Q3 2023 Vimeo Inc Earnings Call

Hello, and thank you for joining Vimeo as Q3 2023 earnings live Q&A before we begin a few comments first this session will be recorded and available on the Vimeo Investor Relations site later today.

Speaker 1: Hello, and thank you for joining Vimeo's Q3 2023 Earnings Live Q&A. Before we begin, a few comments. First, this session will be recorded and available on the Vimeo Investor Relations site later today. Second, we will discuss Vimeo's outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate, or other such statements.

We will discuss <unk> outlook and future performance. These forward looking statements typically may be preceded by words, such as we expect we believe we anticipate or other such statements.

These forward looking views are subject to risks and uncertainties and our actual results could differ materially from the views expressed today.

Speaker 1: These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today.

We've also provided information regarding certain key metrics and our non-GAAP financial measures, including certain forward looking measures.

Speaker 1: We've also provided information regarding certain key metrics and our non-GAAP financial measures, including certain forward-looking measures.

These should be considered in addition to and not as a substitute for or in isolation from GAAP measures.

Speaker 1: These should be considered in addition to and not as a substitute for or in isolation from gap measure.

Additional information regarding <unk> financial performance, including reconciliations with comparable GAAP measures can be found in our shareholder letter and vimeo as filings with the SEC as well as in supplemental information posted on the Investor Relations section of our website with that I'll turn it over to our CFO Julian.

Speaker 1: Additional information regarding Vimeo's financial performance, including reconcilations with comparable GAT measures can be found in our shareholder letter and Vimeo's filings with the SEC, as well as in supplemental information posted on the Investor Relations section of our website. With that, I'll turn it over to our...

Hello, and thank you for joining <unk> Q3 23.

Speaker 2: Hello, and thank you for joining Vimeo's Q323 Marines Q&A session. I am Gillian Munson, CFO of Iimeo, and I'm happy to be joined by Adam Gross, our interim CEO . You can find our Q323 shareholder letter on our investor relations website, which has further details and financial information about the quarter, as well as additional commentary on the results and our outlook.

Q&A session I am Chilean Madison, CFO, Danielle and I'm happy to be joined by Adam Graf Our interim CEO you.

You can find our Q3 23 shareholder letter on our Investor Relations website, which has further details and financial information about the quarter as well as additional commentary on our results and our outlook.

Before we jump into Q&A, a few points on how we are thinking about this quarter.

Speaker 2: Before we jump into Q&A, a few points on how we are thinking about this quarter. We believe our team delivered a solid Q3 result that shows what Vimeo's model can do. In particular, showing that our model can deliver healthy operating leverage thanks to our discipline focused on cost. A couple key points. We were...

We believe our team delivered a solid Q3 result that shows what Vimeo model can do in particular showing that our model can deliver healthy operating leverage thanks to our disciplined focus on cost a couple of key points.

We were able to grow bookings total bookings were up 4% year over year, driven by a reduction in the rate of decline in self serve and add ons strong growth in vimeo enterprise and a shift in timing of a large OTT renewal from Q4 into Q3 and our other category.

Speaker 2: Total bookings were up 4% year-over-year, driven by a reduction in the rate of decline in self-serving add-ons, strong growth in venue enterprise, and a shift in timing of a large OTT renewal from Q4 into Q3 in our other categories.

Taking other out of the math, we grew bookings, 5% a nice acceleration from Q2.

Speaker 2: Taking other out of the math, we grew Bookings 5%, a nice acceleration from Q2.

We also continue to sign premier clients to our platform, including Oxford University, Tory Burch and alarm Dot com.

Speaker 2: We also continue to sign premier clients to our platform, including Oxford University, Tory Burch, and alarm.com.

Cost discipline helped us deliver adjusted EBITDA of $13 million in the quarter.

Speaker 2: Cost Discipline helped us deliver adjusted EBITDA of $13 million in the quarter.

Finally, we ended the quarter with cash of $291 million and generated $17 million of free cash flow.

Speaker 2: Finally, we ended the quarter with cash of $291 million and generated $17 million of free cash flow.

