People Inc: Form 10-Q for the period ended Mar 31, 2025

GENERAL

Management Overview

IAC today is comprised of category leading businesses, including Dotdash Meredith (“DDM”) and Care.com among others and holds strategic equity positions in MGM Resorts International (“MGM”) and Turo Inc. (“Turo”).

As used herein, “IAC,” the “Company,” “we,” “our” or “us” and similar terms refer to IAC Inc. and its subsidiaries (unless the context requires otherwise).

For a more detailed description of the Company’s operating businesses, see “Description of IAC Businesses” included in “Item 1—Business” to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Angi Inc. Spin-Off

On March 31, 2025, IAC completed the spin-off of Angi Inc. (“Angi”) by means of a special dividend (the “Distribution”) of all shares of Angi capital stock held by IAC to holders of its common stock and Class B common stock. As a result of the Distribution, IAC no longer owns any shares of Angi’s capital stock and Angi became an independent public company. On November 1, 2023, Angi completed the sale of Total Home Roofing, LLC (“Roofing”) and reflected it as a discontinued operation in its standalone financial statements. At the time of its sale, Roofing did not meet the threshold to be reflected as a discontinued operation at the IAC level, therefore, IAC moved Roofing to Emerging & Other. As a result of the Distribution, the operations of Angi, which include Roofing, are presented as discontinued operations within IAC’s consolidated financial statements for all periods prior to March 31, 2025.

Defined Terms and Operating Metrics:

Unless otherwise indicated or as the context otherwise requires, certain terms used in this quarterly report, which include the principal operating metrics we use in managing our business, are defined below:

IAC Businesses (for additional information see “Note 5—Segment Information” in the accompanying notes to the financial statements included in “Item 1—Consolidated Financial Statements”):

• DDM - one of the largest digital and print publishers in America. More than 150 million people trust DDM each month to help them make decisions, take action, and find inspiration. DDM’s over 40 iconic brands include People, Better Homes & Gardens, Verywell, FOOD & WINE, The Spruce, allrecipes, BYRDIE, REAL SIMPLE, Investopedia, and Southern Living. DDM has two operating segments: (i) Digital, which includes its digital, mobile and licensing operations; and (ii) Print, which includes its magazine subscription and newsstand operations;
• Care.com, a leading online destination for families to connect with caregivers for their children, aging parents, pets and homes and for caregivers to connect with families seeking care services. Care.com’s brands include Care For Business, Care.com’s offerings to enterprises, and HomePay;
• Search - consists of Ask Media Group, a collection of websites providing general search services and information, and Desktop, which includes our business-to-business partnership operations and the remaining installed base of our legacy direct-to-consumer downloadable desktop applications; and
• Emerging & Other - consists of:
• Vivian Health, a platform to efficiently connect healthcare professionals with job opportunities;
• The Daily Beast and IAC Films; and
• Mosaic Group, a former developer and provider of global subscription mobile applications, for periods prior to the sale of its assets on February 15, 2024, which was accounted for as a sale of a business, for approximately $160 million.

DDM

• Digital Revenue - includes advertising revenue, performance marketing revenue and licensing and other revenue.
• Advertising revenue - primarily includes revenue generated from digital advertisements and intent-based advertising targeting capabilities sold directly to advertisers or through advertising agencies and programmatic advertising networks.
• Performance marketing revenue - primarily includes commissions generated through affiliate commerce, performance marketing services and affinity marketing channels. Affiliate commerce commission revenue is generated when DDM’s branded content refers consumers to commerce partner websites resulting in a purchase or transaction. Performance marketing services commission revenue is generated on a cost-per-click or cost-per-action basis. Affinity marketing programs are arrangements where DDM acts as an agent for both DDM and third-party publishers to market and place magazine subscriptions online for which commission revenue is earned when a subscriber name has been provided to the publisher.
• Licensing and Other revenue - primarily includes revenue generated through brand and content licensing and similar agreements. Brand licensing generates royalties from long-term trademark licensing agreements with retailers, manufacturers, publishers and service providers. Content licensing royalties are earned from our relationship with Apple News+ as well as other content use and distribution relationships, including utilization in large-language models and other artificial intelligence-related activities.
• Print Revenue - primarily includes subscription, advertising, newsstand, project and other, and performance marketing revenue.
• Total Sessions - represents unique visits to all sites that are part of DDM’s network.
• Core Sessions - represents a subset of Total Sessions that comprises unique visits to DDM’s most significant (in terms of investment) owned and operated sites as follows:

Care.com

• Consumer Revenue - consists of revenue primarily generated through subscription fees from families and caregivers, both domestically and internationally, for its suite of products and services. Consumer revenue also includes revenue generated through Care.com’s comprehensive household payroll and tax support services (HomePay) as well as through contracts with businesses that advertise through its platform.
• Enterprise Revenue - consists of revenue primarily generated through annual contracts with businesses (employers or re-sellers) who provide access to Care.com’s suite of products and services as an employee benefit.

