IAC Inc.

Welcome to the IAC First Quarter 2025 Earnings Conference Call. All participants will be in the listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After introductory remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. 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 First Quarter Earnings Call. Joining me today is Neil Vogel, CEO of .-Meridith or as we refer to it today on the call, DDM. IAC has published two presentations on the investor relations section of our website today. A new investor presentation and a Q1 earnings call presentation. On this call, we will be reviewing the latter, which comprises a few key slides from the longer investor presentation. I'll begin with some introductory remarks that will reference that earnings call 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 law. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on our 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 10K and in the subsequent reports that we file with the SEC. And the information provided on this conference call should be considered in light of such risks. We'll also discuss certain non-GAP 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 GAP measures and full reconciliations for all material non-GAP measures. Now that we've covered that, I want to say thank you for joining us on this call as we commence this next chapter in IAC's history. As an overarching comment, I want to say Q1 was a solid start to the year. To echo our Chairman Barry Diller's published comments, IAC is back to doing what we do best. Angie is officially on its own. Our businesses are executing with focus and effort, and we are deploying capital, including into the company we know best, ourselves. Through the repurchase of 4.5 million shares. We've also increased our share repurchase authorization by 10 million shares. The macroeconomic outlook is uncertain, but we are reaffirming full year 2025 adjusted EBITDA guidance across all of IAC. Turning to the Q1 earnings call presentation, you'll see on page three the businesses and assets that comprise IAC today. These include four leaders in large and growing categories. And in Q1, we had a truly productive quarter executing on a number of fronts. On March 31st, we completed the full spin of Angie to shareholders, representing the 10th independent company IAC has created. With the spin, Joey Levin transitioned from IAC CEO to Angie Executive Chairman. Where he's working with CEO Jeff Kipp to drive Angie to be the industry leader in home services. Our companies executed strongly. DDM grew digital revenue 7% in the quarter and increased EBITDA 46%. That's excluding a one time lease gain. That lease gain, however, represents a different type of win as we were able to terminate a long term lease for two floors at DDM's New York headquarters for $43 million in cash payments. Representing about three times saved cash flow and generating a $36 million book gain. Care keeps making progress through its single minded focus on improving its product to drive better customer experience, conversion and retention. MGM reported solid earnings last week and in the words of CEO Bill Hornbuckle is, quote, well prepared for the rest of 2025. Turo, the leading car sharing service has withdrawn its plans for an IPO and is fully focused on driving growth and seizing on the opportunities in front of it. Vivian is implementing AI into its products and processes in truly innovative ways, which combined with the two million clinicians on its platform has the opportunity to potentially fundamentally change healthcare staffing. At Search, we renewed our contract with Google and the business is showing signs of stability after a challenging couple of years. And the Daily Beast grew revenue 72% while achieving profitability. At corporate, we've taken steps to rationalize our cost structure. Additionally, during the quarter, we also reached agreement in principle to settle the match separation litigation with IAC only needing to contribute $200,000 beyond our insurance coverage. But despite all this progress, turning to page four, our shares are still trading for less than the value of our 23% stake in MGM and the 900 million of cash at IAC parent. Importantly, and as a reminder, we have 800 million in IOLs that essentially would offset the taxable gain presently on our MGM stake. So as you can see on the right, our collection of wholly owned businesses, as well as our 32% preferred equity stake in Turo and our unencumbered headquarters building are trading at an implied value of negative $100 million. We obviously think this represents a massive value disconnect. And turning to the next page, we're working every day on a strategy to create equity value and shrink that discount. The first piece of the strategy is obvious, continue to execute and drive growth across the businesses. Neil will talk today about everything he and his team are doing to seize on DDM's opportunities as the largest digital publisher. Care, Vivian, Search and the Daily Beast management are similarly improving their product content and technology to accelerate their revenue and profitability. And in the case of Care and the Beast, we brought in new leaders who've re-energized those companies. And then we're also the largest shareholder with active board members at MGM and Turo, helping those industry leaders seize on their market opportunities. The second prong is capital allocation. Our chairman Barry Diller said last quarter that after working through the challenges of the past few years, capital allocation is front of mind. As an initial step, we completed the buyback of 4.5 million shares of IAC and refreshed our authorization as mentioned earlier. We've demonstrated our conviction in our own stock, underscoring the deep value we see in our businesses. And we will continue to actively evaluate share buybacks going forward. To the right, M&A is a key element of IAC's DNA and success. And Rush Barsh, our head of M&A and strategy is driving an active effort to find investment opportunities both through our existing companies and in new platforms. More on that in a second. And then finally, as we said two quarters ago, we will continue to pursue strategic divestitures of our smaller holdings should they arise, freeing up capital and simplifying IAC where attractive. The final area is major catalysts. Significant events to crystallize value have always been part of the IAC playbook. Spinning Angie was a key step in our strategy last quarter. Looking forward, we can't say what such catalysts may be, but we will be fearless in pursuing them if we believe they will benefit our shareholders. Regarding M&A, we included the next slide to present an overview of how we are approaching capital deployment. Our foundation, our interests, and our advantages. A number of us have been active in capital investment throughout our careers and fundamentally believe we have real advantages through our permanent forever capital and ability to invest at any stage of a company. We've always been unique in the marketplace for capital given our structured deep industry experience, flexibility, and operational know-how, and these strengths continue to serve us well. We're actively pursuing acquisitions and investments small and large and hope to be discussing new additions to IAC. The final slide summarizes our guidance, bringing us back to a discussion of the macro environment. We've been following trends actively across DDM and CARE as well as garnering insights from our other companies and holdings. Consumer spending through DDM's performance marketing has been solid, clearly bucking the weak consumer confidence numbers we've all seen. That may represent consumers pulling forward spend ahead of tariff impacts or it may represent real solidity. It's too early to tell. At CARE, we've seen early signs of consumer pressure around the edges through ebbing conversion but not yet any material moves. On the DDM advertising front, we've been closely watching the trends given the news flow but premium demand has remained generally stable. Strength in pharma, tech, and beauty has helped to offset weakness in areas like food and beverage. One element we are thankful for in our advertising base is that TEMU, Shein, or the de minimis exemption players have never been direct advertisers on our platforms. Programmatic pricing conversely is definitely softened, essentially running flat year over year after being up for much of the year. We're analyzing the disconnect between direct revenues on one hand and programmatic on the other to see which provides better insights on the forward trends in advertisers' demand. But right now, it's too early to say. In some, we'd say we are carefully monitoring the macroeconomic environment for signs of either stability or weakness among consumers and brands. And we're thinking carefully about discretionary spend in that context. Against that backdrop, we're reaffirming our adjusted EBITDA guidance for the year for each of our companies with the core assumption of no significant recession. That assumption derives from what we are seeing in our businesses but we know we are living in unpredictable times. All we can control is our focus and execution. With that, let's go to Q&A. Operator, can we please have the first question?

