People (IAC) Aktie

Good afternoon, everyone. Thanks for joining. We're happy to have Chris Halpin, COO and CFO of IAC and Tim Quinn, CFO of People Inc., here for a fireside chat. I'll leave a little bit of time at the end for if people have questions. But to kick off, Chris, maybe and Tim, if you could talk about the recent corporate actions, the consolidation, the rebrand and the management transition, maybe a good place to start.

Yes, certainly, and thanks for having us, John. So we announced in late April headed into Q2 -- Q1 earnings, I should say, a corporate consolidation, which was really a continuation of what we've been doing to simplify IAC to distill down value in the portfolio and shrink what we perceive as a large discount in our share price. It continues what we've talked about previously of noncore asset divestitures. Most notably, we sold Care.com, which we talked about previously, but we closed that in the first quarter, raising about $300 million of cash.

And we continue -- we have a game plan to continue to liquidate assets. And we've said we'd prioritize the capital allocation out of the $1 billion of cash now on our balance sheet and what we hope to build and also the cash flow that People Inc. generates, as Tim will talk about, we'll prioritize that to IAC stock, and we bought back 13% of the company over the last 5 quarters to MGM stock. We bought 1 million shares there last -- each of the last 2 quarters as well as to strategic M&A at People Inc.

One of the key parts, and we had been scoping this out for a while, was as you get down to the core operating business, which is People Inc. plus the MGM shares, you don't need 2 levels of corporate. And it was a clear cost-saving opportunity. We talked a lot with investors of how we were rationalizing IAC corporate, but the big step would be really collapsing the 2. And then eliminating duplicative functions, retaining those activities such as Investor Relations, internal audit, SEC reporting and consolidation, et cetera, retain those that are in IAC corporate that don't exist at People Inc., but really eliminate the rest.

And our -- we scoped it out. We worked with Neil Vogel, CEO at People Inc. and Tim Quinn, my partner as CFO, aligned it and then got Board approval and we announced it. It is not a rapid consolidation. It is really like 2 businesses merging through a merger. And we also want to be thoughtful about maintaining mission-critical services, software platforms, et cetera. But it will be -- all be done by February of '27 is our goal. We've talked about we expect to generate $40 million plus of OpEx cash savings relative to the corporate expense at IAC, which was running at about $85 million. We also expect to save $20 million to $25 million of stock-based comp on an ongoing basis. And that will -- the first clean quarter will be the second quarter of 2027 but we expect to fully see those -- that improvement in free cash flow dilution, et cetera, at that point.

So every employee of corporate is either staying a small subset or leaving on a specific date. Our Chief Legal Officer, Kendall Handler and I are going to stay through Q2 earnings. And then the expectation is hand off to Neil and Tim. And we think it's going to produce a leaner, faster, more efficient IAC, which will also be rebranded People Incorporated to the benefit of shareholders. Anything you'd add?

No, I think that's well said. People Inc. today has about 3,600 employees. So we do have the infrastructure to absorb it. As Chris said, we're being really thoughtful about how we do that, and there are definitely some functions that we are picking up like IR tax and other areas that we don't have the competency, but feel pretty confident that we can do this thoughtfully and seamlessly.

Okay. Great. Let's move to People Digital revenue, the 3 line items. I just want to drill into each one to start. And so we'll start with advertising. That grew 1% year-over-year in 1Q. It's a little under 60% of total People Digital revenue. Can you talk about the strengths and offsets in the quarter and how things may trend for the advertising line over the rest of the year?

Sure. So we had another solid quarter in Q1 at People Inc. I think it was a 10th consecutive or 11th consecutive quarter of growth, grew total digital revenue about 8%. As you said, John, advertising grew 1%. There are 2 kind of countervailing trends that are underlying that 1% growth. On the one hand, strong performance by our premium sales team, selling capabilities, selling off-platform, what we call off-platform advertising. I'd say the ad market is solid, not spectacular, but solid sector-specific, but strong. And that's counteracting the softness we're seeing from traffic to our owned and operated sites or traffic to, I'll call it, dot-coms today to distinguish. And so that has been a headwind for the last 1.5 years or so. It's something we've seen. It's something we underwrote in our financial models this year, but it's something that we're kind of contending with right now. And so the combination of those 2 things have advertising roughly flat or up a little bit in Q1.

Okay. And then performance marketing grew mid-teens. It's about 1/4 of People Digital revenue. 25% of that was monetized via off-session views. Will that mix shift continue within performance marketing? And how should we think about the key growth drivers for that segment?

Yes, it will continue, as you suggest. But performance marketing is basically specifically the largest piece is referring users, consumers to retailer sites using our guides, ratings and reviews and other techniques that we have. We think it's a valuable service to consumers. It is certainly a valuable service to the retailers themselves. We drive over $1.5 billion at retail to the likes of Amazon, Walmart, Nordstrom, Wayfair and so forth. That business has the same -- some of the same drivers as the advertising business in the sense that 2, 3 years ago, the predominance of that business was search-based referrals to our dot-coms.

We've been able to diversify that business to a more distributed content model, getting those same or similar call to actions to consumers around retail products to Apple News and Discover and e-mail and off-platform marketing and all those types of things. So that's what you're picking up in that 25% that is in the non-session-based revenue. It's been a really strong performer for us, the performance marketing line. I think Q2 will continue to be strong. Back half, the comps get quite a bit harder, but we still continue to expect to grow.

Okay. And then licensing had another great quarter, and that's about 15% of the mix. Could you talk about the key drivers and your partners there that's driving super strong growth?

Yes. As you say, licensing has been particularly strong for us. We had a really good quarter in Q1. The way to think about the licensing line is there's 3 sort of subsets to it. There's content licensing, which is the biggest and fastest growing. That's where we distribute our content across different platforms. Again, Apple News, Meta, Facebook, even Yahoo!, MSN, all those types of guys. I think we have an advantage there because we're continuing to make high-quality branded content that's resonating and the economics certainly support that and the revenue supports that.

Second line within licensing is our AI licensing, or data licensing. That's where you see the OpenAI deal or the growth this year is coming from the Meta deal, to a lesser extent, a smaller Microsoft AI deal that we have there. So that's contributing.

And then the third piece is sort of more standard product and brand licenses and the biggest of which in that category -- revenue category is our Walmart BHG license, which is one of the largest kind of private label brands in Walmart. And you can think about that as growing roughly in line with Walmart. So e-commerce strong, in-store, not as strong, but kind of a flattish to modest growth piece of business.

Okay. That's super helpful. And I know you touched on this, but let's maybe dig a little further into the traffic and monetization. So if you can just kind of talk about the flow of traffic with the advent of AI and chatbots and how people has pivoted to growing off-platform views amidst the Google Search traffic declines with the introduction of AI overviews and AI mode.

Sure. I'll tell a quick story. Chris and I and a bunch of other folks, Neil and others were in Las Vegas in Q4 of 2022, the week that Sam Altman launched ChatGPT. So we saw, sort of like the version 1.0, as in, before it was hitting the market. And I think like probably all of us, the first time we saw it, we were like, this is totally different paradigm, right? It's going to -- this is going to change sort of everything. We were literally looking behind the curtain to see if this was real and so even back then, we started to think like the business is going to change. It's going to have to evolve. The way people are going to consume media, research topics do all those types of things are going to be very different.

And we started then to lean into our brands. We organized, first and foremost, one leader in charge of each brand. And basically, that leader had the mandate to publish content or create content for the magazine, for the dot-com, maybe the same, maybe different content for YouTube or TikTok or Instagram. What that allowed us to do is start to grow -- create native content and grow audiences off platform, again, not within our owned and operated or within our dot-com. It's been, what, 3.5 years since then. It's been kind of slow to emerge and then fast quickly came upon us. And so we have, again, 2 counter trends within our business. Our owned and operated dot-com traffic is in decline and has been for several quarters. We're down 16%, 17% in Q1. We expect that to maybe get a little bit worse even in Q2.

We have the other side of the house, the off-platform views, the off-platform audiences grew nearly 40% on a kind of 2-year CAGR in Q1. What we've gotten really good at is monetizing those off-platform audiences through any number of means. We have events. We have sponsorships. We're creating original programming. And so to frame this out for everyone now with that context, 60% of our revenue comes from a visit is derived from a visit to one of our dot-coms to one of our branded sites. That grew or shrank rather 1% was basically flat in Q1. 40% of our revenue grew 24% in Q1, and that's revenue that was derived from all other sources, anything that is not traffic to our dot-com.

So we really think that, that's a good mental model for the future of the business. We need to hold serve on the dot-coms, sort of accept and acknowledge the reality of the current environment, continue to grow and lean into the brand-led experiences that are off platform.

That makes sense. And I mean, to that point, will there be a point where the traffic from Google Search stabilizes? Is that -- do we...

That's the debate we always have. It's where we discuss...

Asymptotic.

Asymptotic to something. The way I would think about it is there are brands that are out the other side of it already. They have literally no exposure, de minimis exposure, less than $1 million, say, of exposure to search-based traffic. InStyle is a fast-growing site in our portfolio that has virtually no search exposure. By contrast, there are certainly brands that do have some exposure and will have to go through sort of the same transformation that InStyle has done. And I think those are the ones that you'll see some traffic headwinds on. And kind of the most obvious example I can give right now is our recipe traffic.

I think we probably get collectively more recipe-based audiences or traffic than anybody in media. And while that is 50% penetrated by our estimates with AI overviews, there's still a ways to go there. Now we think that that's not the ideal use case for AI, but Google and others may have a different view. And so we'll see. So it's really a portfolio approach. We certainly do think it levels off. We think we're closer to the other side of this than the beginning, but we're not totally out of the other side yet either.

Yes. And I think keep me honest, but there's a cohort in the middle of brands where they are now at pretty much max potential 95% AI overview frequency. So they have gone through that. And whereas InStyle maybe getting 0 search, partly because of the changing behaviors of their users, those that -- there are those that have gotten and they are still getting some search. So -- it's sort of these 3 groups. And the debate is that third group I'm saying, is there some baseline of search that top brands will get even when you pound the user with AI mode. We're not so aggressive as to assume that will happen, but that is -- it is very logical to assume it's asymptotic to something, but we're not going to make any predictions.

Okay. On the -- just going back to the -- sticking with the traffic and the views, engagement. On the off-traffic views, just remind us like the key platforms, #1, but -- and I think you mentioned them, but just -- and then are there some platforms that you don't have relationships like scaled that you don't have relationships with that.

I mean we try to be anywhere where a consumer wants to consume content, right? And we've tried to modify our content formats through those platforms. The biggest of which today are Apple News, Meta, Instagram, TikTok, for sure, YouTube. Each one has their own monetization ecosystem, none of which we control, unfortunately, like we did our dot-coms, but we have figured out ways and each one is different. And so we figured out ways, I think, very clever ways and successful for brands, ways to monetize those audiences off platform.

So yes, that's the play. I don't think there's specifically places that we aren't at or aren't in or having a lot of success today. And as new entrants emerge, we're pretty quick to get involved.

And I would say, Tim has talked about it, but I forget if it's a terrible or Aesop's fable of the ant and the grasshopper about who gets ready for winter and who doesn't and how they perform. But it is really true and that they massively pivoted their strategy in the '23 period. We were talking about it, but investments in video, investments in developing content for those -- for these new platforms and the reps to customize the content by platform for optimal performance. And this isn't like old SEO. This is actually -- is it video? How is it structured, sentence length, all these things and then to sell against it, as Tim said.

So it is -- I don't know if it's too late, it is too strong, but it's probably too late for so many of the competition to make this pivot and be able to do it, and it is reflected in our numbers and Neil and Tim's performance relative to many other content producers and engagement-dependent web platforms.

That makes sense. And maybe sticking with the AI kind of theme. But from the content creation perspective, just how is People leveraging AI across its major brands?

Yes. I think I mentioned earlier, we're making more content today than we ever have before. It's all human made -- always has been and will always be human made at a lower cost per unit than we've ever had before. That is definitely accruing to our benefit. We talked about the licensing line, but across the entire business. We are aggressively using and have for now a year plus AI tools and got more efficient using AI tools to help us write that content. So anything from topic selection, brief writing, workflows. Now again, there's still a human on the other side writing something that is specifically kind of curated and picked by them.

But that's helped a lot, and we have those that ability at scale. I think there are certainly other applications -- many applications, obviously, for AI within the business, the next largest of which is ad targeting. We have always commanded a premium in the marketplace for our ads. Our ads perform. We can use that -- create that intelligence to make the targeting even better, both on platform and off platform. I think that the buy side is getting more sophisticated in finding the value in our inventory and paying more for it. And so again, these are advantages that are, I think, pretty unique to us and certainly unlocked with AI. So we debate honestly, internally at this point, is there more risk to AI than downside on the traffic side, it's like some days, it feels like, yes, there's more upside and some days, maybe a little less so. But there's certainly a much more balanced view of sort of what AI brings to our company today than 2 years ago.

That's great. Just maybe pivoting to margins. The People Digital, the EBITDA in 1Q was better than expected. I think it was like 45% incremental margins, which is higher than we had. So just curious like call out on key drivers there and how to think about 2Q and the rest of the year for People?

Yes. I mean we've always been and continue to be hyper focused on being smart and prudent with our capital. Neil says ruthless in some respects, yes, ruthless with what we continue to do versus what we stop doing and reinvest in other areas. We had particular strength in Q1, as you noted, 200 basis points of improvement in margin as a result of the strength we're seeing primarily in licensing and these off-platform advertising products, both of which, I mean, licensing has exceptionally strong margins. The input is the content creation we just talked about, which we're doing very efficiently. And the off-platform advertising also has extremely strong margins. So those 2 things or that collection of lots of little things, but we put in those 2 buckets, we're able to offset the headwinds from traffic, which has a margin deterioration -- deteriorating margin impact.

So we feel really good about the discipline we brought to the table, the mix of businesses we have, the brand environments that supported premium. We think Q2 should continue to be solid in terms of margins, and we think the year will be at least comparable to last year, if not a little bit margin expansion. So we're on the right track.

Maybe zooming out to total company margins, I think the guide for total IAC, $210 million to $260 million EBITDA this year. How should we think about free cash flow conversion? And looking into '27, I know Chris mentioned the savings that will be worked in as the year goes on next year. But yes, just free cash flow conversion with the nice kind of EBITDA generation.

Yes, you want to talk about People Inc.

People Inc. has very, very strong free cash flow characteristics. We would expect at least 50% of our EBITDA to drop through to free cash flow, if not more. We're delevering pretty quickly at this point. And so we've said kind of publicly at least $150 million of that guide of the broader IAC guide is People Inc., and we're on track for that. In fact, we had a very strong cash generative quarter in Q1.

Yes. And then overall IAC, I mean, clearly, People Inc. is the free cash flow machine. We guided corporate to about $96 million to $105 million, I think, which is -- doesn't reflect the savings. It actually reflects the onetime costs. We'll have about $15 million of onetime costs across the year associated with severance, some retention bonuses, related costs, et cetera. And many of the exits are back-end weighted in the year. So you don't get the full impact. that will pull down a little bit.

One other note, you talked about AI-generated content. Unfortunately, the AI bots came out and said we missed earnings last quarter because Care became a discontinued op. So they only believe People created content, not AI facilitated content. But we will have -- Care is now a discontinued op since we sold that. And then we have wound down our search business, which will also be reflected as a discontinued op. I would note we are looking to sell the domains that underlie that search business, and we've started that process. And we know we have some quite valuable ones, including Ask.com that maybe in the current market context could be even more valuable. But we shall see what the market will bear.

So the numbers will be cleaner of People Inc. and then our Emerging & Other, where both businesses are free cash flow generative and profitable, both The Daily Beast and Vivian. And then as you get into Q2 of next year, we'll be chugging along at hopefully $45 million of corporate costs.

That's great. We -- I have some more questions. And you kind of touched on the capital allocation a bit. And so this will take us into kind of MGM and Turo and other areas. But I don't know if anyone has -- in the audience has a question or if anyone has a question on MGM. I don't know if we have a mic, but I'll repeat the question. So...

Happy to answer. I think for those not in the room, the question is really I think how do we think about MGM Japan for the Osaka project for the value of our MGM holding where we own 26% of MGM Resorts and then talk through the dynamics at play in the MGM.

Okay. We got it. We got it.

No, no, I'm saying I got it. We're just -- so what I'll say about MGM Osaka is this. It is an incredible opportunity to build what will be the only legally licensed gaming integrated resort in Japan. And we've seen what's happened in Macau and Singapore, where legalized gaming is brought to cultures where there is a high propensity to wager and also high incomes. And this will be in Japan. It will also benefit from international travel, and they are building and with our partner, ORIX, MGM is building an extraordinary first-class facility. You raised questions about currency. You can go through the game theory of is it better to have which way the yen moves versus the dollar when you're building versus when you're moving money out, all of that.

MGM Resorts has been very thoughtful around hedging, although it is a very long-dated project. So if anybody knows currency hedging, if you start going out 8 years, the vol kills you, so you can't really do that. But very thoughtful about hedging around local financing and also on tax structuring. We are strong believers in the project. MGM management continues to work well and refine it. And when we look at the projected yields and the opportunity to own and manage with ORIX, the single integrated resort in a market like Japan, we think it's incredibly attractive and investors as we get closer to the launch date of autumn of 2030, we will realize that even more.

Okay. Maybe one more. Well, 2 more quick. Speed around.

Yes. Great. Turo, just stake and...

Yes. We own 32% of Turo. We very much like the business. It was a huge pandemic winner. And by their own admission, they probably in the tail end of it, didn't seize on all the momentum they could. There also were headwinds in the rental car sector, and there just wasn't enough awareness of those who hadn't experienced it. The team, they've hired a great CMO who's focused on all the right actions. They've improved the marketplace dynamics. As we said in earnings, they are back to double-digit growth, and we see further momentum. They're EBITDA and free cash flow positive. Barry said -- I think he said on the call, I wouldn't expect to own it in 4 years, but he sees real continued room to run, and they have a great market opportunity in front of them.

Maybe last, talked about Google during this discussion, and then there's this lawsuit as a potential monetization event. Can you just talk about the timing and how you guys have discussed the size of the potential events?

Yes. We think it will take the entirety of this year into next year to resolve optimistically. I think that there's a chance, of course, could settle, but that doesn't usually seem to be Google's way. We believe we can -- for the benefit of the room, Google is found to be -- have used this monopolistic power to disadvantage advertisers and suppliers, publishers in the ad tech space. We think and we -- that we can rely on the government's findings and the ruling. And then we're really talking about, at this point, damages and the debate for the next several quarters will be about how far the look back is and what size damages.

We think as People Inc., predecessors, Dotdash Meredith, the Time properties, we are among the largest plaintiffs in this action. And we've said publicly $100 million plus, and we think it could be even meaningfully more than that, but we'll have to wait and see.

And the only thing I'd add because we've gotten this question, the appeal Google made of the finding on the search monopoly end of last week or this week is not related to this case. It is related to the overall search behavior/SEM world. This is the ad tech case, the old double-click, Google 360, all that. They are not appealing that. They've already lost.

Okay. Great. All right. Thank you all for joining.

Appreciate it.

All right. Good afternoon, everyone. Thanks for joining. Cory Carpenter, Internet Analyst at JPMorgan. Pleased to have IAC, soon to be People Inc. with us today. Chris and Tim, thanks for joining.

Glad to be here.

Soon to be People Incorporated.

So Chris, maybe we'll start with you. So I see in the midst of a significant transformation. You're going from a holdco to People Incorporated. Maybe just to start, walk us through the changes you're making and why now?

Certainly. So we announced the consolidation of corporate and a number of actions we'll talk about, but it really is the continuation of the strategy that we publicly articulated since end of year '24 earnings, so February '25, where Barry was on the call and talked about, we were spinning Angi and our CEO, Joey Levin, went with it as Chairman.

We said we were going to continue to sell noncore assets. We were going to rationalize corporate costs. And we cut them down significantly to get to a run rate of mid- to low 80s. And then we disclosed this quarter that we were fully consolidating IAC corporate at the holdco into the corporate operations of People Inc., where Tim has been CFO; and Neil and Tim are CFO. And as we said on the earnings call, when you're down to one core operating business, a key step in this was selling care and closing that in March as well as winding down our Search business and other things that simplified the drains on corporate, it made no sense to have 2 levels of corporate for 1 operating business plus our MGM stake plus some smaller sake.

So it really is just a natural evolution of what we laid out as our go-forward strategy a year and change ago, also on the capital allocation front, buy back stock. We bought back 13% of the company in the intervening 15 months, own more MGM both through their buybacks and direct cash from us. We're up to 26% and then do M&A through People. So it just is further implementation and we think is the absolute right thing for shareholders.

So the 2 primary assets going forward are People and then the MGM equity stake, the 26% equity stake at MGM, you just mentioned. What's the benefit of keeping those 2 assets together? Why not separate them out, given there still seems to be a pretty big value disconnect with the stock price?

Certainly. The -- Barry as our Chairman and our Board view real value in both businesses. I think you could argue in the case of People and Tim can talk to it better than I can, their outperformance relative to peers and the thoughtfulness and innovation and execution quality of their strategy has enabled them to be in a differentiated position as a media company, although the market wouldn't probably acknowledge that right now. So they are our cash flow engine. It's a good thing to be inside IAC as they continue to execute and we'll talk through all their growth vectors and the inversion strategy.

And then on MGM, we are real believers that the public markets are undervaluing the asset and a number of components there. And to be fair to the public markets, they tend to have a -- they can buy anything and they tend to have a shorter horizon. And so it makes sense to continue to support MGM drive it forward, see a number of these initiatives and macro dynamics come to fruition or resolve themselves respectively, and there will be a real re-rating there. And for now, the plan is to keep both of them together.

So you recently sold Care, you mentioned that earlier. What's the plan for the other noncore assets like Turo and Vivian?

We have -- if you think holistically, we've had a pretty focused liquidation plan across the portfolio going back a year. Now they tend to be private transactions, so they always take longer than, I think, public investors would hope are used to. Getting Care done was key. Also, we are -- with closing down our Search business, we're going to be selling our URLs that underpin or domain names that underpin that business, and we have a lot of real value there. So that will be ongoing.

We have a few other asset sales on Turo. Barry said on the call that he -- with the business doing better and them on a strong strategy of growth and execution, we sort of said, I don't expect the Turo to be part of IAC in 4 years, but he's not racing to sell it. It's also 32% sake in a private company. We think they're executing well. We talked about getting back to low double-digit growth in profitability and free cash flow in the first quarter, and they've got a whole strategy. So that one as well as Vivian, which is a great little business and a strategic asset in the health care staffing space, it's more around opportunistically the right time to sell their growth, their performance, which would, in certain cases, lead you to hold them longer versus the way we're trading and the fact that a number of these assets are valued at 0, seeking to shrink the discount as rapidly as possible or as reasonably as possible for our shareholders.

All right, Tim, let's shift to you. So I think this is your first investor conference since the announcement that you're going to become the consolidated CFO shortly. So I thought it would be helpful just for investors to hear maybe a bit about your background to start.

Sure. Thanks, Cory. Yes, I started out after school as an investment banker, probably like a lot of people in this building today. I met 2 really important people there, my wife and Neil Vogel, our CEO. And so I did that for a number of years. I then joined American Express. I was at American Express for more than 10 years, running or operating out of their corporate development team. There were only 3 of us when we started. We had our hands and fingers in a little bit of everything, strategy, acquisitions, divestitures, minority investments and all that type of stuff.

I left that after 10 or 11 years. There were about 35 of us, I think, at that point. So we really had gotten involved in the entirety of the global business there. I went on to be a CFO, my first CFO gig at a JV that we helped to create at American Express. And then Neil came calling about 4 years later and had an opportunity he had just been hired by IAC to operate about.com, which was the predecessor to Dotdash and now the predecessor to People Inc. and we'll get into that whole story today, but that's the 30 years in a nutshell.

So shifting to the business. Maybe could you give us a brief overview of People's properties, the scale and just the state of the business today?

Yes. We are America's largest publisher by pretty much any measure. We are, as I said, we created out of the combination of Dotdash, which was formerly about.com, Time Inc. and Meredith. And so we have some of the best, most venerable brands out there. We own People Mag, Better Homes & Gardens, Food & Wine, Travel and Leisure, Southern Living, Allrecipes, a whole host of brands. Back in the day, those were -- many of those brands were rooted in magazines. They have 50, 75-year histories in magazines. Today, 70% of the business is -- revenue of the business is actually digital media. 90% of the profitability is digital media. We still do have a magazine business, of course, but it's a smaller subset of the brands. And the brands really live across all mediums at this point. They live, again, in magazines, they live on our owned dot-coms. They live on Instagram, TikTok and Apple News and all these other distributed platforms that we'll talk about today.

So the financials have actually been pretty steady, kind of mid- to high single-digit grower for the digital business at least in recent quarters, but a lot of moving parts under the surface. So I think investors are often surprised, you've been able to grow at that rate, given just the traffic headwinds from AI overviews. So maybe talk a bit about how have you been able to grow through that headwind? How are you thinking about like traffic going forward?

Yes. It's a lot of different moves. The first thing we did is we set up our brands to be operated under one owner, one General Manager. And so those folks are -- they're managing all the distributed platforms, the content and the distributed platforms on which they reside. So I think that, that was an important move for us. AI overview has certainly been a challenge. It's something we saw early on. We kind of coined a phrase called Google Zero, which was an internal rallying cry to say, if there's no traffic coming from Google, where do these brands live in the universe. That helped to sort of rally our troops and our thinking. And we've really sort of started to frame this out as the -- 20 years ago, this was a magazine business. For the last 10 years, it's been a digital dot-com business and we think the next 10 years are going to be all about the brands. And the brands can live anywhere in the real world across media, through AI, whatever that takes.

And so we'll talk a little bit about the strategies that we've undertaken to get us there, but the fastest-growing part of our business today is non-session-based, we call it, meaning not on the dot-com digital revenue.

Could you talk more about that non-session-based revenue? What is it? Kind of what are some of the components under there?

Yes. Again, if you think about it, we're trying to get -- rather than force people to come to our brands, we're trying to bring our brands, our content, our offerings to people wherever they want to consume media. And so that's an important sort of mental distinction. When we do that, we are aggregating large brands and growth brands or growth audiences across Apple News, which is -- I think we're one of the largest publishers within the Apple News ecosystem, again, on Instagram, TikTok and so on.

The second piece of the puzzle is we have to be able to come and bring advertising solutions to those audiences for our advertisers on behalf of our advertisers to our audiences. On the dot-com, we own the ad experience. On Instagram, Meta owns the ad experience. And so we've really gotten clever at adopting our models to those platforms and really delivering those value again to the advertisers.

The third piece is D/Cipher. D/Cipher is -- we'll talk about it a little bit today, but it's an ad targeting capability that we take sort of this great premium performance that we've had on our brands for many, many years. It's always been sort of a premium buy for advertisers and we can find that same great performance off platform. So that sort of addresses the traffic constraint challenge that we have and kind of uncaps the TAM or significantly expands the TAM.

And then the final piece of that off-platform puzzle are these AI -- licensed AI deals that we'll talk a little bit about today, which we think is -- we think we're well positioned for that to be a meaningful piece of our growth story going forward.

So a few more on -- actually, I want to go deeper on D/Cipher and then also on the licensing deal. So maybe on D/Cipher, you kind of said what it was. I still think people are fairly unfamiliar with it. It's a fairly nascent product. So maybe give us an overview of why you're excited about it? How big is it? How big do you think it can be?

Yes. So D/Cipher is an ad-targeting capability. It is borne out of -- our is proprietary to us, and that is our own first-party data. And it basically allows us to map the performance that we see on our sites, the ad performance that we see on our sites using AI and other tools off platform. And so we can buy that same and extend the buy for the audience, for the advertiser to audiences that are not necessarily resident on a People Inc. brand.

What that allows us to do, again, is uncap sort of the TAM, but it also allows us to take these solutions and apply them to CTV, to social and to everything else. I think one part of the story that resonates for folks helps to bring it home is we tend to sell all of this as a package, right? We go to an advertiser. We go to the agency on behalf of the advertiser, and we're selling the combination of on-platform, off-platform with D/Cipher and our events, sponsorship and other sort of capabilities. And we think that, that's, again, unique to us.

When you think about a world of platforms where so many advertising dollars are going through Google and Amazon and Facebook. There's a place in the ecosystem for branded advertising solutions with a high degree of service that can be customized to what the advertiser wants and needs. And we're doing that and we've seen really great growth as a result.

So we think to answer your question on size, it's still relatively early in the D/Cipher+ that's sort of the off-platform application, but growing. And we've said publicly, we think it will add 2 to 3 basis points to our growth in the back half of this year. So meaningful.

100 basis points.

And then on licensing. So you've entered a number of deals, OpenAI, obviously, one of them. Maybe there's others you have not entered into yet. So I think 2 questions on licensing is, first, what's the monetization model that the industry is kind of coalescing or models that the industry is coalescing around? And then how do you think about the longer-term revenue opportunity?

Yes. We're optimistic about the revenue opportunity. There's 2 models that have emerged. The first generation of this was a couple of years ago, foundational models came into being, OpenAI and others, Google. And we were able to cut a deal with OpenAI that was effectively what we call all-you-can-eat, meaning they can train on our content, they can display our content, they can use our content. We -- then about a year ago, we actually started to block the AI crawlers that we didn't have a deal with. We did that through Cloudflare and some of the other CDNs. And so that really sort of changed the leverage point a little bit for us where as a couple of years ago, everyone was saying, do I have to pay for this? Why don't you start blocking folks from being able to actually access your content in real time, especially as these models have evolved and emerged, I think that's really brought people back to the table.

So the second model that has evolved is a more of a pay-per-use model. Microsoft announced something with us and some other publishers late last year that was sort of on the forefront of that. I think there are other models or other business models like that, that are emerging. I think the way to think about it is as the applications and products start to get built on top of the AI layer, they are going to need access to content. If that content is inaccessible or blocked or whatever, they will be willing to pay for it. And I think where we are now is we're obviously all waiting for that application product layer to find some legs and grow. And we're now in the conversations with folks really talking more about price than whether or not they're going to do it, but what -- at what price is our content going to clear. And so we're excited about it. We think that the AI at this point -- from this point forward, again, is more of an opportunity than a threat for our business.

So I think Barry introduced this concept of inversion, a couple of quarters ago, clearly, something you guys are excited about. I think you have 19 projects underway across the company. What are these? Why is that a strategy you're going after?

Yes. So we talked about this off-platform revenue growth, right? And just to frame this up for a little bit for folks who are less familiar with the story. 40% of our revenue, 41% of our revenue is non-session-based, meeting it does not come to our dot-coms. That piece of our revenue grew 24% in Q1, and that's a continuation of strong growth we saw in Q4. 60% of our revenue still comes through a session, a visit to our owned and operated websites. That piece of the business was flat, right? And so if you think about that sort of 60-40 dynamic and the math involved, that sort of generated the 8% revenue growth that we generated in Q1.

Inversion is sort of the next layer of growth, the layer of growth that's not captured in that 8% that we think can ride and live on top of it. It's Barry's way of sort of saying and challenging us to think completely differently about our business models. And we, our group, as stewards of these sort of iconic brands, like how do we bring these brands into the next 10 years of media? What does that look like? And we've debated different business models. As Chris said, Barry has gotten more involved in our business, more familiar with our business, and he's sort of challenging us to, again, think differently and say, well, why would you take 1% on a license deal for a licensed product or a small percent on an international deal when you could own the whole thing? Now in some cases, it makes sense to take the 1%. But in other cases, we can build and -- build upon and start to build businesses off of these new models that we're envisioning.

So I'll give you something to make it a little bit more concrete as examples. And I think some of the things that we're going to build, in fairness, are going to be a little bit more adjacent than completely revolutionary, and that's where a little bit of the confusion comes in.