Putting 2023 in perspective entering the year, we had three financial goals delivering revenue declines in the mid single digits, posting adjusted EBITDA of $5 million to $10 million and returning to bookings growth in the second half I'm happy to say that we believe we have line of sight to achieving.

Speaker 2: Putting 2023 in perspective, entering the year, we had three financial goals, delivering revenue declines in the mid single digits, posting adjusted EBITDA of five to $10 million, and returning to bookings growth in the second half. I'm happy to say that we believe we have line of sight to achieving or beating two of those goals. And while we aren't all the way there on the third, we are making solid progress.

Or beating two of those calls and while we aren't all the way there on the third we are making solid progress specifically.

Specifically I'm happy to relay that we continue to believe that our revenue outlook is appropriate and we have raised our EBITDA outlook $227 million to $30 million.

Speaker 2: Specifically, I'm happy to relay that we continue to believe that our revenue outlook is appropriate, and we have raised our EBITDA outlook to $27 to $30 million.

As for getting back to sustained bookings growth in the second half of the year Q3 solid results. Aside we now believe that our path there will be non linear in Q4, we now expect bookings to decline in the mid single digits percentage wise about half of the shift from.

Speaker 2: As for getting back to sustained bookings growth in the second half of the year, Q3 solid results aside. We now believe that our path there will be nonlinear. In Q4, we now expect bookings to decline in the mid-single digits percentage-wise. About half of the shift from Q3 to Q4 is expected to be driven by lumpiness in our other categories.

From Q3 to Q4, it is expected to be driven by Lumpiness in our other category.

The rest will come from two factors first while self serve and add ons showed improvement in Q3, we expect we will need more time still to return it for good.

Speaker 2: The rest will come from two factors. First, while self-serving add-ons showed improvement in Q3, we expect we will need more time still to return it for good.

Moreover, as we look at our strategy, we are making overt changes to be more product than paid marketing driven which may cause near term headwinds on new bookings, but should be long term healthier for our business.

Speaker 2: Moreover, as we look at our strategy, we are making overt changes to be more product than paid market intraven, which may cause near-term headwinds on new bookings, but should be long-term healthier for our business.

And if vimeo enterprise, despite strong growth prospects the rate of growth is slowing in part due to some operational issues. We saw in Q3 that resulted in a pipeline softness.

Speaker 2: and evime you enterprise despite strong growth prospects. The rate of growth is slowing. In part, due to some operational issues we saw in Q3, that resulted in pipeline softness.

We are moving the business in the right direction. Despite a delay in delivering sustained growth and continue to believe that vimeo will deliver growth overall first driven by bookings importantly.

Speaker 2: We are moving the business in the right direction despite a delay in delivering sustained growth, and continue to believe that Vimeo will deliver growth overall.

Importantly, vimeo has a financial staying power thanks to its strong cash generation in 2023, and it's enviable balance sheet to invest appropriately to turn our business to a growth posture with that we're happy to take your questions.

Speaker 2: Importantly, Vimeo has the financial stain power thanks to its strong cash generation in 2023 and its enviable balance sheet to invest appropriately to turn our business to a growth posture. With that, we're happy to take your question.

Our first question will come from Youssef Squali of Truest Yusuf.

Speaker 1: Our first question will come from Yousif Squali at Truist. Yousif? Awesome, can you guys hear me?

Awesome can you guys hear me, Yeah, Hi, Youssef.

Hello.

Congrats on a good quarter. So I guess the two questions I have one is around.

Speaker 3: Congrats on a good quarter. So I guess the two questions I have, one is round.

The opex.

You showed some really impressive improvement actually in gross margins to about 8%.

Speaker 3: The OPEX, you showed some really impressive improvement actually in gross margins to about 80%. Can you maybe speak to the drivers there and just seeing the ability into Q4, same with the OPEX?

Can you maybe speak to the drivers there and sustainability into Q4 savings with Opex and then all the King's trends I think you touched on it a little bit of a pitch.

Speaker 3: And then on the book, King's Trends, I think he touched on it a little bit, particularly within self-serve and add-on.

