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As filed with the Securities and Exchange Commission on November 3, 2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended September 30, 2022
Or
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☐ | 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
VIMEO, INC.
(Exact name of registrant as specified in its charter)
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Delaware | | 85-4334195 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
330 West 34th Street, 5th Floor New York, New York 10001
(Address of registrant's principal executive offices)
(212) 524-8791
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class | Trading Symbol | Name of Exchange on Which Registered |
Common Stock, par value $0.01 per share | VMEO | 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.
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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 28, 2022, the following shares of the registrant's common stock were outstanding:
| | | | | |
Common Stock | 157,045,161 | |
Class B common stock | 9,399,250 | |
Total | 166,444,411 | |
TABLE OF CONTENTS
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Item 5. | Other Information | #SectionPage# |
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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:
•our limited operating history as a pure software-as-a-service (“SaaS”) company and our limited history of selling such plans on a sales-assisted basis,
•we have a history of losses,
•our prior rapid growth may not be indicative of future performance,
•our total addressable market may prove to be smaller than we expect,
•our ability to read data and make forecasts may be limited,
•we may need additional funding as we continue to invest in research and development and expand internationally,
•we may not have the right product/market fit,
•we may not be able to attract free users or paid subscribers,
•we may not be able to convert our free users into subscribers,
•competition in our market is intense,
•we may not be able to scale our business effectively,
•we may experience service interruptions,
•hosting and delivery costs may increase unexpectedly, our success depends on our ability to reach customers and acquire subscribers through digital app stores,
•our business involves hosting large quantities of user content,
•we may face liability for hosting a variety of tortious or unlawful materials,
•we collect, store and process large amounts of content and personal information and any loss of or unauthorized access to such data could materially impact our business,
•the impact of the COVID-19 pandemic on our business,
•we have been the target of cyberattacks by malicious actors, 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.
PART I
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
| | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| (In thousands, except par value amounts) |
ASSETS | | | |
Cash and cash equivalents | $ | 272,870 | | | $ | 321,900 | |
Accounts receivable, net | 31,338 | | | 29,451 | |
Prepaid expenses and other current assets | 17,765 | | | 18,811 | |
Total current assets | 321,973 | | | 370,162 | |
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Leasehold improvements and equipment, net | 1,371 | | | 2,868 | |
Goodwill | 245,406 | | | 242,586 | |
Intangible assets with definite lives, net | 6,702 | | | 11,008 | |
Other non-current assets | 28,874 | | | 22,737 | |
TOTAL ASSETS | $ | 604,326 | | | $ | 649,361 | |
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LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
LIABILITIES: | | | |
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Accounts payable, trade | $ | 5,675 | | | $ | 17,501 | |
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Deferred revenue | 169,369 | | | 173,167 | |
Accrued expenses and other current liabilities | 63,398 | | | 67,385 | |
Total current liabilities | 238,442 | | | 258,053 | |
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Other long-term liabilities | 19,045 | | | 20,713 | |
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Commitments and contingencies | | | |
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SHAREHOLDERS' EQUITY: | | | |
Common stock, $0.01 par value; 1,600,000 shares authorized; 157,024 and 156,708 shares issued and outstanding, respectively | 1,570 | | | 1,567 | |