But as an adjacency, as an example of an adjacency, we launched a product called MyRecipes a year ago, a little over a year ago. Think of it as a digital cookbook. You can save any recipe across the web to this digital cookbook and sort, organize, find other recipes like it and so on. We'll be launching, kind of, a version 2.0 of that product later this summer and a lot more capabilities and will incorporate AI, will allow you to save recipes across Instagram and TikTok and so forth.

In the first year, as the sort of version 1.0 product, we signed up over 3 million customers. 3 million registered customers for this product, all 100% on our owned and operated properties, right? And so if you think about sort of how this is going to evolve in our minds is, first, we build products. We won't bat 1,000 or we won't shoot 100% of our free throws, but we'll hit more than we won't. And we can use our assets, our distribution channels, our marketing channels, whether that's e-mail or magazine page or a digital ad or D/Cipher to feed those businesses with customers. And then we will grow those customer bases and those revenue models off of them.

And so the inversion, sort of, has come to embody all of that, that kind of concept of how do we bring these brands into the next generation of media? How do we create new sustainable, durable business models that are not disintermediatable by Google or AI or anyone else? And so that's what we're working on now. Yes. And it's nice to be able to say, okay, I think, that's the growth that's sort of on top of the growth we're already delivering.

And I should have mentioned at the beginning, if anyone has a question, feel free to raise your hand or submit it online, and we'll get around to you.

Okay. So let's see. How should we think about -- so one question on margins, and I want to get back to capital allocation, macro and a few other topics. But for People Digital margins, so 45% incremental margins last quarter, 60% of your revenue -- I mean 40% of your revenue. How are the margin profiles different for the sessions versus non-session-based revenue? And how much investment is required in some of these inversion shifts?

Yes. I mean we had really strong margins in Q1, 200 basis points of margin improvement year-over-year. We expect that to continue in Q2. It's coming because the -- each of the revenue models in the non-session-based bucket, the ones that are growing, have very attractive margins, definitionally; otherwise, we wouldn't be able to do it.

Certainly, licensing, as everyone knows, is very, very high margin. And that's been growing, helpful. Most folks think the fastest-growing bit of that is the AI licensing. It's actually not. It's the content syndication, the content licensing that we're doing, again, across Apple News and other syndication partners, although the AI is certainly high margin and helpful.

The other key point is these non-session-based ad, the ad side of it, meaning the D/Cipher and these sponsorships and these social extensions, all these events, all these things that we do for advertisers, is also very high margins, a very premium product against premium brands that we're able to charge for.

So the margin profile is strong. We are, definitionally and always have been, very cost disciplined about all of this, all of our endeavors, all of our ventures. We do think that AI is benefiting us. We're getting more efficient, particularly at product development, targeting at kind of testing and creating ad copy. So there certainly are some efficiencies coming from all of that. So we think that margins will continue to be strong.

As we think about inversion, the inversions that -- inversion projects, these new projects, again, we're using -- that's the key point. We're using our assets, our owned and operated assets, to seed these businesses. Once we see success, then we invest behind them, then we can start to really accelerate them. And so there's not a big capital outlay today. We're reallocating resources from slowing parts of the business to growth parts of the business. We're investing in our -- using our owned and operated assets to grow. And then once we find success, then we can hit the accelerator and go. So I think we can continue to deliver strong margins while we make these -- navigate all these currents.

I think this is the longest we've ever gone in IAC fireside without asking about capital allocation because you finally had someone interesting.

So I do, Chris, I have a question for you on that. I mean, look, obviously, IAC has historically been very acquisitive, but you're transitioning from a holdco to -- away from a holdco, I guess. So how should we think about your capital allocation priorities and how they're going to change going forward?

Sure. So Barry touched on this directly on the earnings call. Really 3 priorities he said. He said the M&A market is not that interesting to him. He said that for a while. Also, as part of our consolidation, we're going to have less resources running around looking at deals. Our prioritization on capital allocation is our own stock at IAC, MGM shares. The former, we bought back 13% of the company over $400 million over the last 15 months. The latter, we bought about 1 million shares each of the last 2 quarters. And then the third would be strategic M&A through People Inc. And so that's how we've articulated it. That's how he's thinking about it. And it is a cleaner, clearer capital allocation strategy than we've had in some time.

I think that is a natural segue to you, Tim. So third one was M&A and People Inc. So what would be of interest to you?

Anything that would further our ambitions to have direct relationships with the end consumer is the #1 priority for us right now. Anything that can get us there faster or at scale already would be amazing, where we can bring our channels to bear and really accelerate. We are always in the market for brands, new brands. It would only be for A+ brands. That's the future of this segment.

We have many good quality brands that are not A+ brands that, while we have a nice kind of cash annuity, cash flow annuity coming off of them, they're not the future. So A+ brands, of which there are a few, direct connections to advertisers or consumers, consumers first and advertisers second, maybe a little bit of ad tech would be areas. I'd say we're more active than we've been in years, but there's nothing imminent yet that we've really found that sort of all the -- checks all the boxes.

I want to come back to MGM just for a little bit, and maybe we'll wrap on People. So 26% stake, you're well in the green since your 2020 investment. What's -- you've kind of given your rationale, I think, for holding MGM shares, but is there anything -- what could lead you to divest over time? Would you ever consider divesting? And how big of a stake would you be willing -- how high can you go from an ownership perspective?

Sure. So a few elements in there. Would we ever divest? I mean, it really is up to our Chairman and the Board on that. Nothing has been part of IAC forever, except maybe The Daily Beast, but that -- so there is an opportunism, but there is a real commitment to MGM and real belief in it, and Barry has called it a forever asset.

In terms of a natural or targeted ceiling to our stake, I wouldn't articulate any such level. We did agree to a voting agreement with MGM. And between Barry and the Board, which really caps our voting interest at 25.7%, I think, any voting interest we have over that will just be voted proportionately with the shareholder base. So I think it's going to be more around as MGM allocates capital -- continues to allocate capital to their own stock and such where our voting interest would go or our ownership would go.

Look, when you think about MGM, there are a number of factors that will create growth or clarity in the valuation story that are either midstream right now or are uncertain. Uncertain would be the forward environment in Las Vegas. Clearly, we're in a K-shaped economy where the high end is doing extremely well and the low end is under pressure. You can see that manifest in Las Vegas across a variety of earnings. I think when there's clarity around that, given the quality and positioning of their facilities, we think there will be a re-rating there.

Secondly, their digital assets between BetMGM or its 50-50 JV with Entain, they flipped from money with cash flow losing to cash flow generative. They dividended it out last year and have given public guidance for this year; feel good about their position and the solidity of their iGaming business as one of the leaders there.

The wholly owned digital assets at MGM internationally, LeoVegas, the JV in Brazil, we think that will show real growth and profitability improvement over time as they execute on their business. China, which is a very large holding in MGM China. And then the Japan project, which was an unusually large and long-dated capital project. But as we get closer to its opening date, investors, we think, will be as excited about that likely as they were about Macau opening up and Singapore and the other monopoly or close to monopoly Asian gaming assets that have been out there. So we are believers in MGM and the management team and the strategy. And part of the goal is to continue to simplify the story to make clear the value that's inherent in the assets.

Any questions in the audience?

Perfect. What are you guys doing in international markets with the traffic? With the content?

We've never -- we're -- about 85% of our traffic is U.S.-based. So internationally, we rely predominantly on programmatic markets to clear our inventory. We certainly have a lot of -- or several magazine editions throughout Europe and the Middle East that we're excited about and are good partners for us.

You guys have a lot of iconic brands that touch on the same areas that you're seeing creator economy. How do you think about that going forward as something that you are going to co-opt or something that you're going to compete with? But specifically around a lot of your premium brands, there are people getting that same kind of guidance and interaction outside of that ecosystem.

Yes. Good question. We did -- we actually did a little acquisition last year called Feedfeed, which is a creator economy, sort of influencer network around the food space. It was something we kind of easily could plug into our premium sales team, has a lot of resonance with the advertisers. That's one model.

The other is, I mean, we think that we can create those same capabilities, products, personalities ourselves, either resident inside our 4 walls, and we've done -- we have examples of that where what formerly would have been, I don't know, a junior editor or somebody was like a star is now really a social media star or sensation or creating products. And so a little bit of co-opting in, I guess, in that sense has really been the model.

We have brands like InStyle, which some of you are probably familiar with, which was a thick magazine 20 years ago, doesn't even publish a magazine anymore, has virtually no traffic from Google, is our fastest-growing property, is creating original video content, is creating sort of influencer-like characteristics. And so I think for some brands, particularly a brand like that in the beauty fashion space, is really kind of creating its own space within that kind of the context of the creator economy. Yes. It's a good question.

Chris, I'm going to give you your last question, I think. So you've been doing this for 5 years coming to all these conferences, meeting with investors. So you've had a lot of IAC questions and talk. I'd be curious, what do you think, from the inside, like what are the biggest investor misperceptions around the business? Or what surprised you the most over the last 5 years?

Well, I mean, look, we clearly underperformed for investors when I came in and the portfolio was in more challenging shape than I realized, but more importantly than Barry and Joey realized at the time. And the mandate when I was coming in was to help rebuild IAC with the cash balance that was there at the time post-Match and Vimeo spin and then it honestly rapidly moved to triage given the state of Angi and the Meredith Dotdash integration and a few other things.

I think we've gotten it to a clear place, and these guys have done a great job getting People Inc. integrated and executing and really leading the category. I think things that are underappreciated is how hungry and focused Barry is, how active he is, how intellectually curious he is and just his engagement on People Inc. and MGM. The -- I think the performance of People Inc., I think, is underappreciated. And then we've been focused on executing in a disciplined way, and that will likely continue under Neil and Tim's management.

And then maybe, Tim, for you, in our final minute, as you kind of step into the consolidated CFO role, CFO of People. What are you most excited about? What do you think can be most transformative to the business in the years ahead?

Yes. I mean we're obviously excited to take over from the good work that Chris and Joey before him and others have done and step into that seat. That will be an experience for us. Notably, about People Inc., as Chris said also, like, it's been a journey since the merger. We put the former Dotdash and Meredith together about 4 years ago, now 5 years ago, going on 5 years ago. We had to get through the integration, which is always harder than you expect. There was an ad recession, which is never great for an advertising-supported business, and then AI emerged, right?

And so we think we've, sort of, largely, shook off all of those challenges, outperformed all of our competitors, have grown now for 10 straight quarters, solidly expanded margins. And so I'm excited to get sort of that story out there and that narrative past and get past the AI overhang narrative and really start to get people focused on the future of what this business can be.

Great. Thank you, both.

Thanks, Cory.

Thanks, Cory.

Good day, and welcome to the IAC First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Christopher Halpin, COO and CFO. Please go ahead, sir.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC First Quarter Earnings Call. Joining me today are Barry Diller, Chairman and Senior Executive of IAC; Neil Vogel, CEO of People Inc.; and Tim Quinn, CFO of People Inc.

IAC has published a presentation on the Investor Relations section of our website today entitled Q1 Earnings Presentation as well as a letter from our Chairman published last week. On this call, Barry, Neil, Tim and I will provide some introductory remarks referencing that presentation and letter and then open it up to Q&A.

Before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us. 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-K and in the subsequent reports we filed 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, our 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.

And now I will turn it over to Barry.

Thank you, Chris. Good morning, everyone. I wrote a letter that I hope everyone has read because it says it far better than I can say about this transition that we're undergoing. A lot of people ask why now? Well, the truth is this is really been going on for the last couple of years as we simplified -- want to simplify our operations. We've been through -- since this organization started 30 years ago. We've been through 4 cycles. Each time we've gone through one of those cycles, we've been a smaller enterprise because we spun off so many public entities. I like that because I think that gives us kind of energy and focus to build up again. I also think that the 2 principal assets probably, hopefully, the only assets that the company will have in the future.

I'm talking about the -- actually the present rather than the future, people and our interest in MGM Resorts. In a way, as I wrote, I think there's a perfect hedge. One is in the virtual world primarily, that certainly prints a lot of magazines as well, but it's very much in the digital world and the other is very hard assets of resorts in the United States and in China, and a building in Japan. But rather than me [indiscernible] around, I hope you'll just take a second to read the letter. I'm not -- actually, I should do the thing that they do with Amazon, which is, all right. Now we'll take 5 minutes for everyone to read the letter and be silent, but I'm not going to do that.

I would like though to be sure to thank Mr. Halpin, who has been with us for many years outstandingly. And is this the last call which you will be on or you'd be on the next one, too?

It's sort of a coin flip. So we'll figure it out at [indiscernible].

We'll have one more of you, but thanks for a great information.

Thank you.

And with that, let's move on. It's much better, actually, I think for all of us, if you just ask pointed questions and we'll respond pointedly.

Fair enough. We're just going to do a few prepared remarks just to lay out some key pages. So Neil, do you want to kick it off?

Sure. Everyone goes on to Slide 5. And you can see we, again, at People Inc., we had a very solid quarter. We delivered 8% digital revenue growth, our tenth consecutive quarter of growth and digital adjusted EBITDA margins expanded to 20% from 18% in Q1 of last year.

Our performance is underpinned by diversified audience and revenue mix, a real diverse audience and real diverse revenues and a laser focus on meeting our audiences where they are now. To that end, in the quarter, we continue to invest in a host of new products and services including what BD calls or inversion projects and what we've called our inversion projects. These are businesses built off of our iconic brands that extend and transcend traditional publishing models, accelerating our nonsession-based revenue. We have a few updates on the early projects we've talked about and some highlights of what's to come. There's real traction around our [indiscernible], our recipe locker tool, the People App and InStyle breakout series, the intern and the boss on social media.

We expect to roll out in Q2 a membership club for a super fans of Southern Living among our strongest audiences and plan to follow with a similar program for food and wine. And something very exciting for us. We're launching a new social shopping tool based on the learnings of our scaled commerce business, where shoppers can easily save and store their pics for future purchases in a very innovative way, that's to come as well.

We plan on a drumbeat of product launches through the coming quarters. So you can expect that from us. And look, our focus is meeting audiences on their terms and the next slide further illustrates this.

So if everyone flip to Slide 6. You'll see the trends over the last few years continue. As you can see, our opportunity is clearly on the right side of this page, core web sessions continue to be challenged. Google search traffic declined as expected, and we expect that will continue. Traffic from the Open Web also declined a bit as a substitution rate from core web sessions to off-platform audiences increases. The driver of our growth continues to be though these off-platform audiences, which grew 27% in Q1. We see strong performance across Apple News, TikTok, Instagram, YouTube and syndication partners.

And our audience trends align with where users are today and how advertisers and marketers want to connect with them. As you can see in our numbers, the strategy is working. That takes us to Page 7.

Our big story continues to be our nonsessions-based revenue, which grew 24% year-over-year in Q1. Non sessions-based revenue continues to grow as a percentage of our digital revenue. We're now at 41% versus 35% in the first quarter versus the first quarter last year. Similar to last quarter, this is led by Decipher, our AI-powered targeting tool, ad-targeting tool by our social and custom ad programs by Apple News and by strong licensing performance, including the addition of our Meta deal.

We also maintained a healthy business in sessions based revenue by delivering a solid quarter and continued strong monetization of these audiences. The strength of our brands is really driving premium rates. And look, the model for our future is clear and in focus. One, strong growth from our non-session-based revenue streams; two, executing against our sessions-based businesses; and three, connecting directly with our audiences and advertisers and meeting them where they are, including our big focus on our version projects. We're very proud of the quarter, and I'd like to welcome Tim to the call who's going to give a rundown of the financials.

Great. Thanks, Neil. It's great to be here, and I'm excited to have a chance to work with everyone. I, along with almost the entirety of our management team have been in our positions for over a decade, both working with and for Neil and under the leadership of IAC. So this continuity is a big part of the success that we've had together and something that we think is -- it gives us a lot of confidence as we undertake what's going to be an exciting transition. So we look forward to that.

Referencing Slide 8 for a second and refocusing on the financials. As Neil said, we had a really strong quarter in Q1. Digital revenue grew 8%, and we saw digital margin expansion of about 200 basis points, generating solid 45% digital -- incremental digital margins. This is a testament to the strength of our brands, the diverse revenue models that they support and the continued discipline we bring to all of our investment decisions. Print EBITDA declined in the quarter, which was expected. There is some quarter-to-quarter volatility there, but we reiterate our expectation that full year print EBITDA will cover people in corporate overhead with the caveat this year, excluding the estimated $15 million of Google litigation expense.

Finally, I want to highlight that we continue to generate really solid and predictable free cash flow of almost $50 million in the quarter, putting us on track to exceed $150 million of free cash flow this year. That's on net debt of about $1.1 billion. So we feel really good about the balance sheet and the opportunity to continue to delever rather quickly.

Moving on to Page 9. I want to highlight some changes we made to our segment repeating. We transitioned the management of a business we call M&I, which is a legacy media agency business, previously captured within our Print segment, which now operates under the decipher team in Jim Lawson. As a result, we reclassified the business from print to digital, both for Q1 and over historical periods.

The reason for this is it unlocks 2 exciting new opportunities for us. Number one, it opens up a new distribution channel for Decipher, notably independent agencies and political advertisers previously untapped by our sales team. The second opportunity is by putting this business and operations under Decipher, we can offer these advertisers a more advanced product delivering superior performance and at better margins to People Inc., and you saw some of that benefit -- some of that accrued to our benefit in Q1.

One point on political advertising. Historically, People Inc., has not run political ads on our branded properties, but we can now target this ad category on third-party sites using Decipher. These political ad cycles create a little bit of volatility in the numbers, especially related to the 2024 presidential election cycle. Excluding those political dollars, just to give you a baseline, M&I was -- revenue was flat, excluding political. So that's the business we're bringing over.

This change in segment reporting resulted in about a 200 basis points drag in digital revenue growth in Q1. So the 8% growth would have been 10%, but for the change. Ultimately, however, this move is expected to accelerate growth and adoption of December, particularly in the second half of this year.

This change -- all these changes did not impact our guidance for the year, which remains in reiterating digital revenue growth of mid- to high single digits, delivering total company adjusted EBITDA in the $3.10 to $3.40 range.

With that, I'll hand it back over to Chris to take you through the IAC changes.

Thanks, Tim. Moving to Slide 11, we'll talk through financial performance beyond People Inc. this past quarter. It was a busy quarter on a number of fronts as we continue to execute on our core strategy of simplifying IAC and building our cash balances. First off, we completed the sale of Care.com in March, generating $296 million in net proceeds. Following closing, Care.com is now presented as a discontinued operation in our consolidated financials. We think this caused a little bit of confusion overnight, which we'll talk about more later.

I mean I hope it's the thing that caused a lot of confusion given how banged up we got just from people not being able to add properly.

We'll work with them on it, BD. We continue to allocate capital to the 2 companies we know best and believe in, IAC and MGM. We repurchased 2.9 million shares of IAC for $111 million since our last earnings call, and we've now bought back 13% of IAC since the beginning of 2025. We also purchased 1 million incremental shares of MGM for $37 million, increasing our ownership to 26%. As Barry said in his letter, we continue to view both stocks as the priority areas of capital allocation.

Our Emerging and Other segment showed strong performance this quarter as both Vivien and the Daily Beast continued their momentum with both seen accelerating revenue growth in the 2 companies combining to generate about $4 million of adjusted EBITDA in the quarter. We also closed operations in our Search segment in April. As many of you know, this was a noncore business that had frankly lived on well past many expectations. As previously disclosed, Google notified us late last year that it would not renew our search contract under the existing terms. Following negotiations across the first quarter, we came to the conclusion that we could not confidently operate the business profitably on the new terms on offer from Google.

As part of the shutdown, we incurred $7 million in costs from severance and the write-off of prepaid software and the search business will also now be shown as a discontinued operation starting in our second quarter financials.

One other note, we sold an unutilized domain name for $7.5 million this past quarter. With the search business now closed, we will look hard at monetizing the portfolio of domains that underpin that business including [ ask.com ] creating cash raising opportunities.

Finally, there's a lot of noise in comparing year-over-year profitability in the first quarter. So we laid out on the bottom right of the page, some key onetime items, including last year, a large noncash lease gain at People Inc. and the costs associated with our CEO separation and this year notable severance transaction and litigation expenses.

Moving to Slide 12. Last week, in parallel with Barry's letter, sharing his rationale for a planned rebrand of IAC as People Inc., we issued an 8-K summarizing the key elements of the consolidation of the corporate functions of IAC parent and the People Inc. subsidiary. The underlying principle is with 1 core operating business in People Inc., 2 layers of corporate expense, 1 at IAC and 1 at People Inc. are no longer necessary and don't make sense. When we managed a number of operating businesses, the IAC corporate layer provided strategic oversight, shared services and M&A support to the individual companies enabling them to operate independently and positioning them for growth and success. But with the sale of Care.com and the narrowing of our focus to People Inc. and MGM Resorts, the opportunity presented itself to eliminate duplicative functions and generate significant savings.

We've mapped out a careful consolidation plan in which over the course of the coming quarters, more than half of the corporate employees of IAC, including much of senior leadership will transition their responsibilities to counterparts at People Inc. and exit the company. Key areas in this consolidation are accounting, tax, internal audit, legal, M&A, among others. Each employee has a specific exit date and a retention plan in place to ensure they remain engaged until the consolidation is complete. The full transition process is planned to run through February 2027. We expect annual run rate operating expense savings of $40 million and a reduction in stock-based compensation of $20 million to $25 million. These savings will phase in over the coming quarters as employees depart, with the second quarter of 2027 being the first clean quarter where the P&L will show the full savings of the consolidation.

Total onetime expense of the rationalization is $63 million, comprising $15 million in cash severance and related expenses, of which $10 million was recognized this past quarter and then $48 million of stock-based compensation expense, which will be recognized over the next 4 quarters.

Kendall Handler, our superb Chief Legal Officer, and I will leave in mid-August, following the filing of second quarter financials and then will remain on as advisers through March 2027. Further, we expect that Neil will become CEO of the parent company, newly renamed People Inc., and Tim will become CFO in that same mid-August timing. All of us are working together to have a smooth transition to set up People Incorporated for continued success.

Finally, moving to Slide 13. This will be the last slide we present before going to Q&A. I know you're happy about that. On guidance, we reaffirmed People Inc. adjusted EBITDA guidance at $310 million to $340 million while raising emerging and other guidance to $5 million to $15 million of adjusted EBITDA based on the strength at Vivien and the Daily Beast. As a reminder, Care.com is now a discontinued operation, so it is removed from both our financials and our guidance. We saw a couple of reactions overnight that cited a Q1 IAC consolidated miss and reduced guidance. But our analysis is that those market commentators and a number of analysts failed to adjust for Care's revenue and EBITDA being removed as discontinued ops.

As a reminder, search will also be classified as such and will not be in our reported or historical revenue and prospective revenue and adjusted EBITDA and is not part of our guidance. We've raised corporate expense guidance to $95 million to $105 million due entirely to the severance that I just mentioned before and other onetime charges. Following completion of the consolidation, we expect annual run rate IAC corporate costs to be around $45 million and stock-based comp for the entire companies declined to $30 million. These figures are prior to any future reallocation of People Inc. leadership cost to the corporate level, which may occur. However, any such shift in cost allocations would have no impact on expected consolidated expense savings. With that, let's go to Q&A. Operator, first question, please.

The first question will come from James Heaney with Jefferies.

Can you just talk about the next chapter of IV? Like what do you think the next 5 years are going to look like? And what are the key areas of capital allocation going forward? And then would you still look to do M&A and select new areas? And then I have a follow-up.

Well, I can't tell you what the next 5 years. I can't tell you -- I mean, I can tell you with the next year, maybe or months are going to be. 5 years, who the [indiscernible] knows. What we have is, I think, extraordinary opportunity with what we got. I mean, what Chris has just gone over really is kind of a great cleansing. And that cleansing, as I said, has been going on for a while now. The combination of it was actually this quarter, changing our name, doing all of the tasks continuing to shed noncore assets, core assets, as we said before are hopefully going to be just 2.

We've got plenty of capital. We've got a very good balance sheet. We can go in whatever direction that there is opportunity. I think that biggest -- probably the biggest opportunity we have in front of us is the work that is being done in our publishing business and people and what we call [indiscernible] inversion, which is -- we've got 19 different initiatives, having nothing to do with standard advertising or subscription revenue. Out of this, I think we can build wholly owned or partnered extremely large businesses in all sorts of categories. The thing that I came to understand about people is across the -- how many -- actual -- I mean, I always get this figure wrong. How many magazines do we have [indiscernible]?

We have about 40 brands and 9 or 10 significant brands, so invested.

Throughout this, there is so much we know about so many things that no one actually else knows. And instead of being in the kind of tried and true publishing model of licensing, your brands and licensing all this knowledge and all that stuff for other people to exploit, we're going to exploit it. And out of that, I would be -- I'd be giantly disappointed if we are not able to build real substantial businesses having nothing to do with advertising, having nothing to do with subscriptions, but having to do with goods, services, products, et cetera, that out of the corpus of our understanding in all these areas, we have a better advantage than anyone else. And the other thing -- one other little note is, we published, what, $300 million or so actual hard copy things that are in people's homes or whatever, an additional page cost us 0.

How many actual other digital impressions do we have? [indiscernible] so if we come up with and if we don't come up with it, we're really [indiscernible]. But if we come up with good ideas, we can promote them at not a dollar really additional cost to us. What a megaphone that is for the future. So I -- that's the work that we're going to do. Wherever else, what [indiscernible] we're going to use our cash flow, we're going to continue to opportunistically buy our stock. We'll continue to invest in MGM Resorts, which I also couldn't be more excited about its future. So this is -- again, it's been worked on for the last almost 2 years. But this moment forward is a clean, clear, simple sheet that we get to write on, and we got, I think, all the necessary tools. So a bit long-winded, but there it was. Next question.

Great. And I actually just had one follow-up on just the macro environment [indiscernible] sorry, just from environment across people and other businesses, just kind of what you're seeing from geopolitical any other macro factors would be great?

Yes, I'll do a quick take on the ad market. I think last quarter, we told you guys on a 10-point scale, it was a 6 out of 10, I think it's still a 6 out of 10. There's opportunities, there's risks. Tim is here with us now. He can give us some color across industry.

Yes, there's certainly strength in places like health and pharma, tech, telco, areas that are exposed to the consumer are a little bit soft or particularly the average consumer, I would say, things like CPG, food, bev. And we did see a little bit of a slowdown in planning related to the Iran issue and conflict. We think that's abating a little bit now, but it's still a little bit touch and go. But overall, as Neil said, the market is strong, but it's not -- I wouldn't call it ripping.

Good enough to do our job unless something changes.

Yes. And I would just say, across the portfolio, we've been talking about the divergence between high income and low income for a while. I didn't know that was called K-shape but now that's called K-shape. I think that's just only continued and maybe probably unfortunately being exacerbated for the country, what's going on right now.

Your next question will come from John Blackledge with TD Cowen.

Could you talk about the key drivers of the 1Q People Digital revenue line items saw the outsized growth at performance marketing and licensing and other revenue? And just any color on revenue trends in the second quarter. And then on digital EBITDA, that was better than expected. Just any -- any color on the drivers of the upside to margins? And how should we think about 2Q and the rest of the year? And if you -- and just lastly, if you can give some color on like 1 or 2 of the separate initiatives as part of the inversion process, that would be great.

Let me do the inversion first, and then Tim can take the string of other questions. So the emergent stuff that [indiscernible], look, most importantly, it has energized our organization. We are really in a great spot where we own these brands that are iconic and pillars of sort of [indiscernible] culture at American a couple of stats, some updates on things we've talked about. One of the first things we did is we launched this recipe Locker. We're probably more than half of the recipe traffic on the Open Web right now. We launched it a little more than a year ago. We have 3.5 million registered users. We have 40 million recipe saved. We have a lot of momentum and a whole bunch of new product initiatives launching in the next couple of months.

The People app, which we've talked about before, again, the real win here is how we're engaging people. Visit to the app is about 3x as long as a visit to the web. If we get people playing games, which is the most popular thing on the app, it's a 20-minute visit. We're up to 430,000 users since the last call. And I think the important thing to note about both MyRecipes and the People app, which have taught us how to engage users directly and all of these new skills is, as BD said, we have not gone outside our own assets at all to grow these things. And as we roll out and as we tighten up financial models around these, that's a really big opportunity.

Another thing worth mentioning is we've really looked at social video and social video series is sort of like the new TV. And we have a real breakout hit on our hands in style with 2 properties called the intern and the boss. They were -- the first property the interim was launched about a year ago across all these episodes, which are 3-minute long episodes, 4 minute long episodes. We've got 45 million views in a year, and a robust sponsor business has grown around...

Just one side that a while ago that just on internal 1 package, 1 series alone, which is they do multiple series a year, multiple [indiscernible] one episode was like [indiscernible]...

We have been very fortunate that we've been able to sell a season is about 20 minutes long in total 6 or 7, 3-minute episodes and we have sold full seasons in that neighborhood, some more, some less. So there's a lot of interest in what we're doing and different...

Completely homegrown.

Completely homegrown, completely made by us. We own all the rights. We own everything, and it's a really successful venture that we're now modeling across people and a whole bunch of other properties...

So Southern Living, Southern Living one of our strongest [indiscernible] hello, if somebody cough, whatever. There are a couple of things in Southern Living that I think are really interesting. It's such a loyal base. So a couple of [indiscernible]...

Yes, Southern Living is a really big important property for us. Culturally, it is incredibly important in a big part of the country...

One of the things that I learned about and for those people who are the follower of South. Now from [indiscernible], which is a particular southern drink, it is. Southern Living is going to -- has developed. You keep saying that you're going to let me taste this...

We are going to let you taste it, but not right now...

That we are making our own team, our own brand, which we are going to manufacture and distribute and under the Southern Living branded Southern Living Suite T. That -- who knows where that actually goes. If it emerges out of the South, and so many of these beverages have been geographical in where they've started and then they go nation and worldwide. Who knows what that can become. Also, Southern Living does these houses. And I mean, they build every year...

We sell architectural plans to build Southern style houses, really high end houses. They're very, very beautiful houses.

Yes. And also, this community, I mean, we may develop a Southern Living actual housing community, branded Southern Living for that kind of lifestyle that, again, we'll own and hopefully operate.

So when BD mentioned before, 19 different ideas, there are actually probably more than 19 ideas floating around. And we are really chasing these down. I think going back to the tea, it's a really good example.

We can do each one, it can be a separately organized, finance business, whether our capital or other people's capital, that is a stand-alone P&L of its very own separate and apart from this historic publishing business that can spin off -- span off individual profit P&L businesses that have their own revenue, their own structure, et cetera. And you say what can happen again, it won't happen in a year. But in the next years, as I say, 5 years out, this could -- this is the fertile ground for dozens of businesses as we're looking at this because we got the intellectual property that can give us an edge in this that I think no one else has once we begin to concentrate on it, which is what we started to set [indiscernible] I guess we should go to the next question.

Well, let me just -- I'll tackle the financial questions as well.

What was that?

Which was how do we get through Q1, [indiscernible]

I mean that's [indiscernible] people want to hear about our future rather than enabling little figures that no one pays attention to. Look, if you all paid attention to what happened to Care.com, and how it affected this what last quarter or whatever the confusion in guidance and all of that, that would have been, I would say, paying attention to the business.

What I would just say is that Q1 was a continuation of Q4, which was really strength -- incredible strength in licensing and commerce, in particular, with the ads business roughly flat as we navigate these volume challenges. What I think the future is, is what BD is saying and Neil is saying, which is these non session-based revenue models, which currently comprise about 40%, 41% of our revenue, grew 24% in Q1. And that is the future while we kind of hold the line on the traditional sort of session-based media model, as it relates...

I mean, we've lost -- how much of our traffic have we lost from Google?

From Google, 65%.