Operating Costs and Expenses:

• Cost of revenue (exclusive of depreciation) - consists primarily of traffic acquisition costs, which include (i) payments made to partners who direct traffic to our Ask Media Group websites and who distribute our business-to-business customized browser-based applications and (ii) the amortization of fees paid to Apple and Google related to the distribution of apps and the facilitation of in-app purchases. Traffic acquisition costs include payment of amounts based on revenue share and other arrangements. Cost of revenue also includes production, distribution and editorial costs at DDM, compensation expense (including stock-based compensation expense) and other employee-related costs, content costs, hosting fees, credit card processing fees and payments made to care providers for Care For Business.
• Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing expenditures, including fees paid to search engines, social media sites and other online marketing platforms, offline marketing expenditures, which primarily consists of costs related to television, streaming and radio advertising within our Care.com segment, compensation expense (including stock-based compensation expense) and other employee-related costs for sales force and marketing personnel and subscription acquisition costs related to DDM.
• General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions, rent expense and facilities cost (including impairments of right-of-use assets or “ROU assets”), fees for professional services (including transaction-related costs related to the Distribution and acquisitions), provision for credit losses and software license and maintenance costs. The customer service function at Care.com includes personnel who support its caregivers and consumers.
• Product development expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs and third-party contractor costs that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology and software license and maintenance costs.

Long-term debt (for additional information see “Note 3—Long-term Debt” in the accompanying notes to the financial statements included in “Item 1—Consolidated Financial Statements”):

• DDM Term Loan A - due December 1, 2026. At March 31, 2025 and December 31, 2024, the outstanding balance of DDM Term Loan A was $288.8 million and $297.5 million, respectively, and bore interest at an adjusted term secured overnight financing rate (“Adjusted Term SOFR”) plus 2.25%, or 6.66% and 6.94%, respectively. DDM Term Loan A has quarterly principal payments.
• DDM Term Loan B-1 (replaced DDM Term Loan B) - due December 1, 2028. On November 26, 2024, DDM entered into Amendment No. 1 to the DDM Credit Agreement (the “Amended DDM Credit Agreement”), which governs both the existing DDM Term Loan A and the DDM Revolving Facility, and replaced $1.18 billion of then outstanding DDM Term Loan B principal with an equal amount of DDM Term Loan B-1 (together with DDM Term Loan A, these loans are collectively referred to as “DDM Term Loans”). At both March 31, 2025 and December 31, 2024, the outstanding balance of DDM Term Loan B-1 was $1.18 billion, respectively, and bore interest at Adjusted Term SOFR, subject to a minimum of 0.50%, plus 3.50%, or 7.82% and 8.05%, respectively. DDM Term Loan B-1 has quarterly principal payments.
• DDM Revolving Facility - DDM’s $150 million revolving credit facility expires on December 1, 2026. At March 31, 2025 and December 31, 2024, there were no outstanding borrowings under the DDM Revolving Facility.

Non-GAAP financial measure:

• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) - is a non-GAAP financial measure. See “Principles of Financial Reporting” for the definition of Adjusted EBITDA and required non-GAAP reconciliations.

Services Agreement with Google

On January 20, 2025, the Company entered into a further amendment to its Services Agreement (the “Amendment”), with the amended terms effective on April 1, 2025. Following the execution of the Amendment, the expiration date of the Services Agreement was extended from March 31, 2025 to March 31, 2026, with an automatic renewal for an additional one-year period absent notice of non-renewal from either party on or before December 31, 2025.

Google has made changes to the policies under the Services Agreement and has also made industry-wide changes that have in the past (and could in the future) require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, which have negatively impacted revenue and been costly to address (and could in the future), which have had and could have an adverse effect on our business, financial condition and results of operations. Further, changes to certain of the economic terms of the Services Agreement became effective April 1, 2025 and could impact Search revenue. See “Note 1—The Company and Summary of Significant Accounting Policies” in the accompanying notes to the financial statements included in “Item 1—Consolidated Financial Statements” for additional information on the Services Agreement with Google.

Results of Operations for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

The following discussion should be read in conjunction with “Item 1—Consolidated Financial Statements.”

Revenue

(Dollars in thousands)

