IAC 2025 Q1 Earnings Misses Targets with 577% Net Income Decline

IAC (IAC) reported its fiscal 2025 Q1 earnings on May 05th, 2025. The company's revenue fell short of expectations, reflecting a challenging quarter with significant financial setbacks. IAC's guidance for the full year remained unchanged, projecting confidence in its growth potential despite the current hurdles. Analysts noted the company missed both revenue and EPS estimates, with earnings per share falling sharply. Despite these setbacks, IAC's strategic focus continues on capital allocation and growth opportunities across its diverse business segments.

Revenue

IAC's total revenue for Q1 2025 was reported at $570.49 million, marking an 8.6% decline from the previous year's $624.29 million. Dotdash Meredith led with $393.07 million, while the Digital segment contributed $224.22 million. The Print segment added $173.79 million, offset by intersegment eliminations totaling -$4.94 million. Care.com reported $88.85 million, Search generated $70.33 million, and Emerging & Other brought in $18.29 million, affected by additional intersegment eliminations of -$50,000.

Earnings/Net Income

In Q1 2025, IAC reported a net loss of $214.57 million, a stark contrast to the $44.97 million net income in Q1 2024, resulting in a 577.1% decline. The EPS turned negative at $2.64, down from a profit of $0.52 per share last year, reflecting poor performance.

Price Action

The stock price of IAC edged up 2.05% during the latest trading day but experienced a 0.31% decline over the full trading week, with an 11.67% decrease month-to-date.

Post-Earnings Price Action Review

The strategy of buying IAC shares post-earnings and holding for 30 days has underperformed significantly over the last five years. It resulted in a -41.55% return, far behind the benchmark's 58.50% return, with an excess return of -100.05%. The compound annual growth rate (CAGR) stood at -10.83%, indicating substantial losses. This strategy also faced a high maximum drawdown of -64.49%, with a Sharpe ratio of -0.40, highlighting the substantial risk and negative returns associated with this approach.

CEO Commentary

"It was a strong quarter and we are back to what we do best: allocating capital and seizing opportunities for value creation," said Barry Diller, Chairman and Senior Executive of IAC. He highlighted the successful spin-off of Angi and the repurchase of 5% of the company, expressing optimism about capital deployment opportunities within their businesses and in new ventures. Diller emphasized the growth of Dotdash Meredith (DDM), noting that its scale, loyal audiences, and performance differentiate it from industry peers, underscoring DDM's growth potential despite a challenging environment.

Guidance

IAC reiterated its full-year 2025 guidance for all businesses, emphasizing confidence in growth from DDM and the potential for continued capital allocation. The company anticipates ongoing investments in both existing operations and new opportunities, with a focus on leveraging scale and brand strength to drive future performance. The tone reflects optimism about navigating the current landscape while maintaining a disciplined approach to capital deployment.

Additional News

In recent weeks, IAC has been active with strategic moves, including completing the spin-off of Angi, now an independent company, which was finalized on April 1, 2025. Additionally, IAC announced the relocation of Care.com's headquarters to Dallas, Texas, aiming to leverage the tech hub's growth potential for talent acquisition and business expansion. In corporate governance, IAC has nominated Tor R. Braham to its Board of Directors, enhancing its expertise in technology and capital markets, and restructuring its Nominating Committee to strengthen shareholder value.