“Smart brevity” has been good for business at Axios.
The digital news startup, which uses the term as its motto and registered trademark, is on target to make a profit this year despite the economic turmoil stemming from the coronavirus that led to broad layoffs and pay cuts at many media outlets, people familiar with the site’s finances said.
The company has avoided staff reductions and is on track to take in about $58 million in revenue in 2020, up more than 30% compared with the year before, and is on target with its prepandemic projections, largely because of the success of its sponsored-newsletter business, the people said. Some big newsletter sponsors have included Comcast Corp. , Koch Industries and Wells Fargo & Co.
Newsletter sponsorships contribute more than 50% of the company’s total revenue, the people said, and now Axios is looking to expand. Early next year, the company said, it plans to establish two-person newsletter teams in several local markets, starting with Minneapolis; Denver; Tampa, Fla.; and Des Moines, Iowa.
“This is a big bet—a bet that you can hook local readers on a daily basis with a morning newsletter and build up from there,’’ said Jim VandeHei, Axios’s co-founder and chief executive. “It’s a risk worth taking because if we are right, it’s superscalable and part of a solution to the high-stakes local news puzzle.”
Mr. VandeHei said the coming, localized newsletters wouldn’t focus on politics but rather on local business, technology and education.
The company is also looking at possible acquisitions, the people familiar with the site’s finances said, without providing specifics.
When Axios was launched in 2017 by Mr. VandeHei, Mike Allen and Roy Schwartz after they departed from Politico, some questioned whether its bite-size tidbits of news would dumb down complicated issues. Stories are rarely more than a few hundred words and include a time estimate for how long they will take to read. Others said the site might too easily become a platform for “access journalism,” or less-critical coverage in return for closer access to exclusive news and sources.
Axios quickly became a big and respected voice, particularly with its political coverage, scoring numerous scoops on the Trump administration as well as interviews with the president and others on Axios’s television news program on HBO.
Axios currently has 1.4 million individual newsletter subscribers, up from 750,000 a year ago, and sends out over 4 million newsletters a day, when accounting for readers who receive more than one. In August, the site attracted 19.8 million unique visitors, up from 7 million a year earlier, according to Comscore Inc.
Axios came close to breaking even in 2018 and turned a small profit last year, the people familiar with the site’s finances said. The site has no paywall and makes about 85% of its revenue from advertising, primarily the newsletter sponsorships, the people said. The rest comes from events, product licensing and the HBO deal.
Some have wondered if Axios has relied a bit too much on the so-called Trump Bump—increased readership tied to high interest in news about the president—for its fast success and could see its fortunes wane if Joe Biden is elected to the White House.
Mr. VandeHei says Axios’s coverage is far broader than the ups and downs of Washington, with only about 10% of its reporting staff of around 80 focused on D.C. politics. He said much of Axios’s sponsored-newsletter revenue comes from reporting on technology, media and deal making.
Axios employs around 200 people in all and has recently listed job postings on its site for about 25 new positions.
Axios entered the current health and economic crisis on strong financial footing. The venture-capital-backed site raised $27 million in December 2019 and has so far not spent any of that money, the people familiar with the site’s finances said. In total, the site has raised $57 million and was given a pre-money valuation of $200 million at its last funding round, the people said.
In April, as the coronavirus pandemic took hold and ad revenue plunged sharply across the media industry, forcing many news outlets to enact steep cost cuts, Axios prepared for the worst, Mr. VandeHei said.
Expecting a possible 40% decline in revenue—in line with what many other media companies experienced—Axios applied for a loan from the federal Paycheck Protection Program to avoid layoffs. It received a $4.8 million loan, but after drawing public criticism and realizing that its business wasn’t as deeply affected as expected, the company gave the loan back.
Another surprising area of growth for Axios has been the licensing of its technology platform to advertising clients, which are trained to apply brevity to their own communications. The tech and consulting offering, which Axios calls HQ, is on target to bringing in seven figures in revenue this year, the people said.
Write to Lukas I. Alpert at [email protected]
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