Q2 2024 BuzzFeed Inc Earnings Call

August 12, 2024

Operator: Amita Tomkoria, Felicia DellaFortuna, Matthew Omer, Buzzfeed Amita Tomkoria, Felicia DellaFortuna, Matthew Omer, Buzzfeed Amita Tomkoria, Felicia DellaFortuna, Matthew Omer, Buzzfeed Amita Tomkoria. Thank you very much.

Thank you for watching!

Operator: Good day and thank you for standing by and welcome to Buzzfeed, Inc. second quarter twenty twenty four earnings conference. At this time, I'll participate in a listen only. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amita Tomkoria, Senior Vice President of Investor Relations. Please go ahead.

Speaker Change: Good day and thank you for standing by and welcome to BuzzFeed, Inc. second quarter 2024 earnings conference call.

Speaker Change: At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amita Tomkoria, Senior Vice President of Investor Relations. Please go ahead.

Amita Tomkoria: I'm Amita Tomkoria, Senior Vice President of Investor Relations. Joining me today are CEO Jonah Peretti and CFO Matt Omer. 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 2023 annual report on Form 10-K, our Q1 2024 quarterly report on Form 10-Q, and our Q2 2024 quarterly report on Form 10-Q, to be filed with the SEC.

Speaker Change: [inaudible]

Amita Tomkoria: Hi, everyone. Welcome to BuzzFeed Inc. Second Quarter 2024 Earnings Conference Call. I'm Amita Tomkoria, Senior Vice President of Investor Relations. Joining me today are CEO Jonah Peretti and CFO Matt Omer.

Amita Tomkoria: 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 will present both GAAP and non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margins. 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.

Speaker Change: Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements.

Speaker Change: Actual results may differ materially from those contemplated by these forward-looking statements.

Speaker Change: Factors that could cause these results to differ materially are set forth in today's press release.

Speaker Change: Our 2023 Annual Report on Form 10-K, our Q1 2024 Quarterly Report on Form 10-Q, and our Q2 2024 Quarterly Report on Form 10-Q to be filed with the SEC.

Speaker Change: 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.

Speaker Change: During this call, we present both GAAP and non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margins.

Speaker Change: 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.

Amita Tomkoria: 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. A reconciliation of these gap-to-non-gap measures is included in today's earnings press release. Please refer to our investor relations website to find today's press release along with our investor letter. And now, I'll pass the call over to Jonah.

Speaker Change: 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.

Speaker Change: A reconciliation of these gap-to-non-gap measures is included in today's earnings press release.

Speaker Change: Please refer to our investor relations website to find today's press release along with our investor letter. And now I'll pass the call over to Jonah.

Jonah Peretti: Thank you, Amita. Good afternoon, everyone, and thank you for joining us. Before I get into the specifics about the quarter, I want to provide a bit of context. As I've mentioned on our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact, despite a tough market where many of our competitors shed those costs to provide short-term savings. We have a strong conviction that continuously experimenting and innovating with technology sets us up to thrive in the next era of the Internet. We've always lived at the intersection of content and technology, and we're increasingly leaning into new technologies that are beginning to transform the media industry.

Jonah: Thank you, Amita. Good afternoon, everyone, and thank you for joining us today.

Jonah: Before I get into the specifics about the quarter, I want to provide a bit of context.

Jonah: As I mentioned on our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact, despite a tough market where many of our competitors shed those costs to provide short-term savings.

Jonah: We have a strong conviction that continuously experimenting and innovating with technology sets us up to thrive in the next era of the Internet. We've always lived at the intersection of content and technology and we're increasingly leaning into new technologies that are beginning to transform the media industry.

Operator: Good day, and thank you for standing by, and welcome to Buzzfeed Inc. 2nd quarter of 2024 earnings conference call. At this time, I'll participate on our listen only mode. Please be advised that today's conference is being recorded.

Jonah Peretti: I'm pleased to share that we are beginning to see the fruits of our experimentation and innovation. In particular, generative AI, interactive contact formats, enhanced personalization are starting to drive improvements in key metrics across our business. These improvements include more audience loyalty, more user logins, higher conversion on our commerce content, better targeting and growth in our advertising inventory, revenue growth in our most scalable lines of business, and improved profitability. By leaning into new technologies, we have also accelerated the pace of new product development, made our content creators more efficient and creative, and invited our audience to participate directly in AI-assisted content creation.

Jonah: I'm pleased to share that we are beginning to see the fruits of our experimentation and innovation. In particular, generative AI, interactive contact formats, enhanced personalization are starting to drive improvements in key metrics across our business.

Amita Tomkoria: I would now like to hand the conference over to your speaker today, Amita Tomkoria, Senior Vice President of the Vestor Relations. Please go ahead. Hi everyone. Welcome to Buzzfeed Inc. 2nd quarter of 2024 earnings conference call. I'm Amita Tomkoria, Senior Vice President of Vestor Relations.

Jonah: These improvements include more audience loyalty, more user logins, higher conversion on our commerce content, better targeting and growth in our advertising inventory, revenue growth in our most scalable lines of business, and improved profitability.

Amita Tomkoria: Joining me today are CEO Jonah Peretti and CFO Matt Omer. 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 2023 annual report on form 10K, our Q1 2024 quarterly report on form 10Q, and our Q2 2024 quarterly report on form 10Q to be 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.

Jonah: By leaning into new technologies, we have also accelerated the pace of new product development, made our content creators more efficient and creative, and invited our audience to participate directly in AI-assisted content creation.

Jonah Peretti: We've already done much of the hard work that will enable us to do more of the fun consumer-facing work moving forward. Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilots, as well as consumer-facing experiences like our AI-assisted content generator. By leveraging a range of embedding techniques to represent our content in conjunction with vector data stores and model fine tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audience.

Jonah: We've already done much of the hard work that will enable us to do more of the fun consumer-facing work moving forward.

Jonah: Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilots as well as consumer facing experiences like our AI assisted content generators.

Jonah: By leveraging a range of embedding techniques to represent our content in conjunction with vector data stores and model fine-tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audiences.

Amita Tomkoria: During this call, we present both gap and non-gap financial measures, including adjusted evida and adjusted evida margins. The use of non-gap financial measures allows us to measure the operational strengths and performance of our business to establish budgets and to develop operational goals for managing our business. We believe adjusted evida and adjusted evida margin are relevant in 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 gap-to-non-gap measures is included in today's earnings press release.

Jonah Peretti: Our teams are very excited about the capabilities we've built so far, and even more excited about all the new things we'll be able to launch in the coming months and years. We'll share more with you on future earning calls so you can track our progress. These changes have also allowed us to complete the shift away from platform-dependent model of content distribution and monetization.

Jonah: Our teams are very excited about the capabilities we've built so far, and even more excited about all the new things we'll be able to launch in the coming months and years. We'll share more with you on future earning calls so you can track our progress.

Jonah: These changes have also allowed us to complete the shift away from platform dependent model of content distribution and monetization. In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps.

Jonah Peretti: In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps. And our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally. As compared to Q1, audience time spent with our content in Q2 grew 5% according to Comscore. And as the only digital media company among our competitors set to grow over this period, we believe this highlights the strength of our differentiated business model in contrast with peers whose traffic is highly dependent on search and other external referral sources. We also grew time spent among our core demographic, Millennials and Gen Z, by 11% versus Q1.

Amita Tomkoria: Please refer to our investor relations website to find today's press release along with our investor letter, and now I'll pass the call over to Jonah. Thank you, Amida.

Jonah: And our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally.

Jonah: As compared to Q1, audience time spent with our content in Q2 grew 5% according to ComScore.

Jonah Peretti: Good afternoon, everyone, and thank you for joining us today. Before I get into the specifics about the quarter, I want to provide a bit of context. As I've mentioned on our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact despite a tough market where many of our competitors shed those costs provide short-term savings. We have a strong conviction that continuously experimenting and innovating with technology sets us up to survive in the next era of the internet.

Jonah: And, as the only digital media company among our competitors set to grow over this period, we believe this highlights the strength of our differentiated business model in contrast with peers whose traffic is highly dependent on search and other external referral sources.

Jonah: We also grew time spent among our core demographic, Millennials and Gen Z, by 11% versus Q1.

Jonah Peretti: In terms of revenue on a year-over-year basis, we grew Q2 revenues in two of our largest and highest margin lines of business, programmatic advertising and affiliate commerce. And we exceeded our May profit outlook, delivering $2.7 million in Q2 adjusted EBITDA for a $5 million improvement year-over-year. With a vast majority of audience engagement happening on our owned and operated properties, we are well positioned to control our own destiny in terms of enhancing personalization, enhancing and personalizing the audience experience and driving long term monetization.

Jonah: In terms of revenue, on a year-over-year basis, we grew Q2 revenues

Jonah Peretti: We've always lived at the intersection of continent and technology, and we're increasingly leaning into new technologies for beginning to transform the media industry. I'm pleased to share that we are beginning to see the fruits of our experimentation and innovation. In particular, generative AI, interactive contact formats, enhanced personalization, are starting to drive improvements in key metrics across our business. These improvements include more audience loyalty, more user log-ins, higher conversion on our commerce content, better targeting growth in our most scalable lines of business, and improved profitability.

Jonah: in two of our largest and highest margin lines of business, programmatic advertising and affiliate commerce. And we exceeded our May profit outlook, delivering 2.7 million in Q2 adjusted EBITDA for a 5 million improvement year over year.

Jonah: With a vast majority of audience engagement happening on our owned and operated properties, we are well positioned to control our own destiny in terms of enhancing personalization, enhancing and personalizing the audience experience and driving long-term monetization.

Jonah: In Q2, 90% of audience time spent with our content was on our own websites and apps, and direct traffic continues to be our largest source of audience traffic, far surpassing referrals from third-party platforms, including Facebook.

Jonah Peretti: By leaning into new technologies, we've also accelerated the pace of new product development, made our content creators more efficient and creative and invited our audience to participate directly in AI-assisted content creation. We've already done much of the hard work that will enable us to do more of the fun consumer facing work moving forward. Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilot, as well as consumer-facing experiences like our AI assisted content generators.

Jonah: Direct traffic continued to show stability in Q2 across our two largest owned and operated properties, BuzzFeed and HuffPost. More importantly, we saw strong evidence of deepened loyalty among our audience.

Jonah Peretti: More importantly, we saw strong evidence of deep loyalty among our audience, logged in users grew versus q1 better position us to mitigate potential risk of cookie depreciation, As we introduce more interactive content, we also have seen that the number of loyal users or the number of users that visit us more than once a week has grown by a double digit percentage since Q4 2023. And we are also seeing momentum in terms of repeat visits on our site. Page views per unique visitor grew quarter over quarter for the third consecutive quarter.

Jonah: Logged in users grew versus Q1. Better position us to mitigate potential risk of cookie depreciation.

Jonah: As we introduce more interactive content, we also have seen that the number of loyal users, or the number of users that visit us more than once a week, has grown by a double-digit percentage since Q4 2023.

Jonah Peretti: By leveraging a range of embedding techniques to represent our content, in conjunction with vector data stores and model fine tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audiences. Our teams are very excited about the capabilities we've built so far, and even more excited about all the new things we'll be able to launch in the coming months and years. We'll share more with you on future earning calls so you can track our progress.

