BuzzFeed(US:BZFD)2024-05-14 21:15PART I: FINANCIAL INFORMATION Item 1. Financial Statements This section presents BuzzFeed's unaudited condensed consolidated financial statements for Q1 2024, highlighting the Complex Networks sale and substantial doubt about the company's ability to continue as a going concern Condensed Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Financial Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Revenue | $44,755 | $54,907 | | Total costs and expenses | $65,568 | $79,387 | | Loss from continuing operations | $(20,813) | $(24,480) | | Net loss from continuing operations | $(26,569) | $(29,392) | | Net loss from discontinued operations | $(9,213) | $(6,869) | | Net loss attributable to BuzzFeed, Inc. | $(35,729) | $(36,001) | Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $44,457 | $35,637 | | Total Assets | $299,037 | $411,476 | | Total Liabilities | $223,197 | $300,293 | | Total Stockholders' Equity | $75,840 | $111,183 | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(13,299) | $(179) | | Net cash provided by (used in) investing activities | $105,157 | $(4,201) | | Net cash used in financing activities | $(65,828) | $(1,481) | - The company has expressed substantial doubt about its ability to continue as a going concern due to recurring losses, negative cash flows from operations, and significant debt obligations, including convertible notes that may be repurchased by holders starting in December 202445424 - On February 21, 2024, the company completed the sale of its Complex Networks business (excluding the First We Feast brand) for approximately $108.6 million in cash, with results now presented as discontinued operations17963 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2024 financial performance, noting an 18% revenue decrease, a 16% workforce reduction, the Complex Networks sale, and reiterates substantial doubt about the company's ability to continue as a going concern due to liquidity issues and Nasdaq delisting risks Revenue by Category (Q1 2024 vs Q1 2023) | Revenue Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Advertising | $21,423 | $27,393 | (22)% | | Content | $13,107 | $16,251 | (19)% | | Commerce and other | $10,225 | $11,263 | (9)% | | Total revenue | $44,755 | $54,907 | (18)% | - In February 2024, the company implemented a restructuring plan that included an approximately 16% reduction in its workforce, incurring $2.9 million in related costs during the quarter245127 - Management states that due to potential holder repurchase rights on its convertible notes starting December 2024 and potential delisting from Nasdaq, there is substantial doubt about the company's ability to continue as a going concern as it currently lacks sufficient cash to fund these obligations308284311 Reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA (Non-GAAP) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net loss from continuing operations | $(26,569) | $(29,392) | | Adjustments (Tax, Interest, D&A, etc.) | $12,393 | $11,303 | | Restructuring | $2,916 | $0 | | Adjusted EBITDA | $(11,264) | $(18,089) | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines BuzzFeed's primary market risk exposures, including foreign currency exchange risk, interest rate fluctuation risk from its credit facility, and equity investment risk - The company is exposed to foreign currency exchange rate fluctuations, primarily from the British pound, Japanese yen, and Canadian dollar, which can negatively affect reported revenue and results326 - Interest rate risk is primarily related to the variable interest component on the remaining $15.5 million in letters of credit from its former Revolving Credit Facility355 - The company holds an equity investment in a privately-held company with a carrying value of $0.8 million as of March 31, 202438193 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024, due to two unremediated material weaknesses in internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2024, the company's disclosure controls and procedures were not effective361 - The ineffectiveness is due to two identified material weaknesses: (i) deficiencies in the financial statement close process, including segregation of duties, and (ii) a lack of formalized IT general controls over financial information systems357359360 - Management is continuing to implement remediation plans to address these control deficiencies, but the material weaknesses will not be considered remediated until the new controls operate effectively for a sufficient period387385 PART II: OTHER INFORMATION Item 1. Legal Proceedings This section details significant legal matters, including provisional settlements for VPPA mass arbitrations, ongoing mass arbitrations by former employees, and a new CIPA class action lawsuit - The company provisionally settled multiple mass arbitration demands in January 2024 related to alleged violations of the Video Privacy Protection Act (VPPA) concerning the use of tracking pixels on its websites392365139 - BuzzFeed is defending against mass arbitrations initiated by 91 former employees who claim they were unable to convert and sell their shares on the first day of trading after the company's business combination in December 2021394140 - In April 2024, a new lawsuit was filed against the company alleging violations of the California Invasion of Privacy Act (CIPA) related to the use of third-party trackers on its websites398169 Item 1A. Risk Factors This section updates the company's risk factors, primarily focusing on non-compliance with Nasdaq listing requirements, including audit committee composition, and the potential for delisting to trigger convertible note repurchase obligations - The company is not in compliance with Nasdaq Listing Rule 5605(c)(2)(A) because its audit committee consists of only two members, below the required minimum of three399436 - The company has until its 2025 annual meeting or April 25, 2025, to regain compliance with the audit committee requirement to avoid delisting372171 - A delisting of the company's Class A common stock would constitute a "fundamental change" under the indenture governing its convertible notes, giving holders the right to require the company to repurchase their notes for cash at 101% of the principal amount37357 Other Information (Items 2, 3, 4, 5, 6) This section covers remaining disclosure items, reporting no unregistered sales of equity securities, no defaults on senior securities, no mine safety disclosures, and lists the exhibits filed with the Form 10-Q - The company reported no information for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)374401411410 - Item 6 lists the exhibits filed with the quarterly report, including merger agreements, debt indentures, certifications, and XBRL data files402476