Class B common stock, $0.01 par value; 400,000 shares authorized; 9,399 shares issued and outstanding | 94 | | | 94 | |
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Preferred stock, $0.01 par value; 100,000 shares authorized; no shares issued and outstanding | — | | | — | |
Additional paid-in-capital | 756,631 | | | 704,796 | |
Accumulated deficit | (410,252) | | | (335,776) | |
Accumulated other comprehensive loss | (1,204) | | | (86) | |
Total shareholders' equity | 346,839 | | | 370,595 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 604,326 | | | $ | 649,361 | |
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (In thousands, except per share data) |
Revenue | $ | 108,133 | | | $ | 100,090 | | | $ | 327,464 | | | $ | 285,558 | |
Cost of revenue (exclusive of depreciation shown separately below) | 25,247 | | | 25,189 | | | 78,881 | | | 75,916 | |
Gross profit | 82,886 | | | 74,901 | | | 248,583 | | | 209,642 | |
Operating expenses: | | | | | | | |
Research and development expense | 34,378 | | | 26,683 | | | 104,524 | | | 75,221 | |
Sales and marketing expense | 43,554 | | | 37,790 | | | 129,790 | | | 110,107 | |
General and administrative expense | 26,461 | | | 20,590 | | | 84,783 | | | 56,616 | |
Depreciation | 141 | | | 297 | | | 2,054 | | | 597 | |
Amortization of intangibles | 1,234 | | | 1,055 | | | 3,866 | | | 4,526 | |
Total operating expenses | 105,768 | | | 86,415 | | | 325,017 | | | 247,067 | |
Operating loss | (22,882) | | | (11,514) | | | (76,434) | | | (37,425) | |
Interest expense | (124) | | | (124) | | | (367) | | | (310) | |
Interest expense–related party | — | | | — | | | — | | | (726) | |
Other income (expense), net | 2,199 | | | (64) | | | 3,712 | | | 10,165 | |
Loss before income taxes | (20,807) | | | (11,702) | | | (73,089) | | | (28,296) | |
Income tax (provision) benefit | (609) | | | 37 | | | (1,387) | | | (448) | |
Net loss | $ | (21,416) | | | $ | (11,665) | | | $ | (74,476) | | | $ | (28,744) | |
| | | | | | | |
Per share information: | | | | | | | |
Basic and diluted loss per share | $ | (0.13) | | | $ | (0.07) | | | $ | (0.46) | | | $ | (0.18) | |
| | | | | | | |
| | | | | | | |
Stock-based compensation expense by function: | | | | | | | |
Cost of revenue | $ | 297 | | | $ | 159 | | | $ | 698 | | | $ | 348 | |
Research and development expense | 7,908 | | | 3,872 | | | 19,329 | | | 11,340 | |
Sales and marketing expense | 2,977 | | | 1,183 | | | 6,352 | | | 3,003 | |
General and administrative expense | 8,212 | | | 5,720 | | | 25,880 | | | 15,850 | |
Total stock-based compensation expense | $ | 19,394 | | | $ | 10,934 | | | $ | 52,259 | | | $ | 30,541 | |
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (In thousands) |
Net loss | $ | (21,416) | | | $ | (11,665) | | | $ | (74,476) | | | $ | (28,744) | |
Other comprehensive (loss) income: | | | | | | | |
Change in foreign currency translation | (566) | | | 29 | | | (1,118) | | | 30 | |
Total other comprehensive (loss) income | (566) | | | 29 | | | (1,118) | | | 30 | |
Comprehensive loss | $ | (21,982) | | | $ | (11,636) | | | $ | (75,594) | | | $ | (28,714) | |
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three and Nine Months Ended September 30, 2022
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common stock, $0.01 par value | | Class B common stock, $0.01 par value | | | | | | Additional Paid-in-Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Total Shareholders' Equity | | | | | | |
| | $ | | Shares | | $ | | Shares | | | | | | | | | | | | | | | | | |
| | (In thousands) | | | | | | |
Balance at June 30, 2022 | | $ | 1,570 | | | 156,977 | | | $ | 94 | | | 9,399 | | | | | | | | | | | $ | 737,239 | | | $ | (388,836) | | | $ | (638) | | | $ | 349,429 | | | | | | | |
Net loss | | — | | | — | | | — | | | — | | | | | | | | | | | — | | | (21,416) | | | — | | | (21,416) | | | | | | | |
Other comprehensive loss | | — | | | — | | | — | | | — | | | | | | | | | | | — | | | — | | | (566) | | | (566) | | | | | | | |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | | | | | | | | | 19,394 | | | — | | | — | | | 19,394 | | | | | | | |
Amounts related to settlement of equity awards | | — | | | 47 | | | — | | | — | | | | | | | | | | | (2) | | | — | | | — | | | (2) | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2022 | | $ | 1,570 | | | 157,024 | | | $ | 94 | | | 9,399 | | | | | | | | | | | $ | 756,631 | | | $ | (410,252) | | | $ | (1,204) | | | $ | 346,839 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2021 | | $ | 1,567 | | | 156,708 | | | $ | 94 | | | 9,399 | | | | | | | | | | | $ | 704,796 | | | $ | (335,776) | | | $ | (86) | | | $ | 370,595 | | | | | | | |