Okay. What publisher has navigated this transition anywhere close to how you have all navigated this. We have transitioned from depending -- everyone has been -- and I said for a decade more that we all kind of our surf on the property and land of the monopoly of Google. And this transition out of depending upon someone else to give you traffic, which is what every animal has done in this digital world for the last almost 20 years. And we have now transitioned out of it into 2 positive territory of our own traffic with our own hands, not dependent on anyone else. I find it incredible that no one really recognizes that feat for what it has been. [indiscernible]

We think that's the future. And we're going to -- we think we see that 40% that is the traditional model grow meaningfully over the coming quarters and years.

And it's our. We don't have to -- we don't have to beg or borrow or getting these end of conversations with the monopolist. And we're really on our own firm ground, which is completely different than I think almost -- not almost -- it would be every other publisher other than the New York Times and the Wall Street Journal that have strong subscription revenues.

Your next question will come from Cory Carpenter with JPMorgan.

I wanted to ask about MGM in Turo. Maybe Barry for you with MGM. Could you just talk to what you see as the benefit of keeping MGM within People Inc., why not split that out separately? And then on Turo, any update you guys can provide on how that's performing? And is that a business that you plan to hold on or also are looking to divest?

I don't do the MGM thing. Yes. The answer is, of course, it is. Look, this corpus used to house 50, 60 different businesses. We can certainly handle 2. And MGM -- the prospects for MGM, I think our outstanding. MGM -- once we get closer to, we're building a large resort in Japan and each year that we get closer to its opening. I mean the only gaming resort -- and some great size, a $12 billion project that will open in Japan and, I don't know, [indiscernible]. The closer we get to it, the closer people will understand how discounted MGM is. I'm quite happy for it to be discounted now because it allows us -- MGM has bought back 45 -- almost -- we have a little 45% of its stock over the last 5 years. Its operations have been solid.

People talk about Las Vegas. [indiscernible] through also endless cycles. Nobody is killing Las Vegas. Their current conditions that bother going into that have particularly for instance, Canada, we're, I think, down -- I may get the stat wrong, 40%, something like that, from Canada, which was a very good draw for Las Vegas because of the policies of the administration and other onetime items and things. And it's just, I'm kind of glad it's been discounted because it has allowed us to buy back so much of the stock, which I think -- that -- the discount that it currently has will close at some point. I'm not anxious for it to close too soon.

Turo has executed well on its strategic effort to return to growth. We've talked previously that Turo experienced a real slowdown in volumes coming out of the froth of the pandemic. And that, combined with industry pricing pressures due to both working off pandemic highs and also some mistakes in electronic vehicles made by competitors. So the confluence of those 2 drove Turo revenue growth to mid-single digits at one point.

Company generated over $1 billion of revenue in 2025, but management really focused last year with the Board on driving substantially more growth reinvigorating marketing and improving cost efficiency. They hired a new CMO and David Cornes, who we believe is making the right steps to drive greater brand awareness. We've always said with Turo awareness in testing the product in many ways is the biggest challenge, repeat rate, NPS reviews are excellent. So David and team are focused at getting more people into the funnel and trying it and we're excited to see that play out. They also promoted Cedric Matthew to Chief Business Officer in order to improve pricing, matching and execution across the marketplace. These efforts have borne fruit with Turo returning to double-digit revenue growth year-over-year in the first quarter, really led by increases in volumes.

Rental car market pricing is no longer a headwind, and the company really has a clear game plan to drive more new users in. And we think it's an experience that blows away any [indiscernible].

If you asked us 6 months ago, I don't know whatever we'd say. I would have said okay, let's sell our interest in this. We're not going to increase it. We're not going to take over control of it, et cetera, et cetera. But it's now performing very well. I doubt in a year or 2 or 3, it will be part of this corpus because it will probably go public at some point or get sold by some strategic player or whatever, but it's now operating solidly. And my attitude is, unless somebody comes along and so it's a big little brick on our table, we'll keep it as it grows and it will spin itself out in some form, and we'll take the cash.

Yes. The only thing I'd say is I totally agree. They continue to improve gross margins and adjusted EBITDA margins solidly profitable with free cash flow. So full agree.

Your next question will come from Ross Sandler with Barclays.

Neil or Tim, just wanted to go back to the off-platform revenue. Could you just talk a little bit more about how you're diversifying the traffic to off-platform and what you're doing to kind of drive monetization and better margins in that business and kind of what you see for the medium-term kind of growth rate there. And then second question is somewhat related, but any update on the Google ad tech litigation like a time line for remedies and what we might hope to have as an impact to our business?

Yes, I'll do the lawsuit piece, and then I'll let Tim go through the numbers. As we've said before, the lawsuit that you're referring to is sort of what people call the Google Ad Tech lawsuit, it's building on [indiscernible] that Google legally uses dominance to monopolize the ad server and ad exchange markets. We believe we can fully rely on the government's findings here, and we believe damages will be significant given our scale and level of participation in these markets.

I mean it's not really a lawsuit in the sense of law suit because the ruling has already taken place. They've already said that Google is guilty of this [indiscernible] other thing. We and a bunch of other people have based on that huge claims, I mean, they are [indiscernible], they are legitimately huge. I mean -- and to me, it's like, okay, we will just wait for this process, which I guess is like a year or 2 or something like that...

We intend to invest between $10 million and $15 million in it this year. We expect that it will take the entirety of this year into next year optimistically to resolve in the first half of next year, unless we were able [indiscernible].

Yes, I mean it's just a money trough. How big, we don't know.

Yes. And then to transition to Tim's answer, by the way, very high margins.

Yes, correct. That's correct.

You can walk across the street with your check, the cash [indiscernible].

I would like to catch that, [indiscernible]. I'll do a quick background on the off-platform and I'll let Tim take the numbers. The -- just if you zoom out, the reason why our offering [indiscernible] the reason why our off-platform business is working is if you zoom out, we bolted is because we have these terrific iconic brands. And since we bought Meredith 5 years ago, we've worked incredibly hard to put our brands in a position where they can do all of these new things and where their permission to come into people's lives different ways. And whether it's some of the inversion projects or whether it's things like our historical events and things we've done, we've got real momentum because our brands are so strong, particularly the 7, 8, 9 brands that we talk about the most.

And I'll let Tim get into talking about the specific drivers, but this is the underpinning of everything we're doing going forward.

as we were saying before, 41% of our revenue grew 24% in Q1. That revenue is comprised of licensing, which is everything from Apple News to our AI deals to content syndication, as we've been saying and Neil has said a few times, we're creating more content today than we ever have in the past and distributing it across more platforms with success than we've ever had in the past. What is unique to us, we think, as we've highlighted a little bit here, is we have the combination of brands, audience size and reach, data about those audiences. And in the current incarnation, a sales team to go out and access advertisers to sell into those audiences. And so that's where we can control our own destiny, and grow, again, the nonsession-based revenue streams at, we think, really attractive rates, and that's the future for us. And we -- and it's not all speculative. We actually did it in Q1.

The next question will come from Justin Patterson with KeyBanc.

Two for Neil, if I can. First, I would love to hear more about your top priorities for Decipher for the year? And then second, just as you step back and look at how AI has changed the traffic funnel, what are some of your latest learnings there and how you think you can continue standing up a durable business for the next few years?

Sure. I'll do the AI question first, and then we can talk about the other question, Tim can help with that. If you look at where AI is for us from here, we feel very strongly about this. We have more opportunities going forward than we believe we have risks. If you go back in time 1 year or 2 years and you look at the risk of AI for us, they all had to do with search. And is AI going to disintermediate our audience sources. That already happened. And we came off the -- other side of it with a more diversified business and I believe is a stronger business. Now we're looking at AI as opportunity.

And I'll just dovetail back to what Tim just said. We are making 50% more content than we made 3 years ago at the same cost, and I would argue at an incredibly -- at a way higher quality and everything is still made by humans. We are able to do that because all of our processes, we are able to streamline with AI. We are able to use AI and Decipher to really tighten our ad targeting. We're able to use AI in our commerce business to really understand what makes people respond to offers. And AI for us, and people -- we are embracers of the future. We are deeply unsentimental about processes of how we've done things. And we've taught our 3,500-person organization, how do you use AI, -- like we don't have an AI [indiscernible] it is your job in your seat to understand who AI applies to you, and it's really, really working.

And the thing that people think is somehow AI is in congressive brands. What has happened with us is in a world where people's output is now increasingly confused as to, is this real, this is not really mistake. Brands are the -- they're there -- it's a value now. People trust us. They know what they're going to get. And we can now harness AI to make our brands and our brand offerings stronger. We think the opportunities are massive. And look, we are AI optimists at our place. And I think that is really important. And again, dovetails into all the things we're doing with inversion and all the things we do day-to-day to sell ads, like putting AI in your business when you have these incredible brands and they're all powered by humans is an incredible opportunity.

I think that's really well said. I will just add one thing about what I said earlier about what a wonderful situation is. I also have a natural hedge inside your own house. AI at MGM is actually meaningless. It is obviously being used internally to make the systems better in all sorts of ways. But nothing is going to get no AI until we get into the final simulation, whenever that comes. But nobody is going to get between a customer and one of our resorts is not possible to happen. And so it's this wonderful kind of hedge in the world. If everybody worrying about how AI is going to change the story their business, et cetera. At MGM, guess what, people are going to come to our places. There's not going to be a way for AI to in any way to disintermediate them. And I truly love that one.

It's really the fundamental reason I got interested in that area is because I was worried a few years ago about all sorts of areas of ours being dependent upon other people's control and here is this place where if you offer customers a great experience they're going to come to it. All right, end of that.

Quickly on the Decipher. Look, we're very optimistic about the Decipher. It really expands our TAM across the Open Web and CTV. And most importantly, it works. We have incredible first-party data. We have all kinds of AI powering going on, and I'll let Tim [indiscernible].

Yes, I just think I want to reiterate what you'll say is our capabilities are getting more sophisticated. We're getting our products are better. We have now our premium sales team selling it to existing advertisers. We have this M&I sales team selling it to the middle market independent agencies and political advertisers. We're really excited about it. And again, I reiterate what we said last time, we think it adds 200 to 300 basis points of growth to our growth rate back half of this year and into next year.

The next question will come from Youssef Squali with Truist.

So Neil, maybe just a follow-up to the advertising question. Can you maybe talk about the level of visibility you guys have in performance marketing and licensing revenues within people in particular? And any chance of seeing maybe additional licensing deals announced? And then Barry, given the very high free cash flow nature of the business and the cash you have on hand, et cetera, any interest in maybe starting a dividend to attract some yield-seeking investors at this point?

I'll go first. I'm assuming you mean AI licensing deals, very quickly, these seem to be bucketing into 2 categories. One, the All You Can Eat deal, which is sort of like the foundational LMs like our Meta deal and like our OpenAI deal. And then there are the more marketplace deals like our Microsoft deal, which will be pay-per-use deals. We -- since we started locking traffic, we have found -- we've entered into very productive discussions with all kinds of players, both expected and unexpected in this market with the exception -- exception of Google.

And what we are seeing is we're entering a phase of AI where the Internet -- the available source of information have been crawled and what's really valuable is people who are making new information. We make an awful lot of new information, and it's really valuable to people. So I would expect we will have more to report on this in the future. I've got nothing now [indiscernible] it's just -- it's also early. It's really -- also early on all of it. But the key thing we've done, and we believe this is the right thing to do is we want to be early and we want to seed at the table with everybody, and that is our take. And so far so good. We'll obviously keep you guys updated as things develop.

The only thing I'd add is the pivot, the strategic shift that Neil and Tim have already talked about of moving all of the content development overwhelmingly from evergreen to new content makes us even with so many other content sources getting washed out to see in the competitive pressures really positions people link even better with all of the AI models as a constant producer of new information, which is what they need...

High-quality volume of quality...

Sorry. As far as the dividend is concerned, sure. I hope as we build up cash, I think we should be a dividend-paying operation. So I would expect that to happen in the future.

The next question will come from Jason Helfstein with Oppenheimer.

I guess as a follow-on on capital allocation. Given the healthy forecast for free cash flow this year, should we just assume that, that is basically deployed between a combination of buybacks, MGM purchases and potentially a dividend? Or is there kind of a desire to see that kind of just build up on the balance sheet for optionality?

Well, I mean, listen -- no, sorry, let me start again, which is -- the answer is yes, which is we're kind of use our cash to continue to shrink the capitalization of this company opportunistically. I think we'll continue to invest in MGM. And yes, I would think -- I'm not so sure we'll do it within -- I don't people do it within the next few quarters. But sure, we will pay an appropriate dividend. I don't have any -- I think the investments we're going to make are going to be inside the operations of people. I don't see anything. We're not -- we're actually collapsing our -- we had a very large M&A group. We will have a very small M&A group out of this. I'm not seeing that as a -- like as we operated historically, we were out there for all of the opportunities that came along with being very early into e-commerce and Internet activity.

So so we were always on the lookout, always in any sector, in any place. We're not that anymore. I don't want us to be bad. We have so much opportunity in-house. That's where we should direct our capital.

And the next question will come from Matt Condon with Citizens Bank.

I just want to ask on affiliate commerce growth. It seemed like you guys had a healthy quarter there. Can you just talk about the drivers and just the future potential there to sustain growth?

I would just say that the commerce business has been remarkably consistent and resilient for quarters and really years. It's a testament to our team and their ability to drive growth, meaning [indiscernible] growth to recaptures, otherwise, that business wouldn't be growing. We're doing that by creating more [indiscernible] as Neil highlighted, and deepening the partnerships and relationships with the retailers. So there was an earlier question about visibility. We have solid visibility there. Obviously, the consumer is performing well, and we feel good about it and kind of sites. We have some new products coming out soon that we're excited about.

The only thing I would add is in by, and we'll see you in a while. Thanks, Chris again. So please [indiscernible] your income probably will be with us the next thing is that I hope that out of this in the coming days, we straighten out these numbers so that what was a very good first quarter won't be misinterpreted as something other than that, which it seems to have been at least overnight.

Which is the Care discontinued app.

Yes, yes, yes. Other than that, I wish you all well. Thank you all, and we'll see you -- well we don't see, but you'll hear from us.

Thanks all.

Thank you, operator.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Welcome to the IAC Fourth Quarter 2025 Earnings Conference Call.

[Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Christopher Halpin, COO and CFO. Please go ahead.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC Fourth Quarter Earnings Call. Joining me today are Barry Diller, the Chairman and Senior Executive of IAC; and Neil Vogel, CEO of People Inc. IAC has published a presentation on the Investor Relations section of our website today entitled Q4 Earnings Presentation. On this call, Barry, Neil and I will provide some introductory remarks referencing that presentation and then open it up to Q&A.

Before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us. 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-K and in the subsequent reports we filed 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 releases, investor presentations, our public filings with the SEC and again, to the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for material non-GAAP measures.

And now I will hand it over to Barry.

Good morning, everyone. We had a solid fourth quarter at the company. It was a confident finish to a year that was defined by focus and execution. People grew digital revenue by 14%, defying the expectations of all the digital publishing doubters. People's financial performance amid increasing AI disruption speaks really loudly. AI overviews are now appearing on most of our queries, and we're delivering record results.

As I've said before, People has prepared for this disruption for years and with brands able to travel where the audiences are, not just our sites and apps but across all social media, news platforms, video, events. We're expanding with the surge of new products and experiences wherever audiences engage. But at its core, our strategy at People is not to rely on the daily grind of conventional digital publishing to propel our future.

As I talked about last time that I was on this call, we're in the process of inverting these iconic traditional content businesses into entirely new consumer businesses. Products that stand on their own and revenue streams with stronger immunity against disintermediation. This isn't hypothetical. We're on our way right now working through several concepts. At Southern Tea, this iconically wonderful magazine that is beloved by its audience and has a product -- not a product, but often describes the experience of Southern Tea, a particular kind of tea that you only get in the South, we're going to do introduce Southern Tea's Southern Tea as a product that we will own and then distribute.

At Food & Wine, we're going to do a project with best chefs. We know the best chefs every place in the world. And we're going to organize those chefs in a way no one has done before and create a product line through that. At Travel & Leisure, we're going to do our own White Lotus. After all, we know every great destination in the world. We have the most beautiful pictures of everything that the White Lotus creators would have creamed over if they had access to that in creating different places. So we're going to do that. We're going to -- every single one of our books has opportunities for us to essentially invert the process and come up with products and services that we can brand and then we can promote through our -- how many books do we distribute, Neil, a year, like 350 million?

Yes. In the neighborhood, yes.

In the neighborhood, why did I get this wrong?

No, that's right. That's exactly right. Yes.

So we -- not only do we have that, so we have these books. Adding a page, 2 pages, 3 pages costs virtually nothing. So we can sell through in unique ways almost anything that no one else can do. And we've got -- that's just for -- we want to do stand-alone page ads but we also can do editorial about these products of ours. So if we get -- it seems inconceivable to me that we can't take these books that know more about their domains than anybody else anywhere until ChatGPT knows everything and if it does out of it long before, we will have figured out new business lines, which can't disintermediate by AI. But what I'm saying is we know so much about all these domains, and we can use that creatively to say, all right, what is possible for us to do out of that knowledge that we can create a new product or service. I think that is the gold mine of people in the ensuing years.

The other pillar is MGM. And as we had said, we increased our ownership in MGM. We repurchased more IAC in the quarter. We bought about 1%, I think it is of MGM. So we could get to 25%, which is an important actual accounting milestone for us. We've bought stock back of $337 million in '26. We're going to continue to evaluate buybacks as we always do, opportunistically. And we are ever mindful of this huge discount in the value of IAC.

We really do have a formative -- I really do believe -- deeply believe we have a real growth engine in People. We are outcompeting anyone else in digital publishing. And with all the headwinds and all the things that are going to happen to digital publishing and publishing in general that are downsides for us, every one of them seem to be upside. That's our different distinction. Anyway, if anything obvious, I am bullish on what '26 has in store.

And with that, I'm anxious to get to your questions, and I hope Chris will be relatively brief in his remarks.

Thank you, BD. I'll start talking on Page 5 of the presentation about People's financial performance. It was a strong quarter across the board with the business delivering 14% Digital revenue growth, driven by solid execution across all 3 revenue categories: Advertising; Performance Marketing and Licensing. Advertising grew 9% in the quarter, returning to growth and doing so despite a 13% decline in core sessions. Neil will go in more depth on this front but this highlights the success of the off-platform strategy and the strength of People's brands amidst AI headwinds.

Performance Marketing grew 17% in the quarter over the important holiday period, reflecting both excellent execution by Neil's team and the strength of the consumer. Finally, Licensing grew 36%, driven by robust engagement with our content across Apple News and content syndication partners and the new AI content partnership with Meta contributed a little bit to growth as well.

The Print segment declined 23% as expected, due partly to $20 million of revenue in the prior period from political advertising, which we flagged previously, and partly to the continued sectoral decline in print. Adjusted EBITDA was solid in the quarter, growing 9% in Digital when you adjust for severance expense a year ago and with incremental Digital margins at 26%. Print produced $13 million of adjusted EBITDA in the quarter, down from a year ago for the reasons stated earlier but more than enough to offset $9 million of corporate expenses.

So the fourth quarter capped a solid year, $1.8 billion of revenue, $1.1 billion of that Digital revenue growing 10%. Aggregate adjusted EBITDA was $331 million for the year, reflecting the exclusion of the $41 million in gains from lease buyouts and the $15 million in third quarter severance. And Digital full year EBITDA margins were essentially flat year-over-year at 28%.

With that, I will hand it to Neil to go deeper into people, strategy and performance.

Guys. Thanks, Chris. Thanks, Barry. I too will go against my nature and be as brief as I can and hit the highlights here. We had a really strong quarter. As you guys all know, the publishing and web ecosystem has been changing dramatically, and we've been working hard to change along with it. The strategies we've outlined to you and have been talking about, they're working. As Chris and Barry said, we had 14% digital revenue growth in the quarter. It's a testament to the strength of the brands, truly the strength of the brands and our team's execution.

Key is the diversity of our revenue models and the breadth of the industry sectors in which we compete is also a real strength. And I think importantly, in Q4, alongside our growth, we continued to invest heavily in a raft of new products and services, some of which you can see here on this slide, which I believe is Page 6 in your deck. The new Food & Wine Classic in Charleston exceeded our expectations. We had our most successful media cycle in the history of the Rejuvenated Seepixus Manali franchise, a very important franchise for People. And InStyle popular, the Intern social video franchise has become a real blueprint for what we're able to do our platform.

And we made solid progress, which I'm sure we'll get to in the Q&A on initiatives we discussed like D/Cipher and MyRecipes and the PEOPLE app, and there's a lot more to come, as BD said. We are energized. We feel really good about where we are. And we did all this in the face of a lot of disruption.

Let's go to the next slide, and we can talk through that. We delivered this quarter in despite of a very challenging environment to core web sessions. Looking at the core sessions, we're down 13% year-over-year in the quarter. The biggest contributor to that is a 50% drop in Google search referrals over the last 2 years. This quarter, we also saw a little softness in non-search traffic sources, mainly driven by declines in Google Discover, which is their version of Apple News, which had been a contributor to non-search growth earlier in the year.

However, offsetting the effects of core sessions decline is the continued rapid growth in our off-platform and distributed audiences. You can see off-platform views have nearly doubled in the last 2 years and grew 43% last quarter year-over-year. There's real momentum here. This is a continuation of a pronounced shift in our business. We are aligning our efforts and resources to connect with audiences where they are now. We are going where the people are. Our brands have great momentum across everything from Instagram to Apple News to TikTok to YouTube as well as real cultural cloud in our tentpole events and our operated properties.

And the non-session-based growth is underpinning our financial story. And the next slide really gets some color on that. If you go to Slide 8 in the IAC deck, this slide clearly shows that our non-session-based revenue sources are now the fastest-growing part of our business. Again, non-session-based revenue, revenue not based on web sessions, now comprises about 38% of total digital revenue, and it grew 37% year-over-year in Q4. This growth is led by D/Cipher, our events businesses, creator and social models, including the Feedfeed acquisition, our deep partnership with Apple News and our AI licensing deals.

At the same time, sessions-based revenue was 62% of total revenue and grew at 4% year-over-year. We absorbed the declines in Google referral traffic by delivering great premium sales quarter across our brands and showed continued strength in our Performance Marketing business. The brands are still super strong and advertisers and marketers are really interested in these brands, both in the new environments and the traditional environments.

Look, this is the model for our future. Strong growth from non-session-based revenue streams led by our growth in off-platform audiences at D/Cipher and executing against our session-based businesses while absorbing continued declines in referral traffic from Google and other platforms. We're super proud of this quarter. We have a solid model, as BD talked about. We got a lot of seeds planted, and we're excited and we got a clear path in front of us. We've got a ton to do, but we got the teams, and we think we have a real strategy to succeed.

So with that, I will kick it back to Chris.

Thanks, Neil. Moving to Page 10. Let's talk through performance at our other consolidated businesses. Care saw 9% revenue declines in the quarter, driven by softness in Enterprise, which we highlighted last quarter. Consumer revenue declined 4%, steady with last quarter, and we continue to see the benefits of Care's product improvements, marketing investment and add-on offerings bearing fruit.

On the Enterprise side, as employers have tightened their benefit spend, many have adjusted their existing programs, leading to a 13% Enterprise revenue decline for the quarter. This decline is exacerbated by some particularly robust client usage and out-of-period client true-ups in Q4 '24. We believe both Consumer and total Care revenue in aggregate will return to growth by midyear.

Care adjusted EBITDA was excellent at $19 million for the quarter, generating 22% EBITDA margins. Normalized on a year-over-year basis, profitability was essentially flat as Care incurred $9 million in legal charges and $2.5 million in severance in the fourth quarter last year.

Emerging & Other revenue grew 18% and flipped to profitability with $3 million in adjusted EBITDA. The revenue growth was the output of strong performance at the Daily Beast, where revenues grew 50% and at Vivian, which grew in the fourth quarter for the first time since Q3 '24 and has regained its momentum. Both businesses were profitable in the quarter and the year-over-year picture further improved due to the resolution of the legacy legal matter we mentioned on our last earnings call. Finally, Corporate adjusted EBITDA was $23 million, down from a year ago and last quarter as we continue to reduce our overhead and get back into the mid-$80 million range on an annualized basis.

Turning to the next page, we'll talk about guidance. IAC has always managed our businesses for the long term, not on a quarterly basis. At a high level, we will stop providing quarterly guidance as we do not believe it's productive for our businesses to focus on short-term results, particularly people as it navigates fundamental shifts in its industry. We want our businesses to remain focused on execution and long-term value creation, and this change also reflects proactive feedback from some investors.

As in the past, we make changes to our guidance based on what we believe is best for the businesses and our shareholders. We will, however, continue to provide annual guidance as summarized on Page 11. For People Inc., we expect both digital revenue and digital adjusted EBITDA to grow mid- to high single digits for the year. We are forecasting approximately $15 million in litigation expenses this year related to our Google Ad tech litigation, which will result in corporate expense exceeding print adjusted EBITDA by that amount.

Absent the litigation expense, we would expect them to offset. When rolled up, that produces our guidance range of $310 million to $340 million of total adjusted EBITDA for People Inc. I would note, this range implies digital adjusted EBITDA of $325 million to $355 million for the year compared to $315 million in 2025. We are expecting Care adjusted EBITDA of $45 million to $55 million with consumer returning to top line growth by the middle of the year.

Our Search segment, which comprises Ask Media or AMG, a search monetization business, has innovated while navigating a complex and challenging search ecosystem for more than a decade. A reminder that our Search segment is managed for margin, not growth and has not been an area of strategic focus at IAC for a long time as it has steadily shrunk in size and materiality.

As disclosed in our recent 8-K, we are in negotiations with Google, which supplies paid listings to AMG to extend our relationship and the outcome of those negotiations will likely determine the future of the business. At present, we are guiding to a range of negative $5 million to positive $10 million of adjusted EBITDA, and we expect to know a lot more over the next 90 days.

Emerging & Other should continue to grow top line, thanks to Vivian and The Daily Beast, and we are expecting $0 million to $10 million of EBITDA there. And finally, Corporate expense is expected to be $80 million to $90 million, and we will continue to work to come in at the bottom of that range.

Finally, Page 12 summarizes our continued buyback activities, as Barry mentioned. With our purchases since last earnings, we have bought back $337 million of our shares over the past 12 months and reduced our share count by 10%.

With that, let's go to questions. Operator, first question.

[Operator Instructions] Our first question comes from Ross Sandler with Barclays.

Neil, could we go back to Slide 8 and the non-session-based revenue growing 37%. Could you just elaborate on like what are the key drivers of that line? And how do we feel about that in 2026 in the context of the mid- to high single growth rate for People overall?

Wait, wait, wait. Neil, before you do, I just want to say one thing about the growth in people for next year. Yes, we're conservative. And when we come out with guidance, a silly process that why all of us engage in it, I do not know. But nevertheless, there we are. I would be very disappointed if People did not exceed that number. People has momentum. It is getting -- these areas that we're developing are going to take time to develop but that machine is so well run, and I think it's going to produce more than you are saying in your guidance. So I know you'll all get mad at me but that is what life is for.

It's we. It's we.

And look, the truth is we want expectations. Expectations are good. And Ross, to go back to your question, what is fueling that is from a high level, we're going where the audiences are. And if you look back like 5 years ago, this is going to be probably longer than you wanted, we were like 70% of our traffic from Google Search. Now it's like 30%, right? People would look at the Internet that we compete in and they would say, "Oh my God, you guys are too much Google. How can this say you're not diversified enough?" We would look at the market and say, 90% of the web started at Google, we're bad at this. Like we're not good enough at 70%, we should be better. And what that did was gave us a really tight and close view into Google, and we instrumented our business to work with Google, which at the time was the dominant source.

Now that gave us 2 skills. One, we realized very, very quickly when Google started to change, and that wasn't going to be the best source. And two, we were very early on it. So what we were able to do 2, 2.5 years ago is we were jumping up and down and saying Google Zero internally. And what it gave us to do is we developed all of these new skills. And the payoff of these new skills is now. We developed all these new distribution channels for our content, for our audiences, whether it's social, whether it's reaching people through events, whether it's reaching people through things like D/Cipher, we had a sense of where the market was going and we're going with it. The audiences are going in that direction and the advertisers are going in that direction, and we're going in that direction. And we feel like we've put together a really, really interesting pool of assets. It's different for every brand to address this.

And again, the proof is in the numbers, and we feel really good about what we've done. So that would be my answer.

And the next question comes from Jason Helfstein with Oppenheimer.

Just 2 questions for Barry. First, on M&A, without being specific but maybe in generalities, what are the types of assets that IAC is interested in? And obviously, we've all read about speculation of your potential interest in CNN. And would that -- if that was something, would that be done through IAC or outside of IAC but just generally talk about M&A aspirations.

And then just secondly, maybe, Barry, just review your investment thesis on MGM and why you felt that, that was a good deployment of capital right now as opposed to saving that capital for buybacks or M&A.

I'll start with MGM. It's kind of self-evident. We bought the stock at what dollar level, Chris?

$40 million.

No, no, no.

$40 million.

No, our total purchase of MGM stock. Our total equity in MGM how much.

We bought $1.3 billion.

And it's valued at what?

$2.2 billion.

So that's the answer to that. That's not the full answer. Yes, we've done very well. We bought it at the right time. We recognized it as something that we had interest in. But since we bought it, and we bought more since that initial purchase, I have become absolutely convinced that this collection of extraordinary properties, 40% of Las Vegas is owned by MGM. The infrastructure of Las Vegas can never be duplicated. Every piece of what they do is something that you can iterate on, that you can improve, that you can innovate without huge, huge amounts of capital and give people the experience that somewhat actually been hurt in the last couple of years but by its own hand, I think.

Las Vegas always said to people, you come here and there is value here. We've all heard of inexpensive hotel rooms, et cetera. There are some inexpensive. But I think the town really overplay gouge in certain areas. And I'm pretty sure that pretty sure that that's going to turn. Value will come back at the value area of part of the business. We are very much in the luxury part of the business, and that has done well.

And as we begin this period, I think, of innovation, I think we're going to turn the town on in a way it has not been turned on at least in the most exciting way other than the wonderful sphere that has been planted here. So my belief in Las Vegas in that no one is going to get between the excitement and entertainment of Las Vegas by any technical means of AI unless we are all in a simulation and nothing else matters. So that's Las Vegas. Then we are developing a resort in Osaka in Japan, only gaming resort of huge, huge $12 billion scale that it's long dated. It won't come into play until '29, '30. But when it does, it's going to be one of those golden assets.

So I am -- I can't -- if I look around and you say, what would interest me in M&A would be to find another opportunity like this one. By the way, I haven't found it. I don't think it's on the horizon, by the way. I don't really think that right now is the time for us to be, I wouldn't -- we never squander around but putting like bets down on things that are not -- that do not have -- it's kind of a bromide, you never want to do it if you don't have potential. But right now, I really don't see anything at a price that would be rational to pay. And I don't see anything that's really particularly exciting. We've got a company that's got People, which I can only overdue, so I'll not do more than I did before in what I think of the potential of People. And we've got MGM, and we've got cash to continue to increase our ownership in both of those. And yes, an opportunity may come along. But I like the hand we have right now.

So that's a long-winded answer. Did I answer the first part of your question? Oh, Well, you asked about CNN. I've been interested in CNN for years. I think it's less than 50-50. I'll get the opportunity but the hand could play that way. We'll know in the next months as the Paramount Skydance, Warner Discovery, Netflix diorama plays out. I suspect that if it happened, it would be on the personal side, not through IAC but that's really unpredictable at the moment. I think that's the rather fulsome answer to your question.

Thank you, BD. Yes, just one point I'd add for investors, great results released by BetMGM today, reflecting the performance there and solidity. So another leg to the MGM.

What I don't get is how you all people -- I'm not all God here. I sound like that person God forbid. What I don't understand of the entire investment community is here you have a situation where we invested -- not a huge amount but we invested hundreds of millions of dollars in BetMGM. BetMGM lost and people were critical of it for several years. And it took us -- of course, it took us some time to get it together. We go from like $170 million -- or you can correct me with the exact figures or loss or a $200 million loss in 1 year to $170 million profit the next year. Why hasn't everybody say, "Oh my f***ing God, that is a turn." And this year's projections, are much higher than that. Nobody pays attention to it. I truly don't get it. But eventually, truth speaks. What I am assuming nationally.