Jonah: And, we are also seeing momentum in terms of repeat visits on our site. Page views per unique visitor grew quarter over quarter for the third consecutive quarter.

Jonah Peretti: Loyalty continues to be particularly strong across our suite of Buzzfeed games, and the vast majority of Q2 game users on the app returned within a week. One of our biggest learnings in Q2 was that when creativity is in the hands of our audience, engagement is deep. Whether it's our Sims AI generator, make your own emoji, or turn your favorite celeb into Shrek, our AI-powered content generators have demonstrated higher audience engagement and participation relative to other formats.

Jonah: Loyalty continues to be particularly strong across our suite of BuzzFeed games and the vast majority of Q2 game users on the app return within a week.

Jonah: One of our biggest learnings in Q2 was that when creativity is in the hands of our audience, engagement is deeper.

Jonah Peretti: These changes have also allowed us to complete the shift away from platform-dependent model of content distribution and monetization. In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps, and our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally. As compared to Q1, audience time spent with our content in Q2 grew 5% according to ComScore, and as the only digital media company among our competitors set to grow over this period, we believe this highlights the strength of our differentiated business model and contrast with peers whose traffic is highly dependent on search and other external referral sources.

Jonah: Whether it's our Sims AI Generator, Make Your Own Emoji, or Turn Your Favorite Celeb into Shrek, our AI-powered content generators have demonstrated higher audience engagement and participation relative to other formats.

Jonah Peretti: We also launched a new Buzzfeed homepage in June, offering more engagement opportunities for our audience directly on the page, from polls to quizzes to widgets that make it easier for the audience to learn more about themselves and each other. Although it is still early, following the new site launch, we have seen measurable increases in audience engagement and monetization, with more actions per visit and a double-digit percentage increase in programmatic revenue per homepage view.

Jonah: We've also launched a new BuzzFeed homepage in June, offering more engagement opportunities for our audience directly on the page, from polls to quizzes to widgets that make it easier for the audience to learn more about themselves and each other.

Speaker Change: Although it is still early, following the new site launch, we have seen measurable increases in audience engagement and monetization, with more actions per visit and a double-digit percentage increase in programmatic revenue per homepage view.

Jonah Peretti: Looking ahead, we expect to build on these engagement and monetization trends with a new landing page that features all of Buzzfeed's games, a social leaderboard feature, and a newly designed Buzzfeed app that builds on the learning from our web homepage. We see a future where our app provides a mix of trusted content, games, and interactive features, creating a hybrid between a content publisher and a social media destination.

Speaker Change: Looking ahead, we expect to build on these engagement and monetization trends with a new landing page that features all of BuzzFeed's games, a social leaderboard feature, and a newly designed BuzzFeed app that builds on the learnings from our web homepage.

Jonah Peretti: We also grew time spent among our core demographic millennials and Gen Z by 11% versus Q1. In terms of revenue on a year-over-year basis, we grew Q2 revenues in two of our largest and highest margin lines of business, programmatic advertising and affiliate commerce, and we exceeded our May Profit Outlook, delivering 2.7 million in Q2 adjusted EBITDA for a 5 million improvement year-over-year. With the vast majority of audience engagement happening on our owned and operated properties, we are well positioned to control our own destiny in terms of enhancing personalization, enhancing and personalizing the audience experience and driving long-term monetization.

Speaker Change: We see a future where our app provides a mix of trusted content, games and interactive features, creating a hybrid between a content publisher and a social media destination. I'm excited to be building a platform that aligns with the future of digital media.

Jonah Peretti: I'm excited to build a platform that aligns with the future of digital media. Turning to our revenue performance, and I'm pleased to share that we grew Q2 programmatic advertising by 3% year-over-year. This is the first quarter of year-over-year growth in overall programmatic revenue since Q1 2022, a signal that the strategic and organizational changes we have made to stabilize our business are beginning to pay off. And importantly, these changes are also helping us offset the impact of declines on third-party platforms and validating our focus on our owned and operated property.

Speaker Change: Turning to our revenue performance.

Speaker Change: I'm pleased to share that we grew Q2 programmatic advertising by 3% year-over-year. This is the first quarter of year-over-year growth in overall programmatic revenue since Q1 2022.

Jonah Peretti: In Q2, 90% of audience time spent with our content was on our own websites and apps, and direct traffic continues to be our largest source of audience traffic, far surpassing referrals from third-party platforms, including Facebook. Direct traffic continued to show stability in Q2 across our two largest owner-operated property, BuzzFeed, and HuffPose. More importantly, we saw strong evidence of deep-in loyalty among our audience. Login users grew versus Q1, better positioning us to mitigate potential risk of cookie depreciation.

Speaker Change: A signal that our strategic and organizational changes we have made to stabilize our business are beginning to pay off. And importantly, these changes are also helping us offset the impact of declines on third-party platforms and validating our focus on our owned and operated properties.

Jonah Peretti: Although our overall revenue performance continues to be pressured by headwinds in the direct sales channel, we are optimistic about the progress we are seeing on the programmatic side, which represents approximately two-thirds of our overall advertising revenue. As part of our larger company-wide transformation, we continue to prioritize our most scalable high-margin revenue lines, and we expect this momentum to continue into Q3 as strength in our high-margin revenue lines drives further year-over-year improvements in adjusted EBIT.

Speaker Change: Although our overall revenue performance continues to be pressured by headwinds in the direct sales channel, we are optimistic about the progress we are seeing on the programmatic side, which represents approximately two-thirds of our overall advertising revenue.

Speaker Change: As part of our larger company-wide transformation, we continue to prioritize our most scalable high-margin revenue lines, and we expect this momentum to continue into Q3, as strength in our high-margin revenue lines drives further year-over-year improvements in adjusted EBITDA.

Jonah Peretti: As we introduce more interactive content, we also have seen that the number of oil users or the number of users that visit us more than once a week has grown by a double-digit percentage since Q4 2023. And we are also seeing momentum in terms of repeat visits on our site. Page views per unique visitor grew quarter-over-quarter for the third consecutive quarter. Loyalty continues to be particularly strong across our suite of BuzzFeed games, and the vast majority of Q2 game users on the app return within a week.

Jonah Peretti: Our affiliate commerce business also had a strong Q2, growing revenues by 9% year over year. As I discussed in past calls, retail partnerships are an important part of our business. With coverage like editorially-driven product roundups, we drive hundreds of millions of dollars in commerce transactions on behalf of the largest retailers in the world. But our retail partnerships extend far beyond our editorial shopping content. Our relationship with Target is a great example of how we put our diverse product catalog to work to drive actionable results.

Speaker Change: Our affiliate commerce business also had a strong Q2, growing revenues by 9% year over year. As I discussed in past calls, retail partnerships are an important part of our business. With coverage like editorially driven product roundups, we drive hundreds of millions of dollars in commerce transactions on behalf of the largest retailers in the world.

Speaker Change: But our retail partnerships extend far beyond our editorial shopping content. Our relationship with Target is a great example of how we put our diverse product catalog to work to drive actionable results.

Jonah Peretti: Mike. One of our biggest learnings in Q2 was that when creativity is in the hands of our audience, engagement is deeper. Whether it's our Sims AI Generator, make your own emoji, or turn your favorites to lab into Shrek, our AI-powered content generators have demonstrated higher audience engagement and participation relative to other formats.

Jonah Peretti: Target leverages our high-quality onsite real estate to promote general brand aids and supplier-funded campaigns to secure through Rondell, its retail media business, which drives advertising revenue for Buzz. They also purchased branded sponsored content like homepage takeovers to spotlight their big tentpole moments like Target Circle Week or the holiday gifting season. And more recently, Target partnered with us on AI this past holiday shopping season as we introduced Shopee, our AI-powered shopping assistant that helped our readers find the perfect gift for everyone on their list.

Speaker Change: Target leverages our high-quality onsite real estate to promote general brand aides and supplier funded campaigns to secure through Rondell, its retail media business, which drives advertising revenue for BuzzFeed.

Jonah Peretti: We've also launched a new Buzzfeed home page in June, offering more engagement opportunities for our audience directly on the page, from polls to quizzes to widgets to make it easier for the audience to learn more about themselves. Although it is still early, following the new site launch, we have seen measurable increases in audience engagement and monetization, with more actions per visit and a double digit percentage increase in programmatic revenue per homepage view.

Speaker Change: They also purchase branded sponsored content like homepage takeovers to spotlight their big tentpole moments like Target Circle Week or the holiday gifting season

Speaker Change: And more recently, Target partnered with us on AI this past holiday shopping season as we introduced Shopee, our AI-powered shopping assistant that helped our readers find the perfect gift for everyone on their list.

Jonah Peretti: Looking ahead, we expect to build on these engagement and monetization trends with a new landing page that features all of Buzzfeed's games, a social leaderboard feature, and a newly designed Buzzfeed app that builds on the learning from our web homepage. We see a future where our app provides a mix of trusted content, games and interactive features, creating a hybrid between content publisher and a social media destination.

Jonah Peretti: Our expertise in serving retail partners continues to shine in Q3 on the back of Amazon's largest prime day yet. Buzzfeed also had its biggest prime day ever, growing revenues over the two-day period by a strong double-digit percentage year over year, surpassing even Amazon's overall prime growth and demonstrating the value ads we're able to deliver on behalf of the world's largest retailers. I am so proud of the team whose expertise and dedication contributed to such impressive results for the company.

Speaker Change: Our expertise in serving retail partners continued to shine in Q3.

Speaker Change: Off of the back of Amazon's largest Prime Day yet, BuzzFeed also had its biggest Prime Day ever, growing revenues over the two-day period by a strong double-digit percentage year-over-year, surpassing even Amazon's overall Prime growth, and demonstrating the value-add we're able to deliver on behalf of the world's largest retailers.

Jonah Peretti: I'm excited to build, I'm excited to be building a platform that aligns with the future of digital media, turning to our revenue performance. I'm pleased to share that we grew Q2 programmatic advertising by 3% year-over-year. This is the first quarter of year-over-year growth in overall programmatic revenue since Q1 2022. A signal that our strategic and organizational changes we have made to stabilize our business are beginning to pay off. And importantly, these changes are also helping us offset the impact of declines on third-party platforms and validating our focus on our own and operated properties.

Speaker Change: I am so proud of the teams whose expertise and dedication contributed to such impressive results for the company.

Jonah Peretti: As we continue to make progress in growing our programmatic and affiliate revenue lines, this quarter, we are introducing more transparency into our revenue reporting. I encourage you to flip through our Q2 Investor Letter, available on our IR website, for a closer look at revenue performance. Matt will also share more on this shortly. Although legacy digital media continues to face challenges, we are charting a path to a better future and redefining the industry for this next era of technology.

Speaker Change: As we continue to make progress in growing our programmatic and affiliate revenue lines, this quarter we are introducing more transparency into our revenue reporting. I encourage you to flip through our Q2 investor letter available on our IR website for a closer look at revenue performance. Matt will also share more on this shortly.

Speaker Change: Although legacy digital media continues to face challenges, we are charting a path to a better future and redefining the industry for this next era of technology. I want to emphasize the progress we have made in stabilizing the business in a relatively short period of time.

