IAC Inc.'s Q2 2025: A Strategic Reinvention Driving Long-Term Value

IAC Inc. (NASDAQ: IAC) has long been a masterclass in strategic reinvention. Its Q2 2025 results, while mixed on the surface, reveal a company in the midst of a transformative journey—one that prioritizes disciplined capital allocation, digital innovation, and margin expansion. For investors, the question is no longer whether IAC can adapt, but whether its current valuation and strategic moves justify a "Buy" rating in a market increasingly skeptical of legacy media models.

The Numbers: A Tale of Two Metrics

IAC's Q2 earnings report was a study in contrasts. The company delivered a stunning EPS of $2.57, far outpacing the forecasted negative $0.2927, a feat driven by cost discipline and asset-light operations. Yet revenue fell short at $586.9 million, a 2.4% miss against expectations. This duality reflects IAC's dual focus: short-term profitability and long-term reinvention.

The star of the show was People Inc. (formerly Dotdash Meredith), which reported a 15% surge in adjusted EBITDA despite flat digital EBITDA margins. This growth stems from strategic investments in platforms like Decipher Plus, an ad-targeting tool that leverages first-party data to bypass Google's dominance. While these investments temporarily pressured margins, they are laying the groundwork for a 25–28% EBITDA margin rebound in Q3 and Q4.

Digital Transformation: Diversification Over Dependency

IAC's most compelling story lies in its digital transformation. The company has slashed its reliance on Google traffic—from 52% to 28%—by expanding into platforms like Apple News, YouTube, and Instagram. This shift is not just defensive; it's offensive. By building off-platform audiences, IAC is expanding its addressable market by 4–5x, a critical edge in an era where algorithmic volatility can upend business models overnight.

The Decipher Plus platform is the linchpin here. By enabling contextual ad targeting across the open web, IAC is capturing a larger share of digital ad spend while reducing dependency on walled gardens. This innovation is already paying dividends: non-Google search sessions are growing at a 29% CAGR, a metric that underscores the scalability of its new strategy.

Capital Allocation: Buybacks, Debt Refinancing, and Strategic Pruning

IAC's management has consistently demonstrated a knack for capital allocation, and Q2 was no exception. The company executed $200 million in buybacks, a move that signals confidence in its undervalued stock. With a current ratio of 2.7 and gross profit margins of 73.2%, IAC's balance sheet is robust enough to justify such aggressive buybacks without compromising growth.

Equally noteworthy is the $1.4 billion debt refinancing at People Inc. in June. By extending maturities to 5–7 years and securing favorable pricing, IAC has simplified its capital structure and freed up liquidity for future opportunities. This is a textbook example of strategic deleveraging, which should stabilize free cash flow and enhance shareholder returns.

The Care.com Gambit: A New Growth Engine?

The Care.com segment is another wildcard. After a June rebrand and product relaunch, the division reported $46 million in adjusted EBITDA, driven by enterprise growth in senior and pet care. While the consumer segment still faces optimization challenges, the shift toward higher-margin services (e.g., premium pricing tiers) suggests a path to profitability. If Care.com can scale its enterprise model, it could become a standalone growth engine, much like People Inc. did in the 2010s.

Valuation and the "Buy" Case

At first glance, IAC's stock price drop of 13.41% post-earnings might seem alarming. But this reaction overlooks the company's Fair Value analysis, which suggests the stock is undervalued. With a 52-week range still intact and full-year EBITDA guidance of $247–285 million, IAC is trading at a discount to its intrinsic value.

The key risks? Execution on digital margins and the pace of Care.com's optimization. However, the company's track record of reinvention—turning Dotdash into a media powerhouse, then spinning off Backpage—demonstrates a capacity to pivot under pressure. For patient investors, the current valuation offers a compelling entry point.

Conclusion: A Buy for the Long-Term Visionary

IAC Inc. is not a short-term play. It's a company betting on its ability to redefine its business model in a digital-first world. The Q2 results validate its strategic direction: disciplined buybacks, margin-enhancing investments, and a diversified digital footprint. While revenue misses are a red flag, they are a byproduct of intentional, long-term bets that should pay off in 2026.

For investors seeking a "Buy" candidate, IAC checks all the boxes: strong fundamentals, a clear growth narrative, and a management team that knows how to allocate capital. The current pullback is a reminder that even the best companies face short-term volatility—but for those with a 3–5 year horizon, the rewards could be substantial.

In the end, IAC's story is about adaptation. In a world where digital transformation is no longer optional, the company is not just surviving—it's positioning to lead.