribution for complex. It is delivering premium original content that covers the latest trends in sneakers music and convergence culture for first we feel it is expanding the hot ones universe and building more IP at the inter.

Section of food in pop culture for tasty it is attracting emerging food creators and leveraging the social platforms to build community around cooking.

For Hep post its breaking news coverage and audience centric stories for a massive direct front page audience.

The brands, we have built our valuable and hard to replicate as a testament to that we continue to lead the industry in terms of time spent.

Gen Z and millennials spent vastly more time consuming our content that of any other digital media company in our competitive set according to Comscore.

With a streamlined sales.

With a stream line sales team structure and a revamped go to market strategy that is anchoring that is anchored in three intersecting pillars of innovation creators AI and cultural moments, we are now able to leverage the individual strength of our brands more effectively in order to reaccelerate, our growth and close the gap in monetization versus the broader U S digit.

Advertising market.

First we are prototyping, new generative AI formats, including quizzes and chat bots.

Double our output of AI assisted content from Q1 to Q2, and we expect to continue ramping up at a similar rate in Q3.

Second we are rapidly expanding our creator programs to increase both revenue and content output building on the success of the Buzzfeed and tasty creator programs. We have expanded this model to our other brands. We now have close partnerships with more than a 180 creators who publish original content across our distribution channels and we work with a meat with a much larger.

Extended network of hundreds of creators across our brand portfolio collectively creator led content drove hundreds of millions of views across our network in Q2.

And third we are taking advantage of the fragmented media environment as one of the few companies that can deliver culturally relevant moments at scale something that platforms are creators can match on their own.

Moments can be homegrown or they can be part of the broader pop culture calendar various of your partners can deliver voice and scale together in one package Buzzfeed, Inc. As a one stop shop for big moments in culture, whether it's the NBA playoffs are the latest episode of Hotlines that marketers can plan for an advertiser out.

In Q2 across our brand portfolio, we launched several new products in each of these areas a few of which I want to highlight on today's call starting with Buzzfeed Betsy there has always been the leader in data driven storytelling operating at the intersection of technology and media to curate the best of the Internet for our audiences in Q2, the editorial team continued to harness AI.

New ways to deliver deeply engaging entertainment to our audiences over the past six months <unk> has launched several new AI content formats, including new personalized quizzes chat bots and multiplayer games and viral AI image collections.

Even more exciting when we look at individual pieces of AIG content, we see increased engagement more time spent and AI inspired image posts that have gone viral across <unk> dot com Instagram and Tic Toc.

One such example is our recent posts here's what Barbie's Dream House would look like in each state, which capitalize on audience excitement around the Barbie film premiering.

The Barbie film premiere using AI to generate unique images, a fictitious Barbie dream houses across the country. The posts are over 1 million views and went viral and tic Toc in Reals.

More broadly as compared to Q1, the use of our AI content and time spent have both increased threefold driven by higher content output.

And the new content is also driving higher engagement quarter over quarter. Our top 20, AI articles published in Q2 generated more than twice the time spent when compared to our top 20 articles in Q1.

Complex also began integrating AI to engage their audiences in new ways leaning into the brands authoritative voice and audience reach to celebrate the 15th anniversary of hip hop.

Print to digital to streaming to experiential complex represents the past present and future of convergence culture is one of the leading digital media brands for the hard to reach young male demographic. According to Comscore complex attracts loyal audiences with the obsession that range from sneakers to street wear to sports to hip hop.

In Q2 complex continued to celebrate the 15th anniversary of hip hop with experimental AI work in partnership with Sprite.

This innovative collaboration allows fans to generate a personalized mixed tape album cover with the help of AI.

Earlier earlier this year complex launched its first creator program welcoming 18 diverse voices to the inaugural creator class, providing exciting opportunities deliver original creator driven content on behalf of brands.

