BuzzFeed, Inc.

Good day, and thank you for standing by, and welcome to BuzzFeed, Inc. Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amedia Tamakora, Senior Vice President of Investor Relations. Please go ahead.

Hi, everyone. Welcome to BuzzFeed, Inc. Second Quarter 2024 Earnings Conference Call. I'm Amita Tumkoria, Senior Vice President of Investor Relations. Joining me today are CEO Jonah Peretti and CFO Matt Omer. 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 2023 Annual Report on Form 10-K, our Q1 2024 Quarterly Report on Form 10-Q, and our Q2 2024 Quarterly Report on Form 10-Q to be filed with the SEC. 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 margins. 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 gap-to-non-gap measures is included in today's earnings press release. 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.

Thank you, Amita. Good afternoon, everyone, and thank you for joining us today. Before I get into the specifics about the quarter, I want to provide a bit of context. As I mentioned on our past calls, we take a long-term approach to managing our business. This is why we've kept our world-class tech team and product teams intact, despite a tough market where many of our competitors shed those costs to provide short-term savings. We have a strong conviction that continuously experimenting and innovating with technology sets us up to thrive in the next era of the Internet. We've always lived at the intersection of content and technology, and we're increasingly leaning into new technologies that are beginning to transform the media industry. I'm pleased to share that we are beginning to see the fruits of our experimentation and innovation. In particular, generative AI, interactive contact formats, enhanced personalization are starting to drive improvements in key metrics across our business. These improvements include more audience loyalty, more user logins, higher conversion on our commerce content, better targeting and growth in our advertising inventory, revenue growth in our most scalable lines of business, and improved profitability. By leaning into new technologies, we have also accelerated the pace of new product development, made our content creators more efficient and creative, and invited our audience to participate directly in AI-assisted content creation. We've already done much of the hard work that will enable us to do more of the fun consumer-facing work moving forward. Since the start of the year, we've built foundational capacities with the help of AI that now power internal content development tools like our AI co-pilot, as well as consumer-facing experiences, like our AI-assisted content generators. By leveraging a range of embedding techniques to represent our content, in conjunction with vector data stores and model fine-tuning capabilities, we have the right building blocks in place to recommend, remix, personalize, and generate new forms of media for our audiences. Our teams are very excited about the capabilities we've built so far and even more excited about all the new things we'll be able to launch in the coming months and years. We'll share more with you on future earning calls so you can track our progress. These changes have also allowed us to complete the shift away from platform-dependent model of content distribution and monetization. In Q2, our teams were focused on deploying many of the tools to drive deeper audience engagement on our owned and operated websites and apps. And our Q2 results demonstrate the progress we've made in that regard, along with stabilizing our business more generally. As compared to Q1, audience time spent with our content in Q2 grew 5%, according to Comscore. And as the only digital media company among our competitors set to grow over this period, we believe this highlights the strength of our differentiated business model in contrast with peers whose traffic is highly dependent on search and other external referral sources. We also grew time spent among our core demographic, millennials and Gen Z, by 11% versus Q1. In terms of revenue, on a year-over-year basis, we grew Q2 revenues in two of our largest and highest margin lines of business, programmatic advertising and affiliate commerce. And we exceeded our May profit outlook, delivering $2.7 million in Q2 adjusted EBITDA for a $5 million improvement year-over-year. With a vast majority of audience engagement happening on our owned and operated properties, we are well positioned to control our own destiny in terms of enhancing personalization, enhancing and personalizing the audience experience and driving long-term monetization. In Q2, 90% of audience time spent with our content was on our own websites and apps, and direct traffic continues to be our largest source of audience traffic, far surpassing referrals from third-party platforms, including Facebook. Direct traffic continued to show stability in Q2 across our two largest owned and operated properties, BuzzFeed and HuffPost. More importantly, we saw strong evidence of deepened loyalty among our audience. Logged in users grew versus Q1, better positioning us to mitigate potential risk of cookie depreciation. As we introduced more interactive content, we also has seen that the number of loyal users or the number of users that visit us more than once a week has grown by a double digit percentage since Q4 2023. And we are also seeing momentum in terms of repeat visits on our site. Page views per unique visitor grew quarter over