By Daniel Shvartsman
Vimeo (NASDAQ:VMEO) shares are down over 27% after the video software provider posted a slight revenue beat but unimpressive guidance for investors.
Vimeo, which was spun out of InterActiveCorp (NASDAQ:IAC) in May, reported revenue of $100.1M in Q3, its first $100M revenue quarter and 33% above last year’s numbers. Gross margin came in at 75% and the company produced -$.07/share in earnings; free cash flow was $9.3M (NYSE:MMM), with the difference mostly coming from the accounting for share-based compensation.
“Vimeo delivered its first $100 million revenue quarter as the need for video at work grows,” said Anjali Sud, Chief Executive Officer of Vimeo, in the press release. “More than 6,000 enterprise customers can now use our all-in-one software solution to leverage the power of professional-quality video.”
For all that, the shares have sold off on what appears to be muted guidance. As reported in Barron's, the company’s CFO, Narayan Menon, guided to around 25% revenue growth in Q4 and stated 30% revenue growth in 2022 was unlikely. This is a come down from analyst expectations, and a reminder of the challenges for some software providers and tech companies to lap pandemic-accelerated growth.
Vimeo’s shares are trading at around $25.5/share, leaving them at an Enterprise value/sales multiple of 11.9x for this calendar year, and depending on the growth for next year, likely somewhere between 9 and 10x sales.