Vimeo.com, Inc. (VMEO) Earnings Call Transcript & Summary

Hi. Welcome, everybody. I'm Anand Subramanian, Managing Director of Macquarie Capital based in San Francisco. And I'm thrilled today to be with Anjali Sud, the CEO of Vimeo. Vimeo is the leading software platform that enables companies ranging from small businesses to customers like Amazon and Intuit to utilize -- create and utilize video across all aspects of their business today. Anjali, prior to being the CEO of Vimeo, held executive roles in -- as a General Manager and in marketing at Vimeo, as well as executive roles at Amazon and Time Warner. She's also been named a 40 under 40 in Fortune and a 40 under 40 in Cranes as well. So congratulations, and Anjali pleased to have you here today.

Thank you, Anand, and thank you for blowing out my spot about my age.

In addition, I'll point out that you almost recently went public in a spin-off from IAC -- And clearly, the market is reacting incredibly well to the story with a market cap just under $7 billion. So congratulations on a fantastic run so far.

Thank you.

Why don't we begin our conversation today, just perhaps stepping back a little bit. You've led the transformation of Vimeo from a 15-year-old video platform to now a B2B focused enterprise software company. That involves a myriad of changes across, perhaps, all segments of the business, whether it's go-to-market, product development, strategy. Maybe you could share with us just some of your biggest learnings in successfully crossing that chasm.

Sure. A lot of learnings. I stepped in as CEO 4 years ago when we officially decided to pivot our strategy and go from Vimeo really being a media company or a viewing destination that competed with YouTube to being this B2B SaaS platform, a technology company for businesses. And the biggest lesson is, once you have conviction around the strategy, you've got to rip off that band-aid. There's probably no CEO in the world that has gone through change that wishes they had moved slower. You always wish you'd gone faster. And we did have to do everything from change the vision and mission of the company to change how we organize our team to stand up whole new functions, areas like growth in B2B marketing and a sales force and training and enablement. And then also create a culture and momentum where it was very clear this is who we are, this is who we serve, and we had to, kind of, say very, very clear expectations and commitments that we were all in on that over a long-term period. And I look at our workforce today. We're over 850 employees around the world. The vast majority are net new over the last few years, and we've been very thoughtful and intentional about bringing in people who have seen enterprise software at scale, have worked in video tech, who are experts in areas that we just didn't have in the DNA of the company. And it's a process and a journey we're still kind of moving forward. But that's really been, I think, the biggest lesson. The other one, I think myself and the executive team at Vimeo have done is, we tried to leverage pattern recognition here. And by that, I mean, many of the challenges and the lessons have been learned before. If you look, there's a whole bunch of sort of software companies outside of video that have kind of done what we're aiming to do. They have leveraged a freemium funnel and bottoms up growth and product line growth to drive an enterprise business. That's really what we're trying to do with Vimeo. And I talk to a lot of those companies, and we look at a lot of those companies and try and see what were the lessons that they learned? How can we learn them without having to kind of go through that ourselves? And I think the good news is when you look at what we're trying to do, we're not the first. There are successful models and so there are, kind of, playbooks that we can leverage to kind of move faster.

Yes, that's great. That's great. It's interesting, I think the rise of the importance of video was clearly not just for consumers, but how businesses interact with customers internally was increasing pre-pandemic. I think, in the post-pandemic world, it's almost become -- really has become mission-critical for every aspect of interaction or part of the business process. What do you now see -- what are customers asking you for in a post-pandemic world? What does that look like for larger organizations in the next 2 to 3 years, perhaps?

