UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 2022 (February 4, 2022)
(Exact name of registrant as specified in charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant's telephone number, including area code: (212 ) 314-7300
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol | Name of exchange on which registered | ||||||||||||
(Nasdaq Global Select Market) | ||||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
ITEM 2.02 Results of Operations and Financial Condition
On February 9, 2022, Vimeo, Inc. (the “Company”) announced that it had released its results for the quarter and year ended December 31, 2021. The full text of the related press release, which is posted on the Company’s website at https://vimeo.com/investors/ and appears in Exhibit 99.1 hereto, is incorporated herein by reference. Additionally, the Company issued a letter to shareholders. A copy of the letter is furnished as Exhibit 99.2 hereto and is incorporated herein by reference.
The information furnished under Items 2.02 and 7.01, and in the accompanying Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
CFO Transition
On February 4, 2022, Mr. Narayan P. Menon, the Company’s Chief Financial Officer, notified the Company of his decision to resign from the Company. In connection with Mr. Menon’s resignation, Mr. Menon and the Company entered into a transition agreement dated February 4, 2022 (the “Agreement”). The Agreement provides that Mr. Menon will continue in his employment with the Company as its Chief Financial Officer until his successor begins or June 30, 2022, whichever is earlier (the applicable date, the “Separation Date”). After the separation date, Mr. Menon will stay on as a consultant until December 31, 2022 to help with the transition. In exchange for Mr. Menon’s agreement to provide continuing services to the Company and other consideration contained in the Agreement, (i) the Company will continue to pay Mr. Menon his base salary at its current rate through the Separation Date, (ii) the Company will pay Mr. Menon a 2021 bonus equal to his current annual target (65% of his annual base salary), (iii) for the period between January 1, 2022 and the Separation Date, Mr. Menon will be eligible for a discretionary bonus, (iv) during the consultancy period, the Company will pay Mr. Menon at his current annual base salary and will continue to provide Mr. Menon with health benefits, (v) 342,326 of Mr. Menon’s Stock Appreciation Rights (“SARs”), representing three quarters of a tranche that otherwise had a cliff vest on January 6, 2023, will vest on September 6, 2022, and (vi) Mr. Menon will have twelve months after the Separation Date to exercise his vested SARs. In addition, the Agreement includes other customary terms and covenants in favor of the Company. The Company has engaged an executive search firm to identify candidates for a permanent Chief Financial Officer.
The foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
CEO Maternity Leave
At the Company’s earnings event on February 10, 2022, the Company plans to announce that Anjali Sud, Chief Executive Officer of the Company, is expected to go on maternity leave in April 2022. In Ms. Sud’s absence, the Company expects that Mr. Mark Kornfilt, President and Chief Product Officer of the Company, will act as the Company’s interim Chief Executive Officer, while maintaining his current position. Upon Ms. Sud’s return from maternity leave, the Company expects that Ms. Sud will return to the position of Chief Executive Officer and Mr. Kornfilt will continue in the position of President and Chief Product Officer.
Cautionary Statement Regarding Forward-Looking Information
This communication may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "may," "could," "should," "would," "anticipates," "estimates," "expects," "plans," "projects," "forecasts," "intends," "targets," "seeks" and "believes," as well as variations of these words or comparable words, among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements regarding our Chief Executive Officer and the Company’s expectations that Mr. Kornfilt will serve as interim Chief Executive Officer during Ms. Sud’s leave of absence. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions. Actual results could differ materially from those contained in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to the factors set forth in the section titled "Risk Factors" in our Registration Statement on Form S-1 filed with the SEC on May 26, 2021 as they may be updated by our periodic reports subsequently filed with the SEC. Other unknown or unpredictable factors that could also adversely affect Vimeo’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of Vimeo’s management as of the date of this communication. Vimeo does not undertake to update these forward-looking statements.
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ITEM 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description | |||||||
Press Release of Vimeo, Inc. dated February 9, 2022. | ||||||||
Letter to Shareholders, dated February 9, 2022 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VIMEO, INC. | |||||||||||
| By: | /s/ Narayan Menon | ||||||||||
| Name: | Narayan Menon | ||||||||||
| Title: | Chief Financial Officer (Principal Financial Officer) | ||||||||||
Date: February 9, 2022
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Exhibit 99.1
VIMEO REPORTS Q4 2021 AND FULL-YEAR 2021 FINANCIAL RESULTS
Q4 2021 Revenue increases 27% to $106 million
Full-Year 2021 Revenue increases 38% to $392 million
NEW YORK— February 9, 2022—Vimeo, Inc. (NASDAQ: VMEO) (“Vimeo”) released its results for the fourth quarter and full year ended December 31, 2021 today. Vimeo separately posted a letter to shareholders from Vimeo CEO Anjali Sud on the Investor Relations section of its website at https://investors.vimeo.com/.
“Our product expansion efforts in 2021 are starting to bear real fruit,” said Anjali Sud, Chief Executive Officer of Vimeo. “We are now selling our all-in-one solution to some of the largest companies in the world, and seeing millions of employees adopt our software to power video for work. Video, and Vimeo, have never been more essential for the future of business communication.”
VIMEO, INC. SUMMARY RESULTS
($ in millions except per share amounts)
| Q4 2021 | Q4 2020 | ||||||||||
| Revenue | $ | 106.1 | $ | 83.8 | |||||||
| Gross profit | 79.5 | 58.8 | |||||||||
| Gross margin | 75 | % | 70 | % | |||||||
Operating income (loss) | (23.6) | (3.7) | |||||||||
| Net income (loss) | (24.0) | (5.8) | |||||||||
| Diluted EPS | (0.15) | (0.04) | |||||||||
Adjusted EBITDA | (7.6) | 0.7 | |||||||||
See reconciliations of GAAP to non-GAAP measures beginning on page 8.
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DEFINITIONAL CHANGES
In our Form S-4 filed with the Securities and Exchange Commission (the “SEC”) on April 6, 2021, we defined “customers who purchase plans through contact with our sales force” as “Enterprise Customers". For clarity, we will refer to those customers as “Sales-Assisted Customers" in this release and going forward, and any revenue associated with those customers will be referred to Sales-Assisted Revenue.
Q4 2021 HIGHLIGHTS
•Revenue increased 27% year-over-year driven by an 11% increase in subscribers and 13% growth in ARPU. Sales-Assisted Revenue grew over 50% year-over-year in the fourth quarter.
