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

All right. Good afternoon, everyone. We are bringing it home today here on day 1 of BMO's most Growth and ESG Conference. My name is Dan Salmon. I am the Internet and media analyst. And hope everybody's day has gone well. We've got a lot of great presentations that have gone on today. And I know we've had busy one-on-one schedules for everybody as well. I am joined here today by the CFO of Vimeo, Narayan Menon. And the IR team is commencing in the background as well for any clarifications as they need to jump in. But first of all, Narayan, thank you for joining us. And maybe just to start off a little bit since Vimeo, of course, was part of IAC for a long time. So even though you are new security to the market in VMEO, maybe still a little new to some of our listeners. So maybe just start us off with 30 to 60 seconds on the background for Vimeo and yourself.

Yes, of course. Thanks, Dan, and thanks for having me here. Vimeo is a predominant video platform within an enterprise. Our goal is to solve for all business -- all video needs for businesses of all sizes and shapes. We have -- Vimeo has been around for 16 years, started off as a video platform for professional video community and has since then become the preferred platform for businesses all the way from small and medium businesses to large enterprises. We have a very broad product portfolio platform that helps our customers do everything from inspiration for a video to creation of a video to the collaboration and hosting of videos, to live streaming to all the way to analytics on video. It's a very broad platform that solves for video needs across multiple use cases within an enterprise. 2 or 3 years -- actually, 4 years ago, we pivoted from being a professional quality video hosting platform to a B2B SaaS solution that does all the things that we just talked about. So -- and we have been part of IAC for many years and became public in May of this year. Introduction as to who I am. I've been with Vimeo for about 2 years. I've come from a software SaaS background. I've worked in -- I'm an engineer by training, I've been in finance for the last 20 years. worked in companies like Cisco, Microsoft, Intuit and Prezi prior to joining Vimeo 2 years ago. It's been a great opportunity to work with a lot of great people here at Vimeo. And really, it's a fantastic opportunity for Vimeo broadly to change how businesses and enterprises use video in their day-to-day life to make communication, collaboration much better and much more effective and efficient. So looking forward to the conversation there.

I'm not sure I knew that you were an engineer by trade. So I'm -- so I'm glad I asked that. I do know you -- the variety of large company background behind it. And actually, we'll get to some of your new executive additions a little bit later from some other large companies as well. But...

I would say I'm a [indiscernible] engineer still.

Dealing with too many spreadsheets instead, so in your finance life, for better or for worse.

So let's see, let's maybe start with some questions on your most recent results and then kind of slowly pull things back out to the big picture. So several items impacting short-term revenue. But I think probably the most important or most interesting, at least, would be pricing and packaging changes that you discussed last quarter. What are the nature of those changes? Why are you making them now? And what is the timing and nature of the rollout?

