UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Large accelerated filer | ☐ | Accelerated filer | ☐ | |
☒ | Smaller reporting company | |||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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As of August 5, 2022, there were
BUZZFEED, INC.
TABLE OF CONTENTS
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Condensed Consolidated Statements of Stockholders’ Equity (Deficit) | 8 | |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 | |
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2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Our forward-looking statements include, but are not limited to, statements regarding our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:
● | anticipated trends, growth rates, and challenges in our business and in the markets in which we operate; |
● | demand for products and services and changes in traffic; |
● | changes in the business and competitive environment in which we operate; |
● | developments and projections relating to our competitors and the digital media industry; |
● | the impact of national and local economic and other conditions and developments in technology, each of which could influence the levels (rate and volume) of our advertising, the growth of our business and the implementation of our strategic initiatives; |
● | poor quality broadband infrastructure in certain markets; |
● | technological developments; |
● | our success in retaining or recruiting, or changes required in, officers, key employees or directors; |
● | our business, operations and financial performance, including expectations with respect to our financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder and future business plans and growth opportunities; |
● | our future capital requirements and sources and uses of cash, including our ability to obtain additional capital in the future; |
● | expectations regarding future acquisitions, partnerships or other relationships with third parties; |
● | government regulation, including revised foreign content and ownership regulations; |
● | the continued impact of the COVID-19 pandemic and evolving strains of COVID-19 on our business and the actions we may take in the future in response thereto; |
● | our ability to maintain the listing of our Class A common stock and warrants on Nasdaq; and |
● | other factors detailed under the section entitled “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021. |
3
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the section entitled “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
This Quarterly Report on Form 10-Q contains estimates and information concerning our industry, our business, and the market for our products and services, including our general expectations of our market position, market growth forecasts, our market opportunity, and size of the markets in which we participate, that are based on industry publications, surveys, and reports that have been prepared by independent third parties. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. Although we have not independently verified the accuracy or completeness of the data contained in these industry publications, surveys, and reports, we believe the publications, surveys, and reports are generally reliable, although such information is inherently subject to uncertainties and imprecision. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021. These and other factors could cause results to differ materially from those expressed in these publications and reports.
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (https://investors.buzzfeed.com), U.S. Securities and Exchange Commission (“SEC”) filings, webcasts, press releases, and conference calls. We use these mediums to communicate with investors and the general public about our company, our products and services, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors, the media, and others interested in our company to review the information that we post on our investor relations website.
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PART I: FINANCIAL INFORMATION
ITEM 1: Financial Statements (unaudited)
BUZZFEED, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
June 30, | ||||||
2022 | December 31, | |||||
| (Unaudited) |
| 2021 | |||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | | $ | | ||
Accounts receivable (net of allowance for doubtful accounts of $ |
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Prepaid and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use assets | | — | ||||
Capitalized software costs, net |
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Intangible assets, net | | | ||||
Goodwill | | | ||||
Prepaid and other assets |
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Total assets | $ | | $ | | ||
Liabilities and Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | | $ | | ||
Accrued expenses |
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Deferred rent |
| — |
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Deferred revenue |
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Accrued compensation |
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Current lease liabilities | | — | ||||
Other current liabilities |
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Total current liabilities |
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Deferred rent |
| — |
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Noncurrent lease liabilities | | — | ||||
Debt |
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Derivative liability | | | ||||
Warrant liabilities | | | ||||
Other liabilities |
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Total liabilities |
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Commitments and contingencies | ||||||