Net loss | | — | | | — | | | — | | | — | | | | | | | | | | | — | | | (74,476) | | | — | | | (74,476) | | | | | | | |
Other comprehensive loss | | — | | | — | | | — | | | — | | | | | | | | | | | — | | | — | | | (1,118) | | | (1,118) | | | | | | | |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | | | | | | | | | 52,259 | | | — | | | — | | | 52,259 | | | | | | | |
Amounts related to settlement of equity awards | | 3 | | | 316 | | | — | | | — | | | | | | | | | | | (424) | | | — | | | — | | | (421) | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2022 | | $ | 1,570 | | | 157,024 | | | $ | 94 | | | 9,399 | | | | | | | | | | | $ | 756,631 | | | $ | (410,252) | | | $ | (1,204) | | | $ | 346,839 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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-Capital | | Accumulated Deficit | | Accumulated 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 awards | | 7 | | | 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 awards | | 9 | | | 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-off | | 1,500 | | | 149,981 | | | 94 | | | 9,399 | | | (928) | | | (92,789) | | | (663) | | | (66,285) | | | (3) | | | — | | | — | | | — | |
Restricted Stock Award | | 49 | | | 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 | |
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| (In thousands) |
Cash flows from operating activities: | | | |
Net loss | $ | (74,476) | | | $ | (28,744) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | | | |
Stock-based compensation expense | 52,259 | | | 30,541 | |
Amortization of intangibles | 3,866 | | | 4,526 | |
Depreciation | 2,054 | | | 597 | |
Provision for credit losses | 7,750 | | | 502 | |
| | | |
Gain on the sale of an asset | — | | | (10,151) | |
Non-cash lease expense | 4,164 | | | 2,096 | |
Other adjustments, net | (719) | | | 442 | |
Changes in assets and liabilities: | | | |
Accounts receivable | (11,916) | | | (6,690) | |
Prepaid expenses and other assets | (1,556) | | | (7,412) | |
Accounts payable and other liabilities | (18,697) | | | 8,383 | |
Deferred revenue | (1,485) | | | 33,500 | |
Net cash (used in) provided by operating activities | (38,756) | | | 27,590 | |
Cash flows from investing activities: | | | |
Acquisitions, net of cash acquired | 21 | | | — | |
Capital expenditures | (670) | | | (302) | |
Proceeds from the sale of an asset | 1,611 | | | 7,862 | |
| | | |
Net cash provided by investing activities | 962 | | | 7,560 | |
Cash flows from financing activities: | | | |
Proceeds from sale of common stock, net of fees | — | | | 299,750 | |
| | | |
Principal payments on related-party debt | — | | | (94,565) | |
| | | |
Deferred financing costs | — | | | (1,440) | |
Withholding taxes paid related to equity awards | (5,160) | | | (8,942) | |
Proceeds from exercise of stock options | 18 | | | 906 | |
Contingent consideration payment | (4,816) | | | — | |
Other | (621) | | | — | |
Net cash (used in) provided by financing activities | (10,579) | | | 195,709 | |
Total cash (used) provided | (48,373) | | | 230,859 | |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (765) | | | (46) | |
Net (decrease) increase in cash and cash equivalents and restricted cash | (49,138) | | | 230,813 | |
Cash and cash equivalents and restricted cash at beginning of period | 322,345 | | | 110,037 | |
Cash and cash equivalents and restricted cash at end of period | $ | 273,207 | | | $ | 340,850 | |
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION
Description of Business
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 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.
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 considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The information included in this Form 10-Q should be read in conjunction with the annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 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 Vimeo equity awards and borrowings from and principal payments to certain IAC subsidiaries, are reflected in the accompanying consolidated statement of cash flows as operating activities. Amounts related to the settlement of Vimeo 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" and "Other long-term liabilities".