• DDM revenue increased 1% to $393.1 million due to an increase of $14.9 million, or 7%, from Digital, partially offset by a decrease of $12.1 million, or 7%, from Print.
• The Digital increase was due primarily to increases of $7.5 million, or 30%, in Licensing and Other revenue, $5.7 million, or 11%, in Performance marketing revenue and $1.7 million, or 1%, in Advertising revenue. The increase in Licensing and Other revenue was due primarily to the addition of the OpenAI partnership, which began in May 2024, and improved performance of content syndication partners including Apple News+. The increase in Performance marketing revenue was due primarily to an increase in affiliate commerce commission revenue, partially offset by a decrease in performance marketing service revenue in the Finance category. The increase in Advertising revenue was driven primarily by an increase in premium advertising sold through the DDM sales team in the Technology, Retail and Beauty & Style categories, partially offset by lower programmatic revenue as a result of lower impression volumes driven by a 3% decrease in Core Sessions, partially offset by higher programmatic rates.
• The Print decrease was due primarily to decreases of $5.2 million, or 12%, in advertising revenue, $3.6 million, or 5% in subscription revenue, $2.6 million, or 9%, in project and other revenue and $2.4 million, or 23%, in performance marketing revenue. The decreases in advertising revenue, subscription revenue and performance marketing revenue are all due, in part, to ongoing portfolio optimization changes that resulted in a reduction in the number of issues sold in the current quarter compared to the prior year quarter and the ongoing migration of audience from print to digital platforms. The decrease in project and other revenue was due primarily to political advertising spend from a legacy agency business in 2024 on third-party publisher platforms.
• Care.com revenue decreased 4% to $88.9 million due primarily to a decrease of $4.8 million, or 9%, in Consumer Revenue, partially offset by an increase of $1.1 million, or 3%, in Enterprise Revenue. The decrease in Consumer Revenue was driven by a lower number of subscriptions on the Care.com platform. The increase in Enterprise Revenue was primarily due to an increase in backup care usage.
• Search revenue decreased 35% to $70.3 million due to decreases of $32.3 million, or 36%, from Ask Media Group, resulting from a reduction in marketing from affiliate partners that drove fewer visitors to our ad supported search and content websites and $5.9 million, or 32%, from Desktop due primarily to a decline in search queries from our legacy business-to-business partnership operations.
• Emerging & Other revenue decreased 46% to $18.3 million due primarily to the inclusion in the prior year period of $17.9 million in revenue from Mosaic Group, the assets of which were sold on February 15, 2024, partially offset by an increase in revenue of $2.6 million, or 72%, from The Daily Beast.

Cost of revenue (exclusive of depreciation shown separately below)

(Dollars in thousands)

Cost of revenue in 2025 decreased from 2024 due primarily to decreases of $40.2 million from Search, $8.4 million from Emerging & Other and $4.2 million from DDM.

• The Search decrease was due primarily to a decrease in traffic acquisition costs of $39.3 million following a decrease in revenue and the proportion of revenue earned from affiliate partners who direct traffic to our websites.
• The Emerging & Other decrease was due primarily to the inclusion in the prior year period of $7.8 million in expense from Mosaic Group, the assets of which were sold on February 15, 2024.
• The DDM decrease was due primarily to a decrease of $13.5 million from Print, partially offset by an increase of $9.4 million from Digital.
• The Print decrease was due primarily to a decrease of $10.9 million in production and distribution costs (postage, printing, paper and content) resulting from the planned reduction in the number of printed copies of certain publications and a decrease in paper costs and a decrease of $2.1 million in compensation expense primarily related to headcount reductions in the fourth quarter of 2024 intended to better align resources with strategic initiatives.
• The Digital increase was due primarily to increases of $5.6 million in compensation expense and $2.0 million in both traffic acquisition costs and content costs. The increase in compensation expense was due primarily to an increase in headcount to better align resources with strategic initiatives. The increase in traffic acquisition costs was due primarily to a new contractual relationship entered into in the prior year to increase programmatic revenue rates. The increase in content costs was due primarily to increased demand for custom content campaigns within premium advertising revenue.

Selling and marketing expense

(Dollars in thousands)

Selling and marketing expense in 2025 decreased from 2024 due to decreases of $9.4 million from Emerging & Other, $2.6 million from Care.com and $1.0 million from DDM, partially offset by an increase of $5.6 million from Search.

• The Emerging & Other decrease was due primarily to the inclusion in the prior year of $7.9 million of expense from Mosaic Group, the assets of which were sold on February 15, 2024.
• The Care.com decrease was due primarily to a decrease of $2.0 million in online marketing spend.
• The DDM decrease was due primarily to a decrease of $5.1 million from Print, partially offset by an increase of $4.1 million from Digital.
• The Print decrease was due primarily to decreases of $2.7 million in compensation expense and $1.7 million in offline marketing spend. The decrease in compensation expense was primarily related to headcount reductions in the fourth quarter of 2024 intended to better align resources with strategic initiatives. The decrease in offline marketing spend was due primarily to the promotion of branded events in the prior year period.
• The Digital increase was due primarily to increases in compensation expense and online marketing spend of $2.3 million and $1.8 million, respectively. The increase in compensation expense was primarily related to higher headcount and commissions. The increase in online marketing spend was due primarily to an increase in paid affiliate commerce.
• The Search increase was due primarily to an increase of $6.5 million in online marketing spend due to higher traffic volume.

General and administrative expense

(Dollars in thousands)

General and administrative expense in 2025 decreased from 2024 due primarily to decreases of $39.3 million from DDM, $19.1 million from Corporate and $5.1 million from Emerging & Other.

