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vmeo-20210930
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Table of Contents
As filed with the Securities and Exchange Commission on November 5, 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 September 30, 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. 001-40420
https://cdn.kscope.io/374f69bce4964b2625bbda8089bdd9c8-vmeo-20210930_g1.jpg
VIMEO, INC.
(Exact name of registrant as specified in its charter)
Delaware85-4334195
 (State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
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:
Title of Each ClassTrading SymbolName of Exchange on Which Registered
Common Stock, par value $0.01 per shareVMEO
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
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 October 29, 2021, the following shares of the registrant's common stock were outstanding:
Common Stock155,894,179 
Class B common stock9,399,250 
Total165,293,429 



TABLE OF CONTENTS
  Page
Number


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "may, "could," "should," "would," "anticipates," "estimates," "expects," "plans," "projects," "forecasts," "intends," "targets," "seeks" and "believes," as well as variations of these words, among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to Vimeo’s future results of operations and financial condition, business strategy, and plans and objectives of management for future operations.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions. Actual results could differ materially from those contained in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:
•the risks inherent in Vimeo's separation from IAC/InterActiveCorp ("IAC"), completed on May 25, 2021,
•the risks that the anticipated benefits from the separation will not be realized,
•changes in the regulatory landscape including, in particular, changes in laws that might increase the liability of online intermediaries for user-generated content,
•reputational damage caused by problematic user content or our decisions to remove (or not remove) it,
•changes in policies implemented by third party platforms upon which we rely for traffic and distribution of mobile apps,
•increased competition in the online video category,
•our ability to convert visitors into uploaders and uploaders into paying subscribers,
•our ability to retain paying subscribers by maintaining and improving our value proposition,
•our ability to provide video storage and streaming in a cost-effective manner,
•our ability to successfully attract enterprise customers,
•our ability to protect sensitive data from unauthorized access,
•the integrity, quality, scalability and redundancy of our systems, technology and infrastructure (and those of third parties with which we do business),
•our ability to successfully operate in and expand into additional international markets,
•our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties,
•foreign exchange currency rate fluctuations,
•the impact of the COVID-19 pandemic on our business,
•adverse changes in economic conditions,
•the possibility that our historical consolidated and combined results may not be indicative of our future results, and
•the risks described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.

Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by these cautionary statements.

Table of Contents

PART I
FINANCIAL INFORMATION
Item 1.    Consolidated Financial Statements
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 2021December 31, 2020
(In thousands, except par value amounts)
ASSETS  
Cash and cash equivalents$340,618 $110,011 
Accounts receivable, net16,649 12,785 
Prepaid expenses and other current assets16,256 7,932 
Total current assets373,523 130,728 
Leasehold improvements and equipment, net3,035 3,321 
Goodwill219,337 219,337 
Intangible assets with definite lives, net6,328 10,854 
Other non-current assets18,243 6,839 
TOTAL ASSETS$620,466 $371,079 
LIABILITIES AND SHAREHOLDERS' EQUITY  
LIABILITIES:  
Accounts payable, trade$13,300 $3,324 
Promissory note due on demand—related party— 44,565 
Deferred revenue168,169 137,436 
Accrued expenses and other current liabilities52,066 47,432 
Total current liabilities233,535 232,757 
Long-term debt—related party— 50,000 
Other long-term liabilities7,606 3,242 
Commitments and contingencies
SHAREHOLDERS' EQUITY: 
Common stock, $0.01 par value; 1,600,000 shares authorized; 155,847 shares issued and outstanding at September 30, 2021
1,558 — 
Class B common stock, $0.01 par value; 400,000 shares authorized; 9,399 shares issued and outstanding at September 30, 2021
94 — 
Class A Voting common stock of Vimeo OpCo, $0.01 par value; 150,000 shares authorized; 83,656 shares issued and outstanding at December 31, 2020
— 837 
Class B Non-Voting common stock of Vimeo OpCo, $0.01 par value; 150,000 shares authorized; 66,285 shares issued and outstanding at December 31, 2020
— 663 
Preferred stock $0.01 par value; 100,000 and 50,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
— — 
Additional paid-in-capital689,483 366,676 
Accumulated deficit(311,753)(283,009)
Accumulated other comprehensive loss(57)(87)
Total shareholders' equity379,325 85,080 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$620,466 $371,079 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (In thousands, except per share data)
Revenue$100,090 $75,130 $285,558 $199,432 
Cost of revenue (exclusive of depreciation shown separately below)25,189 22,869 75,916 64,126 
Gross profit74,901 52,261 209,642 135,306 
Operating expenses:
Research and development expense26,683 16,476 75,221 48,031 
Sales and marketing expense37,790 25,643 110,107 77,287 
General and administrative expense20,590 10,954 56,616 34,141 
Depreciation 297 106 597 266 
Amortization of intangibles1,055 6,613 4,526 12,651 
Total operating expenses86,415 59,792 247,067 172,376 
Operating loss(11,514)(7,531)(37,425)(37,070)
Interest expense (124)— (310)— 
Interest expense–related party— (2,160)(726)(6,985)
Other (expense) income, net(64)89 10,165 (134)
Loss before income taxes(11,702)(9,602)(28,296)(44,189)
Income tax benefit (provision)37 (205)(448)(654)
Net loss$(11,665)$(9,807)$(28,744)$(44,843)
Per share information:
Basic and diluted loss per share$(0.07)$(0.06)$(0.18)$(0.28)
Stock-based compensation expense by function:  
Cost of revenue$159 $26 $348 $51 
Research and development expense3,872 1,317 11,340 2,483 
Sales and marketing expense1,183 210 3,003 540 
General and administrative expense5,720 1,973 15,850 6,483 
Total stock-based compensation expense$10,934 $3,526 $30,541 $9,557 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (In thousands)
Net loss$(11,665)$(9,807)$(28,744)$(44,843)
Other comprehensive income (loss):
Change in foreign currency translation29 34 30 (17)
Total other comprehensive income (loss)29 34 30 (17)
Comprehensive loss$(11,636)$(9,773)$(28,714)$(44,860)