Jonah Peretti: I want to emphasize the progress we have made in stabilizing the business in a relatively short period of time. Since the start of the year, we have built the leading platform for AI-powered content, accelerated the launch of tons of new content from AI-powered formats to games to new homepage experience, reduced our debt, reduced our cost structure, improved our cash position, returned two of our largest and highest margin revenue lines to growth, and have driven year-over-year improvements in profitability.

Jonah Peretti: Although our overall revenue performance continues to be pressured by headwinds in the Direct Sales Channel, we are often mystic about the progress we are seeing on the programmatic side, which represents approximately two-thirds of our overall advertising revenue. As part of our larger company-wide transformation, we continue to prioritize our most scalable high-margin revenue line, and we expect this momentum to continue into Q3. As strength in our high-margin revenue lines, who drives further year-over-year improvements in adjusted EBITDA.

Matt: Since the start of the year, we have built the leading platform for AI-powered content, accelerated the launch of tons of new content from AI-powered formats to games to new homepage experience, reduced our debt,

Matt: reduced our cost structure, improved our cash position, returned two of our largest and highest margin revenue lines to growth, and have driven year-over-year improvements in profitability.

Jonah Peretti: I'm grateful to work alongside such a talented and dedicated team and excited to showcase what's next for Buzzfeed as we continue to build the defining media company for the AI era. I'll now hand the call off to Matt to discuss our financial performance and outlook. Thank you, Jonah.

Jonah Peretti: Our affiliate commerce business also had a strong Q2 growing revenues by 9% year-over-year. As I discussed in past calls, retail partnerships are an important part of our business. With coverage and like editorial driven product roundups, we drive hundreds of millions of dollars in commerce transactions on behalf of the largest retailers in the world. But our retail partnerships extend far beyond our editorial shopping content. Our relationship with Target is a great example of how we put our diverse product catalog to work to drive actionable results.

Matt: I'm grateful to work alongside such a talented and dedicated team and excited to showcase what's next for BuzzFeed as we continue to build the defining media company for the AI era. I'll now hand the call off to Matt to discuss our financial performance and outlook.

Matt Omer: As Jonah just touched on, we close the second quarter with great momentum. Before I discuss our Q2 financial performance in more detail, I'll recap some highlights from across the business. In terms of audience time spent, we were the only digital media company in our competitive set to grow audience time spent quarter-over-quarter, up 5% versus Q1, according to Comscore. And importantly, we grew time spent among our core demographic, Millennials and Gen Z, by 11% vs. We delivered overall Q2 revenues in line with our May outlook, with year-over-year growth in two of our largest and highest-margin revenue lines of business, Programmatic Advertising and Affiliate Commons.

Matt: Thank you, Jonah. As Jonah just touched on, we closed the second quarter with great momentum. Before I discuss our Q2 financial performance in more detail, I'll recap some highlights from across the business.

Matt: In terms of audience time spent, we were the only digital media company in our competitive set to grow time spent quarter over quarter, up 5% versus Q1 according to Comscore. And importantly, we grew time spent among our core demographic, Millennials and Gen Z, by 11% versus Q1.

Jonah Peretti: Target leverages our high-quality, onsite real estate to promote general brand-aids and supplier-funded campaigns to secure through Rhondel, its retail media business, which drives advertising revenue for BuzzFeed. They also purchase branded sponsored content, like homepage takeovers, to spotlight their big tent pole moments like Target Circle Week or the holiday gifting season. And more recently, Target partnered with us on AI this past holiday shopping season. As we introduce Shoppy, our AI-powered shopping assistant that helped our readers find the perfect gift for everyone on their list.

Speaker Change: We delivered overall Q2 revenues in line with our May outlook, with year-over-year growth in two of our largest and highest margin revenue lines of business, Programmatic Advertising and Affiliate Commerce.

Matt Omer: We've exceeded our May outlook for adjusted EBITDA, generating $2.7 million in Q2 profits, a $5 million improvement year over year. This momentum has continued into Q3 with our biggest Prime Day ever, generating double-digit year-over-year growth in both audience traffic and commerce revenue and outpacing Amazon's overall Prime Day growth.

Speaker Change: We exceeded our May outlook for adjusted EBITDA, generating $2.7 million in Q2 profits, a $5 million improvement year over year.

Speaker Change: This momentum has continued into Q3 with our biggest Prime Day ever, generating double-digit year-over-year growth in both audience traffic and commerce revenue, and outpacing Amazon's overall Prime Day growth.

Jonah Peretti: Our expertise in serving retail partners continues, continued to shining Q3. On the off of the back of Amazon's largest prime day yet, Buzzfeed also had its biggest prime day ever, growing revenues over the two-day period by a strong double digit percentage year over year, surpassing even Amazon's overall prime growth, and demonstrating the value ad we're able to deliver on behalf of the world's largest retailers.

Matt Omer: As we work to return the overall business to growth, we are introducing more transparency in our revenue performance. In this quarter's investor letter, available on our investor relations website, you will find details on the year-over-year revenue performance of our areas of focus, programmatic advertising, and affiliates. With that, let me share some more on our second quarter financial results. As a reminder, all financials and comparables presented here are on a continuing operation basis, which excludes complex. Overall revenues for Q2 2024 declined 24% year over year to $46.9 million, in line with our May output.

Speaker Change: As we work to return the overall business to growth, we are introducing more transparency in our revenue performance.

Speaker Change: In this quarter's investor letter, available on our investor relations website, you will find details on the year-over-year revenue performance of our areas of focus, programmatic advertising, and affiliate commerce.

Matt Omer: Performance by revenue line was as follows. Advertising revenues decline 19% year-of-year to 23.8 million dollars, driven by ongoing pressure on our direct sales channel and a shift in our strategy to prioritize our most scalable, high margin revenue, this offset growth in our programmatic arbitration, across both our owned and operated properties and third-party platforms. Advertising revenues are driven in large part by audience time spent with our content across platforms. In conjunction with advertising revenues, we can continue to report US time spent across our own and operated properties and third-party platforms according to cops.

Jonah Peretti: I am so proud of the team whose expertise and dedication contribute to such impressive results for the company.

Speaker Change: With that, let me share some more on our second quarter financial results. As a reminder, all financials and comparables presented here are on a continuing operations basis, which excludes complex.

Speaker Change: Overall revenues for Q2 2024 declined 24% year-over-year to $46.9 million dollars in line with our May outlook. Performance by revenue line was as follows.

Jonah Peretti: Matt will also share more on this shortly. Although legacy digital media continues to face challenges, we are charting the path to a better future and redefining the industry for this next era of technology. I want to emphasize the progress we have made in stabilizing the business in a relatively short period of time.

Speaker Change: Advertising revenues declined 19% year-over-year to $23.8 million, driven by ongoing pressure on our direct sales channel and a shift in our strategy to prioritize our most scalable, high-margin revenue lines.

Speaker Change: This offset growth in our programmatic advertising business.

Speaker Change: across both our own and operated properties and third-party platforms.

Jonah Peretti: Since the start of the year, we have built the leading platform for AI-powered content, accelerated the launch of tons of new content from AI-powered formats to games to new homepage experience, reduced our debt, reduced our cost structure, improved our cash position, returned two of our largest and highest margin revenue lines to growth and have driven year-over-year improvements in profitability. I am grateful to work alongside such a talented and dedicated team and excited to showcase what's next for Buzzfeed as we continue to build the defining media company for the AI era.

Speaker Change: Advertising revenues are driven in large part by audience time spent with our content across platforms.

Speaker Change: In conjunction with advertising revenues, we continue to report U.S. time spent across our owned and operated properties and third-party platforms according to CompScore.

Matt Omer: And as I mentioned earlier, we led the industry in Q2 in terms of overall audience time spent growing versus Q1. On a year-over-year basis, time spent trends continue to reflect the ongoing declines in referral traffic from third-party platforms. Q2 time spent at Report by Comscore, deploying 5% Eurobeard to 71 millionaires. Content revenues declined 48% year-over-year to $11.4 million.

Speaker Change: And as I mentioned earlier, we led the industry in Q2 in terms of overall audience time spent growing versus Q1.

Speaker Change: On a year-over-year basis, time spent in trends continue to reflect the ongoing declines in referral traffic from third-party platforms.

Speaker Change: Q2 time spent as reported by ComScore declined 5% year-over-year to 71 million hours.

Matt Omer: I'll now hand the call off to Matt to discuss our financial performance and outlook. Thank you, Jonah. As Jonah just touched on, we closed the second quarter with great momentum.

Speaker Change: Content revenues declined 48% year-over-year to $11.4 million.

Matt Omer: Again, driven by ongoing pressure in the direct sales channel. The vast majority of our content revenue is made up of branded content campaigns for clients. Now, if we double down on our higher margin, more scalable revenue lines like programmatic advertising and affiliate commerce, we have put less emphasis on this lower margin branded content. Commerce and other revenues of $11.7 million grew 7% year-over-year, driven by better performance of our shopping content across multiple methods, which grew up higher affiliate commissions from our retail.

Speaker Change: Again, driven by ongoing pressure in the direct sales channel, the vast majority of our content revenue is made up of branded content campaigns for clients. And as we double down on our higher margin, more scalable revenue lines like programmatic advertising and affiliate commerce, we have put less emphasis on this lower margin branded content business.

Matt Omer: Before I discuss our Q2 financial performance in more detail, I'll recap some highlights from across the business. In terms of audience time spent, we were the only digital media company in our competitive set to grow time spent quarter to quarter of 5% versus Q1 according to ComScore. And importantly, we grew time spent among our core demographic, Millennials and Gen Z by 11% versus Q1. We delivered overall Q2 revenues in line with our May Outlook, with year-of-year growth in two of our largest and highest margin revenue lines of business, programmatic advertising and affiliate commerce.

Speaker Change: Commerce and other revenues of $11.7 million grew 7% year-over-year, driven by better performance of our shopping content across multiple metrics, which grew of higher affiliate commissions from our retail partners.

Matt Omer: And we delivered second quarter adjusted EBITDA of $2.7 million, ahead of our May outlook and $5 million better than the year ago quarter. This reflects the cumulative impact of our cost savings plan announced at February, which more than offset the revenue headwinds in the quarter. We ended the second quarter with cash and cash equivalence of roughly $45 million and net increase of approximately $10 million here today.

Speaker Change: And we delivered second quarter adjusted EBITDA of $2.7 million ahead of our May outlook, and $5 million better than the year-ago quarter. This reflects the cumulative impact of our cost savings plan announced in February, which more than offset the revenue headwinds in the quarter.

Matt Omer: We've exceeded our May Outlook for adjusted EBITDA generating $2.7 million in Q2 profits, a $5 million improvement year-over-year. This momentum has continued into Q3 with our biggest prime day ever, generating double-digit year-of-year growth in both audience traffic and commerce revenue and outpacing Amelon's overall prime growth date growth.

Speaker Change: We ended the second quarter with cash and cash equivalents of roughly 45 million dollars, a net increase of approximately 10 million dollars year-to-date.

Matt Omer: And before I share our financial outlook for the third quarter, let me provide some content. Starting with revenues, as we continue to prioritize our more scalable revenue. We once again expect year of year growth in programmatic advertising and affiliate commerce revenues in Q3. In terms of content revenues, we do expect to see an improvement in the year-over-year revenue trends versus what we saw in Q2. It's also worth noting that although historically we have seen a lift in direct sold revenues ahead of the U.S. presidential election, the majority of this spend typically occurs in the fourth quarter.