quarter for the third consecutive quarter. Loyalty continues to be particularly strong across our suite of BuzzFeed games, and the vast majority of Q2 game users on the app return within a week. One of our biggest learnings in Q2 was that when creativity is in the hands of our audience, engagement is deeper. Whether it's our Sims AI generator, make your own emoji, or turn your favorite celeb into Shrek, our AI-powered content generators have demonstrated higher audience engagement and participation relative to other formats. We've also launched a new BuzzFeed homepage in June, offering more engagement opportunities for our audience directly on the page, from polls to quizzes to widgets that make it easier for the audience to learn more about themselves and each other. Although it is still early, following the new site launch, we have seen measurable increases in audience engagement and monetization, with more actions per visit and a double-digit percentage increase in programmatic revenue per homepage views. Looking ahead, we expect to build on these engagement and monetization trends with a new landing page that features all of BuzzFeed's games, a social leaderboard feature, and a newly designed BuzzFeed app that builds on the learnings from our web homepage. We see a future where our app provides a mix of trusted content, games and interactive features, creating a hybrid between a content publisher and a social media destination. I'm excited to be building a platform that aligns with the future of digital media. Turning to our revenue performance. I'm pleased to share that we grew Q2 programmatic advertising by 3% year-over-year. This is the first quarter of year-over-year growth in overall programmatic revenue since Q1 2022. A signal that our strategic and organizational changes we have made to stabilize our business are beginning to pay off. And importantly, these changes are also helping us offset the impact of declines on third-party platforms and validating our focus on our owned and operated properties. Although our overall revenue performance continues to be pressured by headwinds in the direct sales channel, we are optimistic about the progress we are seeing on the programmatic side, which represents approximately two-thirds of our overall advertising revenues. As part of our larger company-wide transformation, we continue to prioritize our most scalable high-margin revenue lines, and we expect this momentum to continue into Q3 as strength in our high-margin revenue lines drives further year-over-year improvements in adjusted EBITDA. Our affiliate commerce business also had a strong Q2, growing revenues by 9% year-over-year. As I discussed in past calls, retail partnerships are an important part of our business. With coverage like editorially-driven product roundups, We drive hundreds of millions of dollars in commerce transactions on behalf of the largest retailers in the world. But our retail partnerships extend far beyond our editorial shopping content. Our relationship with Target is a great example of how we put our diverse product catalog to work to drive actionable results. Target leverages our high-quality on-site real estate to promote general brand aids and supplier-funded campaigns to secure through Rondell, its retail media business, which drives advertising revenue for BuzzFeed. They also purchase branded sponsored content like homepage takeovers to spotlight their big tentpole moments like Target Circle Week or the holiday gifting season. And more recently, Target partnered with us on AI this past holiday shopping season as we introduced Shopee, our AI-powered shopping assistant that helped our readers find the perfect gift for everyone on their list. Our expertise in serving retail partners continues continued to shine in Q3. Off of the back of Amazon's largest Prime Day yet, BuzzFeed also had its biggest Prime Day ever, growing revenues over the two-day period by a strong double-digit percentage year over year, surpassing even Amazon's overall Prime growth and demonstrating the value add we're able to deliver on behalf of the world's largest retailers. I am so proud of the teams whose expertise and dedication contributed to such impressive results for the company. As we continue to make progress in growing our programmatic and affiliate revenue lines, This quarter, we are introducing more transparency into our revenue reporting. I encourage you to flip through our Q2 investor letter available on our IR website for a closer look at revenue performance. Matt will also share more on this shortly. Although legacy digital media continues to face challenges, we are charting a path to a better future and redefining the industry for this next era of technology. I want to emphasize the progress we have made in stabilizing the business in a relatively short period of time. Since the start of the year, we have built the leading platform for AI-powered content, accelerated the launch of tons of new content from AI-powered formats to games to new homepage experience, reduced our debt, reduced our cost structure, improved our cash position, returned two of our largest and highest margin revenue lines to growth, and have driven year-over-year improvements in profitability. I'm grateful to work alongside such a talented and dedicated team and excited to showcase what's next for BuzzFeed as we continue to build the defining media company for the AI era. I'll now hand the call off to Matt to discuss our financial performance and outlook.