8-K: IAC Q4 2025: Digital Growth Surges Amidst AI Disruption

IAC reports strong Q4 2025 digital revenue growth at People Inc. and expanded MGM investment, despite overall revenue decline and significant goodwill impairment.

Summary

• Total revenue for Q4 2025 was $646.0 million, a 10% decrease year-over-year.
• People Inc. Digital revenue increased 14% to $355 million in Q4 2025, marking the highest growth in five quarters.
• Full-year 2025 Digital revenue for People Inc. rose 10% to $1.1 billion.
• Adjusted EBITDA for Q4 2025 increased 29% to $141.6 million.
• Net loss improved by 61% to $76.8 million in Q4 2025, with diluted loss per share improving by 59% to $(0.99).
• IAC repurchased 1.0 million common shares for $37 million in Q4 2025, contributing to $337 million in repurchases over the last year.
• An additional 1.0 million shares of MGM Resorts International were purchased for $40 million, bringing IAC's total holding to 65.8 million shares valued at $2.2 billion as of February 2, 2026.
• Care.com revenue decreased 9% to $86 million, and the segment recorded a $191 million operating loss due to a $207 million non-cash goodwill impairment.
• The Search segment's revenue declined significantly by 68% to $29 million, primarily due to Google algorithm changes and policy updates.
• People Inc. announced a strategic content partnership with Meta for AI, complementing existing partnerships with OpenAI and Microsoft.
• Free Cash Flow for the full year 2025 decreased by $132.6 million to $44.8 million.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a mixed bag. Strong digital growth and strategic capital allocation are positive, but the significant goodwill impairment at Care.com, the severe decline in the Search segment, and the overall revenue decrease temper enthusiasm. The future outlook for Search remains uncertain.

Positives

• People Inc. Digital revenue grew 14% in Q4 2025, achieving its highest year-over-year growth in five quarters.
• Full-year 2025 Digital revenue for People Inc. increased 10% to $1.1 billion.
• Adjusted EBITDA for Q4 2025 rose 29% to $141.6 million, demonstrating improved profitability.
• Net loss significantly improved by 61% to $76.8 million in Q4 2025, and diluted loss per share improved by 59% to $(0.99).
• IAC returned capital to shareholders through the repurchase of 1.0 million common shares for $37 million in Q4 2025, totaling $337 million over the past year.
• The company expanded its strategic investment in MGM Resorts International by purchasing an additional 1 million shares for $40 million.
• People Inc. secured a strategic content partnership with Meta for AI, enhancing its position in the evolving AI landscape alongside existing partnerships with OpenAI and Microsoft.
• The Emerging & Other segment showed strong performance with 18% revenue growth and a shift to an operating income of $3 million from a loss in Q4 2024.
• Care.com's Adjusted EBITDA increased 135% to $19 million, indicating operational efficiency improvements despite revenue decline.

Negatives

• Total revenue decreased 10% year-over-year in Q4 2025 to $646.0 million.
• Care.com reported a $191.1 million operating loss in Q4 2025, primarily due to a $207.5 million non-cash goodwill impairment.
• Care.com's revenue decreased 9% to $86 million, driven by softness in Enterprise and a decline in consumer subscriptions.
• The Search segment's revenue plummeted 68% to $29.0 million, largely due to frequent Google algorithm changes and policy updates impacting Ask Media Group.
• People Inc. Print revenue declined 23% due to the absence of political advertising benefits from Q4 2024 and ongoing audience migration to digital.
• Free Cash Flow for the full year 2025 decreased significantly by $132.6 million to $44.8 million, attributed to unfavorable working capital and higher capital expenditures.
• Total Sessions for People Inc. Digital declined 16% and Core Sessions declined 13% in Q4 2025, primarily due to the growing prominence of Google AI Overviews.
• The company recorded an income tax expense of $78.3 million in Q4 2025, significantly higher than the statutory rate due to the non-deductible portion of the Care.com goodwill impairment.