Although it's still early this content is resonating with advertisers and fact Uber is set to team up with us and one of our creators Ross Mack of Mac comics to develop original branded content around financial tips for Uber drivers.

Firstly vies, our food in pop culture brand celebrated a huge milestone in Q2 airing the 300th episode of its hit Youtube interview show Hotlines.

Since 2015 Hot ones has attracted the biggest celebrity guests garnered more than 25 billion minutes watched received multiple Emmy nominations and broken new ground for Youtube endemic talk shows in Q2. This show continued to monetize major cultural moments like the NBA playoffs to deliver our.

<unk> and clients hotline spans rallied around the NBA playoffs through a collaboration with NBA playoffs official sponsor Google pixel. The partnership went deep into the hot ones Universe to include a hotlines episodes sponsored by Google pixel custom branded social content designed by our creative team and brand integrations, featuring the pixel phone across both hot one.

And the truth or DAP spinoff series.

Turning to tasty since its launch in two.

2015, tasty has taught the internet how to cook through inspiring recipes cutting edge trends and inclusive food stories that reflect the wide identities of our audience today hasty garners over $1 billion cross platform views each quarter and audience engagement across platforms continues to surpass the competition, making it the.

<unk> and most engaged food community on the Internet According to tubular intelligence.

Over the past year Casey has also emerged as a leading platform for food creators to date. The TC Greater program has on boarded 10 residents to develop new content and collaboration with the brand. The residency has produced incredible results, helping creators to grow their audiences substantially while also driving deeper engagement with the tasty community. This.

Success led to new Tasty Tictoc series potatoes, 100 ways held by one of Tcs inaugural residents Jerry Mobley. This series rapidly gaining an audience following earning more than 70 million views to date and securing a multi episode sponsorship from Idaho and potatoes.

As we continue to ramp our creator that content, we're excited to introduce even more ways to bring creators and brands together on our platform.

In May tasty introduced a first of its kind culinary companion <unk> and AI powered chatbot designed to revolutionize the cookie meal prep and shopping experience for Tcs global community of chefs.

And users are engaging more deeply than we expected.

Theyre, having long conversations with Basel III, asking the shaft spot to help solve their daily cookie challenges from meal planning to healthy cooking to ingredient inspiration.

Huffpost continue to engage readers with destination news content in Q2, the brand breaking news coverage from the high profile departures at Fox and CNN to the tragic events of the tightened submersible to new developments and the Trump Dayton in arraignment drove massive audience traffic during the quarter. How close is also working with <unk>.

Rising stars as part of its own creator program to collaborate on editorial content in order to scale. The brand short form vertical video offerings, while preparing the residents for careers as creators resident content has been featured across Hubco social channels since program launched last December .

<unk> has grown its vertical video output exponentially.

Across our portfolio of premium brands and IP, we reached millions of young people every day, who visit us directly to enjoy our content and as you've heard our initiatives around AI creators and cultural moments are gaining real momentum with audiences and clients alike validation that we are pursuing the right long term strategy for growth in months.

<unk> as we execute against our vision, we are committed to building a business that delivered significant margin expansion and generate strong cash flows over time.

I am grateful for the support of our shareholders and honor to work alongside our talented teams of creators journalists producers and all of our employees as we continue to lead the industry forward with an unwavering commitment to our mission to spread truth Joy and creativity on the Internet.

I'll now hand, the call off to Marcello to discuss our business performance and operational highlights Marcella.

Thank you Donna and good afternoon, everyone.

Let me start by recapping our Q.

Foreman and discussing some of the trends we are seeing across the business.

We delivered Q2 revenues in line with the guidance range, we provided in May.

A decline of 27% year over year.

Advertising revenues came in below our expectations pressured by increased competition for both audience time.

Don.

We saw softness across the traditional sale articles, including CPG Entertainment and financial services.

With the bright spot in the quarter with year over year growth led by the partnership with Google pixel that Gina mentioned earlier please.