Yes. Great question there. We have been talking about pricing and packaging change for some time now. We -- Anjali has talked about it multiple times. We talked about it in our Investor Day. So this is not a new thing. In many ways, as Anjali says, this is the last step of our B2B journey from being a hosting provider to a platform that -- a B2B platform. If you think about where Vimeo was and how our pricing was structured. Our current pricing model is from, I think, 6 or 7 years ago when Vimeo was a hosting provider. That's not what we are today. Obviously, our product portfolio has expanded significantly. And this pricing and packaging change is to better align our pricing and packaging to the value that the customers are looking for Vimeo. So that's the foundational thesis behind this. Two things I just want to make sure we're very clear. We are making this pricing change not to solve for a revenue number or to increase our ACVs or anything like that. This is really to align our -- that our existing product portfolio and our future product portfolio to how we interact with our customers, how we price the product to them and how we align the pricing to the value that they get and to the success that they are derived from our product. So that's, the first point. Second thing is this isn't a whole new concept. If you think about most SaaS products in the market, almost all of them have a ratable component to it. And for us, it is the per seat model is the one that is most appropriate for us. And we are aligning to that. We have started testing it with some of our enterprise customers and most of them are welcoming it. There has been no pushback on this because this is something that they are very used to it. In terms of the rollout, we are going to start with new customers. Starting with enterprise. We have started some of the testing, and it is already in the field, as I mentioned earlier. And over time, we will get to all our new customers and then we will think about how we might get existing customers over into this new pricing methodology. So that's one work stream. The other one is on self serve side. Self serve side, we have the ability to do A/B testing on different price points and make sure that we appropriately get to the most optimal pricing structure that works best. So that is just about starting and we can do that in multiple geographies as we go through the A/B test. Again, on the self-serve side also, we will start with new customers now rolling out the new pricing to our new customers and over time, we'll decide how we migrate existing customers to the new pricing or grandfather them into the current pricing models that they are. So still more things to do. It is a big priority for us in 2022. You will hear more from us over time. The one thing that I would say is if you step back and look at it, why are we trying to do this. The reason for this is we believe that it will help us better land with enterprises or customers, help us expand better and faster once we land into an enterprise and also help us retain customers. Because this is very much aligned with the value that they get and the success they measure. A great example is Vimeo Events. This is a brand-new product that we launched about a month ago. The pricing on that is going to be based on the number of registrants for webinar, number of viewers for webinar. This is the standard way almost every webinar company prices their product. This is how the B2B marketer who is running a webinar measures their success. So it's very much aligned in terms of how we price to what customers want and how they measure success. So that's the structure we want to be in, and we believe by going to that we are much better aligned and help us improve both our ability to acquire new customers and expand once we acquire them.

Very helpful. And again, and also thank you for the perspective of noting that pricing has been an evolution for you for some time as well. In addition to what you talked about on the last quarter, returning to those most recent comments. Another thing we've been talking about heavily as well as you have is difficult comps that you're working through right now, to say the least near-term forecasting beyond the pandemic remains pretty challenging, especially for businesses like Vimeo's that saw the sort of significant amount of pull-forward behavior, though, I know you're also going to probably just to say that we hope it's not just pull forward but level set to a new level. But nevertheless, can you just review the comments that you said more recently about Q4 growth and heading into 2022, specifically as those factors impacting?

Yes. You're right. We don't see this as a pull forward, but a reset of demand patterns, which would leave us at a much higher level than historically it has been. So -- but specifically a question about Q4. What we have said is that revenue growth to be about 25% year-over-year. And if you think about that, we are lapping a very strong growth rate in the fourth quarter of last year, which was about 54%. So on a 2-year stack basis, we are significantly higher even compared to Q3 of this year. We haven't talked specifically about 2022 and what the growth rates would be there. We are still in the planning process and for all the reasons that you talked about, the visibility being harder. We'll provide more guidance as we get through this year and into early next year. But what we have said is that the 30% growth rate is unlikely next year. And we also believe the first half of next year and the growth rates will be muted for the same comp reasons that we talked about earlier, and we expect the growth rate to be accelerated in the second half of the year. So if you think about our growth rates coming down in the second half of this year, that would continue through the first half and then we expect it to reaccelerate sometime in the second half of the year. There are a few things that we believe will trigger that reacceleration. One is the new products that we have introduced. Vimeo Record, Vimeo Library Vimeo Events, and we are actively working on improving our go-to-market motions, especially helping the sales team sell more products when they are actually -- the team is scaling and geographically expanding as well. There's a lot of work happening to improve productivity and make the sales team more efficient and the pricing and packaging that we talked about earlier, as we align our pricing and package better to what the customers are looking for and align with their success metrics, we believe we will -- that will help us reaccelerate the growth in the second half of next year.

And you mentioned that there briefly about the expectation not to hit 30% next year, but that is your long-term target. And you recall, you always talked about roughly 15% client growth, 15% ARPU growth. And if I recall correctly, the adjustments that you're seeing right now in the short term, fairly balanced between client growth and ARPU growth or are any of these things leaning one way or the other?

Yes. We are absolutely convinced that nothing has changed in the market long term. It's a huge market. Our estimate is it's about $70 billion, with more than 1 million enterprise customers having revenues north of $10 million. Every single one of them should be using video for internal or external communication. And so we are committed to the 30% growth over the medium term. Most likely split evenly between ARPU and subs. But given all these things, the pricing changes and the mix of small and medium businesses versus large enterprises, there might be some small changes, but broadly, I would say, think about it in terms of evenly split between ARPU and sub-growth.