The next question comes from Justin Patterson with KeyBanc.

You're clearly excited about a lot of these transformations going on at People. How scalable are some of these new curated experiences? How do you think that changes your relationships with audiences and monetization opportunities? And how should we think about just the investment levels to support this transformation in the AI era?

And then separately, just one on Vivian. Bill Kong was recently named CEO. Could you talk about some of his top priorities in that role?

Yes, I'll go first and Chris will go second. So what I would say is the key to our business is we need direct relationships with our audiences and direct relationships with our advertisers. And the things we are most excited about in the business are the things that you highlight, the new things that we've launched. And look, we're -- the roots of our company are 100 years old. So it was not a given we would be great at these things and launching new things. But so far, so good. We feel very good about the momentum we have and some of the headline things we've talked to you about.

So first, let's just go through a couple of them. MyRecipes, which we launched a little bit less than a year ago, which is a recipe locker or place to store recipes. I think most of you guys know we are by far the largest player in food and recipes on the Internet. We have in under a year with very little to no outside marketing, we've got 3 million registered users who've saved 24 million recipes. And we're perfecting that experience. This is an audience that advertisers love. It's a service that people love, and there is no Google between us and these audiences. It's really, really effective, and it's teaching us a skill set, and this has an incredibly bright future. It's got a great team running it also.

We've talked a little bit about the PEOPLE app with you guys. The PEOPLE app for us, I think, and I'm not sure if BD has ever brought this up before, the PEOPLE app can eventually be the hub of the entire People brand. And what we have really focused on with our investment dollars is getting that experience right. So we're -- we launched it again a little less than a year ago. We've got about 300,000 downloads. Our expenditure has not been on getting downloads made but 300,000 is a pretty good number.

What we're really focused on is engagement and how can we change people's relationship lower case P with upper case P People. And here's the key stat that's interesting. And the thing that gets us so enthusiastic about this. On the web, when someone goes to people's -- sort of people.com, People's website, the average visit is 2 minutes long. If you are in the app and you open the app and you start playing around the web experience, which is not anywhere near as good as it's going to get with the plans we have, that's a 6-minute duration. So we are 3x the amount of time spent in the app than on the site for typical visit.

Then we launched a bit ago a suite of games. We launched something called the People puzzler, which was historically in the magazine, a crossword puzzle, and we launched 2 new games since. These games have been a huge hit. People who are in the app and play a game have a 20-minute duration in the app. So you can see real traction. And you can see maybe subscriptions go out of this thing, maybe a big ad business goes out of this thing, maybe sponsorships do. I'm not sure but delighting an audience with a great product is great. And what I would say is with 2 of these things, building new products is not a skill every company has. We've worked very, very hard at this. We've pivoted a ton of resources away from what we've done traditionally into these 2 projects.

And I'll just -- I'll highlight one more while we're at it because it's something we're really proud of. At InStyle, we've got kind of a hit on our hands. We do a lot of social-first video. And we did a social-first video series we're currently doing called the Intern. And it's almost -- it's very like the Office E. Every one that appears in the intern actually works for us and works on the team with the exception of 2 people who play interns at InStyle. And it has captured a zeitgeist of sort of like the Gen Z experience in an incredible way.

Neo, when we started doing the Intern, and we do, I don't know, 6 a season and we do how many seasons -- how many of these do we do a year?

Yes. So there's -- so far last year, we've done 7 seasons, but a season is just 3-minute episodes.

Fine. What I'm trying to do is just educate people. So the first few, they -- first, they cost nothing but you'd made 50,000 or 80,000 or whatever. Now for -- I think it's for a given season, you're up to sponsorships at the 500,000, 700,000 level?

That's correct, yes.

I mean when you think about that, again, out of nothing at no real cost. This is done in-house basically on an iPhone or it has been done on an iPhone. And they are genuinely funny, and they have reached a genuine audience. That is that we now have, as what Neil has done is redeploying his forces into these new and productive areas. With the brands that we have, when you are doing that and you're dealing with ideation, you create new things that have nothing to do with search, with the issues of digital advertising or the problems of digital advertising, they're their own products, and we are producing them at real scale now. That's really exciting.

Yes.

It's quite enough for now. Next question.

Yes. Let me -- and I'll just cover Vivian. Vivian is an exciting business within emerging and other. We announced last week that Vivian Founder and CEO, Parth Bhakta, has moved to Chairman and Bill Kong, our COO, is taking over as CEO. Parth has done a great job building this business. It is a clinician marketplace.

I am not seeing [indiscernible] right now. Can you...

Excuse me, operator.

And the next question comes from...

Operator, please stop. Operator, I'm answering a question quickly. Vivian is a marketplace that sits between 2.7 million nurses on the one side and health care staffing agencies and providers on the other. It is really a great moment. It is -- the business has returned to growth last quarter after facing some major sectoral headwinds. It is driving forward in taking share and its AI products, we think, are industry changing. So Bill is the ideal leader. He's grown -- he's developed across product, marketing and other channels and has really performed extremely well. Parth is excited for him to take over as CEO, and it's really about driving our AI products deeper into our customers.

Operator, next question please.

The next question comes from John Blackledge with TD Cowen.

Great. Maybe 2 for Chris. One on the People 2026 EBITDA outlook. At the midpoint of the range, it looks like kind of flattish EBITDA. Can you unpack the guide a little bit, Chris, and how we should think about drivers of EBITDA at People this year?

And then second question, just on IAC's free cash flow conversion. So you guys guided to '26 EBITDA range of $260 million to $335 million. How should we think about free cash flow conversion of EBITDA this year?

Yes. Thanks, John. On EBITDA guidance, we definitely want to explain this in detail to investors at People. So when you compare 2025 adjusted EBITDA for People to our '26 guidance, there are 2 key countervailing trends you need to understand. As background, '25 adjusted EBITDA, when you remove the $41 million in lease gains and the $15 million in severance expense was $331 million. That comprises $315 million of digital adjusted EBITDA and then an incremental $16 million deriving from the excess of print EBITDA over corporate expense. So $315 million and then a $16 million incremental.

In our 2026 guidance, we are guiding to mid- to high single-digit EBITDA growth off of the $315 million generated in 2025. On the other hand, our guidance assumes $15 million in Google litigation expense hitting corporate. Without that litigation cost, we expect print EBITDA to equal corporate expense. So with the litigation, what you're seeing is a $31 million net swing from '25 actuals to '26 guidance in the relationship between Print and Corporate. It's that swing that leads the guidance to be in the $310 million to $340 million range and to look flattish year-over-year. Our most important line item in our mind is Digital revenue and EBITDA, and that is growing solidly. And as we said before, if you adjust for the Google litigation expense, we are guiding to $325 million to $355 million on Digital EBITDA.

Going to IAC adjusted free cash flow. Simply, there are 4 line items between EBITDA and free cash flow that you should think about in your models. CapEx, change in working capital, net interest expense, taxes. CapEx for IAC is minor. It was $20 million last year, probably $20 million to $30 million in the '26 range. Net cash interest expense is the difference between the interest expense on the People debt and the interest income we make on our cash balances. Last year, it was $64 million of net interest expense. We would expect net interest expense to be around that same number, assuming flat yields on cash.

Cash taxes are minimal due to our NOLs. So that leaves working capital. That was a major use of cash last year due to 2 items. One were the lease buyouts that we talked about, north of $40 million as well as some unfavorable timing this past year of vendor payments and receivables. Looking ahead, we don't expect any similar large outflows like the lease buyouts and then working capital should normalize. So when you roll that up, we'd guide to 50% plus EBITDA to free cash flow conversion across IAC in 2026.

Thanks, John. Operator, next question.

Next question comes from Cory Carpenter with JPMorgan.

I had 2. I wanted to ask, you called out the $15 million spend on the Google litigation. Maybe just update us on where you're at with that and kind of how you're thinking about the range of outcomes.

And then, Barry, I think last quarter, you talked a lot about also the simplification of IAC. So maybe if you could just give us an update on how you're thinking about that and any progress you've made.

I'll do the litigation thing quickly, and then I'll kick to BD. So again, just to refresh everybody, the lawsuit builds on the government's antitrust case against Google, where Google was found to monopolize the ad server and ad exchange markets, right? Two major publishers, Gannett and Daily Mail already sued. And in their cases, the court ruled that they don't need to again prove what the government approved. We expect to rely on that ruling. Again, the costs are about $50 million. Chris has gone in great detail about that. Damages will be proved in this litigation in this phase. We seek to recover hundreds of millions of dollars in damages. Again, it all depends on where this lands. But we look at this as an investment. They've already been found to be sort of, again, I don't know the legal term in violation of these laws. So we'll see where it lands.

BD, you want...

It has the potential to land very big. So as far as simplification, we've been doing this for really the last couple of years as we've cleaned up many, many things inside IAC, closed, transferred, et cetera. We're going to continue to do it. We're bringing down our overhead, which we should. Our overhead was large because we had so many businesses that we were responsible for and so much infrastructure. We're now really down to a couple of key businesses. So you're going to see simplification throughout the year.

Thank you, Cory. Operator, next question.

The next question comes from Eric Sheridan with Goldman Sachs.

Maybe 2, if I could. First, with respect to the Ad business, any mark-to-market views in terms of the overall macro environment, either verticals or the way in which advertisers are spending their money, brand versus direct response in terms of how that's impacting the business right now? And then I wanted to revisit the comments you made about the forward guidance in your prepared remarks in terms of maybe going a little bit deeper on what you think it might do to impact the operations, freeing people up to think a little more medium to longer term and whether the investment community could also expect some sort of at least qualitative commentary mark-to-market on a quarter-to-quarter basis.

Sure. I'll do the ad market first, and I'll kick to Chris. So I think we do this a lot around here. I think we put the market at a 6 out of 10 where it is now. It's healthy, remained generally favorable in Q4. It's pretty solid for us. I think particular to us, we have some real advantages, right? Brands matter and in an AI world where everything is uncertain and everything is a platform and everything is UGC. The strength of brands really resonate. We're in a lot of markets. That helps. Our programs really perform, both the traditional on-platform and off-platform. Our ad relationships are good. And we're very much with some of the new things we're doing, we're in the ad side guest. Not only do we have like the real nuts and bolts to deliver but we've got the cool stuff, too. And it's really helped us.

And I think the strongest sectors -- and again, I can only really speak to us but some of this does trickle out to the broader market. Health and pharma has been good for us, travel, tech. Some of the weaker sections for us or some of the stuff you're seeing macro exposed like food and beverage, CPG, in a large way has been very challenged. I'm sure you guys have heard about that. That's really our take. Look, we -- the market right now is good enough for us to execute, and that's our main concern.

And then on guidance, look, the -- it's a few things. One, there are a lot of -- especially in People Inc., which is our biggest business, there is a lot of volatility in the underlying market. Neil has talked about everything they're doing to guide the ship successfully through the choppy waters and they're proving that out in the data but stressing about quarter-to-quarter metrics on sessions, individual revenue line items, et cetera, we thought -- we came to the conclusion it's a long walk for a short drink. And that doesn't necessarily mean downside. We surprised to the upside last quarter with very strong revenue. It's really around head down execution to drive the strongest, best digital businesses. And we'll do that on with an annual basis and tell you what we're working towards.

And then to your point, we will talk -- or to your second question, we will give guidance qualitatively -- not guidance, we'll give views qualitatively of what's happening in the markets, what's happening in the dynamics and our strategy.

Thank, Eric. Operator, next question.

And the next question comes from Dan Kurnos with StoneX.

Maybe first for Neil, any directional way to think about sizing or helping us think about D/Cipher+ this year? And should we think of any announcements coming the way that Roku used Nielsen ACR as a data and conversion layer with Amazon DSP? Are there any ways that we could think about major partnerships?

And then I guess for Chris, just on Care, maybe just unpack the growth a little bit, how you think it could trend over the course of the year and then more longer -- and then longer term, just what are the aspirations for growth at Care?

I'll go first with Decipher. So we're obviously very excited about Decipher. It's our fastest-growing off-platform business in terms of headcount, in terms of revenue. It's going to be a big driver for us. Again, it opens up a lot of TAM for us, right? We can do CTV. We can basically target using our data, which is fantastic. the Open Web. I think to dimension it for you guys, I think we'd say of the growth, the mid- to high single-digits growth, 2 to 3 points of that this year will be D/Cipher+. It's got real momentum. And I think we're at a place now where Jim Lawson, who I believe who I know that you know, has really found its footing. We have a real team behind this, and this is a -- it's go time on this business. And I think you're going to see real results in it this year. We're very, very excited about it.

Again, it's all about our strategy. We're going where the people are there, and we're bringing advertisers with us, we're bringing our content with us, and this is a really big part of it. And Jim is doing a great job. There's a lot of energy around this.

And I'll pump to Chris for the rest of it.

Yes. And on Care, the consumer business really was in a multiyear slowdown post -- partly driven by post-pandemic dynamics and then also driven by challenges or underperformance on the product and in our marketing. We've taken steps and Brad Wilson and team have taken steps on a number of those in the consumer -- this consumer platform starting second quarter last year that we've talked before about. We're seeing the stability in sign-ups. We know our comps, we start to get back to more normalized levels and lap some easier comps starting in Q2. So as we've talked about, we expect to get back to consumer growth midyear revenue and then drive on from there.

And then Enterprise, we're working through some macro challenges as employers cut back. But there's also opportunities to grow employers and new entrant -- new customers that can come in. So our goal is to get back to revenue growth next -- this coming year. We believe we're going to get there and have line of sight. Margins, we feel good about and the underlying profitability. On an ongoing basis, care should be growing 15% to 20% given its market position, given the opportunities in both its segments and just the ever-increasing need for care, both for consumers who are really struggling with it across child, senior, adult, pet and also employers who are increasingly view it as a base benefit.

Let's do the last question, please.

And the last question comes from James Heaney with Jefferies.

Yes. Great. I think a lot of them have been addressed. But just on -- maybe just on the slowdown in digital revenue growth into the mid- to high singles next year. Curious like any conservatism in that guide? Any comping dynamics that you'd call out driving that? Or is that more of an organic slowdown? Just anything on that? And if you can talk about phasing, I know you're not thinking of it on a quarterly basis but anything we should think about for the year?

Certainly. If you look broadly across '25, Digital revenue grew 10%. Our guidance of mid- to high single digits reflects some conservatism as we continue to navigate broader search disruptions. As Barry and Neil have said, we feel good about our positioning. We feel great about the robustness of our monetization and the off-platform strategy and the scale and freshness of our content. But we always want to be thoughtful at the beginning of the year on our outlook. So that would be the background.

Thank you, James. Thank you, everyone.

Thank you all. Nice to be with you.

Thank you, operator. We can conclude the call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the IAC Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Christopher Halpin, COO and CFO. Please go ahead, sir.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC Third Quarter Earnings Call. Joining me today are Barry Diller, Chairman and Senior Executive of IAC; and Neil Vogel, CEO of People Inc. IAC has published a presentation on the Investor Relations section of our website today entitled Q3 Earnings Presentation.

On this call, Barry, Neil and I will provide some introductory remarks referencing that presentation and then open it up to Q&A. Before we get to that, I'd like to remind you that during this call, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us.

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-K and in the subsequent reports we filed with the SEC. The information provided on this conference call and in the presentation should be considered in light of such risks. We'll also discuss certain non-GAAP measures, which, as a reminder, includes adjusted EBITDA, to refer to today as EBITDA for simplicity during the call.

I'll also refer you to our earnings release, investor presentations, our 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.

And now I will hand it over to Barry Diller.

Thank you. I'm very glad to be with you all today. I've been talking to investors lately and I more than get everyone's desire for more clarity about IAC's future. With the departure of our CEO and the spin-off of Angie, it's understandable that there are questions about our direction and our future. And I'm going to address those this morning, both in my remarks and in answering any of your questions. There are 2 core parts to IAC today. They're underpinned by a strong cash position and our balance sheet. They are people and our investment in MGM.

Broadly, we have been, and we will continue to slim down IAC's assets and our overhead. We'll get lean and crystal clear that People and MGM are IAC until something else wildly compelling comes along. What we want to do is, first, reimagine People Inc. from defense to offense. Second, help MGM's excellent management teams simplify its businesses and change its pitiful multiple. Next, we'll divest our noncore holdings and reduce our overhead and finally, continue to be opportunistic on share purchases -- repurchases. It certainly seems to be that opportunistic is now, as is increasing our ownership of MGM. There's this huge discount in the value of our shares and a mind-blowing discount in the value of MGM. I mean it's selling at an emergency multiple. There's no chance that is going to continue to infinity.

Time will correct this, but we won't let time stand still. So let's start talking about People Inc.. As for transparency, changing the name from the awkward DDM was a good first step. We are the largest digital and print publisher in America. We way outperform our peers with our brands and our content and our technology. The market narrative says content is dead, given all the AI talk of disintermediation and Google's continuing drive to shrink the revenue it shares with publishers. It's all a giant overreaction, and it ain't our reality.

Yes, there's a transition in search. Yes, we're getting declining traffic from Google. But for some years, we've known these disruptions were coming, and we've been preparing and mastering for this rocky environment. Our results speak to that as Neil Vogel and Chris Halpin will soon detail. If you just play the old game, like most publishers and yes, you're in trouble. We've been doing the opposite for several years now, and we're transferring these great brands built over a century in the old media mold into digital powerhouses.

We built out a massive modern content engine behind these brands that allows us to reach consumers wherever they are on our sites and apps via social media and news platforms through video, at events actually everywhere. And for monetization, no one comes close to us. But beyond all that excellent execution from the great people at People, there is the evolution we're conducting beyond the hide-bound publishing industry. What we're going to do is invert the base publishing model. I've used the following examples to my colleagues like what if 5 years ago at Travel & Leisure, which has always had these great pictures every place in the world, covers vacation spots, just some of the best photography and best experiences. What if they thought of white LOTUS and produced it.

What if our Food & Wine magazine, knowing so much about all that, food and wine and stuff, they thought, why don't we invent [indiscernible]. Why didn't Investopedia, one of our sites and then Shark Tank. There's just -- and the other thing is at People, we test an astonishing 16,000 products a year. It's just got to be a pony in that. It goes on and on from there to every property we've got and all these incredible opportunities to invert our content businesses into a whole stream of new businesses.

If we get that going, there's really no ceiling to what we can create, and it is to create and not be on the back foot like almost every other publisher seems to be these days. That's what we'll be doing while we continue to execute on the day-to-day grind of today's publishing business. Neil has got more to tell you. But for the first time, since we've acquired these assets, I am jointly excited about their future, frankly, if we spent all our time on this one asset of ours, we can create a giant octopus of owned and operated companies and businesses to the future.

All right. MGM, here we're dealing with the opposite of the fear of disintermediation. MGM is a giant hedge against this intermediation. I use that a lot, because it's in the genuine and proper because it really is the genuine and proper scare word for the disruption from artificial intelligence. For sure, AI will affect everything other than live entertainment and travel experiences, as there is no simulation that's going to get between MGM and its worldwide customers. Please think on this. These assets can never be disintermediated. Las Vegas can never be disintermediated and no one, nowhere is ever going to build the depth and scale of Las Vegas.

It's now and it's forever going to be the entertainment capital of the world. It's got more infrastructure per square inch than anywhere else, sports, gaming, performances from every big time interior, the best food, on and on. It may ebb and flow given macroeconomic issues from time to time. But it's been a constant build over 30 years or 30 years really when Steve Wynn kind of reinvented the city. Las Vegas is actually almost 100 years old. And MGM's footprint in Las Vegas with 9 resorts is so violently strong that it has 0 comparison.

Back in 2020 at the height of COVID, we invested in MGM. We bought it right, understanding extraordinary position in Las Vegas that had a superb management team, exciting digital opportunities and was building a truly most extraordinary resort in Japan. Our expectations have been realized [indiscernible] rebounded from the lows of the pandemic. Digital operations scaled to profitability and have bought astounding 45% of its shares. Shockingly, despite all this, MGM share prices declined 29% since the beginning of '22. As management said on the last earnings call, if you back out the value of MGM's publicly traded holdings in MGM China and the value of its 50% stake in MGM, everything else in MGM is trading at less than 3x EBITDA.

It's extraordinary to say the least, and it will not continue. Think about what we got at them, Jim. Just think about it without all the gnarling on this and that individual stat, 9 casinos, 40,000 hotel rooms, convention centers at scale that no one else has anywhere, restaurants, hundreds, 400-or-so restaurants, 120 music halls, arenas, et cetera, upcoming F1 and more sports teams coming along in the next years. it just can't be duplicated anywhere. Our ownership at MGM is now at 24%, and I believe it will increase over time, both by our direct purchases as well as MGM stock purchases.

I'm continually awestruck that the stock market seems beyond too focused, I have always does, I guess, in the short term. But Bayer's point to the economic overhang of Las Vegas after this massive post-pandemic bounce, the 50-50 JV structure at MGM, BetMGM and the fact that Japan is going to take some years before it comes online. When Japan comes online, the only casino in the entire country of Japan, I mean, can you imagine? Well, all these people may say in MGM, they're all wrong and time will certainly tell. On IAC capital allocation, which I telegraphed earlier, we purchased an additional $100 million of shares since our earnings call in early August, which brings our total year-to-date purchases to $300 million, which is 7 million shares or 8% or so of our shares outstanding.

Our cash balances are over $1 billion and they will be enhanced when we sell these noncore assets. I don't intend for our capital sit idle, nor to be spent on acquisitions at high prices and speculatively questionable concepts. We've been inventing and building businesses at IAC for over 30 years. We had a green field for decades in Internet and e-commerce. That period has pretty much ended, but it doesn't take a birdbrain to be sure there are going to be opportunities in the future and in our future. But I'm patient. Well, I'm not really very patient about almost anything. But I'm cautious now of the pricing of assets, and I've got no intention of splurging.

And if needs more saying, I will say it again, People and MGM have enough opportunity to fully engage us. So now Neil Vogel will give you more detail on People Inc.

Thanks. Hello, everyone. I share BD's confidence and optimism around our business. We had a strong quarter. It was our 8th consecutive quarter of digital revenue growth. The 9% digital revenue growth in Q3 was the second quarter in a row at 9% and high end of our guidance range. We've talked to you guys a lot about what drives our performance, and it remains consistent. Our performance resulted from 3 things: our iconic portfolio of brands, the scaled audiences we've built and our superior execution around those 2 things. We've continued to focus, as we said we would, on diversifying our sources of revenue and audience in the quarter.

And you can see the evidence of that and the strong results in our licensing and performance marketing revenue streams and our continued extremely strong off-platform audience growth. We've got real traction, and we're excited about it. Even with our investments in the quarter, we saw improved profitability, $72 million of digital EBITDA, 27% margins and 26% incremental margins around that. And we're positioned to grow as we evolve the business. And as BD said, we're doing this on our front foot, not our back foot, and we feel very good about that.

So going to the next slide. Our core asset and advantage is our iconic brands. These are incredible brands with real gravitas, real cultural resonance and real history. People, Food & Wine, Travel & Leisure, household names. And each has scale that puts us near the top in audience size or at the top in audience size of every category that we participate Fun fact, we reach over half the U.S. population each month with our assets. And importantly, for our brands and the type of content we do in an era where content feels increasingly artificial and manufactured and is, in fact, increasingly artificial and manufactured. We are authentic. And our audiences want more of what is authentic. You see it in our growing audiences, and we see it in the responses to our offerings. We have a real relationship between our audiences and our brands. It's been built over decades. That is the core, and that is the underpinning of the opportunity to grow the medium business and do a lot of the things BD talked about.

So if we go to the third slide of our presentation, an important concept is we are where audiences are and where audiences are going. Diverse sources of audience have become a real strength of ours and have been a real focus of ours for a longer time than it's been sexy. We've -- what we've been doing across audience categories is exactly what drove our growth over the last 8 quarters. And let's talk about our different categories, just so everybody understands what we do. The first is sort of the left side of the slide, which are owned and operated assets. These are assets obviously we own, they're scaled, it's diverse ways to reach audiences, everything from events to websites to e-mails to our direct-to-consumer properties, off-platform where our content lives on other platforms and increases the value of those platforms. It is where audiences are increasingly online and we're there with them.

Apple News, YouTube, TikTok, these are our recent Feedfeed acquisition, we'll talk about, et cetera, et cetera. And then the third category is addressable audiences. an addressable audience for us is how can we take our assets and our skills and extend them across the open web. What -- and we do that with something called D/Cipher+, which we've talked a lot to you guys about -- we can leverage our trove of proprietary first-party data around consumer intent and use that to target ads not only on our sites, but around the web, our ads perform in a superior way to almost anything we can find online, and we can extend that across the Internet. This allows us to 4 and 5x the addressable market for our ad products and unlocks the ability for us to target CTV as well, which we're very excited about.

D/Cipher is our fastest-growing product by revenue growth, our fastest growing by investment since its launch, it has grown every quarter sequentially and we're excited. It's going to be a meaningful contributor in 2026 and really expands what we can do with our audiences.

Slide 4 outlines our audience trends. And let's specifically talk about changes in Google search traffic and what that has meant to us. As you can see from the first chart on the left, and this is the first time we've shared this, the rise of AI overviews on the Google search results page for searches that we compete has been rapid and dramatic. Google Search as a traffic source for our core brands has gone from 54% of our traffic 2 years ago even more than that, if you go back to the time we put Dotdash and Meredith together to 24% of our traffic this past quarter.

The good news, and this is the good news is we've maintained our scaled audiences despite this because we were prepared for it, as BD said. We were very early to recognize changes in Google, and we are very early to recognize AI, and that is why every other meaningful source of traffic has increased for us over the past 2 years. We expect the Google Search challenges will continue, but believe our strategy and investments are going to enable us to maintain our overall growth. If you look at core sessions, as we mentioned at the Goldman conference a bit ago, we expect it to be down this quarter in the range of 4% to 6%. We're down about 6%. That was due to some tough comps. We lapped the Olympics last year and the lead up to the election and obviously, the Google challenges. This is the primary reason our ad revenue declined 3% in the quarter, which was very much volume-related, not rate related, but we expect to return to growth in Q4 despite continued pressure on Google sessions.

And off-platform use has been a bright spot. Again, it's something we've been focused on for a long time. And again, I can't say this enough times. It is where consumers are and it's where consumers are growing, off-platform audiences accelerated 66% year-over-year. Over 1/3 of this quarter's revenue is not based on user sessions and this is our fastest-growing revenue stream at 16%, our fastest growing -- faster growing than the outset based revenue. And I want to talk a little bit about our Feedfeed acquisition. Feedfeed, as I think most of you know now, is a leading food influencer network. It's the first time we have bought of capability and not just a media property, it just shows our focus on how we're going to monetize audiences off platform and how we're going to play in an influencer marketplace, which is increasingly important as a media mix, particularly when selling to advertisers social advertising is the fastest-growing sector, digital, and this really put some wind in our sales in that area.

In regard to the last slide, we can talk about our execution, where we go from here. The first thing we should probably talk about is a bit of news that was in the release last night. Our AI conversations are heating up. As you saw in the release, we have an agreement with Microsoft to be a launch partner of what they're calling their publisher content marketplace, it is essentially a pay-per-use market where AI players directly can compensate publishers for use of their content on sort of like an a la carte basis. As we've said, we intend to have a seat at the table as these content markets develop, and we work directly with Microsoft. We are physically in the room with Microsoft, helping to concept this marketplace. The really interesting thing about this is Microsoft has committed to paying for content to support its AI efforts and Microsoft's CoPilot is going to be the first buyer in this marketplace. It's a very strong endorsement of us to be in the room with them and a very strong endorsement of the publishing marketplace and the value of content to make AI that is of high value. If you zoom out a little bit and you take a look at the broader Ideal landscape, which is obviously of great interest to us and to many of you guys.

There seems to be 2 types of deals happening in the world, sort of like this deal, the a la carte Microsoft type deal, which is a marketplace, a vibrant marketplace where people can buy content as they need it, or broad use deals like we have with OpenAI, kind of the all-you-can-eat deal, where people can access our content as much as they would like. We are very happy in either model. Both can be viable as long as our content is respected and paid for. we can work in our model. Now let's briefly talk about where we're focusing and we've talked about this on past calls as well. We are doing 2 things. We're trying to connect directly with our consumers and we're trying to connect directly with our advertisers and our marketers.

In key investments and growth initiatives, we have a deep pipeline, again, as BD alluded to, of direct-to-consumer ideas that we are going to be trying, running down, and we're very excited about them. We call it inversion ideas around here, but these are new ideas, harnessing the power of our brands. We've done some of this already. We've discussed my recipes and the People app. We recently launched something called Review, which is a new commerce offering based on our great commerce relationships for product categories that our brands don't typically cover.

And we've got real momentum around these direct-to-consumer properties. We're also very focused on editorial tentpoles that can drive multiple revenue streams, we just launched something called Red Plate Cafe, [indiscernible] and Gardens and most of you have heard of best new chefs and traveling or wealth best in food and wine. Moving down the page, we talked about Feedfeed, and off platform, we talked about D/Cipher+ and all the different networks that our content lives.

And to close, we've made some hard decisions this past quarter. We laid off about 6% of our workforce. We did that essentially to free up capital to make all these investments and to be very mindful of our profitability goals. So to close, we had a strong quarter. Our brands are great. Our audience are strong. Our execution has been pretty good, and we've got all the ingredients we need for a bright future. I'll now turn it over to Chris.

Thanks, Neil. I'll be efficient so we can get to Q&A, but there was some expense noise in the quarter, which on first blush Cloud's results we were quite happy with. Just turning to Slide 11. Let's quickly walk through People Inc.'s third quarter financial performance. As Neil said, we realized 9% digital revenue growth at the top end of our previous range. Strong growth in performance marketing and licensing offsetting decline in advertising revenue. I'm sure we'll talk about that more in Q&A.

Focusing on profitability. These numbers are pro forma excluding the 2 major onetime impacts in the quarter. $15 million of severance expense deriving from People Inc. reduction in force and a $5 million favorable gain for the buyout of a lease on attractive terms as we rationalize our real estate footprint. Reconciliations for both the one-timers are in the appendix. Digital adjusted EBITDA grew 9% pro forma in the quarter to $72 million. Incremental margins were in line with total margins. Continued cost management in the print division led to only a 10% decline in adjusted EBITDA and a 15% revenue decline, which we are happy with, and corporate costs declined 15% pro forma.

So in aggregate, excluding the 2 onetime items mentioned before. People Inc. produced $75 million in adjusted EBITDA in the quarter, above the high end of our previous guidance range, which had specifically excluded the effective severance.

Looking forward, we expect digital revenue growth in the 7% to 10% range and the usual strong adjusted EBITDA margins in the fourth quarter. For the year, we've slightly lowered the bottom end of our adjusted EBITDA guidance range to $325 million to $340 million. Note, this excludes both the $15 million in severance and $41 million of lease gains year-to-date. The wider reflection under -- reflects -- the wider range reflects some uncertainty around the continued disruptions in Google Search as well as approximately $4 million of legal expenses for our ad tech litigation at Google.

The timing of this litigation has accelerated due to favorable judge's decisions and we view this spend as worthwhile given the magnitude of the sought damages underlying our claims. But it will have a negative impact on profitability in the fourth quarter this year and going into next year.

Turning to Page 12. We wanted to highlight some large onetime items that impacted the quarter beyond those at People Inc. Cares profitability was impacted by $3.5 million of nonrecurring charges deriving from a lease impairment and severance. Additionally, our emerging and other segments swung to negative $20 million of EBITDA this quarter driven entirely by $21 million in legal expenses for litigation that concluded in the quarter related to a legacy business. We had included costs for this litigation in our guidance, but the final costs increased over prior estimates.

