NEW YORK, July 28, 2015 /PRNewswire/ -- IAC (NASDAQ:
IACI) released second quarter 2015 results today and published
management's prepared remarks on the Investors section of its
website at www.iac.com/Investors.
SUMMARY
RESULTS
|
($ in millions
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Q2
2015
|
Q2
2014
|
Growth
|
|
|
Revenue
|
|
$ 771.1
|
$ 756.3
|
2%
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
108.7
|
141.4
|
-23%
|
|
|
Adjusted Net
Income
|
|
74.6
|
3.2
|
2246%
|
|
|
Adjusted
EPS
|
|
0.85
|
0.04
|
2287%
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
62.8
|
95.7
|
-34%
|
|
|
Net Income
(Loss)
|
|
59.3
|
(18.0)
|
NM
|
|
|
GAAP Diluted
EPS
|
|
0.68
|
(0.22)
|
NM
|
|
|
|
|
|
|
|
|
|
See
reconciliations of GAAP to non-GAAP measures beginning on page
10.
|
|
|
Q2 2015 HIGHLIGHTS
- On June 25, 2015, IAC announced
its intent to pursue an initial public offering of less than 20% of
the common stock of The Match Group. The initial public offering is
expected to be completed during the fourth quarter of 2015.
- The Match Group revenue increased 19%, or 25% excluding the
effects of foreign exchange, driven by contributions from The
Princeton Review and FriendScout24 as well as 18% growth in Dating
paid subscribers to over 4.1 million globally.
- On July 14, 2015, The Match Group
announced that it had entered into a definitive agreement to
purchase PlentyOfFish for $575
million in cash. The transaction is expected to close early
in the fourth quarter of 2015.
- Within Search & Applications, Applications queries
increased 8% driven by 20% B2C growth. B2C revenue increased 18%
versus prior year.
- In the Media segment, Vimeo grew paid subscribers 25% to nearly
630,000.
- In the eCommerce segment, HomeAdvisor domestic revenue and
service requests increased 41% and 49%, respectively, while overall
HomeAdvisor revenue grew 26%, or 29% excluding the effects of
foreign exchange.
- IAC declared a quarterly cash dividend of $0.34 per share, payable on September 1, 2015 to IAC stockholders of record
as of the close of business on August 15,
2015.
DISCUSSION OF FINANCIAL AND OPERATING
RESULTS
|
|
|
|
|
|
|
Q2 2015
|
Q2 2014
|
Growth
|
Revenue
|
$ in
millions
|
|
|
Search &
Applications
|
$ 351.4
|
$ 395.7
|
-11%
|
|
The Match
Group
|
254.7
|
214.3
|
19%
|
|
Media
|
36.2
|
36.7
|
-1%
|
|
eCommerce
|
129.0
|
109.9
|
17%
|
|
Intercompany
Elimination
|
(0.1)
|
(0.3)
|
62%
|
|
|
$ 771.1
|
$ 756.3
|
2%
|
Adjusted
EBITDA
|
|
|
|
|
Search &
Applications
|
$
72.9
|
$
91.3
|
-20%
|
|
The Match
Group
|
64.8
|
69.4
|
-7%
|
|
Media
|
(15.5)
|
(8.9)
|
-73%
|
|
eCommerce
|
2.7
|
4.5
|
-41%
|
|
Corporate
|
(16.3)
|
(14.8)
|
-10%
|
|
|
$ 108.7
|
$ 141.4
|
-23%
|
Operating Income
(Loss)
|
|
|
|
|
Search &
Applications
|
$
68.6
|
$
77.8
|
-12%
|
|
The Match
Group
|
51.4
|
61.2
|
-16%
|
|
Media
|
(13.8)
|
(9.8)
|
-41%
|
|
eCommerce
|
(1.0)
|
0.0
|
NM
|
|
Corporate
|
(42.5)
|
(33.5)
|
-27%
|
|
|
$
62.8
|
$
95.7
|
-34%
|
Search & Applications
Websites revenue decreased
20% due primarily to a decline in revenue at Ask.com and certain
legacy businesses, partially offset by strong growth at About.com.
Applications revenue decreased 2% due to lower revenue in B2B
(our partnership operations), partially offset by 18% growth in our
B2C business driven by higher queries from our desktop search
applications and the contribution from mobile applications (via our
acquisition of Apalon on November 3,
2014). Adjusted EBITDA decreased 20% due primarily to the
lower revenue. Operating income in the current year
benefitted from a $6.3 million
contingent consideration fair value adjustment.