Yep. We'll now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using your speakerphone, please pick up your hands and press the keys. To withdraw your question, please press star then 2. Our first question comes from Jason Holstein from Oppenheim. Please go ahead.

Thanks for taking the question. Can you talk about the key priorities and I guess it'd be probably the key product priorities that could drive 2026 TDM revenue growth? And then secondly, how should we think about capital allocation going forward? Obviously, a lot of stock repurchases in the quarter for a time and a while. But going forward, how should we think about allocation between repurchases, and M&A, and is there a minimum gross cash level that you think about? Thank you.

Cool. Hey Jason, it's Neil. First, for those of you in New York, allergies are just destroying me. I'm sorry. I sound so awful. But yeah, to answer your question, let's see if Chris can take the second one. I'll take the first one. 2026 is something we're actually pretty excited about. I think one thing we're talking about before this call is we came into this year, and I think we are executing at an exceptionally high level. And a big part of that is, you know, looking down the field and figuring out what we need to do for the future, and we had a number of really big projects. I'm sure you've seen the People app we launched, which we're very excited about. We're going to meet audiences where they are, meet younger audiences. If you haven't yet, download it and use it. We're really proud of it. It's one of the best things we've ever built. We have a very big project around recipes called My Recipes. If you believe Comscore, we're probably at least 40% of the traffic on the open web to recipes and food content. So it's a really modern take on the recipe locker, which if you're a chef, you're a home cook, you find very, very valuable. We're excited about that. And the other thing we're most excited about is Decipher Plus, which allows us to take Decipher, which we've talked about, which is using our intent-driven contextual data that produces ad targeting that beats cookies and pretty much beats anything else in space, and extending it across the open web. So you can not only use Decipher to target exceptionally our own inventory, but target the whole web. And between those three things, we're really excited about where we can go. We're also not new, but we're really investing in our event businesses. And this is not some new strategy. It's just the continued growth of things like the Food and Wine Classic. We've had really good strength in off-platform audiences across social. We've had a couple of, many of you have probably seen my reality show turn on the InStyle show, The Intern. But we're building really fun audiences in different places that advertisers really, really value. And we're just excited. We're long-term very excited about this business. Great brands, great audiences, real emotional connection to our, the people that use our products, and we feel pretty good.

Thanks. And then Jason, on capital allocation, the, you know, we bought back 4.5. Our goal was buy $200 million of our shares. We have our remaining 900 million of corporate cash. We're also generating cash down at DDM. Our goal now is to look at M&A opportunities as we talked about. Nothing forecloses additional share purchases, but we're interested in M&A. Our chairman, Barry Diller, is we're looking at things large and small. We think the volatility of the current period can lead to new opportunities there. One of the things, you know, Russ and a number of us have talked about a lot is these private equity and VC-backed companies have kind of hung on for a long time waiting for the market to return to exceptional levels. That really hasn't happened in that world, and also their investors, their limited partners are in greater need of liquidity. So we're cautiously optimistic. We'll see more opportunities shake out of the private market. We're also looking at earlier stage opportunities. But again, people have challenged us that, you know, you can walk and chew gum when it comes to capital allocation for a while. You can buy your own stock and do M&A. And we believe that. But we definitely see value embedded in our share price. And, you know, we'll continue to calibrate as we go. Thanks, Jason. Operator, next question.