Yes. Yes. I mean we -- as I said, we set out on this, sort of, journey 4 years ago, and it's interesting. So many of the products that we both launched and that have been asked for by customers were things that we were looking to do in building pre-pandemic. But certainly, there was, like, a very clear acceleration in that, sort of, urgency. And to your point, I think video went from being more like a nice-to-have or must have in the future to mission-critical right now. I would say when I look at the kind of demand patterns we see at Vimeo, and I look out at the market, a couple of things. First, I'm very pleased and excited about the fact that we see demand holding really strong. We think at a very clear elevated new normal that's higher than it was pre pandemic. We see that in our sales pipeline. We see that in the, sort of, conversion rates. We see that in retention and stickiness and user adoption of our products. So all really good solid signals. And then some of the biggest, sort of, things that we're hearing, a lot of companies are kind of -- were very reactive when the pandemic hit. They, sort of, scrambled to quickly get the solutions that they needed. And now they're being much more strategic and intentional in designing a digital-first or video-first organization. And what we're seeing is a lot less of the, sort of, reactive quick, I need this software at a department or team level and much more at a company organization-wide level. There's a person or a team now that's really thinking about this. There's a budget allocated, and we're, sort of, starting to have those conversations. And so I think you're just seeing a natural growth and maturity in this market, that is a good thing. The other thing I'll say is we're just seeing the use cases for our tools really permeate and proliferate across the organization. And the 2 common themes that we are seeing is video being used because it has a higher return on investment for the company and because it has a higher return on time for your employees. And examples are, we're seeing sort of marketing teams. They're producing professional quality video much faster using our tools at a lower budget, and they're getting more engagement because video performs the best on higher ROI. We see sales teams doing training and enablement of their sales force using video or using video to reach out to prospects. We see HR teams using video to onboard and welcome employees and create culture. We see -- we have an asynchronous video messaging tool. We're seeing a ton of adoption of that. So instead of doing that, that Zoom meeting or sort of setting up as a synchronous conversation, a quick report, send your video privately to someone on your team and save tons of time. And so all of these things, I think, are really speaking to the point that video has been a second-class citizen with an organization. If you think about how we use video, we don't use it the same way we use e-mail or chat or image or text. And it's -- I think we're seeing a real movement here in video becoming mission-critical and, sort of, very powerful way to grow this [ outcome ]

That's great. I think one of the things that I've seen over time with platforms that accrete a ton of value for their customers is where the use case -- the usage is only bound by people's imagination or how they think about the application of the technology across their organizational functions and it feels like that's what's happening still in the pretty early innings across your customers today.

Yes, absolutely. I mean I think of it as we have an opportunity to reimagine how we work and how we engage and it's -- you're absolutely right. It's sort of a playground in terms of the innovation and sort of products and technologies, we're very early. It's why our biggest investment this year is in R&D. And it's R&D that's not just building products on our road gap right now because our customers need it, it's really trying to rethink how we make so many of these experiences and touch points, multiples more powerful and effective than they are today.

Maybe shifting gears a little bit. So given where you now have taken the business, right? You sit at -- Vimeo sits at the intersection of the video ecosystem, competing along the likes of YouTube and Google and really around enterprise collaboration, which means Zoom, Microsoft, big tech giants giving technology away for free. In addition, there are other point solutions across video content creation and collaboration. So there are a lot of competitors depending on who you are. How do you think about competing in that environment and making sure the technology, the strategy is -- has long-term differentiation?

Yes. I think the market is competitive. I think it's going to get more competitive. And ultimately, for us, we believe this is really early. We believe professional quality video is way too hard to be adopted the way that it should today. And so it's really about how are we going to solve the needs of these businesses and put the power of video in their hands. And that's ultimately what's going to win. And one of our mantras is, impatience on execution, patience on vision. And what that means is we move fast, we're scrappy. We're going to, like, pivot on a dime if we need to based on valid signals that we see. But we're also going to be really thinking and measuring our success on a very long-term time horizon. And why I think that matters for competition is, sort of, the way I see the competitive market today. You have this sort of destinations where there are viewers of content. And most of those destinations are actually very much walled gardens, right? They're -- they want to keep the content and the viewers on their platforms or social media platforms in particular. And what we're doing is basically providing this sort of distribution hub where you can -- we can help you create great content optimized for each platform automatically, very simply. We're going to distribute that content everywhere. You control your brand. It's white label. You own the customer. And these are things that businesses really care about that directly drive their ability to be successful. So I think we're very aligned -- our business model is very aligned with the best interest of businesses, and I think that will be a competitive advantage if we can build truly the best product. I think as you get into some of the more enterprise players, like this is where, again, our product is going to come down to technology, video expertise. I can tell you after being in this world, like Vimeo has been doing this for 16 years, and even we have had to, sort of, find ways to get institutional knowledge, IT and know-how and extremely complex parts of the, sort of, workflow. Professionally, live streaming and TV quality around the world with [ interact ] and these are not simple things that you can just stand up teams and build. And we have a lot of institutional knowledge there, and I think we have a pretty significant head start on the product. And then the other piece is just the breadth of our offering. Today, we actually enable you to do so many things with video. You can create an Instagram ad on your phone that is professionally produced with licensed footage and music in a couple of minutes and a few taps. You can live stream your CEO town hall securely. You can record messages to your team. You can stand up your own Netflix-like channel. So it's really everything from content creation to distribution, to analytics, to monetization. And we think that horizontal breadth is critical because if you believe video should be ubiquitous, and is complex, it's got to be simplified into one solution. So we think the horizontal breadth is a big advantage. And then lastly, we also have a pretty interesting, kind of, premium, bottoms up growth opportunity. We have 200 million free users on Vimeo and a pretty substantial portion of Fortune 500 companies already have Vimeo account today, but just don't pay us or utilize these capabilities. And so I think that gives us a real advantage as it -- when it comes to actually gaining share and be able to growth very efficiently and at a lower cost of acquisition than a typical player. So lots of things going for us, but ultimately, it's all about the product. And I can tell you from where we are today, from where we will all as a market need to go to actually get every single employee around the world creating and using video, we've got a long way to go.

