Thank you for standing by and welcome to BuzzFeed, Inc.'s Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. I would now like to hand the call over to SVP, Investor Relations, Amita Tomkoria. Please, go ahead.

Thank you. Hi, everyone, welcome to BuzzFeed, Inc.'s Fourth Quarter 2023 Earnings Conference Call. I'm Amita Tomkoria, Senior Vice President of Investor Relations. And 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 to be filed with the SEC and our 2023 quarterly reports on Form 10-Q. 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. 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. At BuzzFeed, the way we pursue our mission to spread truth, joy, and creativity on the Internet is as important as the mission itself. We've never been a conventional media company focused solely on content output. We've always been just as obsessed with the medium as we are with the message. By embracing new technologies, pioneering new formats, and innovating to create new ways to bring our content to life, we have built some of the most iconic brands on the Internet. Our early teams are responsible for much of the foundational work establishing social media. When we started, it wasn't the norm for content to be shareable, relatable, identity-affirming, and purpose-built to connect people into fandoms and affinity groups based on shared passion. Over the past 15 years, we've been part of this medium emerging, maturing, becoming ubiquitous and inspiring media outlets as diverse as the New York Times and Mr. Beast. By empowering these same core tenets of identity, fandom, and shareability, I believe we have a tremendous opportunity in front of us to build the defining media company for the AI era. To capitalize on this opportunity, we have aggressively refocused our business around our iconic brands: BuzzFeed, HuffPost, Tasty, First We Feast, and Hot Ones, which continued to lead the industry in Q4 in terms of time spent, according to Comscore. Our owned and operated websites and apps, where we have more control over monetization, are our most scalable, highest-margin, tech-led revenue streams, programmatic advertising and affiliate commerce. With this as a backdrop, I would like to share some important and exciting updates on our business. We continue to operate in a period of unprecedented change for digital media. Last month, we announced the sale of Complex for approximately two times 2023 revenue in an all-cash deal that brought in $114 million for the company. Our acquisition of Complex in 2021 coincided with the downturn in the advertising market. So instead of being able to close bigger, bundled portfolio deals, our brands ended up competing against each other for the available smaller opportunities. The sale marks an inflection point for BuzzFeed, Inc., as we refocus our business around scalable, high-margin, tech-led revenue streams. Complex was an asset that primarily drove revenues from the lower-margin businesses of custom branded video content and events. Following the sale, the majority of our revenue is now generated through programmatic advertising and affiliate commerce, both capital-efficient, high-margin, scalable businesses that leverage our existing tech infrastructure and have less exposure to the market and secular headwinds that we have experienced over the last several quarters. Further, selling Complex has allowed us to restructure our business around our own sites and apps, where we can better control monetization and build amazing experiences for our audience. The sale proceeds also improved our liquidity, helping us reduce our debt and interest obligations and optimize working capital. As a result, our company is now organized around the business lines that have historically been the most stable, profitable, and nimble. In fact, gross margin on revenues from continuing operations across BuzzFeed, HuffPost, Tasty, First We Feast, and Hot Ones was approximately 44% as compared to a 40% gross margin for the combined business, including Complex, a difference of 400 basis points. Turning to our financial results for our continuing operations, excluding Complex, fourth quarter revenues were $76 million, down 26% year-over-year, in line with our revised outlook provided last month. We aren't satisfied with this performance and made changes to drive improvements in our performance, which I will discuss shortly. We delivered fourth quarter adjusted EBITDA of $15 million, also in line with our revised outlook. Full year revenues were $253 million, also down 26% year-over-year. We generated an adjusted EBITDA loss of $5 million versus approximately breakeven adjusted EBITDA in the prior year. For both Q4 and the full year, adjusted EBITDA remained relatively stable year-over-year despite significant top-line pressure, which reflects the cost-saving initiatives we implemented throughout 2023. I think it is worthwhile to outline the current dynamics impacting our revenue performance as well as some of the strategic decisions we have made to adapt in this environment. First, digital publishers continue to be impacted by intense competition for audience time between the largest platforms. As these platforms attempt to retain users, they are sending less traffic to publishers, which has impacted our ability to drive advertising revenues based on audience time spent. Second, in a tough market for digital advertising, our clients have often had to forego custom-branded advertising campaigns. This