Vimeo: "The Time for AI in Video Is Now"

Vimeo (NASDAQ: VMEO) held its fourth-quarter and fiscal year 2024 earnings call on February 19, 2025. Under new CEO Philip Moyer, the video software company has been focusing on enterprise customers while working to stabilize its Self-Serve business. The company announced plans for significant investments in 2025 to accelerate growth. Here are the most important takeaways for long-term investors.

AI Features Driving 40% of New Enterprise Bookings

Vimeo's artificial intelligence (AI) investments are already showing significant returns, with AI features becoming a major driver of new business acquisition in the enterprise segment.

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In Q4, 40% of our customer deals were driven by our new AI capabilities. And these are new capabilities we have just released earlier in the year, and we've proved very quickly to ourselves, when we develop new capabilities, release them to customers, they sell.

-- Philip D. Moyer, CEO

The company's AI translation capabilities, which support 28 languages, have become a key differentiator in enterprise sales, particularly for global customers who need multilingual video solutions.

A $30 Million Investment to Accelerate Growth

Management announced plans to invest up to $30 million in 2025 to accelerate growth, focusing on video formats, security, enterprise solutions, and AI capabilities. This investment is expected to lead to double-digit growth by year-end.

Given our cash balance and the strength in this business model, we have made huge progress. If you think about it, our EBITDA in 2024 is 3x all the EBITDA we created in the 3 years prior. So our view is we're in a great position to make an investment. ... We expect acceleration through the year. So as we get to the end of the year, we absolutely believe that we'll have line of sight to double-digit growth.

-- Gillian Munson, CFO

This investment should quickly pay for itself, as just 10% growth would cover the investment, according to management.

Self-Serve Business Showing Signs of Stabilization

While Vimeo's Self-Serve subscriber numbers remain under pressure, management has made strategic changes to stabilize this part of the business, including price increases across more than half of the segment resulting in double-digit average order value (AOV) growth.

In Q4, we established that single-threaded leadership and a single-threaded team. I have to tell you, it's very rare that you increase prices and you start seeing better retention and higher AOV at the levels that we're seeing. And so we're really excited about that. That tells us that customers actually want to stay with us.

-- Philip D. Moyer, CEO

Management noted that retention rates remained stable despite price increases of up to 30% in some cases, which they view as a strong signal for future growth potential.

Looking Ahead

Vimeo's management expressed confidence in their growth trajectory for 2025, with Moyer emphasizing that "the time for AI in video is now." With strong enterprise bookings growth, stable retention rates despite price increases, and a robust cash position, the company appears well-positioned to capitalize on expanding enterprise video needs.

Management is particularly focused on expanding video format capabilities, enhancing security features, deepening enterprise solution integrations, and advancing AI capabilities. The company plans to extend its enterprise-grade AI features to Self-Serve customers in the coming quarters. As Moyer noted, "When you see the opportunity like we are seeing, you have a brand and you have a customer base like Vimeo, you must invest."

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David Kretzmann has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.