BuzzFeed(US:BZFD)2025-05-08 20:57PART I: FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis of financial condition, and disclosures on market risk and internal controls Item 1: Financial Statements (unaudited) This section presents BuzzFeed's unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, highlighting a net loss of $12.5 million, a cash position of $34.3 million, and total assets of $203.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $34,326 | $38,648 | | Total current assets | $88,029 | $100,886 | | Total assets | $203,249 | $221,398 | | Total current liabilities | $96,096 | $96,836 | | Total liabilities | $106,957 | $114,456 | | Total stockholders' equity | $96,292 | $106,942 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share amounts) | Income Statement Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $36,021 | $37,009 | | Loss from continuing operations | ($13,742) | ($23,466) | | Net loss from continuing operations | ($12,461) | ($26,950) | | Net loss | ($12,461) | ($35,782) | | Net loss per share (Basic & Diluted) | ($0.33) | ($0.74) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $1,344 | ($13,299) | | Cash (used in) provided by investing activities | ($3,449) | $105,157 | | Cash used in financing activities | ($2,454) | ($65,828) | | Net (decrease) increase in cash | ($4,322) | $25,870 | Notes to Condensed Consolidated Financial Statements The notes provide critical context to the financial statements, highlighting a "substantial doubt" about the company's ability to continue as a going concern due to liquidity issues - The company's financial statements were prepared on a going concern basis, but uncertainties related to its net losses and the upcoming put option on its convertible notes raise "substantial doubt" about its ability to continue as a going concern, with $34.3 million in cash and a net loss of $12.5 million for the quarter as of March 31, 2025323340 - The company has $29.7 million in convertible notes outstanding, with holders having the right to demand cash repurchase on or after May 31, 2025, and is seeking a new asset-backed term loan of up to $40.0 million as it currently lacks sufficient cash to fund this potential put343638 Revenue by Type and Geography (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Advertising | $21,387 | $20,944 | | Content | $4,424 | $6,735 | | Commerce and other | $10,210 | $9,330 | | Total | $36,021 | $37,009 | | By Geography | | | | United States | $32,799 | $33,287 | | International | $3,222 | $3,722 | | Total | $36,021 | $37,009 | - The company implemented a 5% workforce reduction in February 2025, incurring $1.9 million in restructuring costs, following a 16% workforce reduction in February 2024 that cost $2.9 million113114 - The sales of the Complex Networks business for $108.6 million in February 2024 and the First We Feast business for $82.5 million in December 2024 are classified as discontinued operations, with their historical results reclassified and reported separately from continuing operations146147156 - The mass arbitrations initiated by former employees regarding stock conversion issues following the 2021 Business Combination have been resolved and are now closed135 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Q1 2025 financial results, highlighting a 3% revenue decline to $36.0 million, a narrowed net loss, and improved Adjusted EBITDA due to cost-cutting, with significant liquidity risk tied to convertible notes becoming puttable in May 2025 - The company's financial results have been adversely impacted by macroeconomic factors affecting advertising budgets, and this trend is expected to continue in 2025178 Key Operational Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP | | | | Total revenue | $36,021 | $37,009 | | Net loss from continuing operations | ($12,461) | ($26,950) | | Non-GAAP | | | | Adjusted EBITDA | ($5,894) | ($14,367) | | Non-Financial | | | | Time Spent | 67,858 | 67,324 | Results of Operations Total revenue for Q1 2025 decreased by 3% year-over-year to $36.0 million, driven by a 34% decline in Content revenue, partially offset by increases in Commerce and Advertising revenue, leading to significantly reduced operating expenses and a narrowed loss from continuing operations Revenue by Category (in thousands) | Category | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Advertising | $21,387 | $20,944 | 2% | | Content | $4,424 | $6,735 | (34)% | | Commerce and other | $10,210 | $9,330 | 9% | | Total revenue | $36,021 | $37,009 | (3)% | - The 34% decrease in Content revenue was primarily driven by a $3.2 million drop in direct sold content, attributed to a leaner sales team and a strategic shift towards programmatic and affiliate products194196 - Operating costs decreased significantly year-over-year due to cost-saving actions: Cost of Revenue was down 13%, Sales & Marketing was down 49%, and General & Administrative was down 12%198199200 Reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss from continuing operations | ($12,461) | ($26,950) | | Adjustments: | | | | Income tax provision | 80 | 682 | | Interest