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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
FORM 10-Q
______________________________________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from      to
Commission file number: 001-39877
______________________________________________________________
BuzzFeed, Inc.
(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________________
Delaware85-3022075
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
229 West 43rd Street New York, New York
10036
(Address of principal executive offices)(Zip Code)
(646) 397-2039
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per shareBZFDThe Nasdaq Stock Market LLC
Redeemable warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of approximately $46.00 per shareBZFDWThe Nasdaq Stock Market LLC
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. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyx
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x
As of May 10, 2024, there were 35,240,395 shares of the registrant’s Class A common stock outstanding, 1,368,526 shares of the registrant’s Class B common stock outstanding and no shares of the registrant’s Class C common stock outstanding.
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BUZZFEED, INC.
TABLE OF CONTENTS
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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 (the “Securities Act”), 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 “affect,” “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 include all matters that are not historical facts.
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 (some of which are beyond our control), uncertainties 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:
developments relating to our competitors and the digital media industry, including overall demand of advertising in the markets in which we operate;
demand for our products and services or changes in traffic or engagement with our brands and content;
changes in the business and competitive environment in which we and our current and prospective partners and advertisers operate;
macroeconomic factors including: adverse economic conditions in the United States (“U.S.”) and globally, including the potential onset of recession; current global supply chain disruptions; potential government shutdowns or a failure to raise the U.S. federal debt ceiling or to fund the federal government; the ongoing conflicts between Russia and Ukraine and between Israel and Hamas and any related sanctions and geopolitical tensions, and further escalation of trade tensions between the U.S. and China; the inflationary environment; high unemployment; high interest rates, currency fluctuations; and the competitive labor market;
our future capital requirements, including, but not limited to, our ability to obtain additional capital in the future, to settle conversions of our unsecured convertible notes, repurchase the notes upon a fundamental change such as the delisting of our Class A common stock, or repay the notes in cash at their maturity, any restrictions imposed by, or commitments under, the indenture governing the notes or agreements governing any future indebtedness, and any restrictions on our ability to access our cash and cash equivalents;
developments in the law and government regulation, including, but not limited to, revised foreign content and ownership regulations, and the outcomes of legal proceedings, regulatory disputes or governmental investigations to which we are subject;
the benefits of our restructuring;
our success divesting of companies, assets or brands we sell or in integrating and supporting the companies we acquire;
technological developments including artificial intelligence;
our success in retaining or recruiting, or changes required in, officers, other key employees or directors;
use of content creators and on-camera talent and relationships with third parties managing certain of our branded operations outside of the U.S.;
the security of our information technology (“IT”) systems or data;
disruption in our service, or by our failure to timely and effectively scale and adapt our existing technology and infrastructure;
our ability to maintain the listing of our Class A common stock and warrants on The Nasdaq Capital Market (“Nasdaq”); and
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other factors detailed under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q.
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, but not limited to, those described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q. 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 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
(Dollars and shares in thousands, except per share amounts)
March 31, 2024
(Unaudited)
December 31,
2023
Assets
Current assets
Cash and cash equivalents$44,457 $35,637 
Restricted cash17,050  
Accounts receivable (net of allowance for doubtful accounts of $1,351 as at March 31, 2024 and $1,424 as at December 31, 2023)
50,982 75,692 
Prepaid expenses and other current assets20,424 21,460 
Current assets of discontinued operations  
Total current assets132,913 132,789 
Property and equipment, net10,324 11,856 
Right-of-use assets42,430 46,715 
Capitalized software costs, net22,142 22,292 
Intangible assets, net25,801 26,665 
Goodwill57,562 57,562 
Prepaid expenses and other assets7,865 9,508 
Noncurrent assets of discontinued operations 104,089 
Total assets$299,037 $411,476 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$22,544 $46,378 
Accrued expenses16,532 15,515 
Deferred revenue2,401 1,895 
Accrued compensation19,002 12,970 
Current lease liabilities22,476 21,659 
Current debt100,435 124,977 
Other current liabilities6,347 4,401 
Current liabilities of discontinued operations  
Total current liabilities189,737 227,795 
Noncurrent lease liabilities31,858 37,820 
Debt 33,837 
Warrant liabilities442 406 
Other liabilities1,160 435 
Noncurrent liabilities of discontinued operations  
Total liabilities223,197 300,293 
Commitments and contingencies
Stockholders’ equity
Class A common stock, $0.0001 par value; 700,000 shares authorized; 35,079 and 35,035 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
3 3 
Class B common stock, $0.0001 par value; 20,000 shares authorized; 1,368 and 1,368 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
1 1 
Additional paid-in capital723,868 723,092 
Accumulated deficit(647,497)(611,768)
Accumulated other comprehensive loss(2,677)(2,500)
Total BuzzFeed, Inc. stockholders’ equity73,698 108,828 
Noncontrolling interests2,142 2,355 
Total stockholders’ equity75,840 111,183 
Total liabilities and stockholders’ equity$299,037 $411,476 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, dollars and shares in thousands, except per share amounts)
Three Months Ended March 31,
20242023
Revenue$44,755 $54,907 
Costs and Expenses
Cost of revenue, excluding depreciation and amortization31,063 37,237 
Sales and marketing9,145 11,908 
General and administrative16,249 21,410 
Research and development3,230 3,128 
Depreciation and amortization5,881 5,704 
Total costs and expenses65,568 79,387 
Loss from continuing operations(20,813)(24,480)
Other (expense) income, net(556)620 
Interest expense, net(4,481)(3,787)
Change in fair value of warrant liabilities(37)(593)
Change in fair value of derivative liability (1,005)
Loss from continuing operations before income taxes (25,887)(29,245)
Income tax provision682 147 
Net loss from continuing operations(26,569)(29,392)
Net loss from discontinued operations, net of tax(9,213)(6,869)
Net loss(35,782)(36,261)
Less: net loss attributable to noncontrolling interests(53)(260)
Net loss attributable to BuzzFeed, Inc.$(35,729)$(36,001)
Net loss from continuing operations attributable to holders of Class A and Class B common stock:
Basic and diluted$(26,516)$(29,132)
Net loss from continuing operations per Class A and Class B common share:
Basic and diluted$(0.72)$(0.83)
Weighted average common shares outstanding:
Basic and diluted36,57835,176
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, in thousands)
Three Months Ended March 31,
20242023
Net loss$(35,782)$(36,261)
Other comprehensive loss
Foreign currency translation adjustment(337)(759)
Other comprehensive loss(337)(759)
Comprehensive loss(36,119)(37,020)
Comprehensive loss attributable to noncontrolling interests(53)(260)
Foreign currency translation adjustment attributable to noncontrolling interests(160)(58)
Comprehensive loss attributable to BuzzFeed, Inc.$(35,906)$(36,702)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands)
For the Three Months Ended March 31, 2024
Common Stock –
Class A
Common Stock –
Class B
Common Stock –
Class C
Additional paid-in
capital
Accumulated
deficit
Accumulated
other
comprehensive
loss
Total
BuzzFeed, Inc.
stockholders’
equity
Noncontrolling
interests
Total
stockholders’
equity
SharesAmountSharesAmountSharesAmount
Balance at January 1, 202435,035 $3 1,368 $1  $ $723,092 $(611,768)$(2,500)$108,828 $2,355 $111,183 
Net loss— — — — — — — (35,729)— (35,729)(53)(35,782)
Stock-based compensation— — — — — — 776 — — 776 — 776 
Issuance of common stock in connection with share-based plans45 — — — — — — — — — — — 
Shares withheld for employee taxes(1)— — — — — — — — — — — 
Other comprehensive loss— — — — — — — — (177)(177)(160)(337)
Balance at March 31, 202435,079 $3 1,368 $1  $ $723,868 $(647,497)$(2,677)$73,698 $2,142 $75,840 
For the Three Months Ended March 31, 2023
Common Stock –
Class A
Common Stock –
Class B
Common Stock –
Class C
Additional
paid-in
capital
Accumulated
deficit
Accumulated
other
comprehensive
loss
Total
BuzzFeed, Inc.