Retail also showed improvement in year over year trends versus Q1, it system into our ability to deliver performance based advertising solutions for large retailers in a down market by bundling, our media and affiliate products.

Content revenues outperformed our expectations driven by higher than expected sales against our premier might be programming.

Revenues from New theater, driven client partnerships, which I will share more on shortly are also capture here.

<unk> performed in line with expectations with year over year growth in our organic affiliate business for the fourth consecutive quarter overall commerce revenues declined year over year as we lapped last year's Smith at various experiential event, which we did not hold VCR.

Okay.

Going into Q3 media environment remains challenged.

We expect year over year trends.

Revenue to be similar to Q2 as the headwinds we saw in advertising revenues persist and continue to offset the recent momentum in our content business and a return to growth in our commerce business.

From the time, we start engaging with the customers until the campaigning executed it takes about six months.

That being said we are optimistic about the potential for recent sales team reorganization and portfolio wide.

While both to market strategy to Reaccelerate revenue growth over the coming quarters.

Following the reorganization of our sales team kicked off a nationwide road show in May meeting with more than 100 clients and representatives from the major advertising agencies to present <unk> vision for the future with digital media.

Clients are responding positively we have closed pivotal deals uncorked in one or more of our CP next or AI creators and cultural moment, which I will share more on shortly.

Similarly client excitement around complex con.

So building with pipeline activity up by a double digit percentage when compared to the same period last year.

Next let me share some recent client wins in the area of AI creators some cultural moments to illustrate how our focus on these areas attracting premium brands across major advertising categories.

So, let's just start with AI.

As John shared earlier, we have launched new AI powered content formats across our brand portfolio.

Lastly, infinity cases continue to attract new brands as sponsors in Q2.

In partnership with leading mattress brand circa <unk> launched two new sponsor places a dream interpreter and bedtime story generator.

Both cases received overwhelming positive comments from bus at readers and so above average time spend compared to non AI formats.

And the audience click through rate and engagement rate both exceeded the client's expectations.

Yeah.

Complex also introduce its first AI product to a commercial partnership with the sprite to celebrate the 50th anniversary of hip hop.

The complex team develop an interactive website power by GPP.

Athena sonority Hector these spot crafts and distinctive mix tape cover using traditional act were created by the multidisciplinary Internet artist Ocean World.

The experienced guide's funds to personalized journey, while defining a unique mixed tape cover in real time.

In Q2, tasty began integrating AI to develop fresh content for homes check.

In May <unk>.

Just to introduce the first of its kind culinary companion in both Italy, and AI powered chatbot.

Available available exclusively in the tasty app, but that TUI is designed to revolutionize the cooking.

Reparation and shopping experience for tasty global community.

Chessboard started Scott this is neal plants and grocery list when you sort of talked to the board and ask for cooking advised recipes.

Both the TUI integrates shovel recipes power by Walmart to make that cooking experience seamless for users.

The audience excitement and engagement, we are seeing around what actually is driving interest from new and existing clients looking for innovative ways to reach consumers.

Now, let's turn to creators.

Across our brands, we now have close partnerships with more than 180 creators and we're continuing to grow rapidly.

Following the success of Buzzfeed and tasty creator programs in identifying attracting and developing emerging internet creators. We have extended this model to our other brands, including backseat Hospitalists and complex.

And we expect to introduce first we ceased.

Don't create or class very soon.

Our work with creators to continue to validate our thesis that successful both creators and brands is best achieved when creator do even content is paired with a strong IP and massive audience reach when looking at views and engagements with the same content on tasty channels versus a creator.

On channels the data consistently shows that creator content outperformance on our platform.

This content is also attracting major advertising looking to execute sorry major advertisers looking to execute marketing campaigns related innovation.

As John mentioned earlier in Q2, our creators collaborated with the likes of Uber State farm in Idaho.

It is contributing to our better than expected content revenue performance in Q2.

Okay.