• The DDM decrease was due primarily to the inclusion in 2025 of a gain of $36.2 million from the termination of a lease for certain unoccupied office space at Other (unallocated corporate costs).
• The Corporate decrease was due primarily to a decrease in compensation expense of $21.6 million, partially offset by $4.8 million in transaction-related costs related to the Distribution. The decrease in compensation expense was due primarily to a decrease of $37.9 million in stock-based compensation expense due primarily to the reversal of $49.8 million of previously recognized expense related to the forfeiture of our former Chief Executive Officer’s (“CEO”), Joseph Levin, restricted stock award pursuant to an employment transition agreement (the “Employment Transition Agreement”) entered into on January 13, 2025, partially offset by $14.9 million of stock-based compensation expense related to the transfer of 5.0 million Class B shares of Angi held by the Company, prior to the Distribution, to Mr. Levin, pursuant to the Employment Transition Agreement. Partially offsetting this decrease in stock-based compensation is $14.5 million in separation benefits to our former CEO under the Employment Transition Agreement and $1.8 million in severance and related expenses driven by other headcount reductions.
• The Emerging & Other decrease was due primarily to the inclusion in the prior year period of $7.9 million of expense from Mosaic Group, the assets of which were sold on February 15, 2024, partially offset by an increase of $3.3 million in legal fees.

Product development expense

(Dollars in thousands)

Product development expense in 2025 decreased from 2024 due primarily to decreases of $9.0 million from Emerging & Other and $4.8 million from DDM.

• The Emerging & Other decrease was due primarily to the inclusion in the prior year period of $8.0 million of expense from Mosaic Group, the assets of which were sold on February 15, 2024.
• The DDM decrease was due primarily to a decrease of $3.7 million from Digital resulting from decreases in compensation expense related to headcount reductions and outsourced personnel costs.

Depreciation

(Dollars in thousands)

Depreciation in 2025 decreased from 2024 due primarily to a decrease of $1.1 million at Care.com, partially offset by an increase of $0.6 million at DDM. The decrease at Care.com was due primarily to certain capitalized software being fully depreciated. The increase at DDM was due primarily to accelerated depreciation expense recognized in 2025 on certain leasehold improvements in connection with the termination of a lease for certain unoccupied office space, partially offset by certain assets being fully depreciated in the fourth quarter of 2024 and accelerated depreciation expense recognized in 2024 on certain leasehold improvements in connection with the termination of a lease.

Amortization of Intangibles

(Dollars in thousands)

Amortization of intangibles in 2025 decreased from 2024 due primarily to lower expense at DDM due to certain intangible assets that became fully amortized in the prior year.

Operating income (loss)

(Dollars in thousands)

NM = Not meaningful

Operating income in 2025 increased $99.2 million to $35.8 million from a loss of $63.4 million in 2024 due primarily to an increase of $45.3 million in Adjusted EBITDA, described below, a decrease of $39.9 million in stock-based compensation expense and decreases of $13.2 million in amortization of intangibles and $0.8 million in depreciation, both described above. The decrease in stock-based compensation expense was due primarily to a reversal of expense resulting from an increase in awards being forfeited in the current year, as described above in the general and administrative expense discussion, partially offset by new awards granted in 2024.

At March 31, 2025, there was $96.6 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.2 years.

Adjusted EBITDA

(Dollars in thousands)

See “Principles of Financial Reporting” for the definition of Adjusted EBITDA and required non-GAAP reconciliations.

• DDM Adjusted EBITDA increased 166% to $80.3 million due to increases in Adjusted EBITDA of $34.1 million from Other (unallocated corporate costs), $10.5 million from Print and $5.4 million from Digital.
• The Other (unallocated corporate costs) Adjusted EBITDA increase was due primarily to the inclusion in 2025 of a gain of $36.2 million from the termination of a lease for certain unoccupied office space.
• The Print Adjusted EBITDA increase was due primarily to lower operating expenses from continued cost rationalization efforts, including lower cost of revenue, partially offset by lower revenue.
• The Digital Adjusted EBITDA increase was due primarily to higher revenue, partially offset by higher cost of revenue and an increase in online marketing.
• Care.com Adjusted EBITDA decreased 12% to $14.5 million due primarily to lower revenue and higher compensation costs, partially offset by lower selling and marketing expense.
• Search Adjusted EBITDA decreased 31% to $3.0 million due primarily to lower revenue and higher selling and marketing expense, partially offset by lower traffic acquisition costs.
• Emerging & Other Adjusted EBITDA loss decreased 78% to $4.5 million due primarily to the inclusion in the prior year period of $16.5 million in severance expense and transaction-related costs related to the sale of assets of Mosaic Group on February 15, 2024, and profits at The Daily Beast and Vivian Health compared to losses in the prior year period, partially offset by an increase of $3.3 million in legal fees.
• Corporate Adjusted EBITDA loss increased 71% to $42.4 million due primarily to $14.5 million in separation benefits to our former CEO under the Employment Transition Agreement, $4.8 million in transaction-related costs related to the Distribution and $1.8 million in severance and related expenses driven by other headcount reductions.

Interest expense

(Dollars in thousands)

Interest expense in 2025 decreased from 2024 due primarily to decreases in interest rates and the amount of debt outstanding under the DDM Term Loans. For further details, see “Note 3—Long-term debt” in the accompanying notes to the financial statements included in “Item 1. Consolidated Financial Statements.”

Unrealized (loss) gain on investment in MGM

(Dollars in thousands)

The Company accounts for its investment in MGM under the equity method of accounting and has elected to account for this investment pursuant to the fair value option. The fair value of the investment in MGM is remeasured each reporting period based upon MGM’s closing stock price on the New York Stock Exchange on the last trading day in the reporting period and any unrealized pre-tax gains or losses are included in the statement of operations.

