UNITED STATES SECURITIES and EXCHANGE COMMISSION Washington, D.C
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Table of Contents As filed with the Securities and Exchange Commission on May 7, 2021 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________to__________ Commission File No. 333-251656-01 VIMEO HOLDINGS, INC.* (Exact name of registrant as specified in its charter) Delaware 85-4334195 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 555 West 18th Street, New York, New York 10011 (Address of registrant's principal executive offices) (212) 314-7300 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S- T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of April 30, 2021, the following shares of the registrant's common stock were outstanding: Common Stock 90 Class B common stock 10 Total 100 *The Registrant is currently named Vimeo Holdings, Inc. In connection with the consummation of the spin-off described in this Quarterly Report on Form 10-Q, Vimeo Holdings, Inc. plans to change its name to "Vimeo, Inc." Table of Contents Explanatory Note On December 22, 2020, IAC/InterActiveCorp ("IAC") announced that its Board of Directors approved a plan to spin-off its full stake in Vimeo, Inc. ("Vimeo") to IAC shareholders. IAC's Vimeo business will be separated from the remaining businesses of IAC through a series of transactions (which we refer to as the "Spin-off") that, if completed in their entirety, will result in the transfer of IAC's Vimeo business to Vimeo Holdings, Inc. ("SpinCo"), a wholly-owned subsidiary of IAC, with SpinCo becoming an independent, separately traded public company through a spin-off from IAC, and Vimeo, Inc., the IAC subsidiary that currently holds the Vimeo business, becoming a wholly-owned subsidiary of SpinCo. In connection with the foregoing, SpinCo will be renamed as Vimeo, Inc. and Vimeo will be renamed as Vimeo.com, Inc. SpinCo became a reporting company under the Securities Exchange Act of 1934 upon effectiveness of its registration statement on Form S-4 on April 7, 2021. Given the Spin-off has not yet been consummated, the financial statements of Vimeo and SpinCo are separately presented in this Quarterly Report on Form 10-Q. Following completion of the Spin-off, which is expected to occur on May 25, 2021, SpinCo will report consolidated financial results, which will include Vimeo. TABLE OF CONTENTS Page Number PART I Item 1. Consolidated Financial Statements 4 Vimeo, Inc. and Subsidiaries Consolidated Balance Sheet 4 Consolidated Statement of Operations 5 Consolidated Statement of Comprehensive Operations 6 Consolidated Statement of Shareholders' Equity 7 Consolidated Statement of Cash Flows 8 Note 1—The Company and Summary of Significant Accounting Policies 9 Note 2—Income Taxes 11 Note 3—Fair Value Measurements 12 Note 4—Revolving Credit Facility 13 Note 5—Shareholders' Equity 14 Note 6—Accumulated Other Comprehensive Loss 15 Note 7—Earnings (Loss) Per Share 15 Note 8—Consolidated Financial Statement Details 16 Note 9—Contingencies 17 Note 10—Related Party Transactions 18 Vimeo Holdings, Inc. and Subsidiary Consolidated Balance Sheet 20 Note 1—Organization 21 Note 2—Summary of Significant Accounting Policies 21 Note 3—Shareholder Equity 21 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3. Quantitative and Qualitative Disclosures about Market Risk 36 Item 4. Controls and Procedures 37 PART II Item 1. Legal Proceedings 38 Item 1A. Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 Item 6. Exhibits 42 Signatures 43 Table of Contents PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements VIMEO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) March 31, 2021 December 31, 2020 (In thousands, except par value amounts) ASSETS Cash and cash equivalents $ 316,305 $ 110,011 Accounts receivable, net 14,121 12,785 Other current assets 11,335 7,932 Total current assets 341,761 130,728 Leasehold improvements and equipment, net 3,320 3,321 Goodwill 219,337 219,337 Intangible assets with definite lives, net 8,967 10,854 Other non-current assets 11,124 6,839 TOTAL ASSETS $ 584,509 $ 371,079 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Accounts payable, trade $ 2,797 $ 3,324 Promissory note due on demand—related party — 44,565 Deferred revenue 147,766 137,436 Accrued expenses and other current liabilities 40,102 47,432 Total current liabilities 190,665 232,757 Long-term debt—related party — 50,000 Other long-term liabilities 4,710 3,242 Commitments and contingencies SHAREHOLDERS' EQUITY: Class A Voting common stock, $0.01 par value; 150,000 shares authorized; 92,789 and 83,656 shares issued and outstanding, respectively 928 837 Class B Non-Voting common stock, $0.01 par value; 150,000 shares authorized; 66,285 shares issued and outstanding 663 663 Preferred stock $0.01 par value; 50,000 shares authorized; no shares issued and outstanding — — Additional paid-in-capital 667,348 366,676 Accumulated deficit (279,696) (283,009) Accumulated other comprehensive loss (109) (87) Total shareholders' equity 389,134 85,080 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 584,509 $ 371,079 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 4 Table of Contents VIMEO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended March 31, 2021 2020 (In thousands, except per share data) Revenue $ 89,422 $ 56,968 Cost of revenue (exclusive of depreciation shown separately below) 24,956 18,358 Gross profit 64,466 38,610 Operating expenses: Research and development expense 21,475 15,293 Sales and marketing expense 32,069 25,125 General and administrative expense 14,518 12,204 Depreciation 115 58 Amortization of intangibles 1,887 3,123 Total operating expenses 70,064 55,803 Operating loss (5,598) (17,193) Interest expense (64) — Interest expense–related party (726) (2,453) Other income (expense), net 10,086 (59) Earnings (loss) before income taxes 3,698 (19,705) Income tax provision (385) (555) Net earnings (loss) attributable to Class A Voting common stock and Class B Non-Voting common stock shareholders $ 3,313 $ (20,260) Per share information attributable to Class A Voting common stock and Class B Non-Voting common stock shareholders: Basic and diluted earnings (loss) per share $ 0.02 $ (0.14) Stock-based compensation expense by function: Cost of revenue $ 20 $ 4 Research and development expense 1,720 460 Sales and marketing expense 322 157 General and administrative expense 2,850 1,395 Total stock-based compensation expense $ 4,912 $ 2,016 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 5 Table of Contents VIMEO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS (Unaudited) Three Months Ended March 31, 2021 2020 (In thousands) Net earnings (loss) attributable to Class A Voting common stock and Class B Non-Voting common stock shareholders $ 3,313 $ (20,260) Other comprehensive loss: Change in foreign currency translation (22) (120) Total other comprehensive loss (22) (120) Comprehensive income (loss) attributable to Class A Voting common stock and Class B Non-Voting common stock $ 3,291 $ (20,380) The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 6 Table of Contents VIMEO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Three Months Ended March 31, 2021 and 2020 (Unaudited) Class A Voting common stock, Class B Non-Voting common Accumulated $0.01 par value stock, $0.01 par value Additional Other Total Paid-in- Accumulated Comprehensive Shareholders' $ Shares $ Shares Capital Deficit Loss Equity (In thousands) Balance as of December 31, 2020 $ 837 83,656 $ 663 66,285 $ 366,676 $ (283,009) $ (87) $ 85,080 Net earnings attributable to Class A Voting common stock and Class B Non-Voting common stock shareholders — — — — — 3,313 — 3,313 Other comprehensive loss — — — — — — (22) (22) Stock-based compensation expense — — — — 4,912 — — 4,912 Issuance of common stock to IAC/InterActiveCorp as reimbursement for settlement of Vimeo, Inc.