We are also extending maintenance with creator led content in our commerce business.

During Prime day, we invited creator creators from across our brands to develop or national shopping content for our audience.

Content was distributed across our platform as well as through creator in Davita was China.

We saw an incredibly positive response from audiences on significantly higher performance from theater content published to our China as compared to revenue from the same content on our creators owned China.

This highlights the power of creators content, there with our vast distribution network in driving both audience engagement and revenue.

Now in terms of cultural moments.

As Gina mentioned earlier hard ones recently celebrated its 300 <unk> episode than.

The most recent season feature.

Celebrities, including Joe Maloney, Jennifer Lawrence, Melissa Mccarthy and Jason So their kids with each episode, reaching millions of dealers in fact, Jennifer Lawrence interview reached more than 100 million viewers across platforms.

And I'll say back of its forbid audience. Following the show has also continued to attract measured CPG brands sponsors such as Procter and Gamble Amgen it on mute.

HUD one funds also rallied around the NBA playoffs through a deep partnership with the NBA playoffs official sponsor of the Google pixel.

Beyond the traditional episode partnership to include custom social content and brand integrations across both hard ones on the <unk> spinoff series.

Similarly, Microsoft tapped into our audience reach across tasty and first we ceased trusting us with immediate campaign to promote that are being launched.

And Activision Blizzard invested behind the latest Tentpoles release of their video game franchise that Diablo with an episode of sponsorship of hard ones custom co branded hot sauce unlimited merchandise.

Before I wrap up I want to briefly address our cash and liquidity circumstances.

Against the backdrop of lingering macroeconomic uncertainty.

Finishing returns from the major tech platforms, and a tighter digital AD market, we continue to be laser focused on preserving cash.

The fully executed restructuring plans, we discussed with you last quarter have meaningfully reduced our go forward cash cost structure.

We also tapped into the public markets Vienna at the market program through which we raised $800000 in Q2.

These initiatives have enabled us to access additional near term liquidity in order to complete our restructuring program, even amid the current revenue headwind.

And as we exit Q3, we expect to realize the full cash benefits of our restructuring program on an ongoing basis.

Further as we execute against our AI and creators initiative. We are building a content creation model that makes our creative teams more efficient and sustainably expand our output without increasing fixed costs.

Thank you everyone for being here today, I will now handle the call to finish up to discuss our financial results and outlook.

Thank you Marcella, we delivered second quarter results in line with our guidance range for both revenue and adjusted EBITDA.

Overall revenues for Q2, 2023 declined 27% year over year to $77 9 million as expected and in line with Q1 trends performance by revenue line is as follows.

Advertising revenues declined 33% year over year to $35 4 million in line with first quarter trends as expected as increased competition for both audience time and AD dollars have contributed to lower demand and ongoing pricing pressure.

Content revenues declined 22% year over year to $31 5 million with year over year trends, improving relative to Q1, driven by a higher number of branded content clients quarter over quarter.

Last quarter, we introduced the kpis to represent net branded content advertiser revenue retention, which is a function of both the number of clients, we serve and the spend per retained clients. This metric reflects current period trailing 12 month branded content revenues as a percentage of prior period trailing 12 month revenues.

For branded content customers that spent a minimum of $250000 in the prior period Q.

Q2 for.

Q2 retention was in line with Q1 trends.

Commerce and other revenues declined 17% to $11 million almost entirely driven by the <unk> experiential event complex land in the year ago quarter, which did not repeat in Q2 2023.

In terms of adjusted EBITDA. We are we were able to mitigate nearly all of the lower revenue year on year with successful execution against the cost actions, we announced in April delivering breakeven adjusted EBITDA in Q2 2 million lower than the Q2 2022.

We also incurred charges that did not impact adjusted EBITDA, a full reconciliation of our GAAP to non-GAAP measures can be found in today's press release available on our Investor Relations website.

