Vimeo Reports Q2 2021 Financial Results Q2 Revenue
NEW YORK, Aug. 05, 2021 (GLOBE NEWSWIRE) â€" Vimeo, Inc. (NASDAQ: VMEO) (“Vimeoâ€) released its second quarter results today. Monthly metrics for Vimeo through July 2021 are included on page 2 of this release.
“The evolution of video as the new way to work continues,†said Anjali Sud, Chief Executive Officer of Vimeo. â€In the second quarter we gained momentum in the enterprise with expanded product breadth, as we enhanced our all-in-one software solution to enable every employee to be a content creator and every business to be video-first. Our execution is on track and we are investing strategically to position Vimeo as a long-term winner in this large and early market.â€
VIMEO, INC. SUMMARY RESULTS
($ in millions except per share amounts)
Q2 2021Q2 2020
Growth Revenue $ 96.0 $ 67.3 43 % Gross profit $ 70.3 $ 44.4 58 % Gross margin 73% 66% Operating income (loss) (20.3 ) (12.3 ) (65 )% Net income (loss) (20.4 ) (14.8 ) NM Diluted EPS (0.13 ) (0.09 ) NM Adjusted EBITDA (3.8 ) (5.3 ) NM
See reconciliation of GAAP to non-GAAP measures beginning on page 7.
Q2 2021 HIGHLIGHTS
RECENT BUSINESS HIGHLIGHTS
(a) As of the date of this document, the Company has not yet completed its financial close process for July 2021. As a result, the information herein for July 2021 is preliminary and based upon information available to the Company as of the date of this document. During the course of the financial close process, the Company may identify items that would require it to make adjustments, which may impact growth rates and be material to the information presented above.
VIDEO CONFERENCE CALL
Vimeo will live stream a video conference to answer questions regarding its second quarter results on Friday, August 6, 2021, at 8:30 a.m. Eastern Time. This live stream will include the disclosure of certain information, including forward-looking information, which may be material to an investor’s understanding of Vimeo’s business. The live stream will be open to the public at https://www.vimeo.com/investors.
GAAP FINANCIAL STATEMENTS VIMEO, INC. CONSOLIDATED STATEMENT OF OPERATIONS ($ in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenue $ 96,046 $ 67,334 $ 185,468 $ 124,302 Cost of revenue (exclusive of depreciation shown separately below) 25,771 22,899 50,727 41,257 Gross profit 70,275 44,435 134,741 83,045 Operating expenses: Research and development expense 27,062 16,262 48,538 31,555 Sales and marketing expense 40,248 26,519 72,317 51,644 General and administrative expense 21,508 10,983 36,026 23,187 Depreciation 186 102 300 160 Amortization of intangibles 1,583 2,915 3,471 6,038 Total operating expenses 90,587 56,781 160,652 112,584 Operating loss (20,312 ) (12,346 ) (25,911 ) (29,539 ) Interest expense (122 ) â€" (186 ) â€" Interest expenseâ€"related party â€" (2,372 ) (726 ) (4,825 ) Other income (expense), net 142 (164 ) 10,229 (223 ) Loss before income taxes (20,292 ) (14,882 ) (16,594 ) (34,587 ) Income tax (provision) benefit (100 ) 106 (485 ) (449 ) Net loss $ (20,392 ) $ (14,776 ) $ (17,079 ) $ (35,036 ) Per share information: Basic loss per share $ (0.13 ) $ (0.09 ) $ (0.11 ) $ (0.22 ) Diluted loss per share $ (0.13 ) $ (0.09 ) $ (0.11 ) $ (0.22 ) Weighted average shares outstanding used in the computation of net loss per share (a): Basic 159,418 159,381 159,399 159,381 Diluted 159,418 159,381 159,399 159,381 Stock-based compensation expense by function: Cost of revenue $ 169 $ 21 $ 189 $ 25 Research and development expense 5,748 706 7,468 1,166 Sales and marketing expense 1,498 173 1,820 330 General and administrative expense 7,280 3,115 10,130 4,510 Total stock-based compensation expense $ 14,695 $ 4,015 $ 19,607 $ 6,031(a) Weighted average basic and diluted shares outstanding for the three and six months ended June 30, 2020 reflect Vimeo’s outstanding shares immediately after the completion of Vimeo’s separation from the remaining businesses of IAC/InterActiveCorp. For additional information on the separation, see the registration statement on Form S-1 of Vimeo, Inc. filed with the SEC on May 26, 2021.