Redeemable noncontrolling interest |
| — |
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Stockholders’ equity | ||||||
Class A Common stock, $ |
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Class B Common stock, $ |
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Class C Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
| ( | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total BuzzFeed, Inc. stockholders’ equity |
| |
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Noncontrolling interests | | | ||||
Total stockholders’ equity | | | ||||
Total liabilities and equity | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Revenue | $ | | $ | | $ | | $ | | ||||
Costs and Expenses | ||||||||||||
Cost of revenue, excluding depreciation and amortization |
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Sales and marketing |
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General and administrative |
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Research and development |
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Depreciation and amortization |
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Total costs and expenses |
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Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Other (expense) income, net |
| ( |
| |
| ( |
| | ||||
Interest expense, net | ( | ( | ( | ( | ||||||||
Change in fair value of warrant liabilities | | — | | — | ||||||||
Change in fair value of derivative liability | | — | | — | ||||||||
Loss before income taxes |
| ( |
| ( |
| ( |
| ( | ||||
Income tax provision (benefit) |
| |
| |
| |
| ( | ||||
Net loss |
| ( |
| ( |
| ( |
| ( | ||||
Net income attributable to the redeemable noncontrolling interest |
| — |
| |
| |
| | ||||
Net income (loss) attributable to noncontrolling interests | | ( | | ( | ||||||||
Net loss attributable to BuzzFeed, Inc. | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per Class A, Class B and Class C common share: | ||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average common shares outstanding: | ||||||||||||
Basic | | | | | ||||||||
Diluted |
| | |
| |
| |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited) (In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive loss |
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Foreign currency translation adjustment |
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| ( | ||||
Other comprehensive income (loss) |
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| ( | ||||
Comprehensive loss |
| ( |
| ( |
| ( |
| ( | ||||
Comprehensive income attributable to the redeemable noncontrolling interest |
| — |
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Comprehensive income (loss) attributable to noncontrolling interests |
| |
| ( |
| |
| ( | ||||
Foreign currency translation adjustment attributable to noncontrolling interests | ( | — | ( | — | ||||||||
Comprehensive loss attributable to BuzzFeed, Inc. | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited) (In thousands)
Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||
Accumulated | Total | ||||||||||||||||||||||||||||||||
Common Stock – | Common Stock – | Common Stock – | Additional | other | BuzzFeed, Inc. | Total | |||||||||||||||||||||||||||
Class A |
| Class B | Class C | paid-in | Accumulated | comprehensive | stockholders’ | Noncontrolling | stockholders’ | ||||||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| capital |
| deficit |
| loss | equity |
| interests |
| equity | |||||||||||
Balance at January 1, 2022 | | $ | | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | ||||||||||||
Net loss | — | — | — | — | — | — | — | ( | — | ( | | ( | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | | — | — | | — | | |||||||||||||||||||||
Issuance of common stock in connection with share-based plans | | | — | — | — | — | | — | — | | — | | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||
Conversion of Class B common stocks to Class A common stock | | — | ( | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance at March 31, 2022 | | $ | | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | ||||||||||||
Net loss | — | — | — | — | — | — | — | ( | — | ( | | ( | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | | — | — | | — | | |||||||||||||||||||||
Issuance of common stock in connection with share-based plans | | — | — | — | — | — | | — | — | | — | | |||||||||||||||||||||
Shares withheld for employee taxes | ( | — | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | — | | | ( | | |||||||||||||||||||||
Reclassification of noncontrolling interest (see Note 10) | — | — | — | — | — | — | — | — | — | — | | | |||||||||||||||||||||
Conversion of Class B common stock to Class A common stock | | — | ( | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance at June 30, 2022 | | $ | | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | |
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Accumulated | Total | ||||||||||||||||||||||||||||||||
Common Stock – | Common Stock – | Common Stock – | Additional | other | BuzzFeed, Inc. | Total | |||||||||||||||||||||||||||
Class A | Class B | Class C | paid-in | Accumulated | comprehensive | stockholders’ | Noncontrolling | stockholders’ | |||||||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| capital |
| deficit |
| loss |
| (deficit) equity |
| interests |
| (deficit) equity | ||||||||||
Balance at January 1, 2021 | | $ | — |
| | $ | |
| — | $ | — | $ | | $ | ( | $ | ( | $ | ( | $ | — | $ | ( | ||||||||||
Net loss | — |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( |
| ( |
| ( | ||||||||||
Issuance of common stock | — |
| — |
| — |
| — |
| |
| |
| |
| — |
| — |
| |
| — |
| | ||||||||||
HuffPost Acquisition | — |
| — |
| — |
