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Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties including those contained in our most recent annual report on Form 10 ks. And in the subsequent reports that we file with the SEC. The information provided on this conference call should be considered in light of such risks. We'll also discuss certain non GAAP measures, which as a reminder include adjusted EBITDA. Which we'll refer to today as EBITDA for simplicity during the call. I'll also refer you to our earnings release, investor presentations, public filings with the SEC, and again to the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all material non GAAP measures. Now that we've covered that, want to say thank you for joining us on this call as we commence next chapter in IAC's history. As an overarching comment, I want to say Q1 was a solid start to the year. To echo our Chairman, Barry Dillard's published comments, IAC is back to doing what we do best. ANGI is officially on its own Our businesses are executing with focus and effort and we are deploying capital.
12m 50s
Including into the company we know best. Ourselves. Through the repurchase of 4,500,000.0 shares. We've also increased our share repurchase authorization by 10,000,000 shares. The macroeconomic outlook is uncertain but we are reaffirming full year 2025 adjusted EBITDA guidance across all of IAC. Turning to the Q1 earnings call presentation. You'll see on page three the businesses and assets that comprise IAC today. These include four leaders in large and growing categories. And in Q1, we had a truly productive quarter executing on a number of fronts. On March 31, we completed the full spin of ANGI to shareholders representing the tenth independent company IAC has created. With the spin, Joey Levin transitioned from IAC CEO to ANGI Executive Chairman. Where he is working with CEO Jeff Kipp to drive ANGI to be the industry leader in home services. Our company has executed strongly DDM grew digital revenues 7% in the quarter and increased EBITDA 46% that's excluding a one time lease gain. That lease gain however represents a different type of win we were able to terminate a long term lease for two floors at DDM's New York head headquarters. For $43,000,000 in cash payments. Representing about three times saved cash flow and generating a $36,000,000 book gain.
14m 16s
Care keeps making progress through its single-minded focus on improving its product to drive better customer experience, conversion and retention. MGM reported solid earnings last week and in the words of CEO Bill Hornbuckle is well prepared for the rest of 2025. Turo, the leading car sharing service has with withdrawn its plans for an IPO and is fully focused on driving growth and seizing on the opportunities in front of Vivien is implementing AI into its products and processes in truly innovative ways. Which combined with the 2,000,000 clinicians on its platform has the opportunity to potentially fundamentally change healthcare staffing. At Search, we renewed our contract with Google and the business is showing signs of stability after a challenging couple of years. And The Daily Beast grew revenue 72% while achieving profitability. At corporate, we've taken steps to rationalize our cost structure. Additionally, during the quarter, also reached agreement in principle to settle the match separation litigation with IAC only needing to contribute $200,000 beyond our insurance coverage. But despite all this progress, turning to page four, our shares are still trading for less than the value of our 23% stake in MGM and the $900,000,000 of cash at IAC Parent.
15m 39s
Importantly and as a reminder, we have $800,000,000 NOLs that essentially would offset offset the taxable gain presently on our MGM stake. So as you can see on the right, our collection of wholly owned businesses as well as our 32% preferred equity stake in Turo and our unencumbered headquarters building are trading at an implied value of negative $100,000,000 We obviously think this represents a massive value disconnect. And turning to the next page, we're working every day on a strategy to create equity value and shrink that discount. The first piece of the strategy is obvious. Continue to execute and drive growth across the businesses. Neil will talk today about everything and his team are doing to seize on DDMs opportunities as the largest digital publisher. Care, Vivien, Search and the Daily Beast management are similarly improving their product content and technology to accelerate their revenue and profitability And in the case of Care and the Beast, we brought in new leaders who reenergized those companies. And then we're also the largest shareholder with active board members at MGM and Turo helping those industry leaders seize on their market opportunities. The second prong is capital allocation. Our Chairman Barry Dillard said last quarter that after working through the challenges of the past few years, capital allocation is front of mind.
17m 2s
As an initial step, we completed the buyback of 4,500,000.0 shares of IAC and refreshed our authorization as mentioned earlier. We've demonstrated our conviction in our own stock under underscoring the deep value we see in our businesses and we will continue to actively evaluate share buybacks going forward. To the right, M and A is a key element of IAC's DNA and success. And Rush Barst our Head of M and A and Strategy is driving an active effort to find investment opportunities both through our existing companies and in new platforms. More on that in a second. And then finally, as we said two quarters ago, we will continue to pursue strategic divestitures of our smaller holdings should they arise freeing up capital and simplifying IAC. Where attractive. The final area is major catalysts. Significant events to crystallize value have always been part of the IAC playbook. Spinning Angie was a key step in our strategy last quarter. Looking forward, we can't say what such catalyst may be but we will be fearless in pursuing them if we believe they will benefit our shareholders. Regarding M and A, included the next slide, to present an overview of how we are approaching capital deployment.
