Vimeo Going Solo

The online video platform that started out as a harbor for independent film is about to get some independence of its own.

Internet holding company IAC, chaired by media mogul Barry Diller announced on Tuesday it plans to spin off its full stake in Vimeo to IAC shareholders.

Strictly Business For Vimeo

15-year-old Vimeo has evolved greatly from its origins as an indie video hosting site. Though often still regarded as “the other Youtube,” the company has refocused from entertainment streaming to licensing out digital video software tools for live streaming, screen recording, editing, and more.

And the pandemic has driven a demand surge for software-as-a-service (SaaS) companies like Vimeo, which now boasts 1.5 million paying subscribers. That includes over 3,500 enterprise customers like Amazon, Starbucks and Rite Aid.

• According to IAC’s third quarter results, Vimeo’s quarterly revenue was $199.4 million, a 44% jump over a year ago.
• Vimeo recently raised $150 million from investors Thrive Capital and GIC to expand its enterprise licensing business, and the company secured a $2.75 billion valuation in November.

On the Q3 earnings call, IAC CEO Joey Levin asserted, “Clearly, Vimeo is now in control of its own destiny.” Levin has also stated a spinoff would benefit Vimeo, as its rapid growth meant “access to capital inside of IAC will be much more expensive than access to capital outside of IAC.”

The separation is expected to take place in the second quarter of 2021 as a reclassification of shares, leaving Vimeo an independently-traded public company.

Business As Usual For IAC

Vimeo is far from IAC’s first rodeo when it comes to spinoffs. The holding company’s go-to maneuver has been to build up companies from within and then break them off once they have matured:

• Vimeo would be IAC and its predecessors’ 11th spin off. Expedia, LendingTree and Ticketmaster are a few household names the holding company has strengthened and subsequently parted ways with over the years.
• More recently IAC spun off its shares of online dating company Match Group this July. The company is also planning to wave goodbye to Angie’s List owner ANGI Homeservices in the near future.

The Takeaway: IAC stockholders applauded the company’s proposed split with Vimeo. Shares popped more than 15% Tuesday morning on the news.