And shareholders love the ride.
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Internet holding company IAC, chaired by media mogul Barry Diller, announced yesterday it will spin-off its Vimeo video unit to shareholders.
Strictly Business For Vimeo
Vimeo was started in 2004 as a side project for employees of the online comedy platform "CollegeHumor." The project was quickly scooped-up by IAC in 2006 as part of a larger acquisition.
Now known as the "other YouTube," Vimeo sells a suite of video-creation and editing tools to content creators and businesses to help build their online presence.
The pandemic has driven a surge in demand 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.
Who's laughing now?
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.”
Business As Usual For IAC
Vimeo is far from IAC’s first rodeo when it comes to spin-offs. The holding company’s go-to maneuver has been to build up companies from within and then break them off once they have matured:
The Takeaway: Shareholders applauded the move with a 14% jump in IAC's share price.