Okay. So just transitioning, we talked a lot about the pricing changes, but to take a step back to that bigger point about Vimeo as it's entered into the public market as a stand-alone business is all about the shift to enterprise that you've hinted at already and the go-to-market strategy. Tell us maybe just a little bit more about the changes you're making for that broader shift, how Salesforce hiring is going, how sales cycles are evolving as that shift plays out for you?

Yes. Great question. We are continuing to hire significantly on the sales side. I think we started the year with about 75 quota-carrying sales headcount, and we would end the year at about 150, so almost doubling. We have opened offices, at least in 4 or 5 new geographies that we didn't have at the beginning of this year, so significant expansion. And it's not just the sales team, all the supporting teams around that, sales operations, product marketing, sales enablement. So making significant investments across the board as we are accelerating our enterprise push. Along with that comes all the investments in the product that has given us all the new products that they need to sell. So there is quite a bit more for the sales team to sell. It is taking us a little bit more time to get those motions right in terms of creating pipelines, closing deals when there are new decision-makers within an enterprise, who historically, we haven't solved for. If you think about our live streaming product in the past, it was primarily sold to either the communication department who wants to do -- see your town halls or the marketing department, who wants to live stream a product launch. But now with multiple new products, we are selling to HR department, to IT department, video purchase decisions are becoming more and more strategic for enterprises. So procurement teams are involved. IT and security teams are involved. It is becoming a bigger process. So -- but I think the good news is we are seeing more and more larger ACV deals come through. We talked about the Fortune 500 retailer that we landed in Q3. It's a multiyear deal and at a much higher ACV than we typically would see. There is definitely some reduction in urgency post pandemic that we are seeing, but we are seeing the deals becoming more strategic and larger ones, which is very much our strategy.

And I guess, that's really what you mentioned there at the end is an important nuance point, right, is ultimately, urgency is maybe falling but shifting more to the mode of long-term strategic business planning. I think you mentioned in one of the group meetings earlier about in conversations with enterprises, there was always, "video is in our plan, we'll get there, right?" We'll clearly pass the -- we'll get there point. They've been forced to get there, and it's really becoming much more strategic in how they're seeing it now. So on top of that, talking about how your sales cycle and the sales team is evolving, let's maybe bring up the news from I guess, last week, earlier this week, where you did announce some new additions to your leadership. You'd hinted at this a little bit more before on the earnings call. But tell us a little bit about Eric Cox in particular, but also some other new executives who have joined you now officially.

Yes. We were very fortunate to have some very -- a very experienced SaaS leaders join us. Actually, Eric, our first Chief Revenue Officer; and Crystal, our first Chief People Officer, both of them started yesterday and actually are here in the office, sitting a couple of offices away from me. Very fortunate to have both of them. Eric comes from Adobe, where he oversaw all of the GTM sales for Adobe's Creative Cloud and Document Cloud across Americas. It's a $4 billion to $5 billion book of business. And he led a large team, including operations and strategy and is very familiar with premium models and product-led growth and some of the things that we have, which is unique to Vimeo in many ways. So very fortunate to have him. He is going to be leading our entire revenue operations team, sales and customer success and business operations teams. Crystal comes from Canva, where she was the Global Head of People and helped Canva scale from hundreds of employees to north of 2,000 over the 3 years or so she was there. And her charter is to really continue to drive and make Vimeo even more People First and drive that culture across the organization and to help us attract, retain and engage employees in even better ways than we have done in the past. Super excited by those 2 senior folks, SaaS veterans, so to say, and join the team. We have also made many other hires, a couple of them highlighted in the press release or Michael Schiff, who and Erick, Erick Cruz, both joining us from Salesforce leading our business operations team and customer success team, respectively. So it's great to have such experienced folks, who have seen scaling and done scaling in much bigger companies, join us at Vimeo and help us drive growth for the next phase of our growth. Very exciting times here.

