S-1 1 tm2116929-1_s1.htm S-1 tm2116929-1_s1 - none - 29.1095206s
As filed with the Securities and Exchange Commission on May 26, 2021
Registration No. 333-     
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VIMEO, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
7372
(Primary Standard Industrial
Classification Code Number)
85-4334195
(I.R.S. Employer
Identification Number)
555 West 18th Street
New York, New York 10011
(212) 314-7300
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Michael A. Cheah
General Counsel and Secretary
Jessica Tracy
Vice President, Associate General Counsel – Securities & Governance
Vimeo, Inc.
555 West 18th Street
New York, New York 10011
(212) 314-7300
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Andrew J. Nussbaum, Esq.
Jenna E. Levine, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
Approximate Date of Commencement of Proposed Sale of the Securities to the Public:
As soon as practicable after this Registration Statement is declared effective
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 7(a)(2)(B) of the Securities Act. ☒
CALCULATION OF REGISTRATION FEE
Title of Securities to be Registered
Amount to be
Registered
Proposed Maximum
Offering
Price Per Security
Proposed Maximum
Aggregate Offering
Price
Amount of
Registration Fee
Common Stock, par value $0.01 per share
1,263,132(1) $ 55,622,017.62(2) $ 6,068.37(3)
(1)
This registration statement covers shares of common stock, par value $0.01 per share, of Vimeo, Inc. (“Vimeo” and such shares of common stock, “Vimeo Common Stock”) that may be acquired upon exercise of options (“Vimeo Options”) or stock appreciation rights (“Vimeo SARs”) to acquire shares of Vimeo Common Stock held by (1) former employees of IAC/InterActiveCorp (“IAC”) and its subsidiaries (excluding Vimeo, Inc. and its subsidiaries), (2) current employees of IAC’s subsidiaries, (3) former employees of Vimeo, Inc. and its subsidiaries and (4) current and former employees of Match Group, Inc., who, in each case, are not current employees of Vimeo or a subsidiary of Vimeo, and any such individuals’ donees, pledgees, permitted transferees, assignees, successors and others who come to hold any such equity award. The Vimeo Options are outstanding under the Vimeo, Inc. 2021 Stock and Annual Incentive Plan and were converted from options to purchase shares of common stock of IAC (“IAC Options”) in connection with the separation of Vimeo from IAC. The IAC Options were granted under the IAC/InterActiveCorp 2018 Stock and Annual Incentive Plan, the IAC/InterActiveCorp 2013 Stock and Annual Incentive Plan, the IAC/InterActiveCorp 2008 Stock and Annual Incentive Plan and the IAC/InterActiveCorp 2005 Stock and Annual Incentive Plan. The Vimeo SARs are outstanding under the Vimeo, Inc. 2021 Stock and Annual Incentive Plan and were converted from stock appreciation rights covering shares of common stock of Vimeo.com, Inc. in connection with the separation of Vimeo from IAC. The Vimeo SARs were granted under (a) the Vimeo, LLC 2012 Incentive Plan, (b) the Vimeo.com, Inc. (f/k/a Vimeo, Inc.) 2017 Incentive Plan, and (c) the Vimeo.com, Inc. (f/k/a Vimeo, Inc.) 2019 Incentive Plan (including the Israel Appendix). There is also registered hereunder such indeterminate number of additional shares of Vimeo common stock that may become issuable due to anti-dilution adjustments for changes resulting from stock splits, stock dividends, recapitalizations or similar transactions and certain other events as provided for in the terms thereof.
(2)
Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and calculated pursuant to Rule 457(c) and Rule 457(f) under the Securities Act. Such value equals the product of (a) 1,263,132 (the maximum number of shares of Vimeo common stock calculated pursuant to note 1 above), multiplied by (b) $44.04, the average of the high and low prices of the Vimeo common stock as reported on The Nasdaq Global Select Market on May 25, 2021.
(3)
Calculated by multiplying 0.0001091 by the proposed maximum aggregate offering price.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY AND SUBJECT TO COMPLETION, DATED MAY 26, 2021
[MISSING IMAGE: lg_vimeo-4clr.jpg]
The 1,263,132 shares of common stock, par value $0.01 per share, of Vimeo, Inc., a Delaware corporation formerly named “Vimeo Holdings, Inc.” ​(“Vimeo,” “we,” “us,” “our” or the “Company”) covered by the registration statement of which this prospectus forms a part covers options “Vimeo Options” and stock appreciation rights (“Vimeo SARs”) to acquire shares of the common stock of Vimeo that are held by (1) former employees of IAC/InterActiveCorp (“IAC”) and its subsidiaries (excluding Vimeo and its subsidiaries), (2) current employees of IAC’s subsidiaries, (3) former employees of Vimeo, Inc. and its subsidiaries and (4) current and former employees of Match Group, Inc., who, in each case, are not current employees of Vimeo or a subsidiary of Vimeo, and any such individuals’ donees, pledgees, permitted transferees, assignees, successors and others who come to hold any such equity award. The Vimeo Options are outstanding under the Vimeo, Inc. 2021 Stock and Annual Incentive Plan and were converted from options to purchase shares of common stock of IAC (“IAC Options”) in connection with the separation of Vimeo from IAC. The IAC Options were granted under the IAC/InterActiveCorp 2018 Stock and Annual Incentive Plan, the IAC/InterActiveCorp 2013 Stock and Annual Incentive Plan, the IAC/InterActiveCorp 2008 Stock and Annual Incentive Plan and the IAC/InterActiveCorp 2005 Stock and Annual Incentive. The Vimeo SARs are outstanding under the Vimeo, Inc. 2021 Stock and Annual Incentive Plan and were converted from stock appreciation rights covering shares of common stock of Vimeo.com, Inc. (“Vimeo SARs”) in connection with the separation of Vimeo from IAC. The Vimeo SARs were granted under (a) the Vimeo, LLC 2012 Incentive Plan, (b) the Vimeo.com, Inc. (f/k/a Vimeo, Inc.) 2017 Incentive Plan, and (c) the Vimeo.com, Inc. (f/k/a Vimeo, Inc.) 2019 Incentive Plan (including the Israel Appendix). All awards are subject to the terms of the applicable Plan and the applicable award agreement. Any proceeds received by Vimeo from the exercise of stock options covered by the Plans (and issued pursuant to the offering described in this prospectus) will be used for general corporate purposes.
Prior to the Spin-off (as defined below), Vimeo was a wholly-owned subsidiary of IAC. Vimeo common stock is listed on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “VMEO”. Prior to the completion of the Spin-off, there was no established public trading market for Vimeo common stock, although Vimeo common stock traded on a limited, “when-issued” basis on the NASDAQ. “Regular-way” trading of Vimeo common stock began on the first trading day following the completion of the Spin-off.
In reviewing this prospectus, we urge you to read carefully the section entitled “Risk Factors” beginning on page 6 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated [•], 2021

 
TABLE OF CONTENTS
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CERTAIN DEFINITIONS
Unless otherwise indicated or as the context otherwise requires, all references in this prospectus to:

“DGCL” refers to the General Corporation Law of the State of Delaware, as amended;

“Distribution” refers to (i) the contribution of the shares of Vimeo OpCo capital stock owned by IAC Group to Vimeo, (ii) the issuance of IAC Series 1 mandatorily exchangeable preferred stock and IAC Series 2 mandatorily exchangeable preferred stock and (iii) the redemption of IAC Series 1 mandatorily exchangeable preferred stock in exchange for Vimeo common stock and the redemption of IAC Series 2 mandatorily exchangeable preferred stock in exchange for Vimeo Class B common stock, in the case of each of clauses (ii) and (iii), pursuant to the IAC reclassification, taken together;

“employee matters agreement” refers to the employee matters agreement entered into between IAC and Vimeo on May 24, 2021, in the form filed as Exhibit 10.2 to the registration statement of which this prospectus forms a part;

“IAC” refers to IAC/InterActiveCorp, a Delaware corporation;

“IAC board of directors” refers to the board of directors of IAC;

“IAC capital stock” refers to IAC common stock and IAC Class B common stock;

“IAC certificate of incorporation” refers to the restated certificate of incorporation of IAC, as it may be amended from time to time;

“IAC Class B common stock” refers to (i) prior to the IAC reclassification, the shares of Class B common stock, par value $0.001 per share, of IAC, and (ii) from and after the IAC reclassification, the shares of Class B common stock, par value $0.0001 per share, of IAC;

“IAC common stock” refers to (i) prior to the IAC reclassification, the shares of common stock, par value $0.001 per share, of IAC, and (ii) from and after the IAC reclassification, the shares of common stock, par value $0.0001 per share, of IAC;

“IAC Group” refers to IAC Group, LLC, a Delaware limited liability company and a wholly-owned subsidiary of IAC;

“IAC reclassification” refers to (i) the reclassification of each share of IAC par value $0.001 common stock into (x) one share of IAC par value $0.0001 common stock and (y) 1/100th of a share of IAC Series 1 mandatorily exchangeable preferred stock, (ii) the reclassification of each share of IAC par value $0.001 Class B common stock into (x) one share of IAC par value $0.0001 Class B common stock and (y) 1/100th of a share of IAC Series 2 mandatorily exchangeable preferred stock, (iii) the mandatory exchange of each 1/100th of a share of IAC Series 1 mandatorily exchangeable preferred stock into a number of shares of Vimeo common stock equal to the Spin-off exchange ratio of 1.6235, and (iv) the mandatory exchange of each 1/100th of a share of IAC Series 2 mandatorily exchangeable preferred stock into a number of shares of Vimeo Class B common stock equal to the Spin-off exchange ratio of 1.6235, in each case as contemplated by the reclassification charter amendment;

“IAC Series 1 mandatorily exchangeable preferred stock” refers to the Series 1 mandatorily exchangeable preferred stock, par value $0.01 per share, of IAC, with the terms contemplated by the reclassification charter amendment;

“IAC Series 2 mandatorily exchangeable preferred stock” refers to the Series 2 mandatorily exchangeable preferred stock, par value $0.01 per share, of IAC, with the terms contemplated by the reclassification charter amendment;

“Match Separation” refers to the separation of the businesses of Match Group, Inc. from the remaining businesses of the company formerly named “IAC/InterActiveCorp” ​(renamed as Match Group, Inc., and referred to as “Old IAC/New Match” or as “Old IAC” with respect to periods prior to the consummation of the separation) pursuant to a Transaction Agreement, dated as of December 19, 2019 and amended on April 28, 2020 and June 22, 2020, among Old IAC, Match Group Holdings II, LLC (formerly known as Match Group, Inc.) (“Old Match”) and Valentine Merger Sub LLC, an indirect wholly owned subsidiary of Old IAC/New Match. On June 30, 2020,
 
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the separation transactions were completed, resulting in two, separate public companies: (i) Old IAC/New Match, which owns the businesses of Old Match and certain Old IAC financing subsidiaries, and (ii) IAC, which was renamed IAC/InterActiveCorp, and which owns Old IAC’s other businesses;

“Merger Sub” refers to Stream Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Vimeo Holdings;

“Nasdaq” refers to The Nasdaq Global Select Market;

“non-IAC Vimeo OpCo stockholders” refers to the holders of shares of Vimeo OpCo capital stock (other than IAC and its wholly owned subsidiaries) prior to the consummation of the Vimeo merger;

“reclassification charter amendment” refers to the amendment to the IAC certificate of incorporation approved by IAC stockholders that became effective in connection with the closing of the Spin-Off and that provides for the IAC reclassification;

“SEC” refers to the Securities and Exchange Commission;

“separation agreement” refers to the separation agreement entered into between IAC and Vimeo on May 24, 2021, in the form filed as Exhibit 2.1 to the registration statement of which this prospectus forms a part;

“Spin-off” refers to the contribution of the shares of Vimeo OpCo capital stock owned by IAC Group to Vimeo and the IAC reclassification, which taken together resulted in a separation of the Vimeo business from the remaining businesses of IAC;

“Spin-off exchange ratio” refers to 1.6235, which is the number of shares of Vimeo common stock or Vimeo Class B common stock, as applicable, for which each 1/100th of a share of IAC Series 1 mandatorily exchangeable preferred stock or IAC Series 2 mandatorily exchangeable preferred stock, as applicable, will be exchanged;

“Vimeo” refers to Vimeo, Inc., a Delaware corporation formerly named “Vimeo Holdings, Inc.”;

“Vimeo board of directors” refers to the board of directors of Vimeo;

“Vimeo capital stock” refers to Vimeo common stock and Vimeo Class B common stock;

“Vimeo Class B common stock” refers to the shares of Class B common stock, par value $0.01 per share, of Vimeo;

“Vimeo common stock” refers to the shares of common stock, par value $0.01 per share, of Vimeo;

“tax matters agreement” refers to the tax matters agreement entered into between IAC and Vimeo on May 24, 2021, in the form filed as Exhibit 10.1 to the registration statement of which this prospectus forms a part;

“transition services agreement” refers to the transition services agreement entered into between IAC and Vimeo on May 24, 2021, in the form filed as Exhibit 10.3 to the registration statement of which this prospectus forms a part;

“Vimeo OpCo” refers to Vimeo.com, Inc., a Delaware corporation formerly known as “Vimeo, Inc.”;

“Vimeo OpCo capital stock” refers to the Vimeo OpCo voting common stock and Vimeo OpCo non-voting common stock;

“Vimeo merger” refers to the merger of Merger Sub with and into Vimeo OpCo, with Vimeo OpCo as the surviving corporation in the merger, pursuant to the Vimeo merger agreement;

“Vimeo merger agreement” refers to the Agreement and Plan of Merger, as amended and restated on
March 12, 2021, by and among Vimeo, Merger Sub and Vimeo OpCo;

“Vimeo OpCo voting common stock” refers to the Class A Voting Common Stock, par value $0.01 per share, of Vimeo OpCo; and

“Vimeo OpCo non-voting common stock” refers to the Class B Non-Voting Common Stock, par value $0.01 per share, of Vimeo OpCo.
 
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PROSPECTUS SUMMARY
The following is a summary of some of the information contained in this prospectus, and does not contain all of the information that may be relevant to you. In addition to this summary, you should read the entire document carefully, including (1) the risks associated with investing in the common stock of Vimeo as discussed under “Risk Factors,” ​(2) the unaudited pro forma condensed consolidated financial statements for Vimeo as discussed under “Vimeo, Inc. Unaudited Pro Forma Condensed Consolidated Financial Statements” and (3) the historical consolidated financial statements and related notes for Vimeo OpCo and Vimeo, Inc., included as Annex A and Annex B, respectively, to this prospectus. Unless the context otherwise requires, references in this prospectus to “Vimeo” or the “Company” refer to Vimeo, Inc., a Delaware corporation formerly known as “Vimeo Holdings, Inc.,” and its consolidated subsidiaries after the Spin-off. References in this prospectus to “IAC” refer to IAC/InterActiveCorp, a Delaware corporation, and its consolidated subsidiaries (other than, after the Spin-off, Vimeo and its consolidated subsidiaries), unless the context otherwise requires. References in this prospectus to Vimeo’s historical business and operations, and to Vimeo, refer to the Vimeo, Inc. business of IAC prior to the Spin-off and that transferred to Vimeo in connection with the Spin-off. References in this prospectus to the “Spin-off” refer to the separation of the Vimeo business from the remaining businesses of IAC pursuant to the transactions contemplated by the separation agreement.
Vimeo, Inc.
Overview and History
Vimeo, Inc. was incorporated as a Delaware corporation in December 2020 in connection with the Spin-off. Vimeo operates the Vimeo 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 tools empower its users to create and communicate through high-quality video on a single, integrated platform. Vimeo single turnkey solution empowers its users to create, collaborate and communicate with video. And, as businesses face significant barriers to use video today, Vimeo eliminates these barriers and solves essential video needs by offering individual and enterprise subscriptions to its cloud-based software through which users can utilize its easy-to-use video tools. Vimeo’s platform is available to users all over the world.
For information regarding the results of Vimeo’s historical operations, see “Business.” Please also see the discussion under “Vimeo, Inc. Unaudited Pro Forma Condensed Consolidated Financial Statements” and the consolidated financial statements included in Annex A and Annex B.
Summary of Risk Factors
An investment in Vimeo’s common stock is subject to a number of risks. Set forth below are some, but not all, of these risks. Please read the information in the section entitled “Risk Factors,” beginning on page 6, for a more thorough description of these and other risks.

Vimeo may be unable to achieve some or all of the benefits that it expects to achieve through the Spin-off.

If the Spin-off were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Vimeo and its stockholders could suffer material adverse consequences.

Vimeo may not be able to engage in desirable capital-raising or strategic transactions following the Spin-off.

After the Spin-off, actual or potential conflicts of interest may develop between the management and directors of IAC, on the one hand, and the management and directors of Vimeo, on the other hand.

Vimeo or IAC may fail to perform under various transaction agreements that have been executed as part of the Spin-off.

Challenges in commercial, equity and credit markets may adversely affect the expected benefits of the Spin-off, the expected plans or anticipated timeline to complete the Spin-off and Vimeo’s future access to capital on favorable terms.
 
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Vimeo’s accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which it will be subject as a standalone, publicly traded company following the Spin-off.

The terms Vimeo received in its agreements with IAC could be less beneficial than the terms Vimeo may have otherwise received from unaffiliated third parties.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on Vimeo’s business, results of operations or financial condition.

The market price and trading volume of Vimeo securities may be volatile and may face negative pressure.

The dual-class common stock structure of Vimeo may negatively impact the market price of its common stock.

Provisions in the Vimeo certificates of incorporation (including Vimeo’s dual-class structure) and by-laws or Delaware law may discourage, delay or prevent a change of control of Vimeo, or changes in its management and, therefore, depress the trading price of its common stock.

The Vimeo by-laws designate the Delaware Court of Chancery or, in some cases, the federal district courts of the United States as the sole and exclusive forum for certain types of actions or proceedings that may be initiated by its respective stockholders, which could discourage lawsuits against Vimeo and its directors, officers and significant stockholders.

Vimeo has a limited operating history as a pure software-as-a-service company.

Mr. Diller, certain members of his family and Mr. Levin will be able to exercise significant influence over the composition of Vimeo’s Board of Directors, matters subject to stockholder approval and Vimeo’s operations.

Vimeo has a history of losses.

Vimeo’s recent and rapid growth may not be indicative of future performance.

Vimeo’s growth and profitability depend upon a wide variety of factors, some of which are out of Vimeo’s control.

Vimeo’s total addressable market may prove to be smaller than it expects.

Prior to the Spin-off, Vimeo has no experience as a standalone public company.

Vimeo may need additional funding as Vimeo continues to invest in research and development and expand internationally.

Vimeo may not have the right product/market fit.

Vimeo may not be able to convert its free users into subscribers.

Competition in Vimeo’s market is intense.

Vimeo may not be able to scale its business effectively.