Next question comes from Jason, excuse me, John Blackedge from TD Cowan. Please go ahead.

Great. Thanks. Two questions. Sticking with DDM Digital, can you talk about the 1Q trends, revenue trends at DDM Digital? It looked like advertising was a bit lighter than expected, offset by higher performance, and licensing revenue, any further color there would be great. And then on the 2Q DDM Digital revenue guide of 7 to 9%, can you talk about the puts and takes for the Rev Guide across the three segments? And is the current macro with tariffs impacting advertiser brand spend? And then second question on the DDM cashflow to IAC, could you just talk about the dynamic where DDM hits a certain leverage ratio and the cash is accessible to IAC? Like, how does that benefit IAC and its shareholders? Thank you.

Yeah, sure, John. I'll start, and then Neal will definitely weigh in. Q1, you know, we guided last quarter that there were a few elements that would lead to slower growth on traffic and revenue in Q1. Specifically, we had tough comps in January and February in 24 that we were running over. There was one less day in the quarter, which is about a 1% decline. And then Easter, which is an important holiday, fell into the second quarter this year. As it played out, you know, the news cycle wasn't our friend between the fires in LA and then political news seemingly crowding out most other information and people's attention. These factors combined core traffic declining 3% in the quarter and digital advertising only being up 1%. In that 1%, premium was actually pretty solid. We just, you know, with fewer impressions, we had less programmatic to sell, which was a headwind. But things within just traffic and advertising improved across the quarter. March was solid at 8% digital advertising growth, for example. And April similarly was in that vein. For the first quarter, licensing led the way with 30% growth, thanks in part to the OpenAI license, but also due to real strength at Apple News. Performance marketing was also excellent at 11% growth, and we continue to see solid consumer spending on commerce. And that really got us to the 7% for the quarter. So we were not really surprised by that number. For the second quarter, we've guided the 7 to 9% digital revenue growth. That'll come from a combination of stable traffic. We've already seen that. Some easier comps, definitely. So far, we've seen stability and premium demand with some particularly strong categories offsetting those where tariff uncertainty is more pronounced. And continued solid performance marketing offset, again, by soft programmatic. Licensing will have a tougher comp as we lap the OpenAI deal, but will still grow. And then we've spent a lot of time analyzing the advertiser demand and the impact of tariff uncertainty. We do it constantly. That 7 to 9% digital for Q2 is our best view of where we are right now in the trends. Neil, anything? Yeah, I'll add

a little to the market perspective on this. I think, as I said before, we came into the year really strong and executing really well. I think we have seen our premium revenue hold together really, like, really, really well. So far, I think anyone who doesn't think the mood of the buyers is changing is not paying attention, but we haven't seen any significant huge cracks in that yet. I guess it all remains to be seen. We are very focused on control. What we can control. I think we're really well positioned because of our scale and because of our focus on performance, and again, it goes out of things like Decipher and really intent-driven traffic. You got a much better chance to hang in there when you're the ads that really perform. So we'll see, but again, it's control what you can control, and we'll see. I think Chris touched on this a little bit. I think there is a little bit of a disconnect between what is essentially the advertising spot market, which is the real-time programmatic markets, which are probably we're running for a long time for us. We're particularly good at it, up 20-ish percent. We're back down to sort of flattish here every year, and that's not really moving. I think that is definitely a little bit of uncertainty in the buyers and a little slower to pull the trigger. What I would also say about the future is we're not seeing much more than you guys are seeing, right? There's new things coming out every day, and we're reacting and reading and reacting every day. What I would say in the long term, great brands, great audiences, great execution, we'll be fine. We've got to get through whatever short-term bumpiness hits, and if it applies to us, it's going to apply to lots of other people as well.

And then on the cash flow question, so everyone understands, we have entity-level debt at dot-meredith, an institutional term loan in two tranches, as well as an unfunded revolver. Under the credit agreement on that debt, IAC can dividend cash up to itself, the parent from DDM, if the total leverage ratio is below four times total debt to EBITDA. And that's on a credit agreement definition of adjusted EBITDA, which is, I guess, more favorable and slightly different than what we report publicly. In any case, through debt pay down and increased EBITDA, Neil and team have steadily reduced leverage at DDM, and we went below that four times test ratio as of 1231.24. That means IAC has access to DDM cash for any IAC corporate purposes, should we so desire. It's a nice increase to our financial flexibility, and it was a real objective of ours, essentially, since the acquisition closed, to get below both from a, just from a total leverage perspective, but also for access to that cash. We'd also highlight that on a go-forward basis, DDM's leverage ratio should only improve through the combination of improving EBITDA, but also it's a great cash flow producer and that free cash flow generation. Thank you, John. Operator, next question.

Next question comes from James Heaney from Jeffries. Please go ahead.