Well, you are -- putting your money where your mouth is. We have -- we were talking about this in the prep for your appearance here and sort of see the press release get out beforehand, so we can talk a little bit more was nice, because I knew you'd hint to that -- nice to have it be made more tangible. And especially Eric's addition from Adobe is one naturally that got some questions right away. And that's -- if you said -- if he's there in the office and you need to arrange a guest appearance, we can give you 30 seconds if you want to go grab him. No? Okay. Next time we'll get there.

We'll bring him in when he has a little bit more understanding of our business.

Not just 1 day, not 1 day, I think he's ready. No...

He can do this.

So one of the things, and I think this did to look back a little bit beyond new products and to come back to the beginning of the IPO story, I think, one of the things that we heard then from investors, and we still hear from investors is about the level of competition in video software. And I think when I first met Anjali many years ago, it was all about how do you compare with YouTube. I mean I think we're past that point now. Everybody understands it's enterprise software. But how did you -- when people asked about Zoom or Adobe or Microsoft or even some of the video specialists like Kaltura, which also came public recently, Brightcove. What's your answer to investors who say, "Video is so much, there's these type of vendors that are popping up all over. How do I get comfortable in the differentiation with Vimeo?"

Yes, it's a great question. Let me try to answer that in a couple of ways. We think of competition in, let's say, 4 buckets. And I'll go into each of those and kind of say why we win and where we lose. The biggest one still competitive alternative is the nonuse of video. And we talked about the TAM, the $70 billion TAM. Many of the -- a large portion of the 1 million -- large enterprises, who have higher revenue, say, $10 million and above, still don't use video for all the users that they could potentially use it for. So that continues to be the largest opportunity, the majority of the deals that we come across are still greenfield of opportunities. There is definitely more impetus to adopt video, but it is still not where it should be. It will continue to improve over time, but that continues to be one of the largest alternatives for Vimeo. The second one is the legacy OVPs. You talked about some of them right now. Some of them went public recently. How -- where we differentiate from them is that we have a much better UX. There is no custom implementation required and we have a very disruptive price point. You know our average ARPU on enterprise is 20,000 to 25,000. And if you look at the average ARPU for some of those companies, it's at a much significant -- it's at a much higher point. Some of these products are very clumpy and in many ways, very hard to use. It requires customer implementation, which means it takes much longer to get to time to value. And in most cases, when we go head to head in competition with these providers -- legacy providers, we win the deals, because, one, our product is much better, the UX is better, and we provide a very short time to value as we talked about. When we lose, sometimes we do lose, and that's when a customer needs a highly custom solution and needs to fit into certain requirements that they already have. Those kind of deals, we are not well suited within those kind of deals, and that's where we lose. But that's still a very small proportion to the large -- to the number of deals where we've been. The third bucket, I would say, are more point solutions. There are a lot of startups and there are a lot of new use cases that are popping up everywhere. And some of these products are win deals because the customer needs only that one specific use case that they are trying to solve for. We win on the strength and breadth of our product platform. As we talked about, we do the entire suite of things from the conception or -- of a video, the life cycle all the way to analytics and when an enterprise customer is looking for using videos for multiple use cases across multiple departments and really is looking for an enterprise-class product, we win those deals, but we do lose some when the need is a very small niche solution. The last one -- last bucket of competition, I would say, is that people tend to think of competition is the video conference providers, Zoom, the Webex that we are on. Well, we don't see them as competition as much, though. Almost every enterprise deal -- enterprise customer that we have, they have a video conferencing solution in addition to having Vimeo in their portfolio. The reason being video conference providers are great at what they do, which is small one-on-one conversations or short -- small group conversations, but it doesn't do what we do for either -- for a CEO town hall, where you have to reach hundreds of -- potentially hundreds of thousands of employees around multiple locations around the world or to live stream a product launch like [indiscernible] for all their product launches to reach millions of consumers around the world or some of our new products, Vimeo Library, Vimeo record, Vimeo Events. Those are not products or use cases that these video conference providers solve for. So in many -- almost every enterprise account that we have passed one of the video comps. So we don't see them as competition, but we coexist. So those are the 4 buckets of competition the way we see it now. And we have in-hand advantages in all 4 of them.