Speaker Change: And before I share our financial outlook for the third quarter, let me provide some context.

Matt Omer: As we work to return the overall business to growth, we are introducing more transparency in our revenue performance. In this quarter, in this quarter's investor letter, available on our investor relations website, you will find details on the year-of-year revenue performance of our areas of focus, programmatic advertising and affiliate commerce. With that, let me share some more on our second quarter financial results. As a reminder, all financials and comparables presented here are on a continuing operations basis, which excludes complex. Overall revenue is for Q2 2024 to climb 24% year-of-year to $46.9 million in line with our May Outlook. Look.

Speaker Change: Starting with revenues, as we continue to prioritize our more scalable revenue lines.

Speaker Change: We once again expect year-over-year growth in programmatic advertising and affiliate commerce revenues in Q3.

Speaker Change: In terms of content revenues, we do expect to see an improvement in the year-over-year revenue trends versus what we saw in Q2.

Matt Omer: As such, our Q3 guidance does not assume any material lift from political. From a commerce perspective, as I discussed, we have continued to see strong momentum in the affiliate business into Q3, particularly with private. And in terms of adjusted EBITDA, off the back of the expected improvement in revenue trends from Q2 to Q3 and our cumulative cost savings, we expect it to drive operating leverage quarter over quarter and year over year, reflected in an improvement in adjusted EBITDA and adjusted EBITDA margins.

Speaker Change: It's also worth noting that although historically we have seen a lift in direct sold revenues ahead of the U.S. presidential election, the majority of this spend typically occurs in the fourth quarter. As such, our Q3 guidance does not assume any material lift from political sales.

Speaker Change: From a commerce perspective, as I discussed, we have continued to see strong momentum in the affiliate business into Q3, particularly with Prime Day.

Matt Omer: Performance by revenue line was as follows. Advertising revenues declined 19% year-to-23.8 million dollars, driven by ongoing pressure on our direct sales channel and a shift in our strategy to prioritize our most scalable high margin revenue lines. This offset growth in our programmatic advertising business across both our own and operated properties and third party platforms. Advertising revenues are driven in large part by audience time spent with our content across platforms. In conjunction with advertising revenues, we can continue to report U.S, time spent across our own and operated properties and third party platforms according to ComSchool.

Speaker Change: And in terms of adjusted EBITDA, off the back of expected improvement in revenue trends from Q2 to Q3 and our cumulative cost savings, we expect it to drive operating leverage quarter over quarter and year over year, reflected in an improvement to adjusted EBITDA and adjusted EBITDA margins.

Matt Omer: With that, I'll turn to our financial, Again, all figures and comparables presented on a continuing operations. Q3 2024, we expect overall revenues in the range of $58 to $63 million or 3% lower to 5% higher than the year ago quarter. And we expect adjusted EBITDA in the range of $6 million to $11 million in profit.

Speaker Change: With that, I'll turn to our financial outlook.

Speaker Change: Again, all figures and comparables presented on a continuing operations basis.

Speaker Change: For Q3 2024, we expect overall revenues in the range of $58 to $63 million, or 3% lower to 5% higher than the year-ago quarter. And we expect adjusted EBITDA in the range of $6 million to $11 million in profits.

Matt Omer: And as I mentioned earlier, we led the industry in Q2 in terms of overall audience time spent growing versus Q1. On a year-to-year basis, time spent trends continue to reflect the ongoing decline in referral traffic from third party platforms. Q2 time spent as reported by ComSchool declined 5% year-to-71 million hours. Content revenues declined 48% year-to-11.4 million dollars. Again, driven by ongoing pressure on the direct sales channel, the vast majority of our content revenues made up of branding content campaigns for clients.

Matt Omer: Approximately 8 million dollars higher year over year at the midpoint. Our Q2 results have demonstrated our efforts to refocus the business are driving real financial results, and we see this momentum continuing into Q3. And as we return two of our most scalable and highest-margin revenue lines to growth, we continue to execute with a lean cost structure and strong cash management. And we see an opportunity to further stabilize the balance sheet and return the overall business to top-line growth and drive additional margin expansion over the upcoming quarter. Thank you. I'll call you later.

Speaker Change: Approximately $8 million higher year over year at the midpoint.

Speaker Change: Our Q2 results have demonstrated our efforts to refocus the business are driving real financial results, and we see this momentum continuing into Q3.

Speaker Change: And as we return two of our most scalable and highest margin revenue lines to growth, we continue to execute with a lean cost structure and strong cash management, and we see an opportunity to further stabilize the balance sheet and return the overall business to top line growth and drive additional margin expansion over the upcoming quarters.

Amita Tomkoria: I'll hand the call back to Amita so we can take, Thanks, Matt. Hi, everyone. We've gathered a bunch of questions that have come in over the course of the call and in advance. So we'll get right into it. Jonah, starting with you on the topic of AI and some of the upcoming launches that you mentioned. Can you share a bit more about how AI is helping move some of these content launches forward.

Speaker Change: Thank you. I'll call, I'll hand the call back to Amita so we can take questions.

Matt Omer: Now, as we double down on our higher margin more scalable revenue lines like programmatic advertising and affiliate commerce, we have put less emphasis on this lower margin branding content business. Commerce and other revenues of 11.7 million dollars grew 7% year-to-year, driven by better performance of our shopping content across multiple metrics, which will require affiliate commissions from our retail partners. And we delivered second quarter adjusted EBITDA of $2.7 million ahead of our May outlook and $5 million better than the year-to-go quarter.

Amita Tomkoria: Thanks, Matt.

Amita Tomkoria: Hi, everyone. We've gathered a bunch of questions that have come in over the course of the call and in advance, so we'll get right into it. Jonah, starting with you.

Jonah: On the topic of AI and some of the upcoming launches that you mentioned, can you share a bit more about how AI is helping move some of these content launches forward?

Speaker Change: If there's a way to quantify the cost benefit of rolling out content that utilizes some of the new AI capabilities that you talked about.

Matt Omer: This reflects the cumulative impact of our cost savings plan announced at February, which more than offset the revenue headwinds in the quarter. We ended the second quarter with cash and cash equivalence of roughly $45 million and net increase of approximately $10 million year-to-date.

Amita Tomkoria: And if there's a way to quantify the cost benefit of rolling out content that utilizes some of the new AI that you could go through. Yeah, so I'll start just by saying that there's a fair amount of upfront work that we've done really over the last year and a half to build a platform to enable us to accelerate our work in AI and to be able to launch more products and more content. So if you take an example like the Bridgerton Dress Generator or the Celeb Shrek post, it really represents a very different way of thinking about and making content.

Speaker Change: Yeah, so I'll start just by saying that there's a fair amount of upfront work that we've done really over the last year and a half.

Matt Omer: And before I share our financial outlook for the third quarter, let me provide some context. Starting with revenues, as we continue to prioritize our more scalable revenue lines, we once again expect year-to-year growth in programmatic advertising and affiliate commerce revenues in Q3. In terms of content revenues, we do expect to see an improvement in the year-to-year revenue trends, versus what we saw in Q2. It's also worth noting that, although historically we have seen a lift in direct-sville revenues ahead of the U.S, presidential election, the majority of this spend typically occurs in the fourth quarter.

Speaker Change: to build a platform to enable us to accelerate our work in AI and to be able to launch more products and more content.

Speaker Change: So, if you take an example like the Bridgerton Dress Generator or the Celeb Shrek post,

Speaker Change: It really represents a very different way of thinking about and making content. Someone on our team will, instead of making a single post or article, will create a generator, and then our audience will come and use that generator to create...

Jonah Peretti: Someone on our team will, instead of making a single post or article, will create a generator and then our audience will come and use that generator to create hundreds of pieces of content or thousands of pieces of content. And so, you basically shift from a model where your team and your editors and your writers are making one piece of content that is consumed to them making a machine that generates lots of content with the audience and allows the audience to participate in that content creation. I mean, that's just one example of the ways that it increases the content output and the audience and the interactivity.

Matt Omer: As such, our Q3 guidance does not assume any material lift from political sales. From a commerce perspective, as I discussed, we have continued to see strong momentum in the affiliate business into Q3, particularly with Pride Day. And in terms of adjusted EBITDA, off the back of expected improvement in revenue trends from Q2 to Q3 in our cumulative cost savings, we expect to drive operating leverage quarter, quarter, and year-to-year reflected an improvement to adjusted EBITDA and adjusted EBITDA margin.

Speaker Change: you know, hundreds of pieces of content or thousands of pieces of content.

Speaker Change: And so, you basically shift from a model where you're...

Speaker Change: Your team and your editors and your writers are making one piece of content that is consumed to making a machine that generates lots of content with the audience and allows the audience to participate in that content creation.

Speaker Change: I mean, that's just one example of the ways that it increases the content output and the audience and the interactivity You know, we're also driving more personalization on our site. We're building tools to streamline our business operations

Jonah Peretti: You know, we're also driving more personalization on our site. We're building tools to streamline our business operations. We're using AI to detect trends and surface ideas that then our writers can turn into stories and posts.

Speaker Change: We're using AI to detect trends and surface ideas that then our writers can turn into stories and posts.

Matt Omer: Approximately $8 million higher year-over-year at the mid- Our Q2 results have demonstrated that our efforts to refocus the business are driving real financial results. We see this moment in continuing into Q3. As we return two of our most scalable and highest margin revenue lines to growth, we continue to execute with a lean cost structure and strong cash management. We see an opportunity to further stabilize the balance sheet and return the overall business to top line growth and drive additional margin expansion over the upcoming quarters.

Jonah Peretti: So there's a huge range of things that we're able to do, but all of it is really enabled by the fact that we have spent time investing in building a platform. And so now, instead of it taking, you know, many weeks to launch a new interactive format, we can launch things as quickly and easily as other forms of content in the past, but the content is more personalized, more interactive, and is more generative of additional content. And I think it really starts to feel like a collaboration between our team, our audience, and the AI, and it's something that is pointing to a lot of really exciting opportunities for the future. Thank you.

Speaker Change: So there's a

Speaker Change: huge wide range of things that we're able to do. But all of it is really enabled by the fact that we have spent the time investing in building a platform. And so now, instead of it taking

Matt Omer: Thank you.

Speaker Change: You know, many weeks to launch a new interactive format. We can we can launch things as quickly and easily as other forms of content in the past, but the content is more personalized, more interactive and and it's more generative of additional content.

Amita Tomkoria: I'll hand the call back to Amita so we can take questions. Thanks, Matt.

Speaker Change: And I think it really starts to feel like a collaboration between our team, our audience, and the AI, and it's something that is pointing to a lot of really exciting opportunities for the future.

Jonah Peretti: Hi, everyone. We've gathered a bunch of questions that have come in over the course of the call and in advance. So we'll get right into it. Jonah, starting with you on the topic of AI and some of the upcoming launches that you mentioned. Can you share a bit more about how AI is helping move some of these content launches forward? And if there's a way to quantify the cost benefit of rolling out content that utilizes some of the new AI capabilities that you talked about.