Truly within shelf certain add ons.

No.

That you were pushing the.

Speaker 3: Now that you're pushing the you know the inflection back to positive to positive for later I mean can you provide a little more color on what's going on there and how late how later is later Are we expecting first half next year second half next year any kind of color would be held

Inflection back to positive.

That's it for later I mean can you provide a little more color on what's going on there and how <unk> how leaders leader and we expect in first half next year second half of next year any kind of color would be helpful. Thanks, Okay, I'm going to try to remember all of this because that was like four questions, but I'll I'll get there.

Speaker 2: Okay, I'm going to try to remember all of those because that was like four questions, but I'll get there. So in terms of profitability, we had a great quarter on profitability, even though of $13 million. I think our analysis would be that we may have swung a little bit too far towards profit in the quarter. So I wouldn't want you to keep yourself at that kind of a margin moving forward. So let me break it to the parts you asked about. In terms of gross margin on a non-gap basis, that was about 80% in the quarter.

So in terms of profitability, we had a great quarter on profitability EBITDA of $13 million I think our analysis would be that we may have swung a little bit too far towards profit in the quarter. So I wouldn't want you to keep yourself at that kind of a margin moving forward. So let me break it to the parts. He asked about in terms of gross margin on a non-GAAP basis.

That was about 80% in the quarter that is really thanks to the work our team does in terms of hosting costs and other costs that go into the cost of goods sold and in the quarter. It also we benefited from some some healthy revenue in the quarter as well so when I look at that number I think 70, 980% is probably a good range for <unk>.

Speaker 2: That is really thanks to the work our team does in terms of hosting costs.

Speaker 2: and other costs that go into the cost of good sold in the quarter. It also we've benefited from some healthy revenue in the quarter as well.

Speaker 2: So when I look at that number, I think 79, 80% probably a good range for that. I don't think that we see a ton of upside over where we were this quarter. It was a pretty good result there.

That I don't think that we see a ton of upside over where we were this quarter and it was a pretty good result, there on operating expenses as you know we've been bringing down costs through the course of the year. It was down about 11% in the quarter, it's about 5% on head count and the rest coming from non comp costs I think we will continue.

Speaker 2: On operating expenses, as you know, we've been bringing down costs through the course of the year. It was down about 11% in the quarter. It's about 5% on headcount and the rest coming from non-comp costs.

To show discipline on cost and our guidance reflects that as well for Q4, but.

Speaker 2: I think we will continue to show discipline on cost and our guidance reflects that as well for Q4. But we do want to make some investments against growth and probably we were a little bit

But we do want to make some investments against growth and probably we were a little bit too to close on costs. This quarter. So I wouldn't expect us to hold it to this EBITDA margin level as we move forward in order to make the proper tradeoffs. There I think on cost Vimeo showed the kind of operating leverage this.

Speaker 2: too close on cost this quarter. So I wouldn't expect just to hold it to this EBITDA margin level as we move forward in order to make the proper trade-offs there. I think on cost, Vimeo showed the kind of operating leverage this model can deliver. And now Adam and I are working very hard to make sure we have the right balance of investment to growth over time.

Model can deliver and now Adam and I are working very hard to make sure. We have the right balance of investment to growth overtime.

As it relates to the self serve business, we are making good progress there the rate of bookings decline got better in the quarter.

Speaker 2: As it relates to the self-serve business, we are making good progress there. The rate of bookings decline got better in the quarter. We are making progress, particularly in seeing good results in terms of our top-of-the-funnel traffic.

We are making progress were particularly and seeing good results in terms of our top of the funnel traffic.

We have brought our a O V up fairly meaningfully over the course of the last year conversions still not where we want it on new and we need to do some more work there. So it's going to take us a little bit more time to get that sustainably to growth and as you know from the math self serve getting back to growth really helps us get to growth overall for vimeo and silver.

Speaker 2: We have brought our AOV up fairly meaningfully over the course of the last year. Conversion is still not where we want it on new and we need to do some more work there. So it's going to take us a little bit more time to get that sustainably to growth. And as you know from the math.