•Operating Income: GAAP operating loss was $23.6 million, compared to GAAP operating loss of $3.7 million in the fourth quarter of 2020.
•Adjusted EBITDA: Adjusted EBITDA loss was $7.6 million, compared to Adjusted EBITDA of $0.7 million in the fourth quarter of 2020.
•Cash Flow / Liquidity: Cash flow from operating activities was negative $11.6 million, compared to negative $5.2 million in the fourth quarter of 2020. Free cash flow was negative $11.8 million, compared to $5.4 million in the fourth quarter of 2020. We ended the quarter with $321.9 million in cash and cash equivalents.
FULL-YEAR 2021 HIGHLIGHTS
•Revenue increased 38% year-over-year driven by a 11% increase in subscribers and 18% growth in ARPU. Sales-Assisted Revenue grew more than 70% in the full year of 2021.
•Operating Income: GAAP operating loss was $61.0 million, compared to GAAP operating loss of $40.8 million in the full year of 2020.
•Adjusted EBITDA: Adjusted EBITDA loss was $9.4 million, compared to Adjusted EBITDA loss of $13.9 million in the full year of 2020.
•Cash Flow / Liquidity: Cash flow from operating activities was $16.0 million, compared to $13.9 million in the full year of 2020. Free cash flow was $15.5 million, compared to $13.0 million in the full year of 2020.
RECENT BUSINESS HIGHLIGHTS
•Vimeo now has approximately 1.7 million paying subscribers, with more than 7,000 paying Sales-Assisted Customers.
•Added and expanded Sales-Assisted Customers across diverse industries, including Coca-Cola, Planet Fitness, VMware, The Ogilvy Group, Toyota USA, Santander, and CarMax.
•Scaled new products launched in 2021 as part of Vimeo Enterprise offering (Video Library and Vimeo Events), with over 45% of Vimeo Enterprise accounts at the end of 2021 using two or more products versus 10% at the end of 2020.
•Went live with integrations with Figma and Asana to enable Vimeo Record for their users. Launched new partnerships with WordPress, WooCommerce, and Google.
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•Closed our acquisitions of WIREWAX and Wibbitz, with product integration efforts underway to enable interactive video and enterprise video creation for the Vimeo platform.
FINANCIAL OUTLOOK
For the first quarter of 2022, Vimeo expects:
•Revenue growth of 17% to 19% year-over-year.
•GAAP Operating loss margin of roughly negative 25% at the midpoint of the guided ranges.
•Adjusted EBITDA loss between $10.0 million and $12.0 million, representing Adjusted EBITDA margin of roughly negative 10% at the midpoint of the guided ranges.
For full-year 2022, Vimeo expects:
•Revenue growth of 15% to 18% year-over-year.
•GAAP Operating loss margin of roughly negative 21% at the midpoint of the guided ranges.
•Adjusted EBITDA loss between $25.0 million and $30.0 million, representing Adjusted EBITDA margin of roughly negative 6% at the midpoint of the guided ranges.
•Positive Free Cash Flow for the year
Vimeo will provide further commentary on the drivers and assumptions underlying this outlook in its earnings video event.
Vimeo expects to release its January 2022 monthly metrics on Monday, February 14, 2022 after the market closes.
The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
CHIEF FINANCIAL OFFICER TRANSITION
Vimeo also announced today that Chief Financial Officer Narayan Menon has informed the company and its board of directors of his plans to depart the company in the coming months. We have initiated a search for his successor and Mr. Menon will continue his employment with the Company as its Chief Financial Officer until his successor is hired and onboarded to ensure a smooth transition.
VIDEO CONFERENCE CALL
Vimeo will live stream a video conference to answer questions regarding its fourth quarter and full year results on Thursday, February 10, 2022, at 8:30 a.m. Eastern Time. This live stream will include the disclosure of certain information, including forward-looking information, which may be material to an investor’s understanding of Vimeo’s business. The live stream will be open to the public at https://www.vimeo.com/investors.
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DILUTIVE SECURITIES
Vimeo has various dilutive securities. The table below details these securities as well as estimated dilution at various stock prices (shares in millions; rounding differences may occur).
| Shares | Avg. Exercise Price | As of 1/31/2022 | Dilution at: | ||||||||||||||||||||||||||
| Share Price | $ | 14.65 | $ | 18.00 | $ | 22.00 | $ | 26.00 | $ | 30.00 | |||||||||||||||||||
| Common Stock Outstanding as of 1/31/2022 | 166.1 | 166.1 | 166.1 | 166.1 | 166.1 | 166.1 | |||||||||||||||||||||||
| SARs and Stock Options | 17.5 | $ | 5.91 | 8.9 | 10.0 | 10.9 | 11.5 | 12.0 | |||||||||||||||||||||
| RSUs | 3.3 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 | |||||||||||||||||||||||
| Total Estimated Dilution | 11.7 | 12.9 | 13.8 | 14.4 | 14.8 | ||||||||||||||||||||||||
| % Dilution | 7.1 | % | 7.7 | % | 8.3 | % | 8.7 | % | 8.9 | % | |||||||||||||||||||
| Total Estimated Diluted Shares Outstanding | 177.8 | 179.0 | 179.9 | 180.5 | 181.0 | ||||||||||||||||||||||||
The dilutive securities presentation is calculated using the methods and assumptions described below, which are different than those prescribed by GAAP.
The Company currently settles all equity awards on a gross basis; therefore, the estimated dilutive effect is calculated as the number of shares expected to be issued upon vesting or exercise, adjusted for (i) the estimated income tax benefit from the tax deduction received upon the vesting or exercise of awards held in the U.S., as such tax benefit is assumed to be used to repurchase shares of Vimeo common stock and (ii) in the case of stock options, the strike price proceeds that are received by the Company and assumed to be used to repurchase shares of Vimeo common stock. The number of shares required to settle SARs will be impacted by movement in the stock price of Vimeo.