Vimeo may experience service interruptions.

Hosting and delivery costs may increase unexpectedly.

The success of Vimeo will depend upon its continued ability to identify, hire, develop, motivate and retain highly skilled individuals worldwide.

Vimeo’s compensation packages may not be sufficient.

Vimeo may fail to attract or retain employees for issues that negatively impact Vimeo’s image.

Vimeo’s success depends, in substantial part, on its ability to market, distribute and monetize its products and services through search engines, digital app stores and social media platforms.

Vimeo depends on integrations with third parties to enable key features of its video services and to acquire new subscribers.
 
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Vimeo depends on key third-party vendors to provide core services.

Vimeo depends on search engines and social media networks for traffic.

Vimeo depends on internet service providers to deliver traffic to end users and subscribers.

Vimeo’s business involves hosting large quantities of user content.

Vimeo has been sued for hosting content that allegedly infringed on a third-party copyright.

Vimeo may face liability for hosting a variety of tortious or unlawful materials.

Vimeo has faced negative publicity for removing, or declining to remove, certain content, regardless of whether such content violated any law.

Vimeo collects, stores, and processes large amounts of video content (including videos that are not intended for public consumption) and personal information of its users and subscribers.

Vimeo has been the target of cyberattacks by malicious actors.

Vimeo may fail to comply with applicable privacy laws.

Compliance obligations imposed by new privacy laws or industry practices may adversely affect Vimeo’s business.

Vimeo’s ability to transfer personal information to the United States may be restricted.

Vimeo depends on vendors to process transactions.

Vimeo may fail to comply with laws regulating subscriptions and free trials.

Changes in laws or industry practices concerning subscription services may have a negative impact on renewal rates.

The sale of Vimeo’s products are subject to a variety of sales, use and value-added taxes, both in the United States and worldwide.

Vimeo may be subject to digital services taxes in a variety of countries.

The novel coronavirus that causes the disease known as COVID-19 has caused a global health crisis that has caused significant economic and social disruption.

The historical and pro forma financial information included in this prospectus, as well as certain Vimeo operating metrics, may not be indicative of Vimeo’s future results.
The Spin-off
Subject to the terms and conditions set forth in the separation agreement, IAC’s Vimeo business was separated from the remaining businesses of 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 Holdings, and in Vimeo Holdings becoming a separate 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 OpCo, 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 par value $0.001 common stock into (i) one share of IAC par value $0.0001 common stock and (ii) 1/100th of a share of IAC Series 1 mandatorily exchangeable preferred stock that was automatically exchanged for 1.6235 shares of Vimeo common stock (with holders receiving cash in lieu of any fractional shares of Vimeo common stock resulting, after aggregation, from the reclassification); and
 
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the reclassification of each share of IAC par value $0.001 Class B common stock into (i) one share of IAC par value $0.0001 Class B common stock and (ii) 1/100th of a share of IAC Series 2 mandatorily exchangeable preferred stock that was automatically exchanged for 1.6235 shares of Vimeo Class B common stock (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 the IAC certificate of incorporation.
Prior to the Spin-off, IAC indirectly owned approximately 88% of the total outstanding shares of Vimeo OpCo, 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-lAC 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 are 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 (see the sections of this prospectus entitled “The Vimeo Merger — Consideration to Vimeo OpCo Stockholders” and “Vimeo, Inc. Unaudited Pro Forma Condensed Consolidated Financial Statements.”
The Vimeo merger, which was completed on May 25, 2021, satisfied these obligations.
The Merger
On the terms and subject to the conditions of the Vimeo merger agreement, following the Spin-off, Merger Sub merged with and into Vimeo OpCo, with Vimeo OpCo surviving as a wholly-owned subsidiary of Vimeo. Each share of Vimeo OpCo capital stock held prior to the Vimeo merger by a non-IAC Vimeo OpCo stockholder was converted into a number of shares of Vimeo common stock equal to the Vimeo merger exchange ratio. See “The Vimeo Merger” and “The Vimeo Merger Agreement.”
Corporate Information
Vimeo, Inc. is a Delaware corporation formerly known as “Vimeo Holdings, Inc.” and a direct wholly owned subsidiary of IAC that was formed in December 2020 for the purpose of holding IAC’s Vimeo business following the Spin-off. Our principal executive offices are located at 555 West 18th Street, New York, New York 10011, and our telephone number is (212) 314-7300. Vimeo maintains an Internet site at www.vimeo.com. That website and the information contained therein or connected thereto are not incorporated into this prospectus or the registration statement of which this prospectus forms a part, or in any other filings with, or any information furnished or submitted to, the SEC.
 
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THE OFFERING
Common stock offered:
1,263,132 shares of Vimeo common stock
Use of Proceeds:
Any proceeds received by Vimeo from the exercise of Vimeo stock options covered by the Plans (and issued pursuant to the offering described in this prospectus) are expected to be used for general corporate purposes. These proceeds represent the exercise prices for the Vimeo stock options. See “Use of Proceeds.”
Risk Factors:
For a discussion of risk and uncertainties involved with an investment in our common stock, see “Risk Factors” included elsewhere in this prospectus and any risk factors described in any accompanying prospectus supplement.
Listing:
Vimeo common stock is currently listed on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “VMEO”. Prior to the completion of the Spin-off, there was no established public trading market for shares of Vimeo common stock, although Vimeo common stock traded on a limited, “when-issued” basis on the NASDAQ. Vimeo common stock began trading on a “regular way” basis following the completion of the Spin-off.
 
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RISK FACTORS
You should carefully consider each of the following risks and uncertainties associated with Vimeo and the ownership of Vimeo common stock. Any of the following risks could materially and adversely affect Vimeo’s business, results of operations and financial condition. In addition, for more information you should review the specific description of Vimeo’s business under “Business” in this prospectus, as well as the other information set forth in this prospectus. The following list of significant risk factors is not all-inclusive or necessarily in order of importance. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may materially adversely affect us in future periods.
Risks Relating to the Spin-off and the Merger
Vimeo may be unable to achieve some or all of the benefits that it expects to achieve through the Spin-off.
Vimeo may be unable to achieve the full strategic and financial benefits expected to result from the Spin-off, or such benefits may be delayed or may never occur at all. The Spin-off is expected to provide the following benefits, among others:

enabling Vimeo to adopt a capital structure and to make investments best suited for its own objectives and needs, including allowing Vimeo to raise equity capital without the constraint of investment considerations at the IAC level;

creating a “pure play” Vimeo equity currency in order to facilitate capital raising, strategic acquisitions and employee compensation;

the potential increase in the aggregate equity value of Vimeo, including by permitting Vimeo to develop an investor base that focuses on companies similar to its business; and

increasing transparency at Vimeo, including by allowing it to be covered by equity analysts who specialize in its industries.
Vimeo may not achieve these or other anticipated benefits for a variety of reasons, including, among others: (a) the fact that Vimeo will be more susceptible to market fluctuations and other adverse events following the consummation of the Spin-off, (b) the risk of litigation, injunctions or other legal proceedings relating to the Spin-off, (c) the Spin-off required and will require significant amounts of management time and effort, which may divert management attention from operating and growing Vimeo’s business and (d) the other actions required to separate IAC’s and Vimeo’s respective businesses could disrupt Vimeo’s operations. If Vimeo fail to achieve some or all of the benefits expected to result from the Spin-off, or if such benefits are delayed, Vimeo’s business, financial condition and results of operations could be materially and adversely affected.
If the Spin-off were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Vimeo and its stockholders could suffer material adverse consequences.
It was a condition to the completion of the Spin-off that IAC receives an opinion of IAC’s outside counsel, among other things, to the effect that the Distribution will qualify as a “reorganization” within the meaning of Sections 368(a)(1)(D) and 355(a) of the Code. The opinion of counsel will be based upon and rely on, among other things, various facts and assumptions, as well as certain representations, statements and undertakings of IAC and Vimeo, including those relating to the past and future conduct of IAC and Vimeo. If any of these representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if any of the representations or covenants contained in any of the transaction-related agreements and documents or in any document relating to the opinion of counsel are inaccurate or not complied with by IAC, Vimeo or any of their respective subsidiaries, the opinion of counsel may be invalid and the conclusions reached therein could be jeopardized.
Notwithstanding receipt of the opinion of counsel regarding the Distribution, the U.S. Internal Revenue Service (the “IRS”) could determine that the Distribution should be treated as a taxable transaction for U.S. federal income tax purposes if it determines that any of the representations, assumptions or undertakings upon which the opinion of counsel were based are inaccurate or have not been complied with. The opinion of counsel represents the judgment of such counsel and is not binding on the IRS or any
 
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court, and the IRS or a court may disagree with the conclusions in the opinion of counsel. Accordingly, notwithstanding receipt by IAC of the opinion of counsel, there can be no assurance that the IRS will not assert that the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes or that a court would not sustain such a challenge. In the event the IRS were to prevail with such a challenge, Vimeo and its stockholders could suffer material adverse consequences.
If the Distribution were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, in general, for U.S. federal income tax purposes, IAC would recognize a taxable gain as if it had sold the Vimeo stock in a taxable sale for its fair market value. In such circumstance, IAC stockholders who received Vimeo common stock in the Distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. Even if the Distribution were otherwise to qualify as a tax-free transaction under Sections 355(a) and 368(a)(1)(D) of the Code, the Distribution may result in taxable gain to IAC, but not its stockholders, under Section 355(e) of the Code if the Distribution were deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, shares representing a 50 percent or greater interest (by vote or value) in IAC or Vimeo. For this purpose, any acquisitions of IAC stock or Vimeo stock within the period beginning two years before, and ending two years after, the Distribution are presumed to be part of such a plan, although IAC or Vimeo may be able to rebut that presumption (including by qualifying for one or more safe harbors under applicable Treasury Regulations). Stockholders of IAC and Vimeo should consult with their own tax advisors regarding the tax consequences of the Spin-off.
In connection with the Spin-off, IAC and Vimeo entered into a tax matters agreement pursuant to which, among other things, each of IAC and Vimeo will be responsible for certain tax liabilities and obligations following the Spin-off. Under the tax matters agreement, Vimeo will generally be required to indemnify IAC for any taxes resulting from the failure of the Distribution to qualify for the intended tax-free treatment (and related amounts) to the extent that the failure to so qualify is attributable to (i) an acquisition of all or a portion of the equity securities or assets of Vimeo, whether by merger or otherwise (and regardless of whether Vimeo participated in or otherwise facilitated the acquisition), (ii) other actions or failures to act by Vimeo or (iii) any of the representations or undertakings made by Vimeo in any of the Spin-off related agreements or in the documents relating to the opinion of counsel being incorrect or violated. Any such indemnity obligations could be material. For further discussion of the tax matters agreement, see “Certain Relationships and Related Party Transactions — Relationship Between IAC and Vimeo After the Spin-Off — Tax Matters Agreement.”
Vimeo may not be able to engage in desirable capital-raising or strategic transactions following the Spin-off.
Under current U.S. federal income tax law, a distribution that otherwise qualifies for tax-free treatment can be rendered taxable to the distributing corporation and its stockholders, as a result of certain post-distribution transactions, including certain acquisitions of shares or assets of the corporation the stock of which is distributed. To preserve the tax-free treatment of the Distribution, the tax matters agreement will impose certain restrictions on Vimeo and its subsidiaries during the two-year period following the Distribution (including restrictions on share issuances, business combinations, sales of assets and similar transactions). The tax matters agreement will also prohibit Vimeo from taking or failing to take any other action that would prevent the Distribution from qualifying as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. These restrictions may limit the ability of Vimeo to pursue certain equity issuances, strategic transactions, repurchases or other transactions that it may otherwise believe to be in the best interests of its stockholders or that might increase the value of its business. For further discussion of these restrictions, see “Certain Relationships and Related Party Transactions — Relationship Between IAC and Vimeo After the Spin-Off — Tax Matters Agreement.”
After the Spin-off, actual or potential conflicts of interest may develop between the management and directors of IAC, on the one hand, and the management and directors of Vimeo, on the other hand, or between management and directors of either entity and the management and directors of Expedia Group, Inc. or Match Group, Inc.
After the completion of the Spin-off, the management and directors of IAC and Vimeo may own both IAC capital stock and Vimeo capital stock, and certain members of IAC’s senior management team are
 
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directors of Vimeo after the Spin-off. This overlap could create (or appear to create) potential conflicts of interest when IAC’s and Vimeo’s directors and executive officers face decisions that could have different implications for IAC and Vimeo. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between IAC and Vimeo regarding terms of the agreements governing the Spin-off and the relationship between IAC and Vimeo thereafter, including the separation agreement, the employee matters agreement, the tax matters agreement, the transition services agreement or any commercial agreements between the parties or their affiliates. Potential conflicts of interest could also arise if IAC and Vimeo enter into any commercial arrangements in the future.
Additionally, Vimeo has a provision in its certificate of incorporation providing that no officer or director of Vimeo who is also an officer or director of IAC, Expedia Group or Match Group will be liable to Vimeo or its stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to any of such entities instead of Vimeo, or does not communicate information regarding a corporate opportunity to Vimeo that the officer or director has directed to any of such entities. The corporate opportunity provision may have the effect of exacerbating the risk of potential conflicts of interest between IAC and Vimeo, or between Vimeo and Expedia Group or Match Group, because the provision effectively shields an overlapping director/executive officer from liability for breach of fiduciary duty in the event that such director or officer chooses to direct a corporate opportunity to one of such entities instead of to Vimeo.
IAC may fail to perform under various transaction agreements that have been executed as part of the Spin-off.
In connection with the Spin-off, Vimeo and IAC entered into a separation agreement as well as various other agreements, including a transition services agreement, a tax matters agreement and an employee matters agreement. The separation agreement, the tax matters agreement and the employee matters agreement determine the allocation of assets and liabilities between the companies following the separation for those respective areas and include indemnification provisions related to certain liabilities and obligations. The transition services agreement provides for the performance of select services by IAC for the benefit of Vimeo, for a limited period of time after the Spin-off. Each party will rely on the other to satisfy its performance obligations under these agreements. If IAC is unable to satisfy its obligations under these agreements, including its indemnification obligations, it could have a material adverse effect on Vimeo’s results of operations or financial condition.
Challenges in commercial, equity and credit markets may adversely affect the expected benefits of the Spin-off and Vimeo’s future access to capital on favorable terms.
Volatility in the world financial markets could adversely impact the market for, or the liquidity of, Vimeo common stock, and/or affect Vimeo’s ability to access the capital markets. In addition, Vimeo’s ability to issue debt or enter into other financing arrangements on acceptable terms could be adversely affected by the volatility in the world financial markets or if there is a material decline in the demand for its products or in the solvency of its customers or suppliers or if there are other significantly unfavorable changes in economic conditions. These conditions may adversely affect the expected benefits of the Spin-off, including by increasing the time and expense involved in the Spin-off or the cost of borrowing after the Spin-off.
Vimeo’s accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which it is subject as a standalone, publicly traded company following the Spin-off.
Vimeo OpCo’s financial results previously were included within the consolidated results of IAC, and it believes its reporting and control systems were appropriate for those of subsidiaries of a public company. However, Vimeo and Vimeo OpCo were not directly subject to the reporting and other requirements of the Exchange Act. As a result of the Spin-off, Vimeo is directly subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act, which will require annual management assessments of the effectiveness of its internal control over financial reporting and a report by its independent registered public accounting firm addressing these assessments. These reporting and other obligations will place significant demands on Vimeo’s management, administrative and
 
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operational resources, including accounting resources. Vimeo may not have sufficient time following the Spin-off to meet these obligations by the applicable deadlines.
Moreover, to comply with these requirements, Vimeo anticipates that it will need to place additional demands on management, migrate its systems, including information technology systems, implement additional financial and management controls, reporting systems and procedures and hire additional personnel. Vimeo expects to incur additional annual expenses related to these steps, and those expenses may be significant and could adversely affect Vimeo’s cash flow and results of operations. If Vimeo is unable to implement its financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, Vimeo’s ability to comply with its financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired. Moreover, there can be no assurance that Vimeo’s implementation of additional systems or transition to new systems will be successful, or that such implementation or transition will not present unforeseen costs or demands on Vimeo’s management. Any failure to achieve and maintain effective internal controls could result in adverse regulatory consequences and/or loss of investor confidence, which could limit Vimeo’s ability to access the global capital markets and could have a material adverse effect on Vimeo’s business, financial condition, results of operations, cash flows or the market price of Vimeo securities.
The terms Vimeo received in its agreements with IAC could be less beneficial than the terms it may have otherwise received from unaffiliated third parties.
The agreements Vimeo entered into with IAC in connection with the Spin-off, including the separation agreement, a tax matters agreement, an employee matters agreement, and an office lease, were prepared in the context of the Spin-off while Vimeo was still a subsidiary of IAC. Accordingly, during the period in which the terms of those agreements were prepared, Vimeo did not have an independent Board of Directors or a management team that was independent of IAC. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. See “Certain Relationships and Related Party Transactions — Relationship Between IAC and Vimeo Holdings After the Spin-off.”
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on Vimeo’s business, results of operations or financial condition.
As a public company, Vimeo is required to prepare its financial statements according to the rules and regulations required by the SEC. In addition, the Exchange Act requires that Vimeo file annual, quarterly and current reports. Vimeo’s failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject it to penalties under federal securities laws, expose it to lawsuits and restrict its ability to access financing.
In addition, the Sarbanes-Oxley Act requires that, among other things, Vimeo establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in Vimeo’s business or changes in applicable accounting rules. Vimeo cannot assure its stockholders that its internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which Vimeo had previously believed that its internal controls were effective. If Vimeo is not able to maintain or document effective internal control over financial reporting, its independent registered public accounting firm will not be able to certify as to the effectiveness of its internal control over financial reporting.
Matters affecting Vimeo’s internal controls may cause it to be unable to report its financial information on a timely basis, or may cause Vimeo to restate previously issued financial information, and thereby subject it to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in the company and the reliability of Vimeo’s financial statements. Confidence in the reliability of Vimeo’s financial statements is also likely to suffer if it reports, or its independent registered public accounting firm reports, a material weakness in Vimeo’s internal control over financial
 
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reporting. This could have a material adverse effect on Vimeo’s business, results of operations or financial condition and could lead to a decline in the share price of Vimeo common stock or impair Vimeo’s ability to raise additional capital.
Risks Relating to Vimeo Securities Following the Spin-off
The market price and trading volume of Vimeo securities may be volatile and may face negative pressure.
We cannot accurately predict how investors in Vimeo securities will behave after the Spin-off. The market price for Vimeo securities following the Spin-off may be more volatile than the market price of IAC securities before the Spin-off. Prior to the Spin-off, IAC owned Vimeo and the businesses that Vimeo will operate following the Spin-off. Therefore, prior to the Spin-off there was no trading market for Vimeo securities and the Vimeo securities issued in the Spin-off traded publicly for the first time post-Spin-off. Therefore, there may be significant fluctuations in price due to a variety of factors.
The market price of Vimeo securities could fluctuate significantly for many reasons, including the risks identified in this prospectus or reasons unrelated to Vimeo’s performance. Among the factors that could affect Vimeo’s stock price are:

actual or anticipated fluctuations in operating results;

changes in earnings estimated by securities analysts or in Vimeo’s ability to meet those estimates;

the operating and stock price performance of comparable companies;

changes to the regulatory and legal environment under which Vimeo operates;

changes in relationships with significant customers; and

domestic and worldwide economic conditions.
These factors, among others, may result in short- or long-term negative pressure on the value of Vimeo securities.
The dual-class common stock structure of Vimeo may negatively impact the market price of its common stock.
We cannot predict whether the dual-class common stock structure of Vimeo, combined with the concentrated voting power of Mr. Diller and members of his family as the holders of all of the outstanding Class B common stock of Vimeo following the Spin-off, will result in a lower or more volatile market price of Vimeo common stock, or other adverse consequences.
For example, certain stock index providers, such as S&P Dow Jones, exclude companies with multiple classes of shares of common stock from being added to certain stock indices, including the S&P 500. In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures. As a result, the dual class structure of the common stock of Vimeo may prevent the inclusion of Vimeo common stock in such indices, may cause stockholder advisory firms to publish negative commentary about Vimeo’s corporate governance practices or otherwise seek to cause Vimeo to change its capital structure, and may result in large institutional investors not purchasing shares of Vimeo common stock. Any exclusion from stock indices could result in a less active trading market for Vimeo common stock. Any actions or publications by stockholder advisory firms or institutional investors critical of Vimeo’s corporate governance practices or capital structure could also adversely affect the value of Vimeo common stock.
The difference in the voting rights between the common stock and Class B common stock of Vimeo could also harm the value of its common stock to the extent that any investor or potential future purchaser of Vimeo common stock ascribes value to the right of holders of its Class B common stock to ten votes per share of Class B common stock, or could potentially result in the Class B common stock of Vimeo receiving higher consideration in a sale of such company than that paid to holders of Vimeo common stock. The existence of two classes of common stock could also result in less liquidity for Vimeo Class B common stock than if there were only one class of common stock.
 
