Industry Insider: A Look Into Vimeo’s 2023 Q2 Earnings Video
On August 1, 2023, Vimeo (NASDAQ:VMEO) held its second quarter Earnings Call in the form of an interactive video followed by a Q&A session. The results were presented by CFO Gillian Munson and interim CEO Adam Gross, with the addition of a video by former CEO Anjali Sud.
The news on Anjali Sud leaving her position as Vimeo’s CEO on September 1 to pursue a new role as CEO of Tubi already broke in early July, and Adam Gross will step in as interim CEO. Gross has been on Vimeo’s board for the past two years and has vast experience with SaaS (Software-as-a-Service) companies both in executive roles (for example, SVP at Dropbox and CEO at Salesforce) and as founder of two startups. While answering a question from Brian Nicholas Fitzgerald (Senior Analyst at Wells Fargo) about how Gross’s career will impact his leadership at Vimeo, the interim CEO replied that he is most excited about three things in the company. As the years go by, videos will play an increasingly defining role in business, therefore he sees Vimeo adding new companies to its roster of clients (which already includes brands of the likes of Whole Foods, Porsche, Philips, and Swarovski). Secondly, Gross’s experience on Vimeo’s board will greatly help his take on the company, as he is more than familiar with its strategy and the direction it is headed. Lastly, his experience in bringing innovative technology to viable go-to-market models will be key in Vimeo’s own strategy.
“We are still in the early stages of seeing how the increasingly ubiquitous use of video, especially when paired with AI, can transform businesses of all sizes. These fundamental technology shifts are a special opportunity to build iconic and enduring companies – and as someone who has been part of building several of them, I see that opportunity for Vimeo.”
The quarter’s results are $102 million in revenues and $5 million in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), an $11.4 million improvement with respect to the second quarter of 2022. Together with a positive FCF (Free Cash-Flow) of $278 thousand, these results put Vimeo on track for profitable growth. In fact, growth is one of the company’s three main objectives for the future, as revenues have decreased by 8.24% with respect to 22Q2; Vimeo anticipates positive digits by the end of 2023.
In support of returning to growth, the other goals for the company are an increase in simplification and efficiency. The past months were marked by the introduction of many product-related features, such as AI-powered editing, following the acquisition of the companies Wirewax (an interactive video software company) and Wibbitz (video editing). Another achievement in efficiency is improved cost control with an 18% year-over-year decrease in operating expenses, adjusted EBITDA, and FCF despite the lower revenue. The total costs for the first half of 2023 amount to $4.9 million, primarily due to restructuring costs and severance to the 11% of workforce that was laid off.
Notably, as CFO Munson stated, trends in bookings growth precede revenues. Although bookings are still shrinking in 23Q2, Vimeo has effectively reduced the rate of decline and is working on getting them to growth by the end of 2023, led by Vimeo Enterprise (which grew 72% this quarter) - which will consecutively drive revenue. The Shareholder’s Letter states that:
“Our continued progress in Q2 gives us confidence in our ability to execute against our goals of returning to bookings growth by year end while driving non-GAAP profitability.”
