BuzzFeed, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; unaudited. BuzzFeed operates a single digital-media segment, with revenue primarily from advertising, content, and commerce and other.
Financial performance and liquidity
Amounts in millions, except per-share data and percentages.
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $67.2 | $91.6 |
| Gross profit / margin | $19.8 / 29.5% | $30.7 / 33.6% |
| Operating loss | $(29.7) | $(35.3) |
| Consolidated net loss | $(36.3) | $(44.6) |
| Adjusted EBITDA (non-GAAP) | $(20.2) | $(16.8) |
| Net loss per share, basic and diluted | $(0.26) | $(0.33) |
| Cash from operating activities | $(0.2) | $1.1 |
- Revenue fell 27% year over year. Advertising declined 30% to $34.2 million, content declined 33% to $21.6 million, and commerce and other rose 6% to $11.3 million.
- Operating loss narrowed by $5.6 million, while net loss improved by $8.3 million. Adjusted EBITDA loss worsened by $3.4 million.
- At March 31, cash and cash equivalents were $49.9 million, down from $55.8 million at year-end. Current assets were $146.6 million and current liabilities $101.8 million.
- Debt on the balance sheet was $152.3 million, reflecting the net carrying value of the convertible notes and revolver. Principal obligations were $150.0 million on the notes and $32.2 million on the revolver. The notes carry 8.5% stated interest and mature in December 2026; the revolver rate was 8.49% and matures in December 2025.
- Revolver availability was $2.3 million, with $15.5 million of letters of credit outstanding. The facility requires at least $25 million of unrestricted cash; BuzzFeed reported compliance at quarter-end.
- Investing activities used $4.2 million, including $4.0 million for internal-use software. Financing activities used $1.5 million, including a $1.3 million revolver repayment.
Changes, outlook, and notable items
- Advertising and content weakness reflected reduced customer spending amid macroeconomic uncertainty. Advertising declines included lower non-impression-based revenue, lower pricing, and fewer programmatic impressions. Content also faced lower advertiser counts and weaker spending in technology, telecommunications, and retail.
- Cost reductions lowered operating expenses, including compensation savings and lower transaction-related costs. General and administrative expense also benefited from increased sublease income. However, cost of revenue fell less quickly than revenue, reducing gross margin.
- Time Spent, the company’s defined audience-engagement measure, declined 3% year over year to 109.2 million hours. The measure excludes Facebook beginning in 2023; management reported Facebook time separately.
- Branded-content advertiser revenue retention was 62%, compared with 92% in the prior-year measure; the company reported more than 90 qualifying advertisers versus more than 115. These metrics are company-defined and not necessarily comparable across companies.
- On April 20, 2023, BuzzFeed announced a plan to reduce its workforce by approximately 15%. It expects $7 million to $11 million in restructuring charges, mainly severance, with actions expected substantially complete and paid by June 30, 2023. The filing provides no quantified forward revenue or earnings guidance.
- Management expects sufficient liquidity to fund operations for the next 12 months but highlighted significant liquidity challenges, dependence on cash generation or additional capital, and no firm commitment for new outside capital. It may pursue further cost savings or reduce its real-estate footprint.
- Other notable matters include $76.9 million of lease liabilities and a $47.9 million schedule of future sublease receipts; ongoing shareholder-related arbitrations seeking unspecified damages, which management does not expect to have a material adverse effect; and a $0.7 million maximum remaining lease guarantee for an investee, with no liability recorded.
Risks and controls
- Macroeconomic conditions, including reduced advertising and content budgets, are expected to continue weighing on revenue in 2023. Integration and sales execution for Complex Networks may also limit expected synergies or create additional costs.
- Failure to maintain the revolver’s cash covenant or obtain a waiver could permit the lender to accelerate repayment or exercise rights over collateral. BuzzFeed cautions that it may not obtain additional capital on acceptable terms or achieve planned cost savings.
- Management identified material weaknesses in internal control over financial reporting, including deficiencies in the close process and segregation of duties, technical-accounting information and documentation, and IT general controls. Disclosure controls and procedures were deemed ineffective as of March 31, 2023; remediation was ongoing.
- Foreign-currency movements may adversely affect reported results; the company does not hedge those exposures. The filing also identifies interest-rate, equity-investment, restructuring execution, and broader business risks.
Investor verification priorities
- Track revenue trends by advertising, content, and commerce, along with branded-content advertiser retention and audience engagement.
- Monitor cash burn, unrestricted cash relative to the $25 million covenant minimum, revolver capacity, and the availability and terms of any additional financing.
- Assess whether the workforce reduction delivers expected savings and whether its $7 million–$11 million cost estimate changes.
- Review progress in remediating internal-control weaknesses and any developments in the shareholder arbitrations or debt covenants.