IAC/InteractiveCorp. ((IAC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, IAC/InteractiveCorp. expressed a generally positive sentiment, highlighting strong digital revenue growth and successful refinancing efforts. The company also reported promising results from BetMGM and early positive signs from Care.com, despite facing macroeconomic challenges. However, concerns were raised regarding revenue reliance on Google Search, a decline in consumer revenue at Care.com, and the impact of strategic investments on margins.
People Inc. Achieves 9% Digital Revenue Growth
People Inc., formerly known as Dotdash Meredith, reported a 9% increase in digital revenue, accelerating from 7% in the first quarter. This growth is at the high end of their guidance, showcasing the company’s strong performance in the digital space.
BetMGM’s Strong Performance
BetMGM demonstrated impressive growth, with a 36% increase in net revenue for the second quarter. The company has raised its full-year revenue guidance to at least $2.7 billion, with an expected EBITDA of at least $150 million, reflecting its robust market position.
Successful Refinancing at People Inc.
In June, People Inc. completed a $1.4 billion refinancing, replacing its original acquisition capital structure with new bank debt and bonds. This refinancing was achieved at attractive pricing with maturities ranging from 5 to 7 years, strengthening the company’s financial foundation.
Adjusted EBITDA Increase
IAC reported a 15% increase in adjusted EBITDA for the quarter. The company has set its full-year EBITDA guidance between $247 million and $285 million, indicating a positive outlook for its financial performance.
Care.com’s Promising Signs of Engagement
Care.com has shown stability and growth in core consumer metrics, such as direct navigation visits, sign-ups, and subscriptions. These positive signs are the first since 2022, suggesting a turnaround in the platform’s engagement levels.
Care.com Consumer Revenue Decline
Despite positive engagement metrics, Care.com has experienced a decline in consumer revenue from pandemic highs. This decline is attributed to deficiencies in the product experience, suboptimal marketing, and macroeconomic headwinds.
Digital Margins Impacted by Strategic Investments
IAC’s digital EBITDA remained flat year-over-year at $63 million, despite a 9% revenue growth. The flat margins are due to increased costs from strategic investments in new products, technology, and channels.
Challenges from AI and Google Search Changes
The company faces challenges from a decline in Google Search traffic, attributed to AI Overviews and changes to Google’s search page. This has resulted in a lower percentage of traffic originating from Google, impacting overall revenue.
Print Revenue Secular Decline
Print revenue continues to decline, offsetting some of the digital growth. However, it is managed for cash flow and branding value, indicating a strategic approach to this segment.
Forward-Looking Guidance
IAC provided detailed guidance for various metrics during the earnings call. People Inc. reported a 9% growth in digital revenue and successful refinancing of its debt. BetMGM increased its full-year revenue guidance to at least $2.7 billion. Care.com is witnessing promising engagement metrics following a revitalization effort. IAC’s consolidated adjusted EBITDA increased by 15%, with full-year guidance set between $247 million and $285 million. The company is also exploring M&A opportunities and considering strategic divestitures to enhance cash reserves.
In summary, IAC/InteractiveCorp.’s earnings call conveyed a positive sentiment with strong digital growth and successful refinancing. Key highlights include BetMGM’s robust performance and Care.com’s promising engagement metrics. However, challenges such as reliance on Google Search and strategic investment impacts on margins were noted. The company’s forward-looking guidance remains optimistic, with a focus on growth and strategic financial maneuvers.