Industry Insider: Vimeo’s Second Earnings Call
On August 5, 2024, Vimeo hosted their Second Quarter Earnings Call on their website where they held a video session and Q&A with corporate executives Philip Moyer (CEO), Gillian Munson (CFO), and other important executive figures. An earnings call is a quarterly conference call hosted by a public company, such as Vimeo, during which its executives discuss the company's financial performance, business developments, and future outlook with investors.
Although Vimeo is often compared to YouTube and is undoubtedly the lesser-known of the two, the platform is considered a staple video-sharing platform amongst creative professionals. Vimeo can be described as a “video hosting and sharing platform” where individuals can share, watch, and post their content. Recently hired CEO Philip Moyer opens the earnings call on an interesting note, detailing his interest in AI and its potential to drive revenue. He continues to detail the three main areas of focus for the remaining year:
Create a customer-first culture of agility and innovation
Increase the pace of growth in Vimeo Enterprise and reignite Self-Serve
Invest in AI and new innovations that excite our customers
Moyer doesn't shy away from revealing the strengths of quarter two, starting the second half of the presentation with positive statistics: “We grew revenue 2% in Q2, driven by strength in Vimeo Enterprise, which posted 55% revenue growth and again, has some impressive customer wins.” While these are certainly satisfactory numbers, it is interesting to note that the majority of the call is focused on Vimeo Enterprise rather than Vimeo. Vimeo Enterprise is catered towards large companies and offers different services, such as stricter privacy, monetization, and more, rather than Vimeo Standard which catered towards individual creators and small businesses. However, you can’t blame the executives for boasting these numbers; the company reached $23 million in the quarter, which put them in safe territory for their $100 million annualized bookings run rate goal (or the end-of-the-year revenue) for the product.
Beneath the success of Vimeo Enterprise, however, issues are lurking: Subscribers for the entire platform fell 9%. According to the CEO, “new subscriber volumes are not currently large enough to get us back to aggregate nominal subscriber growth…” In other words, the current number of new subscribers being acquired is insufficient to recover the overall growth of the subscriber base to its previous levels. To remedy this problem, Vimeo is relying on “Self-Serve & Add-Ons,” which are the in-platform purchases, to fill in the gap that the low subscriber growth left, which ultimately drove in a 6% ARPU (average revenue per user) increase in the second quarter.
The problem was also addressed in the Q&A portion of the earnings call when an analyst asked the executives to “flesh out a little bit your kind of game plan to get that business to inflect.” To which Munson responded: “On self-serve, when we look at the year-over-year rate of growth, it's in and around rates it's been for the last handful of quarters. So no real change there. But there is a change in terms of how we've been working with that business, which is we've taken away paid marketing spend by about 50%.”
Considering that the current numbers are not large enough to get the company back to aggregate nominal subscriber growth, the change isn’t seemingly dramatic enough. Can Vimeo rely solely on working with large businesses through Vimeo Enterprise? While there were some new, impressive customer wins, such as Westfield, WorkDay, Mazda, and more in the second quarter, it might not be enough to secure a successful financial future.
Ultimately, while Vimeo’s strong performance in Vimeo Enterprise and a 2% revenue increase for Q2 highlight its progress, the 9% decline in overall subscribers poses a significant challenge. The focus on Vimeo Enterprise, with impressive new client wins, demonstrates potential but may not fully address the broader subscriber base issue. The reliance on Self-Serve and Add-Ons, which has boosted ARPU by 6%, shows some promise, yet it’s clear that a more definitive plan is needed to tackle the subscriber shortfall. Vimeo must enhance its strategies for subscriber growth and address this gap to ensure long-term financial stability and success.
