Executive Summary / Key Takeaways

• Focused Core Strategy: IAC has streamlined its portfolio, centering its future on People Inc. and its strategic investment in MGM Resorts International , aiming to divest noncore assets and reduce overhead to unlock substantial shareholder value.
• People Inc.'s Digital Offensive: The rebranded People Inc. is transforming its publishing model, diversifying revenue and audience sources beyond traditional search, with strong growth in performance marketing and licensing, and significant investments in proprietary ad tech (D/Cipher+) and direct-to-consumer products.
• MGM: An Undervalued, Anti-Disintermediation Hedge: IAC's 23.8% stake in MGM is viewed as a deeply undervalued asset, providing a robust hedge against AI disintermediation due to its irreplaceable live entertainment and travel experiences, with potential for increased ownership.
• Disciplined Capital Deployment: With a strong balance sheet and enhanced financial flexibility post-Angi spin-off, IAC is prioritizing opportunistic share repurchases and strategic M&A in quality-defensible, AI-resistant, or AI-leveraged businesses, while maintaining a cautious approach to asset pricing.
• Technological Edge in a Shifting Landscape: Investments in D/Cipher+ offer a significant competitive advantage in ad targeting, outperforming traditional cookie-based solutions, while AI applications across Care.com and Vivian Health aim to enhance matching, customer service, and operational efficiency.

A New Chapter: IAC's Strategic Pivot Towards Core Strength

IAC Inc. (NASDAQ:IAC) is undergoing a profound strategic transformation, shedding its conglomerate past to sharpen its focus on two core pillars: the recently rebranded People Inc. and its substantial, deeply undervalued investment in MGM Resorts International . This pivot follows a period of intense operational restructuring, including the spin-off of Angi Inc. and a concerted effort to rationalize its asset base and overhead. The company's vision, articulated by Chairman Barry Diller, is to "reimagine People Inc. from defense to offense" and to support MGM's management in simplifying its businesses and addressing its "pitiful multiple." This strategic clarity, underpinned by a robust balance sheet, positions IAC for a new phase of value creation.

The broader industry landscape is characterized by rapid digital evolution and the pervasive influence of artificial intelligence. In this environment, IAC's strategy is to leverage its foundational strengths—iconic brands, proprietary technology, and a disciplined approach to capital allocation—to drive growth and competitive advantage. While major players like Alphabet Inc. and Meta Platforms Inc. dominate the digital advertising and content ecosystems with their vast scale and AI investments, IAC carves out a distinct niche through its specialized, high-engagement content and service-oriented marketplaces. The company's agility in niche verticals and user-centric platforms allows for targeted consumer engagement, differentiating it from the broad-scale digital ecosystems of its larger counterparts.

People Inc.: Inverting the Publishing Model with Digital Innovation

People Inc., formerly Dotdash Meredith, stands as America's largest digital and print publisher, a testament to its enduring brands like PEOPLE, Food & Wine, and Investopedia. After a challenging period, the segment has demonstrated a remarkable turnaround, with digital revenue growing 9% for both the three and nine months ended September 30, 2025. This growth is a direct outcome of a multi-year strategy to diversify revenue and audience sources, anticipating and adapting to shifts in the digital landscape, particularly the increasing prominence of Google AI Overviews.

A cornerstone of People Inc.'s competitive strategy is its proprietary ad technology, D/Cipher. This differentiated technology leverages IAC's extensive first-party, intent-driven contextual data to deliver superior ad targeting. Management highlights that D/Cipher-inclusive deals are over 50% larger than those without it, and clients using D/Cipher exhibit faster growth. The company is expanding this capability with D/Cipher+, which allows for the sale of third-party inventory using its proprietary targeting. This initiative is expected to expand People Inc.'s addressable market by 4 to 5 times, potentially including a significant opportunity in Connected TV (CTV) targeting. The appointment of Jim Lawson, a seasoned ad tech executive, as President of D/Cipher underscores the strategic importance of this technology, aiming to build a commercial team capable of fully executing its potential. D/Cipher's real-time, intent-based approach is touted as outperforming traditional cookie-based and other non-cookie solutions, providing a critical competitive edge in an evolving privacy-first advertising environment.

