Vimeo Inc

NASDAQ:VMEO

Earnings Call Transcript

[Gillian Munson, executive]

Hi. I'm Gillian Munson, Vimeo's CFO, here to welcome you to our Q4 2024 earnings results. Before that, I encourage you to read through our safe harbor disclosures on investors.vimeo.com. While you will be able to find much more detailed information in our shareholder letter, 10-K and earnings Q&A, which you can find at investors.vimeo.com, I want to highlight 3 key themes from our Q4 results in this video.

First, our ability to grow our top line is starting to show. Second, we fundamentally reset Vimeo's cost structure. And finally, future is very, very bright.

Let's dive into each one. First, our ability to grow our top line is beginning to show. Q4 bookings grew 3%. We saw growth in both Vimeo Enterprise and OTT. Some interesting details underneath this growth were pointing out. Vimeo Enterprise bookings grew 39% and are now fully 29% of our bookings. We grew both Vimeo Enterprise customers and new AOV in the double digits year-over-year. OTT bookings also grew both in Q4 and for the full year.

And pricing increases being rolled out in our self-serve product began to show more materially in our results as AOVs rose in the double digits and had a positive impact on ARPUs. Revenue tends to trail our bookings trends. So it will take a little while for growth to show in our revenue, but we believe that demonstrating bookings growth is a great step towards delivering revenue growth, something we continue to believe is well within sight.

Second, we have fundamentally reset Vimeo's cost structure. Over the last 2 years, we have done the hard work to reset our cost basis, and we think this has shown in the healthy financial footing we are on and in the resiliency of our business model.

Since Q1 2022, we have reduced quarterly run rate GAAP and non-GAAP expenses by more than $100 million. More specifically, versus Q1 2022, Q4 2024 non-GAAP run rate sales and marketing spend is down 31%. And G&A spend is down roughly 20%.

And we have lowered stock-based compensation expense by 36% -- despite these double-digit declines, revenue is down just in the single digits and was basically flat in 2024 versus 2023. And gross profit has been essentially flat over the period. Q4 net income was $2 million and adjusted EBITDA and free cash flow were $11 million each.

Looking at all of 2024, we delivered $27 million of net income and $55 million in adjusted EBITDA, more than 3x all of the adjusted EBITDA delivered in all of 2021 to 2023 combined. We ended 2024 with a cash balance of $325 million after generating $59 million in free cash flow in 2024 and despite using $33 million to repurchase shares, including purchases to satisfy tax obligations as our team's equity vest. Putting it all together, we believe Vimeo is on a very strong financial footing to invest strategically and responsibly to drive profitable growth.

And third, our future is bright. In 2025, we believe that we will build our position as one of the world's largest and most trusted video platforms, invest in our business, particularly in R&D. These investments will be in solutions, enterprise security, innovative video formats and AI features across the board. These areas are strategic to our current and future customers and by accelerating investment, we can speed our return to sustained profitable growth.

And finally, deliver accelerating growth rates in bookings and revenue, both from work done over the last years as well as the increased investment plan we are enacting. Growth will certainly be led by Vimeo Enterprise, but we believe we can also show OTT's growth potential and return self-serve to growth. We believe that 2025 will be a year that will show investors why Philip, myself, and the rest of our team believe so much in Vimeo's future.

Thanks for watching, and we look forward to taking your questions on our Q&A session and in our interactions with you in 2025.

[Philip Moyer, executive]

Hi. I'm Philip Moyer, Vimeo's CEO. Thank you for joining us for our Q4 2024 earnings release. I would like to take a moment before I discuss our results to express our deepest sympathy and support for everyone who has been impacted by the Los Angeles fires. Over the past few weeks, our customers have shared stories of devastating losses, and we are heartbroken. But the L.A. creative community is strong, and all of us at Vimeo look forward to supporting you as you rebuild.

Customers are at the heart of everything we do. And in 2024, we strengthened our leadership team and got significantly more focused on delivering an exceptional experience for every customer we serve from individual filmmakers to the largest enterprises in the world. In the fourth quarter, we started to show results from this focus. We reversed the negative trends from the past couple of years, and our bookings grew by 3% year-over-year. Our enterprise bookings grew by 39%.

Our OTT business returned to bookings growth, and we got positive signals from our pricing changes in our self-serve products. That said, we are just getting started, and I expect 2025 to be an even more exciting year for Vimeo. In 2025, we are going to increase investment. While this may cause a short-term decline in EBITDA, we are going to utilize shareholder resources responsibly. And we believe that with these investments, we can accelerate growth and set up a path to double-digit growth over the long term.

All of us at Vimeo are excited about 2025. And in early January, we hosted our company and sales kickoffs. I have to say the enthusiasm in the room was electric. And so I want to share with you a brief recap of our 2024 progress.

[Presentation]

[Philip Moyer, executive]

We are on a journey to be the largest and most trusted private video platform in the world. Thanks for being with us on this journey. We look forward to continuing to update you on our progress.