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| GAAP FINANCIAL STATEMENTS | |||||||||||||||||||||||
| VIMEO, INC. CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||||||||
| ($ in thousands except per share data) | |||||||||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenue | $ | 106,120 | $ | 83,786 | $ | 391,678 | $ | 283,218 | |||||||||||||||
| Cost of revenue (exclusive of depreciation shown separately below) | 26,621 | 24,951 | 102,537 | 89,077 | |||||||||||||||||||
| Gross profit | 79,499 | 58,835 | 289,141 | 194,141 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development expense | 30,365 | 16,207 | 105,586 | 64,238 | |||||||||||||||||||
| Sales and marketing expense | 42,584 | 28,343 | 152,691 | 105,630 | |||||||||||||||||||
| General and administrative expense | 28,495 | 15,705 | 85,111 | 49,846 | |||||||||||||||||||
| Depreciation | 326 | 194 | 923 | 460 | |||||||||||||||||||
| Amortization of intangibles | 1,320 | 2,093 | 5,846 | 14,744 | |||||||||||||||||||
| Total operating expenses | 103,090 | 62,542 | 350,157 | 234,918 | |||||||||||||||||||
| Operating loss | (23,591) | (3,707) | (61,016) | (40,777) | |||||||||||||||||||
| Interest expense | (128) | — | (438) | — | |||||||||||||||||||
| Interest expense–related party | — | (2,131) | (726) | (9,116) | |||||||||||||||||||
| Other income, net | 76 | 227 | 10,241 | 93 | |||||||||||||||||||
| Loss before income taxes | (23,643) | (5,611) | (51,939) | (49,800) | |||||||||||||||||||
| Income tax provision | (380) | (174) | (828) | (828) | |||||||||||||||||||
| Net loss | $ | (24,023) | $ | (5,785) | $ | (52,767) | $ | (50,628) | |||||||||||||||
| Per share information: | |||||||||||||||||||||||
| Basic loss per share | $ | (0.15) | $ | (0.04) | $ | (0.33) | $ | (0.32) | |||||||||||||||
| Diluted loss per share | $ | (0.15) | $ | (0.04) | $ | (0.33) | $ | (0.32) | |||||||||||||||
Weighted average shares outstanding used in the computation of net loss per share (a): | |||||||||||||||||||||||
| Basic | 160,658 | 159,381 | 159,884 | 159,381 | |||||||||||||||||||
| Diluted | 160,658 | 159,381 | 159,884 | 159,381 | |||||||||||||||||||
| Stock-based compensation expense by function: | |||||||||||||||||||||||
| Cost of revenue | $ | 145 | $ | 22 | $ | 493 | $ | 73 | |||||||||||||||
| Research and development expense | 4,774 | 448 | 16,114 | 2,931 | |||||||||||||||||||
| Sales and marketing expense | 1,690 | 63 | 4,693 | 603 | |||||||||||||||||||
| General and administrative expense | 7,743 | 1,575 | 23,593 | 8,058 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 14,352 | $ | 2,108 | $ | 44,893 | $ | 11,665 | |||||||||||||||
(a) Weighted average basic and diluted shares outstanding for the three and twelve months ended December 31, 2020 reflect Vimeo's outstanding shares immediately after the completion of Vimeo's separation from the remaining businesses of IAC/InterActiveCorp. Approximately 4.9 million common shares outstanding have been excluded from the computation of shares outstanding for EPS purposes because they are subject to satisfaction of certain vesting conditions that can be found in our filings. For additional information on the separation, see the registration statement on Form S-1 of Vimeo, Inc. filed with the SEC on May 26, 2021.
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| VIMEO, INC. CONSOLIDATED BALANCE SHEET | |||||||||||
($ in thousands) | |||||||||||
| December 31, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 321,900 | $ | 110,011 | |||||||
| Accounts receivable, net | 29,451 | 12,785 | |||||||||
| Prepaid expenses and other current assets | 18,811 | 7,932 | |||||||||
| Total current assets | 370,162 | 130,728 | |||||||||
| Leasehold improvements and equipment, net | 2,868 | 3,321 | |||||||||
| Goodwill | 242,586 | 219,337 | |||||||||
| Intangible assets with definite lives, net | 11,008 | 10,854 | |||||||||
| Other non-current assets | 22,737 | 6,839 | |||||||||
| TOTAL ASSETS | $ | 649,361 | $ | 371,079 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| LIABILITIES: | |||||||||||
| Accounts payable, trade | $ | 17,501 | $ | 3,324 | |||||||
| Promissory note due on demand—related party | — | 44,565 | |||||||||
| Deferred revenue | 173,167 | 137,436 | |||||||||
| Accrued expenses and other current liabilities | 67,385 | 47,432 | |||||||||
| Total current liabilities | 258,053 | 232,757 | |||||||||
| Long-term debt—related party | — | 50,000 | |||||||||
| Other long-term liabilities | 20,713 | 3,242 | |||||||||
| Commitments and contingencies | |||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||
| Common stock | 1,567 | — | |||||||||
| Class B common stock | 94 | — | |||||||||
| Class A Voting common stock of Vimeo OpCo | — | 837 | |||||||||
| Class B Non-Voting common stock of Vimeo OpCo | — | 663 | |||||||||
| Preferred stock | — | — | |||||||||
| Additional paid-in-capital | 704,796 | 366,676 | |||||||||
| Accumulated deficit | (335,776) | (283,009) | |||||||||
| Accumulated other comprehensive loss | (86) | (87) | |||||||||
| Total shareholders' equity | 370,595 | 85,080 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 649,361 | $ | 371,079 | |||||||
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| VIMEO, INC. CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net loss | $ | (24,023) | $ | (5,785) | $ | (52,767) | $ | (50,628) | |||||||||||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||||||||||||||
| Stock-based compensation expense | 14,352 | 2,108 | 44,893 | 11,665 | |||||||||||||||||||
| Amortization of intangibles | 1,320 | 2,093 | 5,846 | 14,744 | |||||||||||||||||||
| Depreciation | 326 | 194 | 923 | 460 | |||||||||||||||||||
| Provision for credit losses | 926 | 288 | 1,428 | 1,834 | |||||||||||||||||||
| Gain on the sale of an asset | — | — | (10,151) | (288) | |||||||||||||||||||
| Other adjustments, net | 100 | 550 | 542 | 3,681 | |||||||||||||||||||
| Changes in assets and liabilities, net of effects of acquisitions and dispositions: | |||||||||||||||||||||||
| Accounts receivable | (12,514) | 1,310 | (19,204) | (7,413) | |||||||||||||||||||
| Prepaid expenses and other assets | (1,084) | (1,043) | (6,400) | (3,707) | |||||||||||||||||||
| Accounts payable and other liabilities | 5,763 | (14,611) | 14,146 | (12,778) | |||||||||||||||||||
| Deferred revenue | 3,198 | 9,670 | 36,698 | 56,291 | |||||||||||||||||||