stockholders’
equity
Noncontrolling
interests
Total
stockholders’
equity
SharesAmountSharesAmountSharesAmount
Balance at January 1, 202331,597$3 1,670$1 1,620$ $716,244 $(523,063)$(1,968)$191,217 $3,337 $194,554 
Cumulative effect of accounting change(126)(126)(126)
Net loss(36,001)(36,001)(260)(36,261)
Stock-based compensation1,1221,1221,122
Issuance of common stock in connection with share-based plans128292929
Shares withheld for employee taxes(30)(193)(193)(193)
Other comprehensive loss(701)(701)(58)(759)
Conversion of Class B common stock to Class A common stock
Conversion of Class C common stock to Class A common stock1,620$— $— (1,620)
Balance at March 31, 202333,315$3 1,670$1 $ $717,202 $(559,190)$(2,669)$155,347 $3,019 $158,366 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BUZZFEED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended March 31,
20242023
Operating activities:
Net (loss)$(35,782)$(36,261)
Less: net (loss) from discontinued operations, net of tax9,213 6,869 
Net loss from continuing operations(26,569)(29,392)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization5,881 5,704 
Unrealized gain on foreign currency(46)(958)
Stock based compensation752 687 
Change in fair value of warrants37 593 
Change in fair value of derivative liability 1,005 
Amortization of debt discount and deferred issuance costs1,226 1,064 
Deferred income tax493 (21)
Provision for doubtful accounts(74)223 
Gain on disposition of assets  (175)
Non-cash lease expense4,261 5,034 
Changes in operating assets and liabilities:
Accounts receivable26,101 43,837 
Prepaid expenses and other current assets and prepaid expenses and other assets1,037 1,979 
Accounts payable(23,123)(95)
Accrued compensation6,062 (12,772)
Accrued expenses, other current liabilities and other liabilities 3,315 (5,183)
Lease liabilities(5,116)(5,862)
Deferred revenue505 (2,395)
Cash (used in) provided by operating activities from continuing operations(5,258)3,273 
Cash used in operating activities from discontinued operations(8,041)(3,452)
Cash used in operating activities(13,299)(179)
Investing activities:
Capital expenditures(88)(402)
Capitalization of internal-use software(3,330)(3,974)
Proceeds from sale of asset 175 
Cash used in investing activities from continuing operations(3,418)(4,201)
Cash provided by investing activities from discontinued operations108,575  
Cash provided by (used in) investing activities105,157 (4,201)
Financing activities:
Proceeds from exercise of stock options 29 
Payment for shares withheld for employee taxes  (193)
Payments on Revolving Credit Facility(33,837)(1,317)
Payment on Convertible Notes(30,900) 
Payment of early termination fee for Revolving Credit Facility(500) 
Payment of deferred issuance costs(591) 
Cash used in financing activities(65,828)(1,481)
Effect of currency translation on cash and cash equivalents(160)34 
Net increase (decrease) in cash and cash equivalents25,870 (5,827)
Cash and cash equivalents and restricted cash at beginning of period35,637 55,774 
Cash and cash equivalents and restricted cash at end of period$61,507 $49,947 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BUZZFEED, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, tabular amounts and shares 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 premier digital media company for the most diverse, most online, and most socially connected generations the world has ever seen. Across entertainment, news, food, pop culture and commerce, our brands drive conversation and inspire what audiences watch, read, and buy now — and into the future. The Company’s iconic, globally-loved brands include BuzzFeed, HuffPost, Tasty, and First We Feast (including Hot Ones). BuzzFeed derives its revenue primarily from advertising, content, and commerce and other sold to leading brands. The Company has one reportable segment.
On December 3, 2021, we consummated a business combination (the “Business Combination”) with 890 5th Avenue Partners, Inc. (“890”), certain wholly-owned subsidiaries of 890, and BuzzFeed, Inc., a Delaware corporation (“Legacy BuzzFeed”). In connection with the Business Combination, we acquired 100% of the membership interests of CM Partners, LLC. CM Partners, LLC, together with Complex Media, Inc., is referred to herein as “Complex Networks.” Following the closing of the Business Combination, 890 was renamed “BuzzFeed, Inc.”
Additionally, pursuant to subscription agreements entered into in connection with the consummation of the Business Combination, the Company issued, and certain investors purchased, $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (the “Notes”) concurrently with the closing of the Business Combination. As a result of the sale of certain assets relating to the business of Complex Networks, as discussed within Note 19 herein (the “Disposition”), the Company repaid approximately $30.9 million of the Notes on March 7, 2024, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024.
Liquidity and Going Concern
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of the date the accompanying condensed consolidated financial statements were issued (the “issuance date”), the significance of the following adverse conditions were evaluated in accordance with U.S. GAAP. The presence of the following risks and uncertainties associated with the Company’s financial condition may adversely affect the Company’s ability to sustain its operations over the next 12 months beyond the issuance date.
Since its inception, the Company has generally incurred significant losses and used net cash flows from operations to grow its owned and operated properties and its iconic brands. During the three months ended March 31, 2024, the Company incurred a net loss of $35.8 million (and a net loss of $26.6 million from continuing operations) and used net cash flows from its operations of $13.3 million (and net cash used in operating activities from continuing operations was $5.3 million). Additionally, as of March 31, 2024, the Company had unrestricted cash and cash equivalents of $44.5 million to fund its operations and an accumulated deficit of $647.5 million.
As described in Note 8 herein, the Company repaid approximately $30.9 million of the Notes on March 7, 2024, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024. As described in Note 8 herein, each holder of a Note has the right under the indenture governing the Notes to require the Company to repurchase, for cash, all or a portion of the Notes held by such holder (i) at any time on or after December 3, 2024, at a repurchase price equal to the principal amount plus accrued and unpaid interest, or (ii) upon the occurrence of a fundamental change (as defined in the indenture) before the maturity date (i.e., December 3, 2026), at a repurchase price equal to 101% of the principal amount plus accrued and unpaid interest. Moreover, the Company will be required to repay the Notes, in cash, at their maturity, unless earlier converted, redeemed, or repurchased. In the event some or all of the holders of the Notes exercise their call rights, the Company currently does not have sufficient cash on hand or projected cash flows to fund the potential call. The Company’s failure to comply with the provisions of the indenture governing the Notes, including the Company’s failure to repurchase the Notes, as required by the indenture, could trigger an event of default under the indenture, which would allow the holders of Notes to accelerate the maturity of the Notes and require the Company to repay the Notes prior to their maturity. In addition, on February 28, 2024, the Company amended the
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indenture governing the Notes to provide that, among other things, 95% of the net proceeds of future asset sales must be used to repay the Notes.
As described in Note 14 herein, the Company’s Class A common stock experienced a significant decline whereby the trading price remained below $1.00 per share for a sustained period during 2023. As a result, the Company received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) on May 31, 2023 notifying the Company that, for the previous 30 consecutive business days, the bid price for the Company’s Class A common stock had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Global Market (the “Bid Price Requirement”) and that the Company had until November 28, 2023 in order to regain compliance. After receiving an extension from Nasdaq on November 28, 2023, the Company now has until May 28, 2024 in order to regain compliance with Nasdaq’s Bid Price Requirement. While, as described in Notes 2 and 14 herein, the Company effected the Reverse Stock Split (as defined in Note 2 herein) on May 6, 2024, and the closing bid price for the Company’s Class A common stock has exceeded $1.00 per share since that date, the Company has not yet regained compliance with the Bid Price Requirement, as there has not been 10 business days since the effective date of the Reverse Stock Split. Further, as also described in Note 14 herein, following its 2024 annual meeting of stockholders (the “2024 Annual Meeting”), the Company is not in compliance with Nasdaq Listing Rule 5605(c)(2)(A), which requires that the audit committees of listed companies have a minimum of three members that satisfy certain criteria for service on the committee (the “Nasdaq Audit Committee Requirement”). The Company has until the earlier of its 2025 annual meeting of stockholders and April 25, 2025 to regain compliance. If the Company is not in compliance with the Nasdaq Audit Committee Requirement by that date, then the Company’s Class A common stock will be subject to delisting. If the Company is not able to regain compliance with either the Bid Price Requirement or the Nasdaq Audit Committee Requirement, and, as such, the Company’s Class A common stock is delisted from Nasdaq, the Company will be faced with a number of significant material adverse consequences, including: limited availability of market quotations for its Class A common stock; limited news and analyst coverage; decreased ability to obtain additional financing or failure to comply with the covenants required by the Notes; limited liquidity for its stockholders due to thin trading; and a potential loss of confidence by investors, employees and other third parties who do business with the Company. In particular, under the indenture governing the Notes, the failure of the Company’s Class A common stock to remain listed would constitute a fundamental change which would require the Company to offer to repurchase the remaining outstanding Notes, for cash, at a repurchase price equal to 101% of par plus accrued and unpaid interest. As of the issuance date, the Company does not have available liquidity to repurchase the Notes upon a fundamental change. The Company’s failure to repurchase the Notes as required by the indenture would constitute an event of default under the indenture.