That's great. So I've got a million questions that I can continue to ask, Anjali. We do have a Q&A channel open for people, and I would encourage you to ask any questions that we have in the remaining 5 minutes or so. Anjali, maybe -- by the way, I'm going to steal your -- I love the impatience on execution, patience on vision statement.

That's an [indiscernible]. I have to say, I forgot to, sort of, reference that. That is something I borrowed and embraced from our experts...

Okay. I appreciate you [indiscernible] it correctly so I don't get in trouble. Slightly different topic on diversity. So clearly, diversity and inclusion is such an important part of how we are all thinking about building teams and fostering culture. You are a -- part of a small handful of women CEOs, just like as we have at Macquarie and obviously in a minority as well. How do you think about you feel like maybe your perspective differs from other CEOs? But also, how do you think about driving culture in that context and given your position?

Sure. Well, I can't speak for the perspective of others, but I can tell you my perspective, which is, I deeply, fundamentally and intellectually believe that diversity of perspective and opinion leads to better decisions in a room. And that better decisions in a room, done consistently over time, will increase shareholder value. And I think I personally experienced that when you allow different voices in the room to come up with a contrarian point of view, I experience this in how I became CEO. I mean it's how we were empowered by IAC to shift the strategy of the company. You have to create those vehicles and then real change and interesting things can happen. It's not always going to succeed, but when it does, it can lead to real outcomes. So I think my approach on this topic is, we have to think about DE&I the same way we think about any business problem where we want to drive an outcome. And for me, that involves transparency, accountability, and investment, right? That's how you're going to drive actual impact, how you're going to really move the needle here. And some of the things that we're doing at Vimeo, and that you're going to see us do more of, on the transparency side, this is our fifth year of sharing publicly our diversity and workforce numbers. We believe that's important. On the accountability side, we're doing much more here. We now have targets for our hiring managers to -- there's a certain percentage of any new hire pipeline where we want to, at least, show hiring managers diverse candidates. And then just thinking about investment, we are trying to put our money where our mouth is, and that is everything from investing internally and the right teams, providing training to all of our employees and managers around bias, investing in employee community groups and a whole host of other things. And I think, to me, my perspective is like we need to avoid this being just lip service. We really need -- leaders have to deeply believe that this is driving the business. And if you believe that, you should be trying to solve it the way you would any other business problem.

Got it. That's great. I think we've got time for maybe 1 or 2 more questions. I'll go to something from the audience. So you mentioned just now about investing significantly in R&D. Are there certain technologies that you're particularly focused on that are going to revolutionize the way we experience video over the next few years?

There are quite a few that I think are really interesting. And the sort of the way we think about it is because we have this integrated solution, a lot of it is what are the adjacency technologies or capabilities happening that we can basically integrate into our solution that will then elevate the utility by a step function. And I think there's a couple of places that are really interesting. One is actually -- doesn't sound as s*** from a tech perspective, but it's actually just how do you use AI, how do you use integrations with third-party software to just radically simplify things like producing a live event. If you talk to most large companies today, they actually have an in-house production team. They require whole teams to literally facilitate something like we're doing right now, or to have scene switching and motion graphics and green screens [indiscernible] and all these things, and we really believe actually it's quite innovative. And you can find ways to almost templatize and make this so easy and self-serve that any employee can just use it. They don't need to be trained, they don't need expertise, and we think that, that's possible. So that's one area that I actually think is quite innovative. Other areas just interactivity. We're all seeing, if you've ever attended a webinar or a virtual event, it's good, but it's not the most engaging experience. It can actually be quite boring. It's hard to feel connected to the audience. It's hard if you're the speaker to feel like you understand the sentiment of the audience when you get feedback. There is whole areas of that experience that we believe can be solved with technology, with data and with our products. So you'll see us kind of looking to do that. And then maybe, sort of, the last piece is, and this is more far -- sort of farther ahead. But I think the number of surfaces by which we engage in video is going to keep expanding. It was originally the theater screen and then it was the TV and then it was the lap phone and now it's the laptop, and we'll probably be AR glasses in the future and self-driving cars and who knows what. And I think that there's just opportunities for the technology to be built in such a way that you can leverage the services of the future. So that's probably the further one, but I think plenty of innovation at, sort of, every step of this market.

Great. Well, thank you so much for taking time today.

Yes, it's great to be here. Thank you so much.