Speaker 2: Self-serve getting back to growth really helps us get to growth overall for Vimeo. And so we're working on that. In addition, and we talked about this in the letter, it's an important point to think about.

We're working on that.

In addition, and we talked about this in the letter and it's an important point to think about we with Adam's leadership or really focus more on product led growth in paid marketing led growth and as we make that transition that might cause a little bit of incremental headwind on new bookings, but we think long term will be super healthy for the business in terms of picking up.

Speaker 2: We, with Adam's leadership, are really focused more on product-led growth than paid marketing led growth. And as we make that transition, that might cause a little bit of incremental headwind on new bookings, but we think long-term will be super healthy for the business.

On a date certain for when we'll get back to growth we're right in the middle of 'twenty 'twenty four strategic planning. So don't think it's appropriate to pick a date, there but will come back with guidance on that on the Q4 call.

Speaker 2: In terms of picking a date certain for when we'll get back to growth, we're right in the middle of 2024 strategic planning. So don't think it's appropriate to pick a date there, but we'll come back with guidance on that on the Q4 call.

Okay or did I get them, all I think I got them all.

Speaker 2: All right. Did I get them all? I think I got them all. Yeah. Okay. Do the great job. Thank you.

Okay got it.

<unk>.

Our next question will come from Tom Champion at Piper Sandler Tom.

Speaker 1: Our next question will come from Tom Champion at Piper Sandler. Tom.

Great. Thank you.

Good afternoon, Adam I'd love to hear from you.

Speaker 3: Great, thank you. Good afternoon, Adam. I'd love to hear from you and just talk about your impressions.

And just talk about your impressions.

Kind of here in the early going I mean, you're familiar with the business, but now youre running it on an operating basis.

Speaker 4: kind of hearing the early going. I mean, you're familiar with the business, but now you're running it on an operating basis day to day. What's some...

Day to day.

What are your current thoughts in the letter refers to kind of doing.

Speaker 4: What are your current thoughts? And the letter refers to kind of doing more with less or as a simplification process that found sensible in the abstract, but just, you know, maybe you could contextualize for us what you're seeing and what you'd like to do.

More with less or as the simplification process.

Sounds sensible in the abstract but just.

Maybe you could.

Actualized for us, what youre seeing and what you'd like to do.

Yeah. Thanks for the question I appreciate that.

So I am I think just about to start or just about to hit my second month anniversary here as I mentioned in the letter.

Speaker 4: Yeah, thanks for the question. I appreciate that. So I am, I think just about the starter, just about to hit my second month anniversary here, as I mentioned in the letter. And it's been really exciting to get a closer seat of the table transitioning from the board to interim CEO .

And it's been really exciting to get a closer seat at the table are transitioning from a board interim CEO.

Some of them are reflections are vimeo has an enormous number of just really interesting assets.

Speaker 4: Some of my reflections are, Viniel has an enormous number of just really interesting aspects.

This in the letter, but since I've taken this role and I started talking to people and our customers and people in the community.

Speaker 4: I mentioned this in the letter, but since I've taken this role and I started talking to people in our customers and people in the community, I'm yet to meet somebody who doesn't have, who doesn't know what the meal is, who doesn't know who we are, and more likely than not, doesn't have a positive story or experience to tell about us.

Im yet to meet somebody who doesn't have a who doesn't know what vimeo is who doesn't know who we are and more likely even though it doesn't have a positive story our experience would tell about us.

When you look at assets like that when you look at how much traffic we have onto our various properties measuring in the tens of millions of mail.

Speaker 4: When you look at assets like that, when you look at how much traffic we have onto our various properties, measuring in the tens of millions of mouths, and you look at fundamentally the...

And you look at fundamentally the category, we're in and how important video is and how strategic it is increasingly to enterprises. Those are all really amazing assets.

Speaker 4: and how important video is and how strategic it is, increasingly to enterprises. Those are all really amazing assets.

I think what we're talking about when we talk about focus and simplicity is how can we really bring all of those assets that we have.

Speaker 4: I think what we're talking about when we talk about focus and simplicity is how can we really bring all of those assets that we have?

