IAC Inc. (IAC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mix of positive and neutral factors. Despite a decline in care revenue, the company shows strong digital revenue growth and EBITDA margins. The Q&A highlights confidence in new revenue channels and strategic investments, particularly in MGM and AI initiatives. The positive outlook for digital revenue and free cash flow conversion, combined with ongoing share repurchases, outweighs the slight EBITDA guidance reduction and Google litigation costs. Given the market cap, the stock is likely to see a positive movement of 2% to 8%.
Key Financial Performance
Digital Revenue Growth 14% year-over-year increase, driven by solid execution across Advertising, Performance Marketing, and Licensing. Reasons include strong execution, robust engagement with content, and new AI content partnerships.
Advertising Revenue Growth 9% year-over-year increase, despite a 13% decline in core sessions. This highlights the success of the off-platform strategy and the strength of People's brands amidst AI headwinds.
Performance Marketing Revenue Growth 17% year-over-year increase during the holiday period, reflecting excellent execution and strong consumer demand.
Licensing Revenue Growth 36% year-over-year increase, driven by robust engagement with content across Apple News, content syndication partners, and new AI content partnerships.
Print Segment Revenue Decline 23% year-over-year decrease, partly due to $20 million of revenue in the prior period from political advertising and the continued sectoral decline in print.
Adjusted EBITDA for Digital 9% year-over-year growth when adjusted for severance expenses from the previous year, with incremental Digital margins at 26%.
Print Adjusted EBITDA $13 million in the quarter, down from the previous year due to the decline in print revenue but sufficient to offset $9 million in corporate expenses.
Total Revenue for the Year $1.8 billion, with $1.1 billion from Digital Revenue growing at 10% year-over-year.
Aggregate Adjusted EBITDA for the Year $331 million, excluding $41 million in gains from lease buyouts and $15 million in third-quarter severance expenses. Digital full-year EBITDA margins were flat year-over-year at 28%.
Care Revenue Decline 9% year-over-year decrease, driven by a 13% decline in Enterprise revenue and a 4% decline in Consumer revenue. Reasons include tightened employer benefit spending and robust client usage in the prior period.
Care Adjusted EBITDA $19 million for the quarter, with 22% EBITDA margins. Profitability was flat year-over-year when normalized for legal charges and severance expenses from the previous year.
Emerging & Other Revenue Growth 18% year-over-year increase, driven by strong performance at the Daily Beast (50% revenue growth) and Vivian (return to growth).
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Operating Highlights
Southern Tea Product Launch: Introduction of Southern Tea's Southern Tea as a product owned and distributed by the company.
Food & Wine Product Line: Collaboration with top chefs globally to create a unique product line.
Travel & Leisure Initiative: Development of a project inspired by White Lotus, leveraging knowledge of global destinations.
Digital Revenue Growth: Achieved 14% growth in digital revenue, driven by advertising, performance marketing, and licensing.
Off-Platform Audience Expansion: Off-platform views nearly doubled in two years, growing 43% year-over-year in Q4.
AI Content Partnership: New AI content partnership with Meta contributed to licensing revenue growth.
Non-Session-Based Revenue Growth: Non-session-based revenue grew 37% year-over-year in Q4, now comprising 38% of total digital revenue.
Print Segment Decline: Print revenue declined 23% due to sectoral challenges and prior period political advertising revenue.
Cost Management: Corporate expenses reduced, targeting mid-$80 million range annually.
Shift to Consumer Businesses: Transitioning traditional content businesses into standalone consumer products and services.
Increased Ownership in MGM: Increased stake in MGM to 25%, marking an important accounting milestone.
Focus on Long-Term Value: Stopped providing quarterly guidance to prioritize long-term execution and value creation.
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Risk or Challenges
AI Disruption: The increasing disruption caused by AI, such as AI overviews appearing on queries, poses challenges to traditional digital publishing models. The company is working to adapt by creating new consumer businesses and products to mitigate risks of disintermediation.