The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three and Nine Months Ended September 30, 2021
(Unaudited)
 
Common stock, $0.01 par value
Class B common stock, $0.01 par value
Class A Voting common stock of Vimeo OpCo, $0.01 par value
Class B Non-Voting common stock of Vimeo OpCo, $0.01 par value
Additional Paid-in-CapitalAccumulated DeficitAccumulated
Other
Comprehensive
Loss		Total
Shareholders' Equity
 $Shares$Shares$Shares$Shares
 (In thousands)
Balance at June 30, 2021$1,551 155,065 $94 9,399 $— — $— — $677,667 $(300,088)$(86)$379,138 
Net loss— — — — — ——— — (11,665)— (11,665)
Other comprehensive income— — — — — ——— — — 29 29 
Stock-based compensation expense— — — — — ——— 10,934 — — 10,934 
Amounts related to settlement of equity awards7 782 — — — ——— 882 — — 889 
Balance at September 30, 2021$1,558 155,847 $94 9,399 $— — $— — $689,483 $(311,753)$(57)$379,325 
Balance at December 31, 2020$— — $— — $837 83,656$663 66,285 $366,676 $(283,009)$(87)$85,080 
Net loss— — — — — ——— — (28,744)— (28,744)
Other comprehensive income— — — — — ——— — — 30 30 
Stock-based compensation expense— — — — — ——— 30,541 — — 30,541 
Amounts related to settlement of equity awards9 995 — — 1 133—— (7,857)— — (7,847)
Issuance of common stock, net of fees— — — — 90 9,000—— 299,660 — — 299,750 
Exchange of shares related to Spin-off1,500 149,981 94 9,399 (928)(92,789)(663)(66,285)(3)— — — 
Restricted Stock Award49 4,871 — — — — — — (49)— — — 
Other— — — — — — — — 515 — — 515 
Balance at September 30, 2021$1,558 155,847 $94 9,399 $— — $— — $689,483 $(311,753)$(57)$379,325 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three and Nine Months Ended September 30, 2020
(Unaudited)
 