Together more effectively so that one plus one equals three and a little bit more of an impactful way Julian referenced that with regards to our self.

Speaker 4: together more effectively so that one plus one equals three and a little bit more of an impactful way. Usually in reference bat with regards to

Self serve strategy, how can we take advantage of the brand how can we take advantage of the traffic. We have how can we take advantage of a product that we invested enormous amount and really making a simple and delightful to use so that we're better able to attract customers get them engaged in the product leveraging organic mechanisms.

Speaker 4: self-service strategy. How can we take advantage of the brand? How can we take advantage of the traffic we have? How can we take advantage of a product that we've invested enormous amount in really making simple and delightful to use?

Speaker 4: so that we're better able to attract customers, get them engaged in the product, leveraging organic mechanisms.

I have been engaged as free users and then over time convert them.

Speaker 4: have been engaged as free users, and then over time convert them into paying customers. I think that's an example of the strategy that we can take at a vantage out. That will let us align our efforts better and ultimately yield more effective and customer acquisition and ultimately more growth.

Into paying customers I think that's an example of a strategy that we can take advantage of that will let us align our efforts better and ultimately yield a more effective and customer acquisition and ultimately more growth.

Great. Thank you.

Our next question comes from Brian Fitzgerald at Wells Fargo, Brian. Thanks.

Speaker 1: Our next question comes from Brian Fitzgerald at Wells Fargo. Brian ?

Thanks, guys wanted to know what the product simple simplification efforts have you seen any early signs of improved conversion that is giving you confidence that we can reduce the emphasis on paid marketing and then maybe scale. The top of funnel and then related wondering how youre thinking about continuing the feed that top of funnel.

Speaker 5: Yeah, thanks guys. I want to know with the product, simple simplification efforts, have you seen any early signs of improved conversion that has given you confidence that we can reduce the emphasis on paid marketing and then maybe scale the top of funnel and then related wondering how you're thinking about continuing to feed that top of funnel is the plan to lean back into paid marketing at some point in the future and any preliminary thoughts on how that would kind of...

Or is the plan to lean back into paid marketing at some point in the future and any preliminary thoughts on how that would kind of phase in.

We take the numbers side of that first Brian and then I'll have Adam talk about the sort of the strategic side. So from our paid marketing perspective, we've been bringing down paid marketing over the course of 2023.

Speaker 2: Let me take the number side of that first spine and then I'll have Adam talk about through the strategic side.

And Turner and and have in Q3 delivered better bookings than we had you know we've been reducing the rate of decline there.

Speaker 2: and turn and have in Q3 delivered better bookings than we had, you know, we've been reducing the rate of decline there. It's a careful balance. It's early days on really doubling down on the product versus paid strategy at the company. So a little bit early to see full results there. But I think what you're seeing is the team has been doing a lot of work all year long to build features and functions to make it, as we talked a lot about, they get easier to get to the features that are the best on board of them. And I think our belief is that as we start to see better and better usage, that's going to bring us that product-led growth as opposed to the paid marketing growth. And we feel very optimistic that that's doable super early days in terms of really doubling down on that. I think it's a while before-

It's a it's a careful balance it's early days on really doubling down on the product versus paid strategy of the company. So a little bit early to see full results there, but I think what you're seeing is the team has been doing a lot of work all year long to build features and functions to make it as we've talked a lot about making it easier to get to the features that are.

The best at Vimeo make it easier to onboard a female and I think our belief is that as we start to see better and better usage, that's going to bring us that product led growth as opposed to the paid marketing growth and we feel very optimistic that that's doable Super early days in terms of really doubling down on that.

Speaker 2: Super early days in terms of really doubling down on that.

I think it's a it's a while before we would say okay. Let's now turn back on the paid marketing I think our real focus is making we have a lot of folks who touch the vimeo product I think it's like 50 million viewers, even see the product and millions of people use the core product every month and theres a lot of opportunity in that for us to see.