We ended the quarter with cash and cash equivalents of approximately 41 million $9 million lower quarter over quarter, including approximately $8 million in payments related to the cost actions, we announced in April further on a year to date basis before restructuring payments, we achieved breakeven operating cash flow.

Turning to audience engagement and time spent in terms of audience time spent we continue to report U S time spent across our owned and operated properties and third party platforms. According to Comscore. This metric is intended to be viewed in conjunction with our advertising revenue performance in Q2 U S time spent as.

Reported by Comscore declined 9% year over year to 96 million hours as we continue to face increased competition for audience time. However, we once again outpaced peer digital media companies in our competitive set by a significant margin.

In terms of creator led vertical video ahead of scale monetization, we are continuing to build audience momentum around newer platforms and formats, including Youtube shorts, Instagram rails and Tic Toc.

In the second quarter of use of our short form content across platforms doubled year over year to reach a new quarterly record.

Before I share our financial outlook for the third quarter, Let me first provide some context.

Starting with revenues, we expect the underlying year over year trends in both content and commerce revenues to remain consistent from Q2 to Q3, we expect further softness in advertising revenues relative to Q2 as lower client spending trends across our core sales verticals persist into Q3.

<unk> Marcella discussed from the time, we start engaging with customers until the campaign is executed it takes about six months. So although we are encouraged by client feedback and pipeline activity. Following last quarter's sales roadshows, we do not anticipate a material impact on Q3 revenues.

In terms of adjusted EBITDA. We have included the full benefit of the restructuring actions in our cost of revenue and operating expense assumptions for Q3 as a result, despite lower year on year revenues, we expect to drive year on year improvement in Q3, adjusted EBITDA and adjusted EBITDA margin with that I will turn to our.

Our outlook for Q3 2023, we expect overall revenues in the range of <unk> $73 million to $78 million or 25% to 29% lower than the year ago quarter. We expect adjusted EBITDA in the range of $1 million in losses to $4 million and profits are up approximately $5 million year on year.

At the midpoint and finally I just want to reiterate Marcellus remarks regarding cash and liquidity, we continue to be laser focused on preserving cash as we exit Q3, we expect to realize the full cash benefits of our restructuring on an ongoing basis.

Thank you I'll now hand, it over to the operator, so we can take your questions.

Thank you, ladies and gentlemen to ask a question on the phone line. Please press star one one on you touched on Charlestown and planning to be announced.

To withdraw your question again, please press star one again.

Now I'll hand, it over to Tom Karam for any web our inbox questions.

Great. Thank you we have received several questions already which gathered here.

So we're going to go ahead and.

Jump right in with the first question.

For Jonna on the topic of first party data Jonah can you talk about.

Help us seed is looking to leverage first party data today and what advantage. This could pose in 2024 as cookies are deprecated.

Yes. Thanks for the question. So in 2022 and 2022, our first party data solution known as lighthouse.

Has served more than 150 advertisers and delivered over 1 billion impressions.

And when we when our partners use lighthouse <unk>.

It drives really meaningful results on average when partners use life of our first party data targeting the.

Macarthur media campaigns to generate 2% to five times higher impact across the brand and business metrics that matter most.

We also are seeing it.

Encouraging signs with new AI models that are enabling us to better understand all of the content on the pages of our site and use that to create better contextual advertising opportunities and having that flow into lighthouses.

A nice tailwind for improved targeting over over the long haul and I think overall the biggest challenge for cookies going away. It will be for sort of the nameless AD tech and <unk> types of companies, but having <unk>.

Strong brands with really strong contextual alignment and the ability to apply new AI technology is something that will allow us to do a really great job of targeting for our for our advertisers. So we're excited about the way that first party data can be applied to our business.

Great. Thank you. Our next question is around advertising revenues, maybe marcella starting with you.

With short form content, gaining traction yet again, how is that impacting the business can you share some thoughts on monetization in the second half and into 2024, and then could you also walk through some of the current trends and short form AD adoption versus owned and operated.

