IAC Inc.

Good day and welcome to the IAC first quarter 2026 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal conference specialists 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, and 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 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 PeopleLink, and Tim Quinn, CFO of PeopleLink. 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 gap measures and full reconciliations for all material non-gap 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 it about this transition that we're undergoing. A lot of people ask why now. Well, the truth is this has really been going on for the last couple of years as we simplified, sought to simplify our operations. We've been through, since this organization started 30 years ago, we've been through four 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 two principal assets, probably hopefully the only assets that the company will have in the future, I'm talking about actually the present rather than the future, people and our interest in MGM resorts. In a way, as I wrote, I think they're the perfect hedge. One is in the virtual world primarily, though it certainly prints a lot of magazines as well, but it's very much in the digital world. And the other is the very hard assets of resorts in the United States and in China. and a building in Japan. But rather than me meandering around, I hope you'll just take a second to read the letter. Actually, I should do the thing that they do at Amazon, which is, all right, now we'll take five 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 these for many years, outstandingly. And is this the last call that you'll be on, or will we be on the next one too?

It's sort of a coin flip, so we'll figure it out whether I make it to the next one.

We'll have one more of you, but thanks from a grateful nation.

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, you want to kick it off?

Sure. If everyone goes on to slide five, you can see we, again, at PeopleLink, we had a very solid quarter. We delivered 8% digital revenue growth, our 10th 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 a quarter, we continue to invest in a host of new products and services, including what BD calls our 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 non-session-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 My Recipes product, our Recipe Locker tool, the People app, and InStyle's breakout series as the intern and the boss on social media. We expect to roll out in Q2 a membership club for 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 picks for future purchases in a very innovative way. That's to come as well. We plan on drumbeat 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 flips to slide six. You'll see the trends of 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 the 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 seven. Our big story continues to be our non-sessions-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 of 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 and 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 inversion 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.

You know, 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, you know, this continuity is a big part of the success that we've had together and something that we think 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 eight 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% 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 deliver, you know, rather quickly. Moving on to page nine, 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 and 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 two 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 accrue 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 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. All these changes do 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 310 to 340 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 PeopleLink 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 something 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 two 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 a 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 segments showed strong performance this quarter, as both Vivian and the Daily Beast continued their momentum, with both seeing accelerating revenue growth and the two 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 non-core 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 new 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 one-time items, including last year a large non-cash 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 8K summarizing the key elements of the consolidation of the corporate functions of IAC parent and the People, Inc. subsidiary. The underlying principle is with one core operating business in People, Inc., two layers of corporate expense, one at IAC and one 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 PeopleLink 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 PeopleLink 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 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 one-time 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 four 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 advisors through March 2027. Further, we expect that Neil will become CEO of the parent company, newly renamed People Incorporated, 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 PeopleLink adjusted EBITDA guidance at $310 to $340 million. while raising emerging and other guidance to $5 to $15 million of adjusted EBITDA based on the strength at Vivian 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 CARES 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 to 105 million due entirely to the severance that I just mentioned before and other one-time 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 company to decline to $30 million. These figures are prior to any future reallocation of PeopleLink leadership costs 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. Thank you.

The first question will come from James Henney with Jefferies. Please go ahead.

Great. Thanks for the question. Can you just talk about the next chapter of IAC? What do you think the next five 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 five years, I can't tell you, I mean, I can tell you what the next year, maybe, or months are going to be, five years, who the hell 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 culmination of it was actually this quarter. changing our name, doing all of the tasks, continuing to shed non-core assets. Core assets, as we said before, are hopefully going to be just two. 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 the biggest probably The biggest opportunity we have in front of us is the work that is being done in our publishing business of people and what we call 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 we have about 40 brands whatever we call them about 40 brands and okay nine or ten 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 that 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. The other thing, one other little note is, we publish, what, 300 million or so actual little hard copy things that are in people's homes or whatever. An additional page costs us zero. How many actual other digital impressions do we have?

Billions and billions.

So if we come up with, and if we don't come up with it, we're really dopes. 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 that's the work. that we're going to do. Wherever else, whatever else we're going to use our cash for, 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 two years. 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 across people.

Why can you follow up?

I think he was going to ask one more.

Go ahead, James. All right, fine. What is it?

Yeah, sorry, just from the environment across people and other businesses, just kind of what you're seeing from geopolitical, any other macro factors would be great. Thanks.

Yeah, 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 risk. Tim's here with us now. He can give us some color across industries.

Yeah, there's certainly strength in places like health and pharma, tech, telco. Areas that are exposed to the consumer are a little bit softer, 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, you know, it's still a little bit touch and go. But, you know, overall, as Neil said, the market's, you know, strong, but, you know, it's not, I wouldn't call it ripping.