Class A Voting common stock of Vimeo OpCo, $0.01 par value
Class B Non-Voting common stock of Vimeo OpCo, $0.01 par value
Additional Paid-in-CapitalAccumulated DeficitAccumulated
Other
Comprehensive
Loss		Total
Shareholders' Equity
 $Shares$Shares
 (In thousands)
Balance at June 30, 2020$750 75,000 $663 66,281 $230,969 $(236,335)$(283)$(4,236)
Net loss— — — — — (9,807)— (9,807)
Other comprehensive income— — — — — — 34 34 
Stock-based compensation expense— — — — 3,526 — — 3,526 
Amounts related to settlement of equity awards— — — 5 — — — — 
Other— — — — 861 — — 861 
Balance at September 30, 2020$750 75,000 $663 66,286 $235,356 $(246,142)$(249)$(9,622)
Balance at December 31, 2019$750 75,000 $660 66,021 $223,754 $(201,299)$(232)$23,633 
Net loss— — — — — (44,843)— (44,843)
Other comprehensive loss— — — — — — (17)(17)
Stock-based compensation expense— — — — 9,557 — — 9,557 
Amounts related to settlement of equity awards— — 3 265 — — — 3 
Other— — — — 2,045 — — 2,045 
Balance at September 30, 2020$750 75,000 $663 66,286 $235,356 $(246,142)$(249)$(9,622)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
 20212020
 (In thousands)
Cash flows from operating activities:  
Net loss$(28,744)$(44,843)
Adjustments to reconcile net loss to net cash provided by operating activities: 
Stock-based compensation expense30,541 9,557 
Amortization of intangibles4,526 12,651 
Depreciation597 266 
Provision for credit losses502 1,546 
Gain on the sale of an asset(10,151)(288)
Other adjustments, net442 3,131 
Changes in assets and liabilities:
Accounts receivable(6,690)(8,723)
Prepaid expenses and other assets(5,316)(2,664)
Accounts payable and other liabilities8,383 1,833 
Deferred revenue33,500 46,621 
Net cash provided by operating activities27,590 19,087 
Cash flows from investing activities:
Capital expenditures(302)(704)
Proceeds from the sale of an asset7,862 288 
Other, net— 98 
Net cash provided by (used in) investing activities7,560 (318)
Cash flows from financing activities:
Proceeds from sale of common stock, net of fees299,750 — 
Principal payments on related-party debt(94,565)(35,457)
Proceeds from issuance of related-party debt— 28,600 
Deferred financing costs(1,440)— 
Withholding taxes paid related to equity awards(8,942)(1,132)
Proceeds from exercise of stock options906 — 
Net cash provided by (used in) financing activities195,709 (7,989)
Total cash provided230,859 10,780 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(46)(46)
Net increase in cash and cash equivalents and restricted cash230,813 10,734 
Cash and cash equivalents and restricted cash at beginning of period110,037 1,963 
Cash and cash equivalents and restricted cash at end of period$340,850 $12,697 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1—THE COMPANY AND BASIS OF PRESENTATION
Nature of Operations
Vimeo is the world’s leading all-in-one video software solution, providing the full breadth of video tools through a software-as-a-service model. Vimeo’s comprehensive and cloud-based tools empower its users to create, collaborate and communicate with video on a single, turnkey platform.
As used herein, "Vimeo," "we," "our" or "us" and similar terms in these consolidated financial statements refer to Vimeo, Inc. (formerly Vimeo Holdings, Inc.) and its subsidiaries (unless the context requires otherwise).
Spin-off
On May 25, 2021, Vimeo completed its separation from the remaining businesses of IAC/InterActiveCorp ("IAC") through a series of transactions (which we refer to as the “Spin-off”) that resulted in the pre-transaction stockholders of IAC directly owning shares in both IAC and Vimeo, and in Vimeo becoming a separately traded public company.
The Spin-off was structured to include the following steps:

•Certain restructuring transactions, including, among other things, the transfer to Vimeo of IAC’s equity interests in Vimeo.com, Inc. ("Vimeo OpCo," formerly known as Vimeo, Inc.), and the repayment by Vimeo OpCo of all outstanding intercompany debt owed to IAC and its subsidiaries (other than Vimeo OpCo’s subsidiaries).

•Amending IAC’s certificate of incorporation to provide for:

◦the reclassification of each share of IAC common stock, par value $0.001 into (i) one share of IAC common stock, par value $0.0001 and (ii) 1/100th of a share of IAC Series 1 mandatorily exchangeable preferred stock that was automatically exchanged for a number of shares of Vimeo common stock equal to an exchange ratio of 1.6235 (the "Spin-off Exchange Ratio," with holders receiving cash in lieu of any fractional shares of Vimeo common stock resulting, after aggregation, from the reclassification); and

◦the reclassification of each share of IAC Class B common stock, par value $0.001 into (i) one share of IAC Class B common stock, par value $0.0001 and (ii) 1/100th of a share of IAC Series 2 mandatorily exchangeable preferred stock that was automatically exchanged for a number of shares of Vimeo Class B common stock equal to the Spin-off Exchange Ratio (with holders receiving cash in lieu of any fractional shares of Vimeo Class B common stock resulting, after aggregation, from the reclassification).

•The effectiveness of certain other amendments to IAC's certificate of incorporation.