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 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.
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 accompanying consolidated financial statements and footnotes thereto. Actual results could differ from these estimates.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Significant estimates and judgments inherent in the preparation of the accompanying 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.
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.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
NOTE 2—REVENUE
Revenue Recognition
Vimeo's revenue is derived primarily from SaaS subscription fees paid by customers for self-serve and sales-assisted 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 generally 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 term of the applicable subscription period or expected completion of its performance obligation is one year or less. During the nine months ended September 30, 2022, Vimeo recognized $166.0 million of revenue that was included in the deferred revenue balance at December 31, 2021. 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. The current and non-current deferred revenue balances are included in the accompanying consolidated balance sheet as follows:
| | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| (In thousands) |
Deferred revenue | $ | 169,369 | | | $ | 173,167 | |
Other long-term liabilities | 1,363 | | | 1,291 | |
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.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Assets Recognized from the Costs to Obtain a Contract with a Customer
Vimeo has determined 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. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods. For sales incentive programs where the customer relationship period is one year or less, Vimeo has elected the practical expedient to expense the costs as incurred. Vimeo capitalizes and amortizes mobile app store fees over the term of the applicable subscription.
The current and non-current balances of capitalized costs to obtain a contract with a customer are included in the accompanying consolidated balance sheet as follows:
| | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| (In thousands) |
Prepaid expenses and other current assets | $ | 3,674 | | | $ | 3,498 | |
Other non-current assets | 7,002 | | | 6,196 | |
NOTE 3—INCOME TAXES
Vimeo was included within IAC’s tax group for purposes of federal and consolidated state income tax return filings through the Spin-off. For 2021, 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. For 2022, the income tax provision is computed for Vimeo on a true standalone basis.
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 with discrete items recorded in the period. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained, or Vimeo's tax environment changes.
For the three months ended September 30, 2022 and 2021, Vimeo recorded an income tax provision of $0.6 million and an income tax benefit of less than $0.1 million, respectively. For the nine months ended September 30, 2022 and 2021, Vimeo recorded an income tax provision of $1.4 million and $0.4 million, respectively. Vimeo is in a net operating loss ("NOL") position for federal and state income tax purposes. The largest deferred tax assets are NOLs. Vimeo has recorded a valuation allowance for the majority of 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.
At September 30, 2022 and December 31, 2021, unrecognized tax benefits were $3.2 million and $2.5 million, respectively. If unrecognized tax benefits at September 30, 2022 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, 2023. 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.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 4—FAIR VALUE MEASUREMENTS
Vimeo's financial instruments that are measured at fair value on a recurring basis are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2022 |
| 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 | $ | 252,079 | | | $ | — | | | $ | — | | | $ | 252,079 | |
Time deposits | — | | | 615 | | | — | | | 615 | |
Total | $ | 252,079 | | | $ | 615 | | | $ | — | | | $ | 252,694 | |
| | | | | | | |
Liabilities: | | | | | | | |
Contingent consideration arrangements | $ | — | | | $ | — | | | $ | 8,307 | | | $ | 8,307 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 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 | $ | 305,836 | | | $ | — | | | $ | — | | | $ | 305,836 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Liabilities: | | | | | | | |
Contingent consideration arrangements | $ | — | | | $ | — | | | $ | 12,200 | | | $ | 12,200 | |
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.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:
| | | | | | | | | | | |
| Three Months Ended September 30, 2022 | | Nine Months Ended September 30, 2022 |
| (In thousands) |
Balance at beginning of period | $ | 13,108 | | | $ | 12,200 | |
| | | |
Total net losses (gains): | | | |
Included in operating loss | 15 | | | (654) | |
Measurement period adjustments | — | | | 1,577 | |
Settlements | (4,816) | | | (4,816) | |
Balance at end of period | $ | 8,307 | | | $ | 8,307 | |
Contingent Consideration Arrangements
At September 30, 2022, the Company had two outstanding contingent consideration arrangements related to the acquisitions of Wibbitz Ltd. (“Wibbitz”) and WIREWAX Ltd. (“Wirewax”), which were completed on November 10, 2021 and December 6, 2021, respectively. The maximum contingent payments related to these arrangements are $15.0 million for Wibbitz and $10.0 million for Wirewax. The acquisition date fair values of the Wibbitz and Wirewax contingent consideration arrangements were $5.6 million and $8.2 million, respectively, and were finalized when the Company recorded measurement period adjustments to increase the provisional amounts recorded by approximately $1.6 million in the first quarter of 2022. These changes were recorded as an increase to "Goodwill" in the accompanying consolidated balance sheet. The allocation of the purchase price for these acquisitions was completed in the second quarter of 2022.
