Vimeo’s Q4 Results Surpass Expectations; Shares Sink Over 21%

Video hosting, sharing and services platform Vimeo, Inc. (NASDAQ: VMEO) recently reported better-than-expected results for the quarter ended December 31, 2021. Strong revenue growth drove the overall positive results of the company.

However, following the earnings, shares of the company declined 21.2% to close at $10.90 in Wednesday’s extended trading session.

Revenue & Earnings

Vimeo reported quarterly revenues of $106.1 million, which denotes a year-over-year increase of 26.6%. Further, the figure surpassed the consensus estimate of $104.94 million. The growth in revenues was primarily driven by the 11% and 13% rise witnessed in subscribers and average revenue per user, respectively.

The company’s loss per share at the end of the quarter stood at $0.05, wider than the loss of $0.01 a year ago. However, the figure came in narrower than the consensus loss estimate of $0.08.

In other operating metrics, Vimeo’s gross margin improved from 70% in the previous year to 75%. The company’s paying subscribers at the end of the quarter stood at 1.7 million.

Vimeo reported an adjusted EBITDA loss of $7.6 million, compared to an adjusted EBITDA of $0.7 million a year ago.

Outlook

For the first quarter and full-year 2022, the company forecasts revenues to grow in the range of 17% to 19% and 15% to 18%, respectively.

Similarly, for the first quarter and full-year 2022, the company expects to report an adjusted EBITDA loss in the range of $10 million to $12 million and $25 million to $30 million, respectively.

CEO Comments

The CEO of Vimeo, Anjali Sud, said, “Our product expansion efforts in 2021 are starting to bear real fruit. 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.”

Stock Rating

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The average Vimeo price target of $26.75 implies that the stock has upside potential of 93.3% from current levels. Shares of the company have declined 74.8% over the past year.

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