Prior to the Spin-off, IAC indirectly owned approximately 88% of Vimeo OpCo's outstanding shares, with the remaining Vimeo OpCo shares held by third parties. In connection with the Spin-off, the Vimeo OpCo shareholders agreement required IAC to cause the conversion of the Vimeo OpCo shares held by such non-IAC Vimeo OpCo stockholders into Vimeo common stock, which we refer to as the “Vimeo minority exchange.” The shareholders agreement also required that the non-IAC Vimeo OpCo stockholders be compensated (in the form of additional Vimeo equity) for dilution resulting from the issuance of Vimeo options in respect of vested IAC employee option awards that were adjusted in the Spin-off. Each such Vimeo OpCo shareholder was compensated for their ratable portion of 50% of the intrinsic value of the Vimeo options so issued, measured at the time of the Spin-off. The Vimeo Merger, as defined below, was completed pre-market on May 25, 2021 and satisfied these obligations.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
On the terms and subject to the conditions of the Agreement and Plan of Merger, as amended and restated on March 12, 2021 (the “Vimeo Merger Agreement”), following the Spin-off on May 25, 2021, Stream Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Vimeo (“Merger Sub”) merged with and into Vimeo OpCo, with Vimeo OpCo surviving as a wholly-owned subsidiary of Vimeo (the “Vimeo Merger”). Each share of Vimeo OpCo capital stock held prior to the Vimeo Merger by a non-IAC Vimeo OpCo stockholder was converted into 1.0143 ("Vimeo Merger Exchange Ratio") shares of Vimeo common stock (with holders receiving cash in lieu of any fractional shares of Vimeo common stock resulting, after aggregation, from the Vimeo Merger).
Additionally, each restricted stock unit ("RSU") corresponding to shares of Vimeo OpCo ("Vimeo OpCo RSU") was converted into an RSU corresponding to shares of Vimeo common stock (“Vimeo RSU”), with the number of shares covered by such Vimeo RSU equal to the number of shares covered by the Vimeo OpCo RSU times the Vimeo Merger Exchange Ratio. Each stock appreciation right ("SAR") corresponding to shares of Vimeo OpCo (“Vimeo OpCo SAR”) was converted into a SAR corresponding to shares of Vimeo common stock (“Vimeo SAR”), with the number of shares covered by such Vimeo SAR equal to the number of shares covered by the Vimeo OpCo SAR times the Vimeo Merger Exchange Ratio and the per share exercise price of such Vimeo SAR equal to the per share exercise price of the Vimeo OpCo SAR divided by the Vimeo Merger Exchange Ratio.
Basis of Presentation and Consolidation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2020 and notes thereto included in the registration statement on Form S-1 of Vimeo, Inc. filed with the SEC on May 26, 2021.
All intercompany transactions and balances between and among Vimeo and its subsidiaries have been eliminated. All related party transactions between Vimeo and IAC and its subsidiaries, other than amounts related to the settlement of equity awards and borrowings from and principal payments to certain IAC subsidiaries, are reflected in the accompanying consolidated statement of cash flows as "Accounts payable and other liabilities" as operating activities. Amounts related to the settlement of equity awards and borrowings from and principal payments to certain IAC subsidiaries, are reflected in the accompanying consolidated statement of cash flows as financing activities.
All related party balances between Vimeo and IAC and its subsidiaries, other than borrowings from and principal payments to certain IAC subsidiaries, are reflected in the accompanying consolidated balance sheet within "Accrued expenses and other current liabilities." Borrowings from and principal payments to certain IAC subsidiaries, are reflected in the accompanying consolidated balance sheet as "Promissory note due on demand—related party" and "Long-term debt—related party."
Prior to the Spin-off, the consolidated financial statements of Vimeo OpCo and subsidiaries were prepared on a standalone basis and were derived from the historical accounting records of Vimeo OpCo and IAC. The accompanying consolidated financial statements reflect the historical financial position, results of operations and cash flows of Vimeo and its consolidated subsidiaries since their respective dates of acquisition by Vimeo and the allocation to Vimeo of certain IAC corporate expenses relating to Vimeo based on the historical accounting records of IAC. The allocation of certain IAC corporate expenses is reflected in the accompanying consolidated balance sheet within "Additional paid-in-capital." Additionally, income taxes were computed for Vimeo on an as if standalone, separate tax return basis and payments to and refunds from IAC for Vimeo’s share of IAC’s consolidated state tax return liabilities have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows. In management’s opinion, the assumptions underlying the historical consolidated financial statements of Vimeo, including the basis on which the expenses have been allocated from IAC, are reasonable. However, these allocations may not reflect the expenses that Vimeo would have incurred as an independent, standalone company for the periods presented.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Accounting Estimates
Management of Vimeo is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial statements in accordance with GAAP that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from these estimates.