Great. Thank you, guys. Could you just talk about the appointment of Jim Lawson as the president of Decipher? I'd just be interested to hear about his strategic objectives for that particular product. Thank you.

Sure. Jim, for us, was a coup of a hire. I've known Jim personally for a while. Our team has known him for a while. If you are in the ad tech space, you know Jim. Jim had been the CEO of a public company called Adferent, which had recently been acquired. Adferent is particularly appealing to us as, A, they're a partner of ours now, and B, they do a lot of the same things to allow advertisers to reach consumers that we're doing with Decipher. Jim's a star. He had lots of opportunities. I think we convinced him to go be CEO of other things. I think we did a good job of convincing him how big and exciting Decipher could be, and he's come and hit the ground running and building a team, very commercial. We knew we had a great business, and, you know, people at our place, Lindsey Van Kirk, John Roberts, who's done an incredible job building this. We needed to bring a real commercial CEO into this. A, it shows our focus on the business to the market, and B, it's just the nuts and bolts skills that we need to build a team that can fully sell and execute on the potential of using our data, which we have more first-party data than any other publisher, to target the open web, and we know that our data and our contextual targeting beats cookie and other targeting, and Jim believes that too, and we're off to the races. Again, I think we've talked a lot about, I think, you're going to see minimal contribution this year, but we're really looking towards 26, as this is a big part of our future. For Decipher Plus. For Decipher Plus, I'm sorry, for Decipher Plus, and, you know, it's interesting. The last thing I'll say about Decipher Plus, while we're talking about it, is, so the actual core Decipher business now is in more than half of our premium deals. It's doing really well. Those deals are -plus-ish percent bigger than deals that don't have Decipher, and those clients are growing faster than clients that don't use Decipher. It's also our ticket in the door. It's one of the few really new, innovative things in ad targeting. And Jim, one of the great skills he has is he's a communicator, and he can communicate what we are doing into this ad tech universe that isn't our native language. We're a publisher at our core. We make amazing content and build amazing things. He really understands our data product that we've built, and is really looking to leverage it. So we're, as you can tell from my tone, we're very excited about this. Great. Thank you,

Neil. Thanks, James. Operator, next question.

Next question comes from Corey Carpenter from JP Morgan. Please go ahead.

Hey, good morning. Thanks for the questions. Maybe sticking with Decipher, Neil, could you just talk about the impact or lack of impact, kind of from Google, no longer phasing out cookies, which they announced a few weeks ago? And then maybe for you, Chris, just could you talk about the announcement you made a few weeks ago with Ark House in the addition of them as a board member? Thank you.

Sure. I'll do the cookies part first, then Chris can go. Cookies is a little bit more, this is a little more my opinion. I'm sure you're going to get different takes on this. I don't think it's that big of a deal at all. I don't think anybody really thought cookies were going away for the last 12 months. And as you guys like to say, it's baked in. It was baked in already. For us, we're neutral on this. I think if anything, it might help us. It really helps us line up what we can do with contextual targeting versus cookies and how much more performant our Decipher and Decipher Plus driven offerings are. So it's pretty good. We also look, we have a lot of clients that want to buy parts of their programs, even all their programs based on cookies for whatever reason, and we can execute those also. So the one thing it will do that's positive is it'll probably eliminate what would have been the thrash in the market to get from a, to a true post-cookies world. But I don't think in the long term it makes any difference for us.

Yeah. I think, and just to align that to some of the prior conversations we've had on this topic. We, if there was going to be a hard cut, we used to say it was going to disrupt everyone, but Decipher would be a winner. Neil and team have highlighted the fear of a hard cut helped highlight Decipher to a number of brands and agencies, which was great for getting them to trial and then see the experience where we are now, you know, stability in the market where we can just out-compete other offerings is ideal.

Yeah. And I think, just to add, well, I think advertisers now really understand cookies are profiling individuals, and there are varying levels of discomfort for that. We're not, we just look at behaviors. And when you look at what cookies are backward looking, they're trying to guess what you're going to do based on what you did, we're real time. We know exactly what you're doing. And I think that's very simply why we're better and why we don't mind cookies still hanging around as a comparison.

Yeah. And the last thing I'd say, PowerPoint is not the answer to anything, but we tried in the investor presentation, spent a lot of time with DDM and team to really lay out what Decipher is and then how Decipher and Decipher Plus work off of what it is in the slide in the presentation. And, you know, we'd encourage investors to look at what we're doing with context, connecting it to data and predictive analytics, and then going on O&O inventory and off.

I mean, we've got the real time first party data of the biggest publisher in America across the biggest consumer categories in America. So we feel really good about where we are.

Thank you. And then, Corey, with respect to Tor Bramann joining our board and the announcement with Arkaus, Arkaus is an IAC investor who is a really strong believer in the economic value embedded in our shares. They've highlighted that publicly. We've had constructive dialogue with Arkaus. Our nominating committee believes Mr. Bramann's background in technology and capital markets, as well as his board service experience in a number of public companies will be valuable as IAC continues to execute its strategy. We're excited to have him join the IAC board and work with us. He's filling the seat that had been held by Joey Levin, and we're excited to move forward with him on our strategy. Thank you, Corey. Operator, next question.