Speaker 2: I think it's a while before we would say, OK, let's not turn back on the paid marketing. I think our real focus is making we have a lot of folks who touch the Vimeo product. I think it's like 50 million viewers even see the product and millions of people use the core product every month. And there's a lot of opportunity in that for us to sell subscriptions to those folks. So I think we still have time to get to a place where you'd say, OK, let's now reassess the paid marketing strategy for right now. I think we're really focused on product more than paid doesn't mean we don't spend money on paid. We do. So I would be remiss if I said that we're not spending on paid. But I think we are really trying to shift that orientation because we think it's healthier for the business over time.

Sell subscriptions to those folks. So I think we still have time to up until you get to a place where you'd say, okay. Let's now reassessed the paid marketing strategy for right now I think we're really focused on product more than paid it doesn't mean, we don't spend money on paid we do so I would be remiss. If I said that we're not spending on pay but I think we are really trying to change shift that orientation because.

We think it's healthier for the business overtime, Adam you want to add anything.

Yes, as he mentioned, it's still pretty early in the journey.

Speaker 6: Adam, do you want to add anything?

Speaker 4: Yeah, as you mentioned, it's still pretty early in the journey on thinking about the strategy and this alignment. But one thing I would keep an eye on is all the things that we are doing in the product as Jillian mentioned. Last week, we announced our new video marketing solution inside of that is an entirely new editing experience. Another product innovation we've had in the past 30 days alone is a new AI powered teleprompter, which

Thinking about the strategy and this alignment, but one thing I would keep an eye on is all the things that we are doing in the product as Julian mentioned.

Last week, we announced our new video marketing solution inside of that isn't entirely new editing experience.

Another product innovation, we've had in the past 30 days alone is a new AI powered.

Telephone.

Which follows you as you speak to kind of Providence for all the words Accordingly, I encourage you to check it out it's really cool.

Speaker 4: Follows you as you speak to kind of prompt and scroll the words accordingly. I encourage you to check it out. It's really cool. And I think it's those kinds of investments of that kind of innovation that's going to be really key to unlocking the opportunity that we have in enterprise video. So really excited about what we've shipped and excited about the pipeline of the new capabilities we've got coming.

And I think it's those kinds of investments of that kind of innovation.

That's going to be really key to unlocking the opportunity that we have an enterprise video. So really excited about what we shipped and excited about the pipeline of the new capabilities, we've got coming.

Got it thanks very helpful.

Yes.

Our next question comes from David less Berg at Jefferies David.

Speaker 1: Our next question comes from David Lussberg at Jeffries. David?

Thanks, Hey, guys.

I have two maybe just to start and then a follow up in the letter you said you saw some vimeo enterprise headwinds in Q3, I think you said, mostly around SMB side due to execution issues that you guys are addressing maybe if you could just start by walking through what some of those execution issues, where there would be helpful. Sure.

Speaker 2: Thanks, hey guys. I have two, maybe just to start in the follow up. In the letter you said you saw some Vimeo Enterprise headwinds in Q3. I think you said mostly around at some B side due to execution issues that you guys are addressing. Maybe if you could just start by walking through what some of those execution issues were, it would be helpful. Sure. So in Vimeo Enterprise during Q3, we started to see some headwinds in our pipeline.

So in Vimeo enterprise during Q3, we started to see some headwinds in our pipeline.

It was across the board, but a little heavier in SMB than in other categories.

Speaker 2: It was across the board, but a little heavier and SMB than in other categories.

We think this is largely execution and really the execution is and how we take leads into the system and make them into real opportunities. So it's a lot of items around focusing on leads responding to leave how quickly we're getting to them things like that all of this we are addressing that said as we've looked at the data.

Speaker 2: We think this is largely execution and really the execution is in how we take leads into the system and make them into real opportunities. So it's a lot of items around focusing on leads, responding to leads, how quickly we're getting to them, things like that. All of this we are...

Speaker 2: That said, as we've looked at the data and we think about SMB being a place of a little bit more weakness than other, we suspect there's probably a little bit of macro in there as well. But in our view, our destiny is ours to fix. And we actually think that for the most part, this is about us executing better in that category, as opposed to, you know, it's all macro and that's our issue. So we'll work on that. We're out there working on it now and, you know, hope to turn that around.

