IAC (IAC) Q3 2025 Earnings Transcript

IAC reported 9% year-over-year digital revenue growth at People Inc., with digital adjusted EBITDA up 9% to $72 million and full-year adjusted EBITDA guidance set at $325 million-$340 million. The company also highlighted a $100 million quarterly buyback, a 24% MGM Resorts stake, and a new Microsoft AI content marketplace partnership, but offset this with 3% advertising revenue declines, 6% workforce cuts, and continued Google-related litigation and traffic pressure. Management said noncore asset sales could add about $1 billion of capital and that Google Search headwinds will likely persist.

Analysis

The market is still misclassifying IAC as a melting-ice-cube publisher, when the real economic shift is toward a two-asset holding company with embedded optionality. The second-order winner is Microsoft: by launching a publisher marketplace with a recognized content owner at the table, MSFT can frame Copilot as “licensed by design,” which reduces regulatory friction and improves model quality versus pure scrape economics. That also pressures other AI platforms to pay up or risk being boxed out of premium publisher supply, so the monetization bar for content is moving from traffic arbitrage to rights arbitrage.

The sharper takeaway is that Google is no longer just a traffic source risk; it is now an earnings catalyst through litigation. If publishers can lean on the antitrust precedent, the expected value of the Google case is asymmetrical relative to the roughly $4M quarterly burn, and the cash recovery could effectively fund repurchases or M&A. In parallel, the drop in search dependence forces People Inc. to become more platform-agnostic, which should improve durability but likely compresses headline growth versus peers that still rely on legacy referral volume. That means the stock can rally even on slower top-line prints if investors start underwriting mix and monetization quality rather than sessions.

MGM is the cleaner equity story near term: buybacks plus a rising IAC stake create a self-reinforcing ownership loop, and the implied value gap is being reinforced by capital allocation, not just rhetoric. The risk is that the discount persists longer than activists or retail holders expect, especially if corporate simplification drags into 2026 or if travel/macro cools. The counterintuitive point: the fastest path to rerating may not be a spin, but continued buybacks and asset sales that make the remaining IAC smaller, simpler, and more levered to visible cash return.

Consensus is underestimating the degree to which off-platform distribution and D/Cipher can offset search decay without destroying margins. If management is right that off-platform contribution is neutral to slightly accretive at roughly 30% incremental EBITDA, then the model is not a decaying publisher model but a re-aggregating audience network model. That shifts the debate from “can they replace Google traffic?” to “how much of the new mix deserves software-like monetization?”

Key Decisions for Investors

• Long IAC common over 3-6 months: market may re-rate the holdco once asset sales, buybacks, and MGM ownership accretion simplify the story; target upside is driven by narrowing the holdco discount rather than operating upside alone. Use a tight stop if MGM rolls over materially or if divestiture timing slips past the next 1-2 quarters.
• Pair trade: long IAC / short GCI for 6-12 months — IAC has diversified monetization, balance-sheet optionality, and buybacks, while smaller publishers remain more exposed to search disruption with less pricing power. This isolates the AI-content monetization winner against a more vulnerable legacy ad model.
• Long MSFT on a 6-12 month horizon as the platform winner in AI content licensing: the marketplace narrative improves Copilot’s defensibility and may create a template that other publishers and enterprise AI buyers must follow. Risk/reward is favorable if the market starts capitalizing content-access economics into Azure/AI attach.
• Sell MGM puts or use a call spread into 3-6 months if volatility is elevated: IAC’s ownership increase and MGM’s buyback cadence create a structural bid underneath the stock, while the remaining downside is more macro-driven than company-specific. Best entry is on pullbacks tied to Vegas demand fears, not at local highs.
• Avoid chasing short GOOGL purely on the IAC call: Google is a headwind for publishers but also a beneficiary of AI-driven search redesign, so the cleaner trade is relative long IAC vs legacy media, not outright bearish GOOGL. If you want a hedge, structure it as a small GOOGL put spread against a larger long IAC.