Importantly, we would note that the total expense for this legal matter for the year were $34 million that future expenses related to the matter will be negligible and that the rest of emerging and other is profitable.

Going to -- are the company's Care as mix performance. Good news is consumer continues to return to growth, great work by Brad Wilson and team on product, marketing, and we're seeing improvement in sign-ups and retention. Unfortunately, enterprise business has slowed significantly over the past few months due to employers tightening their spend with care. For the fourth quarter, driven by those enterprise pressures, we expect 7% to 9% revenue declines in care. We expect consumer and have line of sight to return to growth in the second quarter next year and then the whole business to grow in the back half of the year.

For the full year, we're -- modifying our adjusted EBITDA range for Care to $45 million to $50 million. reflecting the aforementioned $3.5 million in onetime severance and lease impairment costs as well as a little bit from enterprise revenue headwinds. And then finally, turning to Page 14. As Barry said, we bought back $100 million in the quarter. We bought back $300 million, about 8% of the company year-to-date. As Barry said, buybacks continue to be a core part of our capital allocation strategy and our shares at present would seem to be even more attractively priced than earlier this year and there's a high bar on M&A.

With that, let's go to Q&A. Operator, first question, please.

The first question will come from Dayton Helfstein with Oppenheimer.

Barry, nice to have you on the call. I was going to ask about your current thinking on MGM's valuation, what the market is missing, but I think you've covered that pretty thoroughly. So I guess it's really, I guess, why would an investor want to invest in MGM through you? Why wouldn't they just buy it directly, intellectually wouldn't and inherently trade at a discount, like under IAC, and I guess you'd say, that's -- you get it cheaper if you buy it through IAC, but then over time, how do you close the discount and obviously, the RF community is involved here and they find ways to make money. But I guess -- it just feels like fundamental investors are struggling with the IAC stock with MGM just such a big piece of the value. You can look out the stock trades. It literally mirrors the MGM stock price. So that's question number one, I guess, is just like what you can do to get kind of IAC to separate from the performance of MGM. That's question one.

And then question do, Chris, how should we think about the onetime expense cleanup in 3Q? Is there more to come as far as in the P&L? Or should we think about just the numbers should be clean going forward?

Well, I mean I don't think the issue is separate from MGM. As I said before, IAC is now will be primarily People Inc. and MGM. One, by the way, is, as we talked about, we are -- this, I believe, and increasingly going to become this publishing content and businesses that come out of that. And I would think any acquisitions we make, I wouldn't say any, but certainly, acquisitions in line with that, we just made a very small acquisition, but one, I think what was it? Total purchase price was?

We didn't disclose it, but not material.

Well, fine. So like around $10 million, disclose it or not. There it is disclosed, Neil. But, acquisitions in line with where we're kind of inverting this publishing business where we're going to create new businesses out of publishing. So that's kind of -- that is in the world of disintermediated media. I think we're going -- we are dodging it better than our competitors, and we're going to continue to dodge it on that side of it.

And then we've got this absolute disintermediated asset of MGM. The one is -- I wouldn't call it a hedge against the other. But there's -- you can certainly go out and buy MGM, when you buy IAC, you are getting our ambitions in publishing and you're getting MGM. And I think that, that is a very good balance. I don't think that's going to hold forever. I think new things are going to come out of that over time. But it is what it is. Well, you can buy MGM on its own, as they say, we're a twofer.

Yes. I think the -- I'll just quickly add to that, you are owning MGM, in our view, even cheaper through buying it through IAC than owning MGM. We fully support you buying MGM directly. We think both stocks as Barry said are outrageously discounted. But within IAC, you're getting as evidenced on the first slide on our private assets, all our holdings, People Inc., Care, Vivian or little search business that keeps chugging, Daily Beast and other holdings at a discount at a negative value. So embedded, you have even more value upside and optionality in the IAC stock if you believe in MGM.

With respect to the one-timers, and we do feel like we cleaned up a ton this quarter. we don't expect the severance or lease gains. We don't see anything of that continuing to people. We'll always be optimizing our cost structure, but large onetime charges at people, we see a clean path forward care, the lease impairment and severance there were onetime. And then on the emerging and other legal case, that is fully behind us. And as we said, we expect any future costs associated with that to be negligible -- we also had an adverse ruling on a real estate dispute that showed up in other expense and income, and that was settled through previously escrowed funds.

So we really cleaned up a lot in the quarter. Looking forward, the only thing in my mind that I'd highlight would be the Google litigation, where we said we're spending about $4 million this quarter and expect to spend a little bit. But in that case, we are plaintiff seeking damages. So again, it's what we believe is an ROI...

And the range of damages, potentially.

We're seeking hundreds of millions of dollars in damages.

Yes, from any point of view that we've looked at we went into this and said, is it really worth it for us to do it. It was almost as if because I don't like lawsuits, if we actually couldn't have done it, I wouldn't have done it, but we had no choice. There are hundreds and hundreds of millions of dollars that are potentially to be gained here.

The question will come from Cory Carpenter with JPMorgan.

Maybe for you, Neil, just thanks for the background on People. You had a busy quarter, the risk, the Feedfeed acquisition, the Microsoft IPO. Maybe pulling all together, just latest thoughts on the state of the business and what this indicates about your kind of view on the future, recognizing you covered some of that already. And then I want to follow up on the People litigation, which you just referenced. What's the update on that, Chris, I think you mentioned there was another ruling that has implication that came through recently. So how should we think about that going forward?

I'll go first, and then I'll pass it to Chris. I think in aggregate the things you mentioned are all reasons for confidence and optimism. The first is the Microsoft deal, which we talked about the mechanics of it. But I think what it is, is an indication that these deals are happening now. this summer, we started to block AI crawlers. It was very effective. It brought almost everyone to the table. I expect, and I think the pundetreate also expects there will be more deals happening. Hopefully, we'll have some news for you over the coming months and quarters over deals, that could be both sort of the all-you-can-eat deals any a la carte. So we feel very good about that.

The value of our content is becoming clear to people. That is very important. Second feed seed is just an evidence of how well we're doing off-platform and how important that is to our future. We're going to continue to look to ways to monetize these audiences. And I think it's worth noting, and it's something that Chris has talked about before. Our relationships with platforms like Instagram and TikTok and YouTube are very different than our relationship with Google. Google, took and use our content and then had to send traffic out to us, right? So there's an inherent conflict built into that, that they lose value in theory when they send us traffic. These other platforms, our content makes better. We make excellent content, excellent video. We have very close relationships with these, and our content makes these platforms better. So the state of the relationships and nature of the relationships is stronger, and it allows us to do things like Feedfeed, and I think there'll be more things like that in the future.

And then on litigation, just to give the background, the lawsuit builds on the government's antitrust case against Google from an ad tech perspective, where Google was found to have monopolized the ad server and ad exchange markets, harming online publishers. We Dotdash and Meredith combined into People Inc. today are and were one of the largest of those publishers who were harmed. And we, like several other publishers, brought suit to hold to Google accountable and recover the lost revenue resulting from Google's anti-competitive behaviors.

Now damages will be proved in the litigation, but we seek to recover hundreds of millions of dollars and damages. And to your question, Corey, you likely saw the recent ruling in favor of the Gannett and Daily Mail cases where the court ruled that the publishers in those cases don't need to prove again what the government has already proved that Google engaged an anticompetitive conduct. Just what are the specific claims and the damages there. The timing of our case was accelerated by our judge, which we view as a positive. So we now expect to spend about $4 million in the quarter and continue to spend in the coming quarters after that, total magnitude of spend or the pace of it is hard to predict. We'll keep you guys updated. But we believe, as Barry was saying, the spend is more than warranted by the opportunity to cover significant damages we believe we're on.

That is demanded, given what's there for the -- kind of what the government has already found, it's not just a question of saying, totaling up all our stuff. And I think just sending out checks, but I simplify things. All right, let's go on. .

Next question will come from James Heaney with Jefferies.

Just can you give us an update on what you're currently seeing in the macro environment so far in Q4 across the different IAC businesses? And then I had another one.

I think just for environment, everything is good at the middle and upper end, not so great at the lower end. And you can make any prediction you want about what's going to happen in the future. But -- it's been this for a while. Again, for exome exogenous event, I suspect that will continue for a while.

Yes. I'd say if you look at our performance marketing and credit to Neil and his team, but it's growing strongly. The consumer -- the U.S. consumer is hanging in there and spending. It is skewed to the high end. On the Care enterprise side, we have seen corporations belt tightening probably due to a bit to reducing head count and also due to pressures on health care costs and others. So we have seen some pressures on the corporate benefit side. But broadly, things seem in the macro economy seem pretty good.

Yes. I mean I'll just add one thing. I think looking at the ad markets in the macro sense, I think it's in line with what BD said. I think if you had a 10-point rating scale, they're probably at 6, healthy moving ahead, but there are challenged categories. The challenged categories aligned with what BD said, CPG, food and beverage, there's real momentum in some of the higher-end categories like travel and tech and some other things. But I think the ad market is solid, not fantastic, but solid.

No, I was just going to add. I'm also involved in share of Expedia and Expedia in the general travel market with some exceptions, Canadian travel to the U.S., some other little things, but Travel is exceptionally strong. And we've been double-digit growing at Expedia now, I don't know, 12 quarters, and it only accelerates. So anyway. I'm not on all that. Next question.

And then the second part of my question was just around capital allocation going forward. We saw the $100 million buyback in the quarter. Curious how to think about that going forward as you kind of think about potentially M&A or other uses of cash?

Well, I mean, I kind of think I talked about that. I don't know what we call it, a signal or a giant flag, green flag going down or saying, we're opportunistic. The opportunity is now. We're going to be buying stock in IAC. We're going to be buying stock in MGM. That's what we're going to do with our capital at this point as far as acquisitions go. I've said before, I said it earlier, a lot of things are too pricey. .

And we're not anxious. We're always interested. We're always curious. We're always digging around and seeing what's on what's around the next corner, which we've been doing fairly interestingly for 30 years. I expect there'll be more of that being out there banging at things that are overpriced, of which many are. We are wildly underpriced. So I want to stay on that track.

Your next question will come from Eric Sheridan with Goldman Sachs.

Maybe 2 with respect to People Inc. Can you talk a little bit about the building blocks of growth, both the headwinds and the tailwinds that you're seeing with respect to digital revenue that inform your forecast for Q4 and how we should be thinking about those broadly going into '26 and the second part of the question that maybe feeds back into it would be how should we be thinking about the growth trajectory of off-platform traffic and revenue for People Inc. and the resulting margin impact from that traffic and revenue going forward?

I'll take a crack at the first and then I'll hand it over to Chris. I feel like going forward, I think we're in a pretty good position. I think we expect a solid Q4 despite the session challenges. The session challenges is what I would say is the primary headwind in the business. ads will improve. We're a very good sales team. We have very happy clients. We have very good premium sales. off-platform is going to improve. D/Cipher is going to start to kick in. Commerce will continue to be strong, although due to the timing of some payments, it might not be as year-over-year strong in fourth quarter, licensing continues to perform and be strong. .

Our brands are really resonating. They're resonating on our own assets including a lot of the new stuff like People app and the events we're launching and all this other stuff, they're still resonating with sessions. It's still a big number, even though it's not growing. And again, it's really working off platform, and it's really working in all these other places. So we feel really good about the formula for Q4. I think it's going to be the same formula for 2026 roughly. The mix is all going to change. Again, I think in 2026, you're going to see real improvement -- real growth, not just improvement in D/Cipher+, and some other things and get some real traction on some of these new things we've launched. And we'll go to Chris.

Yes. And to talk about margins, there are multiple different components of our off-platform traffic, including Apple News Plus, social media, as Neil said, a D/Cipher+, they have different margins, but I think for simplicity and this is, in many ways, probably a modeling question that you guys would have as you forecast higher growth in off platform. for simplicity and conservatism, incremental digital EBITDA margins on off platform, you can assume are neutral to slightly accretive to our aggregate annual digital EBITDA margins of plus/minus 28%, 29%, maybe a little more.

So I would think of it as around 30%, maybe a little bit more of incremental digital adjusted EBITDA margins on off-platform and then on platform, as we've said before, is higher.

Next question will come from Ross Sandler with Barclays.

Great. Just following up on that last question, Neil, like there's some crazy forecast out there. I think Forrester just put something out that said Open Web display is going to decline 30% next year because of the shift to Gen AI. I doubt that's what's going to happen. But as you're talking with agencies and brands about outlook, what are you hearing? And how should we think about the context of people growth relative to the industry in '26. And if we strip out like the impact from Google, which is down to mid-teens of revenue from that traffic, is the rest of People going to grow in line, faster or slower than the broader open web display industry?

What I'll say is we are not hearing down 30%. We -- again, we are the biggest publisher in America. We have scale. We have terrific brands. We have a history of ad performance. We have great assets we're launching a whole host of new things. There's a lot of energy around everything we're doing from events to off platform to influence things. So we're actually hearing the opposite. There's a lot of energy around our business and our ability to reach audiences. I can't speak to the long tail open web, I don't know where this information comes from, but it is inconsistent with what we are hearing look, we feel pretty good about next year.

And I think when you get the mix of brands and trust and the new things we're doing at our history of performance and our history performance advertisers I think we're much more likely to be share takers in this market than anything else.

We have been going to be. I mean, you can narrow at this or that little fat or that, whatever. But this business, for the last, I don't know, how many quarters that we've been growing, and despite everything that has been thrown at it, this People Inc. and this group that Neil has -- and how many people you got in this thing?

3,500 plus

I mean, they've been executing just such an outstanding way through this while at the same time, we're going to build new businesses inside and out of all the content reboost and all the knowledge that we've got in almost every sector. How many books do we publish?

I mean we've got 40 brands. We actually in print. We have 6 books still in print.

How many print?

6.

How many...

More than 200 million actual books printed a year.

That sit on People's tables that -- you look at Southern Living, which I see all [indiscernible] been in the South. I was in Savannah last weekend. It's all around. Every place you go, you see Southern Living it has such great influence, but not only from the south, but beyond it. So you've got all these things cooking. And as you say, I don't know, how do you say it any better? You say you're confident in the fourth quarter and your projections for next year are solid and good. Plus, we're building all these new businesses. It seems to me like pretty good. it.

Next question is from John Blackledge with TD Cowen.

Two questions. First, could you talk about corporate costs and how we should think about trajectory into the fourth quarter? .

I can think about corporate costs going lower.

Keep going, John.

Yes. Into fourth quarter in 2026. And then second question is, how should we think about the timing of slimming down the IAC's assets? And should we consider everything outside of people and MGM is noncore? .

Okay, Chris, you [indiscernible] answer .

On corporate overhead, we talked about how we've been rationalizing over the year right now, we're at a run rate of basically $22 million to $23 million on a quarterly run rate basis. That is -- there's a little bit of onetime noise in the last quarter that we're still working through. As we've said before, Q1 was highly elevated due to spin costs, CEO separation, et cetera. We expect to be in the mid-80s range from there and we'll -- next year, and we'll continue to look to rationalize costs. .

Yes, it's going to come down. What was the second thing?

Just the approach to Exiting or strategic...

Look, not going to do it, dumbly. I mean we're going to get good prices for everything that we've got. But we are going to -- anything, frankly, other than really -- other than not really, other than MGM and People, those are the core, right? No more. So -- and we've got several other businesses that have real value in them.

Yes. We know we have strategic assets and inbounds from time to time.

So timing, 3 months, 6 months at the most. And then we'll probably have another, I don't know, $1 billion or so of capital.

Well, we're not going to speculate too much, but we will...

I said around that. I just speculated.

Your next question will come from Dan Kurnos with the Benchmark Company.

Chris, can you maybe just talk a little bit about on the run rate savings from the RF. How much do you expect to reinvest, how much will flow through to the bottom line? And then Neil, I guess, sort of a 2-parter. I've asked you before a lot about communitizing your properties. Obviously, Feedfeed looks like more of a move in that direction. And I still think people don't get the value of the off-platform interactivity that you're building. So is there a way to throw more gas on that fire and are there any creative new channels to expand distribution on?

I'll do savings first. So we said it's about $60 million of run rate savings. I think you can think about half of that being realized in profitability and margins than half being reinvested in high ROI digital activities. We've called out previously the drag on our incremental margins that have been occurring Q2, Q3 with our investments in D/Cipher+, my Recipes and People app, et cetera. So we do have these investments we can make as well as content. We're conservatively saying we'll reinvest about half as we go, but we'll be thoughtful as we look at the performance of the market and our growth to make sure we drive profitability and margins using the savings. .

Yes. So I think your question is how do we poor gas on some of the off-platform stuff we're doing. And what I would say is we're really focused on doing that. Our brands are uniquely permission to play in these places. People love them. And again, I go to in a world where things are fake and artificial and no one as who's made what. When you see things from our editors, our influencers, our brands on social. The response is great, and the stats of them are great. Like -- for instance, last night on Jimmy Fallon, we announced this year's Sexiest Man Alive, the 40th Sexiest Man Alive. That will be...

Who is it?

Jonathan Billy from Licken. Okay. I think it's a great show. I wanted to take an Barkley, but they gave me...

You guys were 2 finalist, I wasn't on the run.

But -- so -- but where you will see that, today, is there will be so much in and around social on that from just a simple release to almost like reality type event type buildups for how we got here. Another great example of what we're doing is in, in style, we launched a series of you called the intern, which is like a mock reality show, 3-, 4-minute episodes. We are getting millions of use per episode on this, and it's a bit of a phenomenon among like the Gen Z female crowd, and it's been a huge hit.

We are -- if you're in the target market of our brands, I am very sure and you're active on social, you will see us everywhere in all kinds of ways. And it's part of what Chris has talked about, we are pivoting our resources to where the audiences are, and you're going to see much more from us here.

Your next question will come from Youssef Squali with Truist.

This is Robert on for Youssef Squali. Just one. Sorry if I missed this. Curious what the deal with Microsoft looks like, how long it's for and the unit economics there. And any prospects for new deals on any of the other businesses?

I'll answer it as quick because we already covered it. Yes, I anticipate there will be new deals coming forward. And two, we didn't disclose any terms of the Microsoft deal. Those are confidential. But again, it is a pay-per-use marketplace. So it's a little more a la carte where something like our open AI deal is much more all you can eat, much more of a blanket deal.

The next question will come from Stephen Ju with UBS.

This is [indiscernible] on for Stephen. So just a couple of questions. the LLM that have been designated as high-value content seems to be changing and publishers are making the change in real time to adjust away from traditional SEOs. So can you just talk more about the steps that you have taken so far -- and the other question is in the deck, it mentions that Google search now accounts for 24% of core sessions.

And it seems like the rate of decline has been accelerating, but at the same time, it's also de-indexed from being half your traffic from 2 years ago. So the headwinds have to dissipate over the coming quarters. So can you talk more about the steps you're taking to control what you control, especially as it regards to the traffic you're getting from elsewhere?

So let's do the second question first. I didn't totally understand the first question. So I'm going to reask that after I answer the second. Yes, you did -- I mean, you did the math right. We have we're down from at the time of our merger, 60-ish percent of our traffic came from Google Search and now it's down to 2. So we can see the other side of this. We know what the world looks like, where Google is a very limited source I don't know where it ends. It's definitely not going to 0. I mean we still get traffic from searches where there is an overview.

So we still do pretty well, and they're not in every category. So I don't know where it ends up, but we're confident we can deal with it. In terms of -- I think what you're asking is how do we fill the sessions gap to keep sessions healthy as part of our mix. That's a combination of a whole bunch of things. It's our own e-mails, it's Google Discover, which is their version of Apple News.

It's traffic from direct, it's referral traffic. It's traffic from our direct consumer things we've built, like my recipes and some of the people app stuff. There's a whole host of things we're doing to keep sessions healthy that we'll continue to do. Can you ask your...

That's enough.

Last question will come from Matt Condon with Citizens.

I'll just ask one here. Barry, you talked about launching our standing up businesses based on people's content and brands. Just what stage are we in today with that? Would we expect the products to be launched during the coming quarters.

I don't know about coming -- well, certainly, quarter-by-quarter. What I can tell you and Neil can talk about this, but we started this process this inversion idea, a month or 2 ago, we're going like book by book as deep as we can in sessions where given how much we know about these things. it seems to me, at least probable that we'll be able to invent take out of that knowledge, new products that we own, whether they're new shows, as I've ripped on white LOTUS.

But it seems just very obvious to me. If you got travels, you know so much about travel and you're sitting around looking at all those pictures and you say, "Well, you know a show about a resort, not hard to think about. It's just the skim of the surface. -- in every one of the categories. And we can cover -- I mean, almost every category of content. So looking at our content, as a way to drive out of it, all sorts of new things that we can start that we can own seems so juicy to me. We can spend mean the next forever, just doing that deep and wide. So I would say it isn't going to come kind of next quarter, but -- we're in it now. But I want to be clear, we do -- we have a roster and pipeline of ideas that are like the people up and like my recipes, ideas that are a little closer to fundamentally what we do now that we are going to roll out over the coming quarters.

Yes, there's not going to be a quiet period Yes, no, no. These ideas are coming up. The fundamentals and all the stuff that is natural. -- has been done -- is being done will come out in the next quarters. The stuff I'm talking about, which is real invention here, I think, is going to take a while. But that's why I think it's got I think there's more future in this. I talked earlier about the greenfield of e-commerce that we've exploited for 20-some-odd years. I think there's greenfield here from now to forever.

Or the strength of the brands because of how much -- what's it -- look, just in the initial sessions, Neil, that we had with our colleagues, -- we just came up with this, that and the other .

It's incredibly energizing to have these brands that have permission to do these things, and it's fun and it's going to be exciting. .

Yes. But -- so I really do think -- and I don't think I'm overhyping it, but this inversion concept of dealing with our brands in this way, we are out impeding everybody else in publishing and chugging through to the other side of the search all these search downtrends, I think that's just puts us in a just fantastic issue. Anyway, with that, thank you, Neil. Thank you, Chris, certainly. And glad to be somewhat noisily with you on this call, and I hope that I will be able to continue that. So thank you all for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Okay. I think in the interest of time, we're going to keep moving along. I think we've got -- I don't know if we can close that.

But it's my pleasure to have the team from IAC as well here at the conference this year. They've been here now for a couple of years in a row. We always appreciate when they make the time to come. Christopher Halpin, CFO.

Before we get kicked off, I am going to have to read a safe harbor. So before we begin, I'd like to note that our discussion may include forward-looking statements as defined under federal securities laws. These reflect the company's current views and expectations, but actual outcomes and results could differ materially due to a number of risks and uncertainties as described in its SEC filings, including the most recent Form 10-K and subsequent reports.

We may also touch on certain non-GAAP measures such as adjusted EBITDA, which the company refers to as EBITDA for simplicity. You can find reconciliations to the most comparable GAAP measures in the company's earnings materials, SEC filings and on its Investor Relations website.

Christopher Halpin is Executive Vice President, Chief Operating Officer and Chief Financial Officer of IAC. Mr. Halpin leads Corporate Finance, Accounting, M&A, Investor Relations and Administration functions while also overseeing the day-to-day function and execution of IAC's businesses. So I got through it all. I tried to lay the groundwork for you.

I actually learned a few things in there.

I have a couple of jobs maybe you weren't on a lot.

Well, Chris, look, I always appreciate the opportunity to talk.

IAC has been on quite a transformation over the last 12, 18 months. You did the Angi spin-off that was completed in March. For investors getting reacquainted with the businesses and the assets that sit under the IAC umbrella, maybe you'd just like to level set that to kick us off.

Certainly, and thank you for having us. So we are a holding company. Right now, we have 5 consolidated businesses. Our largest People Inc., the recently rebranded Dotdash Meredith, Care, Vivian our -- we'll talk about Care.com today. Vivian, our health care staffing marketplace, our Search business and then The Daily Beast.

And then we have 2 large minority stakes that we consider strategic, our 24% stake in MGM Resorts and our 32% stake in Turo, the leading car sharing business. We have right now about $830 million of cash at parent, no debt at parent and full flexibility to use that cash. And we believe we trade at a significant discount to fair market value, something we'll talk a lot about today.

We are -- when you look at the value of our large MGM stake, which is publicly traded, our cash balance at corporate, and then the value of our private holdings. We think there's tremendous value to unlock and something that we are focused on through execution, through capital allocation and through catalysts, all of which we'll discuss today to unlock and drive that value.

Yes. I want to stick on this theme of capital allocation. Probably the first part of every shareholder letter I go to every quarter.

Talk to me a little bit about the balance between potentially returning capital to shareholders and the M&A environment you find yourself in and where there might be opportunistic sort of shots on goal, when you think about M&A as a use of capital versus just returning capital to shareholders?

Yes. It's a very fair and common question from shareholders.

If you go back a year or so, we were not buying back shares in 2024. We said we were looking to maintain cash for M&A. Number of investors very fairly asked, can't you walk and chew gum at the same time? You can do both. You've also got a number of different avenues to raise additional cash, if you wanted to. If you chose to buy back shares, reduce your corporate cash balance, there are a number of channels you could go down through your assets to raise more cash to do M&A, you can do both.

Our Chairman, Barry Diller, said earlier this year that buybacks were back on the table. We bought back $200 million in the February to April timeframe, about 4.5% of the company and about 4.5 million shares. And the question we get is why did you stop? And people were disappointed. We didn't.

It was simple as the message was buyback $200 million. That was our approval. We bought it back. Now let's look at -- see if there's M&A opportunities and analyze that. Since Q2 earnings, we have been buying stock. And that is something that we will continue to look at as we go. Barry, does not want to be predictable. We get this question a lot. Why don't you buy X percent constantly? That's not in the IAC DNA. That will aggravate investors or so on. But we do see value in our shares. We have bought back since the Q2 earnings calls, and we'll continue to analyze.

On the M&A front, we're looking for interesting things that we think will create equity value. People ask us about size, profile, et cetera. It is hard to predict. We look at a variety of of different businesses size, scale. But it is one where it has to be something that will add and generate equity value to the overall IAC story.

Maybe just following up on that, this conversation you and I have had on public earnings calls. Just the environment itself, public markets are at all-time highs. Private market valuations are quite elevated by almost any historical measure.

How much of that is a gating factor? Because I've been around the company for a long time. You guys are very disciplined buyers. You're very driven by ROI. How much does the environment act as the headwind to deploying capital into M&A?

It definitely factors in. And for any private transaction to happen, you need price discovery and agreement between buyer and seller or company and investor. You're in this world of ARR multiples and the like, where an enterprise SaaS framework is increasingly applied across a variety of other segments, which may or may not be applicable, but that's where we are. We are, at the end of the day, I don't want to say cash flow buyers, but because we'll buy things that may not be producing cash flow, but where you have clear line of sight to economics and cash flow generation. That is in our DNA. I think that's why IAC has been very successful at investing in digital and looking through certain dynamics to seeing underlying cash flow economics.

On the flip side, for all the froth and momentum right now, there is probably an overemphasis on AI and core AI theme. So there may be opportunities in other segments. That's part of our thesis, things that are out of favor. And again, we're not looking for 20 investments. We're not a VC fund. We're not looking to build up a huge presence. We're looking for a couple of good ideas as Barry Diller would say, and that's what we're focused on.

Okay. Understood. You referenced earlier the decision to re-brand Dotdash Meredith to People Inc. Talk a little bit about the strategy behind that re-brand and how the team there, along with the team at IAC sort of think about the element of that re-brand sort of repositioning the company in the broader media landscape?

Sure. The name Dotdash Meredith was inherently kludgy. We've all gotten used to saying it. But if you say the phrase Dotdash Meredith to people not in this room, not in this industry, it could be an accounting firm or a consulting firm or something.

And there was a real focus on -- we believe -- Neil and team have built an incredibly differentiated -- what we believe is industry leader, across content, across digital and across, we think, ad technology that -- we had a desire to build out the branding and presence of the enterprise.

And the brand People has been tremendously strong for decades. It has really been revitalized since the merger of Dotdash and Meredith. It's extremely strong, is doing really well across platform and has a number of incremental growth vectors, that management is driving. We also like the concept in this AI era of people creating content for people, lower case p, that it is humans who are experts, who actually do the work, who are -- who know everyone in Hollywood, who have done the travel, et cetera, creating premium content for readers and we'll use technology and AI and others where it makes sense, but it is true premium content. And for all those reasons, it was clear that People brand made sense for the company.

Understood. One of the big topics going into and out of the last earnings release, and it's been a topic now for a number of months has been, how the broader search environment is shifting and changing and some elements of how AI have changed dynamics around traffic?

And you've also presented some information on the earnings call about traffic diversification and some of the misconceptions around Search. Talk a little bit about what your key learnings have been about how your Search business is positioned relative to the narratives in the marketplace and how we should be thinking about that beyond just the current quarter, but over the medium to longterm?

Certainly. And we sought to provide incremental information and furnish the market with incremental insight last quarter, as there's so much agita around the outlook for Google Search and what's going to happen for all those who get traffic out of it, be it AI overviews or other things where they're cluttering the search page.

Take a step back, when we combined Meredith and Dotdash, Neil said about 65% of total traffic on platform sessions is the metric we described came from Google Search. That, over time, we have seen -- we wanted to reduce that dependence as we saw ChatGPT come along. And also an underrated dynamic was the really jamming of Reddit into the search page in '23, which was very disruptive to the Google Search experience.

Neil and team have been actively working to diversify our traffic away from Google Search and also Facebook, which I think at the time of acquisition was about 13% of traffic, is minor now, because they put the gates up so much in the '23 period, but also to build the direct relationships with consumers, direct NAV traffic, e-mail and other channels. And then another factor we've seen is the growth in the aggregator platforms, be they Apple News, which isn't captured in our sessions, but in our off-platform views, but also Google Discover, Newsbreak, et cetera.

And so in the disclosure we had, you can see the decline in using second quarter numbers, Google Search is a source of our sessions from the 50s down to 28% last quarter. And People Inc. has really filled that hole with other channels. And then the other layer we added in was Sessions generate 64% last quarter of our Digital revenue entirely. So if you do that math, about 18% of our total Digital revenue comes from Google Search. Now we expect that to continue to decline as whatever disruptions happen with AI overviews.

We think it's going to be asymptotic to something because the idea that there'd be zero traffic means it's probably no Google SEM business, which we wouldn't expect. But put that aside, we expect to continue to fill and drive Sessions away from Google Search. We also talked about off-platform views that we were driving. And we view that as a tremendous avenue of growth across Apple News, which has been a great partner. YouTube, Instagram, TikTok and elsewhere, where our brand, our content and our technology drives engagement on these third-party platforms, where it happens there, but we can monetize through different channels. We talked about rapid growth there. And those two factors, combined with our strong performance marketing as well as the D/Cipher+ product that we can talk about, are why we view ourselves as able to grow and drive value in Digital going forward despite the disruptions in Google Search.

Okay. I want to stick with this theme. I do want to come back to the Digital growth more broadly. But -- so we're reorienting where you get traffic for your media properties.

One of the questions I typically get from investors is how to think about the end state of what that means for growth in traffic and what it means for margin profile for the business over the longterm as well?

Yes. And the margin profile of on-platform and off-platform is different. We've said on-platform -- if you look back at '24, our overall consolidated Digital EBITDA margin was about 28%. We would view fully loaded on-platform margins in the 50% range. We would view off-platform and things like D/Cipher+ as neutral to accretive -- slightly accretive to that 28% digital EBITDA margin.

So we can keep profitably adding impressions and engagement through this off-platform strategy. We had a tough quarter for incremental margins last quarter, and we're going to continue to work to get back to those incremental margins because of the investments we're making in things like D/Cipher+, People App, et cetera, but we feel good about the ability to maintain and tweak up over time our Digital EBITDA margins.

So basically, let me build off of Digital EBITDA and build it back to Digital revenue, that was an area of strength in the most recent quarter. Talk a little bit about the building blocks of sustaining elevated levels of Digital advertising growth. How much of it comes down to the assets you built and acquired to drive that growth?