Advertising trends.

Sure. Thank you I mean for a further question.

So I'm going to start giving.

Giving some information about what we see in regards to short form and then maybe Felicia you can jump in to talk a little bit about advertising revenues under trends how do we see.

So in terms of short form we are excited that the major platforms have already taken the first step to share monetization with publishing partners and as we discussed last quarter. We were selected as one of the first publishers to participate in dogs pulse Premier vertical video monetization program for park.

The chart.

So this is the first time that publishers will be able to earn passive revenue from organically publish content on the platform.

And Buzzfeed is one of a select group of premium publishers invited to participate so we are quite quite happy about that.

And we have already been monetizing short form vertical video by selling directly to advertisers via creator less branded content product. As you have also heard earlier on the call, which we will continue to scale for our clients.

And lastly, I would like to say that we are well positioned to continue to monetize short form our formats. We surpassed 1 billion quarterly views on <unk> for the first time and tasty short form vertical video content surpassed 1 billion quarterly views yet again in Q2.

So Felicia would you want to go on the second part of the question.

Thank you Marcella so in terms of overall advertising revenues. The vast majority of our revenue is still driven by our owned and operated properties across Buzzfeed Dotcom Huffpost Dot com and the rest Q2 advertising revenues ended in line with Q1 trends in terms of year over year with the decline being driven by increased <unk>.

Competition, both for both audience time, and AD dollars, which contributed to both lower demand and ongoing price pressure. However, we are pleased with the short form momentum in terms of output and audience engagement in the second quarter of use of our short term content across platforms doubled year over year to reach a new quarterly.

Record and we have begun to generate advertising revenues on Youtube and Tic Toc for vertical video as Marcel discussed however, we do anticipate it taking time to scale.

We're generating sizeable revenue contributions on a go forward.

Thanks, Marcella Thanks Felicia.

Our next question is on the topic of AI Joanna can you discuss some of the early feedback from AI usage, you mentioned some of the how some of the work is pacing, but specifically what are you seeing in terms of consumer engagement and also anything on cost benefits as well.

Sure. Thanks, So I think to take a step back when we think about AI.

Like any major technology trend, we try to think where whereas the industry headed over the next year or two years three years five years.

And with that.

These new generative AI technologies, it's clear, there's going to be a lot of impact on digital publishing and content.

And so bill.

Building towards that future and aligning our business with <unk>.

Is that a trend is something that we're very focused on.

So we're starting to see some really strong project.

Progress for our early work and I think a good way to understand where we think things are headed is to look at the work we've done so far.

And you can start to get a sense of how we're seeing this AI technology in what we think it's good for.

So so kind of peek into where things are headed a lot more personalization customization and interactivity.

So buzzfeed quizzes, we're already interactive, but now with AI, they're infinitely interactive and so that was the first product we launched.

When we expanded the chatbot games, where you could create new kinds of conversational interfaces that we found our audience really really love and would spend.

Two three or four times more time interacting with the chatbot game than with a static piece of content.

And then AI assisted imagery that allows us to participate in big cultural moments like the.

Barbie Dream House example.

I mentioned earlier on the call.

Those are those are examples of just new things, we can do that enhance our products to make our products more vibrant more personal.

And tend to have.

They have really worked well with with our audience.

On page three you can see we added the Basel III.

To our apps that <unk> bought to our App.

We could have freeform conversations.

With with with this thought about.

What kind of food might cheer up your friend or what kind of things you can cook with a particular ingredient you have in your fridge or.

For tips or suggestions for making food.

Better and it's just.

A more engaging way of interacting compared to sort of search that you would find.

On a traditional food site.

I mentioned before complex launch this interactive sprite.

Album created creation tool.

And we've seen other brands who have.

Who have gotten excited about this new kind of interactivity like a dream interpreting.

Spot for <unk>.

And other kinds of interactive types of content that advertisers and partners have paid us to co develop with them and launched and distributors though.