Jonah Peretti: And then just, you know, as the election approaches, maybe just to quickly touch on Jonah and maybe also for you, Matt, what are the expectations for the impact on both traffic and advertising? I mean, just to quickly start with traffic, I think we're already seeing tremendous interest in the election on both BuzzFeed and HuffPost. BuzzFeed is more of an entertainment property, but there are so many memes and stories and entertainment related to the way that the election is driving culture. And HuffPost is really the best place to go and find out what's going on in this election, especially as social media platforms have gotten more fragmented and there's more misinformation spreading across social platforms.

Jonah: Thank you. And then just, you know, as the election approaches, maybe just to quickly touch on, Jonah, and maybe also for you, Matt, you know, what are the expectations for the impact on both traffic and advertising revenue for the business?

Matt: I mean just to quickly start with traffic. I think we're already seeing tremendous interest in the election

Jonah Peretti: Yeah, so I'll start just by saying that there's a fair amount of upfront work that we've done really over the last year and a half. To build a platform to enable us to accelerate our work in AI and to be able to launch more products and more content. So if you take an example like the Bridgerton dress generator or the select select track post, it's really represents a very different way of thinking about and making content.

Matt: on both BuzzFeed and HuffPost.

BuzzFeed: BuzzFeed is more...

Speaker Change: of an entertainment property, but there's so many memes and stories and entertainment related to the way that the election is driving culture.

Speaker Change: And HuffPost is really the best place to go and find out what's going on in this election.

Speaker Change: especially as social media platforms have gotten

Speaker Change: We're fragmented and there's more misinformation spreading across social platforms. The front page of HuffPost is a great place for an audience to know what's going on, what are the latest developments, what's real, what's not. And we see a lot of strength in HuffPost with the election.

Jonah Peretti: The front page of HuffPost is a great place for an audience to know what's going on, what are the latest developments, what's real, what's not. And we see a lot of strength in HuffPost with the election. I think in terms of ad spend, we usually see that ad spend comes later in the cycle as campaigns spend really rapidly in the run-up to the election to drive turnout, registration, and other things.

Jonah Peretti: Someone on our team or will instead of making a single post or article will create a generator and then our audience will come and use that generator to create. You know hundreds of pieces of content or thousands of pieces of content. And so you basically shift from a model where your team is and your editors and your writers are making one piece of content that is consumed to that making a machine that generates lots of content with the audience and allows the audience participate in that content creation.

Speaker Change: I think in terms of ad spend, we usually see that ad spend come later in the cycle as campaigns spend really rapidly in the run-up to the election to drive turnout, registration, other things.

Matt Omer: Yeah, I'll just echo that. We really expect the Drexel revenue to come in Q4, I suppose. So Matt, that's a good segue maybe into the Q3 guide. You know, the Q3 guidance that you shared shows a pretty significant step up in revenue versus Q2. Can you share a bit about what's driving that list?

Speaker Change: Yeah, I'll just echo that. We really expect the Drexel revenue to come in Q4 as opposed to Q3.

Speaker Change: So Matt, that's a good segue maybe into the Q3 guide. You know, the Q3 guidance that you shared shows a pretty significant step up in revenue versus Q2. Can you share a bit about what's driving that blitz?

Jonah Peretti: And that's just one example of the ways that it increases the content output and the audience and the interactivity. You know, we're also driving more personalization on our site. We're building tools to streamline our business operations. We're using AI to detect trends and surface, surface ideas that then our writers can turn into stories and posts. So there's a huge wide range of things that we're able to do. But all of it is really enabled by the fact that we have spent the time investing in building a platform.

Jonah Peretti: And so now instead of it taking many weeks to launch a new interactive format, we can launch things as quickly and easily as other forms of content in the past. But the content is more personalized, more interactive and is more generative of additional content. And I think it really starts to feel like a collaboration between our team, our audience and the AI.

Matt Omer: Yeah, sure. I mean, we expect the positive trends to continue in both programmatic and affiliate as we double down on owning and operating properly. As you heard from Jonah, the new content launches plus the revamped homepage are certainly driving deeper audience engagement, which is translating into improvements in programmatic revenue. And we just had our best Prime Day ever, as I touched on. So double-digit top-line growth drives significant momentum for everything. I've approached and kind of begun Q3.

Matt: Yeah, sure. I mean, we expect the positive trends to continue in both programmatic and affiliate as we double down on owner-operated properties.

Matt: As you heard from Jonah, the new content launch is...

Speaker Change: Plus a revamped homepage are certainly driving deeper audience engagement, which is translating into improvements in programmatic revenue

Speaker Change: and we just had our best prime day ever as I touched on. So double-digit top-line growth, it drives significant momentum for everything I've approached and kind of began Q3. We're all seeing the stabilization and direct sold.

Matt Omer: We're all seeing the stabilization in direct sold content, dealing direct sold content in Q3, and expect a significant improvement in the year-over-year trend in Q3 versus what we saw in Q2. So that's part of the step up. And then, you know, following the cost-saving action that we touched on last quarter, more of our costs are just fixed in nature. And so as we see the seasonal lift in our revenue and some of the stabilization, we're gonna see improvements to our operating leverage, and that's certainly amplified, particularly when we see two of our highest margin lines of business return to growth.

Speaker Change: in Directed Film Content in Q3 and expect a significant improvement in the year-over-year trend in Q3 versus what we saw in Q2. So that's part of the step up and then

Speaker Change: You know, following the cost-saving action that we touched on last quarter, more of our costs are just fixed in nature, and so as we see the seasonal lift in our revenue and some of the stabilization, we're going to see improvements to our operating leverage, and that's certainly amplified, particularly when we see two of our highest margin lines of business return to growth.

Matt Omer: And as a reminder, we showed $5 million of improvement in adjusted EBITDA in Q2, and based on the bid point of guidance, we expect an $8 million improvement into Q3. So we're extremely excited that we have some momentum, and we're gonna continue to focus as a management team, keep our head down, and continue to focus on execution. And maybe then just to jump over to the balance sheet, you know, you guys obviously still have a fair amount of debt. Outstanding.

Jonah Peretti: And it's something that is pointing to a lot of really exciting opportunities for the future, and then just, you know, as the election approaches, maybe just to quickly touch on Jonah and maybe I'll see for you Matt, you know, what are the expectations for the impact on both traffic and advertising revenue for the business? I mean, just to quickly start with traffic, I think we're already seeing tremendous interest in the election on both Buzzfeed and HuffPost.

Speaker Change: And as a reminder, we showed $5 million of improvement at Just Seed even in Q2. And based on the bid point of guidance, we expect an $8 million improvement into Q3. So we're extremely excited that we have some momentum and we're gonna continue to focus as a management team, keep our head down and continue to focus on execution.

Speaker Change: And maybe then just to jump over to the balance sheet, you know, you guys obviously still have a fair amount of debt Outstanding. Can you share your latest thinking around that and and particularly, you know How you guys are thinking about the impending option that becomes available to the lenders in December, I believe

Matt Omer: Can you share your latest thinking around that? And particularly, you know, how you guys are thinking about the impending options that become available to the lenders in December? Yeah, I guess just coming off the last question, I mean, what we're really focused on is executing on the strategy that Jonah and I have laid out in previous earnings calls and in this one. And we're starting to see some material improvements in our fundamentals and the financials.

Jonah Peretti: Buzzfeed is more of an entertainment property, but there's so many memes and stories and entertainment related to the way that the election is driving culture. And HuffPost is really the best place to go and find out what's going on in this election, especially as social media platforms have gotten more fragmented and there's more misinformation spreading across social platforms. The front page of HuffPost is a great place for an audience to know what's going on, what are the latest developments, what's real, what's not.

Jonah: Yeah, I guess just coming off the last question, I mean, what we're really focused on is executing the strategy that Jonah and I have laid out in previous earnings call and in this one. And we're starting to see some material improvements to our fundamentals and the financials.

Matt Omer: And we have a, we believe we have a pretty collaborative relationship with our note holders as demonstrated by, you know, they gave us consent and we provided the content, complex transaction. And as we previously discussed in our 10Q, the companies were always evaluating strategic changes to our operations or capital structures, including divestitures of which the proceeds will be used to pay down debt. We also consider restructuring or refinancing existing debt and discontinuing, discontinuance, I should say, of any unprofitable lines of business to ensure the long-term health of the business.

Jonah: And we have a we believe we have a pretty collaborative relationship with our note holders as demonstrated by you know They gave us consent and we provided the content complex transaction

Jonah: As we previously discussed in our 10Q, the companies were always evaluating strategic changes to our operations or capital structures, including divestitures, of which the proceeds would be used to pay down debt.

Jonah Peretti: And we see a lot of strength in HuffPost with the election. I think in terms of adspan, we usually see that adspan come later in the cycle, as campaigns spend really rapidly in the run-up to the election to drive turn-out registration, other things. Yeah, I'll just echo that. We really expect the direct full revenue to come in Q4 as opposed to Q3. So Matt, that's a good segue going to be into the Q3 guide.

Jonah: We also consider restructuring or refinancing existing debt and discontinuing, discontinuance I should say, of any unprofitable lines of business to ensure the long-term health of the business.

Matt Omer: Now it's also worth noting that the larger public float, we have been able to increase the size of our ATM program to $150 million. So we have that as well at our disposal for additional liquidity should the market circumstances support it. But overall, again, we're focused on keeping our head to the ground and operating, executing on the plans laid out earlier this year, continue to move forward. That's very helpful.

Jonah: And it's also worth noting that the larger public float, we have been able to increase the size of our ATM program to $150 million. So we have that as well at our disposal for additional liquidity should the market circumstances support it. But overall, again, we're focused on keeping our head to the ground and operating, executing on the plans laid out earlier this year.

Jonah Peretti: The Q3 guidance that you shared shows a pretty significant step up in revenue versus Q2. Can you share a bit about what's driving that with? Yeah, sure. I mean, we expect the positive trends to continue in both programmatic and affiliate, as we double down on own and operate properties. As you heard from Jonah, the new content launches plus a revamped home page, or certainly driving deeper audience engagement, which is translating into improvements in programmatic revenue.

Jonah Peretti: So maybe Jonah, turning back to you, you know, I'd be remiss not to ask about some of the headlines around, you know, new, activist shareholders entering the stock. And I'm curious if there's anything that you can share with us in terms of, you know, whether Buzzfeed's engaged with them up to this point, or really any light that you can shed on that. Sure.

Jonah: and we'll continue to move forward.

Jonah: That's very helpful. So maybe Jonah, turning back to you, you know, I'd be remiss not to ask about some of the headlines around, you know, new

Speaker Change: activist shareholders entering the stock, and I'm curious if there's anything that you can share with us in terms of, you know, whether BuzzFeed's engaged with them up to this point, or really any light that you can shed on that would be great.

Jonah Peretti: So obviously, Buzzfeed is a very well-known brand that means a lot to many people. And I agree that there's a lot of future potential for Buzzfeed, and we're working really hard to unlock that potential. In terms of activists, you know, I'm always very open to hearing from our shareholders, to hearing new ideas, to hearing ways that we might be able to unlock even more value in the future. And I think there are a lot of tremendous possibilities ahead of us, and we're working very hard on our long-term strategy to unlock as much value as possible.

Jonah Peretti: And we just had our best prime day ever, as I touched on. So double digit top line growth, it drives significant momentum of approaching time began Q3. We're all seeing a stabilization and direct-sold, particularly in direct-fold content, Q3 and expect a significant improvement in the year of year trend in Q3 versus what we saw in Q2. So that's part of the step up. And then, you know, following the cast-saving action that we touched on in the last quarter, more of our costs are just fixed in nature.

