Vimeo revenue jumps 54 percent in 2018, but it is still making a loss

Reuters reported that Vimeo revenue jumped 54 percent in 2018, paying subscribers near 1 million.

Its 2018 revenue of $160 million — disclosed for the first time by IAC — rose from $103.3 million in the previous year, while the number of paying subscribers climbed 9 percent year-over-year to about 952,000 by the end of December.

Although Vimeo’s revenue is expected to rise “20 to 30 percent in the near-term,” according to its Chief Executive Anjali Sud, the video service is far from making a profit as it burns cash on product development and aggressive marketing to popularize its brand.

This reminds me of an analogy I came across a few days back.

How to make easy $10,000 revenue:

1. Buy $11,000 worth of salt.
2. Sell for $10,000.
3. Boom. $10,000 in revenue.

Whenever someone shares their revenue numbers, but not their expenses/profits/margins, take it with $1,000 grains worth’s of salt.

— Marc Köhlbrugge (@marckohlbrugge) February 5, 2019

In this scenario, we can take these additional steps:

1. Buy $20,000 worth of salt
2. Sell for $16,000.
3. Now you get a 60% increase in revenue.

People often get too caught up with revenue figures without looking deeper to understand the actual health of a company. That being said, the same applies in the opposite direction. Figures can make the situation look worse than it is if you don’t get to see the bigger picture, or if you look at the numbers with misleading or even wrong information.