Release Date: May 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BuzzFeed Inc (BZFD, Financial) is leveraging AI to enhance user engagement and loyalty, with new features like AI image filters and chatbot games increasing direct audience interaction.
- The company has seen a 3% growth in direct traffic to BuzzFeed web and app properties from Q4, indicating a successful shift from reliance on third-party platforms to driving traffic to owned and operated sites.
- Programmatic advertising revenues across BuzzFeed and HuffPost websites and apps grew year-over-year for the third consecutive quarter, showcasing strength in BuzzFeed Inc (BZFD)'s largest and highest margin revenue streams.
- BuzzFeed Inc (BZFD) has established strong retail partnerships with major retailers like Amazon, Walmart, and Target, driving significant revenue through these relationships.
- The company has successfully implemented a cost savings plan, which is expected to yield approximately $23 million in annualized compensation cost savings, enhancing financial stability.
Negative Points
- Despite the growth in certain areas, overall revenue for Q1 2024 declined by 18% year-over-year, with advertising revenues down 22% due to ongoing pressure on direct sales channels and lower monetization on third-party platforms.
- US time spent on BuzzFeed Inc (BZFD)'s content as reported by Comscore declined 16% year-over-year, primarily due to ongoing declines in referral traffic from third-party platforms.
- Commerce and other revenues declined by 9% year-over-year, affected by less promotional spend by retailers and lower audience traffic compared to the previous year.
- The company reported adjusted EBITDA losses of $11.3 million for Q1, indicating ongoing financial challenges despite cost-saving measures.
- BuzzFeed Inc (BZFD) faces continued pressure on its direct sales channel and lower third-party platform monetization, which may impact future revenue growth.
Q & A Highlights
Q: Can you discuss the opportunities for BuzzFeed to leverage first-party data and the engaged audience to attract retail media network dollars?
A: Jonah Peretti, CEO of BuzzFeed, highlighted the unique position of BuzzFeed in the retail media network space due to its focus on product discovery and emotional buying experiences. He mentioned the company's ability to capture rich first-party data, which is appealing to large retailers like Amazon, Walmart, and Target. This data helps in driving transactions and attracting advertising from retail media networks, enhancing revenue growth.
Q: What are the "green shoots" indicating potential growth in owned and operated (O&O) traffic and content initiatives?
A: Matthew Omer, CFO of BuzzFeed, noted improvements in direct audience traffic and deeper engagement among the most loyal users. He mentioned a 3% quarter-over-quarter growth in BuzzFeed web and app direct traffic and an increase in page views per web visitor for four consecutive months, signaling positive trends in O&O traffic and engagement.
Q: Following the sale of Complex, how does BuzzFeed view its brand portfolio and potential future asset sales?
A: Jonah Peretti explained that BuzzFeed continues to see strong interest in its brands, indicating their robust market reputation. The focus remains on leveraging programmatic and affiliate revenue streams, particularly through BuzzFeed and HuffPost, which are well-positioned to benefit from AI enhancements.
Q: Can you elaborate on the benefits seen from focusing on programmatic advertising and its impact on revenue and EBITDA?
A: Matthew Omer discussed the consistent growth in programmatic revenue across BuzzFeed's largest properties and its positive impact on financial performance. He emphasized that the focus on high-margin programmatic and affiliate revenues is expected to drive improved EBITDA trends and counterbalance revenue pressures in other areas.
Q: How is BuzzFeed planning to drive margin expansion and cash generation throughout the rest of the year?
A: Matthew Omer mentioned the significant cost savings from recent restructuring efforts, approximately $23 million annually, which will help in managing cash costs effectively. The strategy includes focusing on higher-margin revenue streams and optimizing the cost structure to enhance profitability and cash flow.
Q: How does the delay in Google cookie deprecation impact BuzzFeed's strategy with advertisers?
A: Jonah Peretti expressed that while the delay provides more preparation time, BuzzFeed was already well-prepared. He discussed initiatives to leverage first-party data and contextual advertising to mitigate potential impacts from the deprecation. These efforts include enhancing ad targeting capabilities and exploring AI-driven contextual advertising solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
