IAC Inc. (IAC) Q3 2025 Earnings Call Transcript

IAC Inc. reported Q3 2025 results, with Chairman Barry Diller outlining a streamlined strategy focused on two core assets: People Inc. and its 24% stake in MGM. People Inc. achieved 9% digital revenue growth and $72 million in digital EBITDA, despite Google Search traffic declines, by diversifying revenue streams and securing an AI content licensing deal with Microsoft, while aiming to "invert" its publishing model into new businesses. Diller emphasized MGM's significant undervaluation as a non-disintermediable asset and highlighted IAC's strong cash position, which will be primarily allocated to opportunistic share repurchases of both IAC and MGM stock, alongside divesting non-core assets.

Analysis

IAC Inc. reported Q3 2025 results, outlining a strategic pivot to a streamlined structure focused on two core assets: People Inc. and its 24% stake in MGM. Chairman Barry Diller emphasized a commitment to divesting non-core holdings and reducing overhead, aiming to enhance a strong balance sheet with over $1 billion in cash. This capital will primarily fund opportunistic share repurchases, with $300 million executed year-to-date, representing approximately 8% of outstanding shares.

People Inc. demonstrated resilience with 9% digital revenue growth and $72 million in digital EBITDA, despite a significant decline in Google Search traffic from 54% to 24% of core sessions. The company is actively diversifying revenue streams through off-platform growth, which accelerated 66% year-over-year, and strategic content licensing, notably securing a pay-per-use AI deal with Microsoft. Management also outlined an ambitious "inversion" strategy to develop new businesses from its extensive content portfolio.

The investment in MGM is highlighted as a key, non-disintermediable asset, with Diller asserting its "mind-blowing discount" at less than 3x EBITDA when excluding publicly traded holdings. IAC plans to increase its 24% ownership in MGM, viewing both its own and MGM's stock as significantly undervalued. This dual focus on a resilient media business and an undervalued entertainment giant forms the bedrock of IAC's future value creation, complemented by ongoing litigation against Google for ad tech practices, seeking hundreds of millions in damages.

Key Decisions for Investors

• Monitor IAC's capital allocation, including non-core asset divestitures and opportunistic share repurchases of both IAC and MGM stock, given management's strong conviction in their undervaluation.
• Assess People Inc.'s ability to sustain digital revenue growth and profitability by diversifying away from Google Search, particularly through off-platform initiatives and the monetization of AI content licensing deals.
• Evaluate the potential for a re-rating of MGM's stock, considering IAC's increasing stake and the long-term implications for IAC's overall valuation as a holder of a "non-disintermediable" asset.
• Track the progress of IAC's Google ad tech litigation, as a favorable resolution could provide a significant, non-recurring financial uplift.