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Substantial sales of Vimeo common stock following the Spin-off, or the perception that such sales might occur, could depress the market price of Vimeo common stock.
Holders of IAC capital stock may not wish to continue to hold the shares of Vimeo capital stock that they will receive as a result of the Spin-off, which may lead to the disposition of a substantial number of shares of Vimeo common stock following the Spin-off. There is no assurance that there will be sufficient buying interest to offset any such sales, and, accordingly, the price of Vimeo common stock may be depressed by those sales, or by the perception that such sales may occur, and have periods of volatility.
Vimeo securities may not qualify for various investment indices. In addition, Vimeo securities may fail to meet the investment guidelines of institutional investors. In either case, these factors may negatively impact the price of Vimeo securities and may impair Vimeo’s ability to raise capital through the sale of securities.
Companies are generally selected for investment indices, and in some cases selected by institutional investors, based on factors such as market capitalization, industry, trading liquidity and financial condition. As an independent company, Vimeo initially has a lower market capitalization than IAC has today. As a result, Vimeo securities may not qualify for those investment indices despite the fact that IAC securities currently qualify for those same investment indices. In addition, Vimeo securities that are received in the Spin-off may not meet the investment guidelines of some institutional investors. Consequently, these index funds and institutional investors may have to sell some or all of the securities they receive in the Spin-off, and the prices of Vimeo securities may fall as a result. Any such decline could impair the ability of Vimeo to raise capital through future sales of securities.
Vimeo is not expected to declare any regular cash dividends in the foreseeable future.
Vimeo is not expected to pay cash dividends on its capital stock in the near term. Instead, it is anticipated that Vimeo’s future earnings will be retained to support its operations and to finance the growth and development of its business. Any future determination relating to Vimeo’s dividend policy will be made by Vimeo’s board of directors and will depend on a number of factors, including:

Vimeo’s historical and projected financial condition, liquidity and results of operations;

Vimeo’s capital levels and needs;

tax considerations;

any acquisitions or potential acquisitions that Vimeo may consider;

statutory and regulatory prohibitions and other limitations;

the terms of any credit agreements or other borrowing arrangements that will restrict Vimeo’s ability to pay cash dividends;

general economic conditions; and

other factors deemed relevant by Vimeo’s board of directors.
In the absence of dividends, investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
Provisions in Delaware law and the Vimeo certificate of incorporation and by-laws could discourage, delay or prevent a change of control of Vimeo or changes in its management and, therefore, depress the trading price of its common stock.
The DGCL and the Vimeo certificate of incorporation and by-laws contain provisions that could discourage, delay or prevent a change in control of Vimeo or changes in its management that its stockholders may deem advantageous, including its dual-class structure and the existence of the high-vote common stock, and provisions which:

authorize the issuance of “blank check” preferred stock that Vimeo’s board of directors could issue to increase the number of outstanding shares and to discourage a takeover attempt; and
 
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provide that Vimeo’s board of directors is expressly authorized to make, alter or repeal such company’s by-laws.
Any provision of Vimeo’s certificate of incorporation, its by-laws or Delaware law that has the effect of delaying, deterring or preventing a change in control could limit the opportunity for its stockholders to receive a premium for their shares of capital stock, and could also affect the price that some investors are willing to pay for such capital stock.
The Vimeo by-laws designate the Delaware Court of Chancery or, in some cases, the federal district courts of the United States as the sole and exclusive forum for certain types of actions or proceedings that may be initiated by its stockholders, which could discourage lawsuits against Vimeo and its directors, officers and significant stockholders.
The Vimeo by-laws provide that, unless Vimeo consents in writing to the selection of an alternative forum, the Delaware Court of Chancery (or, if the Delaware Court of Chancery lacks jurisdiction, another state or federal court located within the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for:

any derivative action or proceeding brought on behalf of Vimeo;

any action asserting a claim for or based on a breach of a fiduciary duty owed by any current or former director, officer, other employee or agent or stockholder of Vimeo to Vimeo or its stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty;

any action asserting a claim against Vimeo or any current or former director, officer, other employee or agent or stockholder of Vimeo arising pursuant to any provision of the DGCL, the certificate of incorporation or the by-laws;

any action asserting a claim related to or involving Vimeo or any current or former director, officer, other employee or agent or stockholder that is governed by the internal affairs doctrine; and

any action asserting an “internal corporate claim,” as that term is defined in Section 115 of the DGCL.
In addition, the Vimeo by-laws provide that, unless Vimeo consents in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of Vimeo securities. The exclusive forum provisions do not apply to suits brought to enforce any liability or duty created by the Exchange Act.
The enforceability of similar exclusive forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court could find the exclusive forum provisions contained in the Vimeo by-laws to be inapplicable or unenforceable.
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that such stockholder may find favorable for disputes with Vimeo or its directors, officers, employees, agents or stockholders, may discourage lawsuits with respect to such claims and may increase the costs to bring such claims. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Vimeo may incur additional costs associated with resolving such disputes in other jurisdictions, which could have an adverse impact on Vimeo’s business and financial condition.
If securities or industry analysts do not publish research or publish unfavorable research about Vimeo, its stock price and trading volume could decline.
The trading market for Vimeo common stock will be influenced by the research and reports that industry or securities analysts publish about Vimeo and its business. If one or more of these analysts ceases coverage, or fails to publish reports about Vimeo regularly, Vimeo could lose visibility in the financial markets, which in turn could cause its stock price or trading volume to decline. Moreover, if Vimeo’s operating results do not meet the expectations of the investor community, one or more of the analysts who cover Vimeo may change their recommendations regarding Vimeo, and its stock price could decline.
 
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Risks Relating to Vimeo and the Vimeo Business Following the Spin-off
Vimeo has a limited operating history as a pure software-as-a-service (“SaaS”) company.
In its 16-year history, Vimeo (through Vimeo OpCo) has explored or experimented with various service offerings, including a proprietary streaming service, and various monetization methods, including advertising, transactions and subscriptions. While Vimeo has offered subscription plans since 2008, Vimeo did not decide to focus primarily on SaaS offerings until 2017. In addition, Vimeo has only operated an enterprise-focused sales operation since 2017, when it acquired Livestream.
Mr. Diller, certain members of his family and Mr. Levin will be able to exercise significant influence over the composition of Vimeo’s Board of Directors, matters subject to stockholder approval and Vimeo’s operations.
As of April 5, 2021, Mr. Diller, his spouse, Diane von Furstenberg, and his stepson, Alexander von Furstenberg, collectively held shares of IAC Class B common stock and IAC common stock that represented approximately 41% of the total outstanding voting power of IAC (based on the number of shares of IAC common stock outstanding and entitled to vote as of April 5, 2021) and they collectively hold shares of Vimeo Class B common stock and Vimeo common stock that represent approximately 41% of the total outstanding voting power of Vimeo immediately following the Spin-off. The Vimeo shares are also subject to a voting agreement with Mr. Levin, IAC’s Chief Executive Officer and the Chairman of the Vimeo Board of Directors.
As a result of Vimeo securities that are beneficially owned by these individuals following the completion of the Spin-off, such individuals will be, collectively, in a position to influence (subject to Vimeo’s organizational documents and Delaware law), the composition of Vimeo’s Board of Directors and the outcome of corporate actions requiring shareholder approval, such as mergers, business combinations and dispositions of assets, among other corporate transactions. The disparity between the voting power of the holders of the Vimeo Class B common stock and the corresponding economic ownership position could also create incentives for such holders to either seek to obtain benefits for themselves (in the form of compensation or other contractual benefits, for example) in a form not available to all stockholders on a pro rata basis. In addition, this concentration of investment and voting power could discourage others from initiating a potential merger, takeover or other change of control transaction that may otherwise be beneficial to Vimeo and its shareholders, which could adversely affect the market price of Vimeo securities.
In addition, the holders of the Vimeo Class B common stock could sell all or a portion of those shares to a third party, which could result in the purchaser obtaining significant influence over Vimeo, the composition of Vimeo’s Board of Directors, matters subject to stockholder approval and Vimeo’s operations, without consideration being paid to holders of shares of Vimeo common stock, and without holders of shares of Vimeo common stock having a right to consent to the identity of such purchaser.
Vimeo has a history of losses.
The Vimeo business has not earned a profit in any full fiscal year since its inception, and it cannot be certain as to when Vimeo will achieve or maintain profitability. Because the market for SaaS video services is rapidly evolving and highly competitive, Vimeo must continue to invest in research and development. If such investment does not allow Vimeo to scale or attract and retain users and subscribers, Vimeo will not be able to achieve profitability.
Vimeo’s recent and rapid growth may not be indicative of future performance.
The growth Vimeo experienced during the first nine months of 2020 may be partly or largely attributable to increased demand for online video due to social distancing undertaken in response to the COVID-19 pandemic. If the COVID-19 pandemic ends and the level of demand for online video returns to pre-pandemic levels, then the growth rates Vimeo achieved in 2020 may not be indicative of growth rates in future periods. In addition, a prolonged economic downturn caused by the COVID-19 pandemic could ultimately reduce demand by reducing businesses’ ability to pay for Vimeo’s services.
 
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Vimeo’s growth and profitability depend upon a wide variety of factors, some of which are out of Vimeo’s control.
Whether Vimeo can grow its revenue and ultimately achieve profitability will depend upon a number of factors including:

Vimeo’s reputation and brand recognition;

demand for the types of video services Vimeo offers;

the actual and perceived quality, integrity and value of the video services Vimeo provides;

Vimeo’s development and timely deployment of innovative video services that provide value to its users and subscribers;

Vimeo’s ability to price its video services competitively;

Vimeo’s ability to acquire new subscribers sustainably, through a combination of organic efforts (continuing to convert a meaningful portion of its free user base into paying subscribers), paid acquisition (marketing), sales efforts (for enterprise) and partnerships;

Vimeo’s ability to retain and upsell existing subscribers by continuing to provide them with value;

the scalability of Vimeo’s technology platform;

the quality of Vimeo’s support and onboarding efforts for users and subscribers;

the growth of Vimeo’s employee base in a highly competitive market for talent;

Vimeo’s ability to expand internationally;

Vimeo’s ability to successfully integrate new businesses that it acquires;

changes in laws that allow Vimeo to host and distribute large quantities of user and subscriber content; and

domestic and global macroeconomic conditions.
Vimeo’s total addressable market may prove to be smaller than it expects.
While Vimeo believes, based upon internal data, that every small and midsized business and every larger enterprise will need an online video presence to succeed, the number of entities that are willing and able to pay fees for software-based video services may not be as large as it expects. Vimeo has not conducted research by a third party to validate its data and thesis.
Prior to the Spin-off, Vimeo has no experience as a standalone public company.
Prior to the Spin-off, Vimeo’s executive officers did not have experience as officers of a publicly traded company. Transitioning to a public company may distract management from its focus on Vimeo’s core business. In addition, both the Spin-off and registration of Vimeo securities will require Vimeo to incur new significant new expenses, particularly in the areas of finance, legal and human resources, that were previously incurred by IAC.
Vimeo may need additional funding as Vimeo continues to invest in research and development and expand internationally.
Vimeo may need to raise additional funds by way of a primary offering of shares of Vimeo common stock, which would dilute existing shareholders. Vimeo may also raise additional funds through additional borrowings. To obtain such funding, Vimeo may need to pledge assets and agree to certain financial covenants.
Vimeo may not have the right product/market fit.
Vimeo’s business depends upon attracting new subscribers and retaining existing ones. To do so, it must provide products with an attractive value proposition. Vimeo may fail to do that if it:
 
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fails to innovate and provide new and useful features that its users and subscribers want;

releases products that fail to reliably operate (due to bugs or service interruptions);

releases products too late relative to competitors;

prices its products in an uncompetitive manner; or

fails to educate its users and subscribers about its features.
Vimeo may not be able to convert its free users into subscribers.
An essential part of Vimeo’s strategy for attracting subscribers depends upon offering basic services for free and converting a certain portion of its free users into subscribers over time. While a majority of Vimeo subscribers began as free users, only a small percentage of free users become paying users over time. Vimeo’s ability to convert users into subscribers at this or a higher rate may not materialize if:

the number of free users Vimeo attracts declines, which could occur due to, among other things, reduced visibility of its brand or services;

Vimeo overestimates the number of free users who have the propensity to pay due to issues with duplicative, fraudulent or spam accounts;

Vimeo’s free users do not repeatedly use the free product, either because they are unaware of the features Vimeo offers or because the features are not perceived as useful;

Vimeo fails to optimize the conversion of free users by communicating the value of its subscription plans;

Vimeo experiences headwinds in its international expansion due to variety of reasons, including language and cultural barriers, as well as unfavorable regulatory environments; or

Vimeo’s service offerings and pricing are not competitive.
If Vimeo’s efforts to convert free users into subscribers do not succeed, it will have to rely more heavily on paid marketing efforts to acquire new subscribers and therefore achieve growth. Such a shift would cause Vimeo to incur higher costs in acquiring users, which would reduce its profits.
Competition in Vimeo’s market is intense.
Vimeo operates in a highly competitive market. It competes with both large social media networks and a variety of niche software providers for business customers. Large social media networks provide their services for free and offer features such as a large built-in audience, social media features and the ability to monetize through advertising. Niche providers include large, well-funded companies and new entrants. Either may be able to provide more compelling features than Vimeo within their area of focus. In addition, Vimeo expects that more competitors will emerge given the relatively low barriers to entry for software-based video creation applications, particularly mobile-based applications. New competitors could take the form of start-ups or large, well-funded companies that already operate in markets adjacent to Vimeo.
Vimeo may not be able to scale its business effectively.
Vimeo may not be able to capitalize on the market’s demand for video if it cannot scale its operations. For example, Vimeo might experience delays in onboarding new customers and responding to increased customer support tickets, and it may not be able to handle increased loads on its servers during peak times. All of these things would result in missed opportunities or user and subscriber frustration that could negatively affect user and subscriber growth and retention.
Vimeo may experience service interruptions.
Vimeo typically does not provide 100% uptime across its video services in any given month. This may be due to technical errors (bugs), human error (by employees and contractors), interruptions experienced by key vendors (such as cloud-based service or payment providers), higher than anticipated traffic and/or
 
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cyberattacks. Interruptions in key aspects of Vimeo’s video services (notably, video delivery and payment processing) could result in lost business, credits payable to subscribers with service level agreements, increased user and subscriber support tickets, remediation costs and increased subscriber churn (lost renewals). In severe cases, Vimeo could face litigation or reputational risk, particularly if an interruption occurs during a high-profile event.
Hosting and delivery costs may increase unexpectedly.
Hosting and delivery costs comprise the largest component of Vimeo’s cost of goods sold and thus materially influences its gross margin. These costs could increase unexpectedly if Vimeo experiences rapid growth over a short period of time (either in terms of users and subscribers or bandwidth consumed), it fails to address subscribers who use more bandwidth than its plans permit (e.g., either by failing to charge them overage fees or by failing to limit their bandwidth) or Vimeo fails to distribute increased bandwidth across its content delivery network (CDN) vendors in a cost-optimal manner by, for example, moving traffic to the lowest-cost provider. Vimeo may not be able to pass these costs onto subscribers.
The success of Vimeo will depend upon its continued ability to identify, hire, develop, motivate and retain highly skilled individuals worldwide.
In order to build and scale its business, Vimeo will need to further increase its employee base, particularly in the areas of engineering, product development, sales (domestically and internationally), customer support and shared services. Vimeo’s ability to attract and retain talent and to fully experience the benefits of that talent depends upon:

Vimeo’s reputation;

Vimeo’s compensation and benefit packages;

Vimeo’s ability to successfully onboard new employees;

Vimeo’s commitment to diversity, equity, and inclusion;

Vimeo’s ability to maintain its corporate culture while growing headcount, adding employees in new countries and locations and operating on a largely remote basis during the pendency of the COVID-19 pandemic (for further details, see “Risks Relating to Vimeo and the Vimeo Business Following the Spin-off — The novel coronavirus that causes the disease known as COVID-19 has caused a global health crisis that has caused significant economic and social disruption”); and

the competitive landscape in the geographic markets for talent in which Vimeo competes.
Vimeo’s compensation packages may not be sufficient.
While Vimeo has established compensation programs (which include cash compensation, equity-based programs and other benefits) to attract and retain employees, these compensation arrangements may not be sufficient in the highly competitive labor market in which it participates. Large competitors and non-competitors in the technology space may offer compensation arrangements that may significantly exceed those that Vimeo is able to offer. If Vimeo fails to provide competitive compensation arrangements, it may fail to attract and retain talent. In addition, if Vimeo does not ensure the effective transfer of knowledge to successors and smooth transitions (particularly in the case of senior management), its business may be adversely affected. On the other hand, if Vimeo increases compensation levels in a significant way in order to compete for talent, its profitability could suffer.
Vimeo may fail to attract or retain employees for issues that negatively impact Vimeo’s image.
Vimeo’s ability to attract and retain employees could also be adversely affected by issues that negatively impact its image, such as incidents of actual or perceived discrimination, controversial business decisions, including decisions about user content, and issues with the quality of our products (such as bugs or interruptions in services, among other issues).
 