Next question comes from Ross Sandler from Barclays. Please go ahead.

Great. Neil, the bigger slide deck talks about the new -to-consumer experiences. Just curious, can you just elaborate on what you guys are doing there? How many other Meredith sites might be open to something like this, and what kind of impact that's going to have on growing your owned and operated inventory? Thank you.

Yeah, sure. Good question. One thing we've said, and I haven't been on one of these calls in a bit, but we've been saying to anybody who listens, is our objective as a business is, with our brands and our audiences and our strength and the emotional connections we have, we need to focus more on connecting directly with our audiences and directly with our advertisers. One of the things we've been able to do is we've really been able to do that, and we've been doing it quietly. I mean, there's a fun statistic around here that we can share with you in this call. It goes to why we're going direct. When we put Dot-Dash and Meredith together, about 60% of our traffic was from Google search. Right now, it's a little bit more than a third, and we've grown all the way through that. That's because we are able to really connect with users, and that doesn't even account audiences we've built on social. That's just traffic to our O&Os. If you look at what we've done, we've taken our biggest properties and biggest areas, which is entertainment with people, which is food and recipes of my recipes, and which is our superior ad targeting with Decipher Plus. All of these are ways to connect directly with audiences and with advertisers. What we've seen is a really strong take-up for this. Just like we've seen a really strong take-up for participating in our events, just like we've seen a really strong take-up for advertising on our social. It's a long-term strategy. Look, if you do what we do, you have to pay attention to the market. We've been at this a long time. I mean, I've been here almost 12 years. The media landscape looks entirely different than it did when we got here. We've done nothing but grow and adjust the whole time. We feel very positive about where we're going. The second part of the question was, what else are you doing? You guys should expect to hear from us new projects of the size and scale of my recipe or people app. I'm not going to say every quarter, but with great frequency. One of the things we've done is we've pivoted our organization, which is not that easy to do, to really focus much more on innovating these things than we have focusing on the old business model. Like, right, if we're not careful, we've got real innovators dilemma. We've got this old model that works but would decline. But we've had this forever. This has been going on 10 years like this. So we're constantly doing new things. We're really trying to bring innovation, new ideas forth. I think, again, launching the people app, launching my recipes, launching the Cypher Plus, it teaches us and it teaches the ad market that you should expect new things from us and excitement from us and energy from us. And we really like where we are. And what I can say is stay tuned. There's going to be some more.

Thank you, Ross. Operator, next question.

Next question comes from Justin Patterson from KeyBank. Please go ahead.

Great. Thank you very much. Good morning. You're approaching one year of DoFdash working with OpenAI. Could you talk about your learnings from this partnership and perhaps more broadly for Chris, how you're thinking about AI opportunities for the rest of the IAC portfolio? I know you called out Vivian as potential beneficiary in the prepared remarks. And then just a big picture one for Neil. Obviously, the other big ad industry news is just the Google DOJ trial. How might the world look differently for DoFdash if we see some divestitures and what opportunities that might create for you? Thank you.

I'll do the OpenAI. I'll do a quick answer to OpenAI. They've been a really good partner for us. Now, what I would say is we do not have productive relationships with other people in their space, but with OpenAI, they've been great. Our engineers are cooperating. We're really helping them roll out some of their products. They're helping us roll out our products. They were a very big help with some decipher targeting, with some of the AI things we can do around modeling. It's been very, very positive. And I think the choice we made that said we want to seat at the table with these guys that are at the tip of the spear on these things, I think for the first year we were right. And it's been really, really helpful for us in terms of how we're moving AI into our processes and getting a say in the future of how this stuff's working. I know in terms of larger deals, I'll let Chris talk about that.

Yeah, it is like a lot of things where there's so much buzz. And then when there's really substantive, increasingly substantive applications, people are almost tired of hearing about it. So we're in that stage. Across the portfolio, we have essentially a bit of a lab where Neil's team will apply it on certain things. Vivian, who I actually think is the most aggressive and creative in how they've applied AI is doing it, but you've got Care, there are opportunities at Turo, and at our search business. They've applied AI through real-time bidding and other activities. What's clear is where you have massive data sets where you're doing optimization activities, so things like smart matching or fraud detection, you've got real advantages there. We've seen that at Care. Vivian, clearly customer service, and you've heard the comments from Sam Altman and others that sort of level one, level two CSR activities are probably going to go rapidly to voice-driven AI, and if done right, it's a better experience. We debate this all the time, but I think of it as the ATM experience at the bank where most of us never want to go into a bank teller again. I think once you have a sort of pseudo-omniscient AI-efficient voice-activated call service representative, you're not going to want to go back to a human using a dropdown screen and searching for information. What it's done for Decipher is clear, and then also, you know, we're seeing interesting things on onboarding and definitely on marketing. I think over time, there'll be a, through agentic AI, real changes to how marketing creative is generated, tested, optimized, placed. You're still going to have humans involved. It's not going to be a cycle of machines, but much faster cycles that will have benefits over time. Yeah,

