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Despite significant declines in BuzzFeed Inc.’s commerce business, overall revenue was up 26% year over year in the first quarter of 2022 — its first quarter as a fully combined company, which includes BuzzFeed, HuffPost and Complex Networks — compared to the same quarter in 2021. This was primarily due to increases in advertising and content revenue, which grew 26% and 65% year over year, respectively.

But commerce revenue was hit the hardest out of BuzzFeed’s three main businesses, dipping by 27% year over year to $10.6 million. The publisher’s profitability also took a hit, though the loss was within what the company expected. Back in March, the company said it expected losses in the range of $15 to $20 million in Q1 2022, and the actual figure came in at a $16.8 million loss, a 294% drop year over year. 

The key numbers:

  • BuzzFeed Inc. revenue increased 26% in Q1 2022, compared to the same quarter in 2021, to $91.6 million. Notably, BuzzFeed Inc.’s Q1 2022 earnings includes Complex Networks’ revenue, while Q1 2021 did not, as BuzzFeed’s acquisition closed in December of last year.
  • Ad revenue (display, pre-roll and mid-roll video products sold directly and programmatically) grew 26% year over year to $48.7 million.
  • Content revenue (long and short form custom content, and film and TV projects from BuzzFeed Studios and Complex Networks) grew 65% year over year to $32.3 million, “driven primarily by the acquisition of Complex Networks,” BuzzFeed CFO Felicia DellaFortuna said during an investors call on May 16.
  • Commerce revenue (affiliate sales and product licensing revenue) dipped 27% year over year to $10.6 million.
  • Time spent declined 4% year over year to 184 million hours across BuzzFeed Inc’s owned-and-operated properties and on third-party platforms.
  • Adjusted EBITDA dropped 294%, or from $4.3 million in Q1 2021 to $16.8 million in Q1 2022 (net loss was $44.6 million, compared to a net loss of $11.3 million in the first quarter of 2021).
  • BuzzFeed projected Q2 2022 revenue will be up by at least 20% year over year “to surpass $100 million,” BuzzFeed CEO Jonah Peretti said during the earnings call.

How declines in time spent on Facebook are hurting BuzzFeed’s business

BuzzFeed’s audience is continuing to spend more time on Instagram and TikTok and less time on Facebook, putting pressure on BuzzFeed’s commerce and advertising businesses. BuzzFeed mainly monetizes via branded or custom video content on those two platforms, which still have limited revenue share opportunities compared to Facebook.

Time spent declined primarily on third-party platforms but also on BuzzFeed’s owned and operated platforms, DellaFortuna said. BuzzFeed’s time spent metric relies on measurements from Comscore and Facebook and does not capture time spent on TikTok, Instagram, Snapchat or Twitter, she said.

While BuzzFeed’s advertising revenue grew year over year in Q1 2022, that growth primarily came from BuzzFeed’s owned-and-operated properties as the ad revenue generated on third-party platforms was lower year over year “consistent with the trend in time spent,” said DellaFortuna.

The time spent decline is also a reason why BuzzFeed’s commerce business has taken such a hit: “The majority of audience traffic to our commerce content is generated through Facebook,” DellaFortuna said. Less time spent on Facebook means less traffic to BuzzFeed’s commerce content — and fewer sales.

In the first quarter, commerce represented 12% of Buzzfeed’s total revenue, a decline in share of BuzzFeed’s overall revenue compared to 2020, when it represented 13%. This is far from the 23% share BuzzFeed projected its commerce business will represent this year, according to its investor presentation released last June. (However, it remains to be seen what share BuzzFeed’s commerce takes in the 2022 full year, as the fourth quarter often boosts affiliate and product sales due to holiday shopping).

Predictions for Q2 2022: $100 million+

Next quarter, overall company revenue is expected to grow “by a low 20s percentage year-over-year,” with adjusted EBITDA to be in the range of $2 to $7 million, according to BuzzFeed’s latest earnings report. In the investors’ call, Peretti said the company expects second-quarter revenues “to surpass $100 million for the first time in our history.”

Growth will be led by BuzzFeed’s content revenue, DellaFortuna said. However, content revenue is BuzzFeed’s lowest margin business compared to advertising and commerce, meaning it will “have some impact as it relates to our adjusted EBITDA numbers,” she said.

Programmatic ad revenue will also face some headwinds in Q2. DellaFortuna predicts the growth rate of BuzzFeed’s advertising revenue “to soften” in the next quarter. 

“Many of our largest advertising partners continue to face macroeconomic challenges. Our clients continue to be challenged by supply chain constraints” and “rising inflation,” DellaFortuna said. “As a result, some advertisers are pulling back or delaying spending,” she added. She cited tech, CPG and retail advertisers in particular.

Going forward, BuzzFeed will invest in three areas in particular, Peretti said: short-form vertical video, its combined creators program now called Catalyst and its first-party data solution, Lighthouse.

The post The Rundown: BuzzFeed Inc. revenue up by 26% despite hits to commerce business, expects similar momentum in Q2 appeared first on Digiday.