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Vimeo’s success depends, in substantial part, on its ability to market, distribute and monetize its products and services through search engines, digital app stores and social media platforms.
The marketing, distribution and monetization of Vimeo’s products and services depend on its ability to cultivate and maintain cost-effective and otherwise satisfactory relationships with search engines, digital app stores and social media platforms, in particular, those operated by Apple, Google and Facebook. These platforms could decide not to market and distribute some or all of Vimeo’s products and services, change their terms and conditions of use at any time (and without notice), favor their own products and services over those of Vimeo and/or significantly increase their fees. While Vimeo expects to maintain cost-effective and otherwise satisfactory relationships with these platforms, no assurances can be provided that Vimeo will be able to do so and its inability to do so in the case of one or more of these platforms could have a material adverse effect on Vimeo’s business, financial condition and results of operations.
In particular, as consumers increasingly access Vimeo’s products and services through applications (both mobile and desktop), Vimeo increasingly depends upon the Apple App Store, Google Play Store and Google’s Chrome Web Store to distribute its mobile and desktop browser applications. Both Apple and Google have broad discretion to change their respective terms and conditions applicable to the distribution of Vimeo’s applications, including those relating to the amount of (and requirement to pay) certain fees associated with purchases facilitated by Apple and Google through Vimeo’s applications, their ability to interpret their respective terms and conditions in ways that may limit, eliminate or otherwise interfere with Vimeo’s ability to distribute its applications through their stores, the features Vimeo may provide in its products and services, Vimeo’s ability to access information about its subscribers and users that they collect and the manner in which Vimeo markets in-app products. Apple or Google could also make changes to their operating systems or payment services that could negatively affect Vimeo. No assurances can be provided that Apple and/or Google will not interpret their respective terms and conditions in the manner described above and to the extent either or both of them do so, Vimeo’s business, financial condition and results of operations could be adversely affected.
While some of Vimeo’s mobile applications are generally free to download from the Apple App and Google Play Stores, many of them are subscription-based. While Vimeo determines the prices at which these subscriptions are sold, currently, all related purchases must be processed through the in-app payment systems provided by these stores, for which Vimeo pays these stores a meaningful share (generally 30% for the first 12 months, and 15% thereafter) of the related revenue it receives. Given the increasing distribution of its mobile applications through digital app stores and strict in-app payment system requirements, Vimeo may need to offset increased digital app store fees by decreasing traditional marketing expenditures as a percentage of revenue, increasing user volume or monetization per user or engaging in other efforts to increase revenue or decrease costs generally, or its business, financial condition and results of operations could be adversely affected.
In addition to Vimeo’s current branded apps, one of the services Vimeo offers subscribers (for its Vimeo OTT service) is the ability to reach their viewers using apps on various platforms’ operating systems, including those of Apple, Google, Amazon Fire, Roku, and Microsoft’s Xbox. These apps use Vimeo technology but feature the subscriber’s branding. Changes in platform policies may make it more difficult or expensive for Vimeo Holdings to release and maintain its subscribers’ apps.
Vimeo depends on integrations with third parties to enable key features of its video services and to acquire new subscribers.
Some of Vimeo’s video services are integrated, typically through application programming interfaces (“APIs”), with numerous third parties, including companies that compete with Vimeo. For example, Vimeo provides a “publish to social” feature which allows its users and subscribers to publish their videos to their accounts on Facebook and/or YouTube. This type of feature makes Vimeo’s video services valuable because it effectively allows Vimeo to serve as a hub for managing all of the videos for a given user or subscriber across numerous platforms. If platforms change their policies to no longer permit this feature, Vimeo’s video services would be less attractive to its users and subscribers.
 
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Vimeo depends on key third-party vendors to provide core services.
Vimeo depends on third-party vendors to, among other things, provide customer support, develop software, host videos uploaded by its users, transcode videos (compressing a video file and converting it into a standard format optimized for streaming), stream videos to viewers and process payments. Specifically, Google Cloud Service (“GCS”) provides Vimeo with hosting and transcoding services, Amazon S3 provides Vimeo with hosting services and Vimeo uses multiple CDNs to deliver traffic worldwide. Certain of these third-party vendors have experienced outages in the past that have caused key Vimeo video services to be unavailable for several hours. Vimeo does not have backup systems for GCS or Amazon S3. Consequently, outages in those services materially affect its video services. Outages may expose Vimeo to having to offer credits to subscribers, loss of subscribers and reputational damage. Vimeo may not be able to full offset these losses with any credits it might receive from its vendors.
Vimeo depends on search engines and social media networks for traffic.
Vimeo depends on search engines and social media networks to acquire traffic to its website. These third parties have the ability to influence who reaches Vimeo’s website and video services through algorithmic search rankings and other policy decisions, which are subject to frequent change. Some of these third parties or their affiliates compete with Vimeo and may have an incentive to favor their competing services over Vimeo’s. In the past, traffic to Vimeo’s website and video services has been negatively impacted as a result of certain policy changes by both search engines and social media networks.
Vimeo depends on internet service providers (“ISPs”) to deliver traffic to end users and subscribers.
For Vimeo’s video services to operate, users and subscribers must have a connection to the internet. Typically, Vimeo users and subscribers access the internet through a wireline or wireless data service offered by ISPs such as AT&T, Comcast and/or Verizon. There is currently no federal regulation in the U.S. limiting the practices that ISPs may use to impact data flowing from websites and online applications to users and subscribers of online products and services generally. As a result, ISPs could discriminate against data that Vimeo delivers to users or subscribers (or data its users upload to it) by blocking it outright, slowing it down or otherwise degrading its quality vis-à-vis competing traffic. ISPs could also cause their customers to favor competing services by “zero rating” traffic to and from Vimeo competitors (in other words, not counting competitor traffic against an ISP customer’s data caps) but declining to zero rate its traffic. These practices could make Vimeo less attractive as a provider of video services. Alternatively, Vimeo may have to pay fees to ISPs to maintain parity with competitors, which could adversely affect its profitability.
Vimeo’s business involves hosting large quantities of user content.
Vimeo does not (and cannot undertake to) review all or even a significant portion of the videos uploaded to its platform to ensure that the videos do not violate any law or third-party rights. Some of the videos uploaded to Vimeo’s platform will invariably violate a third party’s rights or a law, rule or regulation, and if so, Vimeo could, in turn, face lawsuits, liability and negative publicity for hosting such content.
Vimeo has been sued for hosting content that allegedly infringed on a third-party copyright.
Vimeo cannot guarantee that it will be shielded from third-party copyright infringement lawsuits and related liability for hosting user and subscriber content by laws such as the online safe harbor provisions of the Digital Millennium Copyright Act of 1998 (“DMCA”), which are intended to limit the liability of online providers with respect to user- and subscriber-uploaded content. In addition, even if Vimeo ultimately succeeds in demonstrating that the DMCA limits its liability, litigating these issues is costly and time-consuming. For details regarding pending lawsuits of this nature, see “Business — Legal Proceedings.”
Some countries outside of the United States have laws that, like the DMCA, limit the copyright infringement liability of service providers. However, these laws may impose different requirements upon Vimeo and may not protect it to the same degree as the DMCA. Vimeo cannot guarantee that it will be compliant with foreign requirements. For example, as described in the section entitled “Business — Legal Proceedings,” we have been sued in Italy for the copyright infringement of our users.
 
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If the laws limiting Vimeo’s liability for user and subscriber copyright infringement are changed, either by amendment, regulatory action or judicial interpretation, Vimeo could face increased compliance costs and increased risk of liability for copyright infringement. In 2020, Congress held hearings on whether the DMCA ought to be amended. In 2018, the European Union passed Article 17 to revise the EU’s existing framework for limiting the liability of service providers for copyright infringement. EU member state laws that implement Article 17 (which must be done by July 2021) may require Vimeo to undertake new and costly screening activities or to obtain costly licenses from rights holders or both.
Vimeo may face liability for hosting a variety of tortious or unlawful materials.
In the United States, Section 230 of the Communications Decency Act generally limits Vimeo’s liability for hosting tortious and otherwise illegal content. The immunities conferred by Section 230 could be narrowed or eliminated through amendment, regulatory action or judicial interpretation. In 2018, Congress amended Section 230 to remove immunities for content that promotes or facilitates sex trafficking and prostitution. In 2020, various members of Congress introduced bills to further limit Section 230, and a petition was filed by a Department of Commerce entity with the Federal Communications Commission to commence a rulemaking to further limit Section 230.
Laws like Section 230 generally do not exist outside of the United States, and some countries have enacted laws that require online content providers to remove certain pieces of content within short time frames. For example, in 2020, France enacted a law requiring covered social media networks to remove terror content within one hour upon receiving notice. If Vimeo fails to comply with such laws, it could be subject to prosecution or regulatory proceedings. In addition, some countries may decide to ban Vimeo’s service based upon a single piece of content. Vimeo has been subject to temporary bans in certain countries, including India, Russia and Turkey, for hosting content that those governments determined to be illegal.
Vimeo may also face liability when it removes content and accounts that it believes are violating its acceptable use policy, and Vimeo has been sued in the past for certain content-removal decisions. While Vimeo believes that Section 230 allows it to restrict or remove certain categories of content, its protections may not always end a lawsuit at an early stage, potentially resulting in costly and time-consuming litigation.
Vimeo has faced negative publicity for removing, or declining to remove, certain content, regardless of whether such content violated any law.
Individuals and groups may upload controversial content to Vimeo’s platform. Removing or failing to remove such content may result in negative publicity, which could harm its efforts to attract and retain users and subscribers. Vimeo has also faced criticism from users and subscribers for removing content and terminating accounts in compliance with the DMCA.
Vimeo collects, stores, and processes large amounts of video content (including videos that are not intended for public consumption) and personal information of its users and subscribers.
Vimeo collects, stores and processes large amounts of video content (including videos that are not intended for public consumption) and personal information of its users and subscribers. Vimeo also shares such information, where appropriate, with third parties that help it operate its business. Despite Vimeo’s efforts, it may fail to properly secure its systems and its user and subscriber data. This could be caused by technical issues (bugs), human error or internal or external malfeasance, and could lead to unauthorized disclosure of data, unauthorized changes or data losses. For example, Vimeo routinely receives reports from security researchers regarding potential vulnerabilities in its applications. The existence of such vulnerabilities, if undetected or detected but not remediated, could result in unauthorized access to Vimeo systems or the data of Vimeo users and subscribers.
A data breach could expose Vimeo to regulatory actions and litigation. Depending on the circumstances, Vimeo may be required to disclose a suspected breach to regulators, affected individuals and/or the public. This could lead to regulatory actions, including the possibility of fines, class-action or traditional litigation by affected individuals, reputational harm, costly investigation and remedial efforts, the triggering of indemnification obligations under data-protection agreements with subscribers, vendors, and partners and/or higher premiums for cyber insurance.
 
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Vimeo has been the target of cyberattacks by malicious actors.
Malicious actors may use a variety of techniques to interfere with or gain access to Vimeo’s systems, including hacking (exploiting software vulnerabilities), social engineering (gaining access to internal systems through employees), malware, ransomware and denial of service attacks (sending large quantities of traffic in an attempt to overload our servers). Vimeo may fail to adequately defend against such attacks. If not prevented or mitigated, cyberattacks could result in a data breach, loss of data and business interruption, any of all of which could adversely affect Vimeo’s business.
Some malfeasance could also be directed at the accounts of Vimeo users and subscribers (as opposed to Vimeo’s systems). For example, Vimeo has experienced cases where user and subscriber accounts were compromised due to password guessing or credential stuffing arising from a breach of account credentials on third-party services. These situations take time to remediate and are frustrating for Vimeo users and subscribers, some of whom may blame Vimeo for the relevant cyberattack.
Vimeo may fail to comply with applicable privacy laws.
Vimeo is subject to numerous laws governing the use of personal information, including sensitive personal information, such as financial information and demographic information. Vimeo has been sued for violating the Illinois Biometric Protection Act, which regulates the collection and use of biometric information (see the section entitled “Business — Legal Proceedings”). The failure to comply with applicable privacy laws could lead to regulatory actions, including the possibility of fines, class-action or traditional litigation, reputational harm and/or costly investigation and remedial efforts.
Compliance obligations imposed by new privacy laws or industry practices may adversely affect Vimeo’s business.
New laws could restrict Vimeo’s ability to conduct marketing (by, for example, restricting the emailing or targeting users or use certain technologies like artificial intelligence). Similarly, private-market participants may deploy technologies or require certain practices that limit Vimeo’s ability to obtain or use certain information about its users and subscribers. For example, Google has indicated that it will ultimately phase out the use of cookies to track users of its search services in future versions of its Chrome web browser, and Apple has indicated that a future update to its iOS mobile operating system will require app developers to obtain opt-in consent before tracking users of its various services. If these types of changes are implemented, Vimeo’s ability to determine how its users and subscribers are using its video services and to use targeted advertising in a cost-effective manner may be limited.
Vimeo’s ability to transfer personal information to the United States may be restricted.
Some countries outside of the United States (particularly those states that are members of the European Union) may limit the transfer of data regarding their residents to other countries. Such laws have the potential to adversely affect Vimeo’s business. For example, prior to June 2020, many United States companies (including Vimeo) participated in the U.S.-EU and U.S.-Swiss “Privacy Shield” program, which provided a basis on which to transfer personal information from the EU and Switzerland to the U.S. In June 2020, the EU High Court of Justice determined that the program did not adequately protect EU residents’ privacy rights. Vimeo did not rely solely on the Privacy Shield program to transfer data from the EU to the U.S. and has continued to transfer data from the EU to the U.S. under other legal bases. If those other legal bases were to be invalidated, Vimeo may have to stop transferring personal data from the EU. This could require Vimeo to host personal EU data within the EU and not transfer it outside of the EU. Should this occur, it would face higher costs and operational challenges, which could adversely affect its business and gross margin.
Vimeo depends on vendors to process transactions.
Vimeo relies on payment card transactions to earn revenue from its self-serve subscription plans. Vimeo does not directly process credit cards. Instead, it relies exclusively on third-party vendors to process such payments. While this avoids it having to acquire credit card numbers in the first instance, it makes Vimeo
 
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dependent on payment vendors such as credit card processing companies. These vendors have experienced interruptions and errors that have caused Vimeo to lose revenue.
Vimeo may fail to comply with laws regulating subscriptions and free trials.
Subscriptions to Vimeo’s video services automatically renew unless the subscriber cancels the subscription before the end of the current period, and Vimeo often provides free or discounted trial periods. There are various laws regulating such offers, such as the U.S. Restore Online Shoppers Confidence Act (“ROSCA”) and analogous state-level laws. Non-compliance could result in voided contracts, lost revenue, damages and class action or traditional lawsuits.
Changes in laws or industry practices concerning subscription services may have a negative impact on renewal rates.
New laws or interpretations of existing laws may impose obligations that make it difficult or impossible to implement the automatic renewal of subscription to Vimeo’s video service. For example, if Vimeo were required to obtain express opt-in consent for automatic renewal of its video service and were not permitted to deny transactions to people who fail to opt-in, the related rate of renewal would likely decrease substantially. Similarly, private entities involved in payment collection and processing may also effectively regulate subscriptions to Vimeo’s video services. Failure to comply with these rules could result in Vimeo’s inability to process automatic renewals. Finally, Vimeo has no control over policy decisions by app platforms regarding automatic renewals. Policy changes by app platforms could adversely impact Vimeo’s renewal rates for subscription to its video services, and in turn, its business.
The sale of Vimeo’s products are subject to a variety of sales, use and value-added taxes, both in the United States and worldwide.
In 2018, in South Dakota v. Wayfair, the United States Supreme Court held that states may charge taxes on purchases made by their residents from out-of-state sellers who have no physical nexus to the state. As a result of this decision, Vimeo is subject to taxes in states where one or more of its services is taxable, the state permits taxation based upon economic nexus, and Vimeo meets certain thresholds. Vimeo is also, as before, subject to taxes in states in which it maintains a physical presence. Vimeo cannot guarantee complete tax compliance. Vimeo is currently involved in one voluntary disclosure proceeding in one United States state concerning the non-payment of a certain tax.
Vimeo may be subject to digital services taxes (“DSTs”) in a variety of countries.
A DST typically levies a tax rate on a company’s total revenue derived from a country from covered digital activities, which may include online advertising, online transactions or operating certain types of online businesses, such as a social media network. Countries including the UK and France have passed DST laws and more countries are considering them. Depending on the scope of the law and its revenue thresholds, some of Vimeo’s revenue could be in scope for DST taxation. Vimeo may or may not be able to pass along the cost of such additional taxes to subscribers in the taxing countries.
The historical financial information and pro forma financial information, as well as certain Vimeo operating metrics, included in this prospectus may not be indicative of Vimeo’s future results.
The historical financial information and pro forma financial information included in this prospectus may not reflect what Vimeo’s results of operations, financial position and cash flows would have been as an independent company during the periods presented, or be indicative of what Vimeo’s results of operations, financial position and cash flows may be in the future.
In addition, the pro forma financial information included in this prospectus is based, in part, upon a number of estimates and assumptions. These estimates and assumptions may prove not to be accurate, and, accordingly, the pro forma financial information should not be assumed to be indicative of what Vimeo’s financial condition or results of operations actually would have been as a separate company and may not be a reliable indicator of what Vimeo’s financial condition or results of operations may be in the future.
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference “forward-looking statements” within the meaning of the securities laws. All statements that are not historical facts are “forward-looking statements.” The words “estimate,” “project,” “intend,” “expect,” “believe,” “anticipate” and similar expressions, and statements concerning strategy, identify forward-looking statements. These forward-looking statements include, among others, statements regarding future financial performance, anticipated trends and prospects in the markets and industries in which Vimeo operates, business prospects and strategies, including with respect to the Spin-off and the Vimeo merger, and statements relating to Vimeo’s anticipated financial position, liquidity and capital needs. For those statements, Vimeo claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements reflect Vimeo’s judgment and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Although Vimeo believes that the estimates and projections reflected in the forward-looking statements are reasonable, these expectations may prove to be incorrect. Other unknown or unpredictable factors also could have material adverse effects on Vimeo’s future results, performance or achievements. When considering forward-looking statements, you should keep in mind the factors described under the caption “Risk Factors.” Important factors, some of which are described under the caption “Risk Factors,” that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, among others:

risks and uncertainties discussed in this prospectus and other reports that Vimeo has filed with the SEC;

the impact of the COVID-19 pandemic, or any subsequent or similar epidemic or pandemic;

