IAC 2026 Q2 Earnings Call

Good morning, everyone. Christopher Halpin here, welcome to the People Incorporated second quarter earnings call. Joining me today are Barry Diller, Chairman and Senior Executive of People Incorporated, Neil Vogel, and Tim Quinn. After close of business today, we will complete our leadership transition, making this my last call with you all. I will pass the torch in this new chapter to Neil, who will be CEO of People Incorporated, and Tim, who will be CFO of People Incorporated. People Incorporated has published a presentation on the investor relations section of our website today entitled Q2 Earnings Presentation. On this call, Barry, Neil, Tim, and I will provide some introductory remarks referencing that presentation then opening 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 GAAP measures and full reconciliations for all material non-GAAP measures. Now I will hand it over to Barry.

I think I'm next. It's Neil.

It's great to be here again. There's no need to be gentle. I've been on a few of these, I can handle non-gentle. Let's get right to it and into our presentation. We can go to page three. As Barry just said, the game plan is consistent with what we've been outlining for the past few quarters and again, what Barry just outlined. First, we're going to execute at a high level at People Inc., we have another solid quarter here to detail. Second, we're going to opportunistically deploy capital in the assets we know best. MGM, as Barry said, our publishing businesses, and should we choose, our stock buyback share repurchases. Third, we're going to continue simplifying the non-core portfolio on monetizing assets.

To that end, we're pleased to announce we've signed an agreement to sell our limited partner stake in a third-party fund to a group of private investors. We expect the transaction to close in the third quarter, generating approximately $189 million in gross cash for People Incorporated's balance sheet. Moving on to page four. This will be familiar to many of you. People Incorporated continues to trade at a discount to the value of its MGM holdings plus cash. That means investors are getting the media business people and all of our other stakes, including Turo, Daily Beast, Vivian, as well as our real estate effectively for free. The game plan we outlined is clear, the goal is to unlock the value shown. Onto our publishing results for the quarter.

Going to page five, for Q2, our 6% digital revenue growth represents our 11th straight quarter of growth, our drumbeat of solid execution continues. We continue to drive momentum in the face of major changes and disruptions in the market. Our performance highlights the diversity and quality of our brands, revenue streams, and audience sources. As we increasingly shifted resources to new initiatives in the quarter, we're able to deliver not only on our revenue goals but on our profitability goals as well. We grew digital Adjusted EBITDA by 18%, while expanding margins to 26% versus 23% last year. There are two trends worth highlighting supporting our operating efficiency. First is AI gains. We're realizing significant benefits from AI across the company, including helping our edit team streamline content production and efficiency gains in data science, ad sales, ad targeting, and numerous other areas.

This frees up people and assets to focus on growth initiatives where we are reinvesting these gains. Second is headcount optimization, which is ongoing. We continue to reallocate our existing teams and people to focus on our growth initiatives. The next slide gives a little more color on the business evolution. Going to slide six, the trends of our recent quarters continue. Importantly, audiences and advertisers are increasingly seeking brands with high-quality content in a world that is more and more saturated with the opposite. Q2 clearly illustrates the momentum of our brand-led non-session-based revenues, which grew at 16%, as well as the durability of our sessions-based business, which were nearly flat. This is the growth dynamic for the foreseeable future. Non-sessions growth was driven by Apple News, licensing, including our AI partnerships, social programs, events, and Decipher. Non-session-based revenue is anchored in our brand strength.