That's very helpful. So you mentioned this just briefly before when we were talking about the long-term growth rate target of 30% but you started that out by reiterating your total addressable market of north of $70 billion. Can you just remind us the components of that enterprise versus small business? And how you break that down further?

Yes. So we think about that in 2 categories, the small and medium businesses and enterprises. Small and medium business, there are about 300-plus million small and medium businesses around the world. Even if you assume only a small portion of them would be using video, let's take 100 million. And -- for our average ARPU in that space is about $200. So 200x $100 million and increasing over time to maybe 250, that would be a $25 billion TAM. And on the enterprise side, there are more than 1 million enterprises with revenues north -- annual revenues north of $10 million. And our belief is that all of them should be using videos for either live streaming, internal or external use cases. And that's 1 million-plus enterprises. Currently, what they -- our average ARPU is about 20,000 to 25,000. We believe we can get that to 40,000 to 45,000 over the next 3 to 5 years. So that's a $45 billion TAM. So $25 billion in SMB and $45 billion in enterprises. So that's the -- that's how we add up to the $70 billion. I'll give you one more price proof point there. On the enterprise side, our current ARPU is 20 to 25, as we talked about. Vimeo Events is a new product that we introduced about a month ago. It's going to be an add-on product for the B2B marketers to do webinars. It is going to be priced based on the number of registrants and number of viewers, and is completely aligned with what B2B marketers are looking for. And that's one way that we increase our TAM to get to that 75 -- 70 billion. And that will be an increment to the ARPU that we currently have. So this will be an add-on product and would be sold separately. So that's how we go from that 20,000 to 25,000 ARPU to the 45,000 -- 40,000 to 45,000 ARPU over the next 3, 4 years. And this is just one way. We will have, obviously, new products coming in, in the future, that would be a further layer on top of these ARPU. So that's how we think -- I think of the broader TAM and how we would get there.

Incredibly clear. That might be one of the more clearer explanations of the TAM I've ever heard. That was very helpful. And you also led me and see exactly what I want to talk about next, which is the new product portfolio, and you mentioned Events a few times and Library. Just any -- I know it's early for a couple of these products still, but anything you can share on early traction? And then maybe just tell us a little bit more about how it fits into that broader strategy. I think you've touched on it here a little bit about find your way into different stakeholders within the businesses. But you just -- I'm asking sort of a similar question before, which is how do the new products themselves drive change in how you engage your customers maybe starting with Library and Events first.

Yes. If you go back in time, we were primarily selling live streaming, live streaming cohort, internal use cases to see your town halls and external users to assist your customer. So the decision maker there for either the marketing department or the communication department. Our strategy is to be relevant to every employee within an organization. We want every employee within an organization using video, we want employees using more features within Vimeo, and we want them using Vimeo more and more frequently. So that's our goal. So how do we get there? We have to solve for the use cases within each department within an enterprise. Vimeo's Record, for example, one of the biggest use cases that we see is in the engineering and product departments where they use Vimeo Record for doing product demos, collaborating with teammates across geographies on ideas and concepts. So that's one way to get into an enterprise through the product and engineering department. Vimeo Library, what we are seeing, is -- solves for an important use case across enterprise which is the system of record for all videos within a large organization. Right now, it's very -- it's spread all over. Videos live on people's e-mails, some of them live on your desktops, some on cloud drives. It's all over the place. So every enterprise, every IT department wants a system of record where they can manage all of the videos within that organization. And we talked about Vimeo Events being primarily for the B2B marketing team, where they can do webinars and attract new customers. So the expansion of the product portfolio is targeted at different departments within an enterprise, solving for their needs and helping them be more successful in whatever they are doing. Specifically to library, to your question about what are we seeing. We are seeing very promising early signs on library. Two things I would point out. One, the size of the transactions are becoming larger because, one, it's a broader adoption solution. The AOV, what we are seeing is AOV for customers who are buying libraries larger than average. And there is a much higher propensity to sign multiyear contracts. Both of these are great. One increases ARPU, one increases retention over time. So that's a great early signals there. What we're also seeing is that, it's not just -- library is not just helping with retention, but it is opening new doors for us. There was a customer that we acquired last quarter, who had no need for live streaming. All they wanted was to manage their videos within their enterprise. So they bought Library at a much higher average price than we typically have. So it is also a wedge into an enterprise that we didn't have before. So that's with your Library. Higher -- we're seeing higher AOVs and a higher number of multiyear deals. On Events, events was launched, I think, November 2 or something like that. So it's only a month old, so really early. But we are seeing -- there are thousands of folks actually using Vimeo Events. We have had success in displacing some of more established webinar providers because our customers are seeing that our product is much more -- is a much better end-to-end solution, meaning starting from pre-event planning and staging. We can create videos and stage them and create [ run of ] show pre events so that event goes very smoothly. And the marketing teams can actually do custom branding for the event all the way through the follow-up e-mails. In the event itself, you don't need a technical team or a video professional to actually run the event, you can do it yourself, everybody within an organization can actually do a webinar themselves, which makes it much more easier. Plus it is fully run on browser. You don't need to download a software to run a webinar. It makes it much easier. So -- and a follow-up, this after the event, the video lives in your Vimeo library, it can be edited, it is automatically transcribed, it can be embedded into your website and stays there as an evergreen content. It can be included in your e-mail, sending out to your customers. So it's a complete seamless end-to-end integration, not just for webinar, but back into Vimeo platform. which makes it much more powerful than many of the products out there. So we are starting -- we are seeing great new -- not a traction there, very early but very promising signals there. Sorry for the long...