Good enough to do our job unless something changes.

Yeah. And I would just say across the portfolio, you know, we've been talking about the divergence between high-end 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, you know, probably unfortunately being exacerbated for the country, but what's going on right now. Thanks, James. Operator, next question, please.

Your next question will come from John Blackledge with TD Cowan. Please go ahead.

Great. Thanks. 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 color on the drivers of the upside to margins and how should we think about 2Q and the rest of the year. And just lastly, if you can give some color on like one or two of the separate initiatives as part of the inversion process, that would be great. Thank you.

You do that first. Let me do the inversion first and then Tim can take the string of other questions. So the version stuff is BD said, 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 pose of culture in America. And 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 three and a half million registered users. We have 40 million recipes 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. A visit to the app is about three times 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 My Recipes and the People app, which 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. It's sort of like the new TV and we have a real breakout hit on our hands at InStyle with two properties called the intern and the boss. They, The first Property of the Intern was launched about a year ago. Across all these episodes, which are three-minute-long episodes, four-minute-long episodes, we've got 45 million views in a year, and a robust sponsor business has grown around this.

Didn't you once say a while ago that just on Intern, one package, one series alone, which is they do multiple series a year, multiple episodes or whatever, but one series. Episode was like $750,000.

We have been very fortunate that we've been able to sell – a season is about 20 minutes long in total, six or seven three-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.

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. Also, Southern Living.

Southern Living, one of our strongest. Hello. Did somebody cough? Whatever. There are a couple of things in Southern Living that I think are really interesting. It's such a loyal base of

What, a couple of million? Yeah, 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 a scholar of South, know from sweet tea, which is a particular Southern drink. It is. Southern Living is going to... as has developed, you keep saying that you're going to let me taste this.

We are going to let you taste it. It's ready for you now.

That we are making our own tea, our own brand, which we are going to manufacture and distribute, and under the Southern Living brand of Southern Living Sweet Tea. Who knows where that actually goes? If it emerges out of the South, You know, 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 have a business where we sell architectural plans to build Southern-style houses, really high-end houses. They're very, very beautiful houses.

Yeah, 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, will own and hopefully operate.

Yeah, 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 T, it's a really good example of what we can do.

Each one can be a separately organized, financed, business, whether our capital or other people's capital, that is a standalone P&L of its very own, separate and apart from this historic publishing business that can spin off, spawn 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, let's say five years out, 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've started to do.

We've learned an awful lot about building audiences in the last few years.

All right. So I guess we should go to our next question.

Well, let me just tackle the financial question as well.

What was that?

Which was, well, how do we get through Q1? Oh, please, Q1.

I mean, don't you people want to hear about our future rather than niggling little figures that no one pays attention to? Look, if you all had 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.

Some of them did well.

That would have been, I would say, paying attention to 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, root 24% in Q1. And that is the future while we kind of hold the line on the traditional sort of session-based media model. I mean, we've lost – how much of our traffic have we lost from Google?

From Google? Yeah. 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've said for a decade more, that we all kind of are serfs 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 true 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.

We agree. We think that's the future and we think we see that 40% that is not the traditional model grow meaningfully over the coming quarters and years.

And it's ours. We don't have to beg or borrow or get into these endless 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. you know, other than the New York Times and the Wall Street Journal that have strong subscription revenue.

All right. Okay. Thank you, John. Operator, next question.

The next question will come from Corey Carpenter with JP Morgan. Please go ahead.

Hey, thank you. I wanted to ask about MGM and Turo. Maybe very for you with MGM, could you just talk to, you know, what you see as the benefits of keeping MGM within People Incorporated? 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?

Thank you. I'll 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 two. And MGM, The prospects for MGM I think are 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 it's a great size, a $12 billion project, that will open in Japan in, I don't know, 29, 30. 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's bought back 45, almost a little, 45% of its stock over the last five years. Its operations have been solid. People talk about Las Vegas. Las Vegas has gone through also endless cycles. Nobody is killing Las Vegas. There are current conditions that I won't bother going into that have put 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 one-time items and things. And 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 the discount that it currently has will close at some point. I'm not anxious for it to close too soon.

Turo, talk about Turo. Thank you. So 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 two drove Turo revenue growth to mid-single digits at one point. Company generated over a 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 in David Corns, 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 rental car.

If you'd asked us six months ago, I don't know, whatever we'd say, I would have said, okay, let's sell this, 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, you know, it's now performing very well. I doubt in a year or two or three, it'll be part of this corpus because it'll probably go public at some point or what, or get sold by some strategic player or whatever. But it's now operating solidly. And my attitude is unless somebody comes along and throws a big old brick on our table, We'll keep it as it grows, and it'll spin itself out in some form, and we'll take the cash.