18m 17s
Our foundation, our interests and our advantages. A number of us have been active in capital investment throughout our careers and fundamentally believe we have real advantages through our permanent forever capital and ability to invest at any stage of a company. We've always been unique in the marketplace for given our structure, deep industry experience, flexibility and operational know how and these strengths continue to serve us well. We're actively pursuing acquisitions and investments small and large in hope to be discussing new additions to IAC. The final slide summarizes our guidance bringing us back to a discussion of the macro environment. We've been following trends actively across DDM and CARE as well as garnering insights from our other companies and holdings. Consumer spending through DDM's performance marketing has been solid. Clearly bucking the weak consumer confidence numbers we've all seen. That may represent consumers pulling forward spend ahead of tariff impacts or it may represent real solidity. It's too early to tell. At Care, we've seen early signs of consumer pressure around the edges through ebbing conversion, but not yet any material moves. On the DDM advertising front, we've been closely watching the trends given the news flow but premium demand has remained generally stable.
19m 37s
Strength in pharma, tech and beauty has helped to offset weakness in areas like food and beverage. One element we are thankful for in our advertising base is that TIMU, Shein, or the de minimis exemption players have never been direct advertisers on our platform. Programmatic pricing conversely has definitely softened essentially running flat year over year after being up for much of the year. We're analyzing the disconnect between direct revenues on one hand and programmatic on the other to see which provides better insights on the forward trends in advertiser demand demand. But right now it's too early to say. In some we'd say we are carefully monitoring the macro environment for signs of either stability or weakness among consumers and brands we're thinking carefully about discretionary spend in that context. Against that backdrop, we're reaffirming our adjusted EBITDA guidance for the year for each of our companies with the core assumption of no significant recession. That assumption derives from what we are seeing in our businesses but we know we are living in unpredictable times. All we can control is our focus and execution. With that, let's go to Q and A. Operator, can we please have the first question?
20m 54s
We will now begin the question and answer session. Our first question comes from Jason Helfstein from Oppenheimer. Please go ahead. Hey, thanks for taking the question. Can you talk about the key priorities and I guess it'd be probably the key product priorities that could drive 2026 TDM revenue growth? And then secondly, how should we think about capital allocation going forward? Obviously, a lot of stock repurchase in the quarter for some in a while. But going forward, how should we think about allocation between repurchases and M and A? And is there a minimum gross cash level that think about? Thank you.
21m 44s
Cool. Hey, Jason, it's Neil.
21m 46s
First, for those of you in New York allergies are just destroying me. I'm sorry I sound so awful. But to answer your question, do the Chris can take the second one, I'll take the first let's 2026 is something we're actually pretty excited about. I think one thing we're talking about before this call is we came into this year and I think we are executing at an exceptionally high level. And a big part of that is looking down the field and figuring out what we need to do for the future. And we had a number of really big projects. I'm sure you've seen the People app we launched, which we're very excited about. We're going to meet audiences where they are and meet younger audiences. If you haven't yet downloaded and use it we're really proud of it. It's one of the best things ever built. We have a very big project around recipes called MyRecipes If you believe Comscore, we're probably at least 40% of the traffic on the open web to recipes and food content. So it's a really modern take on the recipe locker which if you're a chef you're a home cook you find very, very valuable.
22m 46s
We're excited about that.
22m 47s
And probably thing we're most excited about is Decipher Plus. Which allows us to take Decipher which we've talked about which is using our intent driven contextual data that produces ad targeting that beats cookies and pretty much beats anything else in space. Extending it across the open web So you cannot only use Decipher to target exceptionally our own inventory but target the whole web. And between those three things we're really excited about where we can go. We're also not new, but we're really investing in our event businesses and the is not some new strategy. It's just the continued growth of things like the Food and Wine Classic, We've had really good strength in off platform audiences across social. We've got a couple of many of you probably seen my reality show turn on the In style show the intern but we're we're building really fun audiences different places that advertisers really, really value. And we're just excited. We're long term very excited about this business. Great brands, great audiences, real emotional connection to our the people that use our products, and we feel pretty good.
24m 2s
Thanks. And then Jason on capital allocation we bought back 4.5, our goal was by $200,000,000 of our shares We have our remaining $900,000,000 of corporate cash. We're also generating cash [indiscernible] Our goal now is to look at M and A opportunities as we talked about. Nothing forecloses additional share purchases, but we're interested in M and A. Our Chairman Barry Diller is. We're looking at things large and small We think the volatility of the current period can lead to new opportunities there. One of the things Ross and number of us have talked about a lot is these private equity and VC backed companies have kind of hung on for a long time waiting for the market to return exceptional levels. That really hasn't happened in that world and also their investors, limited partners are in greater need of liquidity. So we're cautiously optimistic we'll see more opportunities shake out of the private market. We're also looking at earlier stage opportunities.
25m 18s
But again, people have challenged us that you can walk and chew gum when it comes capital allocation for a while. You can buy your own stock. And do M and A and we believe that. But we and we definitely see value embedded in our share price. And we'll continue to calibrate as we go. Thanks, Jason. Operator, next question. Next question comes from Jason excuse me, John Blackidge from TD Cowen. Please go ahead.
25m 49s
Great. Thanks. Two questions.
25m 52s
Sticking with DDM digital, can you talk about the 1Q trends revenue trends at DDM Digital? Looked like advertising was a bit lighter than expected, offset by higher performance and licensing revenue. Any further color there would be great. And then on the 2Q DDM digital revenue guide of 7% to 9%, can you talk about the puts and takes for the rev guide? Across the three segments? And is the current macro with tariffs impacting advertiser brand spend? And then second question on the DDM cash flow to IAC. Could you just talk about the dynamic where DDM hits a certain leverage ratio and the cash is accessible to IAC? Like how does that benefit IAC and its shareholders? Thank you. Yes, sure, I'll start and then Neil will will definitely weigh in. Q1 we guided last quarter that there were a few elements that would lead to slower growth in on traffic and revenue in Q1. Specifically, had tough comps in January and February. In '24 that we were running over. There was one less day in the quarter which is about a 1% decline.
