IAC Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• People Inc. Rebranding: Rebranded from Dotdash Meredith to People Inc., reflecting content made by people for people. Focuses on owned audiences, off-platform audiences, and addressable audiences. Monetization avenues include advertising, performance marketing, and licensing.
• MGM Performance: BetMGM's strong results, with diversified gaming portfolio performance, particularly in digital, regionals, and Macau offsetting Las Vegas softness.
• Care.com Revitalization: Product and brand revitalization in June, with focus on improving consumer product experience, marketing, and expanding into new verticals like senior and pet care. Consumer business shows stability in recent engagement metrics.
• Capital Allocation: Completed $200M in buybacks, actively pursuing M&A opportunities, evaluating platform builds and carve-outs, and considering strategic divestitures to bolster cash balance.

Segment Performance

• People Inc.: Returned to core sessions growth in Q2, achieving 9% Digital revenue growth (accelerating from 7% in Q1, within guidance range). Sessions generate 64% of Digital revenue, with off-platform views contributing to non-sessions-based revenue. The rebranding to People Inc. aligns with content made by people for people, focusing on owned, off-platform, and addressable audiences.
• MGM: Demonstrated strength in its diversified gaming portfolio, with BetMGM showing 36% net revenue growth in Q2 and increasing full-year guidance to at least $2.7B revenue and $150M EBITDA.
• Care.com: Revitalized product and brand in June; consumer business showing promising signs in engagement metrics. Revenue is evenly split between consumer and enterprise segments; enterprise growing, while consumer revenue declined post-pandemic but seeing stability in recent months.

Guidance

• Consolidated IAC: Adjusted EBITDA guidance tightened to $247M to $285M.
• People Inc.: Digital revenue guidance maintained at 7% to 10%; adjusted EBITDA guidance revised from $350M to $340M (bottom end $330M) due to increased spend and health care costs.
• Care.com: Guidance maintained at $45M to $55M.
• Search: Low end of guidance raised.
• Corporate: Run rate costs reduced to $110M to $115M (includes ~$20M one-time costs).

Risks

• Google Search Volatility: Decline in Google Search traffic impacting sessions and revenue.
• AI Disruption: Potential further changes in search behavior due to AI, affecting traffic and revenue.
• Market Volatility: Fluctuations in Google Search ecosystem impacting Search revenue and EBITDA.
• Care.com Execution: Challenges in product and marketing execution affecting consumer revenue growth.

Question and Answer

Q: John Blackledge on traffic trajectory, People Inc. Digital revenue, and margins A: Neil and Chris discussed sessions (O&O sessions expected flat to slightly up, off-platform views continuing growth), revenue sources (advertising, performance marketing, licensing), and margin expectations (non-session revenues slightly accretive to margins, sessions more accretive)

Q: Eric Sheridan on People Inc. brand rebranding and M&A landscape A: Neil talked about brand rebranding rationale (simplicity, alignment with content made by people for people) and Chris discussed M&A focus on quality-defensible businesses, AI applications, platform builds, and carve-out opportunities

Q: Danny Pfeiffer on Google AI Overviews and share repurchases A: Neil discussed AI Overviews penetration (on more than half of relevant searches), and Chris on share repurchase strategy (actively exploring M&A and stock buyback opportunities while seeking compelling returns)

Q: Stephen Ju on Care.com market opportunity A: Chris discussed Care.com's growth opportunities (massive addressable market, focus on improving product experience, pricing/packaging, and vertical expansion into senior and pet care)

Q: Jason Helfstein on People Inc. long-term revenue and licensing A: Neil talked about long-term revenue goal (10% growth) and licensing opportunities, including potential deals with other LLM companies

Q: James Heaney on Search revenue stability A: Chris discussed Search revenue trends (multiyear decline, but seeing stability and second derivative positive, with focus on maintaining margin and profitability)

Q: Dan Kurnos on D/Cipher+ TAM and AI data A: Neil discussed D/Cipher+ TAM expansion (4-5x addressable market, potential CTV opportunity), and Chris on AI data analysis (step-down in click-through not as dramatic as reports suggest, manageable impact)

Q: Daniel Kurnos on D/Cipher+ yields and Care.com enterprise trends A: Neil on D/Cipher+ yields (potential for improvement through algorithmic enhancements), and Chris on Care.com enterprise seasonality (quarter-to-quarter ups and downs due to factors like flu season and employee utilization)

Q: Ygal Arounian on People Inc. brand transition and MGM digital gaming A: Neil on brand transition rationale and Chris on MGM support (own 24%, support management team, active Board role in driving BetMGM success)