Q3 2024 BuzzFeed Inc Earnings Call
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Speaker Change: Good day and thank you for standing by. Welcome to the BuzzFeed Third Quarter 2024 Earnings Conference Call.
At this time, all participants are in a listen-only mode.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker for today, Amita Tomkoria, Senior Vice President of Investor Relations. Amita, please go ahead.
Speaker Change: Thank you. Hi, everyone. Welcome to BuzzFeed Inc's third quarter 2024 earnings conference call. I'm Amita Tomkoria, Senior Vice President of Investor Relations, and joining me today are CEO Jonah Peretti and CFO Matt Omer.
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. 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, and our Q3 2024 quarterly report on Form 10-Q 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 margin. The use of non-GAAP financial measures allows us to measure the operational strength and performance of our business, to establish budgets, and to develop operational goals for managing our business.
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 all for joining us today.
Jonah Peretti: Today's call will be focused entirely on our Q3 results. In the coming weeks, we look forward to sharing an update on our debt balance sheet Q4 financial outlook and the results of the strategic review process we initiated last year with our financial advisors.
Turning to our Q3 results.
Jonah Peretti: In doing so, we were able to reorganize the business around two of our largest high-margin and most scalable business lines in programmatic advertising and affiliate commerce. In Q2, these changes started to bear fruit in the form of improving trends across time spent, revenue, and profitability.
Jonah Peretti: In this quarter, I'm pleased to share that we delivered significant improvements in each of our key operating and financial measures, time spent, overall revenue growth, and adjusted EBITDA profits on a year-over-year basis, as well as versus Q2.
Jonah Peretti: In Q3, audience time spent grew 13% versus Q2 and 2% year-over-year to 80 million hours, outpacing our peers according to Comscore.
Jonah Peretti: And our flagship BuzzFeed brand continued to lead the way among its competitive set, garnering vastly more time spent overall and among its core demographic of Millennial and Gen Z.
Jonah Peretti: We grouped Q3 revenues by 7% year-over-year to $64 million, led by strong performance in both programmatic advertising and affiliate commerce.
Jonah Peretti: Our commerce business had a particularly impressive quarter, growing affiliate commerce revenues by 53 percent, including our biggest Prime Day ever in July, which outpaced even Amazon's overall Prime Day growth.
Jonah Peretti: Programmatic advertising revenues grew 9% year-over-year, accelerating from their Q2 pace of 3% year-over-year.
Jonah Peretti: We delivered adjusted EBITDA of approximately 11 million dollars in the quarter, a nearly four-fold increase versus Q2, and a 10 million dollar improvement versus last year when we were roughly break-even.
Jonah Peretti: We also grew our cash balance by $8 million versus Q2 to $54 million.
Jonah Peretti: These results are a testament to the hard work and resilience of our teams.
Jonah Peretti: in executing our plans to stabilize our business in a tough environment. While we still have some hard work ahead of us, I'm confident in our ability to establish a solid foundation for the business to evolve and thrive in the next era of digital media. And I'm grateful for the support of our shareholders as we look to build on the strong performance in the year ahead.
Jonah Peretti: We will update you further on our go-forward plans very soon. I'll now hand the call off to Matt to share more details on our Q3 financial performance.
Thank you, Jonah.
Matt Omer: As you just heard, we achieved a number of milestones in the third order, returning the business to overall growth in both time spent and revenues, driving exponential year-on-year growth and adjusted EBITDA profitability, and improving our cash balance versus Q2. Before I discuss our Q3 financial performance in more detail, I'll recap some highlights from across the business.
Matt Omer: Audience time spent grew 2% year-over-year and 13% quarter-over-quarter to 80 million hours, according to ComScore. The first quarter of year-over-year growth in time spent since Q1 2023.
Matt Omer: Overall, Q3 revenues grew 7%, exceeding our August outlook, led by strong year-over-year growth in both programmatic advertising and affiliate commerce, including our biggest Prime Day ever in July.
Matt Omer: We deliver Q3 Adjusted EBITDA near the high end of our guidance range, generating approximately $11 million as compared to roughly flat Adjusted EBITDA in the year-ago quarter, a $10 million improvement year-over-year.
Matt Omer: And we ended the quarter with $54 million in cash, an $8 million improvement versus Q2.
Speaker Change: As Jonah articulated, our primary focus in 2024 has been on stabilizing the business and driving profitability. These results underscore the significant progress we have made and position us well to focus on driving consistent top-line growth and expanded profitability in 2025 and beyond.
Speaker Change: Turning to our third quarter financial performance, as a reminder all financials and comparables presented here are on a continuing operations basis which excludes complex.
Speaker Change: Overall revenues for Q3 2024 grew 7% year-over-year to $64.3 million, exceeding our August outlook. Performance by revenue line was as follows.
Speaker Change: Programmatic advertising revenues grew 9% year-over-year, accelerating from Q2 to reach $17.3 million. The strong performance reflects the shift in our strategy to prioritize our most scalable, high-margin, and tech-enabled revenue lines.
Speaker Change: This growth was offset by ongoing pressures on our direct sales channel resulting in a 3% year-over-year decline in overall advertising revenues to $26.1 million.
Speaker Change: Content revenue trends improved versus Q2, but declined 7% year-over-year to $17.4 million.
Speaker Change: As a reminder, the branded content is primarily sold through our direct sales channel, a much smaller team than we had a year ago as we continue to prioritize our programmatic advertising and affiliate commerce revenues.
Speaker Change: Commerce and other revenues of $20.9 million grew 45% year-over-year, driven primarily by the July Prime Day, which was our biggest to date.
Speaker Change: We delivered third quarter adjusted EBITDA of $10.5 million in line with the high end of our August outlook, and $10 million better than the year-ago quarter.
Speaker Change: This reflects a strong revenue performance in two of our largest and highest margin business lines, Programmatic Advertising and Affiliate Commerce, as well as the cumulative impact of our cost savings plan announced in February.
Speaker Change: We ended the third quarter with cash and cash equivalents of approximately 54 million dollars, a net increase of approximately 18 million dollars year to date and 8 million dollars versus Q2.
Speaker Change: As Jonah mentioned, we look forward to sharing our Q4 financial outlook along with an update on our outstanding debt in the coming weeks. Thank you for joining.
This does conclude today's conference call. You may now disconnect.
Thank you very much.
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