Executive Summary / Key Takeaways

• Strategic Pivot and Focused Execution: IAC has emerged from a period of intense restructuring, marked by the Angi spin-off and the rebranding of Dotdash Meredith to People Inc., to a leaner, more focused entity. The company is now poised for renewed offense, prioritizing growth in its core operating businesses and disciplined capital allocation.
• Technological Differentiation Driving Growth: Proprietary technologies like D/Cipher, enhanced by AI, are central to People Inc.'s strategy, expanding its addressable advertising market 4 to 5 times beyond its owned platforms and outperforming traditional ad-targeting methods. AI applications are also being leveraged across the portfolio, notably in Vivian Health and Care.com.
• People Inc. Digital Momentum: The newly rebranded People Inc. is demonstrating robust digital revenue growth, up 9% in Q2 2025, driven by diversified audience acquisition strategies ("Google Zero"), strong premium advertising, and a thriving licensing business. Management targets 10%+ long-term digital revenue growth.
• Value Disconnect and Capital Allocation: IAC's shares trade at a significant discount, implying a negative valuation for its wholly-owned businesses when accounting for its MGM stake and cash. The company is actively pursuing M&A opportunities and has completed substantial share buybacks, signaling confidence in its intrinsic value.
• Balanced Outlook Amidst Headwinds: While macroeconomic uncertainty, AI's impact on search, and programmatic ad market softness present risks, IAC's full-year 2025 adjusted EBITDA guidance of $247 million to $285 million reflects confidence in its strategic responses and operational improvements, with expectations for normalized corporate costs in 2026.

The Phoenix Rises – IAC's Enduring Evolution

IAC Inc. has long been defined by its dynamic portfolio and a strategic philosophy of spinning off successful businesses once they achieve sufficient scale. This approach has historically unlocked significant shareholder value, culminating in the recent spin-off of Angi Inc. on March 31, 2025, marking the tenth independent public company created by IAC. This move signals a deliberate shift from a period of internal restructuring to one of renewed offense and focused growth.

The company recently navigated a challenging period, characterized by a "crisis" in late 2022 and early 2023 when both Angi and Dotdash Meredith (now People Inc.) faced significant operational and financial headwinds. Angi's EBITDA dramatically fell from approximately $260 million to $35 million, while Dotdash Meredith's post-acquisition EBITDA forecasts were sharply reduced. In response, IAC "froze everything" else, dedicating resources to a comprehensive turnaround that involved streamlining operations, divesting non-core assets like Mosaic Group in February 2024, and fundamentally improving product experiences across its portfolio. This strategic pivot has reshaped IAC into a leaner entity, now comprising core operating businesses like People Inc. and Care.com, alongside strategic equity positions in MGM Resorts International and Turo Inc.

Technological Edge: D/Cipher and AI as Growth Engines

At the heart of IAC's renewed growth strategy lies its commitment to technological differentiation, particularly within its digital publishing arm, People Inc. The company's proprietary D/Cipher ad-targeting solution is a prime example of this innovation. D/Cipher leverages first-party, intent-based contextual data to deliver highly effective advertising, consistently outperforming traditional cookie-based and non-cookie-based alternatives in numerous case studies. This technology is not merely an enhancement; it is a foundational competitive advantage.

The expansion to D/Cipher Plus, further integrated with OpenAI's technology, significantly amplifies its capabilities. This allows People Inc. to extend its targeting prowess across the open web, mapping its intent-driven data to over 30 million external URLs. This expansion effectively broadens People Inc.'s addressable advertising market by an estimated 4 to 5 times beyond its owned platforms, including nascent opportunities in Connected TV (CTV). Campaigns utilizing D/Cipher are notably larger, exceeding 60% in size compared to non-D/Cipher campaigns, and demonstrate superior performance metrics for advertisers. This technological edge directly translates into higher monetization, stronger competitive positioning against broader ad platforms like Alphabet (GOOGL) and Meta (META), and a clear path to market share gains.

Beyond D/Cipher, AI is being strategically integrated across IAC's diverse portfolio. Vivian Health, with its platform connecting 2 million clinicians to job opportunities, is implementing AI to potentially revolutionize healthcare staffing through smart matching and optimization. Care.com is leveraging AI to enhance caregiver-seeker matching, improve conversational user interfaces, and streamline fraud detection. Even in the Search segment, AI is applied to real-time bidding and other optimization activities. These applications underscore IAC's commitment to using AI not just for efficiency, but as a core driver of product performance and competitive advantage, ensuring its businesses remain at the forefront of their respective industries.