The Match Group
Dating revenue grew 7% due primarily
to 12% growth in North America
driven by increased paid subscribers, partially offset by 2% lower
International revenue due to foreign exchange effects, despite an
increase in paid subscribers. Excluding foreign exchange
effects, total Dating revenue would have increased 14% and
International revenue would have increased 18%.
Non-dating1 revenue, which benefited from the
acquisition of The Princeton Review, acquired on August 1, 2014, grew 370%. Adjusted EBITDA
decreased 7% due primarily to $9.0
million of costs in the current year period related to the
ongoing consolidation and streamlining of our technology systems
and European operations at our Dating businesses. Operating
income in the current year period was negatively impacted by a
$4.2 million year-over-year increase
in amortization of intangibles.
Media
Revenue was down 1% versus last year, despite
the contribution from IAC Films and strong growth at Vimeo, due to
lower revenue from Electus driven by the timing of certain
projects. The Adjusted EBITDA loss was larger than the prior
year due primarily to increased investment in Vimeo.
Operating income in the current year benefitted from a
$2.4 million contingent consideration
fair value adjustment.
eCommerce
Revenue increased 17% due to significant
growth at HomeAdvisor. Adjusted EBITDA decreased 41%
primarily due to increased sales and marketing investment at
HomeAdvisor.
Corporate
The Corporate Adjusted EBITDA loss increased
due primarily to higher compensation costs. Corporate
operating loss reflects an increase of $7.1
million in stock-based compensation expense due primarily to
the issuance of equity awards since the prior year.
OTHER ITEMS
Q2 2014 Earnings from continuing operations before income taxes
included $68.4 million ($66.6 million after-tax) of write-downs of
certain investments.
The Q2 2015 income tax benefit of $12.0
million from continuing operations was primarily due to the
realization of certain deferred tax assets in the current
period. The effective tax rate for Adjusted Net Income was 4%
in Q2 2015, lower than the statutory rate due primarily to the
realization of certain deferred tax assets in the current period.
The effective tax rates for continuing operations and
Adjusted Net income were 251% and 94%, respectively, in Q2
2014. The Q2 2014 effective rates for continuing operations
and Adjusted Net Income were higher than the statutory rate due
primarily to the unbenefited loss associated with the write-downs
of certain investments; excluding the effect of the write-downs,
the tax rates for continuing operations and Adjusted Net Income in
Q2 2014 would have been 40% and 38%, respectively, and were higher
than the statutory rate due to state taxes and interest on tax
reserves, partially offset by foreign income taxed at lower
rates.
Note 1: Includes The Princeton Review, Tutor.com and
DailyBurn.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2015, IAC had 82.7
million common and class B common shares outstanding. As of
July 24, 2015, the Company had 5.6
million shares remaining in its stock repurchase authorization.
IAC may purchase shares over an indefinite period on the open
market and in privately negotiated transactions, depending on those
factors IAC management deems relevant at any particular time,
including, without limitation, market conditions, share price and
future outlook.
As of June 30, 2015, IAC had
$889.9 million in cash and cash
equivalents and marketable securities as well as $1.1 billion in long-term debt, of which
$80 million is scheduled to be
redeemed on September 1, 2015.
The Company has $300 million in
unused borrowing capacity under its revolving credit facility.