To address its capital needs, the Company may explore options to restructure its outstanding debt, and is working with advisors to optimize its condensed consolidated balance sheet. However, the Company can provide no assurance that it will generate sufficient cash inflows from operations, or that it will be successful in obtaining such new financing, or in optimizing its condensed consolidated balance sheet in a manner necessary to fund its obligations as they become due over the next 12 months beyond the issuance date. Additionally, the Company may implement incremental cost savings actions and pursue additional sources of outside capital to supplement its funding obligations as they become due, which may include additional offerings of its Class A common stock under the at-the-market offering (as described in Note 9 herein). As of the issuance date, no additional sources of outside capital have been secured or were deemed probable of being secured, other than the Company’s at-the-market-offering, which is subject to the conditions contained in the At-The-Market Offering agreement dated June 20, 2023 with Craig-Hallum Capital Group LLC. The Company can provide no assurance it will successfully generate sufficient liquidity to fund its operations for the next 12 months beyond the issuance date, or if necessary, secure additional outside capital (including through the Company’s at-the-market-offering) or implement incremental cost savings.
Moreover, on an ongoing basis, the Company is evaluating strategic changes to its operations, including asset divestitures, restructuring, or the discontinuance of unprofitable lines of business. Any such transaction could be material to the Company’s business, financial condition and results of operations. The nature and timing of any such changes depend on a variety of factors, including, as of the applicable time: the Company’s available cash, liquidity and operating performance; its commitments and obligations; its capital requirements; limitations imposed under its credit arrangements; and overall market conditions. As of the issuance date, the Company continues to work with its external advisors to optimize its condensed consolidated balance sheet and evaluate its assets.
These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that it will be able to realize assets and settle liabilities and
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commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.
2. Summary of Significant Accounting Policies
Basis of Financial Statements and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. As such, the accompanying condensed consolidated financial statements and these related notes should be read in conjunction with the Company’s consolidated financial statements and related notes as of and for the year ended December 31, 2023, as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The condensed consolidated financial statements include all normal recurring adjustments that, in the opinion of management, are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ended December 31, 2024.
The condensed consolidated financial statements include the accounts of BuzzFeed, Inc., and its wholly-owned and majority-owned subsidiaries, and any variable interest entities for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
Reverse Stock Split
The Company held the 2024 Annual Meeting on April 25, 2024 and, at the 2024 Annual Meeting, the Company’s stockholders approved the grant of discretionary authority to the Company’s board of directors to (1) amend the Company’s Second Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to combine outstanding shares of each of the Company’s Class A common stock and the Company’s Class B common stock into a lesser number of outstanding shares of Class A common stock and Class B common stock, as the case may be, at a specific ratio within a range of one-for-two (1-for-2) to a maximum of a one-for-twenty five (1-for-25), with the exact ratio to be determined by the Company’s board of directors in its sole discretion; and (2) effect such reverse stock split, if at all, within one year of the date the proposal is approved by the Company’s stockholders (i.e., by April 25, 2025).
The Company’s board of directors subsequently approved effecting a reverse stock split, effective as of May 6, 2024, and fixed a ratio for the reverse stock split at one-for-four (1-for-4). On April 26, 2024, the Company filed an amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Certificate of Amendment”). The Certificate of Amendment effected a reverse stock split of the Class A common stock and Class B common stock at a ratio of one-for-four (1-for-4) (the “Reverse Stock Split”), effective as of 12:01 a.m., Eastern Time, on May 6, 2024. The Class A common stock began trading on a split-adjusted basis on the Nasdaq on May 6, 2024, under the existing symbol “BZFD,” but the security has a new CUSIP number of 12430A300. The Public Warrants (as defined in Note 4 herein) continued to be traded under the symbol “BZFDW” and the CUSIP identifier for Public Warrants remain unchanged.
As a result of the Reverse Stock Split, every four shares of the Company’s Class A common stock and the Company’s Class B common stock issued and outstanding immediately prior to the Reverse Stock Split were converted into one share of Class A common stock and Class B common stock, after the Reverse Stock Split. The Reverse Stock Split applied uniformly to all holders of Class A common stock and Class B common stock, and did not alter any stockholder’s percentage interest in the Company, except to the extent that the Reverse Stock Split would have resulted in some stockholders owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split, as all fractional shares were rounded up to the nearest whole share. Pursuant to the terms of the agreement governing the Public and Private Warrants, fractional shares of Class A common stock will not be issued upon exercise of a warrant, and if a holder of a warrant would be entitled to receive, upon the exercise thereof, a fractional interest in a share of Class A common stock, the Company will round down to the nearest whole number the number of shares of Class A Common Stock to be issued to such holder.
Unless otherwise noted, all shares of Class A common stock and Class B common stock, including shares of Class A common stock underlying the Public Warrants and Private Warrants (as defined in Note 4 herein), stock options,
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restricted stock units, and the Notes, shares of Class A common stock available for grant under the Company’s equity incentive plans, shares of Class A common stock sold and available for sale under the Company’s at-the-market offering, and all conversion ratios, exercise prices, and per share information with respect thereto in the condensed consolidated financial statements have been retroactively adjusted to reflect the one-for-four (1-for-4) Reverse Stock Split, as if the split occurred at the beginning of the earliest period presented in this Quarterly Report on Form 10-Q.
Discontinued Operations and Held for Sale
A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value, and when certain other criteria are met. A business classified as held for sale is recorded at the lower of (i) its carrying amount and (ii) estimated fair value less costs to sell. When the carrying amount of the business exceeds its estimated fair value less costs to sell, a loss is recognized and updated each reporting period as appropriate.
The results of operations of businesses classified as held for sale are reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on the entity’s operations and financial results. When a business is identified for discontinued operations reporting: (i) results for prior periods are retrospectively reclassified as discontinued operations; (ii) results of operations are reported in a single line, net of tax, in the consolidated statement of operations; and (iii) assets and liabilities are reported as held for sale in the consolidated balance sheets in the period in which the business is classified as held for sale.
The Company concluded the assets of the Complex Networks business, excluding the First We Feast brand, met the criteria for classification for held for sale as of December 31, 2023. Additionally, the Company determined the disposal (i.e., the Disposition), which took place on February 21, 2024, represented a strategic shift that had a major effect on our operations and financial results. As such, the results of Complex Networks, excluding First We Feast, are presented as discontinued operations in the condensed consolidated financial statements of operations for all periods presented. Prior periods have been adjusted to conform to the current presentation. The assets of Complex Networks have been reflected as assets of discontinued operations in the condensed consolidated balance sheet for the year ended December 31, 2023. Refer to Note 19 herein for additional details.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported results of operations during the reporting period. Due to the use of estimates inherent in the financial reporting process actual results could differ from those estimates.
Key estimates and assumptions relate primarily to revenue recognition, fair values of intangible assets acquired in business combinations, valuation allowances for deferred income tax assets, allowance for doubtful accounts, useful lives of fixed assets, and capitalized software costs.
Cash and Cash Equivalents and Restricted Cash
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company considers instruments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company’s cash and cash equivalents consist of demand deposits with financial institutions and investments in money market funds. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. The associated risk of concentration is mitigated by banking with creditworthy institutions.
The Company classifies all cash the use of which is limited by contractual provisions as restricted cash. In the first quarter of 2024, the Company cash collateralized the $15.5 million letters of credit outstanding under the Revolving Credit Facility (as defined in Note 8 herein) in the amount of $17.1 million. As such, the $17.1 million is classified as restricted cash within the condensed consolidated balance sheet.
Accounting Pronouncements
The Company, an emerging growth company, has elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act, as amended, for complying with new or revised
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accounting standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies.
Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity’s segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. Although the ASU only requires additional disclosures about the Company’s single operating segment, the Company is currently evaluating the impact of adopting this guidance on the condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which is intended to enhance the transparency, decision usefulness, and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. Public companies are also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. The Company is currently evaluating the impact of adopting this guidance on the condensed consolidated financial statements.
3. Revenue Recognition
Disaggregated Revenue
The table below presents the Company’s revenue disaggregated based on the nature of its arrangements. Management uses these categories of revenue to evaluate the performance of its businesses and to assess its financial results and forecasts.
Three Months Ended March 31,
20242023
Advertising$21,423 $27,393 
Content13,107 16,251 
Commerce and other10,225 11,263 
Total$44,755 $54,907 
The following table presents the Company’s revenue disaggregated by geography:
Three Months Ended March 31,
20242023
Revenue:
United States$41,033 $50,564 
International3,722 4,343 
Total$44,755 $54,907 
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Contract Balances
The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled revenue (contract assets), and deferred revenues (contract liabilities). The payment terms and conditions within the Company’s contracts vary by type, but the substantial majority require that customers pay for their services on a monthly or quarterly basis, as the services are being provided. When the timing of revenue recognition differs from the timing of payments made by customers, the Company recognizes either unbilled revenue (when performance precedes the billing date) or deferred revenue (when customer payment is received in advance of performance). The Company has determined its contracts generally do not include a significant financing component.
The Company’s contract assets are presented in prepaid and other current assets on the accompanying condensed consolidated balance sheets and totaled $5.4 million and $8.3 million as of March 31, 2024 and December 31, 2023, respectively. These amounts relate to revenue recognized during the respective period that is expected to be invoiced and collected in future periods.
The Company’s contract liabilities, which are recorded in deferred revenue on the accompanying condensed consolidated balance sheets, are expected to be recognized as revenues during the succeeding 12-month period. Deferred revenue totaled $2.4 million and $1.9 million as of March 31, 2024 and December 31, 2023, respectively.
The amount of revenue recognized during the three months ended March 31, 2024 that was included in the deferred revenue balance as of December 31, 2023 was $0.5 million.
Transaction Price Allocated to Remaining Performance Obligations
The Company has certain licensing contracts with minimum guarantees and terms extending beyond one year. Revenue to be recognized related to the remaining performance obligations was $2.1 million as of March 31, 2024 and is generally expected to be recognized over the next one to three years. This amount does not include: (i) contracts with an original expected duration of one year or less, such as advertising contracts; (ii) variable consideration in the form of sales-based royalties; or (iii) variable consideration allocated entirely to wholly unperformed performance obligations.
For each contract, the Company estimates whether it will be subject to variable consideration under the terms of the contract and includes its estimate of variable consideration, subject to constraint, in the transaction price based on the expected value method when it is deemed probable of being realized based on historical experience and trends. The Company updates its estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis.
4. Fair Value Measurements
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are summarized below:
March 31, 2024
Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$15,533 $ $ $15,533 
Total$15,533 $ $ $15,533 
Liabilities:
Derivative liability$ $ $ $ 
Other non-current liabilities:
Public Warrants439   439 
Private Warrants 3  3 
Total$439 $3 $ $442 
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December 31, 2023
Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$25,306 $ $ $25,306 
Total$25,306 $ $ $25,306 
Liabilities:
Derivative liability$ $ $ $ 
Other non-current liabilities:
Public Warrants402402
Private Warrants44
Total$402 $4 $ $406 
The Company’s investments in money market funds are measured at amortized cost, which approximates fair value.
The Company’s warrant liability as of March 31, 2024 and December 31, 2023 includes public and private warrants that were originally issued by 890, but which were assumed by the Company as part of the closing of the Business Combination (the “Public Warrants” and “Private Warrants,” respectively), which are recorded on the balance sheet at fair value. The carrying amount is subject to remeasurement at each balance sheet date. With each remeasurement, the carrying amount is adjusted to fair value, with the change in fair value recognized in the Company’s condensed consolidated statements of operations and comprehensive loss.
The Public Warrants are publicly traded under the symbol “BZFDW,” and the fair value of the Public Warrants at a specific date is determined by the closing price of the Public Warrants as of that date. As such, the Public Warrants are classified within Level 1 of the fair value hierarchy. The closing price of the Public Warrants was $0.18 and $0.16 as of March 31, 2024 and December 31, 2023, respectively.
Historically, Level 3 instruments consisted of the Company’s derivative liability related to the Notes. Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodologies used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. To measure the fair value of the derivative liability, the Company compared the calculated value of the Notes with the indicated value of the host instrument, defined as the straight-debt component of the Notes. The difference between the value of the straight-debt host instrument and the fair value of the Notes resulted in the value of the derivative liability. The value of the straight-debt host instrument was estimated based on a binomial lattice model, excluding the conversion option and the make-whole payment upon conversion. As of December 31, 2023, the Company determined the fair value of the derivative liability was immaterial as (i) the closing share price of our Class A common stock was $1.00 as of December 29, 2023, and (ii) each holder of a Note will have the right to require the Company to repurchase, for cash, all or a portion of the Notes held by such holder at any time on or after December 3, 2024 (see Note 8 herein for additional details). The fair value of the embedded derivative continues to be immaterial as of March 31, 2024.
There were no transfers between fair value measurement levels during the three months ended March 31, 2024.
Equity Investment
For equity investments in entities over which the Company does not exercise significant influence, if the fair value of the investment is not readily determinable, the investment is accounted for at cost, and adjusted for subsequent observable price changes. If the fair value of the investment is readily determinable, the investment is accounted for at fair value. The Company reviews equity investments without readily determinable fair values at each period end to determine whether they have been impaired.
As of March 31, 2024 and December 31, 2023, the Company had an investment in equity securities of a privately-held company without a readily determinable fair value. The total carrying value of the investment, included in prepaid and other assets on the condensed consolidated balance sheets, was $0.8 million as of both March 31, 2024 and December 31, 2023.
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5. Property and Equipment, net
Property and equipment, net consisted of the following:
March 31, 2024December 31, 2023
Leasehold improvements$48,995 $49,007 
Furniture and fixtures3,924 3,910 
Computer equipment3,002 3,057 
Video equipment439 439 
Total56,360 56,413 
Less: Accumulated depreciation(46,036)(44,557)
Net Carrying Value$10,324 $11,856 
Depreciation totaled $1.5 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively, included in depreciation and amortization expense.
6. Capitalized Software Costs, net
Capitalized software costs, net consisted of the following:
March 31, 2024December 31, 2023
Website and internal-use software$84,111 $82,138 
Less: Accumulated amortization(61,969)(59,846)
Net Carrying Value$22,142 $22,292 
The Company capitalized $3.3 million and $4.0 million for the three months ended March 31, 2024 and 2023, respectively, included in capitalized software costs. The Company amortized $3.5 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively, included in depreciation and amortization expense.
7. Intangible Assets, net
The following table presents the detail of intangible assets for the periods presented and the weighted average remaining useful lives:
March 31, 2024December 31, 2023
Weighted-
Average
Remaining
Useful Lives
(in years)
Gross
Carrying
Value
Accumulated
Amortization
Net Carrying
Value
Weighted-
Average
Remaining
Useful Lives
(in years)
Gross Carrying
Value
Accumulated
Amortization
Net Carrying Value
Acquired Technology0$5,500 $5,500 $ 0$5,500 $5,271 $229 
Trademarks and Trade Names1228,550 5,180 23,370 1328,550 4,704 23,846 
Trademarks and Trade NamesIndefinite1,368 — 1,368 Indefinite1,368 — 1,368 
Customer Relationships22,550 1,487 1,063 22,550 1,328 1,222 
Total$37,968 $12,167 $25,801 $37,968 $11,303 $26,665 
With respect to intangible assets, the Company amortized $0.9 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively, included in depreciation and amortization expense.
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Estimated future amortization expense as of March 31, 2024 is as follows (in thousands):
Remainder of 2024$1,906 
20252,488 
20261,903 
20271,903 
20281,903 
Thereafter14,330 
Total$24,433 
Goodwill Impairment
The Company reviews goodwill for impairment annually as of October 1 and more frequently if events or changes in circumstances indicate an impairment may exist (a “triggering event”). As of March 31, 2024, the Company had $57.6 million of goodwill recorded on its condensed consolidated balance sheet. The Company concluded there were no impairment triggering events as of, and for, the three months ended March 31, 2024.
