Mar 22, 2022 - Economy & Business

BuzzFeed announces cuts to news staff

Photo illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

BuzzFeed's stock was flat on Tuesday following news of strong annual revenue growth and cuts to its news division to make it more profitable.

Why it matters: Several changes — including news buyouts, leadership changes and reinvestments — were announced on the call, signaling BuzzFeed's push to course correct following a volatile public debut.

Yes, but: BuzzFeed's revenue may have been up higher year over the year, but it's still much lower than what it had initially promised to investors when it was preparing to go public. BuzzFeed initially said it planned to make $521 million in 2021 in revenue and $57 million in profit.

Details: The company outlined three major priorities on the call:

  1. Profitability in news: Sources tell Axios that about one-third of BuzzFeed's 100 news division employees were offered voluntary buyouts Tuesday. BuzzFeed News editor-in-chief Mark Schoofs will exit the company, as well as his deputy Tom Namako, who is heading to NBCNews Digital as executive editor.
  2. Consolidation for BuzzFeed and Complex teams: The company will continue to integrate Complex, the lifestyle publisher it acquired for $300 million when it went public, into its larger operation. The company is consolidating the advertising teams between the two companies.
  3. Investments in short-form video, streaming and commerce: "We are entering another period of evolution," said BuzzFeed CEO Jonah Peretti. "Short-form vertical video is clearly emerging as a preferred content format for young audiences," he noted, acknowledging the company's success on TikTok.

Zoom out: Buzzfeed's stock has fallen more than 40% since its IPO in December and closed Monday at $4.95.

  • Last week, about 80 current and former BuzzFeed employees sued the company, alleging that its mismanaged public listing process cost them millions of dollars, according to copies of two separate complaints obtained by Axios.
  • Last month, Peretti told staffers the company was limiting hiring to critical positions, and the company lowered revenue guidance for full year 2022, citing a slowdown in its retail business.
  • BuzzFeed's commerce revenue for the fourth quarter ended up dropping by 26% compared to the year prior.

Catch up quick: BuzzFeed went public by merging with a SPAC called 890 Fifth Avenue in December. The vast majority of money the SPAC raised was pulled ahead of the deal closing, a signal that investors weren't very optimistic about BuzzFeed's future prospects.

  • BuzzFeed is currently valued at about $650 million. It was worth $1.15 billion at the end of its first day of trading, and carried a $1.7 billion valuation when it raised $200 million from NBCUniversal in 2016.

By the numbers: In total, the company's full year 2021 revenue grew 24% year-over-year to $398 million, led by double-digit growth in advertising and commerce.

  • 2021 profit: BuzzFeed reached $25.9 million in profit, up 132% year-over-year. 2021 was BuzzFeed’s second consecutive profitable year.
  • Total Q4 revenue: $145.7 million, up 18% year-over-year
  • Q4 ad revenue: $69.1 million, up 24% year-over-year
  • Q4 content revenue: $59.9 million, up 33% year-over-year
  • Q4 commerce revenue: $16.7 million, down 26% year-over-year
  • Q4 net income: $41.6 million, up 29% year-over-year

Catch up quick: BuzzFeed went public by merging with a SPAC called 890 Fifth Avenue in December. The vast majority of money the SPAC raised was pulled ahead of the deal closing, a signal that investors weren't very optimistic about BuzzFeed's future prospects.

What's next: Per Q1 2022 guidance, revenue on a pro forma basis including Complex is expected to be down by a low single-digit percentage from the year prior. On a reported basis excluding Complex, revenue is expected to grow by 30%.

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