BuzzFeed Posts $106.2M Quarterly Loss Over Impairment Charge
Digital media company BuzzFeed swung to a fourth-quarter loss on reduced overall revenues and a non-cash goodwill impairment charge.
BuzzFeed brought in $134.6 million in overall revenues during the fourth quarter. The digital media company ended the quarter with $106 million in net losses, compared to a year-earlier profit of $41.5 million.
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During the latest quarter, BuzzFeed posted a non-cash goodwill impairment charge of $102.3 million, in part due to a steep decline in the value of the company’s stock price in December 2022.
Content accounted for $54.7 million of the company’s revenue, down 9 percent year-over-year, while advertising revenue fell 27 percent to $50.5 million during the latest quarter, and commerce revenue brought in $29.3 million during the fourth quarter, up 76 percent year-over-year.
BuzzFeed said time spent by users during the fourth quarter fell 27 percent, to 135 million hours.
As of March 10, 2023, the majority of the company’s cash and cash equivalents balance were held at Silicon Valley Bank. However, in a joint statement released by the U.S. Department of the Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation, the U.S. government reassured that all depositors will be fully protected.
“The company is accessing its funds and does not currently anticipate any disruption to its ongoing operations,” BuzzFeed CFO Felicia DellaFortuna told analysts during an after-market call. Jonah Peretti, BuzzFeed founder and CEO, added that fallout from Silicon Valley Bank disrupted the company over the weekend, but wasn’t expected to have additional impact on advertising revenues going forward.
Stock in BuzzFeed fell 13 cents, or around 10 percent, to $1.15 in after-market trading after spiking in January on news that the media company was going to lean into OpenAI, the artificial intelligence-powered tool, for some content generation, while also unveiling a content deal with Meta.
“There’s no denying that 2022 was a tough year for digital media. The challenges we faced in Q4 are also impacting us in Q1 2023, and it is clear we have more work to do to realize the full potential of our combined brand portfolio,” Peretti said in a statement that accompanied the fourth-quarter earnings.
During the after-market analyst call, Peretti discussed BuzzFeed’s ongoing pivot to short-form video content aimed at social media platforms like TikTok, Instagram and YouTube, which remains a drag on overall revenues into 2023. “It takes time to ramp monetization of newer content formats,” he told investors.
The BuzzFeed CEO also said the company would begin using OpenAI for content creation this year, to kick off initially with quiz content generated for users, a game format that allows machine learning-generated advice to be given to those seeking to be internet influencers, and AI used to generate animated video characters. “We view AI as an exciting new creativity tool, one that humans can harness to open up new avenues for imagination and storytelling,” Peretti said as the company builds on a partnership with OpenAI.
The media company, which now encompasses BuzzFeed, Complex and HuffPost, has struggled to perform since its IPO in 2021. On the film and TV side, BuzzFeed Studios has partnerships with Lionsgate and NBCUniversal and has released films like Book of Love, 1Up and My Fake Boyfriend on Amazon’s Prime Video.
BuzzFeed has also had its share of layoffs, having recently announced it will eliminate around 12 percent of its workforce — about 182 of 1,522 staffers — as the company’s revenue has been hit by macroeconomic headwinds.