27m 2s
And then Easter which is an important quarter for us sorry, important holiday fell into the second quarter this year. As it played out, the news cycle wasn't our friend between the fires in LA and then political news seemingly crowding out most other information and people's attention. These factors combined core traffic declining 3% in the quarter digital advertising only being up 1%. In that 1% premium was actually pretty solid. We just with fewer impressions we had less programmatic to sell which was a headwind.
27m 40s
But things within just traffic and advertising improved across the quarter March was solid at 8% digital advertising growth, for example, and April similarly was was in that that vein. For the first quarter licensing led the way with 30% growth thanks in part to the OpenAI license, but also due to real strength at Apple News.
28m 8s
Performance marketing was also excellent at 11% growth and we continue to see solid consumer spending on commerce And that really got us to the 7% for the quarter. So we were not really surprised by that number. For the second quarter, we've guided to 7% to 9% digital growth revenue growth. That will come from a combination of stable traffic. We've already seen that. So easier comps definitely So far we've seen stability in premium demand. With some particularly strong categories offsetting those where tariff uncertainty is more pronounced.
28m 46s
And continued solid performance marketing offset again by soft programmatic Licensing will have a tougher comp as we lap the OpenAI deal, but we'll still grow. And then we've spent a lot of time analyzing the advertiser demand and the impact of tariff uncertainty.
29m 4s
We do it constantly. That 7% to 9% digital for Q2 is our best view of where we are right now in the trends. Neil, anything? Yes. I'll add a little to the to the the market perspective on this. I think as I said before, we came into this the year really strong and executing really well. I think we have seen our premium revenue hold together really like really, really well so far. I think anyone who doesn't think the mood of the buyers is changing is not paying attention. But we haven't seen any significant huge cracks in that yet. I guess it all remains to be seen. We are very focused on control what we can control. I think we're really well positioned because of our scale and because of our focus on performance And again, goes down to things like Decipher and really intent driven traffic. You got a much better chance to hang in there when you're the ads that really perform. So we'll see. But again, it's control what you can control and we'll see. I think Chris touched on this a little bit I think there is a little bit of a disconnect between what is essentially the advertising spot market which is the real time programmatic markets, which are probably were running for a long time for us, we're particularly good at it up 20 ish percent.
30m 24s
We're back down to sort of flattish year over year in that's not really moving. I think that is definitely a little bit of uncertainty in the buyers and a little slower to pull the trigger. What I would also say about the future is we're not seeing much more than you guys are seeing, right? There's new things coming out every day. And we're reacting and reading and reacting every day. What I would say in the long term, great brands, great audiences, great execution, We'll be fine. We just got to get through whatever short term bumpiness hits and if it applies to us, it's going to apply to lots of other people as And then on the cash flow question. So everyone understands we have entity level debt at .meritus [indiscernible] institutional term loan in two tranches as well as unfunded revolver Under the credit agreement on that debt IAC can dividend cash up to itself the parent from DDM if total leverage if the total leverage ratio is below four times total debt to EBITDA.
31m 35s
And that's on a credit agreement definition of adjusted EBITDA which is I guess more favorable and slightly different than what we report publicly. In any case through debt pay down and increased EBITDA, Neil and team have steadily reduced leverage at DDM and we went below that four times test ratio as of twelvethirty onetwenty four.
31m 58s
That means IAC has access to DDM cash for any IAC corporate purposes should we so desire.
32m 5s
It's a nice increase to our financial flexibility and it was a real objective of ours essentially since the acquisition closed.
32m 13s
To get below both from a just from a total leverage perspective but also for access to that cash. We'd also highlight that on a go forward basis DDMs leverage ratio should only improve through the combination of improving EBITDA but also it's great cash flow producer and net free cash flow generation.
32m 36s
Thank you, John. Operator, next question.
32m 39s
Next question comes from James Heaney from Jefferies. Please go ahead.
32m 44s
Great. Thank you, guys. Could you just talk about the appointment of Jim Lawson as the President of Decipher? Just be interested to hear about his strategic objectives for that particular product. Thank you. Sure. Jim, us, was a coup of a hire. I've known Jim personally for a while. Our team is known for a while. If you are in the ad tech space Jim had been the CEO of a public company called AdFerint, which had recently been acquired. AdFerint is particularly appealing to us as either a partner of ours now and be they do a lot of the same things to allow advertisers to reach consumers that we're doing with Decipher. Jim's a star. He had lots of opportunities. I think we convinced that to go be CEO of other things. I think we did a good job of convincing him how big and exciting Decipher could be. He's come to hit the ground running. Building a team, very commercial. We knew we had a great business and people at our place Lindsay Van Kirk, John Roberts has done an incredible job building this. We needed to bring a real commercial CEO into this A, it shows our focus on the business.