has resulted in lower demand for custom-branded video products and experiential events. And third, with limited budgets, partners want to go deeper with one brand, with one specific target audience. They are no longer looking for offerings from a collection of brands. In this environment, our brands ended up competing against one another for fewer opportunities. To address these headwinds, we have made strategic organizational changes that I'm excited to share with you today. First, to reduce our dependence on the major platforms for audience traffic, we are prioritizing new content initiatives on our owned and operated websites and apps, where we have a loyal, highly-engaged audience and more control over monetization. Specifically, we are harnessing the power of AI to leverage human creativity. This includes leaning into AI-assisted content formats that are more engaging for our audience as well as AI tools and tech that make our teams and our clients more efficient. Second, we are moving away from branded video to focus on our most scalable, tech-led, and highest margin revenue line, specifically programmatic advertising and affiliate commerce. Together, these businesses drove more than $130 million in revenue in 2023. Divesting Complex was a significant step in this direction since branded video drove the majority of Complex's revenue. This was also some of our lowest margin revenue, positioning us to improve profitability as a result. Third, we are reorganizing our sales team by brand. To enable this, we implemented a restructuring program we shared with you last month to reduce centralized costs and direct more dedicated resources to our individual brands BuzzFeed, HuffPost, Tasty, First We Feast, and Hot Ones. This includes operating with a much leaner direct sales team as we leverage our existing tech infrastructure to drive programmatic advertising revenue. I am confident this is the right strategy for our business because it is centered on our leadership in the marketplace. Across our network of brands, we continue to lead the industry in terms of time spent. In Q4, audiences once again spent more time consuming our content than that of any other digital media company in our competitive set according to Comscore. This is driven by strong and differentiated IP across BuzzFeed, HuffPost, Tasty, First We Feast, and Hot Ones. Each has a trusted and established brand identity. For BuzzFeed, it is pop culture, entertainment, and curating the best of the Internet. As we continue to innovate around new AI-assisted formats and develop a more personalized experience, we see huge opportunity to reach even more young people and deepen engagement with our loyal website and app-based users. Among our app-based audience, we grew time spent per page view quarter-over-quarter throughout 2023. For HuffPost, it’s breaking news coverage and audience-centric stories for a massive, direct-to-front-page audience. The brand is also reaching its audience in new ways with expanded shopping content and two new podcasts, which have opened up new sources of advertising revenue. For Tasty, it's building the next generation of food creators. With more than 300 million cross-platform followers, three times the size of the next closest competitor, Tasty continues to lead the way. In 2023, Tasty drove impressive growth in viewership of its short-form creator-led content, up 25% year-over-year to reach 5 billion views across platforms. Tasty has translated this momentum into new opportunities for brands to partner with us, including sponsorships of creator video series, brand integrations with creator recipe content, and advertiser-sponsored experiences to connect creators and food lovers in real life. For First We Feast, it is expanding the Hot Ones universe and building more IP at the intersection of food and pop culture. With over 30 billion minutes watched to date, Hot Ones continues to attract premium episode sponsorships with household names like Sprite, Zelle, and Snickers. The franchise has continued to build on its cultural relevance and serve the insatiable demand of its fans with spin-off series like Heat Eaters and new CPG launches like Hot Ones Hot Pockets. Before I wrap up, I want to reiterate my excitement for the future. We have taken steps to stabilize our business. We have organized around our most profitable business lines, and we are excited to continue building on this stronger foundation by innovating to create the future of media. More specifically, we have a tremendous opportunity in front of us to build the defining media company for the AI era. We have only begun to see the power of AI in transforming the way we live, work, and interact. The Internet will be a vastly different place in a few years. AI will emerge as an entirely new medium. Creativity will flourish, and I believe BuzzFeed, Inc. is at the forefront of that change. We are already harnessing the capabilities of AI to be more creative and more efficient. While today, it is primarily a tool to adapt our existing businesses, I foresee entirely new businesses and revenue opportunities emerging as new technology evolves and we continue to learn from our experimentation with AI. I'm excited to work alongside you, our employees, creators, partners, and shareholders to realize this vision, and I look forward to sharing more in our annual letter to shareholders next month. I'll now hand the call over to Matt to discuss our financial performance and outlook.