VIMEO, INC. CONSOLIDATED BALANCE SHEET ($ in thousands) June 30,2021 December 31,
2020 ASSETS Cash and cash equivalents $ 331,024 $ 110,011 Accounts receivable, net 16,383 12,785 Prepaid expenses and other current assets 16,090 7,932 Total current assets 363,497 130,728 Leasehold improvements and equipment, net 3,232 3,321 Goodwill 219,337 219,337 Intangible assets with definite lives, net 7,383 10,854 Other non-current assets 19,417 6,839 TOTAL ASSETS $ 612,866 $ 371,079 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES: Accounts payable, trade $ 4,563 $ 3,324 Promissory note due on demandâ€"related party â€" 44,565 Deferred revenue 165,338 137,436 Accrued expenses and other current liabilities 55,153 47,432 Total current liabilities 225,054 232,757 Long-term debtâ€"related party â€" 50,000 Other long-term liabilities 8,674 3,242 Commitments and contingencies SHAREHOLDERS’ EQUITY: Common stock 1,551 â€" Class B common stock 94 â€" Class A Voting common stock of Vimeo OpCo â€" 837 Class B Non-Voting common stock of Vimeo OpCo â€" 663 Preferred stock â€" â€" Additional paid-in-capital 677,667 366,676 Accumulated deficit (300,088 ) (283,009 ) Accumulated other comprehensive loss (86 ) (87 ) Total shareholders’ equity 379,138 85,080 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 612,866 $ 371,079 VIMEO, INC. CONSOLIDATED STATEMENT OF CASH FLOWS ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Cash flows from operating activities: Net loss $ (20,392 ) $ (14,776 ) $ (17,079 ) $ (35,036 ) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation expense 14,695 4,015 19,607 6,031 Amortization of intangibles 1,584 2,915 3,471 6,038 Depreciation 185 102 300 160 Provision for credit losses 198 798 280 1,622 Gain on the sale of an asset â€" â€" (10,217 ) â€" Other adjustments, net 309 1,015 540 2,386 Changes in assets and liabilities: Accounts receivable (2,970 ) (3,535 ) (5,248 ) (6,755 ) Prepaid expenses and other assets (4,271 ) (642 ) (6,100 ) (1,864 ) Accounts payable and other liabilities 10,545 (1,024 ) 3,026 1,079 Deferred revenue 18,290 21,707 29,571 36,526 Net cash provided by operating activities 18,173 10,575 18,151 10,187 Cash flows from investing activities: Capital expenditures (80 ) (356 ) (215 ) (433 ) Proceeds from the sale of an asset â€" â€" 7,768 â€" Other, net â€" â€" â€" 98 Net cash provided by (used in) investing activities (80 ) (356 ) 7,553 (335 ) Cash flows from financing activities: Proceeds from sale of common stock, net of fees â€" â€" 299,750 â€" Principal payments on related-party debt â€" (7,853 ) (94,565 ) (7,853 ) Proceeds from issuance of related-party debt â€" (2,442 ) â€" â€" Deferred financing costs â€" â€" (1,440 ) â€" Withholding taxes paid related to equity awards (3,448 ) (507 ) (8,181 ) (1,089 ) Proceeds from exercise of stock options 4 â€" 4 â€" Net cash provided by (used in) financing activities (3,444 ) (10,802 ) 195,568 (8,942 ) Total cash provided (used) 14,649 (583 ) 221,272 910 Effect of exchange rate changes on cash and cash equivalents and restricted cash 75 157 (57 ) (32 ) Net increase (decrease) in cash and cash equivalents and restricted cash 14,724 (426 ) 221,215 878 Cash and cash equivalents and restricted cash at beginning of period 316,528 3,267 110,037 1,963 Cash and cash equivalents and restricted cash at end of period $ 331,252 $ 2,841 $ 331,252 $ 2,841
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
($ in millions; rounding differences may occur)
Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Reconciliation of gross profit: GAAP Gross profit $ 70.3 $ 44.4 $ 134.7 $ 83.0 % of Revenue 73% 66% 73% 67% Add back: Stock-based compensation expense 0.2 â€" 0.2 â€" Non-GAAP Gross Profit $ 70.4 $ 44.5 $ 134.9 $ 83.1 % of Revenue 73% 66% 73% 67% Reconciliation of operating expenses: GAAP Research and development expense $ 27.1 $ 16.3 $ 48.5 $ 31.6 % of Revenue 28% 24% 26% 25% Less: Stock-based compensation expense 5.7 0.7 7.5 1.2 Non-GAAP Research and development expense $ 21.3 $ 15.6 $ 41.1 $ 30.4 % of Revenue 22% 23% 22% 24% GAAP Sales and marketing expense $ 40.2 $ 26.5 $ 72.3 $ 51.6 % of Revenue 42% 39% 39% 42% Less: Stock-based compensation expense 1.5 0.2 1.8 0.3 Non-GAAP Sales and marketing expense $ 38.7 $ 26.3 $ 70.5 $ 51.3 % of Revenue 40% 39% 38% 41% GAAP General and administrative expense $ 21.5 $ 11.0 $ 36.0 $ 23.2 % of Revenue 22% 16% 19% 19% Less: Stock-based compensation expense 7.3 3.1 10.1 4.5 Non-GAAP General and administrative expense $ 14.2 $ 7.9 $ 25.9 $ 18.7 % of Revenue 15% 12% 14% 15% Reconciliation of net loss to Adjusted EBITDA: Net loss $ (20.4 ) $ (14.8 ) $ (17.1 ) $ (35.0 ) Add back: Income tax provision 0.1 (0.1 ) 0.5 0.4 Other (income) expense, net (0.1 ) 0.2 (10.2 ) 0.2 Interest expenseâ€"related party â€" 2.4 0.7 4.8 Interest expense 0.1 â€" 0.2 â€" Operating loss (20.3 ) (12.3 ) (25.9 ) (29.5 ) % of Revenue (21)% (18)% (14)% (24)% Add back: Stock-based compensation expense 14.7 4.0 19.6 6.0 Depreciation 0.2 0.1 0.3 0.2 Amortization of intangibles 1.6 2.9 3.5 6.0 Adjusted EBITDA $ (3.8 ) $ (5.3 ) $ (2.5 ) $ (17.3 ) % of Revenue (4)% (8)% (1)% (14)%RECONCILIATION OF GAAP TO NON-GAAP MEASURES
($ in millions except per share data; shares in thousands; rounding differences may occur)
Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Reconciliation of net loss to Adjusted net income (loss): Net loss $ (20.4 ) $ (14.8 ) $ (17.1 ) $ (35.0 ) % of Revenue (21 )% (22 )% (9 )% (28 )% Add back: Stock-based compensation expense 14.7 4.0 19.6 6.0 Depreciation 0.2 0.1 0.3 0.2 Amortization of intangibles 1.6 2.9 3.5 6.0 Income tax effects related to non-GAAP adjustments â€" â€" â€" â€" Adjusted Net income (loss) $ (3.9 ) $ (7.7 ) $ 6.3 $ (22.8 ) % of Revenue (4 )% (12 )% 3 % (18 )% Reconciliation of diluted loss per share to Adjusted EPS: Diluted loss per share $ (0.13 ) $ (0.09 ) $ (0.11 ) $ (0.22 ) Add back: Stock-based compensation expense 0.09 0.03 0.12 0.04 Depreciation â€" â€" â€" â€" Amortization of intangibles 0.01 0.02 0.02 0.04 Income tax effects related to non-GAAP adjustments â€" â€" â€" â€" Adjusted EPS $ (0.02 ) $ (0.05 ) $ 0.04 $ (0.14 ) Diluted weighted average shares 159,418 159,381 159,399 159,381 Computation of Free Cash Flow: Net cash provided by operating activities $ 18.2 $ 10.6 $ 18.2 $ 10.2 Less: Capital expenditures (0.1 ) (0.4 ) (0.2 ) (0.4 ) Free Cash Flow $ 18.1 $ 10.2 $ 17.9 $ 9.8PRINCIPLES OF FINANCIAL REPORTING
Vimeo has provided in this press release certain non-GAAP financial measures, including non-GAAP Adjusted EBITDA, non-GAAP gross profit, non-GAAP operating expenses, Adjusted net income, Adjusted EPS, and free cash flow, to supplement our financial information presented in accordance with GAAP. We use these non-GAAP financial measures internally in analyzing our financial results and believe that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Vimeo’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA is the metric on which our internal budgets are based and also the metric by which management is compensated. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Our presentation of these non-GAAP financial measures may differ from the presentation of similarly titled measures by other companies. Vimeo endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and corresponding non-GAAP measure, which are included in this release. Interim results are not necessarily indicative of the results that may be expected for a full year.
Definitions of Non-GAAP Measures
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDAâ€) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. The above items (“Adjusted EBITDA Non-GAAP Adjustmentsâ€) are excluded from our Adjusted EBITDA measure because these items are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.
Non-GAAP gross profit excludes the effect of stock-based compensation included in Cost of revenue.
Non-GAAP operating expenses include Non-GAAP Research and development expense, Non-GAAP Sales and marketing expense, and Non-GAAP General and administrative expense. These Non-GAAP operating expenses exclude the effect of stock-based compensation expense included in their respective expense items.