8. Debt
Revolving Credit Facility
On December 30, 2020, the Company entered into a three-year, $50.0 million, revolving loan and standby letter of credit facility agreement, which was amended and restated on December 3, 2021 in connection with the closing of the Business Combination, further amended and restated on December 15, 2022, and amended on each of June 29, 2023 and September 26, 2023 (i.e., the Revolving Credit Facility). Among other things, the Revolving Credit Facility provided for the issuance of up to $15.5 million of standby letters of credit, which were issued during the three months ended March 31, 2021 in favor of certain of the Company’s landlords. The Company had outstanding letters of credit of $15.5 million under the Revolving Credit Facility at both March 31, 2024 and December 31, 2023.
On February 21, 2024, in connection with the Disposition discussed within Note 19 herein, the Company terminated the Revolving Credit Facility, except for the $15.5 million in letters of credit outstanding, which were cash collateralized in the amount of $17.1 million and resulted in restricted cash classification on the condensed consolidated balance sheet. The letters of credit bear interest at a rate equal to the Secured Financing Overnight Rate (SOFR) Index, plus a margin of 3.75% on the undrawn amount of letters of credit (the implied interest rate was 9% as of March 31, 2024).
Convertible Notes
In June 2021, in connection with the entry into the merger agreement pursuant to which the Business Combination was consummated, the Company entered into subscription agreements with certain investors to sell $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (i.e., the Notes). In connection with the closing of the Business Combination, the Company issued, and those investors purchased, the Notes. The Notes are convertible into shares of our Class A common stock at a conversion price of approximately $50.00 and bear interest at a rate of 8.50% per annum, payable semi-annually. The Notes mature on December 3, 2026. As of March 31, 2024, the Notes were convertible into approximately 2,382,007 shares of our Class A common stock.
The Company may, at its election, force conversion of the Notes after December 3, 2024 (i.e., after the third anniversary of the issuance of the Notes), subject to a holder’s prior right to convert and the satisfaction of certain other conditions, if the volume-weighted average trading price of our Class A common stock is greater than or equal to 130% of the conversion price for more than 20 trading days during a period of 30 consecutive trading days, which has yet to occur. In the event that a holder of the Notes elects to convert its Notes prior to December 3, 2024, the Company will be obligated to pay an amount in cash equal to 12 month’s interest declining ratably on a monthly basis to zero month’s interest, in each case, on the aggregate principal amount of the Notes so converted. Without limiting a holder’s right to convert the Notes at its option, interest will cease to accrue on the Notes during any period in which the Company would otherwise be entitled to force conversion of the Notes, but is not permitted to do so solely due to the failure of a trading volume condition specified in the indenture governing the Notes.
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Each holder of a Note has the right under the indenture governing the Notes to require the Company to repurchase, for cash, all or a portion of the Notes held by such holder (i) at any time on or after December 3, 2024 (i.e., the third anniversary of the issuance of the Notes), at a repurchase price equal to the principal amount plus accrued and unpaid interest, or (ii) upon the occurrence of a fundamental change (as defined in the indenture) before the maturity date (i.e. December 3, 2026), at a repurchase price equal to 101% of the principal amount plus accrued and unpaid interest. In addition, a failure to comply with the provisions of the indenture governing our Notes could trigger an event of default under the indenture, which would allow the holders of Notes to accelerate the maturity of the Notes and require the Company to repay the Notes prior to their maturity. Moreover, the Company will be required to repay the Notes, in cash, at their maturity, unless earlier converted, redeemed, or repurchased.
The indenture governing the Notes includes restrictive covenants that, among other things, limit the Company’s ability to incur additional debt or liens, make restricted payments or investments, dispose of significant assets, transfer specified intellectual property, or enter into transactions with affiliates. Additionally, on February 28, 2024, in connection with the Disposition, the indenture governing the Notes was amended to, among other things, provide that 95% of the net proceeds of future asset sales must be used to repay the Notes.
On March 7, 2024, in connection with the Disposition, the Company repaid approximately $30.9 million of the Notes, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024. In connection with the repayment, the Company determined the modified debt terms were not substantially different from the original terms and applied modification accounting. The Company derecognized approximately 20.6% of the unamortized debt discount and issuance costs, which resulted in an approximately $4.9 million loss on partial debt extinguishment that was attributed to the discontinued operation.
In accounting for the Notes, the Company bifurcated a derivative liability representing the conversion option, with a fair value at issuance of $31.6 million. To measure the fair value of the derivative liability, the Company compared the calculated value of the Notes with the indicated value of the host instrument, defined as the straight-debt component of the Notes. The difference between the value of the straight-debt host instrument and the fair value of the Notes resulted in the value of the derivative liability. The value of the straight-debt host instrument was estimated based on a binomial lattice model, excluding the conversion option and the make-whole payment upon conversion. The derivative liability is remeasured at each reporting date with the resulting gain or loss recorded in change in fair value of derivative liability within the condensed consolidated statements of operations. As of December 31, 2023, the Company determined the fair value of the derivative liability was immaterial as (i) the closing share price of our Class A common stock was $1.00 as of December 29, 2023, and (ii) each holder of a Note has the right to require the Company to repurchase, for cash, all or a portion of the Notes held by such holder at any time on or after December 3, 2024 (i.e., the third anniversary of the issuance of the Notes), at a repurchase price equal the principal amount plus accrued and unpaid interest. The fair value of the embedded derivative continues to be immaterial as of March 31, 2024.
Interest expense on the Notes is recognized at an effective interest rate of 16% and totaled $3.6 million and $3.6 million for the three months ended March 31, 2024 and 2023, respectively, of which amortization of the debt discount and issuance costs comprised $1.2 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively. The effective interest rate of 16% was remeasured in connection with the aforementioned modification accounting and assumes a maturity date of December 3, 2026.
The net carrying amount of the Notes as of March 31, 2024 and December 31, 2023 was:
March 31, 2024December 31, 2023
Principal outstanding$119,100 $150,000 
Unamortized debt discount and issuance costs(18,665)(25,023)
Net carrying value$100,435 $124,977 
The fair value of the Notes was approximately $93.1 million and $112.8 million as of March 31, 2024 and December 31, 2023, respectively. The fair value of the Notes was estimated using Level 3 inputs.
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9. Stockholders’ Equity
Common Stock
The Company is authorized to issue 700,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 10,000,000 shares of Class C common stock, par value $0.0001 per share. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to fifty votes. Class C common stock is non-voting.
Preferred Stock
The Company is authorized to issue 50,000,000 shares of preferred stock, par value $0.0001 per share. The Company’s board of directors is authorized, without further stockholder approval, to issue such preferred stock in one or more series, to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. There were no issued and outstanding shares of preferred stock as of March 31, 2024 or December 31, 2023.
Stock-Based Compensation
Stock Options
A summary of the stock option activity under the Company’s equity incentive plans is presented below:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Term
Aggregate
Intrinsic
Value
Balance as of December 31, 2023845$24.98 1.71$ 
Granted  — — 
Exercised  — — 
Forfeited(28)13.88 — — 
Expired(426)21.90 — — 
Balance as of March 31, 2024391$29.14 3.17$ 
Expected to vest at March 31, 2024391$29.14 3.17$ 
Exercisable at March 31, 2024347$30.42 2.64$ 
As of March 31, 2024, the total share-based compensation costs not yet recognized related to unvested stock options was $0.4 million, which is expected to be recognized over the weighted-average remaining requisite service period of 0.9 years.
Restricted Stock Units
A summary of restricted stock unit (“RSU”) activity is presented below:
SharesWeighted Average Grant-
Date Fair Value
Outstanding as of December 31, 20232,190$3.74 
Granted333 0.72 
Vested(42)13.18 
Forfeited(191)4.37 
Outstanding as of March 31, 20242,290$3.08 
As of March 31, 2024, there were approximately $4.2 million of unrecognized compensation costs related to RSUs.
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Stock-Based Compensation Expense
The following table summarizes stock-based compensation cost included in the condensed consolidated statements of operations:
Three Months Ended March 31,
20242023
Cost of revenue, excluding depreciation and amortization$213 $310 
Sales and marketing140 200 
General and administrative338 530 
Research and development1
61 (353)
Total$752 $687 
________________________________
(1) The negative stock-based compensation expense for the three months ended March 31, 2023 for Research and development was due to forfeitures.
