IAC's Q1 Earnings: Navigating Declines and Uncertainty

Investors in IAC (NASDAQ: IAC) face a critical moment as the company prepares to report first-quarter 2025 earnings on Monday, May 5, after the market close. The results will shed light on whether IAC’s struggles to stabilize its core businesses—Angi, Dotdash Meredith, and its search operations—have intensified or begun to reverse. With Wall Street forecasting significant declines in both revenue and profitability, the stakes are high for a company that has seen its stock price drop 23% over the past year amid recurring disappointments.

The Consensus: A Wider Divide Between Expectations and Reality

Analysts project a stark drop in IAC’s financial performance. The consensus estimate calls for a Q1 2025 loss of $1.14 per share (EPS)—a 22.6% year-over-year (YoY) decline from the $0.93 loss reported in Q1 2024. Revenue is expected to fall to $809.66 million, a 12.9% drop from $929.68 million a year earlier. These figures reflect deepening pessimism: over the past 30 days, EPS estimates have been slashed by nearly 20%, and Zacks’ Earnings ESP model now suggests a -246.83% likelihood of beating expectations, signaling a high risk of a miss.

Segment Spotlight: Angi’s Struggles vs. Dotdash’s Modest Gains

The declines are not uniform across IAC’s key segments:
- Angi Inc. (formerly Angie’s List): Revenue is expected to plummet 22.2% YoY to $305.40 million, underscoring persistent challenges in its home services platform. This segment’s performance has been a recurring weakness, with management citing pricing pressures and slower customer acquisition.
- Dotdash Meredith-Digital: The publisher of brands like Food Network and Byrdie is projected to grow revenue 13.3% YoY to $209.30 million, slightly exceeding estimates. This stands out as a bright spot but remains overshadowed by Angi’s struggles.
- Search Revenue: A 28.8% YoY drop to $108.50 million reflects declining ad spend in the sector, a trend affecting many digital platforms.

Historical Context: Volatility and a Precarious Balance

IAC’s earnings history reveals a pattern of volatility. In Q1 2024, it narrowly beat EPS estimates by 18.4%, but that was followed by a disastrous -2,755% surprise in Q4 2023, when it reported a loss of $2.39 per share versus a projected $0.09 profit. Over the past four quarters, IAC has beaten EPS forecasts just twice, with recent trends pointing to weakening momentum. The company’s current Zacks Rank #3 (Hold) reflects this uncertainty, while peer ITT holds a weaker #4 (Sell) rank, suggesting IAC’s position is fragile but not yet dire.

What’s at Risk—and Why It Matters

A miss on Q1 results could amplify selling pressure on IAC’s stock, which already trades at a price-to-sales ratio of 1.1x, near its five-year low. Investors will scrutinize two critical factors during the earnings call:
1. Cost-Cutting Progress: Management has emphasized restructuring efforts to reduce losses in underperforming segments like Angi. Analysts will look for concrete metrics on expense reductions and EBITDA improvements.
2. Strategic Shifts: With Angi under pressure, IAC’s ability to pivot toward high-growth areas—such as Dotdash Meredith’s e-commerce integrations or its emerging tech ventures—could determine long-term viability.

Conclusion: The Bar Is Lowered, But Risks Remain Elevated

Investors should approach IAC’s Q1 results with cautious optimism. The lowered consensus estimates create a lower bar to beat, but the company’s track record of volatility and the negative Earnings ESP model suggest a miss is highly probable. A disappointment could further depress the stock, especially if management offers weak guidance on Angi’s turnaround or Search revenue recovery.

Crucially, IAC’s valuation hinges on its ability to stabilize its core divisions while capitalizing on growth opportunities in digital content and services. Until those divisions demonstrate consistent progress, the stock will remain under pressure. With a Zacks Rank #3 and a near-term focus on near-term execution, investors should prioritize downside protection while awaiting clearer signals of stabilization.

In the end, Q1 2025’s results won’t just be about numbers—they’ll be a referendum on whether IAC can finally turn the corner after years of turbulence.