Vimeo’s continued ability to successfully market, distribute and monetize its products and services through search engines, digital app stores and social media platforms;

Vimeo’s ability to market its products and services in a successful and cost-effective manner;

the continued display of links to websites offering Vimeo products and services in a prominent manner in search results;

changes in Vimeo’s relationship with (or policies implemented by) Google or Apple;

Vimeo’s ability to compete;

the failure or delay of the markets and industries in which Vimeo’s business operates to migrate online;

adverse economic events or trends (particularly those that adversely impact consumer confidence and spending behavior), either generally and/or in any of the markets in which Vimeo’s business operates;

changes in policies implemented by third party platforms upon which Vimeo’s business relies for traffic and distribution of mobile apps;

increased competition in the online video category;

Vimeo’s 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;

Vimeo’s ability to successfully scale its enterprise business;

Vimeo’s ability to build, maintain and/or enhance its brands;

Vimeo’s ability to develop and monetize versions of its products and services for mobile and other digital devices;

Vimeo’s continued ability to communicate with users and consumers via email (or other sufficient means);
 
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Vimeo’s ability to access, collect and use personal data about its users and subscribers;

Vimeo’s ability to successfully offset increasing digital app store fees;

Vimeo’s ability to protect their systems from cyberattacks and to protect personal and confidential user information;

the occurrence of data security breaches, fraud and/or additional regulation involving or impacting credit card payments;

the integrity, quality, scalability and redundancy of Vimeo’s systems, technology and infrastructure (and those of third parties with whom it does business);

changes in key personnel;

Vimeo’s ability to service its respective outstanding indebtedness and interest rate risk;

foreign exchange currency rate fluctuations,

operational and financial risks relating to acquisitions and Vimeo’s ability to identify suitable acquisition candidates;

Vimeo’s ability to operate in (and expand into) international markets successfully;

regulatory changes;

Vimeo’s ability to adequately protect their intellectual property rights and not infringe the intellectual property rights of third parties;

the possibility that Vimeo’s historical results may not be indicative of future results;

the risks inherent in separating Vimeo from the other businesses of IAC, including uncertainties related to, among other things, the costs and expected benefits of the Spin-off, any litigation arising out of or relating to the Spin-off, the expected tax treatment of the Spin-off and the impact of the Spin-off on the Vimeo business;

risks relating to the Vimeo merger, including uncertainties related to, among other things, any litigation arising out of or relating to the Vimeo merger, and the tax consequences of the Vimeo merger; and

other circumstances beyond Vimeo’s control.
Vimeo believes these forward-looking statements are reasonable. However, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Vimeo is not under any obligation, and Vimeo does not intend, to make publicly available any update or other revisions to any of the forward-looking statements contained in this prospectus to reflect circumstances existing after the date of this prospectus or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.
 
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RECENT DEVELOPMENTS
Minority Investments in Vimeo OpCo
On November 5, 2020, Vimeo OpCo and IAC Group entered into an investment agreement (the “November 2020 Investment Agreement”) with entities affiliated with Thrive Capital (the “Thrive Entities”) and an entity affiliated with GIC Private Limited (together with the Thrive Entities, the “November Investors”), pursuant to which on November 10, 2020, the November Investors acquired an aggregate of 8,655,510 shares of Vimeo voting common stock for an aggregate purchase price of approximately $150 million, or $17.33 per share, with the transaction valuing Vimeo at an enterprise value of approximately $2.75 billion.
In connection with the investment, Vimeo OpCo, IAC Group and the November Investors entered into an amendment to the existing Vimeo OpCo shareholders agreement. The majority of the provisions of the Vimeo shareholders agreement terminated upon the consummation of the Spin-off and/or the Merger, other than certain confidentiality and registration rights provisions. Additionally, pursuant to the amendment to the Vimeo shareholders agreement, Vimeo OpCo and IAC Group agreed that if the Thrive Entities, together with their respective affiliates (“Thrive”), continue to own at least 75% of the shares of Vimeo voting common stock acquired by Thrive pursuant to the November 2020 Investment Agreement, and Thrive owned at least 2% of the outstanding common stock of Vimeo at the time of the Spin-off, Thrive would have the right to recommend a candidate for consideration for appointment to the initial post-Spin-off Vimeo board of directors, and Vimeo and IAC Group would consider such candidate in good faith.
In addition, the amendment to the Vimeo OpCo shareholders agreement specified certain separation principles relating to a potential Spin-off, with the November Investors’ agreement to cooperate with the Spin-off generally conditioned on compliance with such separation principles (other than departures not materially adverse to the November Investors). The amendment to the shareholders agreement also required that, in connection with the Spin-off, all holders of Vimeo OpCo shares, other than IAC and its affiliates, be given the benefit of the anti-dilution adjustment described in the section of this prospectus entitled “The Vimeo Merger — Consideration to Vimeo OpCo Stockholders.”
On January 25, 2021, Vimeo OpCo and IAC Group entered into investment agreements with funds and accounts advised by T. Rowe Price Associates, Inc. and entities affiliated with Oberndorf Enterprises, LLC, pursuant to which Vimeo OpCo issued and sold 6,170,934 shares of Vimeo OpCo voting common stock for $200 million, or $32.41 per share, at a $5.2 billion pre-money valuation, and 2,828,854 shares of Vimeo OpCo voting common stock for $100 million, or $35.35 per share, at a $5.7 billion pre-money valuation.
In connection with the investment, the investors became parties to the Vimeo OpCo shareholders agreement.
Dividend Payment
On November 5, 2020, prior to the completion of the investment pursuant to the November 2020 Investment Agreement, the Vimeo OpCo board of directors declared a cash dividend in the amount of $0.22 per share of Vimeo OpCo voting common stock and Vimeo OpCo non-voting common stock. The dividend payment date was set as November 13, 2020, and the dividend was paid to Vimeo OpCo stockholders of record as of the close of business on November 5, 2020.
 
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THE SPIN-OFF
Structure of the Spin-off
Subject to the terms and conditions set forth in the separation agreement, IAC’s Vimeo business was separated from the remaining businesses of 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 separate 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 OpCo, 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 par value $0.001 common stock into (i) one share of IAC par value $0.0001 common stock 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 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 par value $0.001 Class B common stock into (i) one share of IAC par value $0.0001 Class B common stock 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 the IAC certificate of incorporation.
Prior to the completion of the Spin-off, IAC indirectly owned approximately 88% of the total outstanding shares of Vimeo OpCo, with the remaining Vimeo OpCo shares held by third-parties. In connection with the Spin-off, Vimeo OpCo’s existing 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 are 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 (see the section of this prospectus entitled “The Vimeo Merger — Consideration to Vimeo OpCo Stockholders”), and see the Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements of Vimeo, Inc. — Note 2.
Formation of Vimeo Holdings
Vimeo was formed in Delaware in December 2020 for the purpose of holding Vimeo OpCo following the Spin-off.
Treatment of IAC Equity Awards
IAC Options
Each option to purchase shares of IAC common stock was converted into an option to purchase shares of IAC common stock and an option to purchase shares of Vimeo common stock with adjustments to the number of shares subject to each option and the option exercise prices based on (1) the value of IAC common stock prior to the Spin-off and (2) the value of IAC common stock and the value of Vimeo common stock after giving effect to the Spin-off.
 
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Except as otherwise described above and except to the extent otherwise provided under local law, following the Spin-off, the converted options generally have the same terms and conditions, including the same exercise periods, as the options to purchase shares of IAC common stock had immediately prior to the Spin-off.
Following the Spin-off, solely for purposes of determining the expiration of options with respect to shares of common stock of one company held by employees of the other company, IAC and Vimeo employees will be deemed employed by both companies for so long as they continue to be employed by whichever of the companies employs them immediately following the Spin-off.
IAC RSUs
All IAC restricted stock units (“RSUs”) continue to be IAC RSUs following the Spin-off, with adjustments to the number of RSUs based on (1) the value of IAC common stock prior to the Spin-off and (2) the value of IAC common stock after giving effect to the Spin-off.
Except as otherwise described above and except to the extent otherwise provided under local law, following the Spin-off, the RSUs generally will have the same terms and conditions, including the same vesting provisions, as the IAC RSUs had immediately prior to the date of the Spin-off.
Treatment of Mr. Levin’s IAC Restricted Stock Award
On November 5, 2020, Mr. Levin received an IAC Restricted Stock award covering 3,000,000 shares of IAC common stock.
In the Spin-off, Mr. Levin received in respect of each share of IAC restricted common stock that he holds a number of shares of Vimeo common stock based on the Spin-off exchange ratio and retained his 3,000,000 shares of IAC restricted common stock.
In connection with the Spin-off:

the IAC stock price performance goals applicable to the IAC Restricted Stock award were equitably adjusted to reflect the impact of the Spin-off, including giving effect to the Spin-off exchange ratio; and

Vimeo and Mr. Levin entered into a restricted stock agreement covering the shares of restricted Vimeo common stock received by Mr. Levin in the Spin-off, with the vesting of such shares generally subject to the same requirements as are applicable to the IAC Restricted Stock award, including Vimeo stock price performance goals that reflect the impact of the Spin-off, including giving effect to the Spin-off exchange ratio.
For purposes of the Vimeo Restricted Stock award, the definition of “Change in Control” mirrors the definition that applies to the IAC Restricted Stock award, except that the relevant entity for purposes of the definition will be Vimeo, rather than IAC. Upon a Change in Control of Vimeo, a designated percentage of the Vimeo Restricted Stock award will vest based on the timing of the Change of Control and subject to a floor of 30%, escalating to 100%. Except as otherwise noted above, the Vimeo Restricted Stock award generally will have the same terms as the IAC Restricted Stock award.
Treatment of Vimeo OpCo Equity Awards
Vimeo OpCo has outstanding stock appreciation rights (“Vimeo OpCo SARs”) and restricted stock units (“Vimeo OpCo RSU awards”), the value of which correspond to shares of Vimeo OpCo common stock.
In the Vimeo merger:

each Vimeo SAR was converted into a stock appreciation right corresponding to, and settled in, shares of Vimeo common stock (“Vimeo SAR”), with adjustments to the number of shares subject to each Vimeo SAR and the base price applicable to each Vimeo SAR, based on the exchange ratio in the Vimeo merger; and
 
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each Vimeo RSU Award was converted into an award of restricted stock units corresponding to, and settled in, shares of Vimeo common stock (“Vimeo RSU Award”), with adjustments to the number of shares subject to each Vimeo RSU Award based on the exchange ratio in the Vimeo merger.
The Vimeo SARs and the Vimeo RSU awards otherwise have terms and conditions that are customary for a public company stock appreciation right and restricted stock unit.
Accounting Treatment
IAC and Vimeo prepare their financial statements in accordance with United States generally accepted accounting principles. After the Spin-off, the assets and liabilities of Vimeo will be accounted for at their historical carrying values immediately prior to the Spin-off.
Market for Vimeo Common Stock
Prior to the Spin-off, there was no established public trading market for Vimeo common stock. Vimeo common stock is listed on The Nasdaq Global Select Market under the ticker symbol “VMEO.” Trading in Vimeo common stock under this symbol began on the first business day following the date that IAC completed the Spin-off.
Post-Spin-off Governance and Management
Please see “Directors and Executive Officers” for information regarding the persons who serve on the Vimeo board of directors.
In connection with their prior investment in Vimeo OpCo (see the section of this prospectus entitled “Recent Developments — Minority Investments in Vimeo.”), Vimeo and IAC agreed that if Thrive continues to own at least 75% of the shares of Vimeo voting common stock acquired by Thrive pursuant to the Investment Agreement, and Thrive owns at least 2% of the outstanding common stock of Vimeo at the time of the Spin-off, Thrive will have the right to recommend a candidate for consideration for appointment to the initial post-Spin-off Vimeo Holdings board of directors, and Vimeo and IAC will consider such candidate in good faith.
The executive officers of Vimeo OpCo prior to the Spin-off have been appointed to serve as the executive officers of Vimeo following the Spin-off. Anjali Sud, Narayan Menon, Mark Kornfilt and Michael A. Cheah currently serve as executive officers of Vimeo OpCo. At this time, there are no other individuals identified to serve as executive officers of Vimeo following the Spin-off.
For more information regarding Vimeo’s governance and management, see the section of this prospectus entitled “Directors and Executive Officers.”
 
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THE VIMEO MERGER
The following section summarizes certain material aspects of the Vimeo merger. This summary does not purport to be complete and may not contain all of the information that is important to you. You are urged to read the Vimeo merger agreement filed as Exhibit 2.2 to the registration statement of which this prospectus forms a part carefully and in its entirety, as well as this prospectus and the information incorporated by reference into this prospectus.
Structure of the Merger
The Vimeo merger agreement provides, among other matters and on the terms and subject to the conditions in the Vimeo merger agreement and in accordance with the DGCL, for the merger of Merger Sub with and into Vimeo OpCo, with Vimeo OpCo continuing as the surviving corporation and as a wholly owned subsidiary of Vimeo.
Consideration to Vimeo OpCo Stockholders
Subject to the applicable provisions of the Vimeo merger agreement, at the effective time, by virtue of the Vimeo merger and without any action on the part of the parties or holders of any securities of Vimeo OpCo or any other person:

each share of Vimeo OpCo capital stock owned by Vimeo, IAC or any subsidiary of Vimeo or IAC (other than any subsidiary of Vimeo) or held in treasury by Vimeo OpCo was cancelled for no consideration; and

each share of Vimeo OpCo capital stock issued and outstanding immediately prior to the effective time of the Vimeo merger and owned by a non-IAC Vimeo OpCo stockholder (other than any dissenting shares) was automatically cancelled and converted into the right to receive a number of shares of Vimeo common stock equal to the Vimeo merger exchange ratio.
As used in this document, the terms set forth below will have the following meanings:

“base merger exchange ratio” means (a) the number of mandatory exchange shares divided by (b) the number of shares of Vimeo OpCo capital stock outstanding and owned by Vimeo, IAC or any subsidiary of either Vimeo or IAC immediately prior to the effective time of the Vimeo merger;

“IAC option” means an option (either nonqualified or incentive) to purchase shares of IAC common stock issued under any IAC compensation plan;

“IAC ratio” means (a) one minus (b) the Vimeo Holdings ratio;

“IAC service provider option value” means (a) the product of (i) the total number of shares of IAC common stock underlying IAC options (excluding IAC options held by employees of Vimeo OpCo and its subsidiaries) (referred to as “IAC service provider options”) as of immediately prior to the effective time of the mandatory exchange that is part of the IAC reclassification and (ii) the IAC VWAP, less (b) the sum of the exercise prices required to exercise all IAC service provider options; provided that if such product is a negative number, IAC service provider option value means $0.00;

“IAC stock value” means the opening price of IAC common stock on the Nasdaq on the first Nasdaq trading day beginning following the occurrence of the effective time of the mandatory exchange;

“IAC VWAP” means the average, rounded to four decimal places, of the daily dollar-volume-weighted average price for IAC common stock, as reported by Bloomberg, L.P. through its “IAC Equity AQR” function for the time period 9:30 a.m. through 4:00 p.m. (or if such function or service ceases to exist, any substitute function or service mutually agreed between Vimeo and Vimeo OpCo) for the ten consecutive Nasdaq trading days ending on the date that is the second business day prior to the occurrence of the effective time of the mandatory exchange;

“mandatory exchange shares” means shares of Vimeo capital stock exchanged for shares of IAC Series 1 mandatorily exchangeable preferred stock and IAC Series 2 mandatorily exchangeable
 
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preferred stock pursuant to the mandatory exchange that is part of the IAC reclassification (including any shares of Vimeo capital stock sold or to be sold in order to pay cash in lieu of fractional shares, but excluding any shares of Vimeo capital stock exchanged for shares of IAC Series 1 mandatorily exchangeable preferred stock or IAC Series 2 mandatorily exchangeable preferred stock issued in respect of restricted shares of IAC common stock outstanding on the date of the original Vimeo merger agreement);

“merger exchange ratio adjustment amount” means (a) the option adjustment share number divided by (b) the number of shares of Vimeo common stock outstanding (calculated on a fully diluted, treasury method basis, including all outstanding equity awards of Vimeo) immediately prior to the effective time of the mandatory exchange, with such calculation in respect of all Vimeo SARs made based on a price per share of Vimeo common stock as determined consistent with an aggregate valuation for Vimeo determined in good faith by the Vimeo board of directors prior to the closing of the Vimeo merger;

“option adjustment share number” means (a) the option adjustment value divided by (b) the Vimeo Holdings stock price;

“option adjustment value” means (a) the product of (i) fifty percent (50%) of the IAC service provider option value and (ii) the Vimeo Holdings ratio minus (b) the product of (i) the Vimeo OpCo service provider option value and (ii) the IAC ratio;

“Vimeo Holdings ratio” means (a) the Vimeo Holdings stock value divided by (b) the sum of (i) the Vimeo Holdings stock value and (ii) the IAC stock value;

“Vimeo Holdings stock price” means the quotient of (a)(i) the closing price of IAC common stock on the Nasdaq on the last full Nasdaq trading day prior to the occurrence of the effective time of the mandatory exchange minus (ii) the IAC stock value over (b) the Spin-off exchange ratio;

“Vimeo Holdings stock value” means the product of (a) the Vimeo Holdings stock price and (b) the spin-off exchange ratio;

“Vimeo merger exchange ratio” means the sum of (a) the base merger exchange ratio and (b) the merger exchange ratio adjustment amount, rounded to four decimal places; and

“Vimeo service provider option value” means (a) the product of (i) the total number of shares of IAC common stock underlying IAC options held by Vimeo OpCo employees (referred to as “Vimeo service provider options”) as of immediately prior to the effective time of the mandatory exchange and (ii) the IAC VWAP, less (b) the sum of the exercise prices required to exercise all Vimeo service provider options; provided that if such product is a negative number, Vimeo service provider option value means $0.00.
 