Adjusted net income and Adjusted EPS exclude the effect of the Adjusted EBITDA Non-GAAP Adjustments, as well as the related income tax effects. Adjusted EPS is calculated by dividing Adjusted net income by the Diluted weighted average shares outstanding used in the computation of net loss per share.
Free Cash Flow is defined as net cash used in operating activities less cash used for capital expenditures. We believe Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash.
Non-Cash Expenses That Are Excluded From Non-GAAP Measures
Stock-based compensation expense consists of expense associated with the grants of Vimeo stock appreciation rights (“SARsâ€), including performance-based SARs, restricted stock awards, and restricted stock units. These expenses are not paid in cash and we view the economic costs of stock-based awards to be the dilution to our share base; we also consider the dilutive impact of the stock-based awards in GAAP diluted earnings per share, to the extent such impact is dilutive. Equity awards are generally settled on a gross basis in shares of Vimeo common stock such that individual award holders will pay their withholding tax obligation, generally by selling shares of Vimeo common stock (including a portion of the shares received in connection with the applicable exercise).
Depreciation is a non-cash expense relating to our leasehold improvements and equipment and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.
Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as customer relationships, technology and trade names, are valued and amortized over their estimated lives. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.
Metric Definitions
Gross Margin â€" Revenue less cost of revenue, divided by revenue.
Subscribers â€" The number of users who have an active subscription to one of Vimeo’s paid plans measured at the end of the relevant period. Vimeo counts each account with a subscription plan as a subscriber. In the case of enterprise customers who maintain multiple accounts across Vimeo’s platforms as part of a single enterprise subscription plan, Vimeo counts only one subscriber. Vimeo does not count team members who have access to a subscriber’s account as additional subscribers.
Average Subscribers â€" The sum of the number of Subscribers at the beginning and at the end of the relevant measurement period divided by two.
Average Revenue per User (“ARPUâ€) â€" The annualized revenue for the relevant period divided by Average Subscribers. For periods that are less than a full year, annualized revenue is calculated by dividing the revenue for that particular period by the number of calendar days in the period and multiplying this value by the number of days in that year.
Enterprise Customers â€" Subscribers who purchase plans through contact with our sales force.
OTHER INFORMATION
Cautionary Statement Regarding Forward-Looking Information
This press release and the Vimeo livestream which will be held at 8:30 a.m. Eastern Time on August 6, 2021, contains “forward-looking statements†within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will,†“may,†“could,†“should,†“would,†“anticipates,†“estimates,†“expects,†“plans,†“projects,†“forecasts,†“intends,†“targets,†“seeks†and “believes,†as well as variations of these words or comparable words, among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to Vimeo’s future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, including statements attributable to our Chief Executive Officer. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions. Actual results could differ materially from those contained in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the risks inherent in Vimeo’s recently completed separation from IAC, the risks that the anticipated benefits from the separation will not be realized, changes in the regulatory landscape, including, in particular, changes in laws that might increase the liability of online intermediaries for user-generated content, reputational damage caused by problematic user content or our decisions to remove (or not remove) it; changes in policies implemented by third party platforms upon which we rely for traffic and distribution of mobile apps, increased competition in the online video category, our ability to convert visitors into uploaders and uploaders into paying subscribers, our ability to retain paying subscribers by maintaining and improving our value proposition, our ability to provide video storage and streaming in a cost-effective manner, our ability to successfully attract enterprise customers, our ability to protect sensitive data from unauthorized access, the integrity, quality, scalability and redundancy of our systems, technology and infrastructure (and those of third parties with which we do business), our ability to successfully operate in and expand into additional international markets, our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties, foreign exchange currency rate fluctuations, the impact of the COVID-19 pandemic on our business, adverse changes in economic conditions, the possibility that our historical consolidated and combined results may not be indicative of our future results and the other factors set forth in the section titled “Risk Factors†in our Registration Statement on Form S-1 filed with the SEC on May 26, 2021 as they may be updated by our periodic reports subsequently filed with the SEC. Other unknown or unpredictable factors that could also adversely affect Vimeo’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of Vimeo’s management as of the date of this communication. Vimeo does not undertake to update these forward-looking statements.
About Vimeo
Vimeo is the world’s leading all-in-one video software solution. Our platform enables any professional, team, and organization to unlock the power of video to create, collaborate and communicate. We proudly serve our growing community of over 200 million users â€" from creatives to entrepreneurs to the world’s largest companies. Vimeo is an operating business of IAC. Learn more at www.vimeo.com.
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