| Net cash (used in) provided by operating activities | (11,636) | (5,226) | 15,954 | 13,861 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Acquisitions, net of cash acquired | (14,241) | 500 | (14,241) | 500 | |||||||||||||||||||
| Capital expenditures | (143) | (140) | (445) | (844) | |||||||||||||||||||
| Proceeds from the sale of an asset | — | — | 7,862 | 288 | |||||||||||||||||||
| Other, net | — | — | — | 98 | |||||||||||||||||||
| Net cash (used in) provided by investing activities | (14,384) | 360 | (6,824) | 42 | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Proceeds from sale of common stock, net of fees | — | 149,600 | 299,750 | 149,600 | |||||||||||||||||||
| Principal payments on related-party debt | — | — | (94,565) | (35,457) | |||||||||||||||||||
| Proceeds from issuance of related-party debt | — | 3,963 | — | 32,563 | |||||||||||||||||||
| Deferred financing costs | — | — | (1,440) | — | |||||||||||||||||||
| Dividends | — | (31,079) | — | (31,079) | |||||||||||||||||||
| Withholding taxes paid related to equity awards | 4,891 | (8,993) | (4,051) | (10,125) | |||||||||||||||||||
| Proceeds from exercise of stock options | 2,458 | — | 3,364 | — | |||||||||||||||||||
| Reimbursement to IAC/InterActiveCorp for IAC common shares issued to settle Vimeo OpCo stock appreciation rights | — | (11,634) | — | (11,634) | |||||||||||||||||||
| Net cash provided by financing activities | 7,349 | 101,857 | 203,058 | 93,868 | |||||||||||||||||||
| Total cash (used) provided | (18,671) | 96,991 | 212,188 | 107,771 | |||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | 166 | 349 | 120 | 303 | |||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | (18,505) | 97,340 | 212,308 | 108,074 | |||||||||||||||||||
| Cash and cash equivalents and restricted cash at beginning of period | 340,850 | 12,697 | 110,037 | 1,963 | |||||||||||||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | 322,345 | $ | 110,037 | $ | 322,345 | $ | 110,037 | |||||||||||||||
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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
($ in millions; rounding differences may occur)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Reconciliation of non-GAAP gross profit: | |||||||||||||||||||||||
GAAP Gross profit | $ | 79.5 | $ | 58.8 | $ | 289.1 | $ | 194.1 | |||||||||||||||
| % of Revenue | 75% | 70% | 74% | 69% | |||||||||||||||||||
| Add back: Stock-based compensation expense | 0.1 | — | 0.5 | 0.1 | |||||||||||||||||||
| Non-GAAP Gross Profit | $ | 79.6 | $ | 58.9 | $ | 289.6 | $ | 194.2 | |||||||||||||||
| % of Revenue | 75% | 70% | 74% | 69% | |||||||||||||||||||
| Reconciliation of non-GAAP operating expenses: | |||||||||||||||||||||||
GAAP Research and development expense | $ | 30.4 | $ | 16.2 | $ | 105.6 | $ | 64.2 | |||||||||||||||
| % of Revenue | 29% | 19% | 27% | 23% | |||||||||||||||||||
| Less: Stock-based compensation expense | 4.8 | 0.4 | 16.1 | 2.9 | |||||||||||||||||||
| Non-GAAP Research and development expense | $ | 25.6 | $ | 15.8 | $ | 89.5 | $ | 61.3 | |||||||||||||||
| % of Revenue | 24% | 19% | 23% | 22% | |||||||||||||||||||
GAAP Sales and marketing expense | $ | 42.6 | $ | 28.3 | $ | 152.7 | $ | 105.6 | |||||||||||||||
| % of Revenue | 40% | 34% | 39% | 37% | |||||||||||||||||||
| Less: Stock-based compensation expense | 1.7 | 0.1 | 4.7 | 0.6 | |||||||||||||||||||
| Non-GAAP Sales and marketing expense | $ | 40.9 | $ | 28.3 | $ | 148.0 | $ | 105.0 | |||||||||||||||
| % of Revenue | 39% | 34% | 38% | 37% | |||||||||||||||||||
GAAP General and administrative expense | $ | 28.5 | $ | 15.7 | $ | 85.1 | $ | 49.8 | |||||||||||||||
| % of Revenue | 27% | 19% | 22% | 18% | |||||||||||||||||||
| Less: Stock-based compensation expense | 7.7 | 1.6 | 23.6 | 8.1 | |||||||||||||||||||
| Non-GAAP General and administrative expense | $ | 20.8 | $ | 14.1 | $ | 61.5 | $ | 41.8 | |||||||||||||||
| % of Revenue | 20% | 17% | 16% | 15% | |||||||||||||||||||
| Reconciliation of net loss to Adjusted EBITDA: | |||||||||||||||||||||||
| Net loss | $ | (24.0) | $ | (5.8) | $ | (52.8) | $ | (50.6) | |||||||||||||||
| Add back: | |||||||||||||||||||||||
| Income tax provision | 0.4 | 0.2 | 0.8 | 0.8 | |||||||||||||||||||
| Other expense (income) , net | (0.1) | (0.2) | (10.2) | (0.1) | |||||||||||||||||||
| Interest expense–related party | — | 2.1 | 0.7 | 9.1 | |||||||||||||||||||
| Interest expense | 0.1 | — | 0.4 | — | |||||||||||||||||||
| Operating loss | (23.6) | (3.7) | (61.0) | (40.8) | |||||||||||||||||||
| % of Revenue | (22)% | (4)% | (16)% | (14)% | |||||||||||||||||||
| Add back: | |||||||||||||||||||||||
| Stock-based compensation expense | 14.4 | 2.1 | 44.9 | 11.7 | |||||||||||||||||||
| Depreciation | 0.3 | 0.2 | 0.9 | 0.5 | |||||||||||||||||||
| Amortization of intangibles | 1.3 | 2.1 | 5.8 | 14.7 | |||||||||||||||||||
| Adjusted EBITDA | $ | (7.6) | $ | 0.7 | $ | (9.4) | $ | (13.9) | |||||||||||||||
| % of Revenue | (7)% | 1% | (2)% | (5)% | |||||||||||||||||||
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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
($ in millions except per share data; shares in thousands; rounding differences may occur)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Reconciliation of net loss to Adjusted Net Loss: | |||||||||||||||||||||||
| Net loss | $ | (24.0) | $ | (5.8) | $ | (52.8) | $ | (50.6) | |||||||||||||||
| % of Revenue | (23)% | (7)% | (13)% | (18)% | |||||||||||||||||||
| Add back: | |||||||||||||||||||||||
| Stock-based compensation expense | 14.4 | 2.1 | 44.9 | 11.7 | |||||||||||||||||||
| Depreciation | 0.3 | 0.2 | 0.9 | 0.5 | |||||||||||||||||||
| Amortization of intangibles | 1.3 | 2.1 | 5.8 | 14.7 | |||||||||||||||||||
| Income tax effects related to non-GAAP adjustments | — | — | — | — | |||||||||||||||||||
| Adjusted Net Income (Loss) | $ | (8.0) | $ | (1.4) | $ | (1.1) | $ | (23.8) | |||||||||||||||
| % of Revenue | (8)% | (2)% | 0% | (8)% | |||||||||||||||||||
| Reconciliation of diluted loss per share to Adjusted EPS: | |||||||||||||||||||||||
| Diluted loss per share | $ | (0.15) | $ | (0.04) | $ | (0.33) | $ | (0.32) | |||||||||||||||
| Add back: | |||||||||||||||||||||||
| Stock-based compensation expense | 0.09 | 0.01 | 0.28 | 0.07 | |||||||||||||||||||
| Depreciation | — | — | 0.01 | — | |||||||||||||||||||