I'll go to the DOJ, Google, stuff. I think there's two answers to that. First, the legal case itself, and I assume you're talking about sort of that daily mail related legal case, the settlement, the verdict that just came out. Yeah. What I would say is we're looking very closely at it. We're trying to figure out how we actually participate in this in some way or don't. I don't have any real news on that. We're obviously very close to it, but I think from a business perspective, I mean, this is like my favorite line from my favorite TV show, The Wire, which is the great line is, this is Baltimore gentlemen, the gods will not save us. Like nothing is, we will function and always have functioned as if we are on our own. And we need to have great relationships with advertisers, great relationships with audience, really compelling offerings, really compelling brands, and we will be fine. And that's how we'll continue to operate. Obviously, if the ecosystem changes, I feel very confident we'll be at the front end of reacting, but we'll have to see. I think full outcomes remain to be determined, obviously.

And also, I'd just say that to continue The Wire analogy, we'll defend our turf in our IP. And that's, you know, only in legal manners, but we will do that. Justin, does that answer that question?

That's perfect. Thank you both.

OK, thank you. Operator, next question.

Next question comes from Tom Champion from Piper Sandler. Please go ahead.

Good morning, guys. Chris, maybe you could talk about care for a little bit, particularly the consumer side of the business. How is leadership working on the challenges there? Neil, maybe just a quick one for you. I'd love to have you talk a little bit more about what you're seeing in the spot market and the growth there relative to what you've seen in the past. What do you think is driving that performance? Why would that not be, say, a leading indicator for the market? Thank you.

Go first. You know, the spot market has been really erratic, and I think that is in line with what everyone sees, feels right. Like a lot of advertising is confidence. And some days people feel incompetent, some days they're not. I wish I had more definitive insights for you. I'm reluctant to do it because I got a 50 percent chance of being wrong, depending on what happens tomorrow. Again, it is true. Obviously, look, spot markets are a very good window into what is happening at that very moment. I'm not totally sure it's indicative of tomorrow if the spot market gets better tomorrow. If you're looking for something that says we're getting better, we're getting worse, I just I'm reluctant to say either way.

Yeah. And the only thing I'd add, to keep me honest here, Neil, is we have no Temu, Shien, or a de minimis exemption in our direct base. On the broader programmatic market, they were a player, I mean, especially on mobile apps and all those. Very good point.

The math of those guys coming out of the market because they spend a lot of money, although it was generally below, they can't afford our sites basically because we're really expensive. Well, we're expensive because we perform relative to what they buy. But when a big chunk of demand comes out of the market, prices are going to go down. So that definitely could be a factor in this as well.

Yeah, that would be something sort of specific to the programmatic market, but would especially given our endemic base of advertisers across our brands, we'd have a different dynamic on premium. For sure. We're not saying absolute, Tom. It's just more those are the kind of questions we're working through. On care, thanks for the question on that. We broke care out as a segment earlier this year for the first time. To set the backdrop, it is the number one provider in its area of consumer care, access information, child care, senior care, pet care, housekeeping, et cetera. We got the most liquidity on both sides of the platform, including demand and caregivers. And it's a good brand, great brand. We bought the company in 2020, and at the time of the acquisition, IAC knew there were core issues with the platform, with the product and the experience. A lot of time was spent early on improving the base platform for resiliency, quality of consistency of experience and putting the pieces in place to eventually improve things up the tax stack like the product, pricing, packaging and payments. But because of that, in that period, the product didn't improve. But also in the vein of you might start to think you're better than you are, the pandemic was a real, the post pandemic period was a real boost for the business. As there was major demand for child care and senior care as people came back to work. In a lot of ways, that masked deficiencies in the product in the 22, 23 period. And then as that tailwind subsided, and frankly, given some of the wage increases that have occurred, the realities, there's been more pressure on the category of care, the realities of the product came to the fore. Brad Wilson went in as CEO less than two years ago, and he and his team, and he's significantly upgraded the team and brought in new talent, have been working to steadily improve the product and experience as well as pricing packaging. So, you know, where we are right now on the consumer side, we have three core priorities this year, the product, and they've made some improvements last year, but this year, they're really rolling out major improvements in matching. So getting the most accurate match of a caregiver based on the specs of the care seeker. Messaging, the product was very antiquated in terms of one to one cross messaging of seeker and caregiver to figure out if it's the right match. Search on the platform, very basic things, we're catching up and moving the ball forward there, and fulfillment. So that's the product. The second is optimizing pricing and packaging. It's basically been a one size fits all product of a subscription with the improved platform and product, they can roll out different entry points and offerings to meet care seekers where they are and what they need. And then finally, once you're happy with the product and packaging, is marketing. And that's, you know, both re-energizing the brand of care and then also improving spend efficiency. One of the learnings was we had an always on model that was pretty inefficient relative to there are significant periods during the year when the preponderance of acquisition of household care occurs. So we've seen improvements already in responsiveness and fulfillment in the product versus the old as they continue to ship improvements. We're excited about that. It's going to be around Q3, early Q4 before the product will always continue to improve, but we really have the product where we want it. We have pricing and packaging rolling out and then we'll have improved marketing and we'll step up the spend in Q3, which is a big search period. So a lot of work to do. We feel confident we'll get the consumer business back to stability and, you know, definitely we think it will grow in 2026 and Brad and team are taking the right steps.