33m 57s
To the market and B, it's just the nuts and bolts skills that we need to build a team that can fully sell and execute on the potential of using our data which we have more first party data than any other publisher to target the open web. And we know that our data and our contextual targeting beats cookie and other targeting and Jim believes that too. And we're off to the races. Again, think we've talked a lot about I think you're going to see minimal contribution this year, but we're really looking towards '26 as this is a big part of our future. For Decipher Plus. For Decipher Plus, I'm sorry, for Decipher Plus. And it's interesting. The last thing I'll say about Deciphr and Decyphr Plus while we're talking about it so the actual core Decipher business now is in more than half of our premium deals. It's doing really well. Those deals are 60 plus ish percent bigger than deals that don't have Decipher and those clients are growing faster than clients that don't use Decipher. It's also our ticket in the door. It's one of the few really new innovative things in ad targeting.
35m
And Jim, one of the great skills he has is he's a communicator and he can communicate what we are doing into this ad tech universe that isn't our native language. We're We're a publisher at our core. We make amazing content and build amazing things. He really understands our data product that we've built. And is really looking to leverage it. So we're you can tell from my tone, we're very excited about this.
35m 28s
Great. Thank you, Neil.
35m 30s
Thanks, James. Operator, next question Next question comes from Cory Carpenter from JPMorgan. Please go ahead. Hey, good morning. Thanks for the questions. Maybe sticking with the Cypher deal, could you just talk about the impact or lack of impact kind of from Google no longer phasing out cookies, which they announced a few weeks ago?
35m 49s
And then maybe for you, Chris, just could you talk about the announcement you made a few weeks ago with our [indiscernible] And the addition of them as a Board member? Thank you.
35m 58s
Sure. I'll do the cookies part first and Chris can go. Cooking is a little bit more this is a little more my opinion. Sure you're going to get different takes on this. I don't think it's that big of a deal at all. I don't think anybody really thought cookies were going away for the last twelve months. And as you guys like to say, it's baked in, it was baked in already. For us, we're neutral on this. I think if anything, it might help us. It really helps us line up what we can do with contextual targeting versus cookies and how much more performance our Decipher and Decipher plus driven offerings are, So it's pretty good. We also look, we have a lot of clients that want to buy parts of their programs, even all their programs based on cookies for whatever reason and we can execute those also. So the one thing it will do that's positive is it will probably eliminate what would have been the thrash in the market to get from a true post cookies world. I don't think in the long term, it makes any difference for us.
36m 59s
Yes. I think and just to align that to some of the prior conversations we've had on this topic, We if there was going to be a hard cut we used to say it was going to disrupt everyone, but Decipher would be a winner. Neil and team have highlighted the fear of a hard cut helped highlight Decipher to a number of brands and agencies which was great for getting them to trial and then see the experience. Where we are now stability in the market where we can just out compete other offerings is ideal. Yes. I think just to add Will, advertisers now really understand cookies are profiling individuals and there is varying levels of discomfort for that. We're not. We just look at behaviors. When you look at what cookies are backward looking, they're trying to guess what you're to do based on what you did. We're real time. We know exactly what you're doing and I think that's very simply why we're better and why we don't mind cookies still hanging around as a comparison.
38m 1s
Yes. And the last thing I'd say [indiscernible] PowerPoint is not the answer to anything, but we tried in the investor presentation, spent a lot of time with DDM and team to really lay out what Decipher is and then how Decipher and Decipher Plus work off of what it is in a slide in the presentation and we'd encourage investors to look at what we're doing with context connecting it to data and predictive analytics and then going on O and O inventory and off.
38m 32s
I mean we've got the real time first party data of the biggest publisher in America across the biggest consumer categories in America. So we feel really good about where we are.
38m 41s
Thank you. And then Corey with respect to Tor Brahmin joining our board and the announcement with Arkhouse, Arkhouse is an IAC investor who is a really strong believer in the economic value embedded in our shares.
38m 59s
They've highlighted that publicly.
39m 1s
We've had constructive dialogue with Arkaus Our nominating committee believes Mr. Brahmin's background in technology and capital markets as well as his board service experience in a number of public companies will be valuable as IAC continues to execute its strategy.
39m 23s
We're excited to have him join the IAC board and work with us He's filling the seat that had been held by Joey Levin and we're excited to move forward with him on our strategy. Thank you, Corey. Operator, next question. Next question comes from Ross Sandler from Barclays. Please go ahead.
39m 44s
Great. Neil, the bigger slide deck talks about new direct to consumer experiences.
39m 56s
Just curious how could you just elaborate on what you guys are doing there How many other Meredith sites might be open to something like this and kind of what kind of impact that's going to have on growing your owned and operated inventory Thank you. Yes, sure. Good question. So one thing we've said and and I'm in one of these calls in a bit, but we've been saying to anybody who listen is our objective as a business we've business is with our brands and our audiences and our strength and the emotional connections we have, we need to focus more on connecting directly with our audiences and directly with our advertisers. And one of the things we've been able to do we really been able to do that. We've been doing it quietly. I mean there's a fun statistic around here that we can share with you in this call is when we and it goes to why we're going direct. When we put Dotdash and Meredith together, about 60% of our traffic was from Google search. Right now, it's a little bit more than a third and we've grown all the way through that. And that's because we are able to really connect with users that doesn't even account audiences we've built on social.