| Amortization of intangibles | 0.01 | 0.01 | 0.04 | 0.09 | |||||||||||||||||||
| Income tax effects related to non-GAAP adjustments | — | — | — | — | |||||||||||||||||||
| Adjusted EPS | $ | (0.05) | $ | (0.01) | $ | (0.01) | $ | (0.15) | |||||||||||||||
| Diluted weighted average shares | 160,658 | 159,381 | 159,884 | 159,381 | |||||||||||||||||||
| Computation of Free Cash Flow: | |||||||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (11.6) | $ | (5.2) | $ | 16.0 | $ | 13.9 | |||||||||||||||
| Less: Capital expenditures | (0.1) | (0.1) | (0.4) | (0.8) | |||||||||||||||||||
| Free Cash Flow | $ | (11.8) | $ | (5.4) | $ | 15.5 | $ | 13.0 | |||||||||||||||
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RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL OUTLOOK
($ in millions; rounding differences may occur)
| Three Months Ended March 31, 2022 | Twelve Months Ended December 31, 2022 | ||||||||||||||||||||||
| Operating loss to Adjusted EBITDA range: | |||||||||||||||||||||||
| Operating loss | $ | (25.5) | — | $ | (27.5) | $ | (91.4) | — | $ | (96.4) | |||||||||||||
| Add back: | |||||||||||||||||||||||
| Stock-based compensation expense | 13.5 | 13.5 | 58.7 | 58.7 | |||||||||||||||||||
| Depreciation | 0.4 | 0.4 | 1.8 | 1.8 | |||||||||||||||||||
| Amortization of intangibles | 1.6 | 1.6 | 5.9 | 5.9 | |||||||||||||||||||
| Adjusted EBITDA | (10.0) | — | (12.0) | (25.0) | — | (30.0) | |||||||||||||||||
| Three Months Ended March 31, 2022 | Twelve Months Ended December 31, 2022 | ||||||||||
| Operating loss margin to Adjusted EBITDA margin midpoint: | |||||||||||
| Operating loss margin | (25) | % | (21) | % | |||||||
| Add back: | |||||||||||
| Stock-based compensation expense margin | 13 | % | 13 | % | |||||||
| Depreciation margin | — | % | — | % | |||||||
| Amortization of intangibles margin | 2 | % | 1 | % | |||||||
| Adjusted EBITDA margin | (10) | % | (6) | % | |||||||
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PRINCIPLES OF FINANCIAL REPORTING
Vimeo has provided in this press release certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP gross profit, non-GAAP operating expenses, Adjusted net income (loss), Adjusted EPS and free cash flow, to supplement our financial information presented in accordance with GAAP. We use these non-GAAP financial measures internally in analyzing our financial results and believe that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Vimeo's financial results with other companies in its industry, many of which present similar non-GAAP financial measures. However, our presentation of these non-GAAP financial measures may differ from the presentation of similarly titled measures by other companies. Adjusted EBITDA is the metric on which our internal budgets are based and also the metric by which management is compensated. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Vimeo endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and corresponding non-GAAP measure.
From time to time, we provide forward-looking outlook information, including for Adjusted EBITDA, Adjusted EBITDA margin and free cash flow. Adjusted EBITDA, Adjusted EBITDA margin and free cash flow used in our outlook will differ from net income (loss) and operating income (loss), operating loss margin, and net cash provided by operating activities, respectively, in ways similar to the reconciliations provided above and the definitions of Adjusted EBITDA, Adjusted EBITDA margin and free cash flow provided below. We do not provide an outlook for net cash provided by operating activities or a reconciliation of free cash flow to net cash provided by operating activities, because we are not able to predict with reasonable certainty the amount or nature of all items that will be included in our GAAP metrics on a forward-looking basis. Accordingly, a reconciliation of the Company’s outlook for free cash flow to an outlook for net cash provided by operating activities cannot be made available without unreasonable effort.
Definitions of Non-GAAP Measures
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined as operating loss excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets, (ii) impairments of goodwill and intangible assets, if applicable, and (iii) gains and losses recognized on changes in the fair value of contingent consideration arrangements. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. The above items ("Adjusted EBITDA Non-GAAP Adjustments") are excluded from our Adjusted EBITDA measure because these items are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.
Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenue.
Non-GAAP gross profit excludes the effect of stock-based compensation included in Cost of revenue.
Non-GAAP operating expenses include Non-GAAP Research and development expense, Non-GAAP Sales and marketing expense, and Non-GAAP General and administrative expense. These Non-GAAP operating expenses exclude the effect of stock-based compensation expense included in their respective expense items.
Adjusted Net Income (Loss) and Adjusted EPS exclude the effect of the Adjusted EBITDA Non-GAAP Adjustments, as well as the related income tax effects. Adjusted EPS is calculated by dividing Adjusted net income by the Diluted weighted average shares outstanding used in the computation of net loss per share.
Free Cash Flow is defined as net cash used in operating activities less cash used for capital expenditures. We believe Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash.
Non-Cash Expenses That Are Excluded From Non-GAAP Measures
Stock-based compensation expense consists of expense associated with the grants of restricted stock units, restricted stock awards, and stock appreciation rights ("SARs"), including performance-based SARs. These expenses are not paid in cash and we view the economic costs of stock-based awards to be the dilution to our share base. We also consider the dilutive impact of stock-based awards in GAAP diluted earnings per share, to the extent such impact is dilutive. Stock-based awards are generally
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settled on a gross basis in shares of Vimeo common stock such that individual award holders will pay their withholding tax obligation, generally by selling shares of Vimeo common stock (including a portion of the shares received in connection with the applicable exercise).
