BuzzFeed’s international business losses quadruple
BuzzFeed’s losses in its international business quadrupled last year, underscoring the challenges facing one of the trailblazers of digital publishing.
The company said pre-tax losses in its non-US business, including countries such as the UK, Germany and Brazil, widened to £8.9m in the year ending December 2018, compared to a loss of £1.9m the year before.
Turnover fell by 35 per cent to £21.6m, which BuzzFeed UK attributed to no longer booking ad sales and other “marketing services” carried out for its US parent company BuzzFeed Inc, causing “intercompany revenue” to fall by £14.8m. The same changes helped the international business reduce costs by £4.3m.
BuzzFeed said the “operational and accounting changes” were due to the international business becoming more “independent” from its parent company. “These changes are perfectly normal decisions for companies to make, especially those still in investment mode,” the company said.
The figures offer a glimpse into the international business of the digital publisher known for its quizzes, so-called listicles and investigative reporting. BuzzFeed was, together with companies such as Vice and Vox, the darling of investors before it ran into an uncertain advertising market. Its US-based parent company, which was founded in 2006, made revenues of more than $300m last year but has yet to turn a profit.
British authorities in December threatened to dissolve BuzzFeed’s UK operations after it missed the deadline to submit its financial results for 2018. It prompted chief financial officer Eric Mulheim to send an internal note to staff, in which he warned that BuzzFeed UK’s results would “not provide an apples to apples depiction” of the company’s growth due to it this year recording “primarily its own revenues and costs”.
Excluding the impact of the previous trade with its parent company, BuzzFeed UK said revenue grew by 20 per cent to £18.8m, while operating losses narrowed to £10.7m compared to losses of £14.1m in 2017.
Mr Mulheim used different figures in his email to staff, in which he said “BuzzFeed UK experienced a nearly 25 per cent increase in revenue and a more than 20 per cent improvement in profitability on a consolidated basis”.
He urged staff to view the figures “as an accomplishment of which you should all be proud” and said “it’s important to me that BuzzFeeders understand the true health of our business”.
Broken down by region, the company’s revenues fell by 75 per cent to £6.6m in the UK, while it made £746,000 in Europe, a region that did not book any sales in the year before. However it more than doubled sales to £14.2m in “the rest of the world”, indicating that the business was supported by its non-European operations.
The company left 2018 with a £10.4m deficit in shareholder’s funds, and it injected £3.6m worth of equity in May this year.
BuzzFeed has since the end of the reporting period closed its offices in Spain and France, and in early 2019 it announced it would cut 15 per cent of its workforce — roughly 200 jobs.
Jonah Peretti, Buzzfeed’s founder and chief executive, at the time told staff in an email that the cuts would put the company on “a firm foundation”.