IAC(IAC) - 2024 Q4 - Annual Results

Q4 2024 Financial Highlights IAC's Q4 2024 revenue decreased 6% to $989.3 million, with a net loss of $199.0 million primarily from an MGM investment loss, alongside strong Dotdash Meredith digital growth and an approved Angi Inc. spin-off Q4 2024 Summary Results IAC's Q4 2024 saw a 6% revenue decrease and 9% Adjusted EBITDA decline, with a net loss driven by an MGM investment, alongside an approved Angi Inc. spin-off and strong Dotdash Meredith digital growth IAC Q4 2024 Summary Financial Results | ($ in millions except per share amounts) | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Revenue | $989.3 | $1,058.0 | -6% | | Operating income (loss) | $50.6 | $(37.0) | NM | | Net (loss) earnings | $(199.0) | $327.8 | NM | | Diluted loss (earnings) per share | $(2.39) | $3.70 | NM | | Adjusted EBITDA | $142.0 | $156.8 | -9% | - The IAC Board of Directors has approved a plan to spin off its entire stake in Angi Inc. to IAC shareholders, with the transaction expected to close in the first half of 2025[5] - Concurrently, Joey Levin will step down as IAC CEO to become an advisor and will be appointed Executive Chairman of Angi Inc.[5] - Dotdash Meredith's Digital revenue increased by 10% to $311 million, marking the fourth consecutive quarter of double-digit growth and pushing full-year Digital revenue over $1 billion[4][5] - For the full year 2024, net cash from operating activities increased by $165 million to $355 million, and Free Cash Flow rose by $241 million to $289 million[5] Discussion of Financial and Operating Results Total revenue declined 6% in Q4 2024, primarily due to decreases in Angi Inc., Search, and Emerging & Other, offset by Dotdash Meredith's growth, significantly improving operating income Segment Performance Overview Q4 2024 total revenue declined 6% due to decreases in Angi Inc., Search, and Emerging & Other, offset by Dotdash Meredith's 10% growth, significantly improving total operating income Q4 2024 Revenue by Segment ($ in millions) | Segment | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Dotdash Meredith | $522.1 | $475.9 | 10% | | Angi Inc. | $267.9 | $300.4 | -11% | | Care.com | $93.7 | $91.3 | 3% | | Search | $89.2 | $133.5 | -33% | | Emerging & Other | $16.6 | $59.1 | -72% | | Total Revenue | $989.3 | $1,058.0 | -6% | Q4 2024 Operating Income (Loss) by Segment ($ in millions) | Segment | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Dotdash Meredith | $87.3 | $(18.1) | NM | | Angi Inc. | $2.2 | $7.6 | -72% | | Care.com | $4.6 | $5.3 | -13% | | Search | $6.0 | $7.5 | -19% | | Corporate | $(42.3) | $(38.2) | -11% | | Total Operating Income (Loss) | $50.6 | $(37.0) | NM | Dotdash Meredith Dotdash Meredith's revenue grew 10% year-over-year, driven by digital performance marketing and print, with operating income significantly improving due to lower amortization of intangibles Dotdash Meredith Q4 Revenue Breakdown ($ in millions) | Revenue Stream | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Digital | $310.6 | $283.6 | 10% | | Print | $217.9 | $198.4 | 10% | | Total | $522.1 | $475.9 | 10% | - Digital revenue growth was fueled by a 22% increase in performance marketing (led by 39% affiliate commerce growth), a 3% rise in advertising revenue, and a 19% increase in licensing, partly due to a new partnership with OpenAI[8] - The significant increase in operating income to $87.3 million was largely due to $86.8 million lower amortization of intangibles, which was impacted in the prior year by a $79.9 million impairment charge on an indefinite-lived intangible asset[9] Angi Inc. Detailed financial and operating results for Angi Inc. are available in its separate Q4 2024 earnings release - Further detail on Angi Inc.'s performance can be found in its dedicated Q4 2024 earnings release[10] Care.com Care.com's revenue increased 3% driven by Enterprise segment growth, but operating income and Adjusted EBITDA declined due to