Based on the number of MGM common shares outstanding at March 31, 2025, the Company owns approximately 23.1% of MGM.

Other income, net

(Dollars in thousands)

(a) Includes a pre-tax gain of $29.2 million on the sale of assets of Mosaic Group, which was included within Emerging & Other, and was accounted for as a sale of a business, in the three months ended March 31, 2024.

Income tax benefit (provision)

(Dollars in thousands)

For further details of income tax matters, see “Note 7—Income Taxes” in the accompanying notes to the financial statements included in “Item 1. Consolidated Financial Statements.”

In 2025, the effective income tax rate was higher than the statutory rate of 21% due primarily to state taxes and nontaxable stock-based compensation expense, which was reversed due to the forfeiture of our former CEO’s restricted stock award pursuant to the Employment Transition Agreement.

In 2024, the effective income tax rate was higher than the statutory rate of 21% due primarily to the nondeductible portion of the goodwill in the sale of Mosaic Group, nondeductible compensation expense, and state taxes, partially offset by the realization of a capital loss and research credits.

Net (earnings) loss attributable to noncontrolling interests

(Dollars in thousands)

Net (earnings) loss attributable to noncontrolling interests in 2025 and 2024 primarily represents the publicly-held interest in Angi’s earnings and losses prior to the Distribution.

PRINCIPLES OF FINANCIAL REPORTING

The Company reports Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles (“GAAP”). This measure is our primary segment measure of profitability and among the metrics by which we evaluate the performance of our businesses, and our internal budgets are based and may also impact management compensation. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. The Company endeavors to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure, which we discuss below.

Definition of Non-GAAP Measure

Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets, if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements, if applicable. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

Non-Cash Expenses That Are Excluded from Our Non-GAAP Measure

Stock-based compensation expense consists of expense associated with awards that were granted under various IAC stock and annual incentive plans that are denominated in IAC common shares and expense related to awards denominated in the equity of certain subsidiaries of the Company. These expenses are not paid in cash and we view the economic costs of stock-based awards to be the dilution to our share base; the related shares are included in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method. The Company currently settles all stock-based awards on a net basis; IAC remits the required tax-withholding on behalf of employees for net-settled awards from its current funds.

Depreciation is a non-cash expense relating to our buildings, equipment, leasehold improvements and capitalized software and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.

Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as advertiser relationships, licensee relationships, trade names, content, technology, customer lists and user base, and professional relationships, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.

Gains and losses recognized on changes in the fair value of contingent consideration arrangements are accounting adjustments to report liabilities for the portion of the purchase price of acquisitions, if applicable, that is contingent upon the financial performance and/or operating targets of the acquired company at fair value that are recognized in “General and administrative expense” in the statement of operations. These adjustments can be highly variable and are excluded from our assessment of performance because they are considered non-operational in nature and, therefore, are not indicative of current or future performance or the ongoing cost of doing business.

The following tables reconcile operating income (loss) to Adjusted EBITDA for the Company’s reportable segments and net (loss) earnings attributable to IAC shareholders:

(In thousands)

(a) Corporate reflects the reversal of $49.8 million of previously recognized stock-based compensation expense related to the forfeiture of our former CEO’s restricted stock award pursuant to the Employment Transition Agreement, partially offset by $14.9 million of stock-based compensation expense related to the transfer of 5.0 million Class B shares of Angi held by the Company, prior to the Distribution, to Mr. Levin, pursuant to the Employment Transition Agreement.

(b) Other comprises unallocated corporate expenses.

(c) Includes a gain of $36.2 million related to the termination of a lease for certain unoccupied office space, which otherwise would have expired in 2032.

(In thousands)

47

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position

(In thousands)

The Company’s international cash can be repatriated without significant tax consequences.

For a detailed description of interest rate swaps and long-term debt, see “Note 3—Long-term Debt” in the accompanying notes to the financial statements included in “Item 1. Consolidated Financial Statements.”

Cash Flow Information

In summary, IAC’s cash flows are as follows:

(In thousands)

Net cash provided by operating activities attributable to continuing operations consists of net earnings (loss) adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include the unrealized losses (gains) on the investment in MGM, deferred income taxes, amortization of intangibles, net gain on lease terminations, net loss (gain) on sales of investments and businesses (including unrealized losses on investments), stock-based compensation expense, depreciation, non-cash lease expense (including ROU impairments) and unrealized decrease in the estimated fair value of a warrant.