41m 9s
That's just traffic to our O and O's. So if you look at what we've done, we've taken our biggest properties in biggest areas, which is entertainment with people, which is food and recipes of My Recipes, and which is our superior ad targeting with Decipher Plus and all of these are ways to connect directly with audiences with advertisers. And what we've seen is a really strong take up for this. Just like we've seen a really strong take up for participating in our events, just like we've seen a really strong take up for advertising on our social, And it's a long term strategy. Look, you do what we do, like you have to pay attention to the market. We've been at this a long time. I mean, think you're almost 12 years The media landscape looks entirely different than it did when we got here. And we've done nothing but grown adjust the whole time. And we feel very positive about where we're going. And your the second part of your question was what else you're doing You guys should expect to hear from us new projects of the size and scale of a MyRecipe or People app I'm not going to say every quarter, but with great frequency and we've got a one of the things we've done is we've pivoted our organization, which is not that easy to do.
42m 22s
To really focus much more on innovating these things than we have focusing on the old business model. Like right, if we're not careful, we've got real innovative We've got this old model that works. But would decline. But we've had this forever. This has been going on ten years like this. So we're constantly doing new things. We're really trying to bring innovation new ideas forth I think again launching the people out, launching our recipes, launching the Cypher plus it teaches us and it teaches the ad market that you should expect new things from us and excitement from us and energy from us. And we really like where we are and what I can say is stay tuned there's going be some more.
43m 5s
Thank you, Ross.
43m 8s
Operator, next question.
43m 10s
Next question comes from Justin Patterson from KeyBanc. Please go ahead. Great. Thank you very much. Good morning.
43m 18s
You're approaching one year of Dopdash working with OpenAI. Could you talk about your learnings from this partnership? And perhaps more broadly for Chris, how you're thinking about AI opportunities for the rest of the IAC portfolio? I know you called out Vivien as potential benefit beneficiary in the prepared remarks. And then just a big picture one for Neil. Obviously, other big ad industry news is the Google DOJ trial. How might the world look differently for dash if we see some divestitures? And what opportunities that might create for you? Thank you. I'll do the OpenAI. I'll do a quick answer on OpenAI. They've been a really good partner for us to Now what I would say is we do not have productive relationships with other people in their space. But with OpenAI, they've been great. Our engineers are cooperating. We're really helping them roll out some of their products. They're helping us roll out our products. They were a very big help with some decipher targeting. With some of the AI things we can do around modeling. It's been very, very positive. And I think the choice we made that said we want to sit at the table with these guys that are at the [indiscernible] the tip of the spear on these things.
44m 30s
Think for the first year, we were right. And it's been really, really helpful for us in terms of how we're moving AI into our processes, and getting a say in the future of how this stuff is working. I don't know terms of larger deals, I'll let Chris talk about that.
44m 48s
Yes. It is like a lot of things where there's so much buzz, and then when there's really substantive increasingly substantive applications people are almost tired of hearing about it. So we're in that stage.
45m 3s
Across the portfolio, we have essentially a bit of a lab where Neil team will apply it on certain things. Vivian, who I actually think is the most aggressive and creative in how they've applied AI is doing it, you've got care There were opportunities at Turo and at our search business. They've done a applied AI through real time bidding and other activities. What's clear is where you have massive data sets where you're doing optimization at optimization activities So things like smart matching, or fraud detection you've got real advantages there. We've seen that at care [indiscernible] Clearly customer service and you've heard the comments from Sam Altman and others that sort of level one, level two CSR activities are probably going to go rapidly to voice driven AI and if done right it's a better experience. We debate this all the time, but I think of it as the ATM experience at the bank where most of us never want to go into a bank teller again. Think once you have a sort of pseudo omniscient AI efficient voice activated call service representative, you're not going to go on to go back to human using a drop down screen and searching for information.
46m 44s
What it's done for Decipher is clear And then also we're seeing interesting things on onboarding and definitely on marketing. I think over time there'll be a through AgenTik.ai real changes to how marketing creative is generated tested optimized, placed you're still going have humans involved. It's not going to be a cycle of machines.
47m 11s
But much faster cycles that will have benefits over time.
47m 18s
Yes. And I'll go to the DOJ, Google, stuff. I think there's two answers to that. First, the legal case at I assume you're talking about sort of the Daily Mail related legal case that the settlement that reverted to just came out What I would say is we're we're looking very closely at it. We're trying to figure out how we actually participate in this in some way or don't. I don't have any real news on that. We're obviously very close to it. But I think from a business perspective, I mean, this is like my favorite line from my favorite TV show, The Wire, which is the great line is this is Baltimore gentlemen the gods will not save us. Right? Like nothing is [indiscernible] will function and always have functioned as if we are on our own. And we need to have great relationships with advertisers, great relationships with audience, really compelling offerings, really compelling brands, and we will be fine. And that's how we'll continue to operate. Obviously, if the ecosystem changes, I feel very confident we'll be at the front end of reacting but we'll have to see. I think full outcomes remain to be determined obviously.
48m 34s
And also I'd just say that to continue the wire analogy, we'll defend our turf.
48m 39s
And our IP and that's only in legal manners but we will do that.
48m 49s
Justin, does that answer that question? That's perfect. Thank you both.
48m 55s
Okay. Thank you. Operator, next question.
48m 58s
Next question comes from Tom Champion from Piper Sandler.