Jonah: Sure, so obviously BuzzFeed is a very well-known brand.

Speaker Change: That means a lot to many people.

Speaker Change: and...

Speaker Change: I agree that there's a lot of future potential for BuzzFeed, and we're working really hard to unlock that potential. In terms of activists, you know, I'm always very open to hearing from our shareholders.

Jonah Peretti: And so as we see the seasonal lift in our revenue and some of the stabilization, we're going to see improvements to our operating leverage. And that's certainly amplified, particularly when we see two of our highest margin lines of business return to growth. And as a reminder, we showed $5 million of improvement in adjusting even on Q2. And based on the bit point of guidance, we expected an $8 million improvement in Q3. So we're extremely excited and have that we have some momentum. And, you know, we're going to continue to focus as a management team, keep our head down and continue to focus on execution.

Speaker Change: to hearing new ideas, to hearing ways that we might be able to unlock even more value in the future.

Speaker Change: And I think there are a lot of tremendous possibilities ahead of us, and we're working very hard on our long-term strategy to unlock as much value as possible.

Jonah Peretti: But engaging with voices and, you know, shareholders and beyond shareholders, getting ideas for how to do the best. We possibly can at creating the defining media company for the AI age over the next few years is something that we're, you know, very excited about. We've got a couple minutes left, so Matt, I'd like to close out with you just on the topic of cash. If I look from Q1 to Q2, it looks like the company burned about $16 million in cash quarter to quarter. Is that indicative of your expected cash burn rate going forward? I mean, the Q2 cash burn is absolutely not indicative of the go forward expected run rate.

Speaker Change: but engaging with voices and shareholders and beyond shareholders, getting ideas for how to do the best.

Matt Omer: And maybe then just to jump over to the balance sheet, you know, you guys obviously still have a fair amount of debt outstanding. Can you share your latest thinking around that? And particularly, you know, how you guys are thinking about the intending options that becomes available to the vendors in December, I believe? Yeah, I guess just come up a last question. And what we're really focused on is execute on the strategy that Joan and I have laid out in previous earnings call on in this one.

Matt Omer: We had a few expenditures in Q2 that are not expected to repeat in Q3, the most material of which. For the severance and one-time computation charges related to expenses from the complex transaction and the cost savings actions we announced in February. Secondly, as we previously had noted, we used some proceeds from the complex sale towards optimizing our working capital. And lastly, we had a biannual interest payments that was due in June. None of those are going to be repeated in Q3.

Speaker Change: Thank you.

Speaker Change: We've got a couple minutes left. So Matt, I'd like to close out with you just on the topic of cash. If I look from from Q1 to Q2, it looks like

Matt Omer: And we're starting to see some material improvements to our fundamentals and the financials. And we have a, we believe we have a pretty collaborative relationship with our note holders as demonstrated by, you know, they gave us consent and we provided the complex transaction. And as we previously discussed in our 10Q, the company is, we're always evaluating strategic changes to our operations or capital structures, including the vegetables of which the proceeds would be used to pay down debt.

Matt: The company burned about $16 million in cash quarter to quarter. Is that indicative of your expected cash burn rate going forward? I mean, the Q2 cash burn is absolutely not indicative of the go forward expected run rate. We had a few expenditures in Q2 that are not expected to repeat in Q3, the most material of which

Matt Omer: And so if we remove those expenditures, the cash burn would have been dramatically reduced. And so with a large one-time charges behind us, we do expect much more stability in our cash balance going forward. I'm pretty excited about where we're at. Thank you. Thanks, Matt. And thanks, Jonah.

Speaker Change: were the severance and one-time compensation charges related to expenses from the complex transaction and the cost savings actions we announced in February. Secondly, as we previously had noted, we used some proceeds from the complex sale towards optimizing our working capital.

Matt Omer: We also consider structuring or refinancing and existing debt and the discontinuing, the discontinuance I should say of any unprofitable lines of business to ensure the long-term cost of the business. Now, it's also worth noting that the larger public flow, we have been able to increase the size of our ATM program through $150 million. So we have that as well, our disposal, traditional liquidity should the market circumstances support it, but overall, again, we're focused on keeping our head to the ground and operating executing on the plan played out earlier this year and we'll continue to move forward. That's very helpful.

Speaker Change: And lastly we had a biannual interest payment that was due in June. None of those are going to be repeated in Q3.

Speaker Change: And so if we remove those expenditures and the cash from would have been.

Speaker Change: dramatically reduced. And so with a large one-time charges behind us, we do expect much more stability in our cash balance going forward. I'm pretty excited about where we're at as a business.

Amita Tomkoria: That concludes our Q&A session for today. So I'll hand it back to the operator to close out our call. This includes today's conference call. Thank you for participating. You may now disconnect. Everyone else has left the call.

Speaker Change: Thank you. Thanks, Matt. And thanks, Jonah. That concludes our Q&A session for today. So I'll hand it back to the operator to close out our call.

Jonah Peretti: So maybe Jonah, turning back to you, I'd be remiss not to ask about some of the headlines around new activist shareholders entering stock and I'm curious if there's anything that you can share with us in terms of, you know, whether Buzzfeed's engaged with them up to this point or really any like that you can share on that would be great. Sure. So obviously, Buzzfeed is a very well-known brand that means a lot to many people and I agree that there's a lot of feats for potential for Buzzfeed and we're working really hard to unlock that potential.

Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.

Jonah Peretti: In terms of activists, you know, I'm always very open to hearing from our shareholders, to hearing new ideas, to hearing ways that we might be able to unlock even more value in the future. And I think there are a lot of tremendous possibilities ahead of us and we're working very hard on our long-term strategy to unlock as much value as possible. But engaging with voices and shareholders and beyond shareholders, getting ideas for how to do the best we possibly can at creating the defining media company for the AI age over the next few years. So here's something that we're, you know, very excited about. Thank you.

Operator: Amita Tomkoria, Felicia, Marcela Martin Amita Tomkoria, Felicia, Marcela Martin, Matt Omer, Buzzfeed Amita, [music] I'm sorry. I'm sorry. I'm sorry.

Speaker Change: Thank you for watching!

Speaker Change: [inaudible]

Matt Omer: We've got a couple minutes left, so Matt, I'd like to close out with you just on the topic of cash. If I look from Q1 to Q2, it looks like the company burned about $16 million in cash quarter to quarter. Is that indicative of your expected cash burn rate going forward? I mean, the Q2 cash burn is absolutely not indicative of the go forward expected run rate. We had a few expenditures in Q2 that are not expected to repeat in Q3, the most material of which were the severance and one-time computation charges related to expenses from the complex transaction and the cost savings actions we announced in February.

Matt Omer: Secondly, as we previously had noted, we used some proceeds from the complex sale towards optimizing our working capital. And lastly, we had a biennial interest payments that was due in June. None of those are going to be repeated in Q3. And so if we remove those expenditures, the cash boom would have been dramatically reduced. And so with a large one-time charges behind us, we do expect much more stability in our cash balance going forward. I'm pretty excited about where we're at as business. Thank you. Thanks, Matt. And thanks, Shona.

Speaker Change: [inaudible]

Speaker Change: Thank you for watching!

Speaker Change: Ab institutions J-E-D-L-O-R-N

Matt Omer: I'm sorry, and more. My name is Matt Omer. I'll see you next time.

Speaker Change: Thank you for your time, and I'll see you in the next video.

Operator: [inaudible] [music] Thanks for watching! Good day, and thank you for standing by, and welcome to Buzzfeed Inc.'s 2nd quarter, 2024 Ernest Conference. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and thank you for standing by and welcome to BuzzFeed Inc. second quarter 2024 earnings conference call.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amita Tomkoria, Senior Vice President of Vesta Relations. Please go ahead.

Amita Tomkoria: Hi everyone, welcome to BuzzFeed Inc.'s second quarter 2024 earnings conference call. I'm Amita Tomkoria, Senior Vice President of Investor Relations. Joining me today are CEO Jonah Peretti and CFO Matt Omer. 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 2023 Annual Report on Form 10K, our Q-1 2024 Quarterly Report on Form 10Q, and our Q-2 2024 Quarterly Report on Form 10Q, to be filed with the SEC.

Speaker Change: Hi, everyone. Welcome to BuzzFeed Inc's second quarter 2024 earnings conference call. I'm Amita Tomkoria, Senior Vice President of Investor Relations. Joining me today are CEO Jonah Peretti and CFO Matt Omer.

Amita Tomkoria: 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 GAF and non-GAF financial measures, including adjusted even that and adjusted even that margin. [inaudible] 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.

Speaker Change: Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements.

Speaker Change: Actual results may differ materially from those contemplated by these forward-looking statements.

Speaker Change: Factors that could cause these results to differ materially are set forth in today's press release, our 2023 annual report on Form 10-K, our Q1 2024 quarterly report on Form 10-Q, and our Q2 2024 quarterly report on Form 10-Q to be filed with the SEC.

Speaker Change: During this call we present both GAAP and non-GAAP financial measures including adjusted EBITDA and adjusted EBITDA margins.

Amita Tomkoria: 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 managers. A reconciliation of these gap-to-non-gap measures is included in today's earnings press release. Please refer to our investor relations website to find today's press release along with our investor letter. Now, I'll pass the call over to Jo

Speaker Change: A reconciliation of these gap-to-non-gap measures is included in today's earnings press release.

Speaker Change: Please refer to our investor relations website to find today's press release along with our investor letter. And now I'll pass the call over to Jonah.

Jonah Peretti: Thank you, Amita. Good afternoon, everyone, and thank you for joining us. Before I get into the specifics about this quarter, I want to provide a bit of context.

Jonah Peretti: Thank you, Amita. Good afternoon, everyone, and thank you for joining us today.

Jonah Peretti: Before I get into the specifics about the quarter, I want to provide a bit of context.

Jonah Peretti: As I've mentioned in our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact, despite a tough market where many of our competitors cut those costs to provide short-term savings. We have a strong conviction that continuously experimenting and innovating with technology sets us up to thrive in the next era of the Internet. We've always lived at the intersection of content and technology, and we're increasingly leaning into new technologies that are beginning to transform the media industry.

Jonah Peretti: As I've mentioned on our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact, despite a tough market where many of our competitors shed those costs to provide short-term savings.

Jonah Peretti: We have a strong conviction that continuously experimenting and innovating with technology sets us up to thrive in the next era of the Internet. We've always lived at the intersection of content and technology and we're increasingly leaning into new technologies that are beginning to transform the media industry.

Operator: That concludes our Q&A session for today. So I'll hand it back to the operator to close out our call. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone else has left the call. Thank you very much. [inaudible] Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer,[inaudible] Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer Matthew Omer, Matthew Omer, Matthew Omer, Matthew Omer,[inaudible] Good day, and thank you for standing by, and welcome to Buzzfeed Inc.

Operator: 2nd quarter of 2024 earnings conference call. At this time, I'll participate on our listen only mode. Please be advised that today's conference is being recorded.

Amita Tomkoria: I would now like to hand the conference over to your speaker today, Amita Tomkoria, Senior Vice President of the Vestor Relations. Please go ahead. Hi, everyone. Welcome to Buzzfeed Inc. 2nd quarter of 2024 earnings conference call. I'm Amita Tomkoria, Senior Vice President of the Vestor Relations. Joining me today are CEO of Jonah Peretti and CSO Matt Omer. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements.

