Pre-IPO, Vimeo projected an aggressive medium-term growth rate of 30% through 2025. The qualitative factors for Vimeo looks all well and good, so why is the share price tanking? The answer lies in revenue growth. ![]() In Q3, Vimeo replaced its competitors and signed up new customers such as Moody's ( MCO), Whirlpool ( WHR), and Bayer ( OTCPK:BAYZF). The strong product offerings and brand equity serves as strong distinguishing factors that sets Vimeo apart from the rest and gives them an edge on their competition. These numbers include the renewal of customers that signed up during the pandemic last year, validating the thesis that COVID-19 was not just a one-off tailwind for Vimeo, but instead accelerated the transition to a video-first environment. The success of the company's product offerings is seen in the consistently high net revenue retention (NRR) rates, with over 100% NRR rates for six consecutive quarters. This suite of offerings is expected to continue to grow as Vimeo continues to invest strongly in R&D. It also offers a whole suite of video related products for the enterprise, which includes its traditional live streaming and video hosting solutions, to its newer products like Video Library, Vimeo Record and Vimeo Events. As a video-focused company, Vimeo is widely known for its professional, user-friendly, and ad-free UX. The next question is why Vimeo and not its competitors? In short, Vimeo stands out in the 1) quality of its product offering and 2) its product breadth. livestreams of events, corporate trainings and meetings and even sales and marketing of new products. ![]() Video is now widely adopted for a variety of use cases e.g. The chart above shows how COVID-19 has accelerated the adoption of video in our everyday lives and the business environment. While video is not exactly groundbreaking technology, it is quickly finding its new place as the cornerstone of business communication in the digital future. This premise is supported by the transforming nature of work as well as improvements in technological infrastructure such as 5G networks. The fundamental thesis that an investor must believe before investing in Vimeo is that the business world is moving to a video-first dynamic. In this article, I will explain why I think the sell-off is overdone and illustrate how Vimeo's current valuation provides an extremely attractive entry point for patient investors. ![]() In fact, in the last two weeks since it reported its Q3'21 results, the stock shed another 41% of its value. Interestingly, since its spinout, its share price has been in a tailspin, falling 65% since its IPO high. Vimeo ( NASDAQ: VMEO) is a fast-growing SaaS company that was spun out from IAC in May 2021.
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