And how much of it comes down to elements of brand advertising spend versus performance marketing spend across those channels?

Yes. So if you look at our full Digital revenue picture, about 62% plus/minus comes from Digital Advertising. And within that is premium and algorithmic. About 25% comes from performance marketing. That's predominantly where we have affiliate relationships. We can drive traffic and engagement from our sites and also from third-party properties like Apple News to our e-commerce partners where there's exceptional intent and we're paid in an affiliate model based on purchases there.

We're a very large partner with Amazon, Walmart, Wayfair, et cetera. We also do some services like insurance and others, but that's been declining. But performance marketing, we think we're a real industry leader. And then low to mid-teens percent of that revenue comes from licensing.

We do view growth across all 3 of those. To drive growth in digital advertising. We want to maintain on-platform traffic ideally flat. We'll talk more about what we're seeing right now in a second, but maintain those Sessions, drive enhanced monetization of those sessions through D/Cipher and continued ad performance and then also performance marketing, grow off-platform sessions on these platforms, drive monetization. We feel great about our premium direct sales force and what we're able to do there, be it on-platform, off-platform, D/Cipher+, our ability, our relationships with agencies and advertisers, drive performance marketing, continue to stay ahead of the curve in terms of integrations with Amazon and others and then grow licensing. And licensing shows up in rev shares from partners like Apple News. It shows up in AI licenses like our OpenAI license. It shows up in our partnership with Walmart, et cetera. And all of those are growth vectors.

Talking about our current guidance, we guided last quarter to 7% to 9% Digital revenue growth for Q3 and 7% to 10% for the year. We also guided to 25% to 28% Digital adjusted EBITDA margins for Q3. We are reaffirming that guidance across all of those elements. What we would say is right now, we expected within that -- on the last call, we said we expected for O&O traffic to be down a little in Q3, up a little in Q4 and flattish for the second half. And then off-platform engagement as well as Performance Marketing and Licensing would overcome flattish on-platform sessions and drive growth.

What we're seeing right now is the traffic picture -- on-platform traffic picture is choppier than they've -- Google has ramped up AI overviews. We now say probably high 50s percent frequency. Where we guide right now is on-session -- on-platform sessions down 4% to 6% in Q3, something similar like to that in Q4.

But we feel good about hitting the 7% to 9% Digital revenue growth in Q3 and the full year 7% to 10% because of strength in off-platform, because of strength in Performance Marketing and continued momentum in Licensing. So we're working through it. It is -- there is -- there are some margin pressures with more coming from off-platform. We'll still be in that 25% to 28% in Q3 for Digital adjusted EBITDA margin. We'll be at the lower end of that, with the growth we're having, we would hope to be, but just more traffic, more of the revenue is coming from off-platform. So we'd say lower end of that 25% to 28% digital EBITDA margin in Q3.

Super clear. Building on that and maybe turning to where we are from a macro standpoint, that was more elements of mix in traffic. You have a unique insight into the current state of the consumer across a lot of different businesses you have as well as the advertising landscape broadly.

What's the snapshot as we come out of the middle part of this year with a couple of months to go on your current view of where the macro environment sits relative to your businesses?

Sure. We think about it in two ways that are linked. One is consumer behaviors and then also sort of corporate interpretation of consumer behaviors, and we'll talk about it more.

Consumer behaviors, we've been talking for a bit about the dichotomy of high income versus low-income consumers. Let's just say, I don't know if there's a word, a [ tri-chotomy ] of low income, middle and high. Low income, unfortunately, it's tough for the society, but it is in really difficult shape. And you're seeing that in terms of -- that's been going on for a while. We have less exposure in our portfolio to the lower-end consumer, but it's tough. And you can see -- I think people have talked about it in Las Vegas and in across durable financial services, et cetera.

High income is solid. Performance marketing, we've talked about, which is heavily, heavily commerce, is very strong at People Inc, and there was a solid Prime Day and has continued.

It's a question of where that middle-income consumer goes, and that's just uncertainty around the outlook on rates, on inflation, on the job market. I would say you still see the differing performance at the two ends of the spectrum. And we hope it continues. Obviously, where we are, the holiday period is incredibly important. So one way or another, it's going to play out the rest of the year, and we're watching it closely.

On the corporate side, you definitely see apprehension around hiring. At Care, we've seen companies tighten up on backup care around the edges of how much benefits they want to give and spend there. It's still a core benefit, and you expect more companies to provide it. But on the margin, companies are tightening up.

In the advertising segments, we get that question a lot. We see solidity/strength in pharma, in tech. Tech was something that's been weak for a number of years, is solid right now. We've seen incremental softness or lower confidence in retail and beauty. Part of that is what are tariff impacts going to be? What's inventory going to look like?

And then you've had the segments that have been weak for some time, such as food and beverage and home. So in some, there's always these patterns moving, especially because we're so strong in endemic -- certain endemic categories like finance, food, travel, pharma, et cetera. But we're watching it closely, and there's no key pattern. I don't think anybody has a crystal ball right now.

Okay. Understood. I wanted to turn quick hits now to some of the businesses and investments inside the IAC umbrella. Care.com has embarked on a sort of a turnaround effort. Efforts you can do there to give us a sense of where are we in getting Care as an asset where you want it to be over the medium to longterm and some of the things we should be watching for along that path?

Certainly. The Care is a business, IAC acquired it in 2020. Obviously, went through COVID. We knew when we bought it, there were major improvements that needed to occur. I think a lot of people in this room probably knew it as a public company.

A number of those were made on the platform side, on the trust and safety side, but the product was never improved to where it needed to be. Now it had massive COVID tailwinds of return to work, people wanting to get out and the fish were sort of jumping into the boat. That overly flattered the state of the business. And as those tailwinds dissipated and in some ways, reversed into headwinds, it highlighted the core deficiencies in the product and the consumer experience.

Brad Wilson, the CEO and his team, he came in about 2 years ago, have actively worked to get all of that where it is. We relaunched in June. And the Consumer business from a subscriber and retention perspective has been declining for essentially 8 to 9 straight quarters. We're now seeing the positive impacts of the improvements made in the product and also relaunching marketing and improving messaging. We're seeing direct NAV traffic increase for the first time in a while. We're seeing sign-ups increase. We're seeing subscriptions increase.

Because it's a subscription revenue business, that takes time. And we're also actually seeing renewals and retention improve. But we look for that to show up in the total consumer revenue profile over the coming quarters. Still a lot of work to do, but we're at least second derivative positive, getting to stability and headed in the right direction.

Okay. Understood on that one. The other two we get a fair bit about is just how to think about the non-control stakes in the business. The sort of MGM and Turo. I would say, historically, those were atypical, but they've been more in this form inside IAC for a while now typically the historical pathway had been path to control at IAC, but this was a bit of a different approach over the last couple of years. Talk about having those types of assets in the mix and how they should be thought about by investors?

Sure. So MGM, Barry Diller, our Chairman, said a couple of quarters ago, is core along with People Inc. and foundational. We have 24%, the company has bought back around 42% of their shares outstanding since we invested in 2020. And we think it is highly undervalued. It is the leader in Las Vegas, incredible market position there. There's agita or concern around the macro near-term outlook. The MGM has talked about what they're seeing and and how they're positioned.

We think you just have to get through the concern and get to the other side and Vegas will re-rate as that macro overhang dissipates. We've got strong regionals. They've got excellent international asset in China that's in Macau that's doing quite well in MGM China. And then the Digital has really been an underappreciated part of MGM.

BetMGM, which is a 50-50 JV with Entain has really solidified itself as the #3 player in U.S. sports betting and iGaming and put out strong guidance in July. Interestingly enough, Entain went up significantly. MGM barely moved, even though we both own half and around the same market cap.

So we think that will be an increasingly recognized valuable asset. And then also, you've got international -- you've got the international digital of MGM with the series of acquisitions they've done of LeoVegas and also our JV in Brazil. And over time, that will be recognized as a real driver.

And then you've got the international projects in Osaka, Japan, which is obviously very long dated, to be the basically monopoly or sole player in a big gaming market there and then the Middle East. So we view that as highly undervalued, great management team, a number of avenues to drive greater value and something that will be recognized over time.

Turo, we own about 32% there. Leader as of the last public S-1, they filed in Q3 of '24, just under $1 billion of revenue, cash flow breakeven and a real market leader. They are heads down executing on the market opportunity in front of them, to take share across rental car and other categories. It is a great product, great experience, Net Promoter Score, et cetera, and you're competing against good competitors to compete against in some ways.

It is all about unaided awareness is just too low there, get more people into the funnel, have them experienced Turo, have them understand the use cases, drive the repeat rate and scale up. That business was growing extremely rapidly, slowed down a bit. ADRs -- rates there should be less of a headwind now that we've gotten past some of the pandemic froth and some competitor challenges that were out there. And they are heads down executing and getting back to strong growth and unit economics.

Okay. Understood on both. One of the consistent themes we've asked about at this conference is AI deployment broadly.

When you think about the collection of businesses, and assets you're involved in? And how are you thinking about AI strategies for those businesses broadly versus deploying AI internally to drive productivity and efficiency gains?

And that's very much how we think about it. And we have discussions among -- we have summits across our CEOs, across our CTOs, and then also, we have -- we track AI integration.

So internal-facing code development, product efforts, QA, HR, all of those, we track that. A few of our businesses, Vivian, is one which has integrated AI into their product development in a way that blows me away, including having agents constantly. Agentic AI just constantly use the product and make recommendations on best practices to improve it or where there's dead ends in the product. That's more continued optimization internal, workflows, et cetera.

Externally, you've got a number of avenues. Clearly, as interactive voice continues to scale up, where you've got a large customer service element, there will be savings. And I'm a believer that it's going to sort of be the ATM machine versus bank teller, where once you've dealt with a high-quality -- wrong word, but omnicient interactive voice AI, you're not going to want to go back to the BPO call center person who's dealing with a highly structured screen and you've have that frustrating experience.

We're exploring those across on-boarding, particularly for our marketplaces, Vivian has done this, Care is doing it. Others, dynamic, flexible on-boarding of providers, of customers is a way better experience than traditional static drop-down menus or BPO call center operators.

Another one that is really neat, Vivian is using AI to drive fulfillment of jobs with nurses. And it's like a lot of good insights, which is they're obvious in retrospect after they happen. But the agentic AI can call the nurse whenever they want 24 hours a day versus the time -- sort of the business hours, that the BPO operators that we've been using were. And also, it is a much smoother experience for the nurse in terms of identifying, qualifying for a job or seeking a job to go back and forth.

So we've seen conversion rates per call triple using AI over human operators. Now that's a specific use case, but we'll see more and more of it. At the end of the day, it is all about the executive champion in-house. Everyone can come up with any reason not to use AI or take the risk on integrating into their workflows. You need that CEO, CFO, CTO who are championing it and also testing it. But we've seen it -- some things don't work, but we've seen a lot of good applications already.

Okay. We only have about a minute left. Why don't you leave us on your final thoughts with respect to the key operating and strategic priorities for IAC looking out over the next 12 to 18 months?

We laid it out in our investor deck, but execute across our businesses, both wholly owned and our minority stakes. Drive revenue growth, drive free cash flow, maintain unit economics, continue to build our cash balance.

Number two, capital allocation. That's both capital return. We've said we bought back some shares recently. We'll continue to look at it, reduce our share count with our cash balance and then also look at additive M&A that creates value.

And then number three, catalysts. And we've said we will sell non-core assets, continue to look for opportunities to monetize and distill down our value in our non-core assets and other larger catalysts to unlock value and shrink our discount.

All right. We're going to leave it there. Chris, thanks so much for being part of the conference.

Thanks so much, Eric.

All right. Thanks, everybody.

Good morning, everyone, and thank you for joining us for the fireside chat with IAC. I'm Jason Helfstein, Head of Internet Research for Oppenheimer. Very excited to have Chris Halpin, COO and CFO of IAC and the now CEO of People Inc., Neil Vogel. So gentlemen, thank you for joining us. Neil, I think we've got you. This is your first Wall Street event, I guess, post earnings since the rebrand of People. So thank you for being with us for rebrand to People.

Thanks for having us.

We needed a new brand. Everyone knows the People brand. But for the Wall Street people, it was easier to digest than Meredith Dotdash.

And for our people, it was easier to digest than Meredith Dotdash.

The sales calls go...

Lot of happy people. People.inc is the greatest e-mail address of all time.

That gets back to like what we all should have squatted e-mail addresses at the beginning of the Internet. So everybody fireside chat this morning, if you have questions for participants, please use the link on the bottom or e-mail me at [email protected].

So first, I want to start out, Wall Street should be familiar with your stock. So just Chris, real quick, give us like the 2-, 3-minute overview of like IAC and its goal for kind of shareholder value creation.

Sure. Thanks for having us Jason. So we are a digital holding company. We have a collection of wholly owned businesses, the largest of which are People Inc, which we'll talk about, and Neil runs Care.com. We also have Vivian Health, a leading player in health care staffing, digital marketplace, The Daily Beast and our search business, which continues to produce cash flow. We also have large minority interests, the most prominent of which are our 24% stake in MGM Resorts, the leading gaming and entertainment operator in Turo, where we have a 32% stake the #1 digital marketplace for cars and transportation.

We have $900 million of cash at parent. It was $800 million and change this past quarter, but essentially $900 million, which -- and no debt at parent. There is debt at People, which we attractively refinanced in June. And then we have some smaller growth investments as well as our headquarters building that we own free and clear of any debt.

Great. So with that, Neil, I want to jump in. So I kind of joked a little bit about the beginning to rebrand to people. I think for most folks, it's obvious why People Inc. is just better brand than Meredith Dotdash, which is like saying SpinCo 1, SpinCo 2 and Wall Street [indiscernible]. But really, look, the goal here has been to really take these iconic brands that people have known for a long time, which were largely supported by paper and really make them digitally perpetual brands. So really talk about kind of where we are in that journey of kind of digitizing people and also kind of finding -- removing some of inefficiency around the print media?

Yes. I mean you said it. We are -- we're the biggest publisher in America. We're primarily digital at this point. We have some of the most powerful household name brands, People, Food & Wine, Travel and Leisure, Real Simple, Better Homes & Gardens, you can go down the list. There's 40 of them. There's probably 10 or 15 that you would call a household name. Our name is a bit messy. We cleaned it up, but I think the little -- the understory of why we changed the name was we thought People was obviously great because everybody knew everyone -- when you met somebody at the cocktail party, you said I run Dotdash Meredith, that's People. So we're just now understanding it's People. It makes sense, like Coca-Cola is Coca-Cola.

But the real thing is it's we are content made by people for people. And I think the promise of what we do and the promise of our brands is that the value and expertise of what humans can make in a world where lots of artificial is really our story. And by highlighting the sort of the specialist of our brands and the specialist of our relationships, we've been pretty successful. It's a fun little nod back to timing for those like old media heads, a little Easter egg. But in terms of where we are in a transition from print, I haven't even had to answer that question in a while because we're well on the other side of it. I think when we bought Meredith 3 years ago, there were 12 or 13 monthly, weekly magazines, now we have 7.

The print business for us, we run for 2 reasons. We run 1 for branding because it's interesting. Our fastest-growing digital brands almost all have print counterparts. And we run it for cash flow. And Chris has said and our CFO, Tim Quinn said a number of times. We target EBITDA probably enough to cover our corporate expenses. So we've probably been targeting around 15% EBITDA as revenue goes down. We're probably beaten that by a little bit. But print for us is very healthy. And we looked at print like we looked at everything else. I said it is part of a media mix of a brand. And if we can make a product that people really love, that accrues value to the brand, we're going to still make it. And if we can't, we can't. And we have a very healthy subscription business.

The print ad business is going to remain challenged for obvious reasons that we don't need to get into. But people love getting the print books and our print is in a really healthy spot right now. But what it does is -- what it dovetails into is we have brands. Some of our brands are north of 100 years old, and we have these relationships with people, and it is people, lower case people. And it is our job to always be in front of where human beings want to interact within style and where they want to interact with people. And if they want to interact with us on our O&O websites, great. If they like our app, great, if they like our new applications like MyRecipes, even better. If they want to be on social, great. And I think what we've proven is we can continually grow audience in an economically viable way because we have these great brands, and we're very good tactically at figuring out how to connect with people.

Got it. So is there -- like of those different, I guess, we can call them channels that they could interact with your brand, are there certain channels that are more beneficial to you than others if that's where the consumer is...

Yes. I mean it's fairly obvious. And you know this for those who follow our business, we -- the primary way we make money is O&O sessions on our website and things that we also own like events and things. And that's probably 64 -- that is last quarter, 64% of the economics of our business, right? 2/3 of the economics of our business comes from our O&O websites.

Digital revenue.

Yes, 64% of our digital revenue, right? And I'll jump to your next question. That is the part of the business that to outsiders feels like is in the most flux, right? Because to get traffic and audience to your O&O websites, historically, a lot of that traffic came from Google, and it's increasingly fewer visitors from Google. We've done a very good job with the diversity of how our brands interact with people and connect with people, whether it's e-mail, whether it's our own new products, whether it's direct traffic, whether it's Google Discover, which is our Apple News product, whether it's syndication to Yahoo!, or MSN or all these places we put our content, we've been really good at a healthy sessions number. And while we've been doing that, we've been rapidly growing off-platform sessions, right? TikTok, Instagram, very importantly to us, Apple News, which we're probably the biggest publisher partner of Apple News, our healthy events business, we've been doing some influencer stuff.

So what we're doing and the mix is different for each of our brands is ensuring we have a super healthy audience that loves and trust our brands. And when you have audience that loves and trust your brands, you can do many, many things. And the strength of our brands permissions us to do many things. And for us, we view it as a really exciting time. There is opportunity in the [ thrash ] and opportunity and the change, and we like where we're headed.

So to that point, I think you said on the earnings call, the long-term goal is 10% digital growth. You're almost there. I think it was 9% most recent quarter. I guess you sound quite enthusiastic. I guess like is there a scenario where there's like potential upside to a 10% and whether that's through the creation of like new brands, using the data around -- we can get into D/Cipher, but leveraging the data, what you know about consumers. Just like is it just 10% it? Or is there an opportunity over time to find?

I mean, look, there's always an opportunity to exceed expectations. I mean there's always an opportunity to miss them, too. Let's hope that's not going to happen. But I think if you break our business down into pieces, as we continue to diversify and grow different audiences, if we get some real traction around MyRecipes, which is our recipe locker, which we can talk about around the People app, around a raft of new things we're doing to connect directly to our customers. Some of our event businesses have a lot of momentum. If that clicks in, that's potential upside. You mentioned D/Cipher.

For those of you that don't know, D/Cipher is an ad-targeting tool we use internally based on our really intent-driven contextual data that we now can use to target the rest of the open web. That really opens up the TAM of how we can sell ads, 3x, 4x and opens up CTV also, if that kicks in, that could be some nice upside. And we've said that will be -- that should be material what we're doing next year. Again, some of our licensing opportunities are really interesting. Our events businesses continue to grow. The events are a little bit smaller, but there's some real momentum there. And we haven't talked about it yet, but we're probably the largest commerce referral partner to the major retailers, the Amazons and the Walmarts of the world. And we have really interesting partnerships with them and a lot of momentum behind those.

And if those things really get going, there's upside there, too. So the -- the good thing for us is, I think we feel pretty good about the 10% because of the diversity of like the potential ways we can win because you could also make a case why some of these things aren't going to win. But look, there can always be upside. And as you know, like, look, if you're running a media business today in the current climate. If you are not optimistic, you should probably be doing something else. But we look great assets, really talented team, tons of support from IAC, we feel really good.

So maybe I'll offer like either of you to ask those questions. So on LLM licensing deals, it would seem that your content has a lot of value to Agentic search. Now -- and again, whether it's like agents want to bring the most up-to-date information to a consumer asking something in addition to whatever the training, right, the history, I guess do you have views on like these should be like fixed deals, variable, should you be paid like per call? Like if you give information, if somebody asked an agent, oh, what was the results of like the latest award show or something like that and you generate the results, but they never leave the search to go to you, should you get paid something. So how are you thinking about like over the long-term?

I'll take a shot and then Chris fill in. So that's actually -- you asked the right question. You actually asked it the right way. We've done a couple of things. One, what makes a licensing deal happen; and two, what form of licensing deal takes. And for more licensing deals to happen, and remember, we have one deal with OpenAI that we're very pleased with. They've been an excellent partner. They've helped us with D/Cipher. It's been, I'd say, high end of the range outcome for us in terms of how it's helped our other business. But the other LLM producers, creators, whatever we want to call them, are going to have to have a bit of a change in attitude and look at the world like OpenAI does, like what you said, the value of high-quality content is really important. I think they're realizing as they develop more, it's more and more important, and they're going to have to have a change in attitude.

Second thing, and it's not mutually exclusive from the first is we're going to have to have some more leverage in these negotiations. And one of the things we did around July 4 is we partnered with Cloudflare, and we blocked basically every LLM crawler with the exception of OpenAI, which we have a deal with and Google, which we can't because Google has one crawler for search and AI. You say what you want about that. That's a whole another conversation.

Different webcast.

Different webcast. And what has happened, and maybe it's a coincidence, maybe it's not, is since then, the discussions with the major LLM providers have picked up a bit, right? All of a sudden, now that they can't access our quality content, which, as you said, they need for grounding, they need for source of truth. You need quality ingredients to make a high-quality product, right, that there's now beginning to have discussions of, okay, interesting, some approaches to us about like different ways that they can -- people can get access to our content and different economic arrangements. Now you listed a bunch of them. One can be -- it could be all the way from the bucket of, which is pretty much clean licensing with OpenAI, all the way over to like a pay-per-crawl model, right, or a pay-per-use, almost what you said as your last example.

I'm not sure it would be -- and it could even be pay per output. It's all very, very, very early. All these things are being considered to the extent that we can manufacture and make some more leverage and to the extent that LLM makers realize they need us, I think these will happen more quickly. There's nothing is imminent. There's no guarantee any of these things turn into anything like we're sort of operating as if they won't, but I am hopeful that they will. I don't know, Chris, if you want to add anything to that?

Yes. No, I mean I would agree with all that. I think it's a little bit to Neil's point, where the LLM developer is in the 5 stages of grief.

Totally.

That they have to license premium content. And that also, to Neil's point, premium content versus trash or commoditized content and a constant pace of new content coming into the model is essential for what they're trying to do. To the structure of the deals, as Neil said, we very much like the structure we came to with OpenAI. But there is an element of what are the objectives of the LLM developer and operator what are they trying to drive and aligning incentives and economics around that, which is a little idiosyncratic by LLM developers. So we and others are working through that. We have real conviction of where it's going to end up, but it's a question of time.

And remember, there are the major LLM, like the headline names that everybody on this call would know, but there are literally thousands of entities creating different LLMs that need a way to access our content in a way that is economically viable for us and helps them and whether they do it through one of the existing LLM, there's so much to sort out and everything is changing so quickly, but it's very, very top of mind for everybody.

Yes. We all know that like there are models getting the results from Google, right? So even firms who have a paid deal with Google, like they're not probably not being paid directly. I mean, are you willing to be litigious about this potentially? I mean you've got a nice corporate overhead budget with lawyers and whatnot or just not want to talk about that right now.

I mean I think there's -- what we would say is we are going to maintain all of our rights that we could have. And we understand that we need leverage on our side. And if we feel like that is a clear path and a viable path to leverage, maybe that's something we do. But again, I would say we'll see.

And then maybe, Neil, just talk about it and you addressed this on the call, but you've already managed some of like AI overviews of 50% of searches -- you've actively managed away from search traffic. So just maybe just talk about how you've been able to do that?

Yes. And let's frame some numbers around this, and Chris said this earlier. 28% of our sort of like O&O traffic comes from search. 64% of the economics are of our digital economics are tied to sessions. So it's, call it, 18% of the full bucket of economics is really what we're talking about. We like saying Google Zero. Yes, exactly. We like saying Google Zero internally as a rallying cry, but it's not going to go to zero. It's going to go to something. So there's some risk, some subset of that number. We -- and Jason, we've been talking for a long time. We've been very aware and we were doing things very early when -- sort of Google has always tried to keep a little bit more travel for themselves and very much accelerated after the pandemic. And because we had so much traffic from Google, we were very keen to know what they were doing.

We very quickly realized that Google is operating in the interest of Google, not in the interest of anybody else, they should, and we had to get in front of that. So we started to do 2 and 3 years ago, things that felt very unfashionable, really do things to drive direct traffic, really do things to drive e-mail traffic, really do things to drive syndication. And we've been investing and investing and investing. And it turns out that, that was the right choice. Now we weren't right about everything, but we were right about that. And as the world has evolved, we've been able to do all these new things and launch some of our own new products and do some other things that we've been able to as Google Discover, which is like their Apple News and another factor, like -- as the share of search has gone down, we've been able to plug it with all of these other things. And it's not any one thing. It's a full basket of things. We are constantly trying to find new ways to connect directly with our users.

I think we've gotten a little bit better economically on our O&O also over that time period. So we feel pretty good about it. Again, as we talked about on the call, it's not going to be the growth driver of our audience, but it can be very healthy, and I think it's going to grow a bit. I think third quarter, again, we talked about specifics around tough comps, it might be down a bit. But like long-term, I think it grows a bit. We feel good about it. I think what we also feel good about is the different places our brands are permitted to live, right? So we've built a really nice off-platform business where we can reach audience on behalf of advertisers and about half of our brands TikTok, Instagram, all the social places. We're the biggest partner of Apple News, as we said. That's a really big licensing source for us. Again, our events, our experiences, we're doing some influencer stuff. There's a lot out there. If you have the brands that have the gravitas to hold together in these environments and to thrive, you can do great. And we feel pretty good about it. But that's what we've done to sort of like fill the bucket.

So let me ask you there's 2 questions in the chat from investors and then just we'll get to other things. So one was folks just want to know why the company isn't being more aggressive with share repurchases given the kind of implied like value in the shares today?

Certainly. We didn't buy back last year, and our Chairman, Barry Diller, talked in the February earnings call about we got to the other side and it was a new chapter. We bought back $200 million of stock, 4.5 million shares in the first 4 months of the year. That was very much an approach of let's buy $200 million of stock. And we did that. We messaged or tried to signal last quarter in first quarter earnings that we were looking again at M&A, but we were still considering buybacks. That is the message. We've heard loud and clear from investors that they would -- that you would love us to continue to buy back our stock. We understand it. The discount that we highlight in our own materials is even more pronounced with the way the share price has responded since our earnings a week ago.

So that value capture in buying our shares is -- would be even greater. And we are exploring it. It's an active area of discussion. It is -- we hear the message of we can walk and chew gum at the same time of both doing buybacks and exploring M&A. And we have multiple avenues to capital should something interesting in M&A come along. So the cessation of the buyback, my only message would be it was driven by the directive was to buy $200 million of stock. We did. And it doesn't mean we won't buy back our stock again. And we understand the message from investors regarding the desire for continued buyback, especially given our liquidity.

Great. And then another also kind of corporate question, just where does corporate overhead from -- obviously, doing some of the parts, there's a value of corporate overhead you have to deduct. But like from an expense standpoint, like where do you think corporate overhead shakes out on an annual basis after some of the changes that have been made?

Yes. And that was a key point of focus coming out of last year. The '24 total corporate overhead is benefited by a $10 million insurance settlement that we talked about. So you can think about our run rate last year, we were sort of in that $100 million range. We said we wanted to reduce it. We will continue to chip away. We had a RIF earlier this year. We've also taken actions to improve efficiency. That is a recognition of both the smaller scale post Angie spin of the companies that pull on IAC's resources, but it's also just good management and improving our efficiency. We were about $22.8 million of corporate in Q2. I think the run rate we're at would be slightly below that. We'd look to leave the year, we've said in the $80 million to $90 million run rate corporate expense and targeting the lower end of that and then continue to improve.

We've also talked about strategic divestitures of our holdings that are less core. Our Chairman, Barry Diller, talked about People Inc. and MGM being core. You can think about our other assets. We view them as strategic assets in their respective industries. And we've said going back to the end of 2024 that we are open to strategic transactions around them where we view value and we generate value for shareholders. As we do that, we can continue to simplify our corporate structure. There are certain functions that are just essential to being a public company that happen at corporate and which we bear. We could allocate them down to the businesses. Neil and team would be annoyed by that as with the other businesses. So we just keep them at corporate. But there's some baseline, but we can always be more efficient, and that's very much my goal as CFO.

Great. So Neil, I want to go back just -- if you can comment on the ad market broadly. So were there certain headwinds that you saw in the second quarter at all that have since dissipated? I think there's like a general -- I think overall, most feel pretty comfortable where the ad market is. But like any thoughts you want to share on the ad market?

I think, again, we hit a lot of sectors. So it's very much sector by sector, the bad first, like sort of like CPG, food and beverage is tougher. Some of the other sectors we're in are doing a little better. Chris can give very specific color on that. But what I would say is overall vibe in the market is -- I think it's good, good, not great. There's still some uncertainty. Tariffs are not great. All of the commentary on what is going on economically. The ad market is very much leading, right? It's the easiest expense. It's the easiest thing to turn on and turn off if you're the CEO, particularly digitally where you can really buy in real time. But I think comfortable, I think, is a very good word. It's good, not great, decent spotty. Chris, do you want to add, you go industry by industry?

Yes. I think we've said health and pharma has been solid. Tech and travel. Tech is one that's been in a bit of a winter for a number of quarters, a couple of years coming off of the pandemic trough, but that we've seen strength there. Travel, I think a number of the brands are looking to -- or players are looking to spend more to drive more demand as a bit of that cycle has turned. Retail is spending, again, looking to drive into back-to-school and the holiday period. As Neil said, CPG, food and beverage, tough, home. And home has been tough for a while, but...

Has auto been weaker also?

Auto is kind of weak-ish, but it's a small category for us.

We have a huge auto exposure.

Not endemic. It's more just comes and goes in a small player.

Got it. I mean to that point, like there's...

One other point because we've talked about this point before between premium direct and programmatic, and I think your audience would care about that. Where we saw the real softness post Liberation Day in early April was in the programmatic market, where we've been up, say, 15% plus in pricing year-over-year. That quickly fell to flat to up a few percent. That has come back. It's -- we've seen some strength in July and August and hope to see that continue into -- I think the words we've used are fairly healthy. I could see that continue. And then premium has remained solid, but it does go sector by sector.

And roughly what percent of digital is programmatic?

It's about 30%, 25%, 30% of revenue.

Got it. So I mean, the CPG category it's funny. In some cases, like there's blaming tariffs. In other cases, it's just consumers are focused on value, and therefore, they may -- they're chasing generics and kind of house brands. So what's interesting is just you know a lot about consumers and CPG just at people...

People, right.

Right, people large. So I mean, just given what you've been doing with D/Cipher, which is really about like understanding audience and like it just seems that there's a huge opportunity to leverage that and help these massive CPG companies to do off-platform advertising as like almost like a standing up an ad tech business.

Well, we agree. And again, to simplify this, D/Cipher allows us to take our -- what is probably our best asset that was always powered our own ad business, but now draw a straight line into real value that this data can create. We believe we have as good, if not better, first-party data than anybody in our business because it's not like we have a cookie or an individual identifier that is guessing what you want based on some history you have. This is real-time data. If you're on how do I get my kids fever down content on very well or you're on how to make an Apple Pie on July 3, we know exactly what you're doing. So it's real time. So when you know that and you can take that URL or that web page, and you can map it to any other page around the Internet or map it to a household and connect it to CTV, you have real, real insights. And it's why we created D/Cipher.