Yeah, the only thing I can say is I totally agree. They continue to improve gross margins and adjusted EBITDA margins, solidly profitable with free cash flow, so fully agree. Okay, thank you, Corey. Operator, next question.

The next question will come from Ross Sandler with Barclays. Please go ahead.

Great. 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 right there? And then second question is somewhat related, but any update on the Google ad tech litigation, like timeline for remedies and what we might hope to have as an impact to our business? Thank you.

Yeah, I'll do the lawsuit piece and then I'll let Tim go through the numbers. As we said before, the lawsuit that you're referring to is sort of what people call the Google ad tech lawsuit. It's, building on a federal judge's ruling that Google illegally 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 damage 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 lawsuit, because the ruling has already taken place. They've already... said that Google is guilty of this, that, and the other. We, and a bunch of other people, have, based on that, huge claims.

I mean, they are... Just how much damage is at this point?

Yeah, 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 two or something like that.

We intend to invest between $10 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 to settle it.

Yeah, I mean, it's just a money trough. How big, we don't know. Yeah, and then to transition to Tim's answer, by the way, very high margins.

Very high margins, yes, correct, correct, correct.

How soon you can walk across the street with your check to cash it.

I would like that. It is, however, non-recurrent. I would like to cash that check. I'll do a quick background on the off-platform, then I'll let Tim take the numbers. If you zoom out, the reason why our off-platform business is working is, if you zoom out and you boil it down, it's because we have these terrific iconic brands. And since we bought Meredith five 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 seven, eight, nine 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 non-session-based revenue streams at, we think, really attractive rates, and that's the future for us. And it's not all speculative. We actually did it, if you want.

All right. Next question.

Roll along. The next question will come from Justin Patterson with KeyBank. Please go ahead.

Great. Thank you very much. Two for Neil. I 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 the next few years? Thank you.

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 one year or two years and you look at the risks 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 out the other side of it with a more diversified business, and I believe 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 three years ago at the same cost. And I would argue at an incredibly high at a, 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 to use AI. Like, we don't have an AI czar. It is your job in your seat to understand how AI applies to you. And it's really, really working. And the thing that people think is somehow AI is incongruous with brands. What has happened with us is in a world where people's output is now increasingly confused as to, is this real? Is this not real? Is this fake? Brands, they are the 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 it. all the things we're doing with Inversion and all the things we do day-to-day to sell ads. 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 it is to 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 of everybody worrying about how AI is going to change, destroy 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 in any way to disintermediate them. And I truly love that. 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's this place where your apps, if you offer your, if you offer customers a great experience, they're going to come to it. All right. End of that.

Quickly on the Cypher. Look, we're very optimistic about the Cypher. It really expands our TAM across the open web and CTV. And most importantly, It works.

Our products are better. We have now the 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, reiterating 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.

Okay. Thank you, Justin. Operator, next question, please.

The next question will come from Yousef Scully with Truist. Please go ahead.

Awesome. Thank you so much for taking the question. 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

Correct.

Very quickly, these deals seem to be bucketing into two categories. One, the all-you-can-eat deal, which is the foundational LLMs like our Meta deal and our OpenAI deal. Then there are the more marketplace deals like our Microsoft deal, which will be pay-per-use deals. Since we started blocking traffic, we have found that we've entered into very productive discussions with all kinds of players, both expected and unexpected in this market. With the exception of, the notable exception of Google. And what we are seeing is we're entering a phase of AI where the internet, the available sources 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. It's just, it's also early.

It's really, it's also early on all of it. 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 sea and the competitive pressures really positions PeopleLink 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 training.

Sorry, as far as a 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. Next. One more.

The next question will come from Jason Halfstein with Oppenheimer. Please go ahead.

Thanks. I guess I'll just 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 buyback, 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? Thanks.

Well, I mean, listen, no, sorry. I mean, start again, which is the answer is yes, which is we're going to 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 think we'll 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 have 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... 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 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 that. We have so much opportunity in-house. That's where we should direct our capital.

All right. Thank you, Jason. Operator, one last question.

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

Thank you so much for taking my question. I just want to ask on affiliate commerce growth. It seems like you guys had a healthy quarter there. Can you talk about the drivers and just the future potential there to sustain growth? Thank you so much.

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

The only thing I would add, other than goodbye, and we'll see you in a while, thank Chris again. Thank you. He 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 op.

Yeah, yeah, yeah. We will do that. Other than that, I wish you all well. Thank you all. And we'll see you, well, we won't see you, but you'll hear from us.

Thanks all. Thank you, operator.

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