No, that was -- mostly asked the question tuned it up for a conference planning team that's listening.

There you go.

We just got half of your pitch meeting covered right away there. So they appreciate that as well as our investor clients listening. So let's switch gears and talk M&A a little bit. You have used that as a tactic to help the product portfolio. I know build is your preference. But well, I just covered a multiple part question. I think I just covered Part A of my own one, which is your broad approach and philosophy to M&A. But second, maybe just some of the highlights of your historical track record, of Vimeo's historical track record in M&A. And a couple of recent wins here in WIREWAX and LIVIT that we'd love to cover as well.

Yes, absolutely. Yes, great question that, and you answered it. Our primary growth, we believe, should come from organic investments. All the product investments that we talked about are great examples of that. But we believe M&A can play a significant role in that as well, especially in a space where there is so much innovation happening around. And there are so many new use cases coming up every day. There is an opportunity to use M&A to really help accelerate our growth. We think about M&A from the perspective of -- we will do M&A to do 3 things: one, if it is going to help expand our TAM; two, to materially accelerate our product road map; and three, bring in great talent, actually hire tech and talent acquisition kind of M&A. So those are the 3 reasons that we would use M&A for. Obviously, when we think about M&A, we have very stringent criteria how we put each of the potential acquisition through, meaning is the product that we are acquiring, does it fit into our product portfolio well, does it make it better? Does it really solve the customer problems that we are trying to solve? Is there a cultural fit? Obviously, M&A -- a huge component of any M&A success is the cultural fit of the team that is being brought in and how they gel with the existing Vimeo team. So that's definitely a big filter for us. And the third one, obviously, is does the economics make sense? Are we paying the right price? And how do we make sure that the capital allocation is done appropriately. So those are the filters that we pull them through. Specifically to the acquisitions that we have done, we have done 3 acquisitions in the past. The first one was VHX, which still powers our OTT business; Livestream, which is the foundation for our live streaming products; and third, Magisto, which helped us do the -- build the Vimeo Create product. So all of them have been very successful. In fact, all 3 of the founders are still with Vimeo, which is not something that you typically see in the technology company. And some of these acquisitions are 6, 7 years ago. So all of those have been very successful. The 2 acquisitions that we did recently last month, WIREWAX and Wibits, both are squarely focused on our enterprise side of the business, enterprise creation. WIREWAX is an interactive product. It really helps you create tropical videos to help boost brand awareness and product awareness, drive consumer interest and really moves video from a lean-back experience to a more proactive, interactive experience. I'm sure you have seen a lot of news about interactive video becoming fairly a big component of e-commerce, and this would help us get us into many of those spaces. So super excited by that opportunity. It's a great team. They have been in this space for many, many years. have a lot of customer empathy and understand the space very well. So we're very excited and fortunate to have them join us. Second one is Wibits. Wibits is a video creation for enterprise customers. Think about it as the Vimeo Create for enterprise. And this is also a team that has been in the enterprise video creation space for many, many years, a great set of engineering talent in geographies that we already are. So super excited by both of these things and both of these acquisitions. And we believe both of them together will continue to drive Vimeo's enterprise product road map, significantly accelerate our enterprise product road map and keep us at the cutting edge of technology there.