Thanks for the comments,

guys. Thanks, Tom. Operator, next question.

The next question comes from Yousef Squalley from Truist. Please go ahead.

Hi, guys. This is Robert Delaron for Yousef Squalley. Thanks for taking our questions. On the Google partnership, I'm curious if there was any cloud hosting savings as well with that and what impact you guys are seeing to traffic, if any, from search algo changes as well as Google's transition to AIO. And then on programmatic, I just wanted to unpack the drivers behind the softness. I think you guys mentioned some impression commentary earlier and I just want to reconcile that with, you know, strong advertisers leaving the market and the pressure on CPMs as well. Thanks. Sorry, can you just explain that

last question one more time? I've got the first one.

Yeah, sure. On the programmatic, I'm just curious. I just wanted to unpack the drivers behind the softness a little bit. I thought I heard you guys say that impressions were lower earlier in the call. So I just wanted to reconcile that with what you said about team and machine exiting the market and driving CPMs down as well.

Okay, gotcha. Yeah, no, definitely understand that question. On the first question, the Google contract is for search. So there was no cloud component to that. That's just the long-term AMG search partnership with Google related to its business. We have, you know, we use all the cloud services in our companies, but there was no bundling of vendor relationship there. It's just standalone search. Do you want to take? Yeah, I'll do the AIO

impact. For those of you who don't know, that's the Google AI answers at the top of the page. I think right now, those show up on about a third of our searches. You see a little performance decline on those pages. It's very hard to get a handle on exactly how much because there's so much else going on on that page also. There are so many other features and search features and Reddit and Google's doing so much with that page. I don't want to editorialize from a user point of view, but it's a very confused page right now. As I said earlier, when we put the businesses together, 60% of our traffic was from Google search. Now it's probably a little bit more than a third. We've managed to grow all the way through. We've said many, many times in our history, we are extremely happy to get traffic and audience from other algorithms and interim sources, but it is entirely incumbent upon us to manage those sources and be sure that we're meeting users where they want our content. We've been able to do that. It's hard to say what the actual impact is. I actually don't think for us it's giant yet. It might be a little bit. It's more in the context of a whole search page, so I'm not overly concerned about it.

Yeah, I would think about it. If Google search is about a third of our traffic and you're seeing an AI overview on 35% of that and then you've got a small decline in click through, it's not a significant part of our traffic. Yeah, exactly. That's a much clearer

way of saying it than I said it.

Yeah, the other thing we see is as cluttered as the search page has become with Reddit and LSAs and e-commerce and everything, brands still do well. Being, it's sort of this massive spreading where top one, two, three brands in categories are doing that much better. We see it also in our non-core titles at DDM where we're not investing behind them, but the weaker brands just get washed out to the ocean. At least in the context of a search page. In the context of a search page. There's still value with consumers, there's still value with advertisers, but you've seen a huge spread in search. So we're still feeling very good about our top brands and again, that theme of brand and consumer trust continues across all elements of the business. On programmatic, thank you for the question. It's really bifurcating between Neal's comments and we're on pricing and then I was talking about revenue for DDM. So on pricing, programmatic prices have been up strongly for a while with the recent concerns about tariffs and such. It's essentially gone to flat pricing year over year. That has some impact on programmatic. The point I was making was how our programmatic inventory or quantity works is we have our sessions and we sell as much as we can through premium direct given the improved CPMs and it's strategic for us to provide that inventory to our direct partners and help them execute on their campaigns. If we have some slight traffic declines as we did in core in Q1, that just means there's less traffic for programmatic. So I think of it in Q1 as some less traffic for programmatic partly because the overall traffic declined slightly but also because premium sopped up more and then in Q2 as we see traffic coming back to stability and maybe some slight growth in Q2 but programmatic prices are no longer a tailwind given some of the market disruption we've seen. Operator, thank you. Operator, next question.

The next question comes from Nick Jones from Citizens JMP Securities. Please go ahead.

Hi, this is Luke from Nick. Thanks for taking the question. I guess just double clicking a bit more on care.com. I know it's a tough macro environment but at a high level what are the key strategic priorities there to help accelerate growth in the coming quarters or near south? Thank you.