RSUs settle into shares of common stock upon vesting. Upon the vesting of the RSUs, for certain employees, the Company net-settles the RSUs and withholds a portion of the shares to satisfy minimum statutory employee withholding tax requirements. Total payment of the employees’ tax obligations to the tax authorities is reflected as a financing activity within the condensed consolidated statements of cash flows.
At-The-Market Offering
On March 21, 2023, the Company filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) under which the Company may, from time to time, sell securities in one or more offerings having an aggregate offering price of up to $150.0 million. The Shelf Registration Statement was declared effective as of April 5, 2023. On June 20, 2023, the Company entered into an At-The-Market Offering agreement with Craig-Hallum Capital Group LLC pursuant to which the Company may, from time to time, sell up to 3,316,503 shares of its Class A common stock. As of March 31, 2024, the Company had sold, in the aggregate, 517,385 shares of its Class A common stock, at an average price of $2.08 per share, for aggregate net proceeds of $0.9 million after deducting commissions and offering expenses. The Company used the aggregate net proceeds for general corporate purposes, and the Company has 2,799,118 remaining shares available under the At-The-Market-Offering agreement.
10. Net Loss Per Share
Net loss per share is computed using the two-class method. Basic net loss per share is computed using the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share reflects the effect of the assumed exercise of any stock options, the vesting of any restricted stock units, the exercise of any warrants (including the Public Warrants and the Private Warrants), the conversion of any convertible debt (including the Notes), and the conversion of any convertible preferred stock, in each case only in the periods in which such effect would have been dilutive.
For the three months ended March 31, 2024 and 2023, net loss per share amounts were the same for Class A and Class B common stock because the holders of each class are entitled to equal per share dividends. There were no shares of Class C common stock outstanding for either period presented.
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The table below presents the computation of basic and diluted net loss per share:
Three Months Ended March 31,
20242023
Numerator:
Net loss from continuing operations$(26,569)$(29,392)
Net loss from discontinued operations, net of tax(9,213)(6,869)
Less: net loss attributable to noncontrolling interests(53)(260)
Net loss attributable to holders of Class A and Class B common stock$(35,729)$(36,001)
Amounts attributable to BuzzFeed, Inc. for net loss per common share, basic and diluted:
Net loss from continuing operations(26,516)(29,132)
Net loss from discontinued operations, net of tax(9,213)(6,869)
Net loss attributable to BuzzFeed, Inc.$(35,729)$(36,001)
Denominator:
Weighted average common shares outstanding, basic and diluted36,57835,176
Net loss per common share, basic and diluted:
Continuing operations$(0.72)$(0.83)
Discontinued operations$(0.25)$(0.20)
Net loss per common share, basic and diluted, attributable to BuzzFeed, Inc.1
$(0.98)$(1.02)
_________________________________
(1)Net loss per share information is presented on a rounded basis using actual amounts. Minor differences in totals may exist due to rounding.
The numerator for net loss per basic and diluted common share from continuing operations excludes the impact of net loss attributable to the noncontrolling interests for all periods presented.
The table below presents the details of securities that were excluded from the calculation of diluted loss per share as the effect would have been anti-dilutive:
Three Months Ended March 31,
20242023
Stock options391949
Restricted stock units2,2901,651
Warrants2,4692,469
Convertible notes 2,3822,382
11. Income Taxes
The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision.
Three Months Ended March 31,
20242023
Income tax provision $682 $147 
Effective tax rate(2.6)%(0.5)%

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For the three months ended March 31, 2024, the Company’s effective tax rate on continuing operations differed from the U.S. federal statutory income tax rate of 21% primarily due to (i) limited tax benefits provided for against its current year pre-tax operating loss, as the Company maintains a full valuation allowance against its U.S. deferred tax assets that are not realizable on a more-likely-than-not basis, and (ii) permanent adjustments and state taxes related to the Disposition.
For the three months ended March 31, 2023, the Company’s effective tax rate on continuing operations differed from the U.S. federal statutory income tax rate of 21% primarily due to limited tax benefits provided for against its current year pre-tax operating loss as the Company maintains a full valuation allowance against its U.S. deferred tax assets that are not realizable on a more-likely-than-not basis.
The Company, or one of its subsidiaries, files its tax returns in the U.S. and certain state and foreign income tax jurisdictions with varying statute of limitations. The major jurisdictions in which the Company is subject to potential examination by tax authorities are the U.S., the United Kingdom, Japan, and Canada.
12. Restructuring Costs
In February 2024, the Company announced plans to reduce expenses by implementing an approximately 16% reduction in the then-current workforce (after the Disposition as discussed within Note 19 herein). In doing so, the Company reduced the size of its centralized operations to enable its individual brands to operate with more autonomy and deliver against their differentiated value propositions for advertisers. The reduction in workforce plan is intended to position the Company to be more agile, sustainable, and profitable. The Company incurred approximately $2.9 million of restructuring costs for the three months ended March 31, 2024, comprised mainly of severance and related benefits costs, of which $1.2 million were included in cost of revenue, excluding depreciation and amortization, $1.5 million were included in sales and marketing, and $0.2 million were included in general and administrative. As of March 31, 2024, $1.9 million remain unpaid and were included in accrued compensation on the condensed consolidated balance sheet. These costs are primarily expected to be paid in the second quarter of 2024.
Additionally, in accordance with the Asset Purchase Agreement (the “Complex Sale Agreement”), dated as of February 21, 2024 between a wholly-owned subsidiary of the Company and Commerce Media Holdings, LLC., pursuant to which the Disposition was consummated, Commerce Media reimbursed the Company for approximately $1.8 million in payments related to “Non-Transferring Employees” (as defined in the Complex Sale Agreement), including severance. The amount of these severance and related charges are not included within the restructuring charges noted above. The Company treated the reimbursement as an expense reimbursement.
13. Leases
The Company leases office space under non-cancelable operating leases with various expiration dates through 2029. The Company accounts for leases under Accounting Standards Update 2016-02, Leases (Topic 842) (“ASC 842”) by recording right-of-use assets and liabilities. The right-of-use asset represents the Company’s right to use underlying assets for the lease term and the lease liability represents the Company’s obligation to make lease payments under the lease. The Company determines if an arrangement is, or contains, a lease at contract inception and exercises judgment and applies certain assumptions when determining the discount rate, lease term, and lease payments. ASC 842 requires a lessee to record a lease liability based on the discounted unpaid lease payments using the interest rate implicit in the lease or, if the rate cannot be readily determined, the incremental borrowing rate. Generally, the Company does not have knowledge of the rate implicit in the lease and, therefore, uses its incremental borrowing rate for a lease. The lease term includes the non-cancelable period of the lease plus any additional periods covered by an option to extend that the Company is reasonably certain to exercise. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. Certain of the Company’s lease agreements include escalating lease payments. Additionally, certain lease agreements contain renewal provisions and other provisions which require the Company to pay taxes, insurance, or maintenance costs.
The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. On July 8, 2022, the Company entered into a sublease with a third party with respect to substantially all of the Company’s then-existing corporate headquarters. The sublease commenced on August 26, 2022 and expires on May 30, 2026, unless terminated sooner in accordance with the provisions of the sublease. Pursuant to the terms of the sublease, the subtenant pays a fixed monthly rent of $0.8 million, subject to periodic increases. In-lieu of a cash security deposit, the Company received a letter of credit from Citibank for approximately $4.5 million. On February 21, 2024, in connection
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with the Disposition, the Company licensed the use of office space in our corporate headquarters. Refer to Note 19 herein for further details on this arrangement.
Sublease rent income is recognized as an offset to rent expense on a straight-line basis over the lease term. In addition to sublease rent, other costs such as common-area maintenance, utilities, and real estate taxes are charged to subtenants over the duration of the lease for their proportionate share of these costs.
The following illustrates the lease costs for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
20242023
Operating lease cost$6,177 $7,447 
Sublease income(4,114)(3,958)
Total lease cost$2,063 $3,489 
All components of total lease cost are recorded within general and administrative expenses within the condensed consolidated statement of operations. The Company does not have material short-term or variable lease costs.
