BuzzFeed shares tumbled as much as 14% in after-hours trading on Monday following the company’s guidance that it expects overall revenue in the first quarter of 2023 between $61 million to $67 million — down more than 30% year over year and more than 50% quarter over quarter — and an adjusted EBITDA loss in the range of $18 million to $25 million.
The dismal outlook came alongside a net loss of $106.2 million on Monday for its fourth quarter of 2022, compared to a net income of $41.6 million during the same quarter a year ago. The net loss included a included a non-cash goodwill impairment charge of $102.3 million. Adjusted EBITDA came in at $17.6 million for the fourth quarter, compared to $34.2 million during the same period a year ago.
Total revenue for the quarter fell 8% year over year to $134.6 million, with advertising revenue dropping 27% year over year to $50.5 million and content revenue declining 9% year over year to $54.8 million. The commerce and other segment marked a bright spot, however, with revenue growing 76% year over year to $29.3 million.
In November, BuzzFeed forecasted fourth-quarter revenue between $129 million and $134 million and adjusted EBITDA of $12.5 million to $17.5 million. Analysts surveyed by Refinitiv expected a loss of 3 cents per share on revenue of $131.25 million.
BuzzFeed co-founder and CEO Jonah Peretti acknowledged that 2022 was a “challenging year” for the company’s business during its fourth quarter earnings call, citing “the dual headwinds of a weakening digital ad environment and the ongoing shift to short form vertical video.” According to the company, time spent by users during the fourth quarter fell 27% year over year to 135 million hours.
“Over the course of last year, many of our clients were forced to constrain ad budgets in order to navigate deteriorating macroeconomic conditions which pressured year over year growth in our advertising and content revenues,” he told analysts.
Peretti noted the company also worked to integrate Complex Networks into its business following its acquisition of the digital lifestyle publisher in 2021.
“While that integration resulted in meaningful cost synergies, we believe we have not yet reached our full revenue potential as a combined company,” he continued.
Looking ahead, Peretti said that content created by artificial intelligence would move from a research and development stage to part of BuzzFeed’s core business later this year.
“I cannot be more excited for us to explore these transformative new frontiers in digital media,” he added. “As creator-led and AI-powered content continue to gain audience share, BuzzFeed Inc is well positioned to both input and benefit from these trends.”
The company ended 2022 with approximately $56 million in cash and cash equivalents — the majority of which was held at Silicon Valley Bank as of Friday. However, BuzzFeed assured investors that it’s “accessing its funds and does not currently anticipate any disruption to its ongoing operations.” In a joint statement released by the U.S. Department of the Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation, the U.S. government reassured that all depositors will be fully protected.
BuzzFeed’s stock has struggled since the company went public through a SPAC merger in December 2021. An announcement that it planned to use AI to produce some content briefly lifted shares back in January, prompting NBCUniversal, which had previously invested in the company to explore digital media strategies, to sell some of its holdings. The stock has fallen two-thirds since its late-January peak, but it remains above the sub-$1 price where it started the year.