Thank you, Jonah. I want to echo Jonah's remarks regarding the strength of our go-forward business. With the sale of Complex behind us and our restructuring program nearly fully executed, we believe we are a stronger, more stable, and more profitable business. We now have less exposure to declining lower-margin branded video revenues. We have meaningfully reduced our go-forward headcount and cash cost structure. As a result of paying down a significant portion of our debt, we have also reduced our go-forward cash interest obligations. While we still have work to do to address the traffic and revenue headwinds facing our business and digital publishers at large, I believe we are significantly better positioned than our peers to navigate the way forward sustainably and profitably. Moving on to our fourth quarter results. As a reminder, all financials and comparables presented here are on a continuing operations basis, which excludes Complex. Overall revenues for Q4 2023 declined 26% year-over-year to $75.7 million, in line with the revised outlook we provided last month. Performance by revenue line was as follows. Advertising revenues declined 25% year-over-year to $31.9 million, predominantly driven by lower year-over-year direct sold revenues. Our direct sales channel has been more acutely impacted by current trends in the advertising market. Bundling our brands into a single portfolio proved challenging during a time in which many of our clients face uncertainty with respect to their own budgets and spending. By contrast, trends in our programmatic advertising, which makes up the significant majority of our advertising revenues, saw a more moderate decline of 11% year-over-year in Q4. This was entirely driven by declines on third-party platforms, which offset growth in programmatic revenues on our owned and operated properties. The advertising revenues are driven largely by audience time spent with our content across platforms. In conjunction with advertising revenues, we continue to report US time spent across our owned and operated properties and third-party platforms according to Comscore. In Q4, US time spent as reported by Comscore declined 12% year-over-year to 72 million hours, driven primarily by ongoing declines in referral traffic from third-party platforms. However, we once again outpaced peer digital media companies in our competitive set. Content revenues declined 34% year-over-year to $27 million, driven primarily by a decline in the number of branded content advertisers. Amid a tighter digital ad market, we have continued to experience lower demand for our custom-branded content products, which typically focus on top-of-funnel ad spend aimed at driving overall brand awareness. The Q4 branded content net revenue retention was lower year-over-year, driven by the trends I just described. Commerce and other revenues of $16.7 million declined by $1.4 million or 8% year-over-year. Nearly all of our commerce revenues are generated from commissions earned on transactions initiated from our editorial shopping content. We delivered fourth quarter adjusted EBITDA of $15.1 million, also in line with our February outlook. It's important to note that per US GAAP, we have not allocated any of the shared expenses to discontinued operations. As a result, our fourth quarter and full-year 2023 adjusted EBITDA includes Complex's portion of shared corporate expenses, which are significant. However, as Jonah discussed earlier, the sale of Complex has led to meaningful improvements in the underlying profitability of our operations. In 2023, the gross margin on revenues from continuing operations, across BuzzFeed, HuffPost, Tasty, and First We Feast was approximately 44% as compared to a 40% gross margin for the combined business when including Complex. We ended the fourth quarter with cash and cash equivalents of approximately $36 million. In February, we closed the sale of Complex in an all-cash deal for approximately $114 million, including additional cash considerations. We used the sales proceeds to redeem $30.9 million of the company's $150 million convertible note at par value plus accrued interest of $0.6 million. We eliminated the company's revolving credit facility by repaying it in full for $35.5 million, which includes the outstanding balance plus accrued interest and certain fees. We will finance the strategic restructuring program we announced last month, estimated between $2.5 million to $4 million. The remaining cash proceeds will be retained for working capital optimization and general corporate purposes. We've already made significant strides in strengthening our balance sheet and improving overall liquidity. As we lean into our highest-margin revenue streams, we expect to make further progress towards becoming a cash-profitable business. Before I share our financial outlook for the first quarter, let me provide some context. Starting with revenues, our revenue performance reflects the challenges in the market with a bundled portfolio of brands during a time when our advertising partners have pulled back or delayed spending against the backdrop of prolonged uncertainty in the macroeconomic environment. As Jonah outlined earlier, we have made some strategic and organizational shifts to adapt our business and drive revenue improvement in this environment. Specifically, we've refocused the business around our own websites and apps, where trends in both time spent and revenue have performed better relative to the distributed network. We have prioritized our most scalable and highest-margin revenue streams, programmatic advertising and affiliate commerce, which drove more than $130 million in revenue in 2023 and fared significantly better in Q4 in terms of year-over-year revenue trends compared to our direct sales channel and branded content business. We have adopted a brand-first go-to-market approach. This includes operating with a much leaner direct sales team as we leverage our existing tech and infrastructure to drive programmatic advertising revenues. Each of our brands continues to resonate in the marketplace, holding a leadership position among its core audience and presenting a differentiated value proposition for advertisers. Building on this, we see an opportunity to drive improved revenue trends over time in programmatic advertising and affiliate commerce as we bring our brands to market individually, continue to introduce AI-assisted formats to drive audience engagement on our owned and operated websites and apps, where we have much more control over monetization, and deepen our relationships with our retail partners. In terms of adjusted EBITDA, our Q1 outlook reflects a partial benefit of our recently announced restructuring program. This program is expected to drive approximately $23 million in annualized compensation cost savings, and we expect the program to be fully executed by the end of April. Looking ahead, we expect that our Q2 operating expenses will better represent our ongoing cost structure. Year-over-year, we anticipate significant improvement in Q1 adjusted EBITDA despite the top-line pressure. With that, let me provide our financial outlook. All figures and comparables are presented on a continuing operations basis. For Q1 2024, we expect overall revenues in the range of $42 million to $44 million, which is 20% to 23% lower than the year-ago quarter. We expect adjusted EBITDA losses in the range of $10 million to $12 million, which reflects an improvement of approximately $7 million year-over-year at the midpoint. Before I wrap up, I want to highlight that the changes we have made, specifically to prioritize our high-margin programmatic and affiliate businesses and significantly reduce our cash cost structure, have positioned us to build a much stronger balance sheet in 2024 and take meaningful steps to becoming a cash-positive business. Thank you. I'll hand the call back to Amita so we can take questions.