legal accruals - Revenue growth was driven by an 18% increase in the Enterprise segment, attributed to higher back-up care utilization[14] - Operating income decreased to $4.6 million, and Adjusted EBITDA declined to $7.9 million, mainly due to $9.3 million in accruals for the resolution of certain legal matters[14] Search Search segment revenue declined 33% due to reduced traffic acquisition costs at Ask Media Group and a decline in the legacy Desktop business, impacting profitability - Revenue fell 33%, with Ask Media Group revenue down 35% and Desktop revenue down 23%[14] - The decline at Ask Media Group was due to reduced traffic acquisition costs leading to fewer visitors[14] Emerging & Other Emerging & Other revenue plummeted 72% primarily due to the divestitures of Mosaic Group and Roofing, widening the operating loss - The significant 72% revenue decline was mainly due to the sales of Mosaic Group ($37.5 million in Q4 2023 revenue) and Roofing ($6.3 million in Q4 2023 revenue)[14] Corporate and Other Financial Items Corporate operating loss increased due to Angi Inc. spin-off costs, the MGM investment was valued at $2.2 billion, and a Q4 2024 income tax benefit was recorded - Corporate operating loss grew by $4.1 million, driven by $3.3 million in transaction-related costs for the proposed Angi Inc. spin-off[15] - As of February 7, 2025, IAC held 64.7 million shares of MGM Resorts International, valued at $2.2 billion[16] - The company recorded a Q4 2024 income tax benefit of $63.3 million, for an effective tax rate of 24%, which was higher than the statutory rate primarily due to state taxes[17] Financial Position and Capital Resources IAC's financial position as of December 31, 2024, includes $1.8 billion in cash and $2.0 billion in long-term debt, with Dotdash Meredith improving its leverage ratio Free Cash Flow For full year 2024, IAC generated $289.0 million in Free Cash Flow, a significant increase driven by higher operating cash and lower capital expenditures Free Cash Flow (Twelve Months Ended December 31) | ($ in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $354.5 | $189.5 | | Capital expenditures | $(65.5) | $(141.4) | | Free cash flow | $289.0 | $48.2 | - The $240.8 million year-over-year increase in Free Cash Flow was primarily due to favorable working capital, lower capital expenditures, and higher Adjusted EBITDA[18] Liquidity and Capital Resources As of December 31, 2024, IAC held $1.8 billion in cash and $2.0 billion in long-term debt, with Dotdash Meredith repricing loans and improving its leverage ratio Capital Structure as of December 31, 2024 | Item | Amount ($ in billions) | | :--- | :--- | | Cash and cash equivalents | $1.8 | | Long-term debt | $2.0 | - Dotdash Meredith repriced $1.18 billion of Term B loans, reducing borrowing costs by 60 basis points[23] - Dotdash Meredith's net consolidated leverage ratio declined below 4.0x, which increases IAC's financial flexibility[23] - IAC had 3.7 million shares remaining in its stock repurchase authorization as of year-end[27] Operating Metrics Q4 2024 operating metrics show Dotdash Meredith's Core Sessions up 3%, Angi Inc. Service Requests down 16% but with improved monetization, Care.com Enterprise revenue up 18%, and broad declines in Search Segment Operating Metrics Q4 2024 segment metrics show Dotdash Meredith's Core Sessions up 3%, Angi Inc. Service Requests down 16% with improved monetization, Care.com Enterprise revenue up 18%, and broad declines in Search Dotdash Meredith Q4 Metrics | Metric | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Performance marketing revenue | $86.5M | $71.1M | 22% | | Advertising revenue | $191.8M | $185.5M | 3% | | Core Sessions (millions) | 2,327 | 2,255 | 3% | Angi Inc. Q4 Metrics | Metric | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Total Revenue | $267.9M | $300.4M | -11% | | Service Requests (thousands) | 3,629 | 4,324 | -16% | | Monetized Transactions per Service