Risks

• Ability to compete with artificial intelligence (AI) technology and the disruption across marketing and publishing driven by AI-enabled search features, including Google AI Overviews.
• Unstable market and economic conditions, particularly those that adversely impact advertising spending levels and consumer confidence and spending behavior.
• Changes in the relationship with (or policies implemented by) Google, which significantly impact the Search segment's revenue.
• Risks related to the Print business, including declining revenue, increases in paper and postage costs, reliance on a single supplier, and potential increases in pension plan obligations.
• Ability to establish and maintain relationships with quality and trustworthy caregivers for Care.com.
• Risks related to liquidity and indebtedness, including the impact of debt on business operations, ability to generate sufficient cash to service indebtedness, and interest rate risk.
• Inability to freely access the cash of People Inc. and its subsidiaries.
• Dilution with respect to investments in IAC.
• Ability to protect systems, technology, and infrastructure from cyberattacks and the occurrence of data security breaches and/or fraud.

Future Outlook

IAC will no longer provide quarterly outlooks, focusing instead on full-year performance and long-term strategic priorities due to heightened market volatility and macroeconomic uncertainty. For full year 2026, total Adjusted EBITDA is guided to be between $260 million and $335 million. People Inc. expects mid-to-high single-digit growth for both Digital revenue and Digital Adjusted EBITDA. Care.com is anticipated to return to revenue growth in 2026. The future of the Search segment remains uncertain due to ongoing disruptions in the search ecosystem and potential Google contract changes. Revenue and Adjusted EBITDA growth for Emerging & Other will be driven by Vivian Health and The Daily Beast.

Management Comments

• "People Inc. drove the fastest digital revenue growth we’ve seen in over a year, even amidst AI-driven disruption." Barry Diller, Chairman and Senior Executive, IAC.
• "We’re doing what we set out to do—over the past year we deployed $337 million back into our Company and increased our ownership in MGM, a business that we believe will never be disintermediated." Barry Diller.
• "And we’ll continue to execute our plan to simplify IAC, enhance our cash position, and allocate capital thoughtfully and opportunistically, as we have for over 30 years." Barry Diller.

Industry Context

StockSavvy.ai notes that IAC's performance reflects the broader digital media landscape grappling with AI-driven disruption, particularly Google AI Overviews impacting search traffic. The strategic partnerships with Meta, OpenAI, and Microsoft position People Inc. to adapt to this evolving environment, while the significant decline in the Search segment highlights the immediate challenges posed by Google's algorithm changes. The increased investment in MGM Resorts International signals a diversification strategy into a sector believed to be less susceptible to digital disintermediation.

Legal Proceedings

• Google litigation costs were incurred in Q4 2025 within People Inc.'s 'Other' operating loss.
• Legal fees for litigation related to a legacy business concluded in Q3 2025, resulting in $5.0 million lower legal fees for Emerging & Other.
• A $13.4 million reduction in a non-operating loss was recorded in Q4 2025 following a court ruling regarding a disputed allocation of a gain on a real estate transaction.

Stakeholder Impact

• Shareholders are impacted by share repurchases, increased MGM stake, and mixed financial performance across segments.
• Employees have been affected by severance-related costs in Q4 2024 and Q3 2025, indicating headcount reductions.
• Customers and users of People Inc. may benefit from expanded content partnerships (Meta AI) and new product development (PEOPLE app), while Care.com saw a decline in consumer subscriptions.
• Partners, particularly Google, have significantly impacted the Search segment's performance due to algorithm changes, while new partnerships with Meta, OpenAI, and Microsoft are strategic for People Inc.
• Creditors benefit from People Inc.'s net consolidated leverage ratio remaining below 4.0x, indicating financial flexibility.

Next Steps

• Host a conference call on February 4, 2026, at 8:30 a.m. Eastern Time to discuss Q4 results.
• Continue to execute the plan to simplify IAC, enhance cash position, and allocate capital thoughtfully and opportunistically.
• People Inc. expects mid-to-high single-digit growth for Digital revenue and Digital Adjusted EBITDA in 2026.
• Care.com expects a return to revenue growth in 2026.
• Monitor the impact of Google algorithm changes and potential contract changes on the Search segment.

Key Dates

Recommendation

While People Inc.'s digital segment shows impressive growth and strategic AI partnerships, and capital allocation is shareholder-friendly, the substantial goodwill impairment at Care.com and the severe decline and uncertain future of the Search segment present significant headwinds. The overall revenue decline and reduced free cash flow suggest underlying challenges that balance out the positives, warranting a 'hold' as the company navigates these transitions and aims for a return to growth in struggling segments.

Keywords

IAC, People Inc., MGM Resorts International, Q4 2025 Earnings, Digital Revenue Growth, AI Partnerships, Share Repurchase, Goodwill Impairment, Google AI Overviews, Financial Results, Care.com, Search Segment