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Vimeo, Inc. (VMEO)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 revenue of $104.6M declined 1.6% YoY but was above the company’s Q2 guidance for “at or below $100M”; operating income of $7.4M and Adjusted EBITDA of $16.1M materially exceeded guidance (prior guide: operating loss ≈$1M and high single-digit EBITDA) due to cost discipline and stronger enterprise momentum .
  • Vimeo Enterprise continued to be the growth engine: enterprise revenue grew 42% YoY, annualized enterprise bookings reached $100M, and ARPU rose 11% YoY to $23,043, offsetting Self-Serve pressure; total bookings were slightly up YoY despite ~50% YoY cuts to advertising spend .
  • Profitability and cash generation remained robust: GAAP gross margin 79%; net income $9.3M; cash from operations $20.8M; cash and equivalents increased to $324.8M; the company repurchased 1.3M shares in Q3 and an additional 0.4M through Oct 31 .
  • Q4 guidance implies revenue “around $100M,” operating income ≈$2M, and Adjusted EBITDA ≈$10M as reinvestment ramps; management signaled confidence in returning to bookings and revenue growth in 2025 as enterprise scale, pricing tests, and OTT stabilization take hold .
  • Near-term stock catalysts: continued enterprise acceleration and security/integration wins, evidence of pricing/packaging lift in Self-Serve, delivery vs Q4 profitability guide, and AI product uptake (translations, “ask-a-video,” Vision Pro app) .

What Went Well and What Went Wrong

What Went Well

  • Enterprise outperformance: enterprise revenue grew 42% YoY with annualized enterprise bookings at $100M; ARPU +11% YoY to $23,043; notable wins across e-learning, marketing, and video repositories (e.g., Volvo, Figma, Legal & General) .
  • Profitability and cash flow: GAAP gross margin 79%; Adjusted EBITDA $16.1M (15% margin); net income $9.3M; cash from operations $20.8M; free cash flow $21.0M, all while advertising spend fell ~50% YoY .
  • Strategic product and AI momentum: launched Vision Pro app; AI translations seeing “tens of thousands of minutes” translated among a small cohort; “ask-a-video” feature and enhanced enterprise-grade security/integrations (Teams, Google Meet; HIPAA BAA example) resonating with customers .

What Went Wrong

  • Self-Serve still contracting: Self-Serve & Add-Ons revenue down 6% YoY and subscribers down 9% YoY; bookings -8% YoY despite improving ARPU (+4% YoY) and pricing tests still early .
  • “Other” shrinking due to deprecations: Other revenue down 21% YoY; while OTT stabilized and now 82% of Other, legacy deprecations continue to weigh, though diminishing in impact .
  • Sequential growth pressure into Q4: CFO noted Q4 revenue growth rate comes down due to the bookings waterfall from a prior down bookings quarter; Q4 revenue guided “around $100M” vs Q3 $104.6M as reinvestment ramps .

Financial Results

Sequential performance (Q1–Q3 2024)

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$104.910 $104.376 $104.564
Operating Income ($USD Millions)$2.589 $7.461 $7.365
Operating Margin %2% 7% 7%
Net Income ($USD Millions)$6.073 $10.121 $9.282
Diluted EPS ($)$0.04 $0.06 $0.05
Gross Margin %78% 78% 79%
Adjusted EBITDA ($USD Millions)$12.2 $16.3 $16.1
Adjusted EBITDA Margin %12% 16% 15%
Cash from Operations ($USD Millions)$5.590 $19.698 $20.769
Cash & Equivalents ($USD Millions, period-end)$304.277 $310.579 $324.781

Year-over-year (Q3 2023 vs Q3 2024)

MetricQ3 2023Q3 2024
Revenue ($USD Millions)$106.253 $104.564
Operating Income ($USD Millions)$5.683 $7.365
Operating Margin %5% 7%
Net Income ($USD Millions)$8.464 $9.282
Diluted EPS ($)$0.05 $0.05
Gross Margin %79% 79%
Adjusted EBITDA ($USD Millions)$12.8 $16.1
Adjusted EBITDA Margin %12% 15%
Cash from Operations ($USD Millions)$16.607 $20.769