Great. Thanks, Matt. We have received a bunch of questions ahead of the call and during the call, which I've gathered here. So we'll go ahead and get right into it. Jonah, the first question is for you, regarding the impact of AI. Can you talk a little bit more about how and when we might see some of this impact showing up in the numbers?

Yes, thanks for the question. The first impact of AI will be on our core business, specifically in our programmatic and affiliate revenue lines. What's so exciting about our programmatic and affiliate businesses is they're both highly scalable, tech-enabled revenue lines that are high margin, and you can get a lot of leverage by applying additional technology to those business lines. If you look at the recent developments in AI, particularly with large language models, it's now possible to have a machine read all of our content and understand it, and that's a huge difference. The capability to understand our content enhances opportunities for contextual advertising for programmatic. We can have AI select the perfect ads to align with our articles, something that wasn't possible until recently. The same applies to shopping; imagine everyone having a personal shopper who knows their purchase history and preferences and can make personalized recommendations. Those areas are where we're seeing AI apply to our existing business. I believe we'll see new business lines that haven't been invented yet as AI starts to power a new medium. A historical analogy would be when TV first emerged, companies initially placed radio shows on TV, not realizing it wasn't the best use of the medium. Similarly, we're beginning to create content that is more interactive and personalized with AI technology, marking the start of a new medium that will drive future growth for us.

Great. Thank you. Matt, the next question is for you, regarding profitability. You mentioned BuzzFeed becoming a more profitable business on the other side of the Complex transaction. How should we think about that regarding your Q1 guidance, which is forecasting adjusted EBITDA losses? Can you step us through that?

Sure. You can see the immediate profitability impact by looking at our full-year 2023 results. The gross margin for continuing operations was 44% compared to 40% for the consolidated business when including Complex, a difference of 400 basis points. For Q1 guidance, at the midpoint, adjusted EBITDA is expected to be $7 million better year-over-year. This improvement is despite lower year-over-year revenues, reflecting the cumulative impact of last year's cost-saving initiatives but only a partial impact of our most recent restructuring. As a reminder, that restructuring is projected to drive approximately $23 million in annualized compensation cost savings, and we expect it to be fully executed by the end of April. Looking ahead, our Q2 operating expenses should be much more representative of our ongoing cost structure.

Got it. Jonah, back to you regarding branded video. You talked about moving away from branded video as a source of revenue. Does that mean you'll no longer offer these types of products to clients? Can you elaborate on that shift?

