IAC/InteractiveCorp Earnings Call: Digital Strength vs. Headwinds

IAC/InteractiveCorp. ((IAC)) has held its Q4 earnings call. Read on for the main highlights of the call.

IAC/InteractiveCorp struck a cautiously upbeat tone on its latest earnings call, pairing solid digital growth and improving profitability with frank acknowledgment of structural headwinds. Management emphasized strong off‑platform momentum, disciplined capital returns, and growing engagement from new products, while warning that search dependence, print erosion, and litigation costs will weigh on near‑term results.

Digital Engine Powers Q4 and Full-Year Growth

People’s digital business delivered a robust quarter, with Q4 digital revenue up 14% and IAC’s full‑year digital revenue reaching $1.1 billion, up 10%. Total IAC revenue hit $1.8 billion for the year, underscoring that digital now dominates the portfolio and is the primary driver of growth and investor focus.

Advertising, Performance Marketing and Licensing Outperform

Advertising rose 9% in the quarter despite fewer core web sessions, helped by better monetization and off‑platform gains. Performance marketing jumped 17% during the holiday season and licensing surged 36%, fueled by Apple News, content syndication, and an AI‑driven content partnership with Meta that broadens distribution and diversifies revenue.

Profitability Holds with Solid Digital Margins

Aggregate adjusted EBITDA reached $331 million for the year, excluding lease gains and severance, reflecting disciplined cost control. Digital EBITDA margins were about 28%, essentially flat year over year, while Q4 digital adjusted EBITDA rose 9% with incremental margins around 26%, signaling that growth is coming through at healthy profitability.

Off-Platform and Non-Session Revenue Scale Rapidly

Off‑platform views nearly doubled in two years and climbed 43% year over year in the quarter, highlighting the shift away from reliance on direct site traffic. Non‑session‑based revenue now represents roughly 38% of digital revenue and grew 37% in Q4, far outpacing the 4% growth in session‑based revenue and cushioning the blow from search‑driven traffic declines.

New Products Drive Deeper Audience Engagement

MyRecipes has quickly scaled to about 3 million registered users and 24 million recipes saved in under a year, suggesting a sticky, high‑intent audience. The PEOPLE app has been downloaded roughly 300,000 times, with average app sessions of about six minutes and in‑app games stretching sessions to roughly 20 minutes, opening incremental monetization avenues.

D/Cipher Gains Momentum as Off-Platform Growth Driver

Management spotlighted D/Cipher (also referred to as Decipher+) as a fast‑growing off‑platform data and monetization engine. They expect D/Cipher alone to contribute roughly two to three percentage points of the mid‑ to high‑single‑digit digital growth targeted for People in 2026, underscoring its strategic importance.

Turnaround in Emerging & Other Businesses

The Emerging & Other segment posted an 18% revenue increase and swung to profitability with about $3 million of adjusted EBITDA, marking a key inflection. Within that bucket, The Daily Beast grew revenue by 50% year over year and Vivian returned to growth, showing that IAC’s smaller properties are beginning to generate meaningful operating leverage.

Care Shows Margin Strength Despite Revenue Pressure

Care delivered $19 million of adjusted EBITDA in the quarter with roughly 22% EBITDA margins, demonstrating strong operational discipline. This profitability came even as revenue fell 9%, with management highlighting that the business is absorbing top‑line pressure while preserving margins, a positive sign heading into 2026.

Capital Allocation: Buybacks and MGM Upside Exposure

IAC continued to lean into buybacks, repurchasing $337 million of stock over the past year and shrinking the share count by around 10%, a shareholder‑friendly move given the company’s cash generation. The company also increased its economic exposure to MGM and pointed to operational progress at BetMGM, framing the position as a lever on long‑term gaming and entertainment growth.

Sharp Decline in Core Web Sessions and Search Traffic

Core web sessions fell 13% year over year in Q4, the most acute operational headwind discussed on the call. Management traced the decline to a roughly 50% drop in Google search referrals over two years and softness in Google Discover, underscoring the risk of algorithm dependence and the urgency of building traffic sources beyond search.

Print Segment Continues Its Structural Slide

Print revenue declined 23% in the quarter, reflecting both secular print weakness and tough comparisons that included about $20 million of political advertising in the prior period. Management made clear that print is structurally in decline and will increasingly act as a drag relative to the faster‑growing digital franchises.

Care Enterprise Revenue Softens on Employer Caution

Care’s revenue drop was driven by a 13% decline in enterprise revenue, as employers tightened benefits spending and some out‑of‑period true‑ups hit Q4. Consumer revenue was down 4%, but management signaled that the softness is cyclical rather than structural, positioning Care for a rebound when employer budgets normalize.

Search (AMG) Faces Strategic Uncertainty

The Ask/AMG search business is shrinking in importance, and its outlook remains cloudy as IAC negotiates paid listings terms with Google. Management guided the segment to a wide adjusted EBITDA range of negative $5 million to positive $10 million, effectively signaling that the business could swing either way and will not be a central growth driver.

Litigation Expense Adds Legal and Earnings Risk

IAC expects about $15 million of Google‑related litigation expense to hit corporate in 2026, weighing on reported EBITDA even as digital operations grow. The company is pursuing sizable damage claims, but management acknowledged that legal outcomes and potential broader costs are uncertain, adding another layer of risk for investors to monitor.

Corporate Costs Weigh on Consolidated EBITDA

Corporate adjusted EBITDA came in at $23 million and is being pressured by the upcoming litigation charge, altering the internal profit balance between print and corporate. Management said the $15 million legal cost creates roughly a $31 million swing in the print versus corporate relationship, helping explain why consolidated EBITDA guidance looks flat despite digital strength.

Working Capital and One-Time Cash Drags

Free cash flow in the prior year was pressured by more than $40 million of lease buyouts and unfavorable timing in payables and receivables. Management expects working capital to normalize, but highlighted that these one‑off items were a notable drag and that investors should judge cash conversion over a multi‑year lens rather than a single year.

Guidance and Long-Term Targets Reflect Cautious Optimism

IAC will shift from quarterly to annual guidance and framed its 2026 targets as deliberately conservative given external uncertainties. People is expected to deliver mid‑ to high‑single‑digit growth in digital revenue and digital adjusted EBITDA, with total People adjusted EBITDA of $310 million to $340 million, implying digital EBITDA of $325 million to $355 million including about $15 million of Google‑litigation expense.

Forward-Looking Outlook and Cash Generation

Care is guided to $45 million to $55 million of adjusted EBITDA in 2026, with consumer revenue expected to return to growth by midyear, while Search (AMG) is guided to between negative $5 million and positive $10 million and Emerging & Other to $0 million to $10 million. Corporate expense is forecast at $80 million to $90 million, capex at roughly $20 million to $30 million, net interest around $64 million, and management expects more than 50% EBITDA‑to‑free‑cash‑flow conversion alongside continued opportunistic buybacks.

IAC’s earnings call painted a picture of a digital‑first company successfully pivoting off search‑dependent traffic while absorbing structural print decline and legal friction. For investors, the story is one of resilient digital growth, strengthening engagement, and disciplined capital allocation, tempered by conservative guidance and external risks that management has chosen to confront head‑on.