Actual vs Consensus Estimates (S&P Global)

MetricQ3 2024 ActualQ3 2024 Consensus (S&P Global)Delta
Revenue ($USD Millions)$104.564 N/AN/A
Diluted EPS ($)$0.05 N/AN/A

Note: S&P Global consensus data unavailable at time of analysis due to data access limits; will update when available.

Segment revenue breakdown

Segment Revenue ($USD Millions)Q3 2023Q2 2024Q3 2024
Self-Serve & Add-Ons$71.935 $68.565 $67.864
Vimeo Enterprise$15.220 $20.051 $21.675
Other$19.098 $15.760 $15.025
Total$106.253 $104.376 $104.564

KPIs (selected, by segment)

KPIQ3 2023Q2 2024Q3 2024
Self-Serve Subscribers (000s)1,397.3 1,304.6 1,275.4
Self-Serve ARPU ($)$202 $208 $209
Self-Serve Bookings ($000s)$67,409 $67,904 $62,159
Enterprise Subscribers (000s)3.0 3.7 3.8
Enterprise ARPU ($)$20,848 $21,977 $23,043
Enterprise Bookings ($000s)$18,050 $23,433 $25,092
Other Subscribers (000s)71.0 57.0 53.5
Other ARPU ($)$1,019 $1,080 $1,082
Other Bookings ($000s)$14,403 $9,144 $12,663

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2024“At or below $100M” (Q2 guide) Actual: $104.6M Beat vs prior guidance
Operating IncomeQ3 2024≈($1)M (loss) (Q2 guide) Actual: $7.4M Beat vs prior guidance
Adjusted EBITDAQ3 2024High single-digit millions (Q2 guide) Actual: $16.1M Beat vs prior guidance
RevenueQ4 2024—Around $100M New guide
Operating IncomeQ4 2024—≈$2M New guide
Adjusted EBITDAQ4 2024—≈$10M New guide
RevenueFY 2024Around $405M (Q2) — (not reiterated in Q3 letter)Not updated in Q3

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
Enterprise momentumQ1/Q2: Enterprise bookings +47%/+55% YoY; expanding with large logos; nearing $100M annualized bookings Enterprise revenue +42% YoY; annualized bookings reach $100M; pipeline AOV larger; security/integrations resonating Accelerating
Self-Serve trajectoryQ1/Q2: Deliberate ad spend cuts; subscribers -9% YoY; ARPU +6% QoQ; retention improved Bookings -8% YoY; subs -9% YoY; ARPU +4% YoY; pricing tests “encouraging” Stabilizing, early improvements
OTT/“Other”Q1/Q2: OTT stabilizing; deprecations to zero over time OTT now 82% of Other; stabilized; three new six-figure deals Stabilized; deprecations fading
AI initiativesQ1/Q2: AI-powered translation launch; product-led growth focus “Tens of thousands of minutes” translated; “ask-a-video” capability; enterprise-grade security Expanding adoption
Pricing & packagingQ1/Q2: Product-led growth, homepage, analytics improvements Smoothing purchase paths from free to $1M; early positive signal in Self-Serve tests Positive early traction
Reinvestment vs efficiencyQ1/Q2: ~$100M annualized opex reduction; profitable; plan to reinvest Opex slightly up QoQ; prepare to invest into 2025 while remaining profitable Reinvesting prudently
Spatial/VR (Vision Pro)—Launched Vision Pro app; positioning for new formats New growth vector
International/ChinaQ2: Opened enterprise distribution in China Continued global enterprise positioning; data residency in EU highlighted Building capability