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THE VIMEO MERGER AGREEMENT
The following section summarizes certain material provisions of the Vimeo merger agreement, which is filed as Exhibit 2.2 to the registration statement of which this prospectus forms a part. The summary of the Vimeo merger agreement below and elsewhere in this prospectus is qualified in its entirety by reference to the Vimeo merger agreement. This summary does not purport to be complete and may not contain all of the information about the Vimeo merger agreement that is important to you. This section is not intended to provide you with any factual information about Vimeo or Vimeo OpCo. The rights and obligations of Vimeo and Vimeo OpCo under the Vimeo merger agreement are governed by the Vimeo merger agreement and not by this summary or any other information contained in or incorporated by reference into the registration statement of which this prospectus forms a part. You are urged to read the Vimeo merger agreement carefully and in its entirety, as well as this prospectus and the information incorporated by reference into the registration statement of which this prospectus forms a part.
Explanatory Note Regarding the Vimeo Merger Agreement
The Vimeo merger agreement is filed as Exhibit 2.2 to the registration statement of which this prospectus forms a part and is described in this summary to provide you with information regarding its terms. The Vimeo merger agreement contains representations and warranties by Vimeo and Merger Sub, on the one hand, and by Vimeo OpCo, on the other hand, which were made solely for the benefit of the other parties for purposes of the Vimeo merger agreement. The representations, warranties and covenants made in the Vimeo merger agreement by Vimeo, Vimeo OpCo and Merger Sub were qualified and subject to important limitations agreed to by Vimeo, Vimeo OpCo and Merger Sub in connection with negotiating the terms of the Vimeo merger agreement. In particular, in your review of the representations and warranties contained in the Vimeo merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of allocating risk between the parties to the Vimeo merger agreement, rather than establishing matters as facts about Vimeo, Vimeo OpCo, Merger Sub or any other person at the time they were made or otherwise. The representations and warranties may also be subject to a contractual standard of materiality different from that generally applicable to stockholders and reports and documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this prospectus, may have changed since the date of the Vimeo merger agreement. Accordingly, the representations and warranties and other provisions of the Vimeo merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this prospectus and in the documents incorporated by reference into the registration statement of which this prospectus forms a part. See the section of this prospectus entitled “Where You Can Find More Information.”
The Vimeo Merger
The Vimeo merger agreement provides for, among other matters, on the terms and subject to the conditions in the Vimeo merger agreement and in accordance with the DGCL, the merger of Merger Sub with and into Vimeo OpCo, with Vimeo OpCo continuing as the surviving corporation and as a wholly owned subsidiary of Vimeo.
At the effective time, the certificate of incorporation and the bylaws of the surviving corporation were amended to read the same as the certificate of incorporation and the bylaws, respectively, of Merger Sub as in effect immediately prior to the effective time until thereafter changed or amended (subject to the requirements described in the section below entitled “— Director and Officer Indemnification”), except that the name of the surviving corporation will be named Vimeo.com, Inc. and references to the incorporator will be deleted.
The officers and directors of Vimeo OpCo immediately prior to the effective time of the Vimeo merger are the initial officers and directors of the surviving corporation, until their successors are duly elected or appointed and qualified.
Closing; Effective Time
Pursuant to the merger agreement, the closing took place remotely by exchange of documents and signatures, at 9:00 a.m., eastern time, on the third business day after the satisfaction or, to the extent
 
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permitted by applicable law, waiver of the last of the conditions to closing (other than any such conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted by applicable law, waiver of such conditions at the closing), unless another date or place is agreed to in writing by Vimeo and Vimeo OpCo. The closing of the Vimeo merger occurred on May 25, 2021.
On the closing date, the parties caused a certificate of merger with respect to the Vimeo merger to be duly executed and filed with the Secretary of State of the State of Delaware as provided under the DGCL and made any other filings, recordings or publications required to be made under the DGCL in connection with the Vimeo merger. The Vimeo merger became effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such other time as may be agreed to by Vimeo and Vimeo OpCo and specified in the certificate of merger.
Consideration; Effect of the Vimeo Merger on Vimeo Capital Stock
Subject to the applicable provisions of the Vimeo merger agreement, at the effective time of the Vimeo merger, by virtue of the Vimeo merger and without any action on the part of the parties or holders of any securities of Vimeo OpCo or any other person, each share of Vimeo OpCo voting common stock and each share of Vimeo OpCo non-voting common stock (other than any shares of Vimeo OpCo voting common stock or Vimeo OpCo non-voting common stock owned by Vimeo, IAC or any subsidiary of Vimeo or IAC (other than any subsidiary of Vimeo OpCo), shares held in treasury by Vimeo OpCo, or any dissenting shares) issued and outstanding immediately prior to the effective time of the Vimeo merger were converted into the right to receive a number of shares of Vimeo common stock equal to the Vimeo merger exchange ratio.
Also at the effective time of the Vimeo merger, (a) each share of Vimeo OpCo capital stock issued and outstanding immediately prior to the effective time of the Vimeo merger that was owned by Vimeo, IAC or any subsidiary of Vimeo or IAC (other than any subsidiary of Vimeo OpCo) or was held in treasury by Vimeo OpCo was automatically cancelled without payment of any consideration therefor, and (b) each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the effective time of the Vimeo merger was automatically converted into and become one fully paid and nonassessable share of common stock of the surviving corporation.
Exchange Procedures
Prior to the effective time of the Vimeo merger, Vimeo designated a bank or trust company to act as the exchange agent in connection with the Vimeo merger (the “exchange agent”). Promptly (and in any event within three business days) after the effective time of the Vimeo merger, Vimeo will deposit, or cause to be deposited, with the exchange agent for the sole benefit of Vimeo OpCo stockholders (other than Vimeo, IAC, any subsidiary of Vimeo or IAC (other than any subsidiary of Vimeo OpCo) and any dissenting stockholders) (collectively, the “converting holders”) evidence of book-entry shares of Vimeo common stock representing the shares of Vimeo common stock issuable pursuant to the Vimeo merger agreement. Vimeo will subsequently deposit with the exchange agent cash in immediately available funds (or other property or securities, as applicable) in an amount sufficient to pay any dividends or other distributions on shares of Vimeo common stock payable in accordance with the applicable provisions of the Vimeo merger agreement.
As soon as reasonably practicable after the effective time of the Vimeo merger, Vimeo will cause the exchange agent to mail to each holder of shares of Vimeo OpCo capital stock that were converted into the right to receive shares of Vimeo common stock:

with respect to (a) each holder of record of a certificate or certificates which immediately prior to the effective time of the Vimeo merger represented outstanding shares of Vimeo OpCo capital stock (“Vimeo OpCo certificates”) and (b) each holder of record of a book-entry position or book-entry positions which immediately prior to the effective time of the Vimeo merger represented outstanding shares of Vimeo OpCo capital stock (“Vimeo OpCo book-entry shares”), a customary letter of transmittal, which will specify that delivery will be effected, and risk of loss and title to the Vimeo OpCo certificates will pass, only upon delivery of the Vimeo OpCo certificates (or affidavits of loss in lieu thereof and, if required by Vimeo OpCo Holdings, an indemnity bond) to the exchange agent; and
 
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instructions for effecting the surrender of the Vimeo OpCo certificates (or affidavits of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry shares in exchange for the shares of Vimeo common stock into which such shares of Vimeo OpCo capital stock have been converted, including any cash amount payable in lieu of fractional shares of Vimeo common stock and any dividends or other distributions on shares of Vimeo common stock payable in accordance with the applicable provisions of the Vimeo merger agreement.
Upon surrender of a Vimeo OpCo certificate (or an affidavit of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry share for cancellation to the exchange agent, together with a duly completed and validly executed letter of transmittal and such other documents as may be required, such holder will be entitled to receive (a) that number of whole shares of Vimeo common stock (which will be in uncertificated book-entry form), (b) any cash in lieu of fractional shares of Vimeo common stock, and (c) any dividends or other distributions on shares of Vimeo common stock, in each case that such holder has the right to receive in respect of the shares of Vimeo OpCo capital stock formerly represented by such Vimeo OpCo certificate or Vimeo OpCo book-entry shares in accordance with the applicable provisions of the Vimeo merger agreement, and the Vimeo OpCo certificate (or an affidavit of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry shares so surrendered will be cancelled. The exchange agent will accept such Vimeo OpCo certificates (or affidavits of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry shares upon compliance with such reasonable terms and conditions as the exchange agent may impose to effect an orderly exchange.
From the effective time of the Vimeo merger, there will be no further registration of transfers of Vimeo OpCo capital stock. Until surrendered, each Vimeo OpCo certificate and each Vimeo OpCo book-entry share is deemed at any time after the effective time of the Vimeo merger to represent only the right to receive the shares of Vimeo common stock payable in respect of such shares, including any cash amount payable in respect of fractional shares of Vimeo common stock and any dividends or other distributions on shares of Vimeo common stock payable in accordance with the applicable provisions of the Vimeo merger agreement.
Any amounts remaining unclaimed by the converting holders six months following the effective date of the Vimeo merger will, at any time thereafter at the request of Vimeo, be delivered to Vimeo or as otherwise instructed by Vimeo. None of Vimeo, Vimeo OpCo, the surviving corporation or the exchange agent will be liable to any converting holder or any other person for the shares of Vimeo common stock issuable pursuant to the Vimeo merger agreement or other amounts delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Any amounts remaining unclaimed by converting holders immediately prior to such time when the amounts would otherwise escheat to or become property of any governmental entity will become, to the extent permitted by applicable law, the property of Vimeo free and clear of any claims or interest of any person.
In the event that any Vimeo OpCo certificate has been lost, stolen or destroyed, the exchange agent will issue in exchange for such lost, stolen or destroyed Vimeo OpCo certificate, upon the making of an affidavit of that fact by the holder and, if required by Vimeo, an indemnity bond, the shares of Vimeo common stock issuable in respect of the shares of Vimeo OpCo capital stock represented by such Vimeo OpCo certificate, including any cash amount payable in respect of fractional shares of Vimeo common stock and any dividends or other distributions on shares of Vimeo common stock payable in accordance with the applicable provisions of the Vimeo merger agreement.
No dividends or other distributions with respect to Vimeo common stock with a record date after the effective time of the Vimeo merger will be paid to the holder of any unsurrendered Vimeo OpCo certificate or Vimeo OpCo book-entry shares with respect to the shares of Vimeo common stock issuable pursuant to the Vimeo merger agreement, and all such dividends and other distributions will be paid by Vimeo to the exchange agent until the surrender of such Vimeo OpCo certificate (or an affidavit of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry shares. Subject to applicable law, following surrender of any such Vimeo OpCo certificate (or affidavit of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry shares, there will be paid to the holder thereof, without interest, (a) the amount of dividends or other distributions with a record date after the effective time of the Vimeo merger paid with respect to such shares of Vimeo common stock to which such holder is entitled pursuant to the Vimeo merger agreement and (c) at the appropriate payment date, the amount of
 
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dividends or other distributions with a record date after the effective time of the Vimeo merger but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such shares of Vimeo common stock.
No Fractional Shares
Vimeo will not issue fractional shares of Vimeo common stock in the Vimeo merger. As promptly as reasonably practicable following the effective time of the Vimeo merger, the exchange agent, acting as agent for the holders of Vimeo OpCo capital stock who would otherwise have been entitled to receive fractional shares of Vimeo common stock, will aggregate all fractional shares of Vimeo common stock that would otherwise have been required to be distributed to such holders and cause such fractional shares to be sold on the nationally recognized stock exchange on which shares of Vimeo common stock will be listed in connection with the Spin-off at then-prevailing prices in the manner provided in the immediately following sentence. The sale of such fractional shares by the exchange agent, acting as agent for such holders, will be executed in round lots to the extent practicable, and until the proceeds of sale or sales have been distributed to such holders, the exchange agent will, subject to the return to Vimeo or as otherwise instructed by Vimeo of any amounts remaining unclaimed by the converting holders six months following the closing date, hold such proceeds in trust for such holders. Each such holder will, in lieu of receiving fractional shares that such holder would otherwise have been entitled to receive, be entitled to receive from the proceeds from such sales by the exchange agent, rounded to the nearest whole cent and without interest, an amount equal to such holder’s proportionate interest in the proceeds from such sales. As promptly as reasonably practicable after the determination of the amount of cash, if any, to be paid to the holders of Vimeo OpCo capital stock who would otherwise have been entitled to receive fractional shares of Vimeo common stock, the exchange agent will make available such amounts, without interest, to such holders.
Withholding Rights
Each of Vimeo, Vimeo OpCo, the surviving corporation and the exchange agent will be entitled to deduct and withhold from amounts otherwise payable pursuant to the Vimeo merger agreement any amounts as are required to be deducted or withheld with respect to such payment under the Code or any other applicable law. To the extent that amounts are so deducted or withheld, such amounts will be treated as having been paid to the person in respect of which such deduction or withholding was made.
Dissenting Shares
Any share of Vimeo OpCo capital stock, as of the effective time of the Vimeo merger, held by a holder who properly exercised (and has not effectively withdrawn or lost) his, her or its appraisal rights with respect to such share under Section 262 of the DGCL (a “dissenting share”) were not converted into and do not represent a right to receive the consideration set forth in the applicable provisions of the Vimeo merger agreement, and the holder of such dissenting share will be entitled only to such rights as may be granted to such holder in Section 262 of the DGCL. However, if the status of any such dissenting share as a share carrying appraisal rights is withdrawn, or if any such dissenting share loses its status as a share carrying appraisal rights, then, as of the later of the effective time or the loss of such status, such dissenting share will automatically be converted into and will represent only the right to receive (upon the surrender of the applicable Vimeo OpCo certificate (or an affidavit of loss in lieu thereof and, if required by Vimeo, an indemnity bond) or Vimeo OpCo book-entry share) the consideration set forth in the applicable provisions of the Vimeo merger agreement, without any interest thereon.
Actions Related to the Spin-off
The Vimeo merger agreement provides that nothing in the Vimeo merger agreement will, or will be deemed to, restrict, prevent or prohibit the consummation of any transactions determined by IAC or any of its subsidiaries to be necessary or desirable to carry out the Spin-off, including the transfer by IAC Group to Vimeo of the shares of Vimeo OpCo capital stock held by IAC Group and including the IAC reclassification, or to affect in any respect IAC’s right to abandon the Spin-off (and accordingly cause the Vimeo merger to be abandoned) in its sole discretion.
 
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Representations and Warranties
The Vimeo merger agreement contains representations and warranties by Vimeo, Vimeo OpCo and Merger Sub that are subject to certain exceptions and qualifications (including exceptions and qualifications related to materiality).
The Vimeo merger agreement contains representations and warranties by Vimeo OpCo relating to, among other things, the following:

due organization, valid existence, good standing and qualification to do business;

capitalization;

corporate power and authority; and

absence of certain conflicts.
The Vimeo merger agreement contains representations and warranties by Vimeo and Merger Sub relating to, among other things, the following:

due organization, valid existence, good standing and qualification to do business;

corporate power and authority; and

absence of certain conflicts.
The representations and warranties in the Vimeo merger agreement do not survive the effective time of the Vimeo merger.
Covenants and Agreements
Consent Solicitation
The Vimeo merger agreement provides that Vimeo OpCo will seek Vimeo OpCo stockholder approval of the Vimeo merger, which approval has been obtained.
Director and Officer Indemnification
The parties to the Vimeo merger agreement have agreed that, for a period of six years from and after the effective time, Vimeo will:

cause the surviving corporation to indemnify and hold harmless all past and present directors and officers of Vimeo OpCo and its subsidiaries (collectively, the “Vimeo indemnified parties”) against any costs or expenses, judgments, fines, claims, damages and amounts paid in settlement in connection with any actual or threatened claim, investigation or proceeding in respect of acts or omissions alleged to have occurred at or prior to the effective time of the Vimeo merger, to the fullest extent permitted by applicable law and the Vimeo OpCo governing documents; and

cause to be maintained in effect the provisions in the Vimeo OpCo governing documents in existence on the date of the original Vimeo merger agreement regarding elimination of liability, indemnification of officers and directors and advancement of expenses that are in existence on the date of the Vimeo merger agreement.
Certain Additional Covenants and Agreements
The Vimeo merger agreement contains certain other covenants and agreements, including, among others, covenants relating to preparation and filing of a joint registration statement, exemption from takeover laws, and the submission of an application for the listing of the shares of Vimeo common stock to be issued in the Vimeo merger on any nationally recognized stock exchange on which shares of Vimeo common stock will be listed in connection with the Spin-off.
 
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Expenses
Except as otherwise expressly provided in the Vimeo merger agreement, all costs and expenses incurred in connection with the Vimeo merger agreement and the Vimeo merger will be paid by the party incurring such costs and expenses.
Amendments and Waivers
Subject to applicable law and except as otherwise provided in the merger agreement, the merger agreement may be amended, modified and supplemented by written agreement of the parties at any time before or after receipt of the Vimeo OpCo stockholder approval. However, after the Vimeo OpCo stockholder approval has been obtained, there may not be any amendment that by applicable law requires further approval by the respective stockholders of Vimeo, Vimeo OpCo or Merger Sub, as applicable, without such further approval of such stockholders.
No Third-Party Beneficiaries
The Vimeo merger agreement is not intended to and does not confer upon any person other than the parties to the Vimeo merger agreement any rights or remedies, except with respect to certain provisions related to (a) the right of IAC to, without restriction from the Vimeo merger agreement, carry out or abandon the Spin-off (and the Vimeo merger) and (b) the indemnification of Vimeo OpCo directors and officers.
Governing Law
The Vimeo merger agreement is governed by Delaware law, without giving effect to conflicts of laws principles that would result in the application of the law of any other state.
 
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DIVIDEND POLICY
The timing, initiation, declaration, amount and payment of any dividends following the Spin-off is within the discretion of the Vimeo board of directors and depends upon many factors, including Vimeo’s financial condition, earnings, capital requirements of Vimeo’s operating subsidiaries, legal requirements, regulatory constraints, industry practice, ability to access capital markets, and other factors deemed relevant by the Vimeo board of directors. Moreover, if Vimeo determines to pay any dividend in the future, there can be no assurance that Vimeo will continue to pay such dividends or the amount of such dividends. Vimeo does not currently expect that cash or other dividends will be paid by it in the near future.
 