Depreciation is a non-cash expense relating to our leasehold improvements and equipment and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.
Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as customer relationships, technology and trade names, are valued and amortized over their estimated lives. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.
Gains and losses recognized on changes in the fair value of contingent consideration arrangements are accounting adjustments to report contingent consideration liabilities at fair value. These adjustments can be highly variable and are excluded from our assessment of performance because they are considered non-operational in nature and, therefore, are not indicative of current or future performance or the ongoing cost of doing business.
Metric Definitions
Gross Margin – Revenue less cost of revenue, divided by revenue.
Subscribers – The number of users who have an active subscription to one of Vimeo’s paid plans measured at the end of the relevant period. Vimeo counts each account with a subscription plan as a subscriber. In the case of Sales-Assisted Customers who maintain multiple accounts across Vimeo’s platforms as part of a single Sales-Assisted subscription plan, Vimeo counts only one subscriber. Vimeo does not count team members who have access to a subscriber’s account as additional subscribers.
Average Subscribers – The sum of the number of Subscribers at the beginning and at the end of the relevant measurement period divided by two.
Average Revenue per User (“ARPU”) – The annualized revenue for the relevant period divided by Average Subscribers. For periods that are less than a full year, annualized revenue is calculated by dividing the revenue for that particular period by the number of calendar days in the period and multiplying this value by the number of days in that year.
Sales-Assisted (formerly referred to as Enterprise) Customers – Subscribers who purchase plans through contact with our sales force.
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OTHER INFORMATION
Cautionary Statement Regarding Forward-Looking Information
This press release and the Vimeo livestream which will be held at 8:30 a.m. Eastern Time on February 10, 2022, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "may," "could," "should," "would," "anticipates," "estimates," "expects," "plans," "projects," "forecasts," "intends," "targets," "seeks" and "believes," as well as variations of these words or comparable words, among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to Vimeo's expectations regarding future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, including statements attributable to our Chief Executive Officer. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions. Actual results could differ materially from those contained in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the risks inherent in Vimeo's separation from IAC, completed on May 25, 2021, the risks that the anticipated benefits from the separation will not be realized, changes in the regulatory landscape, including, in particular, changes in laws that might increase the liability of online intermediaries for user-generated content, reputational damage caused by problematic user content or our decisions to remove (or not remove) it; changes in policies implemented by third party platforms upon which we rely for traffic and distribution of mobile apps, increased competition in the online video category, our ability to convert visitors into uploaders and uploaders into paying subscribers, our ability to retain paying subscribers by maintaining and improving our value proposition, our ability to provide video storage and streaming in a cost-effective manner, our ability to successfully attract Sales-Assisted Customers (formerly referred to as Enterprise Customers), our ability to protect sensitive data from unauthorized access, the integrity, quality, scalability and redundancy of our systems, technology and infrastructure (and those of third parties with which we do business), our ability to successfully operate in and expand into additional international markets, our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties, foreign exchange currency rate fluctuations, the impact of the COVID-19 pandemic on our business, adverse changes in economic conditions, the possibility that our historical consolidated and combined results may not be indicative of our future results and the other factors set forth in the section titled "Risk Factors" in our Registration Statement on Form S-1 filed with the SEC on May 26, 2021 as they may be updated by our periodic reports subsequently filed with the SEC. Other unknown or unpredictable factors that could also adversely affect Vimeo’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of Vimeo’s management as of the date of this communication. Vimeo does not undertake to update these forward-looking statements.
About Vimeo
Vimeo is the world's leading all-in-one video software solution. Our platform enables any professional, team, and organization to unlock the power of video to create, collaborate and communicate. We proudly serve our growing community of over 230 million users — from creatives to entrepreneurs to the world's largest companies. Learn more at www.vimeo.com.
Contact Us
Vimeo IR
Yaoxian Chew
ir@vimeo.com
Vimeo Communications
Matt Anchin
pr@vimeo.com
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Exhibit 99.2
Vimeo 2022 Annual Shareholder Letter
February 9, 2022
Dear Shareholders,
Video is replacing text, images, and calls in millions of businesses around the world. Every day the size of Vimeo’s market grows, and every day we capture more of this opportunity. My team and I are here to change how the world uses video. We're here to define and lead a new category: video for work.
Eight months ago, Vimeo spun-out of IAC as its 11th independent publicly-traded company and the first SaaS business born from its formidable portfolio. We went public during a pandemic, experienced our share of growing pains, and ultimately did not achieve the ambitions we set for the year. All of this has made us stronger, more self-aware and more disciplined.
2021 was also a year of great progress and validation, as our self-serve business gave rise to a new and fast-growing opportunity: reaching large companies through a sales force and empowering them with enterprise-grade video. We launched powerful new products and landed 7-figure deals as we scaled this nascent sales-assisted business to over $100 million in revenue growing over 70%, while continuing to grow our self-serve business nearly 30%. This is progress we can, and will, build on.
It has been a transformational and humbling first year as a public company. We’re entering 2022 with clarity, focus and essential learnings. I’d like to articulate concretely what we've learned thus far, and what you can expect from us in Vimeo’s next chapter.
A video software solution for work
What is Vimeo, really? The majority of our potential customers don’t yet know the answer to this question, largely because Vimeo has evolved so materially over the last few years. Today we are a technology platform, not a viewing destination. We are a B2B solution, not the indie version of YouTube.
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We are both an established free video platform and an emerging enterprise software leader. But our customers don’t care about how we define ourselves; they care about what Vimeo does for them.
Vimeo powers video for work. For our customers, this means:
•Williams Sonoma uses Vimeo to centralize their video content securely for over 28,000 employees worldwide across all 7 brands.
•Nike uses Vimeo to train retail partners across Europe, from Footlocker to JD Sports.
•Expedia uses Vimeo to broadcast high-profile, no-fail internal events to thousands of employees.
•Gap uses Vimeo to publish and manage their marketing videos, from digital lookbooks to social media campaigns.
•Bayer uses Vimeo to host live panel discussions, distribute marketing content in multiple languages, and train their buyers in over 20 countries.
Why video for work? Why now?