The fair value of each of the contingent consideration arrangements was determined by using probability weighted analyses to estimate the contingent payments, adjusted to fair value by applying a discount rate. The Company remeasures the fair value of each contingent consideration arrangement each reporting period and any adjustments are recognized in "General and administrative expense" in the consolidated statement of operations.
The contingent consideration arrangement for Wibbitz is dependent upon the amount of revenue generated by Wibbitz subscribers who migrate to the Vimeo platform by December 31, 2022. During the three and nine months ended September 30, 2022, the fair value of the contingent consideration liability was reduced by approximately $0.3 million and $1.9 million, respectively, due primarily to a decrease in forecasted Wibbitz revenue during the earnout period.
The contingent consideration arrangement for Wirewax is based upon achievement of an integration milestone and attainment of certain revenue thresholds within two years of the acquisition. The integration milestone was met during the quarter ended September 30, 2022, resulting in a payment of $4.8 million in July 2022, which is consistent with the fair value estimated as of the acquisition date. Additionally during the three and nine months ended September 30, 2022, the fair value of the contingent consideration arrangement based on the attainment of certain revenue thresholds was increased by $0.3 million and $1.2 million, respectively, due primarily to the expected attainment of certain revenue thresholds earlier than previously estimated.
At September 30, 2022, $8.3 million of contingent consideration is included in “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheet. At December 31, 2021, $12.2 million of contingent consideration is included in "Other long-term liabilities" in the accompanying consolidated balance sheet.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 5—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, 2022, 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, 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, 2022, there were no outstanding borrowings under the Credit Facility. In December 2021, Vimeo agreed to cease any borrowings under certain non-USD currencies due to the applicable LIBOR benchmark rates no longer being available publicly from and after December 31, 2021 and until an amendment is made to the Credit Facility to replace LIBOR with an alternative benchmark.
NOTE 6—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.
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 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 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.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Stock Repurchase Program
On February 25, 2022, the Board of Directors authorized a stock repurchase program of up to $50 million of the Company’s common stock through open market or private transactions. Under the stock repurchase authorization, Vimeo may repurchase shares of its common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations, as determined by management. Vimeo's repurchases may be made through 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or other transactions. No date has been established for the completion of the stock repurchase program. Vimeo intends to fund repurchases under the repurchase program from cash on hand. Vimeo has no obligation to repurchase any shares under the repurchase program and may suspend or discontinue it at any time. There were no shares repurchased during the nine months ended September 30, 2022.
NOTE 7—ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss consisting of foreign currency translation adjustments is as follows:
| | | | | | | | | | | |
| Three Months Ended September 30, |
| 2022 | | 2021 |
| (In thousands) |
Balance at beginning of period | $ | (638) | | | $ | (86) | |
Other comprehensive (loss) income | (566) | | | 29 | |
Balance at end of period | $ | (1,204) | | | $ | (57) | |
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| (In thousands) |
Balance at beginning of period | $ | (86) | | | $ | (87) | |
Other comprehensive (loss) income | (1,118) | | | 30 | |
Balance at end of period | $ | (1,204) | | | $ | (57) | |
At both September 30, 2022 and 2021, there was no tax benefit or provision on accumulated other comprehensive loss.
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. In 2021, Vimeo entered into a Restricted Stock Agreement with Joseph Levin, Chairman of the Vimeo Board of Directors, which provided for a grant of 4,870,500 shares of common stock ("Vimeo Restricted Shares"). 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 has been made as the Vimeo Restricted Shares do not participate in losses of the Company.