Significant estimates and judgments inherent in the preparation of the consolidated financial statements include those related to: the carrying value of accounts receivable, including the determination of the allowance for credit losses; the determination of the estimated customer relationship period for certain costs to obtain a contract with a customer; the carrying value of right-of-use assets ("ROU assets"); the useful lives and recoverability of intangible assets with definite lives; the recoverability of goodwill; contingencies; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. Vimeo bases its estimates, judgments and assumptions on historical experience, its forecasts and budgets and other factors that Vimeo considers relevant.
Revenue Recognition
Vimeo's revenue is derived primarily from SaaS subscription fees paid by customers for self-serve and enterprise subscription plans. Revenue, in the amount that reflects the consideration Vimeo expects to be entitled to, is recognized on a straight-line basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer. Subscription periods range from one month to three years with the most common being an annual subscription and are generally non-cancellable.

Deferred Revenue
Deferred revenue consists of payments that are received or are contractually due in advance of Vimeo's performance. Vimeo’s deferred revenue is reported on a contract-by-contract basis at the end of each reporting period. Vimeo classifies deferred revenue as current when the remaining term of the applicable subscription period or expected completion of Vimeo's performance obligation is one year or less. The current and non-current deferred revenue balances at September 30, 2021 were $168.2 million and $1.3 million, respectively. Non-current deferred revenue is included in "Other long-term liabilities" in the accompanying consolidated balance sheet. The current and non-current deferred revenue balances at December 31, 2020 were $137.4 million and $0.8 million, respectively. During the nine months ended September 30, 2021, Vimeo recognized $130.8 million of revenue that was included in the deferred revenue balance at December 31, 2020. During the nine months ended September 30, 2020, Vimeo recognized $80.3 million of revenue that was included in the deferred revenue balance at December 31, 2019.
Practical Expedients and Exemptions
As permitted under the practical expedient available under Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, Vimeo does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which Vimeo recognizes revenue at the amount which Vimeo has the right to invoice for services performed.
Assets Recognized from the Costs to Obtain a Contract with a Customer
Vimeo has determined that certain costs, primarily commissions paid to employees pursuant to certain sales incentive programs, and mobile app store fees meet the requirements to be capitalized as a cost of obtaining a contract. Commissions paid to employees pursuant to certain sales incentive programs are amortized over the estimated customer relationship period. Vimeo calculates the estimated customer relationship period as the average customer life, which is based on historical data, and includes renewal periods because renewal commissions are not commensurate with the initial commission. For sales incentive programs where the customer relationship period is one year or less, Vimeo has elected to expense the costs as incurred, as permitted under the practical expedient. Vimeo generally capitalizes and amortizes mobile app store fees over the term of the applicable subscription.

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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The current and non-current capitalized costs to obtain a contract with a customer are included in "Prepaid expenses and other current assets" and "Other non-current assets" in the accompanying consolidated balance sheet and were $3.3 million and $5.8 million, and $2.7 million and $4.9 million, at September 30, 2021 and December 31, 2020, respectively.
Recent Accounting Pronouncements
There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect on the consolidated results of operations, financial condition or cash flows of Vimeo.
NOTE 2—INCOME TAXES
Vimeo is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings through the Spin-off. For all periods presented, the income tax provision was computed for Vimeo on an as-if-standalone separate tax return basis. Payments to and refunds from IAC for Vimeo's share of IAC’s consolidated state tax return liabilities, calculated on this basis, have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows.
At the end of each interim period, Vimeo estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or Vimeo's tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs.
For the three months ended September 30, 2021 and 2020, Vimeo recorded an income tax benefit of less than $0.1 million and an income tax provision of $0.2 million, respectively. For the nine months ended September 30, 2021 and 2020, Vimeo recorded an income tax provision of $0.4 million and $0.7 million, respectively. Vimeo is in a net operating loss ("NOL") position for federal and state income tax purposes. The largest deferred tax assets are the federal and state NOLs. Vimeo has recorded a valuation allowance for its net deferred tax assets because it has concluded that it is more likely than not that the NOLs will not be utilized due to its history of pre-tax losses.

Vimeo recognizes interest and penalties related to unrecognized tax benefits, if applicable, in income tax provision. There are currently no accruals for interest or penalties.
At September 30, 2021 and December 31, 2020, unrecognized tax benefits were $2.1 million and $1.9 million, respectively. If unrecognized tax benefits at September 30, 2021 are subsequently recognized, there would be no impact to income tax provision due to the valuation allowance on deferred tax assets. Vimeo believes no unrecognized tax benefits would decrease by September 30, 2022.

