BuzzFeed, Inc. (NASDAQ:BZFD) Q3 2023 Earnings Call Transcript November 5, 2023
Operator: Good day, and thank you for standing by. Welcome to the BuzzFeed, Inc. Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Amita Tomkoria, Senior Vice President of Investor Relations.
Amita Tomkoria : Hi, everyone. Welcome to BuzzFeed, Inc.’s third quarter 2023 earnings conference call. I’m Amita Tomkoria, Senior Vice President of Investor Relations. Joining me today are Founder and CEO, Jonah Peretti; President, Marcela Martin; and CFO, Felicia DellaFortuna. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today’s press release, our 2022 annual report on Form 10-K, our Q1 and Q2 quarterly reports on Form 10-Q, and in our Q3 quarterly report on Form 10-Q to be filed tomorrow.
Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we present both GAAP and non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. The use of non-GAAP financial measures allows us to measure the operational strength and performance of our business to establish budgets and to develop operational goals for managing our business. We believe adjusted EBITDA and adjusted EBITDA margin are relevant and useful information for investors because they allow investors to view performance in a manner similar to the method used by our management. A reconciliation of these GAAP to non-GAAP measures is included in today’s earnings press release.
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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 today. We continue to operate in an unprecedented environment for digital media. Last quarter, I outlined some of the challenges facing digital media companies in the current platform ecosystem, namely the audience traffic referrals from the major platforms have diminished as they continue to prioritize their own vertical video formats amid intense competition for audience share. This has a direct impact on our ability to monetize content across our portfolio of brands. As you’ve seen by now, this has resulted in significant year-over-year revenue declines in Q3. However, Q3 also reflects the full benefit of the restructuring actions we announced earlier this year.
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Q&A Session
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As a result, we were able to deliver a profitable Q3, an improvement over Q2 and last year quarter despite lower revenues. We have already taken significant steps to combat the ongoing traffic and monetization challenges. Earlier this year, we made a decision to reprioritize editorial and creative resources across the business to focus on the platforms and formats with the highest potential for long-term monetization. We also made changes to our sales organization to align with the weaker demand environment, reducing organizational layers to drive efficiency and improve sales execution. With these changes in place, we continue to be laser-focused on driving traffic directly to our owned and operated websites and apps in order to reduce our dependence on the major tech platforms for audience traffic, improve monetization and pivot our business to adjust to the new realities of an altered digital media landscape.
Specifically, we continue to introduce new AI-assisted content formats to increase engagement and offer innovative advertising opportunities for our clients, expand our creator network and creator-driven advertising opportunities to participate in the rise of vertical video and prioritize destination news content to grow HuffPost front-page audience. We have strong and differentiated IP across BuzzFeed, Complex, Hot Ones, First We Feast, Tasty and HuffPost, each with a trusted and established brand identity. For BuzzFeed, it is pop culture, entertainment and curating the best of the Internet using AI to shift content delivery and distribution. For Complex, it’s delivering premium original content that covers the latest trends in sneakers, music and convergence culture.
For First We Feast, it is expanding the Hot Ones universe and building more IP at the intersection of food and pop culture. For Tasty, it’s attracting emerging food creators and leveraging the social platforms to build community around cooking. For HuffPost, it’s breaking news coverage and audience-centric stories for a massive direct-to-front page audience. Across this brand portfolio, we continue to lead the industry in terms of time spent. In Q3, U.S. Gen Z and Millennials once again spent vastly more time consuming our content than that of any other digital media company in our competitive set, according to Comscore. I will highlight a few of the specific areas where we are gaining traction with direct audiences and clients alike in the areas of AI, creators and destination news content.
Starting with BuzzFeed. BuzzFeed has always been a leader in data-driven storytelling, operating at the intersection of technology and media to curate the best of the Internet for our audiences. Over the past several months, the BuzzFeed editorial team has launched multiple new AI-powered content formats from interactive quizzes to chatbot games to AI-assisted content posts. In Q3, audience traffic to our original AI content was more than 60% higher relative to our non-AI content. And both paid news and time spent with our AI content grew versus Q2. Our chatbot games like Under the Influencer, the Clout Queen will determine whether you have what it takes to make it in the world of Internet influencing. And Nepogotchi where players get their very own nepo baby to raise and bond with have driven particularly deep audience engagement with time spent per user growing by a double-digit percentage versus Q2.
Building on the success of these games with our web and app-based audiences in particular, the BuzzFeed team is working to bring even more gaming content directly to the BuzzFeed mobile app. Complex Tentpole content continued to perform strongly in Q3, attracting premium brand sponsors. Across Complex’s flagship YouTube series, Sneakers Shopping, GOAT Talk, 360 With Speed and more, Q3 viewership on the platform grew approximately 40% year-over-year, attracting a wide variety of sponsorships from brands such as Starz and Honda. And the Complex team is preparing to host its 8th iteration of ComplexCon later this month, featuring Artistic Director, CACTUS PLANT FLEA MARKET and a performance by Grammy Award winning rapper and producer, Kid Cudi.
The event will welcome thousands of fans over 2 days in Long Beach, California to experience some of the world’s most influential artists and brands for an immersive culture-defining weekend of style, sneakers, art, food and music. First, We Feast, our food and pop culture brand kicked off its Season 22 of Hot Ones with guests NSYNC. The episode immediately went viral with multiple major news outlets covering the interview. Throughout the quarter, the show continued to drive millions of weekly viewers and attract premium brand sponsors such as Coors, State Farm, and Disney. Since 2015, Hot Ones have attracted the biggest celebrity guests, garnered more than 25 billion minutes watched, received multiple Emmy nominations and broken new ground for YouTube endemic talk shows.
