IAC Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• People's Performance: Digital revenue grew 14% in Q4. Non-session-based revenue is the fastest-growing part, making up 38% of digital revenue and growing 37% in Q4. Focus on off-platform audiences and new products like Food & Wine projects, Travel & Leisure's White Lotus, etc.
• MGM: Increased ownership in MGM, repurchased $337 million of IAC stock in '26, aiming for 25% ownership in MGM.
• Care's Situation: 9% revenue decline in Q4 due to Enterprise softness, but Consumer revenue steady, and product improvements bearing fruit.
• Emerging & Other: Vivian under Bill Kong's leadership, returning to growth with AI products.

Segment Performance

• People: Digital revenue grew 14% in Q4. Digital revenue was $1.1 billion of $1.8 billion total revenue for the year. Adjusted EBITDA for Digital grew 9% in Q4 with 26% incremental margins. Non-session-based revenue was 38% of total digital revenue, growing 37% in Q4. Print segment declined 23% due to political advertising in prior period and sectoral print decline.
• Care: 9% revenue decline in Q4 driven by Enterprise softness; Consumer revenue declined 4%. Adjusted EBITDA was $19 million with 22% margins.
• Search: In negotiations with Google, guiding to -$5 million to $10 million adjusted EBITDA.
• Emerging & Other: 18% revenue growth, flipped to profitability with $3 million adjusted EBITDA.
• Corporate: Adjusted EBITDA $23 million, down from prior periods.

Guidance

• Stopping quarterly guidance, providing annual guidance.
• People Inc.: Digital revenue and digital adjusted EBITDA to grow mid- to high single digits. Litigation expenses around $15 million. Total adjusted EBITDA range $310M-$340M.
• Care: Adjusted EBITDA $45M-$55M, consumer returning to growth midyear.
• Search: Guidance -$5M to $10M adjusted EBITDA, negotiations with Google ongoing.
• Emerging & Other: Top line growth, EBITDA $0M-$10M.
• Corporate expense: $80M-$90M, aiming for bottom of range.

Risks

• Litigation: $15 million litigation expenses related to Google Ad tech litigation.
• Macro Challenges: Headwinds in digital publishing, including AI disruption, Google referral traffic declines, and sectoral declines in print.
• MGM Uncertainties: Long-term development of Osaka resort and potential M&A risks.

Q: Ross Sandler asks about key drivers of non-session-based revenue growth at People.

A: Neil Vogel talks about going where the audiences are, developing new distribution channels like social, events, D/Cipher, etc.

Q: Jason Helfstein asks about M&A interests and MGM investment.

A: Barry Diller discusses MGM's value, M&A interest in opportunities like CNN (potentially personal), and BetMGM's turnaround.

Q: Justin Patterson asks about scalability of new curated experiences at People.

A: Neil Vogel talks about MyRecipes, PEOPLE app, games, and InStyle's Intern series as examples of scalable experiences.

Q: John Blackledge asks about People's 2026 EBITDA outlook and IAC's free cash flow conversion.

A: Christopher Halpin explains the impact of litigation expenses on EBITDA guidance and breaks down free cash flow components.

Q: Cory Carpenter asks about Google litigation update and IAC simplification.

A: Neil Vogel updates on Google litigation and Barry Diller talks about simplification by reducing overhead.

Q: Eric Sheridan asks about Ad business macro views and forward guidance.

A: Neil Vogel talks about ad market health and Chris Halpin discusses moving away from quarterly guidance to long-term focus.

Q: Daniel Kurnos asks about D/Cipher+ sizing and Care growth.

A: Neil Vogel talks about D/Cipher+ momentum and Christopher Halpin discusses Care's recovery and growth aspirations.

Q: James Heaney asks about slowdown in digital revenue growth guidance.

A: Christopher Halpin mentions conservatism in guidance due to search disruptions but confidence in positioning.