It's still it's still pretty early and I feel like we've we've figured out how to bake. Some good cakes, but we still have to build out the bakery that can scale this and make make more content experiences like this widely distributed across our network.

And you also asked about cost benefit so in terms of cost benefits one of the big areas. We are seeing is and workflow. So our programmers are using co pilot tools to be more efficient in their coding.

The sales and business team has just recently started to use an in house tool that we developed that allows them to take rfps match them to our product set.

And turnaround a response to a client in one case recently, we turned around.

Our response and won a deal in 24 hours when ordinarily that process would have required bringing lots of teams together and having lots of meetings and <unk>.

Maybe a couple of weeks of work, we were able to turnaround in a day.

And all of this is using the technology for what is good for which is.

For example out of the dozens of products, we have matching it with the RFP and what the clients want and then we bring in creative teams to brainstorm and add that human element to make sure. The quality of the work is even better than it would've been had we not.

Had this AI assistant process.

And so those are just a few examples and I think when you look at both AI and creators it is helping us build a content creation model that can be.

More efficient and more scalable than the traditional models, but in media.

It is a long road and we're seeing we're seeing a lot of early success, but.

We're building this for a longer time horizon, because we feel strongly that this is where media is headed and that theres a lot of ways to enhance the products that we're building to delight our users more and also to find more efficiencies, where we can have much more output with with.

The same amount of of of labor.

By having co pilots and other tools that give give our people superpowers to be able to make more and create more do more and serve our clients better and sort of our audience better because of these AI tools that are assisting them.

Thank you Jonah.

So moving on maybe to the go to market strategy Marcella.

Following the reorganization and some of the changes you guys discussed last quarter can you provide an update on how that's going in terms of sales productivity cross sell trends any other impacts or improvements that you guys are seeing across the business.

Yes sure. Thanks, Thanks coming down as you May recall, we announced a restructuring in April and at that time, we also decided to reorganize the sales team.

And this restructuring reorganization of the sales team and the way that they were organized into five was finalized or completed in may.

So what this restructuring meant for that team was a reduction in layers and the organization of the teams around two mega verticals products and services with five underlying sales start to calls and right. After that the team engaged in nationwide Roadshows meeting with hundreds of clients and I'd say it's representative.

So far the response from clients has been positive and we are seeing increased pipeline activity for the back half as well as the positive momentum related relative to Q1 in branded content.

And as a reminder, for the audience EM sales cycle. It takes about five to six months. So while we expect that it will be potentially reviews with the use of AI in the future gave an example earlier we had a steel in managing through these timeline and we expect to start seeing that.

Impact on effects of the latest reorganization probably in Q4.

Great. Thank you Marcella and we have time for one final question on the financial outlook Felicia.

In May you guys had at the Investor Day, you guys had shared.

Our outlook for full year profitability and expectations for for high teens adjusted EBITDA for the full year do you have an update on that or can you speak to how your expectations have changed or not since then.

Sure. So broadly speaking last year, we saw compression through the year with topline revenue being challenged in the back half and in Q4, specifically.

Which had a very needed a typical seasonal seasonal lift that we would expect going into Q4 from a revenue perspective as of today, we are expecting a return to normalized seasonality as it relates to the quarter over quarter lift from Q3 into Q4 as compared to 2022, when we saw the muted seasonal lift in terms of <unk>.

Revenue.

As it relates to bottom line guide for Q3, we expect to drive a year over year improvement of $5 million at the midpoint on adjusted EBITDA and we will continue to drive additional opex savings through real estate and other non head count cost initiatives in the back half of this year.

Okay.

Okay.

Thank you.

Alright, Thank you everyone for joining us today, and we look forward to speaking with many of you. Many of you over the coming weeks, that's our call. Thanks.

Yeah.

Ladies and gentlemen, thank you for your participation today. This concludes today's program you may now disconnect.

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