The following amounts were recorded in the Company’s condensed consolidated balance sheets related to operating leases:
March 31, 2024December 31, 2023
Assets
Right-of-use assets$42,430 $46,715 
Liabilities
Current lease liabilities22,476 21,659 
Noncurrent lease liabilities31,858 37,820 
Total lease liabilities$54,334 $59,479 
Other information related to leases was as follows:
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
Supplemental cash flow information:
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows for operating lease liabilities7,032 8,459 
March 31, 2024December 31, 2023
Weighted average remaining lease term (years)2.42.7
Weighted average discount rate13.90 %13.87 %
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Maturities of lease liabilities as of March 31, 2024 were as follows:
YearOperating Leases
Remainder of 2024$21,205 
202525,633 
202613,062 
20272,723 
2028821 
Thereafter539 
Total lease payments63,983 
Less: imputed interest(9,649)
Total$54,334 
Sublease receipts to be received in the future under noncancelable subleases as of March 31, 2024 were as follows:
YearAmount
Remainder of 2024$13,226 
202516,587 
20264,886 
2027178 
Thereafter 
Total$34,877 
14. Commitments and Contingencies
Guarantees
In the course of its business, the Company both provides and receives indemnities which are intended to allocate certain risks associated with business transactions. Similarly, the Company may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not fulfill its obligations under an indemnification obligation. The Company records a liability for indemnification obligations and other contingent liabilities when probable and reasonably estimable.
Legal Matters
The Company is party to various lawsuits and claims in the ordinary course of business. Although the outcome of such matters cannot be predicted with certainty and the impact that the final resolution of such matters will ultimately have on the Company’s condensed consolidated financial statements is not known, the Company does not believe that the resolution of these matters will have a material adverse effect on the Company’s future results of operations or cash flows.
The Company settled or resolved certain legal matters during the three months ended March 31, 2024 and 2023 that did not individually or in the aggregate have a material impact on the Company’s business or its condensed consolidated financial position, results of operations, or cash flows.
Video Privacy Protection Act:
On May 16, 2023, a lawsuit titled Hunthausen v. BuzzFeed, Inc. was filed against the Company in the United States District Court for the Southern District of California, asserting class action claims for alleged violation of the Video Privacy Protection Act (“VPPA”) based on the claimed transmission of personally identifying information via the Meta pixel, Google Analytics, and the TikTok pixel, all of which are purportedly connected to posts on the BuzzFeed.com website. The putative class plaintiff was seeking an injunction to stop further alleged wrongful conduct, to recover unspecified compensatory damages and an award of costs, and any further appropriate relief. The matter was settled on January 4, 2024 and is now disposed.
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On August 4, 2023, the Company received 8,927 individual demands for JAMS arbitration in California, all of which allege that the Company violated the VPPA by transmitting personally identifying information via the Meta pixel, purportedly connected to posts on the BuzzFeed website. Each claimant was seeking to recover damages in the amount of $2,500 (actual dollars) for each alleged violation of the VPPA. The Company provisionally settled these claims on January 29, 2024.
On August 15, 2023, the Company received (1) 5,247 individual demands for JAMS arbitration in California, all of which allege that the Company violated the VPPA by transmitting personally identifying information via the use of various pixels purportedly in connection with the HuffPost.com website; and (2) 12,176 individual demands for JAMS arbitration in California, all of which allege that the Company violated the VPPA by transmitting personal identifying information via the use of various pixels purportedly in connection with the BuzzFeed.com website. Each claimant was seeking to recover damages in the amount of $2,500 (actual dollars) for each alleged violation of the VPPA, as well as punitive damages, attorneys’ fees and costs, and equitable relief. The Company provisionally settled these claims on January 16, 2024.
On October 31, 2023, we received 590 individual demands for JAMS arbitration in California, all of which allege that we violated the VPPA by transmitting personally identifying information via the use of various pixels purportedly in connection with the BuzzFeed.com website. Each claimant was seeking to recover damages in the amount of $2,500 (actual dollars) for each alleged violation of the VPPA. The Company provisionally settled these claims on January 29, 2024.
Mass Arbitrations:
Two mass arbitrations (the “Arbitrations”) were initiated before the American Arbitration Association on March 15, 2022 against the Company and certain of its executive officers and directors (together, the “BuzzFeed Defendants”) and Continental Stock Transfer Corporation by 91 individuals previously employed by Legacy BuzzFeed (the “Claimants”). The Claimants alleged that they were harmed when they were allegedly unable to convert their shares of Class B common stock to Class A common stock and sell those shares on December 6, 2021, the first day of trading following the Business Combination, and asserted claims for negligence, misrepresentation, breach of fiduciary duty, and violation of Section 11 of the Securities Act. The Claimants sought to recover unspecified compensatory damages, an award of costs, and any further appropriate relief.
On April 21, 2022, the BuzzFeed Defendants filed a complaint in the Delaware Court of Chancery seeking to enjoin the Arbitrations on the grounds that, inter alia, the Claimants’ purported causes of action arise from their rights as shareholders of the Company, are governed by the Company’s charter, including its forum selection provision, and are therefore not arbitrable (the “Delaware Action”). The complaint sought declaratory and injunctive relief. A hearing on the merits of the Delaware Action was held on July 26, 2022. On October 28, 2022, the Court of Chancery granted the Company’s motion to permanently enjoin the Claimants’ arbitration claims.
On January 17, 2023, the Claimants filed amended statements of claim in the Arbitrations against BuzzFeed Media Enterprises, Inc., a wholly-owned subsidiary of the Company, and Continental Stock Transfer & Trust Corporation, the transfer agent for 890 and, later, the Company. The amended statements of claim likewise allege that the Claimants were harmed when they were allegedly unable to convert their shares of Class B common stock to Class A common stock and sell those shares on the first day of trading following the Business Combination. The Claimants allege claims for breach of contract and the covenant of good faith and fair dealing, misrepresentation, and negligence, and seek to recover unspecified compensatory damages, an award of costs, and any further appropriate relief.
On March 29, 2023, BuzzFeed Media Enterprises, Inc., filed a complaint in the Delaware Court of Chancery seeking to enjoin the Arbitrations on the grounds that, inter alia, the Claimants’ purported causes of action arise from their rights as shareholders of the Company, are governed by the Company’s charter, including its forum selection provision, and are therefore not arbitrable. The complaint seeks declaratory and injunctive relief. The parties cross-moved for summary judgment.
On November 20, 2023, the Court of Chancery heard oral arguments on the Company’s motion for summary judgment and the Claimants’ cross-motion to dismiss the Company’s complaint. The arbitrations are stayed until the Court resolves the motions on the merits. The decision of the Court is pending.
California Invasion of Privacy Act
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On April 11, 2024, a lawsuit titled Chih-Yuan Chang et al. v. BuzzFeed, Inc. was filed against the Company in the Southern District of New York, alleging that the Company, by causing the Sharethrough, IQM, and Dotomi trackers to be installed on website visitors’ internet browsers, is collecting visitors’ personal identifying information without their consent, in violation of the California Invasion of Privacy Act (CIPA). Plaintiff, additionally, seeks class certification. The Company plans to move to dismiss the claims.
Nasdaq Listing Compliance
Minimum Bid Requirement
On May 31, 2023, the Company received a letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the previous 30 consecutive business days, the bid price for the Company’s Class A common stock had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Global Market under Nasdaq Listing Rule 5550(a)(2) (i.e., the Bid Price Requirement).
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, or until November 27, 2023, to regain compliance with the Bid Price Requirement. The Company did not regain compliance with the Bid Price Requirement on or before November 27, 2023. However, upon receipt of both the Company’s application to transfer from The Nasdaq Global Market to The Nasdaq Capital Market and a written notification by the Company of its intent to regain compliance with the Bid Price Requirement, including by effecting a reverse stock split, if necessary, the Staff notified the Company in a letter dated November 28, 2023, that the Company was eligible for an additional 180-day period, or until May 28, 2024, to regain compliance (the “Second Compliance Period”). The Staff’s determination was based, in part, on the Company meeting the continued listing requirement with respect to the market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market except for the Bid Price Requirement. As of the opening of business November 30, 2023, the Company’s Class A common stock and warrants were transferred to The Nasdaq Capital Market, which operates in substantially the same manner as The Nasdaq Global Market, where they continue to trade under the symbols “BZFD” and “BZFDW,” respectively.