People Inc. is actively "inverting the base publishing model", moving beyond traditional content monetization to create new businesses directly from its vast content and consumer insights. This includes new direct-to-consumer products like the People app and MyRecipes, and the recent acquisition of Feedfeed, a leading food influencer network, to enhance off-platform monetization and influencer marketing capabilities. Off-platform audiences have accelerated 66% year-over-year, now contributing over one-third of digital revenue, representing the segment's fastest-growing revenue stream. The company's agreement with Microsoft (MSFT) to be a launch partner for a publisher content marketplace, a pay-per-use model for AI content, further validates the value of its content in the AI era.

Financially, People Inc.'s Digital Adjusted EBITDA grew 9% pro forma in Q3 2025 to $72 million, achieving 27% margins and 26% incremental margins. This demonstrates effective cost management, even with strategic investments in new products and technology. For the full year 2025, People Inc. anticipates digital revenue growth in the 7% to 10% range, with full-year Adjusted EBITDA guidance set at $325 million to $340 million (excluding one-time severance and lease gains). While Google Search traffic remains a headwind, declining from 54% two years ago to 24% of core brand traffic in Q3 2025, People Inc.'s diversified strategy is enabling it to maintain scaled audiences and overall growth.

MGM: An Undisintermediated Fortress

IAC's 23.8% ownership in MGM Resorts International is a cornerstone of its investment thesis, viewed by Barry Diller as a "giant hedge against disintermediation" from AI. Unlike digital content, live entertainment and travel experiences offered by MGM's nine Las Vegas resorts, 40,000 hotel rooms, and extensive convention facilities are inherently immune to AI replication. Despite MGM's strong operational rebound post-pandemic, including scaling digital operations to profitability and repurchasing 45% of its shares, its stock price has declined 29% since early 2022, trading at an "emergency multiple" of less than 3x EBITDA when excluding its holdings in MGM China and BetMGM.

IAC's investment in MGM has seen a cumulative unrealized net pre-tax gain of $979.50 million through September 30, 2025. This position is expected to grow through both IAC's direct purchases and MGM's ongoing share repurchases. The future outlook for MGM includes the development of a $10 billion+ integrated resort in Osaka, Japan—the country's sole gaming resort—which is anticipated to be a significant long-term growth driver. IAC actively supports MGM's management, providing strategic perspectives to optimize performance, particularly for BetMGM, which reported 36% net revenue growth in Q2 2025 and raised its full-year guidance to at least $2.7 billion in revenue and $150 million in EBITDA.

Care.com and Emerging Opportunities

Care.com, a leading online marketplace for family care, is undergoing a strategic revitalization. While revenue decreased 5% for the three and nine months ended September 30, 2025, due to lower enterprise utilization and fewer consumer subscriptions, the company has relaunched its product and brand in June 2025. This relaunch features fine-tuned search, enhanced messaging, and improved matching capabilities, aiming to drive better customer experience, conversion, and retention. Early metrics show promising signs of stability and growth in core consumer engagement. Care.com plans to aggressively expand into senior and pet care, leveraging its market leadership and liquidity on both the care seeker and caregiver sides of the platform. The full-year 2025 Adjusted EBITDA guidance for Care.com is $45 million to $50 million, with a return to consumer growth expected in Q2 2026 and overall business growth in the latter half of 2026.

The Emerging Other segment, comprising Vivian Health, The Daily Beast, and IAC Films, saw a 7% revenue decrease in Q3 2025. However, Vivian Health is noted for its innovative application of AI to healthcare staffing, leveraging its platform of 2 million clinicians to potentially transform the industry. The segment's Q3 2025 Adjusted EBITDA loss of $20 million was primarily due to $21 million in legal expenses for a legacy business, with future expenses expected to be negligible. The Search segment continues to face headwinds from Google's algorithm changes, with revenue declining 41% in Q3 2025, but management is focused on maintaining profitability and has renewed its Services Agreement with Google.