49m 2s
Please go ahead.
49m 4s
Morning, guys.
49m 6s
Chris, maybe you could talk about Care for a little bit, particularly the consumer side of the business. How is leadership working on the challenges there?
49m 19s
Neil, maybe just a quick one for you. I'd love to have you talk a little bit more about what you're seeing in the spot market and the growth there relative to what you've seen in the past? What What do you think is driving that performance? Why would that not be a, say, a leading indicator? For the market? Thank you.
49m 38s
First. The spot market has been really erratic. And I think that is in line with what everyone sees feels right like a lot of advertising is confidence and some days people feeling confident, some days they're not. I wish I had more definitive insights for you. I'm reluctant to do it because I got a 50% chance of being wrong depending what happens tomorrow. Again, is true. Obviously, spot markets are a very good window into what is happening at that very moment. I'm not totally sure it's indicative of tomorrow if the spot market gets better tomorrow. If you're looking for something that's we're getting better or we're getting worse. I just I'm reluctant to say either way.
50m 28s
Only thing I'd add keep me honest here, Neil, is we have no Tmall, Xi'an or De minimis exemption in our direct base.
50m 39s
On the broader programmatic market they were a player. I mean especially mobile apps and all those. The math of those guys coming out of the market they spend a lot of money although it was generally below can't afford our sites basically because we're really expensive. Well, we're expensive because we perform relative to what they buy. But when a big chunk of demand comes out of the market, prices are going to go down. So definitely could be a factor in this as well.
51m 8s
Yes. That would be something sort of specific to the programmatic market, but would especially given our endemic base of advertisers across our brands, 'd have a different dynamic on premium.
51m 20s
For sure.
51m 21s
We're not saying absolute, Tom, it's just more those are the kind of questions we're working through.
51m 29s
On care, thanks for the question on that. We broke Care out as a segment earlier this year for the first time set the backdrop, it is the number one provider in its area of consumer care access information child care, senior care, pet care, housekeeping, etcetera.
51m 57s
We got the most liquidity on both sides of the platform including demand and caregivers. And it's a good brand, great brand. We bought the company in 2020 and at the time of the acquisition IAC knew there were core issues with the platform, with the product and the experience. A lot of time was spent early on improving the base platform for resiliency quality of consistency of experience and putting the pieces in place to eventually improve things up the tax stack like the product pricing, packaging and payments. But because of that in that period the product didn't improve But also in vein of you might start to think you're better than you are the pandemic was a real the post pandemic period was a real boost for the business. As there was major demand for child care and senior care as people came back to work. In a lot of ways, that masked deficiencies in the product in the 2022, twenty twenty three period. And then as that tailwind subsided and frankly given some of the wage increases that have occurred, the reality is there's been more pressure on the category of care The realities of the product came to the fore.
53m 33s
Brad Wilson went in as CEO less than two years ago and he and his team and he's significantly upgraded the team and brought in new talent have been working to steadily improve the product and experience as well as pricing packaging. So where we are right now on the consumer side, we have three core priorities this year the product, and they've made some improvements last year, but this year they're really rolling out major improvements in matching So getting the most accurate match of a caregiver based on the specs of the care seeker. [indiscernible] The product was very antiquated in terms of one to one cross messaging of seeker and caregiver to figure out if it's the right match. Search on the platform, very basic things We're catching up and moving the ball forward there. And fulfillment. So that's the product. The second is optimizing pricing and packaging. It's basically been a one size fits all product of a subscription. With the improved platform and product they can roll out different entry points and offerings to meet care seekers where they are and what they need.
54m 53s
And then finally, you're once we're happy with the product and packaging is marketing. And that's both reenergizing the brand of care and then also improving spend efficiency One of the learnings was we had an always on model that was pretty inefficient relative to there are significant periods during the year when the preponderance of acquisition of House Care Household Care occurs. So we've seen improvements already in responsiveness and fulfillment in the product. Versus the old. As they continue to ship improvements.
55m 33s
We're excited about that. It's going to be around Q3, early Q4 before the product will always continue to improve but we really have the product where we want it. We have pricing and packaging rolling out and then we'll have improved marketing and we'll step up the spend in Q3 which is a big search period. So a lot of work to do We feel confident we'll get the consumer business back to stability and definitely we think it will grow in 2026. And Brad and team are taking the right steps. Thanks for the comments guys. Thanks Tom. Operator next question.
56m 15s
The next question comes from Youssef Squali from Truist Please go ahead.
56m 21s
Hi, This is Robert Zeller on for Yousef Scully. Thanks for taking our questions. On the Google partnership, I'm curious if there was any cloud hosting savings as well with that. And what impact you guys are seeing to traffic if any, from search algo changes as well as Google's transition to AIO? And then on programmatic, I just wanted to unpack the drivers behind the softness. I think you guys mentioned some impression commentary earlier and I just want to reconcile that with strong advertisers leaving the market and the pressure on CPs as well? Thanks. Sorry, can you just explain that last question? One more time? I've got the first one. Yes. Just Yes, sure. On the programmatic, I'm just curious I just wanted to unpack the drivers behind the softness a little bit. I thought I heard you guys say that impressions were lower earlier in the call. So I just wanted to reconcile that with what you said about Team Machine. Exiting the market and driving CPMs down as well. [indiscernible] understand that question. On the first question, the Google contract is for search. So there was no cloud component to that. That's just the long term AMG search partnership with Google related to its business.