The computation of basic and diluted loss per share attributable to common shareholders is as follows:
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (In thousands, except per share data) |
Numerator: | | | | | | | |
Net loss | $ | (21,416) | | | $ | (11,665) | | | $ | (74,476) | | | $ | (28,744) | |
Denominator: (a) (b) | | | | | | | |
| | | | | | | |
| | | | | | | |
Denominator for loss per share—weighted average shares | 161,529 | | | 160,064 | | | 161,433 | | | 159,624 | |
| | | | | | | |
Loss per share attributable to common stock shareholders: |
Loss per share | $ | (0.13) | | | $ | (0.07) | | | $ | (0.46) | | | $ | (0.18) | |
_____________________
(a) Vimeo Restricted Shares were included in shares of common stock issued and outstanding at September 30, 2022 in the accompanying consolidated balance sheet, but were excluded from the computation of shares outstanding for EPS purposes because the number of shares that ultimately vest is subject to the satisfaction of certain service and market-based conditions.
(b) For both the three and nine months ended September 30, 2022, and three and nine months ended September 30, 2021, approximately 35.1 million and 25.7 million, respectively, potentially dilutive equity awards were excluded from the computation of diluted EPS because the impact would have been anti-dilutive.
NOTE 9—FINANCIAL STATEMENT DETAILS
Cash and Cash Equivalents and Restricted Cash
The reconciliation of cash and cash equivalents and restricted cash reported within the accompanying consolidated balance sheet to the total amounts shown in the accompanying consolidated statement of cash flows is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 | | September 30, 2021 | | December 31, 2020 |
| (In thousands) |
Cash and cash equivalents | $ | 272,870 | | | $ | 321,900 | | | $ | 340,618 | | | $ | 110,011 | |
Restricted cash included in Prepaid expenses and other current assets | 337 | | | 445 | | | 232 | | | 26 | |
Total cash and cash equivalents and restricted cash as shown in the accompanying consolidated statement of cash flows | $ | 273,207 | | | $ | 322,345 | | | $ | 340,850 | | | $ | 110,037 | |
Restricted cash at September 30, 2022 and December 31, 2021 primarily consisted of deposits related to a lease and corporate credit cards.
Restricted cash at September 30, 2021 primarily consisted of a deposit related to a lease.
Restricted cash at December 31, 2020 primarily consisted of a deposit related to corporate credit cards.
VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Credit Losses
The changes in the allowance for credit losses for the nine months ended September 30, 2022 and 2021 are as follows:
| | | | | | | | | | | |
| 2022 | | 2021 |
| (In thousands) |
Balance at beginning of period | $ | 1,324 | | | $ | 476 | |
Provision for credit losses | 7,750 | | | 502 | |
Write-offs charged against the allowance | (4,726) | | | (916) | |
Recoveries collected | 757 | | | 432 | |
Currency translation adjustment | (11) | | | — | |
Balance at end of period | $ | 5,094 | | | $ | 494 | |
The increase in the allowance for credit losses for the nine months ended September 30, 2022 was due primarily to growth in the sales-assisted business, as well as the implementation of a new billing system beginning in the fourth quarter of 2021 that led to an increase in aged accounts receivable balances in the first half of 2022.
Accumulated Amortization and Depreciation
Accumulated amortization and depreciation within the accompanying consolidated balance sheet are as follows:
| | | | | | | | | | | |
Asset Category | September 30, 2022 | | December 31, 2021 |
| (In thousands) |
ROU assets included in Other non-current assets | $ | 8,868 | | | $ | 8,548 | |
Leasehold improvements and equipment | $ | 640 | | | $ | 1,591 | |
Intangible assets with definite lives | $ | 43,558 | | | $ | 39,692 | |
Other income (expense), net
The components of "Other income (expense), net" are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (In thousands) |
Foreign exchange gains (losses), net | $ | 961 | | | $ | (19) | | | $ | 2,016 | | | $ | (48) | |
Interest income | 1,238 | | | 21 | | | 1,696 | | | 62 | |
(Loss) gain on sale of an asset | — | | | (66) | | | — | | | |