Adjustments to net loss from continuing operations consist primarily of an unrealized loss on the investment in MGM of $324.3 million, amortization of intangibles of $23.5 million, depreciation of $11.9 million, non-cash lease expense (including ROU impairments) of $9.0 million and net loss on sales investments and businesses (including unrealized losses on investments) of $7.5 million, partially offset by deferred income taxes of $80.6 million, net gain on lease terminations of $36.0 million and stock-based compensation expense of $20.4 million. The decrease from changes in working capital includes decreases in accounts payable and other liabilities of $48.2 million, a decrease in operating lease liabilities of $34.3 million and an increase in other assets of $32.4 million, partially offset by a decrease in accounts receivable of $79.0 million and an increase in deferred revenue of $22.6 million. The decrease in accounts payable and other liabilities is due primarily to a decrease in accrued employee compensation, due primarily to payment of 2024 bonuses in 2025, a decrease in accrued payroll due to timing of payments and a decrease at DDM due to severance payments, and a decrease in accrued traffic acquisition costs and related payables at Search, partially offset by an increase in a liability related to the settlement of a legal matter. The decrease in operating lease liabilities is due to cash payments on leases, including $26.1 million related to the termination of a lease for certain unoccupied office space at DDM described under “Contractual Obligations” below, net of interest accretion. The increase in other assets is due primarily to a receivable related to insurance coverage for the aforementioned legal matter. The decrease in accounts receivable is due primarily to a decrease in revenue in the first quarter of 2025 relative to the fourth quarter of 2024 at DDM. The increase in deferred revenue is due primarily to timing of annual subscription renewals at Care.com.

Net cash used in investing activities attributable to continuing operations includes a cash distribution of $386.6 million related to the Distribution and capital expenditures of $4.7 million, partially offset by net proceeds from the sales of investments and businesses of $10.1 million and proceeds from the sale of a portion of the retirement investment fund of $5.2 million at DDM.

Net cash used in financing activities attributable to continuing operations includes the repurchase of 3.9 million shares of common stock, on a settlement date basis, for $179.4 million at an average price of $45.71 per share, withholding taxes paid on behalf of employees for stock-based awards that were net settled of $45.2 million and principal payments on DDM Term Loans of $8.8 million.

2024

Adjustments to net earnings from continuing operations consist primarily of an unrealized gain on the investment in MGM of $163.8 million and net gain on sales of businesses and investments (including unrealized losses on investments) of $25.9 million primarily related to the sale of assets at Mosaic Group in February 2024, partially offset by deferred taxes of $39.8 million, amortization of intangibles of $36.7 million, stock-based compensation expense of $19.5 million, depreciation of $12.7 million, non-cash lease expense of $10.4 million and an unrealized decrease in the estimated fair value of a warrant of $10.2 million. The increase from changes in working capital includes a decrease in accounts receivable of $81.8 million, a decrease in other assets of $31.2 million, an increase in deferred revenue of $17.7 million and an increase in income taxes payable and receivable of $5.8 million, partially offset by decreases in accounts payable and other liabilities of $72.1 million and operating lease liabilities of $13.2 million. The decrease in accounts receivable is due primarily to a decrease in revenue in the first quarter of 2024 relative to the fourth quarter of 2023 at DDM and a decrease at Mosaic Group due to cash receipts prior to the sale of its assets. The decrease in other assets is due primarily to receipt of pre-acquisition income tax refunds at DDM and a decrease in prepaid hosting services at DDM and Corporate. The increase in deferred revenue is due primarily to timing of annual subscription renewals at Care.com. The increase in income taxes payable and receivable is due to income tax accruals in excess of payments, primarily due to the sale of assets of Mosaic Group. The decrease in accounts payable and other liabilities is due primarily to decreases in accrued employee compensation, due primarily to payment of 2023 bonuses in 2024 and a decrease in accrued payroll due to timing of payments, and accrued traffic acquisition costs and related payables at Search and DDM. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion.

Net cash provided by investing activities attributable to continuing operations includes net proceeds from the sales of businesses and investments of $159.7 million, including $155 million from the sale of assets of Mosaic Group, maturities of marketable debt securities of $137.5 million and net proceeds from the sales of assets of $12.7 million, principally from the sale of an aircraft at DDM, partially offset by $123.1 million for the purchases of marketable debt securities and capital expenditures of $2.9 million.

Net cash used in financing activities attributable to continuing operations includes withholding taxes paid on behalf of employees for stock-based awards that were net settled of $8.2 million and principal payments on DDM Term Loans of $7.5 million.

Discontinued Operations

Net cash used in and provided by discontinued operations of $29.6 million and $1.0 million, respectively, for the three months ended March 31, 2025 and 2024, respectively, relates to the operations of Angi. The Company does not expect significant cash flows from discontinued operations following the Distribution.

Liquidity and Capital Resources

Investment in MGM

At March 31, 2025, the Company owns 64.7 million common shares of MGM. Based on the number of MGM common shares outstanding at March 31, 2025, the Company owns 23.1% of MGM.

Investment in Turo

At March 31, 2025, IAC’s ownership percentage in Turo is approximately 32%.

Share Repurchase Authorizations and Activity

During the three months ended March 31, 2025, IAC repurchased 3.9 million shares of its common stock, on a trade date basis, at $45.71 per share, or $179.4 million in aggregate, consisting of the remaining 3.7 million shares of its existing stock repurchase authorization from June 2020 (the “2020 Share Authorization”) and 0.2 million shares of its new stock repurchase authorization of 10 million shares, which was approved by the board of directors of IAC on March 16, 2025 (the “2025 Share Authorization”). From April 1, 2025 through May 2, 2025, IAC repurchased 0.6 million shares of its common stock, on a trade date basis, at $36.55, or $20.6 million in aggregate. At May 2, 2025, IAC has 9.2 million shares remaining in the 2025 Share Authorization.