People Inc.: A Digital Publisher's Rebirth

On July 31, 2025, Dotdash Meredith Inc. officially rebranded as People Inc., a move symbolizing its renewed focus and aligning with its flagship brand. This rebranding emphasizes the company's core mission of delivering "content made by people for people" across its more than 40 iconic brands, including PEOPLE, Food & Wine, and Investopedia. People Inc. operates through two segments: Digital (advertising, performance marketing, licensing) and Print (magazine subscriptions, newsstand).

In Q2 2025, People Inc. demonstrated a strong turnaround in its Digital segment, with revenue growing 9% year-over-year to $260.36 million, accelerating from 7% in Q1. This growth was fueled by robust premium advertising sales in key verticals like Health, Technology, and Travel, a thriving affiliate commerce business, and significant contributions from content licensing, including partnerships with Apple (AAPL) News and OpenAI. The Print segment, however, continued its secular decline, with revenue down 9% to $173.54 million, reflecting ongoing portfolio optimization and audience migration to digital platforms. Despite this, Print's Adjusted EBITDA grew 27% to $16.73 million, as the segment is strategically managed for cash flow and branding value.

People Inc.'s overall Adjusted EBITDA for Q2 2025 increased 5% to $69.62 million. While Digital Adjusted EBITDA saw a slight 1% decline to $63.01 million, this was attributed to strategic investments in new products like the People app and MyRecipes, alongside the D/Cipher+ expansion. This reflects a deliberate strategy to invest in future growth, with management expecting Digital EBITDA to grow year-over-year in Q3 2025, targeting margins of 25% to 28%, and returning to "real margin scale" in Q4 2025. The company's "Google Zero" strategy, aimed at diversifying audience acquisition beyond Google Search (which now accounts for only 28% of sessions, down from 52%), is critical to its long-term resilience. Non-Google search sessions have grown at a 29% CAGR, highlighting the success of building direct consumer relationships and off-platform engagement. People Inc. maintains a long-term goal of 10% Digital revenue growth, driven by a combination of traffic growth and improved monetization.

Care.com: Revitalizing the Care Marketplace

Care.com, a leading online marketplace connecting families with caregivers, is undergoing a significant revitalization. The business operates through Consumer (direct subscriptions) and Enterprise (employer benefits) channels. In Q2 2025, Care.com's total revenue decreased 6% year-over-year to $82.02 million, with Consumer revenue down 9% and Enterprise revenue down 4%. This decline in consumer revenue since 2022 has been attributed to past product deficiencies, suboptimal marketing, and broader macroeconomic headwinds.

Despite the revenue dip, Care.com's Adjusted EBITDA surged 117% to $5.84 million in Q2 2025, largely due to the resolution of certain legal matters that impacted prior-year figures. In June 2025, the company launched a comprehensive product and brand revitalization, introducing fine-tuned search capabilities, enhanced messaging, and improved matching algorithms. Early results are promising, with core consumer metrics like direct navigation visits, sign-ups, and subscriptions showing stability and growth for the first time since 2022. Care.com remains the clear market leader, boasting the #1 brand position and 62% of its traffic from organic sources. Its enterprise business continues to benefit from a "nice tailwind" as employer-provided care support increasingly becomes a standard employee benefit. The company's strategic priorities include further product refinement, optimizing pricing and packaging, and aggressive expansion into high-growth verticals like senior care and pet care. Management expects the consumer business to return to stability and growth in 2026, maintaining its full-year 2025 Adjusted EBITDA guidance of $45 million to $55 million.

Search & Emerging Other: Niche Plays and Innovation Hubs

IAC's Search segment, comprising Ask Media Group and Desktop operations, continues to face top-line challenges but is managed for profitability. In Q2 2025, Search revenue declined 39% to $61.69 million, primarily due to shifts in channel mix and reduced affiliate marketing. Despite this, Adjusted EBITDA grew 10% to $5.10 million, reflecting management's focus on higher-margin channels and cost optimization. The business recently renewed its Google contract and is showing signs of stability, though the Google Search ecosystem remains inherently volatile.

The Emerging Other segment, which includes Vivian Health and The Daily Beast, also saw a revenue decline of 20% to $15.88 million in Q2 2025, largely due to the prior-year sale of Mosaic Group assets and a decrease from IAC Films. However, Vivian Health is a key innovation hub, implementing AI to connect healthcare professionals with job opportunities, leveraging its platform of 2 million clinicians. The Daily Beast has also demonstrated strong performance, achieving profitability and 72% revenue growth in Q1 2025. These niche businesses, while smaller, contribute to IAC's diversified portfolio and provide avenues for future growth and technological exploration.