Yes. The biggest challenge with branded video is that producing one-off videos is not a scalable or durable form of production, as every video needs to succeed individually. Creating unique ideas for each branded integration often lacks a natural home or reason for viewing. We're focusing on partnerships for differentiated, high-quality IP, such as Hot Ones and Tasty. These IPs allow us to explore unique business avenues like sponsorships and product integrations without being limited to standalone branded videos. The divestiture of Complex allows us to move away from high-cost, low-margin custom-branded content towards leveraging established pop culture brands that offer more scalable, effective avenues for brand integration. We're aiming to be smarter in our video production that maximizes profitability and scalability of brand partnerships.

Continuing from that, you made several references to your programmatic advertising business and affiliate commerce and refocusing around those two revenue streams. Can you discuss the specific opportunities you see in each of those areas? How are you thinking about Google's rollout of cookie deprecation and its impact?

I love our affiliates and programmatic businesses because they are scalable, high-margin areas allowing us to leverage tech investment further. Affiliation generates revenue from driving transactions. We drive over $0.5 billion in transactions for our retail partners, resulting in about $50 million for us. AI can help personalize experiences and drive even more transactions in the future. On the programmatic side, we can sell attention. We have more time spent than competitors, meaning significant monetization opportunities. AI advancements will enhance contextual alignment for ads and improve targeting as we transition away from cookies. More sophisticated targeting methods based on AI and contextual relevance will replace outdated cookie-based methods. We're preparing for this shift and believe it positions us strongly for future growth.

Thank you. Matt, we've seen some press reports regarding a potential licensing deal for BuzzFeed in the UK. Could you discuss the nature of that deal and its materiality?

Yes, the deal hasn't closed yet, so we'll share more soon. We're in the final stages of an agreement with an independent entity to license our BuzzFeed UK, Tasty UK, Seasoned, and HuffPost UK brands. It's akin to a strategic partnership we announced last June with our Australia business and Val Morgan Digital. Under the proposed license, the independent will support our brands across editorial and sales, offering a wider mix of products and media bundling. Regarding materiality, we can't assess that until it closes, but we'll keep everyone updated on the expected impact.

Got it. Jonah, regarding TikTok and a potential ban, what does that mean for BuzzFeed, and how do you view the role of social platforms in BuzzFeed's future?

TikTok is massive in terms of time spent, but they don't send much traffic to other properties. We don’t get a lot of audience from TikTok. They've been among the worst for monetization. Our scale there has required us to monetize through other means. If TikTok is banned, it may benefit platforms like Facebook and Instagram, as those audiences might migrate. If TikTok remains, we hope they'll enhance their ad products to better align with others in terms of revenue sharing. Regardless, we aim to reduce dependence on any big tech platform and focus on building strong audience relationships through our owned channels, which are more valuable. Our goal is to create amazing products that hold audience attention and allow us to leverage new technology, especially in AI, for content evolution.

Great. Thank you so much. We've time for a couple more questions here. Matt, diving into the debt situation and balance sheet, you mentioned the use of proceeds from the Complex transaction. How do you plan to address the remaining significant debt?

As I mentioned earlier, the sale of Complex enables us to significantly reduce our outstanding debt and interest obligations. We eliminated our revolving credit facility and paid down approximately 20% of the convertible note. The remaining balance of that note gives unsecured lenders the option to call in December. However, we plan to work with them before that date. As we utilized the proceeds, they agreed to a pay down to facilitate more allocation towards business essentials. They do have a claim on future asset sale proceeds, which could further reduce debt. Overall, by prioritizing high-margin programmatic and affiliate business, our stronger cash cost structure puts us on track for a more favorable debt management position in 2024.

Finally, Jonah, regarding the executive team, some recent departures have raised questions. Are there plans to rehire, or how are you addressing the executive team structure?

Thank you for the question. I am confident in our future leadership team. I'm pleased to announce that we are elevating Ken Blom to the role of Chief Business Officer across all our brands. He joins our new CFO, Matt Omer, and Jess Probus, our new publisher for BuzzFeed, Inc. We have a strong team and are all committed to the next stage of building the company.

Fantastic. Thank you, Jonah. Thank you, Matt. Thank you all for joining us. That wraps our Q&A session for today. I will hand the call back over to our operator for concluding remarks.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.