57m 42s
We have we use all the cloud services in our companies but there was no bundling of vendor there, it's just standalone search. Do you want to take Yes, I'll do the AIO impact.
57m 55s
That's for those of you who don't know that's the Google AI answer at the top of the page. I think right now, those show up on about a third of our searches. You see a little performance decline on those pages. It's very hard to get a handle on exactly how much because there's so much else going on that page also. There are so many other features and search features and Reddit and Google is doing so much with that page. I want to editorialize from a user point of view but it's a very confused page right now. And as I said earlier, look when we put the business together 60% of our traffic was from Google search. Now it's probably a little bit more than a third. And we've managed to grow all the way through. And we've said many, many times in our history we are extremely happy to get traffic and audience from other algorithms and interim sources, but it is entirely incumbent upon us to manage those sources and be sure that we're meeting users where they want our content. We've been able to do that. So it's hard to say what the actual impact is.
59m 8s
I actually don't think for us it's it's giant yet. It might be a little bit like and it's more in the context of a whole search page. So I'm not overly concerned about it.
59m 22s
Yes. Mean, would think about it if Google search is about a third of our traffic and you're seeing an AI overview on 35% of that and then you've got a small decline in click through. It's it's not a significant part of our traffic.
59m 38s
Yes, exactly. That's a much clearer way of saying it than I said it. Yes. The way the other thing we see is as cluttered as the search pages and this is IAC wide, As cluttered as the search page has become with Reddit and LSAs and e commerce and everything. Brands still do well and being it's sort of this massive spreading where top one, two three brands in categories are doing that much better So we see it also in our non core titles at DDM. Where we're not investing behind them but also they just the weaker brands just get washed out to the ocean and At least in the context of search page. In context of a search page. There's still value consumers, there's still value with advertisers, but you've seen a huge spread in search. So we're still feeling very good about our top brands and again that's theme of brand and consumer trust continues across all elements of the business. On programmatic, thank you for the question. It's really bifurcating between Neil's comments and we're on pricing. And then I was talking about revenue for DDM. So on pricing programmatic prices have been up strongly for a while.
1h 1m 18s
With the recent concerns about tariffs and such it's essentially gone to flat pricing year over year. That has some impact on programmatic The point I was making was how our programmatic inventory or quantity works is we have our sessions and we sell as much as we can through premium direct given [indiscernible] improved CPMs and also it's strategic for us to provide that inventory to our direct partners and help them execute on their campaigns.
1h 2m
If we have some slight revenue or slight traffic declines as we did in core in Q1 That just means there's less traffic for programmatic So I think of it in Q1 is some less traffic for programmatic [indiscernible] overall traffic declined slightly, but also because premium sopped up more And then in Q3 as we see traffic coming back to stability and maybe some slight growth in Q2, but programmatic prices are no longer a tailwind given some of the market disruption we've seen. Operator, thank you. Operator, next question. The next question comes from Nick Jones from Citizens JMP Securities. Please go ahead.
1h 2m 54s
This is Luke on for Nick. Thanks for taking the question. I guess just double clicking a bit more on Care.com. I know it's a tough macro environment, but at a high level, what are the key strategic priorities there to kind of help growth in the coming quarters or in the years? Thank you.
1h 3m 13s
Yes, thanks for the question.
1h 3m 16s
I would say at the end of the day care on the consumer side is the industry lead is the industry leader and on the enterprise side is definitely one of the top companies with with clear advantages. We've got liquidity on both sides of our marketplace. Care seekers, the consumer on one and then caregivers child, senior, pet, etcetera on the other. So it is really around execution and making the product, the experience the matching as good as possible [indiscernible] continuing to through that drive initial conversion recapture because right now it's a subscription product. So people go on get a caregiver may lapse or cancel their subscription, come back on, get a senior caregiver or a new child caregiver.
1h 4m 12s
So there's a number of elements of initial subscription, and then recapture and re engagement and you've got to keep making the product and experience as good as possible. That is where we have missed the most over the last few years and we feel good about the path we're on.
1h 4m 29s
Next is pricing and packaging as I said and the third is marketing. And we've known our marketing was inefficient marketing and suboptimal We came to decision to hold off on really pushing behind it reinvigorating the brand until we had the product where we want. So it's really been a it's a serial game plan that we have. On the enterprise side, it's a true cultural shift post pandemic. Where backup care and that service is increasingly a base consumer sorry, base employee benefit. And we've benefited from that We think CARES Care for Business is offering of backup care customer support, access to the care database of caregivers and our life service through life care or life service offering is truly differentiated. So for us on enterprise, it's really three prongs. One, make help employees who have access to care for work, care for business. Know what they have and utilize it.
1h 5m 49s
Two, continue to improve the product to make it as easy to book backup care as an employee is possible. And then three, acquire new logos.
1h 5m 58s
And that's new sales of Fortune 500 companies all the way to down to small business through our own sales force.
1h 6m 4s
So we're heads down continuing to execute but the tailwind, the dynamics of pressure on households for both senior care and child care is not going away. And it's really as we said before in the four corners of care to execute.
1h 6m 22s
Thank you, operator. Last question?