Jonah Peretti: These improvements include more audience loyalty, more user logins, higher conversion on our commerce content, better targeting and growth in our advertising inventory, revenue growth in our most scalable lines of business, and improved profitability.

Jonah Peretti: By leaning into new technologies, we have also accelerated the pace of new product development, made our content creators more efficient and creative, and invited our audience to participate directly in AI-assisted content creation.

Jonah Peretti: We've already done much of the hard work that will enable us to do more of the fun consumer facing work moving forward. Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilots, as well as consumer-facing experiences like our AI-assisted content generator. By leveraging a range of embedding techniques to represent our content in conjunction with vector data stores and model fine-tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audience.

Amita Tomkoria: 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 2023 annual report on form 10K, our Q1-2024 quarterly report on form 10Q, and our Q2-2024 quarterly report on form 10Q to be 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.

Jonah Peretti: We've already done much of the hard work that will enable us to do more of the fun consumer-facing work moving forward.

Jonah Peretti: Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilots, as well as consumer-facing experiences like our AI-assisted content generators.

Jonah Peretti: By leveraging a range of embedding techniques to represent our content in conjunction with vector data stores and model fine-tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audiences.

Amita Tomkoria: During this call, we present both GAF and non-GAF financial measures, including adjusted EBITDA and adjusted EBITDA margins. The use of non-GAF financial measures allows us to measure the operational strengths 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 in 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 gap to non-gap measures is included in today's earnings press release.

Jonah Peretti: Our teams are very excited about the capabilities we've built so far and even more excited about all the new things we'll be able to launch in the coming months and years. We'll share more with you on future earnings calls so you can track our progress. These changes have also allowed us to complete the shift away from platform-dependent models of content distribution and monetization. In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps.

Jonah Peretti: These changes have also allowed us to complete the shift away from platform dependent model of content distribution and monetization. In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps.

Jonah Peretti: And our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally. As compared to Q1, audience time spent with our content in Q2 grew 5%, according to ComScore. And as the only digital media company among our competitors that grew over this period, we believe this highlights the strength of our differentiated business model in contrast to peers whose traffic is highly dependent on search and other external referral sources.

Jonah Peretti: Please refer to our investor relations website to find today's press release, along with our investor letter, and now I'll pass the call over to Jonah. Thank you Amita. Good afternoon everyone and thank you for joining us today. Before I get into the specifics about the quarter, I want to provide a bit of context. As I mentioned on our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact despite a tough market where many of our competitors shed those costs provide short-term savings.

Jonah Peretti: And our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally.

Jonah Peretti: As compared to Q1, audience time spent with our content in Q2 grew 5% according to ComScore.

Jonah Peretti: and as the only digital media company among our competitors set to grow over this period, we believe this highlights the strength of our differentiated business model in contrast with peers whose traffic is highly dependent on search and other external referral sources.

Jonah Peretti: We also increased time spent among our core demographic millennials and Gen Z by 11% versus Q1. In terms of revenue on a year over year basis, we grew Q2 revenues in two of our largest and highest-margin lines of business, programmatic advertising and affiliate commerce. And we exceeded our May profit outlook, delivering 2.7 million in Q2 adjusted EBITDA for a 5 million improvement year over year.

Jonah Peretti: We also grew time spent among our core demographic, Millennials and Gen Z, by 11% versus Q1.

Jonah Peretti: We have a strong conviction that continuously experimenting and innovating with technology sets us up to thrive in the next era of the internet. We've always lived at the intersection of continent and technology and we're increasingly leaning into new technologies for beginning to transform the media industry. I'm pleased to share that we are beginning to see the fruits of our experimentation and innovation. In particular, generative AI, interactive contact formats, enhanced personalization are starting to drive improvements in key audience loyalty, more user log-ins, higher conversion on our commerce content, better targeting growth in our advertising inventory, revenue growth in our most scalable lines of business, and improved profitability.

Jonah Peretti: In terms of revenue, on a year-over-year basis, we grew Q2 revenues

Jonah Peretti: By leaning into new technologies, we've also we have also accelerated the pace of new product development, made our content creators more efficient and creative, and invited our audience to participate directly in AI assisted content creation. We've already done much of the hard work that will enable us to do more of the fun consumer-facing work moving forward. Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilot as well as consumer-facing experiences like our AI assisted content generators.

Jonah Peretti: in two of our largest and highest margin lines of business, programmatic advertising and affiliate commerce. And we exceeded our May profit outlook, delivering 2.7 million in Q2 adjusted EBITDA for a 5 million improvement year over year.

Jonah Peretti: By leveraging a range of embedding techniques to represent our content in conjunction with vector data stores and model fine tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audiences. Our teams are very excited about the capabilities we've built so far, and even more excited about all the new things we'll be able to launch in the coming months and years.

Jonah Peretti: We'll share more with you on future earning calls so you can track our progress. These changes have also allowed us to complete the shift away from platform-dependent model of content and distribution and monetization. In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps, and our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally.

Jonah Peretti: As compared to Q1, audience time spent with our content in Q2 grew 5 percent according to ComScore, and as the only digital media company among our competitors that to grow over this period, we believe this highlights the strength of our differentiated business model and contrast with peers whose traffic is highly dependent on search and other external We also grew time spent among our core demographic millennials and Gen Z by 11% versus Q1. In terms of revenue on a year-over-year basis, we grew Q2 revenues in two of our largest and highest margin lines of business, programmatic advertising and affiliate commerce.

Jonah Peretti: And we exceeded our May Profit Outlook, delivering 2.7 million in Q2 adjusted EBITDA for a 5 million improvement year-over-year. With the vast majority of audience engagement happening on our own and operated properties, we are well positioned to control our own destiny in terms of enhancing personalization, enhancing and personalizing the audience experience and driving long-term monetization. In Q2, 90% of audience time spent with our content was on our own websites and apps, and direct traffic continues to be our largest source of audience traffic, far surpassing referrals from third-party platforms, including Facebook.

Jonah Peretti: Direct traffic continued to show stability in Q2 across our two largest owned and operated properties, Buzzfeed and HuffPose. More importantly, we saw strong evidence of deep in loyalty among our audience. Login users grew versus Q1, better positioned us to mitigate potential risk of cookie depreciation. As we introduce more interactive content, we also have seen that the number of users or the number of users that visit us more than once a week has grown by a double-digit percentage since Q4 2023.

Jonah Peretti: And we are also seeing momentum in terms of repeat visits on our site. Page views per unique visitor grew quarter over quarter for the third consecutive quarter. Loyalty continues to be particularly strong across our suite of Buzzfeed games, and the vast majority of Q2 game users on the app returned within a week. One of our biggest learnings in Q2 was that when creativity is in the hands of our audience, engagement is deeper.

Jonah Peretti: Whether it's our Sims AI generator, make your own emoji, or turn your favorite celeb into Shrek, our AI powered content generators have demonstrated higher audience engagement and participation relative to other formats. We've also launched the new Buzzfeed home page in June, offering more engagement opportunities for our audience directly on the page, from polls to quizzes to widgets that make it easier for the audience to learn more about themselves and each other.

Jonah Peretti: Although it is still early, following the new site launch, we have seen measurable increases in audience engagement and monetization. With more actions per visit and a double-digit percentage increase in programmatic revenue per homepage view. Looking ahead, we expect to build on these engagement and monetization trends with a new landing page that features all of Buzzfeed's games, a social leaderboard feature, and a newly designed Buzzfeed app that builds on the learning from our web homepage.

Jonah Peretti: We see a future where our app provides a mix of trusted content, games and interactive features, creating a hybrid between content publisher and a social media destination. I'm excited to build, I'm excited to be building a platform that aligns with the future of digital media.

Jonah Peretti: Turning to our revenue performance. I'm pleased to share that we grew Q2 programmatic advertising by 3% year-over-year. This is the first quarter of year-over-year growth in overall programmatic revenue since Q1 2022. A signal that our strategic and organizational changes we have made to stabilize our business are beginning to pay off. And importantly, these changes are also helping us offset the impact of declines on third-party platforms and validating our focus, on our own and operated properties.

Jonah Peretti: Although our overall revenue performance continues to be pressured by headwinds in the direct sales channel, we are often mystic about the progress we are seeing on the programmatic side, which represents approximately two-thirds of our overall advertising revenue. As part of our larger company-wide transformation, we continue to prioritize our most scalable high-margin revenue lines, and we expect this momentum to continue into Q3. As strength in our high-margin revenue lines, who drives further year-over-year improvements in adjusted EBITDA.

Jonah Peretti: Our affiliate commerce business also had a strong Q2, growing revenues by 9% year-over-year. As I discussed in past calls, retail partnerships are an important part of our business. With coverage and like editorally-driven product roundups, we drive hundreds of millions of dollars in commerce transactions on behalf of the largest retailers in the world. But our retail partnerships extend far beyond our editorial shopping content. Our relationship with Target is a great example of how we put our diverse product catalog to work to drive actionable results.

Jonah Peretti: Target leverages our high-quality onsite real estate to promote general brand aids and supplier-funded campaigns to secure secure through Ron Dell, its retail media business, which drives advertising revenue for BuzzFeed. They also purchase branded sponsored content like homepage takeovers to spotlight their big temple moments like Target Circle Week or the holiday gifting season. And more recently, Target Target partnered with us on AI this past holiday shopping season as we introduce Shoppy, our AI-powered shopping assistant that helped our readers find the perfect gift for everyone on their list.

Jonah Peretti: Our expertise in serving retail partners continue to shine Q3 on the off-of-the-back of Amazon's largest prime day yet, BuzzFeed also had its biggest prime day ever growing revenues over the two-day period by a strong double digit percentage year-over-year surpassing even Amazon's overall prime growth and demonstrating the value ad we're able to deliver on behalf of the world's largest retailers. I am so proud of the team whose expertise and dedication contribute to such impressive results for the company.

Jonah Peretti: As we continue to make progress in growing our programmatic and affiliate revenue lines, this quarter we are introducing more transparency into our revenue reporting. I encourage you to flip through our Q2 investor layer letter available on our IR website for a closer look at revenue performance. Matt will also share more on this shortly. Although legacy digital media continues to face challenges, we are charting the path to a better future and redefining the industry for this next era of technology.

Matt Omer: I'll now hand the call off to Matt to discuss our financial performance out. Look. Thank you, Jonah. As Jonah just touched on, we closed the second quarter with great momentum. Before I discuss our Q2 financial performance in more detail, I'll recap some highlights from across the business. In terms of audience time spent, we were the only digital media company in our competitive set to grow time spent quarter to quarter up 5% versus Q1 according to ComScore.

Matt Omer: And importantly, we grew time spent among our core demographic, Millennials and Gen Z by 11% versus Q1. We delivered overall Q2 revenues in line with our May Outlook, with year-of-year growth in two of our largest and highest margin revenue lines of business, programmatic advertising and affiliate commerce. We've exceeded our May Outlook for adjusted EBITDA, generating $2.7 million in Q2 profits, a $5 million improvement year over year. This momentum has continued into Q3 with our biggest prime day ever, generating double digits year-of-year growth in both audience traffic and commerce revenue and outpacing Amelon's overall prime growth day growth.

