Business Combinations

3 Months Ended

Dec. 31, 2021

Acquisition of Depositphotos Inc.

On October 1, 2021, we acquired Depositphotos Inc. and its subsidiaries ("Depositphotos"), a global creative platform for digital design. We acquired all outstanding shares of the company for a purchase price of $84,900, which includes a post-closing adjustment based on acquired cash, debt, and working capital as of the closing date. We paid $76,119 in cash at closing, and the remaining purchase consideration, including the post-closing adjustment but net of any indemnifiable losses recoverable against the deferred amount, will be paid in two separate deferred payments. The first, and smaller, payment will be made in January 2022 and the second, and majority, of the deferred payment is due in October 2022.

The acquisition is managed within our Vista business and includes VistaCreate (formerly Crello), a rapidly growing leader in do-it-yourself (DIY) digital design. The acquisition also includes their separately branded Depositphotos business, a platform for creators that includes images, videos and music that are developed by a large group of content contributors. We expect synergies to provide significant benefits to our Vista business as this represents another integral step toward providing a compelling, full-spectrum design offering to our customers, and also provides another vehicle for the acquisition of new customers, to whom we plan to cross-sell our other products and services.

The table below details the consideration transferred to acquire Depositphotos:


Cash consideration (paid at closing)	$	76,119
Deferred payment	8,781

Total purchase price	$	84,900

We recognized the assets and liabilities on the basis of their fair values at the date of the acquisition with any excess of the purchase price paid over the fair value of the net assets recorded as goodwill, which is primarily attributable to the synergies that we expect to achieve through the acquisition. The goodwill balance has been attributed to the Vista reporting unit and none of the goodwill balance is deductible for tax purposes. Additionally, we identified and valued Depositphotos intangible assets, which include their trade name, customer relationships,

owned content and developed technology.

Our preliminary estimate of the fair value of specifically identifiable assets acquired and liabilities assumed as of the date of acquisition is subject to change upon finalizing our valuation analysis, including certain valuation assumptions and tax matters. The final determination may result in changes in the fair value of certain assets and liabilities as compared to our preliminary estimates, which are expected to be finalized prior to the end of fiscal year 2022.

The fair value of the assets acquired and liabilities assumed was:

Amount

Weighted Average Useful Life in Years

Tangible assets acquired and liabilities assumed:

Cash and cash equivalents

7,173

n/a

Accounts receivable, net

329

n/a

Prepaid expenses and other current assets

448

n/a

Property, plant and equipment, net

611

n/a

Operating lease assets, net

383

n/a

Other assets

324

n/a

Accounts payable

(843)

n/a

Accrued expenses

(5,009)

n/a

Deferred revenue

(10,999)

n/a

Operating lease liabilities, current

(152)

n/a

Deferred tax liabilities

(4,176)

n/a

Operating lease liabilities, non-current

(231)

n/a

Identifiable intangible assets:

Customer relationships

11,600

4 years

Trade name

2,500

10 years

Developed technology

2,300

2 years

Owned content

7,700

10 years

Goodwill

72,942

n/a

Total purchase price

84,900

n/a

Depositphotos has been included in our consolidated financial statements starting on its acquisition date. The revenue and earnings of Depositphotos included in our consolidated financial statements for the three and six months ended December 31, 2021 are not material, and therefore no proforma financial information is presented. We used our cash on hand to fund the acquisition. In connection with the acquisition, we incurred $387 and $887 in general and administrative expenses, as part of our central and corporate costs during the three and six months ended December 31, 2021, respectively, primarily related to legal, financial, and other professional services.