IAC may repurchase shares pursuant to its repurchase authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, price and future outlook.

Contractual Obligations

At March 31, 2025, there were no material changes to the Company’s contractual obligations disclosures as of December 31, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. As previously disclosed, during the first quarter of 2025, DDM entered into an agreement that terminated its lease for certain unoccupied office space, which otherwise would have expired in 2032, for a total payment of $43.1 million, consisting of equal payments paid in January and April 2025. The Company recorded a gain on the lease termination of $36.2 million for the three months ended March 31, 2025, which is reflected in “General and administrative expense” in the statement of operations. The termination of this lease reduces future fixed lease payments by $101.7 million.

Capital Expenditures

The Company anticipates that it will need to make capital expenditures in connection with the development and expansion of its operations. The Company’s 2025 capital expenditures are expected to be higher than its 2024 capital expenditures of $15.0 million by approximately 30% to 40%, due primarily to an increase related to capitalized software at DDM.

Liquidity Assessment

On a consolidated basis, the Company generated positive cash flows from operating activities of $0.1 million for the three months ended March 31, 2025; excluding the positive cash flows from operating activities of $16.6 million generated by DDM, the Company generated negative cash flows from operating activities of $16.6 million.

At March 31, 2025, the Company’s consolidated cash and cash equivalents were $1.2 billion, of which $242.6 million was held by DDM. The Company’s consolidated debt of approximately $1.5 billion is the liability of DDM.

The Amended DDM Credit Agreement contains covenants that would limit DDM’s ability to pay dividends, incur incremental secured indebtedness, make distributions or certain investments in the event a default has occurred or if DDM’s consolidated net leverage ratio exceeds 4.0 to 1.0, subject to certain available amounts, all as defined in the Amended DDM Credit Agreement. DDM did not exceed this ratio for the test period ended March 31, 2025. The Amended DDM Credit Agreement also permits IAC to, among other things, contribute cash to DDM, which has in the past and may in the future provide, among other things, additional liquidity to ensure that DDM does not exceed certain consolidated net leverage ratios for any test period, as defined in the Amended DDM Credit Agreement. In connection with these capital contributions, DDM may make distributions to the Company in amounts not to exceed these capital contributions, provided that no default has occurred and is continuing. No quarterly contributions have been made to DDM since September 2024, which DDM distributed to the Company in October 2024; therefore, there were no pending contributions or distributions outstanding as of March 31, 2025. See “Note 3—Long-term Debt” in the accompanying notes to the financial statements included in “Item 1. Consolidated Financial Statements” for additional information.

The Company’s liquidity could be negatively affected by a decrease in demand for its products and services due to adverse market or macroeconomic conditions or other factors.

The Company believes DDM’s existing cash, cash equivalents and expected positive cash flows from operations, and the Company’s existing cash and cash equivalents and expected positive cash flows from operations, excluding DDM, will be sufficient to fund their respective normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes on behalf of employees for net-settled stock-based awards and investing and other commitments for the next twelve months, and thereafter for the foreseeable future. The Company may need to raise additional capital through future debt or equity financing to refinance its existing capital structure and make acquisitions and investments. Additional financing may not be available on terms favorable to the Company, or at all, and may also be impacted by any disruptions or volatility in the financial markets. The indebtedness at DDM could further limit the Company’s ability to raise additional financing.

Equity Price Risk

At March 31, 2025, the Company owns 64.7 million common shares of MGM. The Company accounts for its investment in MGM under the equity method of accounting and has elected to account for this investment pursuant to the fair value option. The fair value of the investment in MGM is remeasured each reporting period based upon MGM’s closing stock price on the New York Stock Exchange on the last trading day in the reporting period and any unrealized pre-tax gains or losses are included in the statement of operations. For the three months ended March 31, 2025 and 2024, the Company recorded unrealized pre-tax losses and gains from its investment in MGM of $324.3 million and $163.8 million, respectively.

The cumulative unrealized net pre-tax gain through March 31, 2025 is $654.5 million. At March 31, 2025 and December 31, 2024, the carrying value of the Company’s investment in MGM, which includes the cumulative unrealized pre-tax gain, was $1.9 billion and $2.2 billion, or approximately 27% and 23% of the Company’s consolidated total assets, respectively. A $2.00 increase or decrease in the share price of MGM would result in an unrealized gain or loss, respectively, of $129.4 million. At May 2, 2025, the fair value of the Company’s investment in MGM was $2.1 billion. The Company’s results of operations and financial condition have in the past been and may in the future be materially impacted by increases or decreases in the price of MGM common shares.

Interest Rate Risk

At March 31, 2025, the principal amount of the Company’s outstanding debt totals $1.47 billion pertaining to the DDM Term Loans, which bear interest at variable rates.

