IAC Earnings Call: Digital Momentum Amid Structural Shift

IAC/InteractiveCorp. ((IAC)) has held its Q1 earnings call. Read on for the main highlights of the call.

IAC/InteractiveCorp.’s latest earnings call struck a cautiously optimistic tone, highlighting solid digital growth, expanding margins and strong cash generation despite persistent headwinds from print declines, Google search traffic losses, one-time restructuring costs and a choppy ad market. Management framed 2026 as a year of operational tightening and strategic repositioning that should set up structurally higher profitability.

Digital Revenue Growth & Margin Expansion

Digital revenue rose 8% year over year in Q1 and would have been closer to 10% absent segment reclassification effects, underscoring healthy underlying demand. Digital adjusted EBITDA margin improved to 20% from 18% a year ago, with incremental digital margins around 45%, signaling solid operating leverage as the mix shifts toward higher‑margin revenue streams.

Non-Session-Based Revenue Acceleration

Non-session-based revenue jumped 24% year over year and now makes up 41% of digital revenue versus 35% in the prior-year quarter, showing a clear move away from volatile session-driven models. This shift should reduce reliance on search traffic and support more predictable monetization as subscription, affiliate and other durable formats gain share.

Off-Platform Audience Diversification

Off-platform audiences across Apple News, TikTok, Instagram, YouTube and syndication partners grew 27% in Q1, becoming a key engine of digital expansion. Management stressed that these diversified channels are helping offset core web traffic pressure and are improving monetization as content reaches users where they already spend time.

Strong Free Cash Flow & Capital Deployment

The company generated nearly $50 million of free cash flow in Q1 and remains on track to exceed $150 million for the full year, providing ample flexibility for capital allocation. Net debt stands around $1.1 billion, while IAC has repurchased 2.9 million shares since the last call and now has bought back about 13% of its shares since 2025, alongside increasing its MGM stake to 26%.

Care.com Sale and Cash Proceeds

IAC completed the sale of Care.com in March and received roughly $296 million of net proceeds, which were highlighted as a key monetization win. Care.com is now classified as a discontinued operation, simplifying the company’s structure and freeing up capital for buybacks, strategic investments and balance sheet flexibility.

Decipher & M&I Reorganization to Accelerate Growth

Management reclassified the legacy M&I media agency business from Print into the Digital segment under the Decipher brand to broaden distribution and sharpen the product focus. They expect this move to open access to independent agencies and political advertisers and to boost Decipher growth by roughly 200–300 basis points in the back half of the year and into 2027.

Emerging Brands Momentum

Emerging & Other businesses, led by Vivien and The Daily Beast, posted faster revenue growth and delivered about $4 million of adjusted EBITDA in Q1, marking a clear swing toward profitability. On the back of that momentum, IAC raised full-year Emerging & Other adjusted EBITDA guidance to a range of $5–15 million, signaling growing confidence in these nascent assets.

Turo Returning to Growth

Car-sharing platform Turo is back to double-digit year-over-year revenue growth after a period of slowdown, with the business generating more than $1 billion of revenue in 2025. Management emphasized improving gross and adjusted EBITDA margins and positive free cash flow trends, reinforcing Turo’s status as a scaled asset with better economics.

Planned Corporate Consolidation with Multi-Year Savings

IAC announced a sweeping consolidation and rebrand to People Inc., targeting about $40 million in annual operating expense savings and $20–25 million less stock-based compensation once fully implemented. The transition will run through early 2027, with Q2 2027 expected to be the first quarter that fully reflects the savings from this streamlined corporate structure.

Print EBITDA Decline

Print EBITDA declined in the quarter in line with management’s expectations, creating a near-term drag on results as the segment continues its structural fade. Even so, leadership reiterated that full-year print EBITDA should still cover People Inc. and corporate overhead, excluding any costs tied to ongoing litigation.

Core Web Sessions & Google Search Traffic Weakness

Core web sessions remain under significant pressure as Google search traffic has fallen sharply, with management citing around a 65% reduction in traffic from Google. These changes are a major headwind for legacy session-based models and are a key reason IAC is aggressively pushing off-platform growth and non-session-based revenue.

Reported Growth Impacted by Segment Reclassification

The transfer of the M&I business from Print to Digital created roughly a 200 basis point drag on reported digital revenue growth in Q1, leaving the headline rate at 8% instead of about 10%. Management cautioned that this accounting shift will make quarter-to-quarter comparisons noisy in the near term but does not reflect a change in underlying performance.

Search Business Shutdown Costs

IAC shuttered its noncore Search segment after Google declined to renew terms, recognizing about $7 million of severance and prepaid software write-offs tied to the closure. The discontinued Search operation will be reported separately going forward, helping clarify ongoing earnings power but weighing on near-term results.

One-Time Consolidation & Severance Expenses

The corporate consolidation plan comes with roughly $63 million of one-time costs, including about $15 million of cash severance and $48 million of stock-based compensation to be recognized over the next four quarters. Corporate expense guidance has therefore been raised to $95–105 million for the year, temporarily elevating overhead as the restructuring is executed.

Litigation Spend & Uncertain Timing/Outcomes

IAC expects to spend $10–15 million this year on Google ad-tech litigation, introducing another layer of near-term expense pressure. Management acknowledged that both the ultimate costs and any potential awards are uncertain, making this an overhang that investors will need to monitor as the case progresses.

Ad Market Softness & Geopolitical Volatility

Advertising demand remains uneven, with strength in health, pharma, tech and telecom but weakness in consumer-facing categories such as packaged goods and food and beverage. Management also noted planning delays linked to geopolitical tensions, which are causing short-term swings in spending and adding noise to quarterly results.

Guidance and Outlook

Management reaffirmed People Inc. adjusted EBITDA guidance of $310–340 million and maintained expectations for mid- to high-single-digit digital revenue growth, while raising Emerging & Other EBITDA guidance to $5–15 million. They detailed $63 million of one-time consolidation costs but highlighted that the restructuring should eventually lower corporate costs to about $45 million and support more than $150 million in annual free cash flow.

IAC’s earnings call painted a picture of a business in transition, using strong cash generation and asset sales to fund buybacks, a cleaner portfolio and a leaner corporate structure. While print declines, search traffic losses, litigation and ad-market volatility pose challenges, the company’s pivot to diversified audiences, higher-quality digital revenue and long-term cost savings leaves management sounding confident about future profitability.