Vimeo(VMEO) - 2025 Q2 - Quarterly Results

Letter to Shareholders Q2 2025 Highlights Vimeo demonstrated progress towards profitable growth in Q2 2025, with 6% YoY bookings growth and improved profitability Q2 2025 Performance Summary | Metric | Performance | Note | | :--- | :--- | :--- | | Total Revenue | Flat YoY | Up 2% excluding 'Other' segment | | Total Bookings | +6% YoY | Highest growth in 3 years | | Self-Serve Bookings | +11% YoY | Highest growth rate in 3 years | | Vimeo Enterprise Revenue | +25% YoY | Bookings grew 9% YoY | | Net Income | $6 million | Improved sequentially | | Adjusted EBITDA | $11 million | Improved sequentially | | Free Cash Flow | $18 million | Improved sequentially | - The company is on track with its 2025 plan to accelerate revenue growth profitably and aims to achieve a line of sight to double-digit growth by the end of the year[6] - Vimeo accelerated its product development, releasing 35% of its 2025 product roadmap during Q2, and began generating revenue from new investments like AI translations[10] Q2 Financial Overview Total Bookings & Revenue Q2 2025 saw total bookings grow 6% YoY for the fourth consecutive quarter, while total revenue remained flat Bookings & Revenue YoY Growth Trend | Metric | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | | :--- | :--- | :--- | :--- | :--- | :--- | | Bookings YoY Change | (4)% | 0% | 3% | 3% | 6% | | Revenue YoY Change | 2% | (2)% | (2)% | (2)% | 0% | Vimeo Enterprise Vimeo Enterprise achieved strong Q2 performance with 25% YoY revenue growth and 9% bookings growth, despite some headwinds Vimeo Enterprise Q2 2025 Key Metrics (YoY) | Metric | Q2 2025 YoY Growth | | :--- | :--- | | Revenue | +25% | | Bookings | +9% | | Subscribers | +10% | | ARPU | +12% | - Notable new customers acquired in the quarter include Jaguar Land Rover Limited, Spotify, and FanDuel[18] - The company believes the current level of bookings growth can be improved and is not fully reflective of the future opportunity, citing ongoing sales approach changes and a healthy pipeline for the second half of the year[18] Self-Serve Self-Serve bookings surged 11% YoY in Q2, the highest in 14 quarters, with revenue decline narrowing to 1% YoY Self-Serve Q2 2025 Key Metrics (YoY) | Metric | Q2 2025 YoY Growth | | :--- | :--- | | Bookings | +11% | | Revenue | -1% | | Subscribers | -11% | | ARPU | +11% | - The second-half product roadmap focuses on modernizing video discovery, simplifying professional workflows, and introducing AI-driven search to drive free-to-paid upgrades and increase user engagement[24][25] OTT, Add-Ons, & Other Smaller segments experienced mixed Q2 results with continued revenue declines, notably OTT down 3% and Add-Ons down 20% YoY Segment Revenue YoY Change (Q2 2025) | Segment | Revenue YoY Change | | :--- | :--- | | OTT | -3% | | Add-Ons | -20% | | Other | -48% | - The company is optimistic about OTT's growth potential and expects the Add-Ons product line to eventually include meaningful contributions from consumables like AI credits and other pay-as-you-go options[28] Expenses & Profitability Vimeo improved Q2 profitability sequentially, with 78% gross margin, while GAAP operating expenses rose 5% YoY due to R&D investments Q2 2025 Profitability Metrics | Metric | Q2 2025 Value | YoY Change | | :--- | :--- | :--- | | Gross Margin (GAAP & Non-GAAP) | 78% | Stable | | Net Earnings | $6.3 million | -38% | | Adjusted EBITDA | $10.9 million | -33% | | Adjusted EBITDA Margin | 10% | Down from 16% | | GAAP Operating Expenses | $77.8M | +5% | - Operating expenses increased due to planned investments in growth and innovation, particularly in R&D (+10% YoY GAAP) for areas like payment infrastructure, AI, and enterprise security[33][34] - Stock-based compensation expense decreased 39% year-over-year to $5 million, reflecting diligence in limiting shareholder dilution[35] Balance Sheet & Cash Flow Highlights Vimeo ended Q2 with $303 million cash, generating $19 million cash from operations and $18 million free cash flow Q2 2025 Cash Position & Flow | Metric | Q2 2025 Value | | :--- | :--- | | Cash and cash equivalents | $303 million | | Cash provided by operations | $19 million | | Free Cash Flow | $18 million | - The Board authorized an additional $50 million share repurchase program on April 29, 2025[45] - Shares outstanding decreased to 165.4 million at the end of Q2, down from 166.6 million in the prior year[46] Guidance Vimeo projects Q3 revenue of ~$106 million and Adjusted EBITDA of ~$9 million, raising full-year Adjusted EBITDA guidance to ~$35 million Q3 2025 Guidance | Metric | Q3 2025 Outlook | | :--- | :--- | | Revenue | ~$106 million | | Operating income | ~$2 million | | Adjusted EBITDA | ~$9 million | Full Year 2025 Guidance | Metric | Full Year 2025 Outlook | Change from Prior Guidance | | :--- | :--- | :--- | | Revenue Growth | Low single digits | In line | | Operating income | ~$6 million | N/A | | Adjusted EBITDA | ~$35 million | Increased from $25 million-$30 million | GAAP Financial Statements Consolidated Statement of Operations Q2 2025 revenue was $104.7 million (flat YoY), with operating income at $3.7 million and net earnings at $6.3 million Consolidated Statement of Operations (Three Months Ended June 30) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $104,650 | $104,376 | | Gross profit | $81,503 | $81,698 | | Operating income | $3,724 | $7,461 | | Net earnings | $6,285 | $10,121 | | Diluted EPS | $0.04 | $0.06 | Consolidated Balance Sheet As of June 30, 2025, Vimeo reported total assets of $620.6 million, total liabilities of $229.5 million, and $303.0 million in cash Consolidated Balance Sheet Highlights (as of June 30, 2025) | ($ in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $302,956 | $325,276 | | Total current assets | $350,364 | $374,656 | | Total assets | $620,638 | $642,821 | | Deferred revenue | $170,724 | $161,923 | | Total liabilities | $229,546 | $234,024 | | Total shareholders' equity | $391,092 | $408,797 | Consolidated Statement of Cash Flows Q2 2025 net cash from operations was $19.4 million (flat YoY), with $2.4 million used in investing and $3.8 million in financing Consolidated Statement of Cash Flows (Three Months Ended June 30) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,369 | $19,698 | | Net cash used in investing activities | ($2,449) | $0 | | Net cash used in financing activities | ($3,830) | ($13,215) | Disaggregated Revenue and Operating Metrics Disaggregated Revenue and Operating Metrics Summary Q2 2025 saw Self-Serve revenue of $57.6 million and Vimeo Enterprise revenue of $25.0 million, reflecting strong bookings Q2 2025 Disaggregated Metrics | Segment | Revenue ($M) | Subscribers (thousands) | ARPU ($) | Bookings ($M) | | :--- | :--- | :--- | :--- | :--- | | Self-Serve | 57.6 | 1,156.5 | 197 | 65.0 | | Vimeo Enterprise | 25.0 | 4.0 | 24,705 | 25.6 | | OTT | 12.3 | 3.1 | 15,720 | 7.4 | Reconciliations of GAAP to Non-GAAP Measures Reconciliation of Net Earnings to Adjusted EBITDA Q2 2025 GAAP Net Earnings of $6.3 million reconciled to Adjusted EBITDA of $10.9 million, and Free Cash Flow was $17.8 million Q2 2025 Reconciliation of Net Earnings to Adjusted EBITDA ($ in millions) | Metric | Q2 2025 | | :--- | :--- | | Net earnings | $6.3 | | Operating income | $3.7 | | Stock-based compensation expense | +$5.1 | | Restructuring costs | +$1.5 | | Other adjustments | +$0.6 | | Adjusted EBITDA | $10.9 | Q2 2025 Free Cash Flow Calculation ($ in millions) | Metric | Q2 2025 | | :--- | :--- | | Net cash provided by operating activities | $19.4 | | Add: Restructuring costs | +$0.8 | | Less: Internal-use software development costs | ($2.4) | | Free Cash Flow | $17.8 | Reconciliation of GAAP to Non-GAAP Financial Outlook Vimeo reconciled Q3 2025 operating income of $2.2 million to Adjusted EBITDA of $9.0 million, and full-year to $35.0 million Full Year 2025 Outlook Reconciliation ($ in millions) | Metric | Full Year 2025 | | :--- | :--- | | Operating income | $6.2 | | Stock-based compensation expense | +$26.8 | | Depreciation & Amortization | +$2.0 | | Adjusted EBITDA | $35.0 | Principles of Financial Reporting & Key Terms Definitions of Non-GAAP Measures This section defines non-GAAP measures, including Adjusted EBITDA (operating income adjusted for non-cash items) and Free Cash Flow - Adjusted EBITDA is defined as operating income (loss) excluding stock-based compensation, depreciation, amortization of intangibles, changes in fair value of contingent consideration, and restructuring costs[69] - Free Cash Flow is defined as net cash from operating activities, excluding restructuring costs, less capital expenditures and capitalized internal-use software development costs[74] Operating Metrics and Key Terms This section defines key business segments (Self-Serve, Enterprise, OTT) and operating metrics like Subscribers, ARPU, and Bookings - Self-Serve refers to subscription plans sold online, while Vimeo Enterprise is the offering for teams and organizations sold through a direct sales force[81][82] - Subscribers are defined as the number of users with an active paid plan, counting each customer once per subscription type (Self-Serve, Enterprise, OTT) regardless of the number of individual users on the account[86] - Bookings consist of fixed fees for SaaS services that subscribers have committed to pay during their subscription period, typically 12 months[88] Other Information Dilutive Securities As of July 31, 2025, Vimeo had 165.7 million common shares outstanding, with estimated dilution of 5.1 million shares at $4.00 Estimated Dilution at Various Stock Prices (as of 7/31/2025) | Share Price | Common Stock Outstanding (M) | Total Estimated Dilution (M) | % Dilution | Total Estimated Diluted Shares (M) | | :--- | :--- | :--- | :--- | :--- | | $4.00 | 165.7 | 5.1 | 3.1% | 170.8 | | $6.00 | 165.7 | 5.2 | 3.1% | 170.9 | | $8.00 | 165.7 | 6.0 | 3.6% | 171.7 | | $10.00 | 165.7 | 6.6 | 4.0% | 172.3 | Cautionary Statement Regarding Forward-Looking Information This section provides a cautionary statement regarding forward-looking information, highlighting risks and uncertainties impacting actual results - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[95]