And we think about F N b being a place of a little bit more weakness than other we suspect there's probably a little bit of macro in there as well, but in our view are.

Our destiny is ours to fix and we actually think that for the most part this is about us executing better in that category as opposed to you know its all macro and that's our issue. So so we'll work on that were out there working on it now and hope to turn that around.

Got it that's helpful. And then maybe just as a follow up.

Speaker 7: got it. A tough one. Then maybe just a follow up. In the letter, I think Adam, you talked about your cash position and how to provide a wide array of investment opportunities going forward. Maybe if you could just talk through, you know, one of those investment areas in the business that you might be thinking about leaning in hard to with that cash position. Thanks, guys.

In the letter I think Adam you talked about your cash position and I'll provide a wide array of investment opportunities going forward, maybe if you could just talk through why.

What are some of those investment areas in the business that you might be thinking about leaning in hard to do with that cash position. Thanks guys.

Yes sure. Thank you for the question happy to speak to that obviously, it's a.

Speaker 4: Yeah, sure. Thank you for the question. Happy to speak to that. Obviously, it's too early for us to say anything definitive about how we want to use that. But I think if you look even in the past 30 days at some of the things we've been talking about and releasing, it signals a lot of our strategy. Fundamentally, one of the things I'm really focused on is how do we become more strategic to our customers? We know that companies have all sizes.

Too early for us to say anything definitive about how we want to use that but I think if you look even in the past 30 days at some of the things we've been talking about and releasing it signals a lot of our strategy fund.

Fundamentally.

One of the things I'm really focused on is how do we become more strategic to our customers. We know that companies of all sizes.

Need help navigating the new world of Enterprise video.

Speaker 4: need help navigating the new world enterprise video, whether that's in the marketing domain, whether that's in how companies use that if they're in the media business, and increasingly also in knowledge sharing and collaboration.

Whether thats in the marketing domain, whether thats in how companies use that.

They are in the media business and increasingly also in knowledge sharing and collaboration.

So as I mentioned, you saw investments that we've made and the editor. We've also made additional investments in our core player technology, which is probably the industry standard for Internet quality video playback.

Speaker 4: So as I mentioned, you saw investments that we've made in the editor. We've also made additional investments in our core player technology, which is probably the industry standard for Internet quality video playback. And all of these, we introduced new analytics capabilities to help our customers understand how videos being used.

And all of these we introduced new analytics capabilities to help.

Our customers understand how video is being used all of these are efforts that are.

Designed to either attract and convert customers or to ultimately become more strategic to our customers and we think there's just a lot of opportunity to do that across those different areas that I mentioned.

Speaker 4: All of these are efforts that are designed to either attract and convert customers or to ultimately become more strategic to our customers. And we think there's just a lot of opportunity to do that across those different areas that I mentioned. And David, I might add for that.

And David I might add to that.

When we talk about investing it's all a balance so what we are committed to is being a profitably growing company. So I want to make sure we're not.

Speaker 2: When we talk about investing, it's all a balance. So what we are committed to is being a profitably growing company. So I want to make sure we're not leading you the wrong direction on that. I think it's just more about the level. I think that what we're trying to say is in Q3, we might just want a little bit too positive relative to the level investment we want to make. So don't expect us to go into a lost position. That's not our strategy. We want to be a profitably growing business.

Leading in the wrong direction on that I think it's just more about the level I think that what were trying to say is in Q3, we might have swung a little bit too positive relative to the level of investment we want to make so don't expect us to go into a loss position that's not our strategy, we want to be a profitably growing business as well.

Okay.

Our next question will come from William Kirk of TD Cowen William.

Speaker 1: Our next question will come from William Kerr at TD Cowan. William?

Great. Thanks for the thanks for the question.

So in the in the shareholder letter you noted a number of large customer wins on the enterprise side.

Speaker 8: Great, thanks for the question. So in the in the shareholder letter, you noted a number of large customer wins on the enterprise side. Could you just give us a bit more color on what categories are driving the most demand and maybe where you're seeing your customers pull back a little bit and then I've won an additional question.

