So hopefully, that gives you some of the green shoots kind of how we’re getting to the math on it. And then, Adam, I don’t know if you want to add anything on sort of how you’re thinking about products and how they’re performing.
Adam Gross: Yes, sure. From the product side, one of the things that I think we’re seeing across the industry is, obviously, there’s a tremendous amount of innovation and excitement in video, in general, and we’re seeing our customers asking us to help them make the video more strategic for them. You’re seeing and how we’re modifying and evolving our products, especially on the enterprise side, to be more solution-oriented to fundamentally be more strategic to our customers and hopefully create more value and allow us to capture more value as part of that. Last quarter, we launched Vimeo Marketing, which is kind of the first pillar of our new enterprise product strategy. You’ll see we’ve got a lot more stuff like that in the pipeline in the coming quarters.
And the early results are promising. In Q4, we have some great customer wins, Hermès, Southwest, Toyota, Domino’s, Gartner. We’re really seeing a lot of adoption across a broad swath of industries, which is a great early indication that our product value proposition is being well received.
Operator: Our next question will come from Brian Fitzgerald at Wells Fargo. Brian?
Brian Fitzgerald: Thanks guys. On the sales execution and the macro issues, you talked about last quarter, I think it was lead handling and also maybe some macro softness with respect to SMBs. Could you give us an update on what you saw in the current quarter? How did you address those lead handling issues? Are you starting to see improvement and any signs in the environment for SMBs?
Gillian Munson: Sure. Let me just take some of the macro stuff. Obviously, we’re not economists. The environment is what it is. No meaningful change in the environment that we’re operating in that was noticeable in the quarter. In terms of the sales team, we made nice progress during the quarter. We still have work to do there, but we feel like those – the issues that we highlighted last quarter we’re working our way through and working beyond. Adam, I don’t know if you want to add anything there?
Adam Gross: Yes, I’d just say that we’re continuing to be proactive and aggressive in optimizing both the systems and structure of our sales organization. We made some changes that we rolled out at the beginning of this quarter. Reorganizing how we look at territories, looking at our systems about how we’re around lead handling and other issues and continue to be very focused, and we’re optimistic about the opportunities for optimization there.
Brian Fitzgerald: Got it. Thanks guys. And I have one if I could get one quick follow-up on – you talked about AII investments. I think we’re starting to see some of that in the product in terms of multi-language closed captioning. Any other key areas of opportunity you see there in terms of using AI to address key customer pain points.
Adam Gross: Yes. Obviously, AI is a tremendously exciting area in video for our customers, and I would encourage all of you to stay tuned. We’ve got a lot of exciting products in the pipeline.
Operator: Our next question will come from William Kerr at TD Cowen. Will?
William Kerr: Great. Thanks for the questions. So first off, you guys have been able to generate some solid free cash flow over the last few quarters. Just wondering how we should think about your ability to convert EBITDA to free cash flow in ’24 and beyond. And then I have one additional question.
Gillian Munson: Yes. I mean the free cash flow and EBITDA story here really shows you what a great business model Vimeo has. And even while we make the transitions that we’ve been talking about to get the business to where we want to get it to in terms of setup, we’re able to have really strong EBITDA results. As you saw our guide was for essentially flat EBITDA. That’s even taking in another $5 million of cash cost replace some equity with cash, given where the stock is. Our cash flow was in excess of the EBITDA in 2023. I think it will be again in 2024. That’s the beauty of a subscription business. you oftentimes get the cash upfront, and we think that trend will continue for the business.
William Kerr: Great. Thanks. And then in terms of the investments, you talked about there being some areas that may take some time to develop and looking out even into 2025. Can you just talk about the balance of your R&D investments in terms of enterprise versus self-serve? And then are there areas that do you feel you need to invest other than on the R&D side, like in the sales force or do you feel like you’re pretty squared away in those other areas?
Gillian Munson: Let me just take the areas generally, and then I’ll have Adam give you a little bit more color on kind of where we’re focused. Just one reminder on the R&D front. Much of Vimeo’s product line spans the customer bases. So a lot of the investments we make actually benefit most all of our customers across the board. But when we look at the blend of investment, we’re really trying to make sure we’re freeing up investment dollars to put in the R&D area to really come up with the best products. We are feeling emboldened by what we’re seeing out there in the business that, that’s the right strategy and you’re seeing us move that way. In a few weeks ago, we made a small reduction in force in our G&A areas and just to right-size us for where we want to be. So in general, what we are looking for is about flat head count, and there will be a mix shift towards the R&D group as we work our way through the year.