expense, net | 1,171 | 2,209 | | Other (income) expense, net | (1,298) | 556 | | Depreciation and amortization | 4,585 | 5,479 | | Stock-based compensation | 1,377 | 704 | | Change in fair value of warrant liabilities | (1,234) | 37 | | Restructuring | 1,886 | 2,916 | | Adjusted EBITDA | ($5,894) | ($14,367) | Liquidity and Capital Resources The company faces a critical liquidity situation, raising "substantial doubt" about its ability to continue as a going concern, with $34.3 million in cash and a significant risk from $29.7 million in convertible notes puttable by holders in May 2025 - The company's history of significant losses and its current cash position of $34.3 million as of March 31, 2025, contribute to the going concern uncertainty216 - A key risk is the $29.7 million in convertible notes, which have a holder put option exercisable on or after May 31, 2025, and the company does not have sufficient cash to fund a full repurchase217226 - To address its capital needs, the company has entered into a non-binding term sheet for an asset-backed term loan of up to $40.0 million, with proceeds intended to repurchase the remaining notes218 - These factors combined raise "substantial doubt about our ability to continue as a going concern," and the financial statements do not include any adjustments that might result from this uncertainty221 Cash Flows from Continuing Operations (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Operating Activities | $1,344 | ($3,853) | | Investing Activities | ($3,449) | ($3,418) | | Financing Activities | ($2,454) | ($65,828) | Item 3: Quantitative and Qualitative Disclosures About Market Risk The company is exposed to several market risks in its ordinary course of business, primarily including foreign currency exchange risk, interest rate fluctuation risk on cash holdings, and equity investment risk - The company is exposed to foreign currency risk as it transacts business in various foreign currencies, primarily the British pound, Japanese yen, Australian dollar, and Canadian dollar248 - Interest rate fluctuations pose a risk to the interest income generated from the company's cash and cash equivalents249 - The company holds a $0.8 million equity investment in a privately-held company, which carries valuation risk due to the lack of a readily determinable fair value250 Item 4: Controls and Procedures The company acknowledges that material weaknesses in its internal control over financial reporting, identified in prior years, remain unremediated as of March 31, 2025, pertaining to the financial statement close process and IT general controls - Material weaknesses in internal control over financial reporting, identified in previous audits, remain unremediated252 - The weaknesses are related to: (i) a lack of formalized controls and segregation of duties in the financial statement close process, and (ii) insufficient IT general controls over financial systems, specifically in change management and logical security252 - Management is continuing to execute remediation plans, including enhancing documentation, redesigning workflows, centralizing IT functions, and implementing stricter policies and procedures253254255256 PART II: OTHER INFORMATION This section covers legal proceedings, updated risk factors, unregistered equity sales, defaults on senior securities, mine safety disclosures, other information, and a list of exhibits Item 1: Legal Proceedings This section reports on legal matters, focusing on the "Mass Arbitrations" case initiated in March 2022 by 91 former employees concerning their ability to trade stock post-Business Combination, which has since been resolved and closed - Two mass arbitrations were initiated in March 2022 by 91 former employees of Legacy BuzzFeed regarding alleged harm from being unable to convert and sell shares on the first day of trading after the Business Combination261 - After a series of legal actions, including complaints filed by BuzzFeed in the Delaware Court of Chancery, the arbitrations were ultimately resolved between the parties and are now considered closed267 Item 1A: Risk Factors The company states that there have been no material changes to its risk factors since those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - The company's risk factors have not changed materially since December 31, 2024269 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None270 Item 3: Defaults Upon Senior Securities This item is not applicable - Not applicable271 Item 4: Mine Safety Disclosures This item is not applicable - Not applicable272 Item 5: Other Information This item is not applicable - Not applicable273 Item 6: Exhibits This section provides a list of all exhibits filed with the Quarterly Report on Form 10-Q, including key corporate and financial documents such as merger agreements, debt indentures, and officer certifications - The exhibits include various agreements related to the 2021 business combination, asset purchase agreements for the Complex and First We Feast dispositions, and the indenture and its four supplemental amendments governing the company's convertible notes274275