So what D/Cipher allows us to do is, again, we can -- we get from a good partner, they spend a $20 CPM super simply, and they buy a whole bunch of ads around us. Well, they also have a bit of that budget that is always going to be for reach. We can say, give us that budget too. And we'll make it perform very similarly to it performs on our sites, but we can do it much cheaper, and we'll go out and we will buy that inventory for them, and we will resell it to them at a very good margin. And we open up 3x to 4x the TAM for us to do this. We're very optimistic about early results. I mean the numbers are small, but the percentage growth is really substantial quarter-over-quarter. We think it's going to be a meaningful contributor next year. But as you said, for us, it's a bit of an ad tech challenge, right? It looks a little bit like a DSP. It is a DSP in some ways. But it is...

And there are some DSPs that trade a pretty big multiple.

Listen, we're happy to be a DSP, right? Right now, we have some DSP partners. We can use it like again, -- you and I could set up a DSP today for $300,000. That's not the trick. The trick...

I think mine wouldn't work too well.

Maybe -- the trick is to put the real value in the D...

All the ads we go on oppenheimer.com.

The trick is to put the ads and the data in that DSP that makes it effective. And we're increasingly optimistic, and we hired a guy named Jim Lawson, who I think you know, who ran a small public company called AdTheorent, who did something like this for a long time. We are investing heavily behind this. And look, we really believe in if you go back to that investor deck we did where there was like on-platform, off-platform distributed, like the ability to use our data to target distributed content across the open web is really substantial. And we're in the game now, and we'll see where it leads.

There's one massive point, too, that makes this possible, which speaks to the challenges of broader open web, which is we talked about how high our percentage was of premium, which is a credit to the performance of our inventory, but also to our direct sales force. These other open web publishers have pivoted massively to programmatic because they've had to. So we can see because of all the signal needle has and because of the proprietary clustering and insights of what is most performing relative to a behavior pattern, we know that inventory is being mispriced on the programmatic markets on a purely cookie basis. So where we can guarantee and realize performance on price versus where we can buy it creates a -- what we would view as super normal margin relative to broader ad tech and is why we view this as highly accretive, both on a revenue growth, but also profitability basis for People Inc.

And our challenge now is with the question is, well, why wouldn't everybody do this right away? And right now, it's an execution question. We have to get the word out. And the way people buy ads in ad tech, as you know, is not a very efficient market. There are a lot of people that have -- there's a lot of things forcing behaviors. We got to break through some of that. And at the end of the day, decisions follow the money. And if we can do a good enough job, we're going to get this worked out, and we feel pretty good about it.

Great. Okay. I want to spend we have 5 minutes left. I just want to hit on a few non-People points. So Care.com, $50 million EBITDA business, Chris, potentially much bigger. Take us through the path to get there.

Sure. There are 2 key parts -- 2 segments to Care.com, the consumer business, the enterprise. When IAC bought Care in 2020, it was heavily, heavily a consumer business. That is a direct-to-consumer, predominantly subscription product across childcare, senior care, pet and others. We built up the enterprise business, including through a great acquisition in 2021 that was made that really increased the size. The 2 businesses are -- the 2 segments are now 50-50 on a revenue basis. Enterprise, they both had huge pandemic tailwinds. Enterprise had it earlier -- had the reset earlier is doing well. That is a key tailwind. It's about executing, adding logos, growing within those presence and continue to scale, very good business.

Consumer had a huge pandemic tailwind. That masked some core deficiencies in the product. We brought a new CEO in there in 2023, Brad Wilson. He got in and identified that deficiencies in the product as well as marketing were really negatively impacting both retention and recapture and new subscriber addition. That team has spent a lot of time, including with some new executives, rebuilding the product, the platform, payments. We relaunched it in June. It is all about -- in parallel with that, launched a rebooted marketing campaign and a more active presence. That is very much increased funnel, conversion, retention, bring in value-added services, recapture of lapsed subscribers because someone will go into care for -- or check for child care, will want to come back either for new child care or for senior care or pet or to find day care center as their lives evolve and their needs change, continue to bring them back in and recapture.

The goal is to get -- consumer has really been -- we've had declining users -- declining subscribers and revenue there since end of 2022. We're seeing -- it's early, but we're seeing green shoots from those activities. And our goal is to get to revenue stability in consumer and eventually growth by the time we exit '25 to set up for overall growth in '26 and beyond. That business should be growing 10% to 20%. As you said, it's EBITDA positive, free cash flow generative today, but margins long-term should get to 15% and 20%. It's all really in the 4 corners of the Care business. It's just about us executing.

And then lastly, Vivian, most folks don't really talk about and know that much about it, but how big is it today and kind of where do we see it going?

Sure. Vivian is a strategic asset in health care staffing. We -- on the platform, we have 2 million nurses and clinicians. It's almost like a LinkedIn for nursing. We sit as a marketplace on the one side between the nurses, on the other, between the health care systems and staffing agencies. They grew rapidly in the pandemic boost in travel nursing, et cetera. It's been a sort of a nuclear winner in that space for a couple of years. We kept growing, slowed down. We've had stability. The business is EBITDA and cash flow positive now. Think of it in the mid-8 figures for revenue. It is really a strategic asset with what we view as perhaps the only or maybe one other player which is proprietary to an agency has our scale of active nurses on the platform.

They have instituted AI in a way into their processes, workflows, user experience that no one else has. We think they have the opportunity to revolutionize health care staffing and fulfillment. And Parth and the management team there are executing and driving it forward.

Great. So with that, I think we're getting to the end. I want to thank you, Neil and Chris, for the time. If anyone has any other questions, feel free to e-mail us, and we can connect you with the company. Have a great day, everybody.

Thanks, Jason. It's fun.

Jason, thanks, everyone.

Hello, and welcome to the IAC Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Christopher Halpin, IAC's COO and CFO. Please go ahead.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC Second Quarter Earnings Call. Joining me today is Neil Vogel, CEO of the newly rebranded People Inc.

IAC has published a presentation on the Investor Relations section of our website today entitled Q2 Earnings Presentation. On this call, Neil and I will provide some introductory remarks referencing that presentation and then open it up to Q&A.

Before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us. 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-K and in the subsequent reports we filed 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, our 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, let's turn to the presentation. On Page 3, IAC's businesses continue to seize momentum and make excellent progress against our goals in the second quarter of 2022. Dotdash Meredith rebranded as People Inc., a new name with a storied legacy fitting a company where people that is human experts create the premium content that people are consumers and readers seek for entertainment and information. We truly believe People Inc. achieves that by providing superior content across superior brands using superior technology.

This quarter, despite the volatility and uncertainty in both the macro environment and Open Web, we're happy to report that People Inc. returned to core sessions growth and achieved 9% digital revenue growth, accelerating from 7% in Q1 and at the high end of our guidance. We were also thrilled to complete a $1.4 billion refinancing of our debt at People Inc. in June, replacing the original acquisition capital structure with new bank debt and bonds at attractive pricing and 5- to 7-year maturities. Neil will go into more depth on People Inc shortly.

MGM reported second quarter earnings last week and demonstrated the power of its diversified gaming portfolio with strength in digital, the regionals and Macau offsetting softness in Las Vegas. We're particularly excited about BetMGM's strong results. Net revenue growth in the second quarter and increased guidance for the full year to at least $2.7 billion of revenue and at least $150 million of EBITDA. The digital gaming opportunity at MGM has always been a core pillar of our thesis, and it is great to see those assets performing so well.

Our second largest wholly owned business, Care.com, revitalized its product and brand in June, a key step in its comprehensive plan to reenergize growth in its consumer business. Care also unveiled a fresh new lip and launched a new marketing campaign across its offerings. As we will discuss shortly, while it is early days, we are seeing promising signs across engagement metrics. Finally, across consolidated IAC, adjusted EBITDA increased 15% in the quarter and we are guiding to $247 million to $285 million of EBITDA for the full year.

On the capital allocation front, it was a quiet quarter following the completion of the previously announced $200 million in buybacks. As our Chairman, Barry Dealer noted in the remarks included in our earnings release, we are actively pursuing M&A opportunities and hoping some visibility in the economic and trade outlook will lead to more price discovery and deal activity in the back half of the year. As always, we continue to analyze further buybacks of our shares with our corporate cash balance while also exploring strategic divestitures of noncore businesses to bolster that cash balance. Now let's go deeper into our 2 largest wholly owned businesses.

With that, I'll turn it over to Neil.

Thanks, guys. One of the things we just did, which was change our name to People Inc. from Meredith I think this is a very good time for us to reset and reflect on where we sit in the market, reflect on the media markets and give you guys some context as to our strategies and what we're doing and I think the thing we're most excited about the People Inc. name is. Dotdash Meredith was a name of convenience for us. We put together the names of 2 companies. We didn't want to offend anybody. We want to live with it, and I'll be a bit more generous than our Chairman, Mr. Diller, who did not like the name at all. I was happy to live with it until we could really find something better, and we did.

And it turns out the name we went in with emotion and aspiration and ambition and simplicity baked in was People Inc. It's the name of our hero brand. It's sort of been with us the whole time. much like great businesses like Coca-Cola. We feel like the flagship branch would be the name of the business. And rather than having to say we're Dotdash Meridith and then the first thing you say is we're people. We cannot just say that we are people. But I think the thing that got us most excited and it sort of kicks us off into the rest of the story is what people also means. And it means that we are content made by people for people.

We are very aware and embracing of AI and things other things in the marketplace. But it's really important that experiences of our experts, our writers, our product testers, our paramount to our brands, and many of these brands have a 100-year history relating to people. And People Inc. but like a fitting name. And there's a little bit of ease there for those of you who like watch the media inside baseball. It is a little bit of a play on the old Time Inc. name, which again suggests some of the best brands in media. So that was Slide 4. Let's go to Slide 5.

And we're going to zoom out for a second. There are 2 things that we have that we think are going to propel us into the future. One is an incredible series of iconic brands and two, we have scaled audiences. And it's helpful to zoom out and look at media and the type of media that we do. So food, home, tech, travel, beauty style entertainment, 30 years ago, these brands were exclusively communicated in some form of print, then that changed. And they the content and the relationships all moved online. And when they move online, that's when we got in this business, and we took great advantage of that transition from offline to online. And by making smart investments and by being very disciplined in how we did things and by recognizing the power and permission of these brands, we built a really strong O&O business, owned and operated websites that really grew and put us at sort of like the top end of the brands in each of the categories in which we compete. Now that business was a Google-driven business, right? And if we don't go back too far, Google was, 70%, 80%, 90% of the track on the Open Web came through Google, and we got very, very good at Google.

And we're very successful and we ended up buying Meridith in doing these things. But we also noticed around coming out of the pandemic, 3, 4, 5 years ago, Google started to send out less and less traffic to people like us to publishers into others who created content. And that is Google's prerogative, right? So we're like, okay, we need to figure out how we're going to live in a world where Google traffic might not be the driver of our growth. And then add to that, 2 years ago, ChatGPT launched commercially, and we saw that. And we had a very faithful meeting where we sat and met with Sam Altman and we saw ChatGPT right before it launched. And we said, you know what, this is going to be a catalyst for change for us. We need to connect directly to our audiences, and we need to connect directly to our advertisers, and we need to have leverage here.

So knowing that Google is favor in Google results, doing things with Reddit, knowing that ChatGPT is coming around. There's going to be a search answer replacement, what can we do? And if you look at Slide 5, Slide 5 is the outcome of a process that we really started 2 and 3 years ago. And if we can go left to right, we have 3 large buckets of owned audiences, off-platform audiences and audiences we can address. The owned and operated audience at the far left is what is still a very robust open web business. And we talked a lot about sessions. We grew sessions again this quarter, and that is a business that is going to be the underpinning of our growth going forward. But what we have really done over the past 2 years is build other assets. We've built a tremendous e-mail business. our print business is strong, but a big events business, a very big syndication business. And our owned and operated sites and our owned and operated assets are very vibrant to that, we've really added incredible off-platform audiences across Apple moves and YouTube and Instagram and TikTok. And this is the process of lots and lots of investment and lots and lots of time for us.

And the way we run the business now is we look at our business and say, okay, we need to aggregate audience from as many sources as possible an incredible diversity of audience sources. We have a term used internally called Google 0. What happens if Google goes to 0? What happens if Google no longer send us traffic? Well, I think we're going to be very healthy. And then the third thing we've done is taken our most valuable asset, which is our data and the first-party data that we know about our audiences, and we can extend that data across the Open Web, and we've talked a lot before about our decipher ad targeting that allows us to contextually target based on to our own sites. And by allowing us to take that data and spread it across the open web. So we now can target advertisements off of Dotdash Meredith.

And what that does and a lot of you guys have asked is that really expands our addressable market. We are 4 to 5x in addressable market. If we can use our data to target other people sites than our sights so you can get our quality of performance and do it around the Internet. So if you look at this slide and you say, okay, we've got a healthy open web business. We've got all these incredible new assets underpinned by our world-class brands. We have these rapidly growing off-platform audiences, and we have these addressable audiences well beyond our owned and operated assets. I like our pool of assets. And I feel like we have what we need, the audiences, the brands, the technical skills and the products to hit the revenue goals that we've laid out for everybody.

So if you go to the next slide, this is some factual background to what we just talked about. And if you look at the left, you can see core sessions, and these are recessions to our core sites. And you can see over the last 3 years, from '23 to '25 core sessions have grown while the percentage of traffic from Google has shrank. Now there are 2 reasons for that. One, Google is changing their search page rapidly to favor things, Google chooses to favor. And two, that is the impact of AI. When people talk about the impact of our business, they're really talking about search for us because as AI competes with Google and Google put eye on their page or someone used to go somewhere else for search, there's no guarantee we get a link like the old days like we used to get a link. So you're seeing our traffic from Google go down while you're seeing our overall sessions go up. And that is everything we talked about on the prior page.

The second thing, the middle chart is off-platform views, and we've done an outstanding job across our brands, whether it's people or travel and leisure, food and wine are real simple, of building off-platform views. And this really started actively investing in this in 2023, 2024, and you can see the results so far in 2025. Now about 1/3 of our digital revenue comes from sources that are not sessions related that are not sessions based. And then you can go to the far right, and you can see we've grown digital revenue all the while. And we are very proud that as we've made this transition from what was print-based business to a digital owner-owned Google-based business to a, we have to be everywhere with these assets business. We've grown revenue the entire way.

And just to add on a couple of themes there. The -- going to core sessions, that decline in the dark blue box from $1 million to down to $600 million. That is partly AI and also predating that, the numerous changes that have been made to the search page over that time, including Red it being heavily prioritized as well as cluttering of the search page. So as Neil talked about, the -- while the portion of our traffic -- of our sessions that comes from Google Search has declined from 52% to 28%. And through the proactive efforts he and the team have driven at People Inc., we've increased our non-Google search sessions at a 29% CAGR and believe that we can still continue to fill that hole.

The second point, as Neil said, those sessions generate 64% of our digital revenue. That's a key theme. So when you think about the remaining Google search exposure, it's that 28% of that 64% approximately that we're talking about. The off-platform views are a component of our non sessions or 36% non-sessions-based revenue along with things like licensing related performance marketing, et cetera. So we wanted to get across in this slide relative to the broader AI question. how much Google Search has come down and also the diversification in our digital revenues and the various growth vectors we have from here.

And we'll talk about that. It's a good transition to the next slide. Our 3 primary avenues and monetization, advertising revenue, performance marketing, proximate e-commerce and licensing. All of our revenue sources are growing. Our brands are super strong. Our execution is good. We feel very good about the advertising business. We're very excited about our Decipher Plus business that we just talked about a little bit that allows us to use our proprietary data to help people buy across the open web. We think there's a big CTV opportunity in there as well. performance marketing and commerce. We work very closely with the biggest retailers online. I think in most cases, we are their largest referral partner, and that's been a really robust business. And even in our licensing business, which -- this quarter has -- we're 2/3 lapped the OpenAI deal that we signed last year. There's a lot of strength in places like Apple News and in Walmart. And it speaks to the strength of our brands. And Chris, do you want to do the next one?

Yes, turning to page -- thanks, Neil. On the next page, 1 topic we wanted to proactively cover today is our digital margins this past quarter. People Inc.'s digital margins have been steadily scaling over the past few years with higher revenue. We reached just under 29% in FY '24. As a reminder, on a quarterly basis, EBITDA margins increased across the year with the lowest margins in the first quarter and the highest margins in the fourth quarter due to revenue scale. And as we've grown digital revenue, we have expected to see incremental digital margin scale. You can see that demonstrated in Q1 where margins were up about 100 basis points year-over-year on 7% revenue growth.

In Q2, however, digital EBITDA was essentially flat year-over-year at $63 million, while revenues grew 9%, representing a 24% adjusted EBITDA margin. The increased cost, and this is featured at the bottom of Page 8, that reduced those margins derived heavily from the strategic investments Neil talked about across new products, technology and channels, everything we're doing to set the business up to grow. We expect and are confident in getting ROI of those investments, including in the third quarter that we're in this year. And so we expect adjusted EBITDA to grow year-over-year. You can see the guidance on the right in Q3 on 7% to 9% revenue growth. Digital revenue growth and we expect margins in the 25% to 28% range and then get back to real margin scale in the fourth quarter.

So with that, let's turn to Care.com on the next page, which continues to be the largest online marketplace for families and individuals looking for household caregivers across children, seniors, adults, pets, housekeeping. The company offers its services through 2 channels: consumer and enterprise. The left side of the page summarizes the direct-to-consumer segment where care seekers go online, sign up post jobs and are matched with care providers. Despite some consumer revenue erosion over the past couple of years, Care remains the clear leader in the online space, holding it's #1 brand position with 62% of traffic coming from organic sources, primarily direct navigation.

On the right side of the page is our enterprise business, where employers contract with Care.com to provide backup care days and employee access to care services as a benefit to their employees. Today, Care's relationships with over 700 employers covering 31 million employees. Financially, revenue is basically evenly split between the 2 segments, with both offerings utilizing Care.com's database of approximately 700,000 caregivers. The 2 businesses, though, have seen a clear divergence in performance recently with Enterprise growing solidly as more employers provide backup care as a benefit to their employees and the employees increasingly utilizing the product. But as discussed previously, consumer revenue has declined from pandemic highs since 2022. That's due to a combination of core deficiencies in the product experience, suboptimal marketing and some macro headwinds.

Turning the page. That brings us to the Care.com relaunch in June. The outcome of more than a year of work, the new care experience both fine-tuned search capabilities and enhanced messaging and matching, offering care seekers a smoother experience as they hone in on the perfect caregiver for their essential job. In many ways, Care.com's the biggest challenge has not been liquidity on either side of their marketplace but instead optimizing the process for families and providers to match, connect and communicate on the platform. We feel good about where the product is today and where it is going. On the right side of the page, Care has held off on marketing over the last few quarters until the product was ready for prime time. In parallel with the relaunch, Care.com has rebooted its visual identity with a new brand and integrated marketing pain highlighting the breadth, quality and ease of its offerings product and marketing have been a challenge over the last few years.

Now they are working in concert to propel the business forward. In the light green, we highlight the further areas for optimization as Care.com continues to refine its product, improve pricing and packaging and push more aggressively into senior care and pet care, 2 attractive growth areas that we're ready to aggressively pursue now that the building blocks are in place. On the metrics front, it's still early, but across June and July, we have seen core consumer metrics, direct navigation visits, sign-ups and subscriptions, achieve stability and growth really for the first time since 2022. A lot more to do, but we are moving on the right path. Closing out on care. Page 11 summarizes the financial picture, a major pandemic boost followed by growth in enterprise and softness in consumer over the last few years. Profitability has remained solid with $46 million in adjusted EBITDA and minimal CapEx. The key for care is to reignite revenue and generate the incremental margins we believe are possible.

Turning to Page 12, we would reiterate that our discount remains pronounced in our mind. While MGM share price has risen since last quarter, the implied value of our private holdings on the right remains negligible. As we've said before, we will continue to drive IAC forward to unlock value from those holdings, drive simplification and shrink that discount as laid out in the strategy overview on the following slide. execution, capital allocation and catalysts. These are the pillars of our focus and how we believe we will reduce that discount.

Turning to guidance. We have tightened the range of IAC consolidated adjusted EBITDA for the year to $247 million to $285 million, with the midpoint relatively unchanged versus prior guidance. At People Ink, we have reiterated full year digital revenue guidance at 7% to 10% and brought down the high end of full year adjusted EBITDA guidance from $350 million to $340 million, while maintaining the bottom end at $330 million. This reflects our confidence in the revenue outlook across advertising, performance marketing and license, but with increased spend and investments in new products like the D/Cipher Plus, My Recipes and the People app, as well as more than $3 million in higher health care costs hitting us in the back half of the year. For Care, we maintained guidance of $45 million to $55 million. And at search, we brought up the low end of it. Finally, on corporate, we continue to make progress on lowering run rate costs and have reduced the range to $110 million to $115 million, which includes approximately $20 million of onetime costs.

With that, let's go to Q&A. Operator, can we have the first question, please?

[Operator Instructions] First question comes from John Blackledge with TD Cowen.

So really helpful what you included in the earnings deck on sources of traffic and how they build into revenue. Can you just go into greater depth on how you see the trajectory of sessions, including Google Search and off-platform views and kind of how that translates into revenue and margin? And then second question, can you just walk through puts and takes in the 2Q People Inc digital revenue? And how do you think about digital revenue growth and digital margins in the third quarter?

I'll do sessions first, and then I'll let maybe Chris do the margin thing. I think you're going to see sessions O&O sessions. I think they're going to be -- the third quarter will be down a little bit. We have a very tough comp. But I think going forward, flat to slightly up is a fair expectation for us Again, we're very actively investing and hustling hard to keep on sessions up and I think our results prove that. I think off platform, you're going to see continued growth probably continue to grow somewhere around the trajectory where we're growing now. Now the numbers get bigger, the percentages are going to get lower. But you're going to see real growth there. It's a real investment area for us. I'll let Chris do the -- we'll take the margin piece of this.

Yes. And on margins, we view both on platform and off-platform as generating attractive EBITDA margins. And we are capable to do that because of the technology and offerings that we have. When you -- I said before, last year, on a consolidated digital basis, we generated 29% adjusted EBITDA margins. We view non-session revenues as slightly accretive to that margin and then sessions on a marginal -- on an incremental basis, session revenues are more accretive. One of the natural questions we'll get is all this off-platform nonfashion revenue being done at low margins. It is not. We feel good about the margins where we can do it and that we will continue to scale off that 29% adjusted EBITDA margin. And that includes the D/Cipher Plus as well as off-platform views on third party.

And will address the next question, which is the exposure to the platform because we have really good diversity across all those sessions. It comes from a whole host of different places and different sources at different points in their life cycle. So we feel pretty good about when you look at the diversity of what's now driving core sessions in the diversity and off-platform section, so think the diversity is a real strength for us.

And then I think your second question, John, was about Q2 and Q3 revenue. In Q2 digital Advertising grew 5%, led by 2% core session growth and some improvement in monetization. We knew it was going to be a choppy monetization quarter as we signaled on advertising last quarter between -- given all the disruptions around tariff and trade. For those interested, Direct was solid. Direct premium sales were solid, led by health, travel and tech offsetting, not surprisingly, CPG, food and bev and home. Programmatic pricing was flat for much of the quarter. but began strengthening in June and has continued. Currently, we're running up about 10% on pricing year-over-year. Last quarter, performance marketing was very strong at 14% and licensing also solid at 20%. That's real strength in Apple News. Neil and team are doing a fantastic job there. Also some performance at Walmart and then some OpenAI. All in all, strength really from our diversification of the diversified digital revenues that Neil talked about previously. For the third quarter, we do have some tougher comps on traffic with the Olympics last year and some entertainment. So we'd expect core sessions to be slightly down. off-platform growth and improved monetization should drive advertising revenue growth despite that. Performance marketing continues to be excellent, especially if you want a window into the consumer. Prime Day was great for us in July. And licensing should continue to grow, led by Apple News, Walmart and other areas. All in all, we're guiding the 7% to 9% digital revenue growth in Q3 and reaffirming 7% to 10% for the year. And then on margins, as we discussed previously, we're guiding to 25% to 28% digital adjusted EBITDA margins in Q3.

That comes from Eric Sheridan with Goldman Sachs.

Maybe following up on people first. I know in the prepared remarks, you made a couple of statements about the decisions, but I just want to go a little bit deeper in why this is the right brand and why the team and you landed on this to go forward and how you plan on sort of positioning the brand in the broader digital, maybe ecosystem looking out over the next couple of years? And the second question would be, you led with the quote from Barry in terms of the press release that talked a little bit about deployment of capital and the current state. I wanted to better understand what you look at as the M&A landscape you're facing right now. So the alternative of returning capital to shareholders to be deploying it into external opportunities? And maybe a quick update about how you see that landscape right now.

I'll take the People Inc first. So if you go to -- let's talk about our goal first. Our goal for the company for People Inc. Believe we can have platform scale with all the benefits of premium branded publisher environments. And we needed a name to reflect that. And again, the Dotdash Meredith name was quite simply putting together Dotdash and putting together Meredith. I don't think either of those names had any particular residence in the marketplace, people does. Everybody knows what people is, again, it was always the first thing you said when you're explaining what we did. But what we really liked about it is -- it's simple, it's clear. It has that second meaning about what we are. We're people making content for people in it is energy and ambition and simplicity. And look, you can make 1 million jokes about it.

Dotdash Meridith sounds like an oil company. People Ink, sounds like a media company. And if our ultimate aspiration and where we would like to end up again, platform level scale with premium branded performance and all the advantages of these like beautiful safe environments, both online and off-line. If you want to do that, you didn't name it reflects that. And we wanted to name that when people are talking about the great media companies and the -- were going to be like -- again, we're obviously not here yet, but you have to aspire to something. I'd like it to be MetaComcast people. right? Google. And it just hangs way better. I think the reception since last week across our client center, our advertisers and really importantly, our employees, everybody who is just really happy and really energized. And it just -- as Mr. Diller said, it just -- it's easy and it fits. The only regret I have is we've probably done it a little bit sooner. I may have been the resistance there, but we're really happy with where it ended up.

Thanks, Eric. On M&A landscape, we are actively working, looking at things small and large and as always, through 2 prongs through our existing businesses, particularly people ink as well as new platforms. Look, we look for ways to be creative, think differently and find assets that we have a different view on or an advantage. We continue to actively pursue acquisition opportunities through People Ink, looking to build on its premier brands and technology. I'd say the more we continue to -- as everything Neil said and is doing to make progress there. In many ways, the more opportunities we see that we have a particular advantage on. So that's a key area of effort.

On a new platform basis, we've been evaluating both public and private opportunities, platform builds as well as carve-out opportunities.

The investment focus -- we talked about this last call, can be put in 2 buckets, quality defensible businesses, particularly where the first one is particularly where AI disruption or disintermediation platform risk, everything is reduced. We've talked previously about experiential businesses that cannot be disintermediated digital interactive businesses like gaming, others where the consumer is in the moment and you can -- you don't have the overhang of AI and other products. And then we're also looking at areas where you can find AI applications to sectors that we know well. And with the growth of Egentic AI, you can see AI strategies in a host of sectors that we have spent time in previously at IAC or others of us in our careers. And I won't get too specific, but are trying to get to reasonable values on those opportunities. We've not wrestled the right one into the boat yet, but continue to work hard and focus. And then as I said before, hopefully, the macro environment will allow for more price discovery and agreement between buyers and sellers.

It comes from Cory Carpenter with JPMorgan.

This is Danny [indiscernible] from for Cory. For the first question, can you comment on the current penetration of Google AI reviews. And then for the second there any further color you could provide on the cause and share repurchases in 2Q after you disclosed that in April?

Yes, AI reviews. I think we said last quarter, we were on about 35% of our searches as expected, that has rapidly expanded. It's probably on more than half of the searches where our content appears. Some properties less, some properties more, but probably around 50%, 55%. Again, we run through the math that definitely depresses but it's the reason why we're doing everything we're doing, and it's the reason why we're investing behind brands. It's the reason why we are doing things like the people app and my recipes and some more things you're going to see from us to connect directly to our audiences and directly to our advertisers. And in spite of this, we're holding sessions steady. We're growing them a little bit. So -- but yes, there's -- look, we don't -- again, we said -- we run this business as if Google from search is going to go to 0.

Now it's obviously not going to go to 0. But that is the discipline with which we are approaching our investment and how we see the future media landscape. And where audiences are going to come from. And again, part of being media for as long as we've been in it, it is a constant state of change, and this is just another state of change. And we have been dealing with Google and Google changes and Google disruptions for a long time. And there's nothing new. Perhaps the remedy is a bit different, but it all feels very familiar to us.

One comment, and I'll go to buy back for a second, but 1 comment I'd add, we've seen research that estimates the step-down in click through, there was a per report of others. Our observation relative to the decline in click down those reports very much overstate the decline for a premium publisher like People Inc. because there's a whole swath of searches that have been 0 click for years. that never led to referral traffic from Google and are not -- haven't been sources of traffic for People ink and our properties for years. So I think some of those -- you really need to do those studies right, normalize for what was searches, which is why when we talk about searches that are germane for People Ink, what are searches that produced Google SEO traffic historically and then what's the change in that. There is a step down, but not nearly as big as we're seeing...

It's almost like you have to look at it, it's like the marginal step down.

That's the key element there. And again, Google Search is 28% of our traffic. So it's 55% of 28% and then the step down there. So manageable. In terms of POS share repurchases, we tried to signal some of this last quarter. We announced that we completed $200 million in buybacks. We said we were going to focus on M&A opportunities while continuing to look at our stock price, we definitely see value in our stock and now we have the opportunity to buy it and take advantage of that embedded discount. We are actively exploring opportunities to deploy capital and create compelling returns for shareholders that way. I know our time horizon may be longer than some shareholders would want, but we believe we've got opportunity to do both at the same time, and we will continue to analyze both. And we -- definitely, as we are together, with our Chairman, Barry Diller and our leadership team, we are contemplating both on an active basis.

And that comes from Stephen Ju with UBS.

Okay. Great. I think your Slide 9, talking about care was pretty striking because I think your trailing 12-month revenue is $360 million. And that's material. That's not even 1% of the addressable market that you're calling out of $375 billion. So the optimist in me wants to think that given the white space ahead of you, you should be growing much faster. So what factors are under your control and what needs to happen at the industry level, what needs to happen from a consumer perspective and what needs to happen from an enterprise perspective.

Thank you, Stephen. So you hit on it. It is obviously a massive market that Care.com participates in has in front of us, addressable market. And when you think about the needs of families for care, both in-home and out-of-home across children, seniors, adult care and pets. It's a national challenge. It is something that the households themselves struggle with. And there's a theme of what we call the sandwich generation that sits between an ever burgeoning number of seniors who require care as well as their own children. And that is a two-pronged effort and then certainly, in certain cases, their pets as well. That is a demand that's an ever-increasing drain on the financial resources as well as the mental energies of families to find and maintain care.

And it is a tailwind. For Care.com to fully take advantage of that TAM, they need to continue to grow demand of care seekers and supply of caregivers on each side of the marketplace and then get better and better at matching those 2 parties and making transactions easier to execute in the platforms. What does that mean in practice? First is drive consumers from using offline methods to find care and turn to our platform first. To do that, that is very much front and center in what we're doing of improving the product experience to make it easier. There's a big element of care of repeat visits, particularly for those who fulfilled jobs the first time.

The easier you make it, the smoother the experience, the higher the quality of the match, the more likely people are to come back and repeat either for another child caregiver if there's turnover there or to solve their senior or pet needs after a good experience on child or vice versa. The second, and this is a key step is bring to market new pricing and packaging that meets consumer needs where they are in the journey. When you have the diversity of offerings, child, senior pet, daycare, in-home care, backup care, et cetera, you need different offerings on a price point, on a subscription versus transactional, et cetera, to meet the specific needs of a consumer coming to the platform.

We've said this before, but we have 1.6 million nonregistered monthly visits and care is only monetizing a small percentage of them or only serving truly a small percentage of them. That means a lot of people are showing up and not seeing the entry point or the offering that is optimal for them. That's the opportunity of the business. It's also been the biggest challenge. But Brad Wilson and team are focused on creating on-trade to the platform, limited time use, smaller entry as well as upsell value packages as people become more familiar with the product and can use it going forward, things like background checks, et cetera, to offer greater flexibility and easier entry and access.