Strategic Investments: MGM and Turo

Beyond its wholly-owned operating businesses, IAC holds significant strategic equity positions. Its 23.8% stake in MGM Resorts International , valued at a carrying amount of $2.23 billion as of June 30, 2025, remains a cornerstone of IAC's investment thesis. In Q2 2025, this investment generated an unrealized gain of $307.44 million. Management views MGM as "wildly undervalued," praising its "superb management" and its non-disintermediatable business model. The strong performance of BetMGM, MGM's digital gaming arm, with 36% net revenue growth in Q2 2025 and increased full-year guidance of at least $2.7 billion in revenue and $150 million in EBITDA, validates IAC's initial investment rationale.

IAC also holds approximately 33% ownership in Turo Inc., a leading car-sharing service. While Turo has withdrawn its IPO plans, it remains focused on driving growth. These strategic investments provide IAC with exposure to large, growing markets and potential for significant value creation, complementing its operating portfolio.

Financial Health, Liquidity, and Capital Allocation

IAC's financial position reflects a disciplined approach to capital management following its recent restructuring. The company reported a 15% increase in consolidated Adjusted EBITDA in Q2 2025. As of June 30, 2025, IAC held $1.10 billion in cash and cash equivalents. A significant development was the $1.4 billion debt refinancing for People Inc. in June 2025, which replaced its acquisition capital structure with new, attractively priced debt. Crucially, People Inc.'s consolidated net leverage ratio is now below 4.00 to 1.00, granting IAC access to People Inc.'s cash for corporate purposes, as demonstrated by an $80 million contribution and subsequent distribution in June/July 2025.

In terms of capital allocation, IAC completed $200 million in share repurchases during the first half of 2025, exhausting its 2020 authorization and initiating a new 2025 authorization with 9.2 million shares remaining as of August 1, 2025. This aggressive buyback activity underscores management's conviction in the deep value embedded in its shares, particularly given the perceived valuation disconnect where its wholly-owned businesses are implied to have negative value when accounting for its MGM stake and cash. The company is also actively pursuing M&A opportunities, focusing on quality-defensible businesses and AI applications in known sectors. Corporate costs for FY 2025 are guided at $110 million to $115 million, including approximately $50 million in non-recurring expenses related to the Angi spin-off, executive transitions, and legacy litigation, with expectations for these costs to normalize in 2026.

Risks and Challenges

Despite the positive momentum, IAC faces several pertinent risks. The Services Agreement with Google, a significant revenue source for the Search segment, remains subject to Google's unilateral policy updates and economic term changes, which could negatively impact revenue and operations. The broader impact of generative AI, particularly Google's AI Overviews (AIOs), poses a long-term challenge to traditional search referral traffic for publishers. AIOs are now present on over 50% of searches where People Inc. content appears, leading to a low-to-mid single-digit depression in click-through rates. While IAC's "Google Zero" strategy aims to mitigate this, the evolving AI landscape remains a key uncertainty.

Macroeconomic volatility continues to influence advertising spending and consumer confidence, potentially impacting People Inc.'s advertising revenue and Care.com's consumer business. The programmatic advertising market has shown softness, with pricing running flat year-over-year, creating a disconnect with more stable direct premium sales. Furthermore, Care.com's consumer business turnaround, while showing early positive signs, is a multi-year effort to overcome past product deficiencies and suboptimal marketing. These factors necessitate continuous adaptation and execution to sustain growth and profitability.

Conclusion

IAC is undergoing a profound transformation, shedding non-core assets and focusing its formidable capital allocation prowess on a streamlined portfolio. The rebranding of Dotdash Meredith to People Inc. and the successful spin-off of Angi (ANGI) mark a new chapter, emphasizing focused execution and technological leadership. With its proprietary D/Cipher ad-targeting and strategic AI integrations across its businesses, IAC is building a robust competitive moat, particularly in digital content and specialized marketplaces.

The company's Q2 2025 performance, highlighted by People Inc.'s digital revenue growth and Care.com's operational revitalization, underscores the early success of this strategic pivot. While macroeconomic headwinds and the evolving AI landscape present ongoing challenges, IAC's confident guidance, disciplined capital allocation, and commitment to unlocking value from its undervalued assets like MGM (MGM), position it for a compelling future. Investors should closely monitor the continued scaling of D/Cipher+, the sustained growth in People Inc.'s digital revenues, and the successful turnaround of Care.com's consumer business as key indicators of IAC's ability to deliver on its long-term investment thesis.