As disclosed in Note 2 herein, the Company effected the Reverse Stock Split on May 6, 2024. While the closing bid price of the Company’s Class A common stock has exceeded $1.00 since the effective date of the Reverse Stock Split, the Company has not yet regained compliance with the Bid Price Requirement, as there has not been 10 business days since the effective date of the Reverse Stock Split. If, at any time before the end of the Second Compliance Period, the bid price for the Company’s Class A common stock closes at $1.00 or more for at least 10 consecutive business days, unless the Staff exercises its discretion to extend this 10-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H), the Staff will provide written notification to the Company that it has regained compliance with the Bid Price Requirement. If the Company does not regain compliance with the Bid Price Requirement by the end of the Second Compliance Period (i.e., by May 28, 2024), Nasdaq will notify the Company that its securities are subject to delisting. In the event of such a notification, the Company may appeal the Staff’s determination to delist its securities before the Nasdaq Listing Qualifications Panel. However, there can be no assurance that, if the Company receives a delisting notice and appeals the delisting determination, such an appeal would be successful.
Audit Committee Requirement
On March 6, 2024, Patrick Kerins, then a member of the Company’s board of directors and its audit committee, notified the Company that he did not intend to stand for re-election as a director of the Company at the 2024 Annual Meeting. The Company then promptly notified the Staff that, as a consequence of Mr. Kerins’ failure to seek re-election, following the 2024 Annual Meeting, the audit committee of the Company’s board of directors would consist of two members and, as such, that the Company would no longer be in compliance with Nasdaq Listing Rule 5605(c)(2)(A), which requires that the audit committees of listed companies have a minimum of three members that satisfy certain criteria for service on the committee (i.e., the Nasdaq Audit Committee Requirement). On April 26, 2024, as expected, the Company received a letter from the Staff notifying the Company that the Company was no longer in compliance with the Nasdaq Audit Committee Requirement.
The Company has until the earlier of its 2025 annual meeting of stockholders and April 25, 2025 (i.e., one year from the date on which the Company ceased to be compliant) to regain compliance. If the Company is not in compliance with the Nasdaq Audit Committee Requirement by that date, then the Staff will provide written notification to the Company that its Class A common stock will be subject to delisting. At that time, the Company may appeal the Staff’s
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delisting determination to the Nasdaq Listing Qualifications Panel. However, there can be no assurance that, if the Company receives a delisting notice and appeals the delisting determination, such an appeal would be successful. The Company intends to appoint a third member to the audit committee of the Company’s board of directors prior to the expiration of the cure period in order to regain compliance with the Nasdaq Audit Committee Requirement.
15. Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM, in deciding how to allocate resources and in assessing performance.
The Company has determined that its chief executive officer is its CODM who makes resource allocation decisions and assesses performance based upon financial information at the consolidated level. The Company manages its operations as a single segment for the purpose of assessing and making operating decisions. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.
16. Related Party Transactions
The Company recognized revenue from NBCUniversal Media, LLC (“NBCU”), a holder of 5% or more of our Class A common stock, of $0.4 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively. The Company recognized expenses under contractual obligations from NBCU of $nil and $nil for the three months ended March 31, 2024 and 2023, respectively. The Company had outstanding receivable balances of $0.3 million and $0.2 million from NBCU as of March 31, 2024 and December 31, 2023, respectively. The Company had an outstanding payable balance of $0.2 million and $0.2 million to NBCU as of March 31, 2024 and December 31, 2023, respectively.
Verizon Ventures LLC (“Verizon”), collectively with its affiliates, is a holder of 5% or more of the Company’s Class A common stock. Verizon is the landlord for the Company’s corporate headquarters, and the Company transacts with Verizon in the normal course of business, such as with agency advertising deals and for certain utilities. The Company recognized revenue from Verizon of $nil and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The Company recognized expenses under contractual obligations from Verizon of $1.5 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. The Company had no outstanding receivables or payables from or to Verizon as of March 31, 2024 or December 31, 2023.
17. Supplemental Disclosures
Film Costs
Film costs, which were included in prepaid and other assets on the condensed consolidated balance sheets, were as follows:
March 31, 2024December 31, 2023
Individual Monetization:
Feature films$1,707 $1,707 
Total$1,707 $1,707 
The Company had no material amortization of film costs for the three months ended March 31, 2024 or 2023.
Governmental Assistance
Production tax incentives reduced capitalized film costs by $0.7 million as of December 31, 2023 (no material change as of March 31, 2024). The Company had receivables related to our production tax credits of $3.6 million and $3.5 million as of March 31, 2024 and December 31, 2023, respectively, included in prepaid and other current assets in our condensed consolidated balance sheet.
Supplemental Cash Flow Disclosures
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Three Months Ended March 31,
20242023
Cash paid for income taxes, net$205 $98 
Cash paid for interest1,419 970 
Non-cash investing and financing activities:
Accounts payable and accrued expenses related to property and equipment38 20 
Accrued deferred offering costs5  
Reconciliation of cash and cash equivalents and restricted cash within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents44,457 49,947 
Restricted cash17,050  
Total cash and cash equivalents and restricted cash$61,507 $49,947 
18. Other (Expense) Income, Net
Other (expense) income, net consisted of the following for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
20242023
Exchange (loss) gain
$(181)$763 
Other expense(627)(352)
Other income252 209 
Total$(556)$620 
19. Held for Sale, Discontinued Operations, Disposals, and Licenses
Disposal of Complex Networks
Complex Sale
On February 21, 2024, a wholly-owned subsidiary of the Company entered into the Complex Sale Agreement with Commerce Media, providing for the sale of certain assets relating to the business of Complex Networks (i.e., the Disposition). Pursuant to the Complex Sale Agreement, Commerce Media purchased certain assets, and assumed certain liabilities, related to the business of Complex Networks, excluding the business operating under the First We Feast brand and as otherwise set forth in the Complex Sale Agreement, for an aggregate purchase price of $108.6 million, which was paid in cash on February 21, 2024.
In connection with the Disposition, the Company was required to repay (i) approximately $30.9 million to holders of the Notes and (ii) approximately $33.8 million outstanding under the Revolving Credit Facility, plus accrued and unpaid interest of $0.7 million (such amounts were repaid shortly after the Disposition). The Company terminated the Revolving Credit Facility, except for the $15.5 million in letters of credit outstanding, which were cash collateralized in the amount of $17.1 million. The Company incurred a $0.5 million early termination fee and a standby letter of credit fee of $0.5 million, both of which were paid upon closing of the Disposition on February 21, 2024. Additionally, as described in Note 9 herein, on February 28, 2024, the indenture governing the Notes was amended to, among other things, provide that 95% of the net proceeds of future asset sales must be used to repay the Notes.
Concurrent with the closing of the Disposition, the Company and Commerce Media entered into a space sharing agreement whereby Commerce Media paid the Company a one-time license fee of approximately $2.8 million for use of the certain office space in our corporate headquarters from February 21, 2024 until on June 30, 2025 (or such earlier date that the underlying sublease or master lease earlier expires or is terminated).
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Held for Sale and Discontinued Operations
As of December 31, 2023, the Company determined the assets of Complex Networks, excluding the First We Feast brand, met the criteria for classification as held for sale. On February 21, 2024, the Company completed the Disposition for approximately $108.6 million in cash. The Company disposed of Complex Networks in order to refocus its business around scalable, high-margin, and tech-led revenue streams. As such, the Company concluded the ultimate disposal (i.e., the Disposition), represented a strategic shift that had a major effect on the Company’s operations and financial results. Therefore, the historical results of Complex Networks, excluding the First We Feast brand, are classified as discontinued operations for all periods presented herein.
Details of net loss from discontinued operations, net of tax, were as follows:
Three Months Ended March 31,
20242023
Revenue$2,115 $12,246 
Costs and Expenses
Cost of revenue, excluding depreciation and amortization3,500 10,107 
Sales and marketing1,046 3,393 
General and administrative225 592 
Research and development344 691 
Depreciation and amortization 2,701 
Total costs and expenses5,115 17,484 
Loss from discontinued operations(3,000)(5,238)
Loss on partial debt extinguishment(4,919) 
Gain on remeasurement of classification to held for sale854  
Other (expense) income, net(292) 
Interest expense, net(1,230)(1,631)
Loss from discontinued operations before income taxes (8,587)(6,869)
Income tax provision