And then finally, I talked about this earlier. We've got to continue to expand our vertical footprint outside of child care, which is our predominant category today. Senior Care is a burgeoning marketplace and this next-generation we'll be much more comfortable using digital to line up caregivers for their parents. And then pet care is a massive area of spend. We have liquidity there. it's really around putting -- and we've improved the product. It's really around making the investment there to drive growth. So in some cares never lacked for growth opportunities. The hurdle has been our product and marketing. We feel good about where we're going. It's going to be -- continue to make progress every day and build the business.

Next question comes Jason Holstein with Oppenheimer.

Two quick ones. Neil, how are you thinking about long-term revenue growth for people? And I guess, how do you get there from the 9% we're doing today? Just if you could kind of maybe bridge it to the aspirational goal? And then second, any thoughts on expanding licensing revenue beyond open AI as it relates to other LLM companies who I'm sure are using your content.

Yes. I'll do the long-term revenue. I think we've said and we believe a long-term goal for us is 10% revenue growth. And I think it's a combination of what we can do on our O&O properties. We've talked about where monetization continues to get better as well as all the growth we have off-platform and in advance and all the other things we're doing. So 10% remains our North Star ball, which we feel pretty comfortable with in the long term. In terms of licensing revenue, it is something we are obviously very interested in. I think there's 2 things going on in the market to to make more licensing deals happen, sort of 1 of these 2 things is going to have to happen and they're not necessarily mutually exclusive. One, you're going to have to see a change in tenor or change in approach from the LLM creators; and two, we're going to have to manufacture some more leverage for ourselves. And you've seen that in what we've done with Cloudflare where we're now blocking almost all AI crawlers other than OpenAI, where we have a deal and Google where we can't block them because they use 1 caller for search and AI, which is a different discussion.

But what we've seen in the last few weeks, and again, nothing is imminent, but we have seen some of the larger players approach us and come back to sort of reignite some discussions around how these things would work -- there's lots of different ideas and lots of different economic models. We are very, very active here. You've obviously heard Mr. Diller and me and Chris and pretty much all of us talk consistently about what we believe, and we believe that if people are going to train and use and display our content, we need to be properly compensated for that. And hopefully, we're heading in that direction, but we will see.

Just can you clarify the 10% for people? Is that total or digital? I was asking digital, but if you want to give both.

10% for digital and we've said print will continue to secularly decline -- the good news is as a weighted average percent of our total revenue base, it continues to decline. We've driven low single-digit total revenue growth the last few quarters. I think that should continue as we drive 10% plus digit.

We've always said with print print will offset our corporate expenses, and we very much manage that business for cash flow and for the branding marketing value of having print in the world, which is fairly material.

That comes from James Heaney with Jefferies.

Search revenue came in a little bit lighter than expected. Can you just talk about when we should see stability in that business? How much of that is an intentional pullback versus more market-related weakness.

Yes. On search, we manage that business for margin. And there are a number of different revenue streams that we are operating in at any given time. And within the broader Google Search ecosystem as well as search on other platforms, there are different trends, different competitive dynamics. You can see in our Q2 print despite coming in below our revenue guidance, we came in above our adjusted EBITDA guidance, and we raised the midpoint of our full year adjusted EBITDA. That's a reflection of identifying some higher-margin channels that we were able to pursue in the quarter. And again, we're coming back to gross -- essentially gross profit on our omni search activities and advertiser we're driving and then running that against our OpEx. I'd say it's been a multiyear decline in search that's been pronounced on the top line, and that has flown through to EBITDA over the last few years. We are seeing stability. It's been second derivative positive over the last few quarters, the market is hopefully finding some level. But again, the Google Search ecosystem is always volatile. We'll feel good about it at 1 point and then it will switch again. That's the nature of what we're doing with. We do feel good about our ability to maintain margin and profitability there. and on our guidance for adjusted EBITDA. .

[Operator Instructions] That comes from Dan Kurnos with the Benchmark Company.

Yes. Great. Neil, is the chat again. Maybe just going back to Jason's question. If we just think about the Spurs maybe a good time to kind of refresh how you're thinking about the TAM since you alluded to new potential markets like CTV and kind of how it fits in this decreasing signal loss, but increasingly self-selecting environment, especially agenetic browsing picks up. And then Chris, kind of your point on AI industry reports. I mean a lot of the recent data actually suggest that traffic click-through quality has been improving for certain brands. So maybe just more of a question for you guys on or you sit on the data and analytics side, if you're kind of in a good position to track this evolution even as you guys prepare in case things get worse from a Google perspective.

I'll do D plus and then Chris can pick up after that. So we're really pleased with the D/Cipher Plus, Jim Lawson, who is an experienced executive we brought in to run and he's doing an excellent job scaling. I think we have said this before, and we believe it is going to be -- it should be a material contributor into 26 numbers. And right now, quarter-over-quarter, the numbers, albeit small, they look really good. And what we're seeing is, again, for those less versed in the story, what the Cyprus does, it allows us to use our first-party intent-based contextual data understanding the relationship between our content, use that to target ads on other sites off platform. So we can go and understand that inventory buy it and essentially resell it to our pool of advertisers.

This obviously greatly expands our total TAM. We did some work since our last call together because a bunch of you guys have been asking for this. We think it's 4 to 5x our -- the existing market size that we have on platform, and that doesn't actually include CTV. CTV is very interesting because we found a way to combine are signal with the identifiers needed on a household level to target CTV. We've actually run a few of these deals. They seem to be working really well. It's too early to make a call, but we feel very good about the CTV opportunity. You said it CTV targeting for many reasons we don't need to get into today is fraud. It doesn't really work that well. It's a little bit messy.

This is a very clean way for us to use our data to target CTV. And if we can add it just -- that TAM number is going to get bigger. I think this is a really important strategy for us, deciphers because it's very much in line with what we do. We are extremely good at getting people to our owned assets, be them websites, the events, be apps, BMI recipes, the platform places. And we've always had this data product that we used to target our own ads. What this is, is a great unlock to take what we think is the best first-party data potentially in media. It is real intent-driven contextual data and use it to target across the open web. And if this performs the way it performs, we're very excited about the future.

And on the -- Dan, when I talk about click through, there's -- we have been running our searches. This is the data we've been reporting about frequency there's -- it's less clean on traffic that comes via attribution within an AI overview versus a consumer just skipping the AI overview and going down to the SEO links -- what we'd say is it is, in many ways, just a continuation of the cluttering of the search page that's been going on for a number of years with greater SEM sort of thrusting read it directly into the top of the search results [indiscernible] YouTube e-commerce.

We agree with you that the step-down in click-through is -- I said it before, not nowhere as dramatic as these reports are citing. It is something -- but it feels like more of a page knock rather than -- or Page fill-up rather than a significant change in the search behavior. I would say, and I'll turn it back to Neil in a sec, but I would say there is a element of the underlying content that the consumer is looking for. So the more commoditized that content is a historical SEO, the better AI overview will answer and be the endpoint of that search. -- versus what we tend to do in the core of our -- the foundation of our core brands is much more in-depth premium content where you want to go to the actual reference page, source and learn more. And so again, as we've said before, the decline in our click-through may just be fundamentally less than other publishers that have been heavily.

We've been out of the commodity content business essentially for some time. This is not a new phenomenon. Remember, Google was doing things like answer boxes that was knocking some of this stuff out. years and years ago. And again, I just go back to the math that Chris shared earlier, right? It's Google Search and course, 28% of traffic. Overviews to keep the math as we called on 50%. It's a little bit more than 50% but 50%. And then we lose depending on the search somewhere from very little to 20%, 25% -- yes, to the baseline is lower than that. We're it's very well boxed and the sort of content we're making is moving away from what is being distorted at this deployment.

That comes from Matt Condon with Citizens.

My first one is just on the core D/Cipher product. Do you still believe that there's an opportunity to improve yields in your O&O properties just to algorithmic improvements or whatnot -- and then my second one, just on Care.com. Understood the enterprise segment lapping a more difficult comp there, but still declined 7% quarter-over-quarter. Can you just talk about trends you're seeing on the enterprise side of that business?

Yes. The answer to that is yes. The yield opportunity is still there. The smarter we get about our audience isn't smarter, we get about targeting the better dose forget on platform, the more we're going to be able to do. Also, the value -- as we increase the value of our brands and the value of our content, and of our content, I think we're seeing the ability to increase value on O&O was the first question, and Chris, there was the -- I'll let Chris and its question here.

Okay. Yes. I mean the -- on enterprise, I think the 7% you're referencing is a sequential decline quarter-over-quarter. There are elements of seasonality when you think about flu season or sickness in the winter produces more usage of backup days, and then it similarly goes up in the -- it tends to go up in the summer a lot when kids are out of school, those types of things. And then again, in many ways, on a sequential basis, Q2 is our lightest revenue quarter -- any given quarter, there are different elements. You basically have a subscription and a utilization element in that business. The utilization, you'll have peaks and valleys depending on where different employers are and the pace at which their bank of backup days get used. So long term, the sectoral tailwind of backup care and access to platforms like here, we view as increasingly a table stakes employee benefit, but there will be some ups and downs quarter-to-quarter.

And that comes from Ygal Arounian with Citi.

Just 1 follow-up on care and 1 on on digital gaming. Neil, in some of the press articles when you rebranded people you talked about, we've got 40 brands, and I don't think all of them are going to last. Can you just expand on that a little bit? And I understood that the core sessions are driving most of the growth. But does that create any sort of headwind to top line if we think about that transition. And the investment here you're talking about in this quarter as you rebrand and next quarter kind of going back to normal. Is there a chance that you would need more investment levels as we transition around Jenai search. And then with MGM and the digital gaming, you talked about that performing well and that being a core part of the thesis with MGM. Are you guys actively involved in that as 25% shareholders and kind of maybe you could expand on that strategy a little bit.

I'll do the people question first. No. For the purpose of these numbers, the brands I was talking to in that are sort of the brands that are part of the core. So that's -- anything is fully baked and fairly -- it's going to be in a steady state where it is now. It's more of a way to explain to people that are -- which you guys have known for a long time. Our biggest invest brands are carrying the water around here, and they're getting all the investment. The second question is GenAI and I or whatever going to require more investment. I think we are at a point now where I think we made some really smart investments I think they're going to pay back in measured in quarters, not years. And as Chris said, I think we're going to follow the margin profile. Chris outlined earlier, if that's the question. I think -- we've been doing this a long time, and we're very good at investing behind success, not ahead of success. We've never been and invest ahead of success person. We're going to see to do things are working. We're going to invest. So I feel very comfortable with the margins Chris outlined, and I don't think there's going to be any outsized investment going forward that would affect that.

Yes. And just a couple of things I'd add on that. Core sessions now generate 90% of total. So we're sort of in that path to noncore becoming less and less relevant. The -- in that vein. And the only thing I'd say is relative to the investments that we made in Q2, the spend associated with those are baked into the guidance we've done in as well as our full year guidance. So we have ramped up that investment. That's a little bit why the top end of the range came down. Also the other, as I said before, there's $3 million plus of incremental health care costs due to high-cost claims that have flowed through, and we are booking in the second half. We will look to optimize that going forward.

On MGM, we are -- we own 24%. We are big supporters of the management team, Bill Hornbuckle, Jonathan Halkyard and others and also of the BetMGM management team and the joint venture there of Adam and Gary and others. We have humbly sought to provide our perspectives through Barry Diller and our former CEO, Joey Levin, who's on the board on ways to drive revenue, optimize performance and along with the Chairman, Paul Salem and other Board members make BetMGM as successful as possible. We had a former joint employee of IAC and MGM, Gary Fritz, who's gone into full-time and leads their digital and strategy efforts. And we feel great about his contributions and are thrilled he's working so closely with Bill. So we are active board members, but really support the management team in their strategy. Thank you. Any other questions, operator? I think that's it.

I would like to return the floor just time to Chris Halpin for any closing comments.

Thank you. Thank you to all for being on and the questions, and have a great day.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Good bye.

Great. Good morning, everyone. I'm John Blackledge, Internet analyst here at TD Cowen. We're happy to have Chris Halpin, Executive Vice President, Chief Operating Officer and Chief Financial Officer at IAC. Chris is going to walk through an investor presentation, which is available on IAC's Investor Relations website. And then time permitting, there'll be questions for the audience. Chris, thanks for doing this.

Absolutely. Thanks, John. Yes. So we're trying something different today. We put the new investor presentation on the website as of earnings. We had a short -- a few slides from it that we went through on the earnings call, but this is the more in-depth and we really want to give investors, especially those who are newer to IAC, a foundation in the story, our assets, where we are and where we're headed. So I'll refer to page numbers for those on the phone or listening through streaming.

Page 3, this is just the core mission of IAC. And there are a few terms that we really focus on. One is financially disciplined opportunism. That's been throughout our history. We are at our core cash flow owners, investors, we look for value creation. But we are also opportunistic. The second is rational patience of permanent capital. We are a generally closed system and have recycled money over the years and put it to work in a variety of different environments. And then the third is exceptional shareholder returns and spins. And we've done that throughout our history.

Page 4 is just -- you guys have seen it. It evidences throughout IAC, the different forms we've taken and also the proactive approaches we take to generate shareholder returns, buys, spins, start-ups, consolidations, mergers, et cetera. And as we look at our current portfolio, we'll talk about it today, we are going to continue to do that. And then the last slide on Page 5 is just we've reinvented ourselves multiple times. So where are we going next? And that's the topic today. Which -- Barry talked about this, Barry Diller, our Chairman talked about this 2 earnings calls ago, where we really had a rough spot coming out of 2021.

In many ways, the pandemic froth led us to be in a position where we had a couple of assets that were in challenging spots. One was Angi, the flawed strategy of the heavy investment in services as well as the rebranding really destroyed a lot of value. We focused on that and pivoting it. And then the second was our business Dotdash acquired Meredith in late '21 off extremely high pandemic consumption engagement numbers, put out very aggressive targets. The integration there was harder than thought. And we also had the unhelpful ad recession start in about Q2 of '22.

So I joined in '22, and we really went in a laser-focused way on execution. Angi, which we spun on March 31, we got into a far better spot. Joey Levin, our then CEO, went in as CEO of Angi. We cut out a lot of wasted spend. And as we call them, low-calorie revenue dollars, got them to a much better spot, free cash flow positive. Jeff Kip moved from running Europe to running all of Angi as CEO, and we spun them and think they're off to a great start as a stand-alone public company. Dotdash, in many ways, the industrial logic of combining the 2 businesses. We'll talk a lot about Dotdash today, rank true. It was more getting through the challenges of the integration, the step-down in pandemic traffic and the ad recession. But where we are now, we feel great about over $300 million of EBITDA, continued digital revenue growth, continued total top line growth and a lot of opportunity.

So because of that, as Barry said, we are in a much different mindset today, when it comes to capital allocation, when it comes back to buying our own stock, we bought back $200 million in the first half of the year, and we are glad to be through that era. Page 7 are the core assets that define IAC today. Dotdash, we'll talk a lot about that, the #1 digital and print publisher in America. MGM Resorts are 23% plus stake there and active involvement in that company. Care.com, where we own 100%, the leading home care marketing place in the world. Turo, the leading car sharing marketplace where we have 32% ownership, Ask, our longtime search business that continues to survive and chug along.

Our smaller businesses, Vivian and Daily Beast and then our headquarters that we own unencumbered in Chelsea and then $900 million of cash at the holdco on hand. But when you look at those assets and also the progress we made, we realized the reality is if you net out our MGM stake at its public value, and we have $800 million of NOLs to offset the gain there and our cash, which is free and clear apparent, our equity -- the rest of our company, which comprises the assets on the right is trading at 0 value. And so we recognize that discount, and we are actively focused on shrinking it.

How are we going to do that? We've done it before. Throughout its history, IAC is traded at a discount of various levels. This is 1 of the biggest to the perceived value of our private assets times at a premium, but predominantly at a discount, but we are at a high level right now, and we have a game plan to -- that we've done in the past and that we plan to do on a forward basis to realize and unlock that discount.

First is simple, execution. It seems like a platitude, but that's the reality we've been doing it the last few years. Dotdash, MGM, Care or other businesses. We've made management changes at IAC, with Barry coming but much more actively involved as CEO, I as COO and CFO report to Barry, as does our General Counsel; and then Neil Vogel, who's CEO of Dotdash Meredith, all the other company CEOs report to me. We've also brought in a new management team at Care, we'll talk about. And then the Daily Beast, we brought in a new team has really reinvigorated.

We've been focused on corporate cost rationalization, particularly with the Angi spin and smaller footprint and we'll continue to narrow that down. This year's numbers are skewed by some large onetime events. And then we're focused on free cash flow and continuing to delever Dotdash Meredith. Capital allocation is key. We talked about the -- about 5% of the company we bought back in the first half of the year. We will continue to look at buybacks. We still view our stock as underpriced. We increased our share authorization to another 10 million shares in the first quarter. We are looking at M&A, both strategic add-ons for our existing holdings, DDM, others as well as new platforms and we'll talk about that in a second.

And then opportunistic divestitures. We've sold 2 businesses where we thought that the cash would be better served within IAC and whether it's buying our own stock or other purposes. We said a couple of quarters ago, MGM and DDM are core and then really everything else for the right strategic acquirer, we would contemplate a transaction. And we think those businesses have strong strategic fits. We're not going to necessarily run out and sell them tomorrow. But freeing up that cash to do other things with is a key -- continues to be a key priority. And then the last step is catalysts. We view those as spins. We spun Angi when we felt they could be stand-alone. And we are not going to sit passively by relative to large catalysts given the size of our discount and how undervalued we think we are.

So that's the playbook and one that's worked in the past and one we are heads down executing. On M&A, we included this slide just to give you a sense of where we're looking. It really is across all stages of companies. We're looking at some early-stage things, some mid and later stage. We are interested in companies that are around the leisure space, entertainment, media, travel and hospitality, engagement, things that are not disintermediable, especially with less large tech platform dependents or as Barry Diller calls them the tech overlords that are out there. So more one-to-one relationships. We've seen great things from MGM, from digital gaming and MGM and live experiences. And we are actively looking, led by Russ Farscht, our Head of Strategy and M&A, and we are while also contemplating buybacks seeing if there are interesting investment opportunities.

Moving to the companies. Dotdash Meredith, we formed this in late '21 through the combination of our business, Dotdash and the much larger Meredith. Where we are today, #1 digital and print publisher, over $1.8 billion in majority digital revenue and we are -- really benefit from 3 key assets, which are 3 key strategic elements, which are at the bottom. One are our brands. And the learning of the last few years is even with the platforms with AI, everything, having top brands that consumers trust that you can drive repeat traffic to combined with best-in-class technology, which is what Dotdash brought to Meredith, you will win. And we've seen that in our core traffic increasing and also in how strong we are direct sales to advertisers and brands.

The second, which we'll talk about more is D/Cipher, that is the predictive analytics, AI-driven ad targeting solution that we have developed. And we really think we're the only ones who can develop using intent rather than cookies. We've had great success rolling that out direct to advertisers on our inventory, and we'll talk about expanding that to the broader Open Web. And then the last is the diversity of our revenue. We'll talk about that in a bit, but we are diversified across industries, health, home, CPG, travel, food, beauty on down the list. And we are also diversified. We've got advertising. We've also got an incredibly strong performance marketing business. where we are a top partner for Amazon, Walmart, Target, others. And then we've got our licensing business and our events business, and we'll talk more about those revenue streams.

This is Page 14, our properties. You can see that all of these are really intent-driven special interest categories. We are the #1 player in food, entertainment and home. We also can segment, and Neil Vogel, our CEO, has talked about this, we can really segment users across so many of these where we have young, old, urban, rural, rich, middle lower income, et cetera. That scale is differentiated for advertisers as they're seeking different groups or trying to get the whole market. Real strength in beauty and style, and we've adapted that business as we've gone to the changing nature and where consumers are going. Health, excellent property and doing very well for us and then finance and travel.

This next page is just a sense of scale versus other publishers. And in some ways, we think we're getting -- or we know we're starting to encroach on the platforms in our scale and in our reach. This is -- Page 16 is an important strategic element. So we have really 2 main ways to engage with consumers, forgive me. One is on our owned and operated sites, which are the consumption data you just saw. The other is off-platform, which we've gotten better and better at and we think is a real strength. On our own properties, we've obviously got our sights. The key element here was taking the Meredith sites and moving them to the best-in-class Dotdash platform, building a whole new ad performance stack. And we have had a great experience of driving repeat traffic, market share, et cetera, through top brands, better and continued refresh content and best platforms.

We've got our People app that we launched as well as our MyRecipes Locker. These are 2 new digital products launched this year. which now that we've got the company in the right spot technically, we can launch these product extensions, drive greater repeat traffic, drive greater engagement and have differentiated content, and you'll see more of these types of products. You can see ratings and reviews. This is a real strength. Because of the infrastructure we have, we actually test products. We test experiences. We can then market them, and that heavily helps drive our e-commerce platform.

E-mail sounds old. This is a tremendous channel. And I get it from certain things like New York Times, others, it is a very good reengagement platform or channel, I should say, to bring people back to your site. And we've gotten better. It also helps us in building our database and has been a nice source of direct traffic. Events, these are premium experiences, also very helpful with advertisers. Food & Wine is a great platform for this. We have others. Brand licensing about $100 million of revenue, different channels there and then Print, which has really outperformed expectations since we bought. We very much slimmed it down when we bought it to what we call the Magnificent 7 titles.

They all exist on their own 2 legs, and we will continue to manage that business to offset corporate. 10 billion sessions annually on O&O digitally. And then we have these off-platform audiences. Apple News is a tremendous partner, continuing to drive traffic. None of that shows up in our sessions. You can see social media. We've really grown our video on YouTube over the last couple of years and 50 billion-plus views annually off platform. Diversified monetization, direct advertising is -- digital advertising is a 63% of our digital revenue. That's roughly 2/3 direct premiums sold, 1/3 programmatic. Performance marketing, 24%. We think we're best in class at this, both because we test the products, can recommend them. and also our integrations and tactics there.

Licensing, that includes Apple News and our Open AI partnership as well as some product licenses we have with Walmart and others. And then Print revenue and you can see the makeup there. And we are below -- we were over half digital revenue, and that will keep growing. D/Cipher is an important one. So this was developed because of the intent-driven nature of our sites, we got so much signal that you'll never get from cookies and then running that through AI, machine learning and performance, all of our performance testing online, we can pick the best ad to serve relative to a consumer.

If they're looking at painting a nursery, means they haven't recently had a child, you can obviously recommend paint, but you can also represent a host of others. We have scored all those elements on our sites, and that drives D/Cipher which is a -- we guarantee performance. We beat cookies in all of our tests for the metric that our advertisers are looking at. And we can now also roll this out and open AI has been a big -- a key partner for us in this across the open web. So we can then guarantee performance by programmatically on third-party sites that have the same signal as ours, same categories, et cetera. and monetize and generate an attractive margin.

We rolled this out in Q1. We think this can be a really meaningful part of our business, and we are actively scaling that up this year. Quarterly digital growth, you can see up top. We consistently grew across last year, grew 7% in the first quarter. We knew it was going to be a tough comp for a few factors, some spikes at People the year before, the leap year and also Easter, which matters to us shifting into Q2. A little bit of headwinds with the fires and entertainment. But 7% digital growth there. We've guided 7% to 9% for Q2 and 7% to 10% for the year. And then financially, top line overall, growing led by digital and we've scaled up adjusted EBITDA.

We were doing $309 million on a trailing basis, guided $330 million to $350 million for the full year. There is strong free cash flow conversion of this, we have a minor amount of CapEx, working capital and then we have $1.2 billion net, $1.4 billion credit facility that we were very happy to delever, which was our stated goal below 4x leverage as of 12/31. And with that, being below 12/31 -- sorry, being below 4x leverage, we can then dividend cash up to IAC parents. So we have further flexibility in what is our cash flow machine.

MGM Resorts, we originally invested in 2020 through a little bit of incremental purchasing originally about 12%, but also the amount of buybacks they've done, we've accreted up to 23%, 24% ownership. Skipping to Page 23, people ask us, what do we see in MGM. This is really the slide. You've got the digital properties, both BETMGM, which is really turned it around, put up a nice first quarter, and we and Entain and MGM have all actively worked with them to get their strategy and marketing where they want it.

We also have the owned and operated digital properties in MGM, LeoVegas, Push and then our Globo joint venture in Brazil. Market share in Las Vegas, premier properties, premier positioning in what is increasingly the digital entertainment core of the world. Combined, there's over 50 million MGM rewards members, and then you've got the international opportunities in Macau and in the future, Japan and Dubai. We view it as grossly undervalued, trading at about 3.3x current value for the properties, and they've been active re-buyers of their capital.

So to us, the property should be rated. The digital will continually be recognized and we think there's a lot of upside. Barry and our advisor, Joey Levin, are both on the board, who are active supporters of the company and believe MGM has real upside. Care, we bought this business in 2020, sorry. The key message here is it is the #1 site for acquiring home services care for your child, for your senior for -- and increasingly for your pet. The macro dynamic there is only strengthening and will only strengthen with federal spending cutbacks. And we have the premier infrastructure -- the largest infrastructure of background check caregivers. We've got liquidity on both sides of the market.

The story in Care -- and then there's 2 parts to the market going to the business 27. Direct-to-consumer where consumers come on and subscribe and get access to our platform and match with caregivers and then care for business where companies, everything from Fortune 500 to small and medium businesses buy backup days through care and access to our platform for their consumers should their caregiver get sick, so they can come to work and have a backup caregiver or at a facility. We bought it in 2020, made significant investments in the platform, improved that, got a huge bump from COVID. And for the enterprise business, it really jump-started it to a different level and made it a base benefit in most companies.

Consumer [indiscernible] some of the product challenges. We brought in a new CEO in 2023, Brad Wilson, who's appointed a new management team. And they're really taking care now that they've made the investments in the product and in the platform back to market this year. Business was -- has slowed down growth. Consumer has been turning around, but was declining and really positioned to grow better platform, better matching, improved pricing and packaging and marketing. And we expect to see that -- you can see the flat revenue over the last few years on 29, good business, good margins. We think over time, they can be even better, get to 20% with some revenue growth. And it's really -- and at the bottom of 29, you can see the core economics are solid on payback and retention. The key is improve the product, improve the marketing and take advantage of the significant opportunity in front of Care. So that's been a real point of focus.

Turo, just going to Page 33. We invested in this company in 2019, bought some more over time and then exercised a warrant. It is the leading car sharing market. Think of it as the Airbnb for cars, competing with rental cars and also additional use cases like long-term rentals and test driving cars or special experiences. They had an S-1 on file which they've pulled. We were fine with that. We've always said we were indifferent to them going public. What we want them doing is executing on the opportunity, competing with the rental car companies, growing the market. Big opportunity there is marketing. The MPS repeat experience, all that of people who get into Turo and use it is excellent. Unaided awareness is about 16% to 18%.

So based on the last S-1, we can't disclose information on an ongoing basis, but they had $900 million plus of revenue, slightly EBITDA positive. They've got plenty of cash. It really is heads down, execute, grow the business and build a new top marketplace and then pursue liquidity options over time. Other assets, Vivian, really 1 of the top health care staffing platforms. They are doing really interesting things with AI and a thought leader in our portfolio and also being a resource on product development, customer service, other areas. It's impressive to see. Daily Beast, our new leadership there have done a great job of revitalizing the platform, Joanna, Ben & Keith, and we had EBITDA positive, which is a first in our ownership of the Beast over a decade plus. Ask, our search business. We just renewed the contract there, guiding about $10 million to $15 million of EBITDA. And then our headquarters building, which we bought the land on and owned free and clear of any mortgage.

So we talked about it, but that's our portfolio and our plan again on Page 35. Those other businesses as we build them up, we believe they are strategic partners. There's opportunities to realize value there. We will pursue opportunistic divestitures. We are looking at M&A. We also believe there's a big value in our own stock, and we will pursue catalysts. Just finally on guidance. We reaffirmed guidance at DDM, our overall approach to guidance given tariffs and today is a new day or a further development in the tariff cycle. Our -- we are looking at our existing businesses, DDM, premium advertising was solid, hanging in there. Programmatic was softer, which you'd attribute to some concern by advertisers.

Consumers were still spending strongly on performance marketing, maybe tariff pull-forward, may be real strength. So the overall approach we took was to expect some softness macro, Q2 and Q3, relative strength in Q4 and no big recession. And based on that, you can see our guidance -- we reaffirmed $330 to $350 million for DDM, $45 million to $55 million for Care, $10 million to $15 million, you can see all those numbers. In the corporate, we would highlight. We had about $43 million of corporate expense in Q1. We had CEO separation costs, spin costs as well as severance at IAC Corporate and some other things. The run rate we expect to leave the year at about $80 million to $90 million, but it is inflated and we'll continue to look to how to rationalize that and ship away, but it is inflated by the Q1 spending. And then you can see the rest of the guidance. So with that, I will stop there and welcome any questions. John?

Yes, maybe 2 questions. First on the macro, probably tariffs. Just can you walk through, was there a pause early in 2Q? And then as the tariff narrative is cooling down, are you seeing -- what are you seeing in terms of spending? Or is it maybe still a wait-and-see environment?

Yes, what we saw was if you go to April 2, we had -- there was real strength March 31. That now seems a long time ago, given the volatility since then. What we saw afterwards, we were expecting a shoe to drop just given how negative the news flow was. Premium Direct, which we said is about -- is just over 2/3 of our advertising revenue has stayed strong, solid. And the -- that strength in areas like health and beauty and even tech, which is coming off really low numbers being offset by some definite weakness or pause in food and bev, CPG, parts of retail. And -- but overall, direct premium has been fine.

Programmatic, that's the more spot immediate. That reset, we were up 15%, 20% on programmatic prices year-over-year. That quickly compressed to flat to up a few percent. So that's where you see it. The question is which way we go. And then as I said, on our performance marketing, consumers spending strongly in March, April and continue to. We don't have enough insight to say what will be the long-term winner between -- or which will be right between what the direct market is doing and what the programmatic market is doing. But it's hanging in there. And where you see concern is advertisers and -- sorry, retailers and CPG companies not knowing what their inventory will be June, July, August, September based on ships not coming in. And -- but if you can have a resolution of some of these tariff issues, I think you can set up for a solid position going into September thereafter.

Maybe 1 or 2 more. On Turo, is there a path for IAC to take a controlling stake back in the company at some point?

I don't think that would be a priority. We've got 32%, $380 million invested. We really want to work with them to execute on the opportunities that they have in front of them and get the marketing going and drive value there.

Maybe another 1 on. So you have the open AI relationship, [indiscernible] Google out there, Entropic. A number of other hires. Just curious, are you having any discussions with them?

Yes. We've been having -- we've had a number of discussions with large language model developers, builders, that were in various stages. I think OpenAI was the farthest along, some might say in the 5 stages of grief that they need a license to train an LLM on copyrighted content and OpenAI has been a great partner, including on D/Cipher. The others have progressed at different rates. A lot of that kind of froze with DeepSeek and then right now, all these guys are looking at the administration, hoping they come out with something that would enable LLM training. We think even if they do the copyright act and fair use is actual legislation and protects our IP. But I think that's -- those licenses are on hold while people figure out what the administration's position is going to be.

Not a great history of companies getting credit for minority stakes in other companies, 80% majority see [indiscernible].

Yes. I mean there's it's clearly been a negative in certain settings lately, and we're cognizant of that when we look at some other peers. I think right now, the performance, given where MGM is trading, there's enough upside in just performance, bucking the negativity around the outlook in Las Vegas and then proving out the digital strategy that we can drive value there relative to discount longer term, it's something we're going to have to think about. We do highlight some people tax effect it or gain and we do highlight given our NOLs, we can use that to offset our gain there.

I think that's it.

That's it. Thank you all.