Decline in Google Search Referrals: A 50% drop in Google search referrals over the last two years and softness in non-search traffic sources, such as Google Discover, have negatively impacted core web sessions, which declined by 13% year-over-year in the quarter.
Print Segment Decline: The print segment experienced a 23% revenue decline, attributed to the continued sectoral decline in print and the absence of $20 million in political advertising revenue from the prior period.
Regulatory and Legal Risks: The company is incurring $15 million in litigation expenses related to Google Ad tech litigation, which will impact corporate expenses and profitability.
Search Segment Uncertainty: The future of the Search segment is uncertain due to ongoing negotiations with Google, which supplies paid listings. The outcome of these negotiations will likely determine the segment's viability.
Economic Pressures on Enterprise Revenue: Enterprise revenue declined by 13% due to tightened employer benefit spending and adjustments to existing programs, reflecting economic pressures.
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Guidance & Outlook
Digital Revenue Growth: People Inc. expects mid- to high single-digit growth in digital revenue and digital adjusted EBITDA for 2026.
Litigation Expenses: Approximately $15 million in litigation expenses related to Google Ad tech litigation is expected in 2026.
Total Adjusted EBITDA: Guidance range for total adjusted EBITDA for People Inc. is $310 million to $340 million for 2026.
Care Revenue and EBITDA: Care revenue is expected to return to growth by mid-2026, with adjusted EBITDA guidance of $45 million to $55 million.
Search Segment EBITDA: Guidance for Search segment adjusted EBITDA is in the range of negative $5 million to positive $10 million, with clarity expected within 90 days.
Emerging & Other EBITDA: Emerging & Other segment is expected to generate $0 million to $10 million in adjusted EBITDA.
Corporate Expense: Corporate expense is expected to range between $80 million and $90 million, with efforts to achieve the lower end of the range.
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Shareholder Return Plan
Share Buyback: The company repurchased $337 million worth of its own stock in 2026, reducing its share count by 10%. The company also increased its ownership in MGM by buying approximately 1% more shares to reach a 25% ownership stake. The company plans to continue evaluating buybacks opportunistically, considering the significant discount in IAC's value.
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Key Q&A
Q:What are the key drivers of the non-session-based revenue growth of 37% and its outlook for 2026?
A:The growth is driven by diversification away from Google Search, which now accounts for only 30% of traffic compared to 70% five years ago. The company has developed new distribution channels such as social media, events, and platforms like D/Cipher. These efforts have positioned the company to align with audience and advertiser trends, and management feels confident about the momentum and numbers achieved.
Q:What are IAC's M&A aspirations and the potential interest in CNN?
A:Barry Diller stated that IAC is not actively pursuing M&A opportunities due to a lack of exciting and rationally priced options. He expressed interest in CNN but noted it is less than 50-50 that an opportunity will arise, and if it does, it would likely be on a personal level rather than through IAC.
Q:What is the investment thesis for MGM?
A:IAC invested $1.3 billion in MGM, which is now valued at $2.2 billion. Barry Diller highlighted MGM's strong assets, including 40% ownership of Las Vegas properties and a $12 billion resort development in Osaka, Japan. He emphasized the potential for innovation and value creation in Las Vegas and the long-term value of the Osaka project.
Q:How scalable are the new curated experiences at People, and what are the investment levels to support this transformation?
A:The new curated experiences, such as MyRecipes, the PEOPLE app, and social-first video series like 'The Intern,' are scalable and show strong engagement metrics. For example, MyRecipes has 3 million registered users, and the PEOPLE app has 300,000 downloads with higher engagement times compared to the website. Investments have been redirected to these projects, and management is optimistic about their potential.
Q:What are the priorities for Vivian under its new CEO, Bill Kong?
A:Vivian aims to drive growth by leveraging its AI products, which are considered industry-changing. The business has returned to growth after sectoral headwinds, and Bill Kong will focus on deepening AI integration and expanding the marketplace for nurses and healthcare providers.