Yeah, thanks for the question. I would say at the end of the day care on the consumer side is the industry leader and on the enterprise side is definitely one of the top companies with clear advantages. We've got liquidity on both sides of our marketplace. Care seekers, the consumer on one and then caregivers, child, senior, pet, etc. on the other. So it is really around execution and making the product, the experience, the matching as good as possible and continuing to through that drive initial conversion, recapture because right now it's a subscription product so people go on, get a caregiver, may lapse or cancel their subscription, come back on, get a senior caregiver or a new child caregiver. So there's a number of elements of initial subscription and then recapture and re-engagement and you've got to keep making the product and experience as good as possible. That is where we have missed the most over the last few years and we feel good about the path we're on. Next is pricing and packaging as I said and the third is marketing. And we've known our marketing was inefficient and suboptimal but we came to the decision to hold off on really pushing behind it, reinvigorating the brand until we have the product where we want. So it's really been a serial game plan that we have. On the enterprise side, it's a true cultural shift post pandemic where backup care and that service is increasingly a base employee benefit and we've benefited from that. We think care for businesses offering of backup care, customer support, access to the care database of caregivers and our life service through life care, our life service offering is truly differentiated. So for us on enterprise, it's really three prongs. One, help employees who have access to care for work or care for business know what they have and utilize it. Two, continue to improve the product to make it as easy to book backup care as an employee as possible. And then three, acquire new logos and that's new sales of Fortune 500 companies all the way down to small business through our own sales force. So we're heads down continuing to execute but the tailwind, the dynamics of pressure on households for both senior care and child care is not going away and it's really as we've said before in the four corners of care to execute. Thank you, operator. Last question.

The last question comes from Yigal Aronian from Citigroup. Please go ahead.

Hey guys, thanks for squeezing me in. We spent a lot of time talking about the programmatic side and maybe thought we can suppose talking a little bit more about the premium side and strength you're seeing there. Are those commitments kind of multi-quarter? What are you seeing there? And as I think Neil you mentioned, okay, premium strong but advertisers are kind of looking around at the environment. What are the trends? What are your advertisers saying as we look forward a couple of quarters? And then not sure if there's anything to add here but if there is, we'd love to hear just on the M&A environment as you kind of move to this stage. Any change or focus on areas that you kind of want to look into from here? Thanks.

Yeah, I'll let Chris do the M&A thing. I'll do the premium side. Our premium business coming in this year was super strong. First quarter was very good as Chris said. Second quarter, you know, where we would hope to be. But again, I think a lot of it is relative to the market, we've got really good offerings. We've got really good brands. We've got really good audience. Our stuff performs. Decipher is really helping. Again, I would love to be able to answer your question more thoroughly and more eloquently but we just don't know. Again, if things hang on where they are, I think we feel pretty good about where we're going to be going. Before any of this macro disturbance at the end of last year, we felt fantastic. We're executing a high level, having great conversations. And I guess look, the advertisers are people too. They look at markets, they look at it like the way you guys look at it. They're analysts, right? CEOs and CMOs are analysts. So it's just a way of saying that we don't really know but but as of right now, there's nothing to suggest that we won't do fine the rest of the year. And potentially good the rest of the year, but we'll see.

Yeah, and I'd say this goes a bit to our approach to guidance and how we thought about it. Neil said it well, which is we are looking closely at the data to identify trends and patterns. We're very thankful again that Ti Mu and Shi-Yin are not in our base that we have to comp against. Partly that was because as Neil said, we priced them out of our inventory, but it's great. Broader IAC, we're looking at CARE and others. We've seen some recent softness in conversion, but that can be volatile from quarter to quarter. Not volatile, but no material moves. On enterprise for CARE, we're looking to see if employers lay folks off or significantly reduce. Haven't seen that yet, but we're cautious on the world. Where we sat, to Neil's point, when we did our original guidance for the year in February, we factored in some volatility for the unknown. It seemed like every year I've been here, we've had some unknown, unknown come out of the work and hit us. We had some factoring in there. By the end of March, we were seeing our businesses trending to the high end of their guidance ranges. At DDM, for example, March and April saw digital revenue growth of 13 and 18 percent, respectively, across all digital. We were pacing to be up below double digits for the second quarter. Now we're at 7 to 9 percent. We're factoring in some economic slowdown and the rest of Q2 and Q3 in our guidance, but no significant recession. Also, our businesses are thinking about cost actions they can take, which if things were going great, you'd continue to invest in your business macro, but they can take to be thoughtful around their cost structure. This is the approach we're taking and into our guidance based on what we're seeing right now, as Neil said. With respect to the second question, M&A environment, we're excited. We're looking at different things. We highlighted some of the industries that we're thinking about. We've always asked ourselves, how do we build a business or concept into something much bigger that can be through early seed investment, it can be through roll-ups, consolidations, or it can be through buying underappreciated larger businesses that we have a different thesis on. Digital is definitely tougher than it was 10, 20 years ago, but we still see opportunities. We're looking across experiences, digital enablement of experiences, what we've seen in MGM through the in-person experiences, through digital gaming like LiveDealer, through BetMGM, others. You can see where the puck is going and the opportunities as things become even more real time and personalized. Then there's always idiosyncratic things. We're interested in how AI is going to influence consumer interactions, gaming, etc. It's hard to reveal too much, but we are working away and I think we will have some interesting opportunities. Thank you, Ayal. Thank you. I believe that's it, operator?

Yes, that was the last question.

Thank you all for your time and engagement and onward and upward. Have a great day.

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