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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Vimeo is routinely under income tax audits by federal, state, local and foreign authorities as a result of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service ("IRS") has substantially completed its audit of IAC's federal income tax returns for the years ended December 31, 2013 through 2017, and has begun its audit of the years ended December 31, 2018 through 2019, which includes the operations of Vimeo. The statutes of limitations for the years 2013 through 2017 have been extended to June 30, 2022. Various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes payable include unrecognized tax benefits that are considered to be sufficient to pay assessments that may result from the examination of prior year tax returns. Vimeo considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on the liquidity, results of operations or financial condition of Vimeo, these matters are subject to inherent uncertainties and management's view of these matters may change in the future.

NOTE 3—FAIR VALUE MEASUREMENTS
Vimeo categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:
•Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.
•Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of Vimeo's Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.
•Level 3: Unobservable inputs for which there is little or no market data and for which Vimeo must develop its own assumptions, based on the best information available in the circumstances, about the inputs that market participants would use in pricing the assets or liabilities.
The following tables present Vimeo's financial instruments that are measured at fair value on a recurring basis:
 September 30, 2021
 Quoted Market
Prices for
Identical Assets in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Fair Value
Measurements
 (In thousands)
Assets:    
Cash equivalents:    
Money market funds$329,837 $— $— $329,837 
Time deposits— 542 — 542 
Total$329,837 $542 $— $330,379 

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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 December 31, 2020
 Quoted Market
Prices for
Identical Assets in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Fair Value
Measurements
 (In thousands)
Assets:    
Cash equivalents:    
Money market funds$104,852 $— $— $104,852 
Time deposits— 544 — 544 
Total$104,852 $544 $— $105,396 
Vimeo's non-financial assets, such as goodwill, intangible assets with definite lives, ROU assets and leasehold improvements and equipment, are adjusted to fair value only if an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
NOTE 4—REVOLVING CREDIT FACILITY
On February 12, 2021, Vimeo OpCo entered into a $100 million revolving credit facility (the "Credit Facility"), which expires on February 12, 2026. Any borrowings under the Credit Facility are guaranteed by Vimeo's wholly-owned material domestic subsidiaries, if any, and are secured by substantially all assets of Vimeo and any guarantors, subject to certain exceptions. At September 30, 2021, the commitment fee, which is based on the consolidated net leverage ratio most recently reported and the average daily amount of the available revolving commitments, was 20 basis points. Any borrowings under the Credit Facility would bear interest, at Vimeo's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is determined by reference to a pricing grid based on Vimeo’s consolidated net leverage ratio. The financial covenants require Vimeo to maintain a minimum liquidity of not less than $50.0 million until December 31, 2022 and, thereafter, at the end of each quarterly test period, a consolidated net leverage ratio (as defined in the agreement) of not more than 5.5 to 1.0. The Credit Facility also contains customary affirmative and negative covenants, including covenants that would limit Vimeo’s ability to pay dividends or make distributions on or repurchase certain equity interests in the event a default has occurred or Vimeo’s consolidated net leverage ratio exceeds 4.0 to 1.0. At September 30, 2021, there were no outstanding borrowings under the Credit Facility.
NOTE 5—SHAREHOLDERS' EQUITY
Description of Vimeo Common Stock and Vimeo Class B Common Stock
Except as described herein, shares of Vimeo common stock and Vimeo Class B common stock are identical.
In general, the holders of Vimeo common stock vote together as a single class with the holders of Vimeo Class B common stock on all matters, including the election of directors; provided, however, that the holders of Vimeo common stock, acting as a single class, are entitled to elect twenty-five percent (25%) of the total number of Vimeo directors, rounded up to the next whole number in the event of a fraction. Each outstanding share of Vimeo common stock and Vimeo Class B common stock entitles the holder to one vote per share and ten votes per share, respectively.
The holders of shares of Vimeo common stock and the holders of shares of Vimeo Class B common stock are entitled to receive, share for share, such dividends as may be declared by Vimeo's Board of Directors out of funds legally available for the payment of dividends. In the event of a liquidation, dissolution, distribution of assets or winding-up of Vimeo, the holders of shares of Vimeo common stock and Vimeo Class B common stock are entitled to receive, share for share, all the assets available for distribution after payment of a proper amount to the holders of any series of Vimeo preferred stock, including any series that may be issued in the future.
Upon completion of the Spin-off, Vimeo amended and restated its certificate of incorporation such that it is authorized to issue 1,600,000,000 shares of Vimeo common stock and 400,000,000 shares of Vimeo Class B common stock.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Description of Preferred Stock
Vimeo's Board of Directors is authorized to provide for the issuance of shares of preferred stock, and any class or series thereof, and to assign the designations, powers, preferences and rights to each such class or series and any qualifications, limitations or restrictions. There have been no preferred stock issuances to date.
Sale of Common Stock
In January 2021, Vimeo OpCo raised $300 million of equity capital via the sale of approximately 6.2 million shares of its Class A Voting common stock for $200 million, or $32.41 per share, at a $5.2 billion pre-money valuation, and approximately 2.8 million shares of its Class A Voting common stock for $100 million, or $35.35 per share, at a $5.7 billion pre-money valuation.
NOTE 6—ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss consists of foreign currency translation adjustments:
Three Months Ended September 30,
20212020
(In thousands)
Balance at July 1$(86)$(283)
Other comprehensive income29 34 
Balance at September 30$(57)$(249)