Request | 1.45 | 1.27 | 14% | | Transacting Professionals (thousands) | 168 | 196 | -14% | Care.com & Search Q4 Revenue ($ in millions) | Segment/Revenue Stream | Q4 2024 | Q4 2023 | Growth | | :--- | :--- | :--- | :--- | | Care.com - Enterprise | $48.6 | $41.3 | 18% | | Care.com - Consumer | $45.0 | $50.0 | -10% | | Search - Ask Media Group | $74.0 | $113.9 | -35% | | Search - Desktop | $15.2 | $19.6 | -23% | Dilutive Securities The company estimates potential share dilution at approximately 1.2 million shares (1.4-1.5%), with Joey Levin forfeiting 3 million restricted shares Dilution Analysis and Equity Award Updates The company estimates total share dilution at approximately 1.2 million shares (1.4-1.5%), with Joey Levin forfeiting 3 million restricted shares and certain Angi Inc. equity awards potentially settled in IAC common stock - As part of his Employment Transition Agreement on January 13, 2025, Joey Levin forfeited 3 million shares of IAC restricted stock granted in November 2020[34] - The company presents its calculation of potential share dilution, which differs from GAAP methodology, showing total dilution of 1.2 million shares (1.4%) at a stock price of $50.00[32] - Certain Angi Inc. equity awards can be settled in IAC common stock at IAC's discretion[36] - The dilution from vested awards expected to be settled in March 2025 is included in the company's dilution calculation[36] GAAP Financial Statements This section presents the unaudited consolidated financial statements, including the statement of operations, balance sheet, and cash flows, providing a comprehensive view of IAC's financial performance and position Consolidated Statement of Operations Q4 2024 revenue was $989.3 million, with operating income improving to $50.6 million, but a $287.4 million unrealized MGM investment loss led to a $199.0 million net loss Consolidated Statement of Operations Highlights ($ in thousands) | | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Revenue | $989,307 | $1,058,034 | | Operating income (loss) | $50,621 | $(36,957) | | Unrealized (loss) gain on investment in MGM | $(287,373) | $512,611 | | Net (loss) earnings | $(199,390) | $326,650 | | Diluted (loss) earnings per share | $(2.39) | $3.70 | Consolidated Balance Sheet As of December 31, 2024, total assets were $9.5 billion, down from $10.4 billion due to the MGM investment, with $1.8 billion cash and $1.9 billion net long-term debt Consolidated Balance Sheet Highlights ($ in thousands) | | December 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,798,170 | $1,297,445 | | Investment in MGM Resorts International | $2,242,672 | $2,891,850 | | Total Assets | $9,547,160 | $10,371,177 | | Long-term debt, net | $1,931,847 | $1,993,154 | | Total shareholders' equity | $6,278,973 | $6,755,003 | Consolidated Statement of Cash Flows For the twelve months ended December 31, 2024, IAC generated $354.5 million in operating cash, resulting in a $501.0 million net increase in cash and cash equivalents Consolidated Statement of Cash Flows Highlights (Twelve Months Ended Dec 31, $ in thousands) | | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $354,518 | $189,528 | | Net cash provided by (used in) investing activities | $276,825 | $(87,467) | | Net cash used in financing activities | $(129,099) | $(223,013) | | Net increase (decrease) in cash | $501,014 | $(119,828) | | Cash at end of period | $1,807,255 | $1,306,241 | Full Year 2025 Outlook IAC forecasts FY 2025 Adjusted EBITDA between $345 million and $425 million, with Dotdash Meredith contributing $330-$350 million FY 2025 Outlook and Q1 Commentary IAC forecasts FY 2025 Adjusted EBITDA between $345 million and $425 million, with Dotdash Meredith expecting high-single-digit Q1 digital revenue growth and elevated corporate expenses FY 2025 Adjusted EBITDA Outlook ($ in millions) | Segment | FY 2025 Outlook | | :--- | :--- | | Dotdash Meredith | $330 - $350 | | Angi Inc. | $135 - $150 | | Care.com | $45 - $55 | | Search | $10 - $15 | | Emerging & Other | $(25) - $(15) | | Corporate | $(150) - $(130) | | Total | $345 - $425 | - For Q1 2025, Dotdash Meredith expects Digital revenue growth in the high-single digits, while Angi Inc. anticipates revenue declines in the low 20% range year-over-year[43] - Corporate expenses in 2025 will be impacted by non-recurring items, most of which are concentrated in Q1, including professional fees for the Match Group litigation, restructuring costs for Joey Levin's departure, and Angi spin-off costs[43] Reconciliations of GAAP to Non-GAAP Measures This section provides detailed tabular reconciliations of GAAP Operating Income (Loss) to non-GAAP Adjusted EBITDA for Q4 and full-year 2024 and 2023, including a forward-looking Q1 2025 reconciliation Adjusted EBITDA Reconciliations This section provides detailed tabular reconciliations of GAAP Operating Income (Loss) to non-GAAP Adjusted EBITDA for Q4 and full-year 2024 and 2023, including a forward-looking Q1 2025 reconciliation - Provides detailed reconciliations of Operating Income (Loss) to Adjusted EBITDA for Q4 and full-year 2024 and 2023, showing adjustments for stock-based compensation, depreciation, and amortization of intangibles for each business segment[45][47] - A specific reconciliation for Dotdash Meredith shows that excluding $13.0 million in Q4 2024 severance, its full-year 2024 operating income would have been $119.9 million and Adjusted EBITDA would have been $308.4 million[48] - A reconciliation for the Q1 2025 outlook is provided, detailing the expected adjustments from operating income to Adjusted EBITDA for key segments[49] Financial Reporting Principles and Metric Definitions This section defines IAC's key non-GAAP metrics, Adjusted EBITDA and Free Cash Flow, and provides detailed definitions for each business segment's operating metrics Definitions of Non-GAAP Measures IAC defines its key non-GAAP metrics, Adjusted EBITDA and Free Cash Flow, explaining their components and utility for evaluating business performance - Adjusted EBITDA is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items such as amortization and impairment of intangible assets[52] - Free Cash Flow is defined as net cash provided by operating activities, less capital expenditures, and is considered useful as it represents the cash generated by operating businesses before non-operational movements[53] Metric Definitions This section provides detailed definitions for key operating metrics across IAC's segments, including Dotdash Meredith's 'Core Sessions' and Angi Inc.'s 'Service Requests' - Dotdash Meredith's 'Core Sessions' are defined as unique visits to its most significant owned and operated sites, including brands like People, Investopedia, and Better Homes & Gardens[62] - Angi Inc.'s 'Service Requests' include submitted domestic service requests, directory contacts, and bookings for Services jobs[65] - 'Monetized Transactions' are requests matched to a paying professional or completed/in-process Services jobs[66] - Care.com's 'Enterprise Revenue' is generated from annual contracts with businesses that provide Care.com services as an employee benefit[70] Other Information The report concludes with a Safe Harbor statement outlining forward-looking risks and an 'About IAC' section describing its company-building philosophy Safe Harbor Statement and Company Overview The report concludes with a Safe Harbor statement outlining forward-looking risks and an 'About IAC' section describing its company-building philosophy - The Safe Harbor statement lists key risks, including competition from generative AI, changes in relationships with partners like Google, unstable market conditions, and risks associated with the proposed spin-off of Angi Inc.[73] - IAC describes its corporate strategy as building companies, guided by curiosity and financially-disciplined opportunism, noting that 11 public companies have emerged from IAC[74]