We've long believed that any business with an online presence or distributed team will one day use video, much like they use e-mail, chat, image, and text today. This may have seemed far-fetched a few years ago, but it shouldn’t anymore. Video has already become a primary form of expression for consumers, with billions of us watching and creating video every day. Most of us now naturally seek video to stay informed, learn new skills, and interact with each other. This behavior is permeating to the workplace, where employees increasingly expect to consume engaging content at work. As a result, organizations must now plan for a future that is video-first, and invest in software that will enable their teams to adopt video at scale.
The transition to video for real-time collaborative meetings, powered by products such as Zoom and Microsoft Teams, has already dramatically changed the way we work. But video is still massively underutilized beyond meetings. Today product managers still describe complex user flows to colleagues using text, when they could record and share the experience from the user’s perspective with video. Marketers still produce overly edited whitepapers and infographics, when they could instantly host a webinar from their browser to interact with potential customers with video. HR departments continue to draft lengthy training manuals that are rarely read or digested, when they could just show how the job is done with video. Companies continue to settle for less engaging, less scalable, and less impactful
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communication modes at work. Because for most of us, creating, distributing, and accessing video is still too hard and full of friction.
Enterprise video at consumer scale
Vimeo is removing this friction. Our solution enables companies and their teams to effortlessly collaborate, communicate, and connect with video. We offer a unique combination of 3 things that companies care about: enterprise-grade video capabilities, delivered via a consumer-friendly UX, integrated into a single platform. The result is software that our customers, and their end users, tell us they love to use. Whether broadcasting live to large audiences or sharing recorded content asynchronously, Vimeo solves problems that will only become more pronounced as video use cases proliferate at work. Our job is to anticipate and serve these use cases, to make them as easy as typing or pressing “play”.
Our market is large, growing and underserved today. Vimeo’s biggest competition is employees not being exposed to the power of video at work. In Q4 the majority of our new sales deals were greenfield video installations, not competitor replacements. And the alternatives remain fragmented — to the extent we are replacing existing software, they are typically some combination of expensive legacy hosting providers, single-feature point solutions, and custom in-house tech that doesn’t scale.
Most telling is that when we speak to our existing customers, they are looking to use video more. Companies want to make video more interactive, to help train their employees and transact with customers directly in the content. They want to be able to edit videos as easily as they would a Google Doc. They want to record a 3-hour long session, and have that content be easily cut into bite-size chunks, automatically enhanced, and dynamically optimized to share with their audience. Every day we uncover more potential uses for video, and Vimeo, at work.
We win today because of our product, specifically our time to value, ease of use, and technological differentiation. We believe that product is how we’ll win tomorrow. We have years of industry knowledge and expertise, the most advanced and horizontal video solution on the market, and the singular focus of spending 100% of our energy on video. It’s a decent head start and one that we plan to widen the distance on this year.
Essential learnings
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Two of Vimeo’s guiding principles are “Own It” and “Be Real”.
When we decided to go public at the height of the pandemic, we faced challenging comparables. We also knew that we had an early-stage, high potential sales-assisted business with enduring tailwinds. With customers knocking on our door and our backlog soaring, we weren’t able to discern how much of our momentum was from COVID-driven demand versus the growing strength and universal applicability of our video solution. We figured that our tailwinds would carry us similarly throughout 2021.
It’s now clear that we were naive about some things: our ability to predict post-pandemic demand (particularly for livestreaming), our expectation that urgency to buy and willingness to pay would hold up for our smaller customers, and our resulting challenges in forecasting performance. These missteps are regrettable, but fixable. Importantly, none of them undermine the fundamental drivers of Vimeo’s long-term value.
I like to think that it's this same naivety that led us to bet our future on this market in 2017, when it was far from obvious. Our entrepreneurial ambition has served us well, but we must channel it better towards execution in 2022. We will make the necessary changes to how we operate and communicate with you so we can all focus on what matters most: building the best product to power video at work, and translating that power into a great business.
What you can expect in 2022
We expect revenue to grow between 15% and 18% this year. We expect our revenue to grow between 17% and 19% in Q1, to decelerate from there as we compare to an exceptional first half of 2021, and to reaccelerate in the second half of 2022. We are dealing with several factors that contribute to this view as the year progresses, including: predicting SMB demand post-COVID, moving to a seat-based monetization model, and deprecating our consumer-oriented Magisto business as we refocus resources on serving large companies. These are more unknowns than we want going into the year; but we’d rather not show you false precision or constrain ourselves from making the right long-term decisions for Vimeo.
While we expect our overall revenue growth to decelerate from 2021, we expect our revenue makeup will be of higher value, stickier dollars. Our Sales-Assisted revenue (anything sold through our sales force, previously referred to as “Enterprise”) now comprises 30% of total revenue and grew over 50% year-over-year in Q4. In 2022, our north star metrics are focused on serving companies with more than 100
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employees. These are the customers who are best served by our expanding product suite, who exhibit the highest willingness to pay, and who we can grow with most. We expect Sales-Assisted revenue to grow well above 30% in 2022; within that, we expect revenue from companies with more than 100 employees to grow much faster, and revenue from companies with more than 1,000 employees faster still.
As an early business in transition, we owe you more visibility into what is happening under the surface and the underlying trends that give us confidence in our strategy. I want to share 3 signals that we think indicate we’re on the right track:
1.Our product is engaging and delivers value people are willing to pay for. Over the past eight quarters, users who try our tools for free are converting to paying subscribers at increasing rates. Our flagship Vimeo Enterprise is showing strong signs of product-market fit, with a Net Promoter Score of over 65 and over 90% of teams active on the platform each month. The Vimeo platform now powers content for millions of users worldwide across hundreds of thousands of business domains, and the number of new users who belong to a business domain grew over 60% year-over-year in Q4. Importantly, these business domain accounts convert to paying subscribers at a significantly higher rate than our other free users today. So in 2022, we’ll aim to more directly convert more business domains to Vimeo Enterprise through our product and sales team. 
2.Our all-in-one platform strategy is resonating with companies and expanding our addressable market. We launched several new products in 2021 to increase our utility and entry points within companies (namely Video Library and Vimeo Events, both sold as part of our Vimeo Enterprise offering). While still early, this product expansion is gaining steam with over 45% of Vimeo Enterprise accounts in Q4
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using two or more products versus just 10% a year ago. Said differently, almost half of our Vimeo Enterprise customers are now using us for workflows beyond livestreaming. We are steadily diversifying into stickier use-cases that will enable Vimeo to touch many more employees at work. 