Q:What is the outlook for People’s 2026 EBITDA and IAC’s free cash flow conversion?
A:People’s 2026 EBITDA is guided to $310 million to $340 million, reflecting mid- to high single-digit growth in digital EBITDA but offset by a $31 million swing due to Google litigation costs. IAC expects a 50%+ EBITDA to free cash flow conversion in 2026, with minimal CapEx and cash taxes, and normalized working capital.
Q:What is the status and potential outcome of the Google litigation?
A:The lawsuit builds on the government’s antitrust case against Google, with IAC seeking to recover hundreds of millions of dollars in damages. The litigation costs are estimated at $50 million, and management views this as an investment with significant potential upside.
Q:What is the current state of the ad market and its impact on IAC?
A:The ad market is rated as a 6 out of 10, with strong performance in health, pharma, travel, and tech sectors, while food and beverage and CPG are weaker. IAC’s strong brand presence and innovative programs have helped it navigate the market effectively.
Q:What is the growth outlook for Care and its long-term aspirations?
A:Care aims to return to revenue growth in 2023, driven by stabilization in consumer sign-ups and opportunities in the enterprise segment. Long-term, the business aspires to grow 15%-20% annually, leveraging its market position and increasing demand for care services.
Q:What is the rationale behind the slowdown in digital revenue growth guidance for 2026?
A:The guidance of mid- to high single-digit growth reflects conservatism due to ongoing search disruptions. Management remains confident in its off-platform strategy and monetization capabilities but is cautious given broader market uncertainties.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the types of M&A assets IAC is interested in, beyond general comments about the lack of exciting opportunities. Additionally, while Barry Diller expressed interest in CNN, he did not provide concrete plans or timelines, leaving the response vague and speculative.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI content
Advertising
BD
CFO COO
Chief Executive
Cipher
Executive Officer
Executive VP
Licensing
Marketing
Officer People
Page
People Inc
Print
QA
Southern Tea
VP CFO
White Lotus
book
brand strength
chef
contributor
core session
creator
decline Google
domain
franchise
front
momentum
neighborhood
period
product experience
product service
publishing
session decline
severance
stream
strength brand
video
web session
IAC Transcript
IAC Inc. (IAC) Q4 2025 Earnings Call Transcript
Positive2-4
The earnings call reveals a mix of positive and neutral factors. Despite a decline in care revenue, the company shows strong digital revenue growth and EBITDA margins. The Q&A highlights confidence in new revenue channels and strategic investments, particularly in MGM and AI initiatives. The positive outlook for digital revenue and free cash flow conversion, combined with ongoing share repurchases, outweighs the slight EBITDA guidance reduction and Google litigation costs. Given the market cap, the stock is likely to see a positive movement of 2% to 8%.
IAC Inc. (IAC) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call reveals a mix of positive and negative factors. Positive elements include increased revenue guidance for BetMGM, strategic divestitures, and capital allocation plans. Challenges include declining print division revenue and legal expenses. The Q&A indicates optimism about People Inc.'s future and strategic growth initiatives. The market cap indicates a moderate reaction. Overall, the positive guidance adjustments and strategic growth plans outweigh the negatives, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
IAC Inc. (IAC) Presents At Goldman Sachs Communacopia + Technology Conference (Transcript)
Neutral9-9
IAC Inc. (IAC) Q2 2025 Earnings Call Transcript
Positive8-5
The earnings call highlights positive aspects such as digital revenue growth, a strong M&A strategy, and strategic investments in ad targeting and licensing. The reaffirmation of 2025 EBITDA guidance and a focus on shareholder returns through repurchases are also favorable. While there are concerns about search revenue and share repurchase pauses, the overall sentiment is optimistic, with guidance for revenue growth and strategic partnerships. Given the market cap, these factors indicate a positive stock price movement within the 2% to 8% range over the next two weeks.
IAC Slides
IAC Report
Frequently Asked Questions
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