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SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected financial data is only a summary and should be read in conjunction with the historical consolidated financial statements and accompanying notes and management’s discussion and analysis of financial condition and results of operations included elsewhere in this prospectus. For information relating to periods prior to the Spin-off, the financial statements presented below relate to Vimeo OpCo. Following completion of the Spin-off, Vimeo will report consolidated financial results, which will include Vimeo OpCo.
The following table presents selected consolidated financial information of Vimeo OpCo as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 and as of and for the years ended December 31, 2019 and 2020. The selected consolidated financial data of Vimeo OpCo as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 and as of December 31, 2019 and 2020 and for the years ended December 31, 2019 and 2020 were derived from the consolidated financial statements of Vimeo OpCo included as Annex A to this prospectus. You should read the information in the following table in conjunction with the consolidated financial statements and accompanying notes of Vimeo OpCo included in Annex A to this prospectus, as well as the disclosure set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Three Months Ended
March 31,
Years Ended
December 31,
2021
2020
2019
2020
(In thousands, except per share data)
Statement of Operations Data:
Revenue
$ 89,422 $ 56,968 $ 196,015 $ 283,218
Operating loss
(5,598) (17,193) (60,253) (40,777)
Net earnings (loss)
3,313 (20,260) (75,577) (50,628)
Basic and diluted earnings (loss) per share
$ 0.02 $ (0.14) $ (0.58) $ (0.36)
Dividends declared per share
$ $ $ $ 0.22
March 31,
December 31,
2021
2019
2020
(In thousands)
Balance Sheet Data:
Total assets
$ 584,509 $ 271,500 $ 371,079
Debt – related party:
Promissory notes due on demand – related party
59,753 44,565
Long-term debt – related party
37,706 50,000
 
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VIMEO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 22, 2020, IAC announced that its Board of Directors approved a plan to spin-off its full stake in its Vimeo business to IAC shareholders. IAC’s Vimeo business (Vimeo.com, Inc., formerly Vimeo, Inc. or “Vimeo OpCo”) was separated from the remaining businesses of IAC through a series of transactions (which we refer to as the “Spin-off”) that resulted in the transfer of IAC’s Vimeo business to Vimeo, Inc. (formerly Vimeo Holdings, Inc. or “Vimeo”), a wholly-owned subsidiary of IAC which became an independent, separately traded public company through a spin-off from IAC. The Spin-off was completed prior to the open of business on May 25, 2021.
In connection with the Spin-off, pursuant to Vimeo OpCo’s existing shareholders agreement, Vimeo OpCo shares held by non-IAC Vimeo OpCo stockholders were converted into Vimeo common stock, which we refer to as the “Vimeo minority exchange.”
The following unaudited pro forma condensed consolidated financial statements of Vimeo give effect to the Spin-off and Vimeo minority exchange and are presented in accordance with Article 11 of the Securities and Exchange Commission’s (the “SEC”) Regulation S-X.
For purposes of these unaudited pro forma condensed consolidated financial statements, the Spin-off and Vimeo minority exchange are assumed to have occurred as of January 1, 2020 with respect to the unaudited pro forma condensed consolidated statements of operations and as of March 31, 2021 with respect to the unaudited pro forma condensed consolidated balance sheet.
The unaudited pro forma condensed consolidated balance sheet and related unaudited pro forma statement of operations as of and for the three  months ended March 31, 2021 have been derived from the unaudited historical consolidated balance sheet and related historical consolidated statement of operations of Vimeo OpCo as of and for the three months ended March  31, 2021 included in Annex A to this prospectus. The unaudited pro forma condensed consolidated statement of operations for the year ended December  31, 2020 has been derived from the audited historical consolidated statement of operations of Vimeo OpCo for the year ended December 31, 2020 included in Annex A to this prospectus.
The historical consolidated financial statements of Vimeo OpCo have been derived from IAC’s historical accounting records and reflect the allocation of costs from IAC for certain services that IAC provided to Vimeo OpCo in the ordinary course (e.g. shared services and rent for space in IAC’s corporate headquarters). In addition, certain previously unallocated costs have been allocated to Vimeo OpCo in accordance with the SEC’s Staff Accounting Bulletin Topic No. 1:B:1, “Allocation Of Expenses And Related Disclosure In Financial Statements Of Subsidiaries, Divisions Or Lesser Business Components Of Another Entity” in the preparation of Vimeo OpCo’s historical consolidated financial statements included in this prospectus. In management’s opinion, the basis on which these expenses have been allocated to Vimeo OpCo from IAC is reasonable. However, the historical consolidated financial statements of Vimeo OpCo do not necessarily represent the financial position or results of operations of Vimeo OpCo had it been operated as an independent, separate public company during the period or at the date presented. As a result, a pro forma adjustment has been made to reflect the incremental costs that Vimeo expects to incur as an independent, separate public company. These pro forma adjustments are referred to as “Autonomous Entity Adjustments” in these unaudited pro forma condensed consolidated financial statements.
The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved had the Spin-off occurred on the dates assumed, nor is it indicative of Vimeo’s future operating results or financial position. Because these unaudited pro forma condensed consolidated financial statements have been prepared based upon preliminary estimates, the impact of the Spin-off and the timing thereof could cause material differences from the information presented herein.
The pro forma adjustments are based upon information and assumptions available at the time of the filing of this prospectus as set forth in the notes to the unaudited pro forma condensed consolidated financial statements. The pro forma information should be read in conjunction with the accompanying notes thereto, with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included elsewhere in this prospectus, and Vimeo OpCo’s historical unaudited and audited consolidated financial statements and related notes thereto, which are included in Annex A to this prospectus.
 
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VIMEO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2021
(In thousands, except par value amounts)
Vimeo OpCo
Historical
Consolidated
Adjustments
Related to the
Spin-off and
Other
Transactions
Notes
Autonomous
Entity
Adjustments
Notes
Vimeo, Inc.
Pro Forma
ASSETS
Cash and cash equivalents
$ 316,305 $ $ $ 316,305
Accounts receivable, net
14,121 14,121
Other current assets
11,335 11,335
Total current assets
341,761 341,761
Leasehold improvements and equipment, net
3,320 3,320
Goodwill 219,337 219,337
Intangible assets with definite lives, net
8,967 8,967
Other non-current assets
11,124 11,124
TOTAL ASSETS
$ 584,509 $ $ $ 584,509
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable, trade
$ 2,797 $ $ $ 2,797
Deferred revenue
147,766 147,766
Accrued expenses and other current liabilities
40,102 786 (5a) 1,512 (7) 42,400
Total current liabilities
190,665 786 1,512 192,963
Other long-term liabilities
4,710 4,710
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Class A Voting common stock $0.01 par value
928 (177) (2)
(751) (3)
Class B Non-Voting common stock $0.01 par
value
663 (16) (2)
(647) (3)
Preferred stock $0.01 par value
Common stock $0.01 par value
195 (2) 1,548
1,304 (3)
49 (4b)
Class B common stock $0.01 par value
94 (3) 94
Additional paid-in-capital
667,348 (2) (2) 667,297
(49) (4b)
Accumulated deficit
(279,696) (786) (5a) (1,512) (7) (281,994)
Accumulated other comprehensive loss
(109) (109)
Total shareholders’ equity
389,134 (786) (1,512) 386,836
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 584,509 $ $ $ 584,509
 
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VIMEO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(In thousands, except per share data)
Vimeo OpCo
Historical
Consolidated
Adjustments
Related to the
Spin-off and
Other
Transactions
Notes
Autonomous
Entity
Adjustments
Notes
Vimeo, Inc.
Pro Forma
Revenue $ 89,422 $ $ $ 89,422
Cost of revenue (exclusive of depreciation shown separately below)
24,956 24,956
Gross profit
64,466 64,466
Operating expenses:
Research and development expense
21,475 21,475
Sales and marketing expense
32,069 32,069
General and administrative expense
14,518 2,565 (4a) 1,512 (7) 16,878
(1,717) (5b)
Depreciation
115 115
Amortization of intangibles
1,887 1,887
Total operating expenses
70,064 848 1,512 72,424
Operating loss
(5,598) (848) (1,512) (7,958)
Interest expense
(64) (64)
Interest expense – related party
(726) 726 (1)
Other income, net
10,086 10,086
Earnings before income taxes
3,698 (122) (1,512) 2,064
Income tax (provision) benefit
(385) 28 (6) 348 (7) (9)
Net earnings attributable to Class A
Voting common stock and Class B
Non-Voting common stock shareholders
$ 3,313 $ (94) $ (1,164) $ 2,055
Per share information attributable to Class A Voting common stock and Class B Non-Voting common stock shareholders: (8)
Basic earnings per share
$ 0.02 $ 0.01
Diluted earnings per share
$ 0.02 $ 0.01
Weighted average basic shares outstanding
156,480 159,347
Weighted average diluted shares outstanding
165,888 173,911
 
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VIMEO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2020
(In thousands, except per share data)
Vimeo OpCo
Historical
Consolidated
Adjustments
Related to the
Spin-off and
Other
Transactions
Notes
Autonomous
Entity
Adjustments
Notes
Vimeo, Inc.
Pro Forma
Revenue $ 283,218 $ $ $ 283,218
Cost of revenue (exclusive of depreciation shown separately below)
89,077 89,077
Gross profit
194,141 194,141
Operating expenses:
Research and development expense
64,238 64,238
Sales and marketing expense
105,630 105,630
General and administrative expense
49,846 8,133 (4a) 8,908 (7) 69,931
3,044 (5b)
Depreciation
460 460
Amortization of intangibles
14,744 14,744
Total operating expenses
234,918 11,177 8,908 255,003
Operating loss
(40,777) (11,177) (8,908) (60,862)
Interest expense – related party
(9,116) 9,116 (1)
Other income, net
93 93
Loss before income taxes
(49,800) (2,061) (8,908) (60,769)
Income tax (provision) benefit
(828) 474 (6) 2,049 (7) 1,695
Net loss attributable to Class A Voting
common stock and Class B Non-Voting
common stock shareholders
$ (50,628) $ (1,587) $ (6,859) $ (59,074)
Per share information attributable to Class A Voting common stock and Class B Non-Voting common stock shareholders:(8)
Basic and diluted loss per share
$ (0.36) $ (0.37)
Weighted average shares outstanding
142,426 159,347
 
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VIMEO, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Adjustments Related to the Spin-off and Other Transactions:
(1)
Reflects the elimination of historical related party interest expense associated with the intercompany debt payable to IAC and subsidiaries that was repaid in January 2021.
(2)
Prior to the Spin-off, IAC indirectly owned approximately 88% of the total outstanding shares of Vimeo OpCo, with the remaining Vimeo OpCo shares held by third parties. In connection with the Spin-off, pursuant to Vimeo OpCo’s existing shareholders agreement, Vimeo OpCo shares held by non-IAC Vimeo OpCo stockholders were converted into Vimeo common stock, which we refer to as the “Vimeo minority exchange.” The shareholders agreement also required that the non-lAC Vimeo OpCo stockholders be compensated (in the form of additional Vimeo equity) for a portion of the dilution resulting from the issuance of Vimeo options in respect of vested IAC option awards under the IAC equity plans that are adjusted in the Spin-Off. Each such existing 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, in accordance with the Vimeo merger agreement.
This adjustment reflects the Vimeo minority exchange using the Vimeo merger exchange ratio of 1.0143, pursuant to the Vimeo merger agreement.
See the section of this prospectus entitled “The Vimeo Merger — Consideration to Vimeo OpCo Stockholders”.
(3)
As a part of the Spin-off, Vimeo’s outstanding capital stock was subject to a stock split, resulting in IAC owning a number of shares of Vimeo common stock equal to the product of the number of outstanding shares of IAC common stock and the Spin-off exchange ratio, and a number of shares of Vimeo Class B common stock equal to the product of the number of outstanding shares of IAC Class B common stock and the Spin-off exchange ratio of 1.6235.
Following the stock split described above, each share of IAC par value $0.001 common stock was reclassified into (i) one share of IAC par value $0.0001 common stock and (ii) 1/100th of a share of IAC Series 1 mandatorily exchangeable preferred stock that was automatically exchanged for 1.6235 shares of Vimeo common stock (with holders receiving cash in lieu of any fractional shares of Vimeo common stock resulting, after aggregation, from the reclassification) and each share of IAC par value $0.001 Class B common stock was reclassified into (i) one share of IAC par value $0.0001 Class B common stock and (ii) 1/100th of a share of IAC Series 2 mandatorily exchangeable preferred stock that was automatically exchanged for 1.6235 shares of Vimeo Class  B common stock (with holders receiving cash in lieu of any fractional shares of Vimeo Class B common stock resulting, after aggregation, from the reclassification).
This adjustment reflects the implementation of the Spin-off by the exchange of 803,578 shares of IAC Series 1 mandatorily exchangeable preferred stock for 130.4 million shares of Vimeo common stock and the exchange of 57,895 shares of IAC Series 2 mandatorily exchangeable preferred stock for 9.4  million shares of Vimeo Class B common stock based on the Spin-off exchange ratio of 1.6235 (based on the number of outstanding shares of IAC common stock and IAC Class B common stock as of May 24, 2021).
(4)
Vimeo OpCo has outstanding stock appreciation rights (“Vimeo OpCo SARs”) and restricted stock units (“Vimeo OpCo RSUs”), the value of which corresponds to shares of Vimeo OpCo common stock. Upon exercise of Vimeo OpCo SARs or vesting of Vimeo OpCo RSUs, the awards were generally settled for shares of IAC common stock representing (i) the increase in value between the Vimeo OpCo SAR grant date and the date a holder exercises the Vimeo OpCo SAR or (ii) the value of the Vimeo OpCo RSU on the vesting date. In the Vimeo merger, each outstanding Vimeo OpCo SAR or Vimeo OpCo RSU were converted into either a Vimeo stock appreciation right (“Vimeo SAR”) or Vimeo restricted stock unit (“Vimeo RSU”), respectively, corresponding
 
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to, and settled in, shares of Vimeo common stock, with adjustments to (i) the number of shares subject to each Vimeo SAR and Vimeo RSU based on the merger exchange ratio in the Vimeo merger and (ii) the base price applicable to each Vimeo SAR and Vimeo RSU. The Vimeo SARs and Vimeo RSUs otherwise have terms and conditions that are customary for a public company stock appreciation right and restricted stock unit.
On November 5, 2020, Mr. Levin, IAC’s Chief Executive Officer (“CEO”), received an IAC Restricted Stock award covering 3,000,000 shares of IAC common stock. As a part of the Spin-off, Mr. Levin received in respect of each share of IAC restricted common stock that he holds a number of shares of Vimeo common stock equal to the Spin-off exchange ratio. The calculation of the allocation of stock-based compensation expense to Vimeo for the IAC Restricted Stock award was based upon the closing per share stock price of IAC on May 24, 2021 of $252.63 and the closing per share stock price of Vimeo on May 24, 2021 on a when-issued trading basis of $52.08.
These transactions have been reflected through the following adjustments:
(a)
$2.6 million and $8.1 million of incremental stock-based compensation expense for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively, resulting from (i)  the modification of Vimeo OpCo SARs and Vimeo OpCo RSUs and (ii) the November  5, 2020 IAC Restricted Stock award to IAC’s CEO upon completion of the Spin-off in his capacity as the Chairman of the Vimeo Board of Directors; and
(b)
the issuance of 4.9 million restricted shares of Vimeo common stock in connection with the modification of the IAC Restricted Stock award of 3,000,000 shares based on the Spin-off exchange ratio of 1.6235.
(5)
Transaction and one-time costs related to the Spin-off have been reflected through the following adjustments:
(a)
Additional estimated transaction and one-time costs related to the Spin-off of $0.8 million that are expected to be incurred by Vimeo subsequent to March 31, 2021 and are, therefore, not reflected in the historical consolidated balance sheet of Vimeo OpCo.
(b)
Reversal of transaction and one-time costs of $1.7 million incurred in the historical consolidated statement of operations of Vimeo OpCo for the three months ended March 31, 2021 as this amount is already reflected in the additional estimated transaction costs of $3.0 million in the unaudited pro forma condensed consolidated statement of operations for the year ended December  31, 2020.
(6)
Reflects the tax effects of the pro forma pre-tax adjustments at the applicable statutory income tax rate of 23%.
Autonomous Entity Adjustments:
(7)
As an independent, separate public company following the Spin-off, Vimeo expects to incur certain costs including financial reporting and regulatory compliance, board of directors’ fees and expenses, accounting, auditing, tax, legal, insurance, information technology, human resources, investor relations, risk management, treasury and other general and administrative-related functions.
The unaudited pro forma condensed consolidated financial statements have been adjusted to depict Vimeo as an autonomous entity. Vimeo expects to incur approximately $1.5 million and $8.9 million of expenses in addition to IAC’s corporate and shared costs allocated to Vimeo OpCo in its historical consolidated financial statements for the three months ended March  31, 2021 and the year ended December 31, 2020, respectively. The additional expenses have been estimated based on assumptions that IAC and Vimeo management believe are reasonable. However, actual incremental costs that will be incurred could differ materially from these estimates and depend on several factors, such as the macro-economic environment and strategic decisions made in the applicable functional areas.
 
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The adjustment also reflects the tax effects of the autonomous entity adjustment at the applicable statutory income tax rate of 23%.
Earnings (Loss) Per Share
(8)
Vimeo common stock and Vimeo Class B common stock are treated as one class of stock for earnings per share (“EPS”) purposes as both classes of stock participate in earnings, dividends and other distributions on the same basis. As described in Note (4), in the Spin-off, Mr. Levin, IAC’s CEO, received in respect of each share of IAC restricted common stock that he holds a number of shares of Vimeo common stock equal to the Spin-off exchange ratio. As the Vimeo Restricted Stock award is a participating security, Vimeo pro  forma EPS is calculated using the two-class method given those shares are unvested and have a non-forfeitable dividend right in the event Vimeo declares a cash dividend to common shareholders and participates in all other distributions of Vimeo in the same manner as all other Vimeo common shareholders.
Undistributed earnings allocated to the participating security is subtracted from net income in determining net income attributable to Vimeo common stock and Vimeo Class B common stock shareholders for pro forma basic EPS. Pro forma basic EPS has been computed by dividing net income attributable to Vimeo common stock and Vimeo Class B common stock shareholders by the total number of Vimeo common stock and Vimeo Class B common stock outstanding upon completion of the Spin-off as described in Notes (2) and (3)  above.
For the calculation of pro forma diluted EPS, net income attributable to Vimeo common stock and Vimeo Class B common stock shareholders is adjusted for the reallocation of undistributed earnings allocated to the participating security, then divided by the total number of Vimeo common stock and Vimeo Class  B common stock outstanding upon completion of the Spin-off as described in Notes (2) and (3) above plus dilutive securities.
 