DDM holds interest rate swaps with a total notional amount of $350 million, which synthetically converts a portion of DDM Term Loan B-1 due December 1, 2028 from a variable rate to a fixed rate to manage interest rate exposure until April 1, 2027. DDM applies hedge accounting to these contracts. See “Note 3—Long-term Debt” in the accompanying notes to the financial statements included in “Item 1—Consolidated Financial Statements” for more information. The fair value of the interest rate swaps is determined using discounted cash flows derived from observable market prices, including swap curves, and represents what DDM would pay or receive to terminate the swap agreements. DDM intends to continue to meet the conditions for hedge accounting, however, if these interest rate swaps were not highly effective in offsetting cash flows attributable to the hedged risk, the changes in the fair value of the interest rate swaps used as hedges could have a significant impact on future results of operations.

At March 31, 2025, the outstanding balance of $1.18 billion related to DDM Term Loan B-1 bore interest at adjusted term secured overnight financing rate (“Adjusted Term SOFR”), subject to a minimum of 0.50%, plus 3.50%, or 7.82%, and the outstanding balance of $288.8 million related to DDM Term Loan A bore interest at Adjusted Term SOFR plus 2.25%, or 6.66%. If Adjusted Term SOFR were to increase or decrease by 100 basis points, the annual interest expense on the DDM Term Loans, net of the impact related to the $350 million in notional amount of interest rate swaps, would increase or decrease by $11.2 million.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), management, including our Chairman and Senior Executive and Chief Financial Officer (“CFO”), conducted an evaluation, as of the end of the period covered by this quarterly report, of the effectiveness of the Company’s disclosure controls and procedures as defined by Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our Chairman and Senior Executive and CFO concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

The Company monitors and evaluates on an ongoing basis its internal control over financial reporting in order to improve its overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.

During the quarter ended March 31, 2025, there have been no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

OTHER INFORMATION

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains “forward‑looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: the future financial performance of IAC and its businesses, business prospects and strategy, the anticipated benefits of the completed Angi Inc. spin-off, the reorganization of IAC’s leadership, anticipated trends and prospects in the industries in which IAC’s businesses operate and other similar matters. These forward-looking statements are based on IAC management’s expectations and assumptions about future events as of the date of this quarterly report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others: (i) our ability to market our products and services in a successful and cost-effective manner, (ii) the display prominence of links to websites offering our products and services in search results, (iii) changes in our relationship with (or policies implemented by) Google, (iv) our ability to compete with generative artificial intelligence technology and the related disruption to marketing technologies, (v) the failure or delay of the markets and industries in which our businesses operate to migrate online and the continued growth and acceptance of online products and services as effective alternatives to traditional products and services, (vi) our continued ability to develop and monetize versions of our products and services for mobile and other digital devices, (vii) unstable market and economic conditions (particularly those that adversely impact advertising spending levels and consumer confidence and spending behavior), either generally and/or in any of the markets in which our businesses operate, as well as geopolitical conflicts, (viii) the ability of our Digital business to successfully expand the digital reach of our portfolio of publishing brands, (ix) our continued ability to market, distribute and monetize our products and services through search engines, digital app stores, advertising networks and social media platforms, (x) risks related to our Print business (declining revenue, increased paper and postage costs, reliance on a single supplier to print our magazines and potential increases in pension plan obligations), (xi) our ability to establish and maintain relationships with quality and trustworthy caregivers, (xii) our ability to access, collect, use and protect the personal data of our users and subscribers, (xiii) our ability to engage directly with users, subscribers, consumers, professionals and caregivers on a timely basis, (xiv) the ability of our Chairman and Senior Executive and certain members of his family to exercise significant influence over the composition of our board of directors, matters subject to stockholder approval and our operations, (xv) risks related to our liquidity and indebtedness (the impact of our indebtedness on our ability to operate our business, our ability to generate sufficient cash to service our indebtedness and interest rate risk), (xvi) our inability to freely access the cash of DDM and its subsidiaries, (xvii) dilution with respect to investments in IAC, (xviii) our ability to compete, (xix) our ability to build, maintain and/or enhance our various brands, (xx) our ability to protect our systems, technology and infrastructure from cyberattacks (including cyberattacks experienced by third parties with whom we do business), (xxi) the occurrence of data security breaches and/or fraud, (xxii) increased liabilities and costs related to the processing, storage, use and disclosure of personal and confidential user information, (xxiii) the integrity, quality, efficiency and scalability of our systems, technology and infrastructure (and those of third parties with whom we do business), (xxiv) changes in key personnel and risks related to leadership transitions and (xxv) changes to our capital deployment strategy.

Certain of these and other risks and uncertainties are described in IAC’s filings with the SEC, including under the caption Part I-Item 1A-Risk Factors of our annual report on 10-K for the year ended December 31, 2024, filed with the SEC on February 28, 2025 (the “Annual Report”). Other unknown or unpredictable factors that could also adversely affect IAC’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of IAC management as of the date of this quarterly report. IAC does not undertake to update these forward-looking statements.

Risk Factors

There have been no material changes to the risk factors disclosed in Part I-Item 1A-Risk Factors of our Annual Report. In addition to the other information set forth in this quarterly report, you should carefully consider the risk factors discussed under the caption Part I-Item 1A-Risk Factors of our Annual Report, any or all of which could materially and adversely affect IAC’s business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect IAC’s business, financial condition and/or results of operations.