Matt Omer: As we work to return the overall business to growth, we are introducing more transparency in our revenue performance. In this quarter and this quarter's investor letter, available on our investor relations website, you will find details on the year-of-year revenue performance of our areas of focus, programmatic advertising and affiliate commerce. With that, let me share some more on our second quarter of financial results. As a reminder, all financials and comparables presented here are on a continuing operations basis, which excludes complex.

Matt Omer: Overall revenues for Q2 2024 declined 24% year-of-year to $46.9 million in line with our May Outlook. Performance by revenue line was as follows. Advertising revenues declined 19% year-of-year to $23.8 million, driven by ongoing pressure on our direct sales channel and a shift in our strategy to prioritize our most scalable, high margin revenue lines. This offset growth in our programmatic advertising business across both our own and operated properties and third-party platforms. Advertising revenues are driven in large part by audience time spent with our content across platforms.

Matt Omer: In conjunction with advertising revenues, we can continue to report US time spent across our own and operated properties and third-party platforms according to ComSchool. And as I mentioned earlier, we led the industry in Q2 in terms of overall audience time spent growing versus Q1. On a year-of-year basis, time spent trends continue to reflect the ongoing decline in referral traffic from third-party platforms. Q2 time spent as reported by ComSchool declined 5% year-of-year to 71 million hours.

Matt Omer: Content revenues declined 48% year-of-year to $11.4 million. Again, driven by ongoing pressure in the direct sales channel, the vast majority of our content revenue is made up of branding content campaigns for clients. Now to double down on our higher margin more scalable revenue lines like programmatic advertising and affiliate commerce, we have put less emphasis on this lower margin branding content business. Commerce and other revenues of $11.7 million grew 7% year-of-year, driven by better performance of our shopping content across multiple metrics, which drew a prior affiliate commissions from our retail partners.

Matt Omer: And we delivered second quarter adjusted EBITDA of $2.7 million ahead of our May outlook and $5 million better than the year-of-go quarter. This reflects the cumulative impact of our cost savings plan announced in February, which more than offset up the revenue headwinds in the quarter. We ended the second quarter with cash and cash equivalents of roughly $45 million and net increase of approximately $10 million year-to-date.

Matt Omer: And before I share our financial outlook for the third quarter, let me provide some context. Starting with revenues, as we continue to prioritize our more scalable revenue lines, we once again expect year-of-year growth in programmatic advertising and affiliate commerce revenues in Q3. In terms of content revenues, we do expect to see an improvement in the year-of-year revenue trends first of what we saw in Q2. It's also worth noting that, although historically we have seen a lift in direct-sled revenues ahead of the U.S, presidential election, the majority of this spend typically occurs in the fourth quarter.

Matt Omer: As such, our Q3 guidance does not assume any material lift from political sales. From a commerce perspective, as I discussed, we have continued to see strong momentum and the affiliate business into Q3, particularly with private. And in terms of adjusted EBITDA, off the back of expected improvement in revenue trends from Q2 to Q3 in our cumulative cost savings, we expected to drive operating leverage quarter quarter and year-of-year reflected in improvement to adjusted EBITDA and adjusted EBITDA margin.

Matt Omer: With that, I'll turn to our financial outlook. Again, all figures and comparables presented on a continuing operations basis. For Q3, 2024, we expect overall revenues in the range of $58 to $63 million, or 3% lower to 5% higher than the year-to-go quarter. And we expect adjusted EBITDA in the range of $6 million to $11 million in profits, approximately $8 million higher year-over-year at the midpoint. Our Q2 results have demonstrated that our efforts to refocus the business are driving real financial results.

Matt Omer: And we see this momentum continuing into Q3. And as we return two of our most scalable and highest margin revenue lines to growth, we continue to execute with a lean cost structure and strong cash management. And we see an opportunity to further stabilize the balance sheet and return the overall business to top line growth and drive additional margin expansion over the upcoming quarters. Thank you.

Jonah Peretti: I'll hand the call back to Amida, so we can take questions. Thanks, Matt. Hi, everyone. We've gathered a bunch of questions that have come in over the course of the call in an event, so we'll get right into it. Jonah, starting with you on the topic of AI and some of the upcoming launches that you mentioned, can you share a bit more about how AI is helping move some of these content launches forward?

Jonah Peretti: And if there's a way to quantify the cost benefit of rolling out content that utilizes some of the new AI capabilities that you talked about. Yeah, so I'll start just by saying that there's a fair amount of upfront work that we've done really over the last year and a half to build a platform to enable us to accelerate our work in AI and to be able to launch more products and more content.

Jonah Peretti: So if you take an example like the Bridgerton dress generator or the select Shrek post, it's really represents a very different way of thinking about and making content. And someone on our team or will, instead of making a single post or article, will create a generator. And then our audience will come and use that generator to create hundreds of pieces of content or thousands of pieces of content. And so you basically shift from a model where your team and your editors and your writers are making one piece of content that is consumed to that making a machine that generates lots of content with the audience and allows the audience participate in that content creation.

Jonah Peretti: And that's just one example of the ways that it increases the content output and the audience and the interactivity. We're also driving more personalization on our site. We're building tools to streamline our business operations. We're using AI to detect trends and surface ideas that then our writers can turn into stories and posts. So there's a huge wide range of things that we're able to do, but all of it is really enabled by the fact that we have spent the time investing in building a platform.

Jonah Peretti: And so now, instead of it taking many weeks to launch a new interactive format, we can launch things as quickly and easily as other forms of content in the past, but the content is more personalized, more interactive, and is more generative of additional content. And I think it really starts to feel like a collaboration between our team, our audience and the AI, and it's something that is pointing to a lot of really exciting opportunities for the future.

Jonah Peretti: Thank you, and then just, you know, as the election approaches, maybe just to quickly touch on Jonah and maybe I'll say for you, Matt, you know, what are the expectations for the impact on both traffic and advertising revenue for the business? I mean, just to quickly start with traffic, I think we're already seeing tremendous interest in the election on both Buzzfeed and HuffPost. Buzzfeed is more of an entertainment property, but there's so many memes and stories and entertainment related to the way that the election is driving culture.

Jonah Peretti: And HuffPost is really the best place to go and find out what's going on in this election, especially as social media platforms have gotten more fragmented and there's more misinformation spreading across social platforms. The front page of HuffPost is a great place for an audience to know what's going on, what are the latest developments, what's real, what's not, and we see a lot of strength in HuffPost with the election. I think in terms of adspan, we usually see that adspan come later in the cycle as campaigns spend really rapidly in the run-up to the election to drive turnout, registration, other things. Yeah, I'll just echo that. We really expect the direct full revenue to come in Q4 as opposed to Q3.

Matt Omer: Matt, that's a good segue maybe into the Q3 guide. The Q3 guidance that you shared shows a pretty significant step up in revenue versus Q2. Can you share a bit about what's driving that with? Yeah, sure. I mean, we expect the positive trends to continue in both programmatic and affiliate, you know, as we double down on own and operate properties. As you heard from Jonah, the new content launches plus a revamped home page are certainly driving deeper audience engaging, which is translating into improvements in programmatic revenue.

Matt Omer: And we just had our best prime day ever as I touched on. So double digit top line growth, it drives significant momentum of approaching the time we began Q3. We're all seeing a stabilization and direct-sold, dealing direct-sold content in Q3 and expect a significant improvement in the year of year trend in Q3 versus what was song Q2. So that's part of the step up. And then, you know, following the cast-saving action that we touched on in the last quarter, more of our costs are just fixed in nature.

Matt Omer: And so as we see the seasonal lift in our revenue and some of the stabilization, we're going to see improvements to our operating leverage. And that's certainly amplified particularly when we see two of our highest margin line to business return to growth. And as a reminder, we showed $5 million of improvement at just the year of Q2. And based on the bit point of guidance, we expected an $8 million improvement in Q3. So we're extremely excited and have that we have some momentum. And, you know, we're going to continue to focus as a management team, keep our head down and continue to focus on execution.

Matt Omer: And maybe then just to jump over to the balance sheet, you know, you guys obviously still have a fair amount of debt outstanding. Can you share your latest thinking around that? And particularly, you know, how you guys are thinking about the impending options that becomes available to the vendors in December, I believe. Yeah, I guess just come up the last question. And what we're really focused on is execute on the strategy that Joan and I have laid out in previous earnings call on in this one.

Matt Omer: And we're starting to see some material improvements to our fundamentals and the financials. And we have, we believe we have a pretty collaborative relationship with our note holders as demonstrated by, you know, they gave us consent and we provided the complex transaction. And as we previously discussed in our 10Q, the company is, we're always evaluating strategic changes to our operations or capital structures, including the vegetables of which the proceeds would be used to pay down debt.

Matt Omer: We also consider restructuring or refinancing and existing debt and discontinuing, discontinuance, I should say, of any unprofitable lines of business to ensure the long-term Now, it's also worth noting that the larger public flow, we have been able to increase the size of our ATM program through $150 million. So we have that as well as our disposal, traditional liquidity should the market circumstances support it. But overall, again, we're focused on keeping our head to the ground and operating executing on the plan played out earlier this year and we'll continue to move forward.

Matt Omer: Thanks. That's very helpful.

Jonah Peretti: So maybe Jonah, turning back to you, I'd be remiss not to ask about some of the headlines around new activist shareholders entering stock and I'm curious if there's anything that you can share with us in terms of whether Buzzfeed's engaged with them up to this point or really any light that you can shed on that would be great. Sure. So obviously, Buzzfeed is a very well-known brand that means a lot to many people and I agree that there's a lot of feats for potential for Buzzfeed and we're working really hard to unlock that potential.

Jonah Peretti: In terms of activists, I'm always very open to hearing from our shareholders, to hearing new ideas, to hearing ways that we might be able to unlock even more value in the future. And I think there are a lot of tremendous possibilities ahead of us and we're working very hard on our long-term strategy to unlock as much value as possible. But engaging with voices and shareholders and beyond shareholders, getting ideas for how to do the best we possibly can at creating the defining media company for the AI age over the next few years is something that we're very excited about.

Jonah Peretti: Thank you.

Matt Omer: We've got a couple minutes left so Matt, I'd like to close out with you just on the topic of cash. If I look from Q1 to Q2, it looks like the company burned about $16 million in cash quarter to quarter. Is that indicative of your expected cash burn rate going forward? The Q2 cash burn is absolutely not indicative of the go forward expected run rate. We had a few expenditures in Q2 that are not expected to repeat in Q3, the most material of which were the severance and one-time compensation charges related to expenses from the complex transaction and the cost savings actions we announced in February.

Matt Omer: Secondly, as we previously had noted, we used some proceeds in the complex sale towards optimizing our working capital. And lastly, we had a biannual interest payments that was due in June. None of those are going to be repeated in Q3. And so if we remove those expenditures, the cash burn would have been dramatically reduced. And so with a large one-time charges behind us, we do expect much more stability in our cash balance going forward and pretty excited about where we're at as business. Thank you. Thanks, Matt. And thanks, Shona.

Operator: That concludes our Q&A session for today. So I'll hand it back to the operator to close out our call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Q2 2024 BuzzFeed Inc Earnings Call

Request a DemoDemo

BZFD

Buzzfeed

Earnings