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Three Months Ended
March 31, 2021
Vimeo OpCo
Historical
Consolidated
Vimeo, Inc.
Pro Forma
(In thousands, except per share data)
Basic EPS:
Numerator:
Net earnings attributable to Vimeo OpCo / Vimeo shareholders
$ 3,313 $ 2,055
Net earnings attributed to unvested participating security(a)
(61)
Net earnings attributable to Vimeo OpCo Class A Voting common stock and Class B Non-Voting common stock shareholders / Vimeo common stock and Class B common stock shareholders
$ 3,313 $ 1,994
Denominator:
Vimeo OpCo historical weighted average shares outstanding
156,480
Vimeo common shares outstanding after giving effect to the reclassification
and minority exchange
159,347
Weighted average basic shares outstanding
156,480 159,347
Basic EPS
$ 0.02 $ 0.01
Diluted EPS:
Numerator:
Net earnings attributable to Vimeo OpCo Class A Voting common stock and Class B Non-Voting common stock shareholders / Vimeo common stock and Class B common stock shareholders
$ 3,313 $ 1,994
Net earnings attributed to unvested participating security(a)
61
Reallocation of net earnings attributable to unvested participating security
(56)
Net earnings attributable to Vimeo OpCo Class A Voting common stock and Class B Non-Voting common stock shareholders / Vimeo common stock and Class B common stock shareholders for diluted EPS computation
$ 3,313 $ 1,999
Denominator:
Weighted average basic shares outstanding used for basic EPS computation
156,480 159,347
Dilutive securities(b)(c)
9,408 14,564
Number of shares used for diluted EPS computation
165,888 173,911
Diluted EPS
$ 0.02 $ 0.01
 
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Year Ended
December 31, 2020
Vimeo OpCo
Historical
Consolidated
Vimeo, Inc.
Pro Forma
(In thousands, except per share data)
Numerator:
Net loss attributable to Vimeo OpCo / Vimeo shareholders
$ (50,628) $ (59,074)
Denominator:
Vimeo OpCo historical weighted average shares outstanding
142,426
Vimeo common shares outstanding after giving effect to the reclassification
and minority exchange
159,347
Weighted average basic shares outstanding
142,426 159,347
Dilutive securities(d)
Number of shares used for diluted EPS computation
142,426 159,347
Loss per share:
Basic and diluted loss per share
$ (0.36) $ (0.37)
(a)
On November 5, 2020, IAC’s CEO, Mr. Levin, was granted a stock-based award in the form of 3.0 million shares of restricted common stock. In the Spin-off, Mr. Levin received in respect of each share of IAC restricted common stock that he holds a number of shares of Vimeo common stock equal to the Spin-off exchange ratio. The number of shares that ultimately vest is subject to the satisfaction of growth targets in Vimeo’s stock price over the 10-year service condition of the award. These restricted shares have a non-forfeitable dividend right in the event Vimeo declares a cash dividend to common shareholders and participates in all other distributions of Vimeo in the same manner as all other common shareholders. Accordingly, the two-class method of calculating EPS is used.
(b)
If the effect is dilutive, weighted average diluted shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock appreciation rights (“SARs”), vesting of restricted stock, and vesting of restricted stock units. For the three months ended March 31, 2021, 4.9 million potentially dilutive securities were excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive.
(c)
Performance-based SARs are considered contingently issuable shares. Shares issuable upon exercise of performance-based SARs are included in the denominator of diluted EPS if (i) the applicable performance condition(s) has been met and (ii) the inclusion of the performance-based SARs is dilutive for the respective reporting periods. For the three months ended March  31, 2021, 2.3 million shares underlying performance-based SARs were excluded from the calculation of diluted EPS because the performance condition(s) had not been met.
(d)
For the year ended December 31, 2020, Vimeo had a loss from operations. As a result, approximately 18.9 million potentially dilutive securities were excluded from computing dilutive loss per share as their inclusion would have been anti-dilutive. Accordingly, the number of shares used to compute diluted EPS for the year ended December 31, 2020 is based (i) in the case of Vimeo OpCo Historical Consolidated, on the number of shares of Vimeo OpCo Class A Voting common stock and Class B Non-Voting common stock, and (ii) in the case of Vimeo, Inc. Pro Forma, on the number of shares of Vimeo common stock and Class B common stock outstanding upon completion of the Spin-off as described in Notes (2) and (3) above.
 
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BUSINESS
For the purpose of the following business description about Vimeo , “we,” “our” or “us” refers to Vimeo.com, Inc. (formerly known as Vimeo, Inc.) with respect to periods prior to the completion of the Spin-off and to Vimeo, Inc. (formerly known as Vimeo Holdings, Inc.) with respect to periods following the completion of the Spin-off.
Overview
Our mission
Our mission is to enable professional-quality video for all.
We believe that we can empower every professional, team and organization to use video, with tools that are far easier and more effective than ever before.
Who we are
We are the world’s leading all-in-one video software solution, providing the full breadth of video tools through a software-as-a-service (“SaaS”) model.
We provide a single turnkey solution to create, collaborate and communicate with video. Businesses face significant barriers to use video today, including time, cost, lack of technical expertise and the need to pay for and manage multiple software vendors. Our cloud-based software eliminates these barriers and solves essential video needs, including:

Creation:   Record, produce, edit and stream videos, for both live and on-demand viewing.

Collaboration:   Share videos privately with clients and teams, review and comment on work-in-progress videos and manage team access and permissions.

Distribution:   Share videos publicly, including: publishing on a website, blog, marketplace or social media platform, broadcasting through a secure corporate portal, or building a branded video destination or storefront.

Hosting:   Organize and manage a central video library across users and teams, in one centralized location.

Marketing:   Use video to capture leads and convert them into customers.

Monetization:   Monetize video through a subscription fee, pay-per-view model or third-party advertising, across devices, currencies and payment methods.

Analytics:   Measure video performance across platforms, including tracking viewer engagement and drop-off rates, sources of traffic and customer leads.
We serve a growing community of over 200 million registered users (those users who have created an account with us using an email address) in over 190 countries. Our users include creative professionals, small businesses, marketers, agencies, schools, nonprofits and large organizations. They range from the Emmy-nominated animator working on her next short, to the beauty entrepreneur creating videos for Instagram and her Shopify store, to the Fortune 500 company live streaming town halls and remotely training sales associates at stores around the world.
We operate at a significant scale. As of December 31, 2020, our video player was embedded on millions of websites and is powering billions of views a month, with 297,000 new videos being uploaded to our platform each day. Our brand is well known and highly regarded, and most of our new users find us organically. We are also regarded as an industry leader in video technology, having set new standards in adopting higher resolutions, advanced imaging and audio protocols, new video compression formats and intelligent streaming algorithms. In 2020, Vimeo was recognized by Fast Company as the #1 Most Innovative Video Company in the World.
 
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Recent performance
We have grown rapidly in 2020. As of December 31, 2020, we had over 1.5 million subscribers who pay us an average of $223 per year. For the year ended December 31, 2020, our total bookings increased 62% year-over-year and new bookings increased 158% year-over-year.1 We attribute this growth to (1) our recent product enhancements to better serve business needs and (2) the ongoing secular shift to online video for all forms of business communication, which has been accelerated by the COVID-19 pandemic.
As of December 31, 2020, over 80% of our subscribers are on annual plans. As a result, we enjoy a high degree of revenue predictability in future periods. Our revenue is also highly diversified across customers and geographies. For the year ended December 31, 2020, our top 10 customers generated less than 3% of our revenue, and nearly 50% of our revenue came from customers outside of the U.S.
We believe that we have a large opportunity to both grow our free user base and convert more of our free users into paying customers. 60% of our nearly 1.5 million subscribers started as free users, using our platform for free first before deciding to sign up for a subscription plan. These users contributed 50% of our total bookings for the year ended December 31, 2020. We have over 200 million free users today, and continuously seek to improve our free offering and increase product usage by adding features those users want, such as mobile video creation. Over the year ended December 31, 2020, we added over 35 million free users, who were more actively engaged with our platform than new free users over the same period last year.
We further believe that we have a large opportunity to grow average revenue per user. Over the year ended December 31, 2020, 25% of our bookings came from subscribers who upgraded to a higher-priced plan from their initial plan. We continually seek to add compelling features in our higher- priced plans, and we frequently test and optimize the pricing and packaging of our subscription plans to encourage upgrades. As of December 31, 2020, we had over 3,800 enterprise customers, who, as of the quarter ended December 31, 2020, pay us over $22,000 per year, on average. We define “enterprise customers” as those who purchase plans through contact with our sales force. Our enterprise customers grew 87% year-over-year for the quarter ended December 31, 2020, and these customers now represent nearly 25% of our total revenue for the same period. We believe that we can continue to attract enterprise customers both through product enhancements which make our offering more relevant to large organizations, and through expanded sales efforts.
As of December 31, 2020, more than 60% of Fortune 500 companies have at least one paid Vimeo account, while less than 1% of our subscribers pay more than $10,000 per year. We believe this demonstrates that our product has already gained a foothold in many of the largest enterprises and that there is a clear opportunity to expand within these large enterprises to more departments, employees and customers. The net revenue retention (NRR) for our enterprise customers was above 110% for the quarter ended December 31, 2020, meaning that the enterprise customers we had one year prior paid us more overall in the current period than they did a year before, including accounting for churn.2 This represented the seventh consecutive quarter of sequentially increasing NRR for our enterprise customers.
1
We define “bookings” as fixed fees for SaaS services that subscribers have paid or committed to pay during their subscription period or 12 months, whichever is shorter, less refunds and chargebacks during the same period. “New bookings” refers to bookings from new subscriptions during a particular period.
2
We calculate net revenue retention by taking the sum of (a) annualized subscription revenue for enterprise subscribers at the end of the period that also existed twelve months prior and (b) the variable revenue attributed to these same subscribers over the preceding twelve months and dividing that by annualized subscription revenue for all subscribers that existed twelve months prior plus the variable revenue attributed to this same set of subscribers over the twelve months prior to that date.
 
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Lastly, we believe that we have attractive margin characteristics to support investment in future growth. In the quarter ended December 31, 2020, our gross margin reached 70%, we exhibited significant sales and marketing customer acquisition efficiency with room to scale, and we generated positive Adjusted EBITDA.3
Businesses need video
In the past decade, video has gone from a form of entertainment to the most engaging and effective medium to communicate ideas, build brands, promote products and connect with each other. This is because video is a far richer and more expressive medium than text or static images. As consumers spend more time online and as workforces become more distributed, businesses need to keep pace with their customers and employees, who increasingly expect to consume engaging video content.
Yet for too many businesses, professional-quality video remains out of reach due to lack of time, budget and expertise. For example:

the average professionally-produced video takes weeks to make and costs thousands of dollars, but has a shelf life on social media of just a few days. Simply shooting content on one’s phone won’t produce a high-quality product demo, brand video or Facebook ad given the need to edit and stitch together multiple shots and add branding, music, voice-over and motion graphics.

collaborating on video projects is inefficient and full of friction, often requiring multiple pieces of software, shared passwords, expensive licenses and wasted time sharing feedback in back-and-forth email chains.

producing a live event typically requires expensive hardware and a professional production team. Even the largest companies struggle today to make their town halls, conferences, webinars and training programs high-quality and engaging.

companies lack a centralized, secure video library where all their videos are intuitively organized and easily searchable. They also lack robust and centralized video analytics to measure the return on their video investment across platforms and teams.
Vimeo solves essential video needs
We offer a SaaS solution that spans the full breadth of a business’s video needs. Our cloud-based software enables users to create, collaborate and communicate with video, eliminating the need to pay for multiple software providers and removing the barriers of time, budget and technical expertise for a wide range of use cases. For example:

a flower shop owner can promote their store re-opening on social media with professional-looking videos they create on their phone in a few clicks;

a fitness studio can launch its own video channel to stream classes in TV-quality in a matter of minutes;

a freelancer or creative agency can showcase their portfolio, collaborate with clients and deliver projects securely, all from a single account; and

a global company can integrate video across all of its corporate communications, from town halls and training to virtual conferences and product launches.
3
Operating loss of $3.7 million for the quarter ended December 31, 2020 less amortization of intangibles of $2.1 million less stock-based compensation expense of $2.1 million less depreciation expense of $0.2 million = Adjusted EBITDA of $0.7 million for the quarter ended December 31, 2020. For the year ended December 31, 2020, we realized a net loss of approximately $50.6 million.
 
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Trends in Our Favor
We believe that we are witnessing the rapid proliferation of video into every aspect of business communication. We expect many more businesses to require video in the future, aided by the following secular trends:

Consumers expect engaging video.   Consumers increasingly expect engaging and real-time video from both brands and employers. We expect the marked growth of self-produced video on social media platforms to put more pressure on businesses to produce professional-quality videos for these platforms as well. At work, employees are increasingly driving IT modernization as they demand the latest technologies from their personal lives in their workplace.

Video works better than image and text.   Video is the most engaging medium. A 2018 analysis by Twitter showed that social media posts with video attract 10 times more engagement than those without, and a 2018 analysis by LinkedIn showed that videos are shared 20 times more often than other content formats. A 2020 study on advertising by Amazon shows that video increases clicks, conversion rates and visitor time-on-site, which can assist with both driving traffic and search engine optimization (SEO).

The nature of work is changing, and organizations must adapt.   As workforces become more distributed and teams rely more on software to interact with their colleagues, video has become a critical tool to increase employee engagement, productivity and retention. A 2020 study completed by GlobalWebIndex for Vimeo shows that employees at companies that use video are 75% more likely to rate employee engagement highly and 72% more likely to rate productivity highly. Beyond distributed teams, the COVID-19 pandemic has likely ignited a permanent trend towards workplace flexibility, with over 80% of company leaders intending to permit remote work some of the time according to a 2020 study by Gartner.

The rise of direct-to-consumer streaming.   Content creators are increasingly reaching audiences directly, without traditional media intermediaries like television networks. According to Mediaplaynews, the average streaming U.S. household pays for nearly four subscription services, and Wikipedia and other sources report there are now over 16 streaming services with over one million subscribers. In 2020, Forbes reported that outside of traditional media, there are two million content creators on YouTube, Instagram, TikTok and Twitch making over six figures in advertising income; we expect many of these creators will want to launch their own direct-to-consumer video offerings in the future.

Video is broadly distributed.   In the past, online video was primarily viewed on desktop computers that required a physical high-speed Internet connection. Today, mobile phones and tablets enable high-definition video recording and playback, 5G network coverage is expanding, and connected TVs have made their way to many households. With consumers spending an average of over six hours a day watching online video content (based upon 2020 data from Nielsen), we expect more viewing surfaces to emerge in the future, from virtual reality headsets to augmented reality devices to self-driving cars. As audiences engage on more devices, businesses will increasingly need a central hub to publish video across these platforms.
While the COVID-19 pandemic has accelerated the demand for video from businesses, we believe this shift is secular and will endure given the fundamental need for businesses to communicate online. For example, we believe that the businesses streaming their town halls, classes and events today will continue to value the global reach of livestreaming along with their physical events in the future. We see countless examples of the power of this reach in our user base today:

When drugstore chain Rite Aid used Vimeo to produce their first virtual town hall to their store locations, they engaged more associates than they had in over a decade of in-person events.

When coatings manufacturer Axalta added video to their auto shop training programs, they went from limited classroom instruction to engaging an additional 8,000 technicians virtually, for a fraction of the cost.

When interior design company Spoak Decor tested video ads versus image ads, they saw a 35 times higher engagement rate and 30% more registrants. They now use Vimeo for all feature releases and demo videos.
 
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When fitness chain System of Strength moved its studio classes online, their viewership grew from hundreds in Ohio to thousands of people across 33 states. Video streaming will remain a key part of their ongoing strategy.
Our Market Opportunity
Target customers
Our target customers include small-to-midsize businesses (SMBs), larger enterprises, marketers, agencies and creative professionals.
We believe that anyone who produces video content, markets to customers, works with distributed teams or hosts in-person experiences is a potential Vimeo user. We further believe that once our users begin to experience the benefits of our platform, they tend to greatly expand their use of video internally and externally. As a result, we expect that use of our platform will increase the broader market penetration of video across all customer types and use cases.
Geographic market
Our market is global. Our products are used by customers in over 190 countries.
Total addressable market
Based on our internal data, we estimate our total addressable market to be approximately $40 billion in 2021, growing to $70 billion in 2024. While our opportunity includes a range of customer types, we believe the largest market segments are:

Small-to-midsize businesses (SMBs) who use video for marketing to consumers.   IDC estimates the number of global SMBs to be 348 million. We estimate that there is an approximately $20 billion market of SMBs willing to pay for video software, aided by the growing need for brands of all sizes to reach their customers on social media and increase engagement on their websites and marketplaces. We expect this market to grow to approximately $25 billion in 2024.

Enterprises who use video for internal and external communications.   CapIQ estimates that there are more than one million global enterprises with annual revenues above $10 million. We believe every one of these organizations will look to use video, and that as our product portfolio expands to cover more use cases, departments and employees within the enterprise, we can materially expand both our footprint and contract value. We estimate the addressable market for enterprises to be currently at approximately $20 billion and expect it to grow to approximately $45 billion in 2024.
Our Business Model and Services
We earn revenue primarily through a SaaS business model, selling subscriptions to our cloud-based software on an annual or monthly basis. We employ a “freemium” pricing strategy, offering free membership and access to our video tools alongside paid subscription plans for advanced video capabilities. As of December 31, 2020, over 95% of our subscribers purchased plans without ever speaking to customer support or going through a salesperson.
Basic (free) memberships
Anyone can access a basic (free) membership to Vimeo by signing up with an email address. With a basic membership, users can create, record, upload and share videos through our website and native apps for free. Our free users are subject to weekly and total caps on uploaded videos, and do not have access to advanced video capabilities such as live streaming or the ability to add team members. We provide opportunities to upgrade to a paid subscription at natural points in the user’s experience, such as when a free user nears or hits an uploaded video cap. We also highlight the advanced video capabilities of our subscription plans natively within our free user product experience.
 
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Self-serve subscription plans
We offer paid subscription plans on a “self-serve” basis, meaning that users can sign up directly through our website or apps and pay subscription fees with a credit card or an in-app purchase mechanism. We charge fees that typically range from $7 per month to $900 per year for features that vary depending on the plan type. These features include video creation, collaboration, distribution, hosting, marketing, monetization and analytics. We also offer the ability to add multiple team members to our higher-priced plans. As of December 31, 2020, nearly 10% of our subscribers had added team members, and the number of team accounts is up over 100% from the same time last year.
Enterprise subscription plans
We sell enterprise subscription plans through our sales force. Our enterprise plans provide additional features beyond our self-serve plans, plus options for dedicated support, account management, service level agreements and professional live event services. Our enterprise contracts range from thousands to hundreds of thousands of dollars per year, and for the quarter ended December 31, 2020, over 65% of our new enterprise contracts came from customers who were existing free users or self-serve subscribers first. Our enterprise plans include:

Vimeo Enterprise:   an organization-wide video solution that includes secure unlimited live streaming of events, a corporate video portal, single-sign-on support, content delivery network optimization to improve quality-of-service in corporate networks, and the ability to use our technology on a fully branded basis (so that the company’s own branding is featured instead of Vimeo’s).

Vimeo OTT:   an over-the-top (OTT) video monetization solution that allows customers to launch and run their own video streaming channel directly to their audience through a branded web portal, mobile apps and Internet-enabled TV apps. Our customers have a direct relationship with the end viewers of their content, and we handle everything from app development to billing to customer support. Customers may offer their videos on a subscription basis, an à la carte basis, an ad-supported basis or for free.

Vimeo Custom:   plans optimized for high-volume users, e.g., plans that offer significantly higher storage or bandwidth.
Sales and Marketing
We acquire subscribers primarily through: (1) conversion of free users to subscribers through organic efforts, including word-of-mouth referrals and in-product messaging; (2) acquisition of subscribers through marketing spend, primarily through digital media channels; (3) our sales force (for enterprise customers); and (4) acquisition of