1h 6m 25s
The last question comes from Yigal Aronian from Citigroup. Please go ahead. We spent a lot of time talking about the programmatic side and maybe thought you can close talking a little bit more about the premium side and strength you're seeing there.
1h 6m 43s
Are those commitments kind of multi quarter What are you seeing there? And as I think, Neil, you mentioned, okay, premium is strong, but advertisers are looking around at the environment.
1h 7m
What's are the trends, what are your advertisers saying as we look forward a couple of quarters? And then sure if there's anything to add here, but if there is, we'd love to hear just around on the M and A environment as you kind of move to this stage. Any change or focus on areas that you kind of want to look into from here? Thanks.
1h 7m 21s
I'll let Chris do the M and A thing. I'll do the premium side. Our premium business coming in this year was super strong. First quarter was was very good, as Chris said. Second quarter, we're we're where we would hope to be. Again, I think a lot of it is relative to the market. We've got really good offerings we got really good brands, we got really good audience, our stuff performs, the Cypher is really helping. Again, I would love to be able to answer your question more thoroughly and more eloquently, but we [indiscernible] if things hang on where they are, I think we feel pretty good about where we're going to be going. Any of this macro disturbance at the end of last year, we felt fantastic. We're executing at a high level having great conversations. And I guess, look, advertisers are people too. They look at markets, they look at it like in May was the way you guys look at it, they're analysts. Right? CEOs and CMOs are analysts. So it's just a way of saying that we don't really know, but But as of right now there's nothing to suggest that we won't do fine the rest of the year.
1h 8m 39s
And potentially good the rest of the year, but we'll see.
1h 8m 41s
Yes. And I'd say this goes a bit to our approach to guidance and how we thought about it.
1h 8m 51s
Neil said it well, which is we are looking closely at the data to identify trends and patterns. We're very thankful again that Timu and Sheehan are not in our base that we have comp against Partly that was because as Neil said we price them out of our inventory, it's great.
1h 9m 11s
Broader IAC, we're looking at care and others. We've seen some recent softness in conversion, but that can be volatile from quarter to quarter, not volatile, but no material moves. On enterprise, [indiscernible] are looking to see if employers lay folks off or significantly reduce.
1h 9m 32s
Haven't seen that yet but we're we're cautious on the world. Where we sat to Neil's point when we did our original guidance for the year in February, we factored in some volatility for the unknown. It's seemed like every year I've been here we've had some unknown unknown come out of the woodwork and hit us. We had some factoring in there. By the March, we were seeing our businesses trending to the high end of their guidance ranges. DDM for example, March and April saw digital revenue growth of 1318% respectively. Across all digital. And we would were pacing to be up low double digits for the second quarter. Now we're at 7% to 9%. So we're factoring in some economic slowdown in the rest of Q2 and Q3 in our guidance. But no significant recession.
1h 10m 26s
And also our businesses are thinking about cost actions they can take which if things were going great, you'd continue to invest in your business macro. But they can take to be thoughtful around their cost structure. So this is the approach we're taking and into our guidance based on what we're seeing right now as Neil said.
1h 10m 46s
With respect to the second question, M and A environment, [indiscernible] We're excited We're looking at different things. We highlighted some of the industries that we're thinking about We've always asked ourselves how do we build a big business or concept into something much bigger that can be through early seed investment, it can be through roll ups, consolidations. Or it can be through buying underappreciated larger businesses that we have a different thesis on.
1h 11m 30s
Digital is definitely tougher than it was ten, twenty years ago.
1h 11m 35s
But we still see opportunities. And we're looking across experiences digital enablement of experiences, what we've seen in MGM through the in person experiences, through digital gaming, like Live Dealer, through BetMGM, others.
1h 11m 55s
You can see where the puck is going and the opportunities as things become even more real time and personalized And then there's always idiosyncratic things. We're in in how AI is going to influence consumer interactions, gaming, etcetera. It's hard to to reveal too much, but we are working away and we will have some interesting opportunities.
1h 12m 23s
Thank you, Eyal. Thank you.
1h 12m 27s
I believe that's it operator.
1h 12m 30s
Yes. That was the last question. Okay. Thank you all for your time and engagement and onward and upward. Have a great day.
1h 12m 39s
Thanks.
1h 12m 42s
Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Key Insights
IAC reported a solid Q1, highlighted by the successful spin-off of ANGI, strong execution across its portfolio, and a reaffirmation of full-year 2025 adjusted EBITDA guidance for all businesses.
DDM (Dotdash Meredith) grew digital revenues by 7% and increased EBITDA by 46% (excluding a one-time lease gain), with licensing (including OpenAI) and performance marketing as key growth drivers; Q2 digital revenue is guided to grow 7-9%.
The company repurchased 4.5 million shares and increased its share repurchase authorization by 10 million shares, while also actively pursuing M&A opportunities and considering strategic divestitures to unlock value.
Decipher, IAC’s contextual ad targeting product, is gaining traction with premium advertisers and is expected to be a significant growth driver in 2026; the recent hire of Jim Lawson as President aims to accelerate its commercial potential.
Care.com is focused on product improvements, pricing/packaging optimization, and more efficient marketing, with expectations for consumer business stability and growth in 2026; across the portfolio, AI initiatives are being implemented to drive innovation and efficiency.