Could you just give us a bit more color on what categories are driving the most demand and maybe where youre seeing.

You or your customers pulled back a little bit and then I have one additional question. So just on a macro basis. The pullback was more by size as opposed to usage. So really in terms of the pipeline I think we saw some our execution was a bit of a bunch of the pull back but then in SMB, we saw a little bit more than elsewhere, but kind.

Speaker 2: So just from a macro basis, the pullback was more by size as opposed to usage. So really in terms of pipeline, I think we saw some, our execution was a bit a bunch of the pullback, but then in SMB, we saw a little bit more than elsewhere, but kind of across the board. So it wasn't like one use versus another. And I think in terms of use cases, we continue to see many of the same ones that you've seen over time, marketing comms, communications, all those good things. So no real change in how people are using the product.

Across the board so it wasn't like one used versus another.

I think in terms of use cases, we continue to see many of the same ones that you've seen over time marketing coms.

Communications all those good things.

No real change in how people are using the product.

Okay, Great and then.

SBC was down again year over year this quarter and you've got you guys have made a lot of progress on that side of things and I was just wondering how youre thinking about limiting share dilution over time, and if you think youre happy with the current levels of <unk>.

Speaker 2: Great, and then, you know, SBC was down again year-over-year, this quarter, and you know, you've done, you guys have made a lot of progress on that side of things. And I was just wondering how you're thinking about limiting shared delusion over time. And if you think you're, you know, you're happy with the current levels of SBC and, you know, where you're thinking for the next several quarters. Yeah, I didn't mention this in the beginning, when we talk about cost, I really talked up to the EBITDA, but the net income story at Damia was also really strong. In addition to the interesting income we're trying to earn on our cash balance.

SPC.

You know where youre thinking for the next several quarters, Yeah I didn't mentioned this in the beginning when we talk about cost I really talk to the EBITDA, but the net income story. It I mean it was also really strong. In addition to the interest income were starting to earn on our cash balance as it helped the bottom line. The stock based comp is in really controlled now.

Speaker 2: as it helped the bottom line the stock based comp is in really controlled uh... now there are some ins and outs on that right as you know we've had some folks depart the company over the course last year there's been a lot of change here and so i think in this quarter we had a handful of folks who are sort of late last year grants

There are some ins and outs on that right. As you know we've had some folks depart the company over the course of last year Theres been a lot of change here and so I think in this quarter. We had a handful of folks who were sort of late last year grants that backed out were backed out of the stock based comp, which is just normal with the kind of change we are having so that less.

Speaker 2: that were backed out of the stock-based comp, which is just normal with the kind of change we are having. So that level for this quarter, which was just around 7 million, probably is a little bit lower than where we'll land. My suspicions will be closer to 9, 10 million a quarter moving forward. But if you can think about it in sort of the longer form, a year ago, that number was 19 million. And we were thinking we were gonna be looking at $20 million a quarter in stock-based comp. And as that represents dilution, that's a pretty hefty number. The company and our comp committee have really joined forces to limit dilution this year. I think we've done a really nice job at it. And we will continue to be conservative in terms of giving stock out.

For this quarter, which was just around 7 million probably is a little bit lower than where we'll land. My my suspicion is we'll be closer to 10 $910 million a quarter moving forward, but if you can think about it in sort of the longer form a year ago that number was $19 million and we were thinking we were going to be looking at $20 million a quarter in stock based comp.

That represents dilution, that's a pretty hefty number.

The company and our comp committee and really joined forces to limit dilution. This year I think we've done a really nice job at it and we will continue to be conservative in terms of giving stock out over the course of the future.

Great. Thanks, so much.

Speaker 2: over the course of the future.

And with that there are no further questions I will hand, the call back to Julian Thank.

Speaker 6: And with that, there are no further questions. I will hand the call back to Jillian. Thank you so much for joining our Q3 2023 Live Q&A. We look forward to updating you again next quarter.

Thank you so much for joining our Q3 2023 live Q&A, we look forward to updating you again next quarter.

Uh huh.

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