IAC Sees Turnaround Coming at Angi and Dotdash Meredith

For the third quarter, IAC (ticker: IAC) posted revenue of $1.11 billion, down 15% from a year ago, and about in line with Wall Street consensus as tracked by FactSet. Adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, was $100.4 million, up 83% from a year ago, and above the Street consensus at $83 million. 

The company posted a net loss for the quarter of $390.5 million, or $4.72 a share, mostly reflecting a noncash $463 million loss to mark-to-market the company’s stake in the casino gaming company
MGM Resorts International
(MGM). 

Revenue for Dotdash Meredith, which includes publications like People, Food & Wine, and Investopedia, were $418 million, off 11% but a touch above consensus estimates. Search revenue was up 6% to $166 million, ahead of Street estimates. Revenue from “emerging and other” was $158 million, off 12%.

Angi
(ANGI), which is publicly traded but majority-owned by IAC, had revenue of $372 million in the quarter, down 25%, and slightly below consensus at $374 million.

“A year ago, we made some big changes: I stepped in as CEO of Angi and we reset our expectations at Dotdash Meredith to reflect the challenges of a large integration and a slowing market for advertising,” IAC CEO Joey Levin said in a letter to shareholders. “These were tough but necessary adjustments at our two largest businesses, but since then, we’ve generally delivered what we said.”

On Angi, he sees continued risk—and potentially rich rewards. 

“At Angi, the highest risk-to-reward bet in the IAC portfolio, we grew adjusted Ebitda 13% this quarter…and are deep in the process of evolving the business from a lead generator to a category-leading marketplace.”

He noted that Angi plans to buy back 14 million shares.

“We view repurchases as the right decision given the progress we’re seeing and the current trading prices,” Levin said.

Levin also noted that Dotdash Meredith grew adjusted Ebitda 37% in the quarter, excluding some one-time charges in the year-earlier period.

“We’ve stopped the slide” in the company’s digital business, he wrote, adding that he didn’t expect any additional declines.

“Two quarters ago, I wrote that we saw light at the end of the tunnel for Dotdash Meredith after a long journey through the integration,” he wrote Tuesday. ” The value of the merger with Meredith is now coming to life.”

IAC now sees full-year adjusted Ebitda, excluding certain items, between $330 million and $370 million, narrowing from a previous range of $320 million to $440 million. The company now sees a full-year operating loss of between $170 million and $240 million, narrowing from a previous forecast loss range of $80 million to $260 million.

IAC shares are up less than 1% for the year to date. Angi is off 27%.

Write to Eric J. Savitz at [email protected]