Management Commentary

  • “Bookings growth turned slightly positive. We delivered $105 million in revenue and $21 million in operating cash flow… Vimeo is better positioned than ever to support customers in their strategic video communications.” – CEO Philip Moyer .
  • “Run rate, we’ve taken about $100 million in operating expenses annually out of the business… making room for us to make investments… we firmly believe Vimeo should be a profitable business… investments will be sizable, but not… put us in any kind of loss position.” – CFO Gillian Munson .
  • “Enterprise… AOV of our pipeline has gotten to a larger size… investments in integrations and security are really resonating with customers.” – CEO Philip Moyer .
  • “We’re seeing tens of thousands of minutes being translated already by the [AI translation] tool… we think we can make video even more intelligent… [and] bring a lot of security to that space.” – CEO Philip Moyer .
  • “Q4 guide… implies the growth rate comes down… due to [bookings] waterfall… we’re looking forward [to 2025].” – CFO Gillian Munson .

Q&A Highlights

  • Enterprise strength and drivers: Larger AOV pipeline, security/integrations (Teams, Google Meet), HIPAA BAA, EU data residency; use cases across e-commerce, e-learning, internal comms, media .
  • Investment cadence: ~$100M opex cut gives room to invest in 2025 while keeping profitability intact; hiring pace will govern spend ramp .
  • Path to growth in 2025: Enterprise scale can carry overall growth even if other products unchanged; pricing/packaging and OTT stabilization add tailwinds .
  • Self-Serve outlook: Not guiding by segment; aim to get back to growth with pricing/packaging and product; math favors overall growth as enterprise expands .
  • Q4 revenue shape: Growth rate “comes down” due to bookings waterfall from a prior down bookings quarter; revenue guided “around $100M” with positive operating income and ~$10M Adjusted EBITDA .

Estimates Context

  • S&P Global consensus estimates for Q3 and Q4 were unavailable at the time of analysis due to data access limits; as a result, we cannot quantify beat/miss vs Street for revenue or EPS in this report. We will update with S&P Global consensus when accessible. In the interim, results significantly exceeded company-issued Q3 guidance across revenue, operating income, and Adjusted EBITDA .

Key Takeaways for Investors

  • Enterprise is the flywheel: 42% YoY revenue growth, $100M annualized bookings, and double-digit ARPU growth provide a durable multi-quarter growth vector into 2025 .
  • Self-Serve stabilization underway: Despite subscriber declines, ARPU gains and early pricing/packaging tests suggest improving unit economics as ad spend stays disciplined .
  • Profitability/cash optionality: 79% gross margin, $16.1M Adjusted EBITDA, and $20.8M operating cash flow in Q3 provide ample firepower to reinvest while maintaining profits; cash balance $324.8M and ongoing buybacks support per-share value .
  • Product/AI differentiation: Active adoption of AI translations and “ask-a-video,” plus enterprise-grade security/integrations and the Vision Pro app, strengthen enterprise win rates and pricing power .
  • Q4 setup is conservative by design: Guide for ~$100M revenue and profitability reflects bookings timing; 2025 commentary points to bookings and revenue growth resumption with reinvestment .
  • Watch for catalysts: Continued enterprise deal velocity, evidence of Self-Serve uplift from pricing/packaging, OTT six-figure adds, and 2025 plan disclosure in Q4 update .
  • Risk checks: Self-Serve subscriber erosion, macro/IT budget variability, and regulatory/data residency requirements remain watch points even as enterprise mix rises .

Appendix: Additional Items

  • Share repurchases: 1.3M shares in Q3 at $3.83 average; additional 0.4M through Oct 31 at $4.87; $31M buyback authorization remaining as of Oct 31 .
  • Balance sheet: Total assets $643.0M; deferred revenue $163.3M; shareholders’ equity $409.4M at Q3-end .
  • Q4 non-GAAP outlook bridge: Operating income ~$1.6M plus add-backs (SBC ~$8.0M, D&A ~$0.4M) to Adjusted EBITDA ~$10.0M .