Nine Months Ended September 30,
20212020
(In thousands)
Balance at January 1$(87)$(232)
Other comprehensive income (loss)30 (17)
Balance at September 30$(57)$(249)
At both September 30, 2021 and 2020, there was no income tax benefit or provision related to accumulated other comprehensive loss.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 7—STOCK-BASED COMPENSATION
Vimeo has one active plan (the “2021 Plan”) which was adopted in connection with the Spin-off. The 2021 Plan replaced the Vimeo, LLC 2012 Incentive Plan, the Vimeo, Inc. 2017 Incentive Plan and the Vimeo, Inc. 2019 Incentive Plan (including the Israeli Appendix), collectively referred to as the “Prior Plans.” The Prior Plans were automatically terminated and replaced and superseded by the 2021 Plan upon the completion of the Spin-off. Any and all awards granted under the Prior Plans, remain in effect on their pre Spin-off terms pursuant to the 2021 Plan, subject to adjustment in connection with the Spin-off and the Vimeo Merger. The 2021 Plan also covers vested IAC stock options that were converted into Vimeo stock options in connection with the Spin-off.
The 2021 plan authorizes the Company to grant equity awards to its employees, officers, directors and consultants covering an aggregate of up to 10,000,000 shares of the Company's common stock. Equity awards provided for in the 2021 Plan include SARs, stock options, RSUs, and other stock-based awards related to shares of Vimeo common stock. The exercise price of stock options and SARs cannot be less than the market value of Vimeo common stock on the grant date. In connection with the settlement of stock-based awards, shares of Vimeo common stock may be issued either from authorized but unissued shares or from treasury stock.
Stock-based compensation expense primarily includes amounts related to the Company’s SARs, including performance-based SARs, RSUs, and Vimeo Restricted Shares (as described further below). The amount of stock-based compensation expense recognized is net of estimated forfeitures, as the expense recorded is based on awards that are ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate. At September 30, 2021, there was $56.8 million of unrecognized compensation cost, net of estimated forfeitures, related to all outstanding SARs and RSUs which is expected to be recognized over a weighted-average period of 2.3 years. Additionally, there was $84.0 million of unrecognized compensation cost related to the Vimeo Restricted Shares, which is expected to be recognized over the remaining vesting period of 9.1 years. For more information on the impact of the Spin-off and the Vimeo Merger on equity awards refer to "Note 1—The Company and Basis of Presentation."
Stock appreciation rights and stock options
SARs and stock options outstanding at September 30, 2021 and changes during the nine months ended September 30, 2021 were as follows:
SARs and stock optionsWeighted average exercise priceWeighted average remaining contractual term in yearsAggregate intrinsic value
(Shares and intrinsic value in thousands)
Outstanding Vimeo OpCo SARs at December 31, 2020
13,897$6.42 
Granted6335.35 
Exercised(305)5.52 
Forfeited(178)6.56 
Outstanding Vimeo OpCo SARs prior to Spin-off13,477 6.57 
Outstanding Vimeo SARs after Spin-off (a)
13,686 6.49 
Conversion of Vested IAC Stock Options (b)
6,201 4.33 
Exercised(1,208)5.20 
Forfeited(55)6.75 
Outstanding Vimeo SARs and Stock Options at September 30, 2021
18,624 5.85 6.3$438,026 
Exercisable Vimeo SARs and Stock Options at September 30, 202113,571 $5.23 5.6$327,581 
____________________
(a)    Reflects the conversion of unvested Vimeo OpCo SARs into Vimeo SARs by multiplying each award of Unvested Vimeo OpCo SARs prior to Spin-off by the Vimeo Merger Exchange Ratio.
(b)    Reflects the conversion of vested IAC stock options into vested Vimeo stock options by multiplying each vested award of IAC stock options prior to the Spin-off by the Spin-off Exchange Ratio.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Restricted stock units