I'm glad you reminded us of that point that of your 3 prior acquisitions, the founders of all 3 are still with Vimeo. I remember when I learned that from Anjali, I thought I was just amazing because that does not -- so you're right, it does not usually work that way. So it's an important thing to remind people when you're sitting there and talking about things like filtering for culture, for example, that sort of tangible evidence that you're not acquiring businesses where founders are building things to sell, right? Those are founders that are building things to grow them further if they're still -- they're working side by side with you. So...

Yes, says a lot about the culture of the company and how we integrate those teams into the organization and give them enough -- keeps their innovative entrepreneurial spirit still going within the larger organization.

Yes. No, exactly. Yes, that's a great point as well. Let's -- we've got a few minutes left. So let's get you out here on the last one. Just a little bit on margins and profitability. It is not the most important thing in the near term we recognize, but one day it will be. But firstly, just on the near term with the slower revenue growth and some of the moving parts that you talked about, especially the pricing changes, what sort of changes are you seeing in the near term? And then maybe just remind us of your longer-term targets and whether you feel you're sort of on track with how you ramp up to those over time and the basic structure of those components of the margin as well.

Yes. Great question. I would say on the revenue front, nothing has really changed. We believe in the medium term, which is, say, 5 years, we can -- we will be at the 30% revenue growth rate. On gross margins, what we had said during the Investor Day 8, 9 months ago, that we expect to get to 75% gross margin within that time frame. Actually, we hit that in Q3. I don't expect gross margin to expand the way it has expanded over the last 6 to 8 quarters. But I do expect it to expand slightly as we go through the next few years. Obviously, our focus is not just getting the last dollar of gross margin out but also continue to add value and feature set to our platform that would help all our customers. So that's a balance that we have to strike, and that would mean that we would be growing at a much smaller pace than what we have done in the last 6 quarters, which is the gross margin's about 10 percentage points over the last 4 to 6 quarters. So definitely going to be a slower pace, but I would expect it to continue to grow. EBITDA, we expect to hit 20% EBITDA margin in the next 3 to 5 years. In Q3, we were slightly EBITDA positive. Q2, we were EBITDA negative. We're kind of hugging the breakeven point at this point in time. But that's it. We are not trying to solve for an EBITDA at this point as we have talked about. We believe that we have significant opportunities to invest in our product, as we have done in the past. Q4, our pro forma R&D spend grew 50% and pro forma sales and marketing spend grew, I think, 44%. So we are going to continue to invest in both our product and our go-to market, which would keep -- would make us EBITDA negative for the next year. And as we continue to scale up, we will start turning positive and get to 20% EBITDA margin over the next few years? I think the one thing I would say is that we -- the opportunity for us to expand our products and expand our go-to-market, there is -- we talked about the 70 billion TAM. So our focus is on having the best product in the market and to gain as much market share as possible in the near term. So that's going to be our investment thesis, have the best product and continue to expand our market reach and grow market share.

Excellent. It is not -- as you said, not optimizing for EBITDA right now, but good to know the perspective over the long term that we are headed to and be reminded of that. We are, over time, Narayan. Thank you very much for joining us. We appreciate your time, especially in a more volatile market than normal. We appreciate our investors' time tuning in. And so we'll let you run. Thank you again. Thank you, Yaoxian on the IR team for all your help getting this arranged, and everyone else listening. If you've got follow-up questions on Vimeo's story, you know where to find me and we can help connect you with the Vimeo team as well. So thanks, again, Narayan and everyone. We appreciate it. See you soon.

Thank you, Dan. Great chatting with you.