Financial Strength and Disciplined Capital Allocation

IAC's financial position is robust, with cash balances exceeding $1 billion. The company has significantly enhanced its financial flexibility, particularly after the spin-off of Angi Inc. (ANGI) on March 31, 2025, which was the 10th independent company created by IAC. People Inc. successfully refinanced its debt in June 2025, establishing a new capital structure with $1.45 billion in long-term debt and a $150 million revolving credit facility. Importantly, People Inc.'s consolidated net leverage ratio is below 4 to 1, granting IAC access to its cash for corporate purposes.

In a notable shift from a period of capital preservation during business turnarounds, IAC is now actively deploying capital. The company repurchased 7.30 million shares for $300 million during the nine months ended September 30, 2025, with 6.40 million shares remaining in its authorization. This underscores management's conviction in the deep value embedded in IAC's shares, which are perceived to be trading at a significant discount, with the implied value of its private holdings being negligible. IAC also plans to divest noncore holdings within the next 3-6 months, expecting to generate approximately $1 billion in additional capital. While M&A remains a key element of IAC's DNA, the company is exercising caution regarding asset pricing, prioritizing "quality-defensible businesses" that are resilient to AI disruption or offer strong AI application opportunities.

Risks and Competitive Dynamics

Despite its strategic clarity, IAC faces several risks. The ongoing evolution of Google Search and the increasing prominence of AI Overviews continue to negatively impact core sessions and advertising revenue for People Inc. Google's unilateral policy updates and algorithm changes pose a persistent threat, potentially requiring costly modifications to IAC's products and business practices. The ad market, while "solid," is not "fantastic," with challenges in certain categories and softening programmatic pricing. Care.com's enterprise business has experienced a slowdown due to employers tightening spending, and its consumer segment's return to growth is a multi-quarter effort. Furthermore, ongoing legal expenses, such as those related to ad tech litigation against Google (seeking "hundreds of millions of dollars in damages") and a legacy real estate dispute, impact profitability.

In the competitive landscape, IAC's diversified portfolio and strong brands provide a moat against larger, more generalized tech giants like Alphabet (GOOGL) and Meta (META). While these competitors boast superior scale, R&D investment, and faster innovation cycles in broad AI applications, IAC differentiates itself through deep engagement in specialized content and service marketplaces. For instance, D/Cipher's performance-driven ad targeting offers a tangible advantage over generic programmatic offerings. However, IAC's reliance on acquisitions for growth and potential fragmentation across segments could lead to higher operational costs and slower product-to-market times compared to integrated ecosystems. The company's strategic response emphasizes direct-to-consumer connections and leveraging its unique data assets to maintain relevance and drive growth in an increasingly AI-driven and platform-centric world.

Conclusion

IAC is executing a decisive strategic pivot, transforming from a sprawling conglomerate into a focused entity centered on the dynamic People Inc. and its robust investment in MGM Resorts International (MGM). This narrative of strategic reinvigoration is driven by a clear vision to unlock shareholder value through operational excellence, technological differentiation, and disciplined capital allocation. People Inc.'s proactive "inversion" of the publishing model, fueled by D/Cipher+ and direct-to-consumer initiatives, positions it for sustained digital growth despite Google Search headwinds. Concurrently, the deeply undervalued MGM stake provides a powerful, anti-disintermediation hedge in an AI-dominated world.

While macroeconomic uncertainties and competitive pressures, particularly from evolving AI search paradigms, present challenges, IAC's strong balance sheet and commitment to opportunistic share repurchases and strategic M&A underscore management's confidence in its intrinsic value. The company's ability to leverage its iconic brands, proprietary technology, and agile operational model across its core assets will be paramount in realizing its long-term growth ambitions and narrowing the pronounced discount at which its shares currently trade. Investors should closely monitor the execution of People Inc.'s digital offensive, the continued performance of MGM, and IAC's capital deployment strategy as key indicators of its success in this new chapter.