IAC (IAC) Q4 2025 earnings review
Digital Accelerates, Legacy Businesses Evaporate
IAC delivered a distinct 'tale of two cities' in Q4. People Inc. (formerly Dotdash Meredith) posted its fastest Digital revenue growth in five quarters (+14%), proving it can thrive despite Google headwinds. However, consolidated revenue fell 10% YoY as the Search business collapsed (-68%) and Print continued its structural decline (-23%). While the company swung to a $77M net loss due to a massive $207.5M goodwill impairment at Care.com, strict cost discipline drove Adjusted EBITDA up 29% to $142M. Management is aggressively buying back stock ($37M in Q4) and increasing its MGM stake, signaling confidence in the sum-of-the-parts valuation.
🐂 Bull Case
Digital revenue growth accelerated to 14% YoY, the highest in over a year. Driven by 17% growth in Performance Marketing and 36% in Licensing, the segment is successfully diversifying away from reliance on Google Search traffic.
Despite a 10% drop in total revenue, Adjusted EBITDA surged 29% to $142M. Margins are expanding as the company aggressively cuts costs in declining segments (Search/Print) and optimizes Care.com.
🐻 Bear Case
IAC recorded a $207.5M non-cash goodwill impairment for Care.com. With revenue down 9% and Enterprise revenue falling 13%, the growth story for this asset has stalled significantly.
Revenue plummeted 68% YoY to just $29M, and Adjusted EBITDA fell 96% to near zero. The combination of Google algorithm changes and policy updates has effectively neutralized this cash cow.
⚖️ Verdict: ⚪
Neutral. The acceleration at People Inc. is a major validation of the core thesis, but the utter collapse of Search and the impairment at Care.com drag down the aggregate picture. Profitability improvements are impressive, but top-line shrinkage remains a hurdle.
Key Themes
People Inc. Digital Acceleration
Accelerating. Digital revenue growth hit 14% in Q4, up from 9% in Q3. This was driven by a 17% jump in Performance Marketing (affiliate commerce) and a 36% surge in Licensing (Apple News+, OpenAI, and a new Meta partnership). This segment is successfully decoupling from Google Search headwinds.
Care.com Impairment & Enterprise Weakness
Reversing. A $207.5M goodwill impairment signals a reset in valuation expectations. Revenue declined 9%, with the Enterprise segment dropping 13% due to lower utilization. While EBITDA improved due to cost cuts, the growth story is currently broken.
Search Segment Collapse
Decelerating. Revenue fell 68% YoY to $29M, following a 41% drop in Q3. Ask Media Group revenue dropped 71% due to Google algorithm changes. This segment has turned from a reliable cash generator to a rounding error ($0.2M EBITDA).
AI & Content Licensing Wins
Licensing revenue grew 36% YoY. In addition to existing deals with OpenAI, People Inc. announced a strategic content partnership with Meta to provide real-time content for Meta AI. This validates the value of premium content in the AI era and provides a high-margin revenue stream.
Google AI Overviews Impact
Core Sessions declined 13% YoY, driven primarily by the growing prominence of Google AI Overviews. While People Inc. is diversifying revenue (only 24% of traffic from Google Search now), the structural headwind on ad impressions remains significant.
Capital Allocation: MGM & Buybacks
IAC purchased an additional 1 million shares of MGM in Q4 for $40M and repurchased 1 million IAC shares for $37M. With $960M in cash, IAC continues to view its own stock and MGM as the best available values.
Other KPIs
Decelerating significantly from $177.4M in FY24. The decline was driven by unfavorable working capital timing (lease amendments, legal settlements) and slightly higher CapEx. Despite the drop, liquidity remains robust with nearly $1B in cash.
Decelerating. Down 23% YoY. The decline reflects the loss of political advertising from the prior year and ongoing migration to digital. This segment continues to shrink as a portion of the total mix.
Stable/Growing. IAC holds 65.8 million shares. The stake represents a massive portion of IAC's enterprise value, effectively meaning investors are paying very little for the operating businesses.
Guidance
Decelerating vs Q4's 14% growth. Management is guiding conservatively compared to the recent acceleration, likely due to ongoing volatility in the ad market and search ecosystem.
Stable. The midpoint ($325M) is roughly flat vs FY25's $331M (excluding certain items). Growth in Digital is being offset by a $15M drag from estimated Google litigation expenses.
Stable. In line with FY25 results ($46.8M). Suggests no major profitability breakout despite the restructuring, as the company focuses on returning to revenue growth.
Stable/Decelerating. The midpoint ($297.5M) is below FY25's Adjusted EBITDA excluding certain items ($331M+). Corporate costs ($80-90M) and Search decline ($5M loss to $10M profit) are weighing on the aggregate.
Key Questions
Care.com Impairment Logic
You took a massive $207.5M impairment on Care.com this quarter. Does this signal a permanent structural impairment to the long-term earnings power of the asset, or is it purely a reflection of current interest rates?
Search Business Viability
With Search revenue down 68% and EBITDA effectively zero, at what point does this segment become a distraction? Is there a scenario where you shut it down or divest it entirely?
Litigation Spend ROI
You are guiding for significant litigation expenses against Google in FY26 ($15M impact). What is the expected timeline for a resolution, and what is the potential financial upside if you win?
Enterprise Weakness
Care.com Enterprise revenue fell 13% due to 'lower utilization.' Is this a macro signal of corporate belt-tightening on benefits, or a competitive loss to other providers?