FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2022

Vimeo's financial instruments that are measured at fair value on a recurring basis are as follows:


	June 30, 2022
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	254,818	$	—	$	—	$	254,818
Time deposits	—		256		—		256
Total	$	254,818	$	256	$	—	$	255,074

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	13,108	$	13,108


	December 31, 2021
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	305,836	$	—	$	—	$	305,836



Liabilities:
Contingent consideration arrangements	$	—	$	—	$	12,200	$	12,200

Vimeo's non-financial assets, such as goodwill, intangible assets with definite lives, ROU assets and leasehold improvements and equipment, are adjusted to fair value only if an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

The changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
	(In thousands)
Balance at beginning of period	$	13,777	$	12,200

Total net losses (gains):
Included in operating loss	(669)		(669)
Measurement period adjustments	—		1,577
Settlements	—		—
Balance at end of period	$	13,108	$	13,108

Contingent Consideration Arrangements

At June 30, 2022, the Company had two outstanding contingent consideration arrangements related to the acquisitions of Wibbitz Ltd. (“Wibbitz”) and WIREWAX Ltd. (“Wirewax”), which were completed on November 10, 2021 and December 6, 2021, respectively. The maximum contingent payments related to these arrangements are $15.0 million for Wibbitz and $10.0 million for Wirewax. The fair values of the contingent consideration arrangements were finalized during the first quarter of 2022, when the Company recorded measurement period adjustments to increase the provisional amounts recorded by approximately $1.6 million. These changes were recorded as an increase to "Goodwill" in the accompanying consolidated balance sheets. As of June 30, 2022, the allocation of the purchase price for the two acquisitions has been completed. The final acquisition date fair values for the contingent consideration arrangements for Wibbitz and Wirewax were $5.6 million and $8.2 million, respectively.

The fair value of each of the contingent consideration arrangements was determined by using probability weighted analyses to estimate the contingent payments, adjusted to fair value by applying a discount rate. The Company remeasures the fair value of each contingent consideration arrangement each reporting period and any adjustments are recognized in "General and administrative expense" in the consolidated statement of operations.

The contingent consideration arrangement for Wibbitz is dependent upon the amount of revenue generated by Wibbitz subscribers who migrate to the Vimeo platform by December 31, 2022. During the quarter ended June 30, 2022, the fair value of the contingent consideration liability was reduced by approximately $1.6 million due primarily to a decrease in forecasted Wibbitz revenue during the earnout period.

The contingent consideration arrangement for Wirewax is based upon achievement of an integration milestone and attainment of certain revenue thresholds within two years of the acquisition. The integration milestone was met during the quarter ended June 30, 2022, resulting in a payment of $4.8 million in July 2022, which is consistent with the fair value estimated as of the acquisition date. Additionally during the quarter ended June 30, 2022, the fair value of the contingent consideration arrangement based on the attainment of certain revenue thresholds was increased by $0.9 million, due primarily to the expected attainment of certain revenue thresholds earlier than previously estimated.

At June 30, 2022, $13.1 million of contingent consideration is included in “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheet. At December 31, 2021, $12.2 million of contingent consideration is included in "Other long-term liabilities" in the accompanying consolidated balance sheet.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details