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Vimeo’s Business Detailed In IAC’s S-4 Filing: All The Numbers and Key Takeaways You Need To Know

[Updated with Q4 and full year revenue] Last month, IAC filed an S-4 detailing Vimeo’s business and their planned spin-off from IAC. Here’s the numbers which are all from the first 9 months of 2020 and some key takeaways on the business:

  • *Updated: Q4 revenue of $83.8M, up 54% y/o/y
  • *Updated: Total 2020 revenue of $283.2M, up from $196M the previous year
  • Based on Q4 growth, total 2020 revenue should be $230M-$240M (my estimate)
  • Revenue for first 9 months of $199.4M, with a net loss of $44.8M
  • Vimeo has 1.5M subscribers who pay an average of $214 per year ($17.83 a month). 50% of revenue came from customers outside of the U.S. Vimeo has 200M free users one the platform, having added 25M free users in the first 9 months of 2020.
  • Has over 3,300 enterprise customers who pay over $22,000 per year ($1,833 per month), on average. Vimeo defines “enterprise customers” as those who purchase plans through contact with their sales force. As a comparison, in Q3 2020, Brightcove’s average annual subscription revenue per “premium” customer was $87,200 ($7266 a month).
  • Less than 1% of subscribers pay more than $10,000 per year
  • While a majority of Vimeo subscribers began as free users, only a small percentage of free users become paying users over time
  • Vimeo’s sales and marketing expenses were $77M, an increase of $12.1M, or 19% y/o/y, due to the growth in the sales force and increased commission expense resulting from growth in bookings and marketing costs. Accounted for 39% as a percentage of revenue.
  • Research and development expense increased $14.7M, or 44% y/o/y, due primarily to increased investment in products, including Vimeo Create and accounted for 24% as a percentage of revenue.
  • Cost of revenue primarily consisted of $48.9M in hosting fees, $9.4M in credit card processing fees and $4.2M in-app purchase fees paid to Apple and Google.
  • 674 full-time employees, of whom 204 were based outside of the U.S.
  • Vimeo uses Google’s Cloud Service (hosting/transcoding), AWS (S3) and multiple CDNs (Akamai/Fastly [my info added, CDNs not called out by name in the filing]) Vimeo does not have backup systems for GCS or Amazon S3.
  • [Corrected]The $150M Vimeo raised in November of 2020 was by selling 8,655,510 shares at $17.33 per share (They have since raised another $150M in 2021, valuing Vimeo at $6B) Vimeo did a $200M raise at a $5.2B pre-money valuation and a second raise of $100M at a $5.7B pre-money valuation. [Updated] Raised $450M in total with another $150M raise in January 2021.
  • Vimeo has $19.4M of a current payable due to IAC and $90.6M of long-term debt
  • IAC financed the acquisition of Livestream in 2017 and Magisto in 2019 for Vimeo, but didn’t break out what they paid for the acquisitions, only calling them “small acquisitions”. But they did say the cost of revenue in 2018 increased from 2017, by $19M, “due primarily to the inclusion of Livestream”.
  • Over 300,000 new videos are being uploaded to Vimeo’s platform each day
  • Vimeo typically does not provide 100% uptime across its video services in any given month
  • In its 16-year history, Vimeo did not decide to focus primarily on SaaS offerings until 2017. In addition, Vimeo has only operated an enterprise-focused sales operation since 2017, when it acquired Livestream.
  • Based on Vimeo’s internal data, they estimate their total addressable market to be approximately $40B in 2021, growing to $70B in 2024. [I 100% DISAGREE with these TAM numbers, they are not realistic]
  • Vimeo says the growth they experienced during the first nine months of 2020 may be partly or largely attributable due to the COVID-19 pandemic. If the COVID-19 pandemic ends and the level of demand for online video returns to pre-pandemic levels, then the growth rates Vimeo achieved in 2020 may not be indicative of growth rates in future periods.
  • Vimeo has a few lawsuits currently on their hands, including one filed by British Telecommunications plc on March 18, 2018, regarding patent infringement. Another is a class action complaint in Illinois against Vimeo regarding “facial biometric information”.

The video platform market is crowded with many vendors offering services and I routinely heard Vimeo compared with the likes of Kaltura, Panopto, Zype, Resi, Brightcove, Microsoft Stream, MediaPlatform, Vidyard, Wistia, Qumu, Wowza, YouTube, Dacast, JW Player, ON24, Uscreen, Frame, Hive Streaming, VidGrid, Metacafe and a long list of others. Of course the majority of companies on that list are NOT comparable to Vimeo at all! Let me make that clear. Many vendors target a specific vertical only, or a specific video use case, go after only certain sized customers based on users or revenue, or only operate in regional locations.

You cannot compare Vimeo who has 1.5M customers, paying $17.83 a month, with an enterprise video platform that is on-prem, that ties into learning management systems (LMS), ingestion from video conferencing gear etc. and has customers signing six and seven figure contracts per year. The same goes for video platforms targeting edu institutions and lecture capture based solutions. There are a LOT of differences between video platforms in the market and it is very important to compare apples-to-apples across services and market targets.

If you have any questions on Vimeo’s business, the size of the market for video services, the competitive landscape, Vimeo’s strengths and weaknesses etc. I’m happy to chat more about it. Reach out anytime at 917-523-4562 or dan@danrayburn.com