RSUs outstanding at September 30, 2021 and changes during the nine months ended September 30, 2021 were as follows:
Number of SharesWeighted Average
Grant Date
Fair Value
(Shares in thousands)
Unvested Vimeo OpCo RSUs at December 31, 2020
88 $17.33 
Granted1,734 35.35 
Forfeited(5)35.35 
Unvested Vimeo OpCo RSUs prior to Spin-off1,817 34.48 
Unvested Vimeo RSUs after Spin-off (a)
1,844 34.70 
Granted354 42.17 
Forfeited(21)$38.54 
Unvested Vimeo RSUs at September 30, 2021
2,177 $35.88 
_____________________
(a)    Reflects the conversion of unvested Vimeo OpCo RSUs into Vimeo RSUs by multiplying each award of Unvested Vimeo OpCo RSUs prior to Spin-off by the Vimeo Merger Exchange Ratio.

Vimeo Restricted Shares
In connection with the Spin-off, pursuant to which Vimeo equity awards were issued as part of the adjustment of certain outstanding IAC equity awards, Vimeo entered into a Restricted Stock Agreement (the “RSA”) with Joseph Levin, Chairman of the Vimeo board of directors and IAC’s Chief Executive Officer. The terms of the RSA were determined pursuant to the existing requirements of Mr. Levin’s restricted stock agreement with IAC as in effect prior to the Spin-off.
The RSA provides for a grant of 4,870,500 shares of Vimeo common stock (“Vimeo Restricted Shares”), that cliff vest on November 5, 2030, based on satisfaction of certain Vimeo stock price targets and Mr. Levin’s continuous service as a Vimeo director through the vesting date. The number of Vimeo Restricted Shares subject to the RSA is the result of the 3,000,000 shares of IAC Restricted common stock, subject to Mr. Levin’s restricted stock agreement with IAC, multiplied by the Spin-off Exchange Ratio.
Mr. Levin may elect to accelerate vesting of the Vimeo Restricted Shares, effective on the 6th, 7th, 8th, or 9th anniversary of the original effective date of the IAC restricted stock agreement (November 5, 2020) (the “Effective Date”), in which case performance will be measured through such date, and Mr. Levin will receive a pro-rated portion of the award (based on the years elapsed from the Effective Date) and any remaining shares will be forfeited. The applicable stock price goals are proportionately lower on the earlier vesting dates.
The value of the Vimeo Restricted Shares was determined using a lattice model that incorporated a Monte Carlo simulation of Vimeo's stock price and IAC’s stock price as this award contains a market condition. The attribution of the estimated fair values of the awards (the sum of the fair value of the original IAC award as of the Effective Date, plus any incremental value as a result of the modification to the original IAC award) between IAC and Vimeo, was determined on a proportional basis as a function of the estimated fair value of each respective award as of the date of the Spin-off. The amount allocated to Vimeo was $87.3 million and is expected to be recognized over the remaining requisite service period through November 2030 subject to Mr. Levin’s continuous service as a Vimeo director.
Modification
In connection with the Spin-off and Vimeo Merger, the Company modified certain equity awards resulting in a modification charge of $14.0 million, of which $1.7 million and $8.7 million was recognized as stock-based compensation expense in the three and nine months ended September 30, 2021. The remaining charge is expected to be recognized over the vesting period of the modified awards.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 8—LOSS PER SHARE
Vimeo common stock and Class B common stock are treated as one class of common stock for earnings per share ("EPS") purposes as both classes of common stock participate in earnings, dividends and other distributions on the same basis. The Vimeo Restricted Shares are participating securities because these shares are unvested and have a non-forfeitable dividend right in the event the Company declares a cash dividend to common shareholders and participates in all other distributions of the Company in the same manner as all other Vimeo common shareholders. No allocation of undistributed losses was made for the three and nine months ended September 30, 2021 as the Vimeo Restricted Shares do not participate in losses of the Company.
The following table sets forth the computation of basic and diluted loss per share attributable to common shareholders.

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (In thousands, except per share data)
Numerator:
Net loss$(11,665)$(9,807)$(28,744)$(44,843)
Denominator: (a) (b) (c)
Denominator for loss per share—weighted average shares160,064 159,381 159,624 159,381