3.We have a growing blue chip customer base and low-hanging fruit to improve monetization. Revenue from companies with more than 1,000 employees grew significantly faster than total Sales-Assisted revenue in Q4. Our sales pipeline for those customers grew even faster, faster still outside the U.S. We believe we can improve our pipeline win rates with more surgical sales plays, increased sales force specialization and improved data-driven qualification. Same goes for retention and expansion, where we are investing in customer success and moving to a per-seat monetization model that better aligns with our customers’ realization of value. In Q4, we used this new monetization model to land a 7-figure, multi-year deal with a large retailer, our largest Vimeo Enterprise deal ever.
Looking ahead we see a sizable monetization opportunity within our existing user base, as we continue to add value to our product and better educate users of that value. As of Q4, 89% of Fortune 500 companies have at least one account on Vimeo; yet most of these companies are paying us less than $100 a month. When we successfully upgrade these companies through our sales force, we do so at an average ARPU of over 250x our average Vimeo ARPU. We’re actively unlocking this opportunity through investments this year in product expansion, per-seat monetization, and scalable sales campaigns.
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These signals continue to give us confidence that Vimeo can be a 30% grower over the long term. To get to that growth rate we have to penetrate less than 5% of the businesses in our addressable market, and increase our ARPU by a few hundred dollars over the next 4 years. This is against an accelerating pace of six and seven-figure deals that we’ve closed in the last few months with the help of our latest product introductions. And there is much more to come.
Conclusion
Back in 2017, I believed deeply that video was transforming the world and that businesses were missing out. That if we could find a way to help them harness the power of video, we could build a wildly successful SaaS company. But there were still many open questions about the market: would businesses actually adopt video in their day-to-day work? Would employees ever get truly comfortable being in front of the camera? Would technology evolve fast enough to make video truly ubiquitous? At the time, there was a small group of us at the company who believed, and who were ready to bet our careers and the future of Vimeo on that belief.
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Today, I look at our executive team and board of directors and I see that same belief. But this time there’s a larger group of believers, more battle tested and experienced, with the best kind of validation: a treasure trove of world-class customers using Vimeo to work better, faster and smarter. We enjoy the support of fantastic long-term investors by our side, the flexibility of a robust balance sheet, and we’ll keep adding proven industry veterans to our team. A far cry from those lonely days four years ago.
Execution is hard to get right, but it’s also something you can improve at, course correct and hone. Not so if you’ve got the wrong strategy, a subpar product, or a market with structural headwinds. Vimeo has the opposite. We also have over 1,200 Vimeans who are passionate, hungry, and eager to show the world what video can do. So we start 2022 with a more focused playbook and the same entrepreneurial spirit that got us here— betting on ourselves, and all in. Now back to work.
Sincerely,
Anjali Sud
CEO
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Glossary
Sales-Assisted (formerly referred to as “Enterprise”) Customers – Subscribers who purchase plans through contact with our sales force.
Self-Serve Customers – Subscribers who purchase plans without contact with our sales force, including directly through our website or mobile app.
Subscribers – The number of users who have an active subscription to one of Vimeo’s paid plans measured at the end of the relevant period. Vimeo counts each account with a subscription plan as a subscriber. In the case of Sales-Assisted Customers who maintain multiple accounts across Vimeo’s platforms as part of a single Sales-Assisted subscription plan, Vimeo counts only one subscriber. Vimeo does not count team members who have access to a subscriber’s account as additional subscribers.
Average Subscribers – The sum of the number of Subscribers at the beginning and at the end of the relevant measurement period divided by two.
Average Revenue per User (“ARPU”) – The annualized revenue for the relevant period divided by Average Subscribers. For periods that are less than a full year, annualized revenue is calculated by dividing the revenue for that particular period by the number of calendar days in the period and multiplying this value by the number of days in that year.
Vimeo Enterprise – Vimeo’s video offering for large organizations, sold through our sales force, that provides intuitive tools to record and upload content, secure live streaming of events, a corporate video library, webinar functionality, single-sign-on support, content delivery network optimization to improve quality-of-service in corporate networks, robust analytics, and the ability to use our technology on a white-label basis (so that a company’s own branding is featured instead of Vimeo).
Business Domains – Email domains that represent likely business customers. Business domains exclude common education domains and public email providers such as Gmail, Yahoo, etc.
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VIDEO CONFERENCE CALL
Vimeo will live stream a video conference to answer questions regarding its fourth quarter and full year results on Thursday, February 10, 2022, at 8:30 a.m. Eastern Time. This live stream will include the disclosure of certain information, including forward-looking information, which may be material to an investor’s understanding of Vimeo’s business. The live stream will be open to the public at https://www.vimeo.com/investors. This letter will not be read on the call.
This letter contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "may," "could," "should," "would," "anticipates," "estimates," "expects," "plans," "projects," "forecasts," "intends," "targets," "seeks," and "believes," as well as variations of these words or comparable words, among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to Vimeo's expectations regarding future results of operations and financial condition, long- and short-term growth rates, market opportunity, customer demand, industry tailwinds, business strategy, and plans and objectives of management for future operations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions. Actual results could differ materially from those contained in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the risks inherent in Vimeo's separation from IAC, completed on May 25, 2021, the risks that the anticipated benefits from the separation will not be realized, changes in the regulatory landscape, including, in particular, changes in laws that might increase the liability of online intermediaries for user-generated content, reputational damage caused by problematic user content or our decisions to remove (or not remove) it; changes in policies implemented by third-party platforms upon which we rely for traffic and distribution of mobile apps, increased competition in the online video category, our ability to convert visitors into uploaders and uploaders into paying subscribers, our ability to retain paying subscribers by maintaining and improving our value proposition, our ability to provide video storage and streaming in a cost-effective manner, our ability to successfully attract Sales-Assisted (formerly referred to as “Enterprise”) customers, our ability to protect sensitive data from unauthorized access, the integrity, quality, scalability and redundancy of our systems, technology and infrastructure (and those of third parties with which we do business), our ability to successfully operate in and expand into additional international markets, our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties, foreign exchange currency rate fluctuations, the impact of the COVID-19 pandemic on our business, adverse changes in economic conditions, the possibility that our historical consolidated and combined results may not be indicative of our future results, and the other factors set forth in the section titled "Risk Factors" in our Registration Statement on Form S-1 filed with the SEC on May 26, 2021, as they may be updated by our periodic reports subsequently filed with the SEC. Other unknown or unpredictable factors that could also adversely affect Vimeo’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of Vimeo’s management as of the date of this communication. Vimeo does not undertake to update these forward looking statements