| — |
| |
| — |
| |
| — |
| — |
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Stock-based compensation | — |
| — |
| — |
| — |
| — |
| — |
| |
| — |
| — |
| |
| — |
| | ||||||||||
Issuance of common stock upon exercise of stock options | |
| — |
| |
| — |
| — |
| — |
| |
| — |
| — |
| |
| — |
| | ||||||||||
Other comprehensive loss | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( |
| — | ( | |||||||||||
Balance at March 31, 2021 | | $ | — |
| | $ | |
| | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | ( | ||||||||||
Net loss | — | — | — | — | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | | — | — | | — | | |||||||||||||||||||||
Issuance of common stock upon exercise of stock options | | — | | — | — | — | | — | — | | — | | |||||||||||||||||||||
Merger of BuzzFeed Japan and HuffPost Japan | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | — | | | — | | |||||||||||||||||||||
Balance at June 30, 2021 | | $ | — | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
Six Months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
Operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation and amortization |
| | | |||
Unrealized loss (gain) on foreign currency |
| | ( | |||
Stock based compensation |
| | | |||
Change in fair value of warrants | ( | — | ||||
Change in fair value of derivative liability | ( | — | ||||
Amortization of debt discount and deferred issuance costs | | — | ||||
Deferred income tax |
| | ( | |||
Provision for doubtful accounts |
| | ( | |||
Unrealized gain on investment | ( | — | ||||
Non-cash lease expense | | — | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable |
| | | |||
Prepaid expenses and other current assets and prepaid expenses and other assets |
| ( | ( | |||
Accounts payable |
| ( | | |||
Deferred rent |
| — | ( | |||
Accrued compensation |
| ( | | |||
Accrued expenses, other current liabilities and other liabilities |
| ( | ( | |||
Lease liabilities | ( | — | ||||
Deferred revenue |
| | ( | |||
Cash (used in) provided by operating activities |
| ( | | |||
Investing activities: | ||||||
Capital expenditures |
| ( | ( | |||
Capitalization of internal-use software |
| ( | ( | |||
Cash from acquired business, net |
| — |
| | ||
Cash (used in) provided by investing activities |
| ( | ( | |||
Financing activities: | ||||||
Proceeds from issuance of common stock | — | | ||||
Proceeds from exercise of stock options | | | ||||
Payment for shares withheld for employee taxes | ( | — | ||||
Borrowings (payments) on revolving credit facilities | | ( | ||||
Deferred reverse recapitalization costs | ( |
| — | |||
Cash provided by (used in) financing activities |
| | | |||
Effect of currency translation on cash and cash equivalents | ( | ( | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | ( | | ||||
Cash and cash equivalents and restricted cash at beginning of period | | | ||||
Cash and cash equivalents and restricted cash at end of period | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
BUZZFEED, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Tabular amounts in thousands, except per share amounts)
1. Description of the Business
BuzzFeed, Inc. (referred to herein, collectively with its subsidiaries, as “BuzzFeed” or the “Company”) is a global media company with social, content-driven publishing technology. BuzzFeed provides breaking news, original reporting, entertainment, and video across its owned and operated brands and the social web to its global audience. BuzzFeed derives its revenue primarily from content, advertising and commerce sold to leading brands. The Company has
On December 3, 2021 (the “Closing Date”), the Company consummated the previously announced business combinations in connection with (i) that certain Agreement and Plan of Merger, dated June 24, 2021 (as amended, the “Merger Agreement”), by and among 890 5th Avenue Partners, Inc. (“890”), certain wholly-owned subsidiaries of 890, and BuzzFeed, Inc., a Delaware corporation (“Legacy BuzzFeed”); and (ii) the Membership Interest Purchase Agreement, dated as of March 27, 2021 (as amended, the “C Acquisition Purchase Agreement”), by and among Legacy BuzzFeed, CM Partners, LLC, Complex Media, Inc., Verizon CMP Holdings LLC and HDS II, Inc., pursuant to which the Company acquired
The shares and corresponding capital amounts and earnings per share related to Legacy BuzzFeed redeemable convertible preferred stock (other than Series F Preferred Stock and Series G Preferred Stock) and Legacy BuzzFeed common stock prior to the Business Combination have been retroactively recast as shares reflecting the Exchange Ratio of
In addition, pursuant to subscription agreements entered into in connection with the Merger Agreement, the Company issued, and certain investors purchased, $
Liquidity
As of and for the six months ended June 30, 2022, the Company had cash and cash equivalents of $
COVID-19
In March 2020, the World Health Organization declared the viral strain of COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The spread of COVID-19 and the resulting economic contraction has resulted in increased business uncertainty and significantly impacted the Company’s business and results of operations.
The Company believes the COVID-19 pandemic drove a shift in commerce from offline to online, including an increase in online shopping, which we believe contributed to the rapid growth we experienced in our commerce revenue for fiscal 2020. However, the growth of the Company’s commerce revenue decelerated during 2021 and continued to decelerate in the first half of 2022 as shelter-in-place orders were lifted, consumers returned to shopping in stores, and retailers struggled with supply chain disruptions and labor shortages.
The continued duration and severity of the COVID-19 pandemic and evolving strain