OPERATING METRICS
|
|
|
|
|
|
|
|
|
|
|
Q2 2015
|
Q2 2014
|
Growth
|
|
|
|
|
|
|
|
SEARCH &
APPLICATIONS (in millions)
|
|
|
|
Revenue
|
|
|
|
|
|
Websites
(a)
|
|
$ 164.8
|
$ 205.2
|
-20%
|
|
Applications
(b)
|
|
186.5
|
190.5
|
-2%
|
|
Total
Revenue
|
|
$ 351.4
|
$ 395.7
|
-11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Websites Page Views
(c)
|
|
5,448
|
7,731
|
-30%
|
Applications Queries
(b)
|
|
5,501
|
5,076
|
8%
|
|
|
|
|
|
|
|
THE MATCH
GROUP
|
|
|
|
|
Dating Revenue (in
millions)
|
|
|
|
|
|
North America
(d)
|
|
$ 155.0
|
$ 138.1
|
12%
|
|
International
(e)
|
|
67.9
|
69.5
|
-2%
|
|
Total Dating
Revenue
|
|
$ 222.9
|
$ 207.6
|
7%
|
|
|
|
|
|
|
|
Dating Paid
Subscribers (in thousands)
|
|
|
|
|
|
North America
(d)
|
|
2,691
|
2,430
|
11%
|
|
International
(e)
|
|
1,439
|
1,070
|
34%
|
|
Total Dating Paid
Subscribers
|
|
4,130
|
3,500
|
18%
|
|
|
|
|
|
|
|
HOMEADVISOR
(in thousands)
|
|
|
|
|
|
Domestic Service
Requests (f)
|
|
2,804
|
1,887
|
49%
|
|
Domestic Accepts
(g)
|
|
2,978
|
2,118
|
41%
|
|
|
|
|
|
|
|
|
International Service
Requests (f)
|
|
298
|
266
|
12%
|
|
International Accepts
(g)
|
|
454
|
538
|
-16%
|
(a)
|
Websites revenue
is principally composed of Ask.com, About.com, CityGrid,
Dictionary.com, Investopedia, PriceRunner and
Ask.fm.
|
(b)
|
Applications
includes B2C, including SlimWare and Apalon, and
B2B.
|
(c)
|
Websites page
views include Ask.com, About.com, CityGrid, Dictionary.com,
Investopedia and PriceRunner.
|
(d)
|
North America
includes Match, Chemistry, People Media, OkCupid, Tinder and other
dating businesses operating within the United States and
Canada.
|
(e)
|
International
includes Meetic, Tinder and all dating businesses operating outside
of the United States and Canada.
|
(f)
|
Fully completed
and submitted customer service requests on
HomeAdvisor.
|
(g)
|
The number of
times service requests are accepted by service professionals.
A service request can be transmitted to and accepted by more
than one service professional.
|
DILUTIVE SECURITIES
IAC has various tranches of dilutive securities. The table
below details these securities as well as potential dilution at
various stock prices (shares in millions; rounding differences may
occur).
|
|
|
|
Avg.
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
As
of
|
|
|
|
Shares
|
|
Price
|
|
7/24/15
|
Dilution
at:
|
|
|
|
|
|
|
|
|
|
|
|
Share
Price
|
|
|
|
|
$81.69
|
$85.00
|
$90.00
|
$95.00
|
$100.00
|
|
|
|
|
|
|
|
|
|
|
|
Absolute Shares as
of 7/24/15
|
82.9
|
|
|
|
82.9
|
82.9
|
82.9
|
82.9
|
82.9
|
|
|
|
|
|
|
|
|
|
|
|
RSUs and
Other
|
4.9
|
|
|
|
4.9
|
4.7
|
4.5
|
4.3
|
4.1
|
Options
|
7.2
|
|
$51.49
|
|
2.7
|
2.8
|
3.1
|
3.3
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
Total
Dilution
|
|
|
|
|
7.5
|
7.5
|
7.5
|
7.6
|
7.6
|
|
% Dilution
|
|
|
|
|
8.3%
|
8.3%
|
8.3%
|
8.4%
|
8.4%
|
Total Diluted
Shares Outstanding
|
|
|
|
|
90.5
|
90.5
|
90.5
|
90.5
|
90.5
|
CONFERENCE CALL
IAC will audiocast a conference call to answer questions
regarding the Company's second quarter 2015 results and
management's published remarks on Wednesday,
July 29, 2015, at 8:30 a.m. Eastern
Time. This call will include the disclosure of certain
information, including forward-looking information, which may be
material to an investor's understanding of IAC's business.
The live audiocast will be open to the public at, and management's
remarks have been posted on, www.iac.com/Investors.
GAAP FINANCIAL STATEMENTS
IAC CONSOLIDATED
STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
($ in thousands
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
771,132
|
$
756,315
|
|
$
1,543,644
|
$
1,496,562
|
Operating costs and
expenses:
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation shown separately below)
|
|
183,276
|
210,730
|
|
374,829
|
419,964
|
Selling and marketing
expense
|
|
319,397
|
272,490
|
|
677,063
|
571,089
|
General and
administrative expense
|
|
129,349
|
109,897
|
|
244,143
|
204,986
|
Product development
expense
|
|
46,430
|
38,845
|
|
91,687
|
77,661
|
Depreciation
|
|
15,500
|
15,257
|
|
31,068
|
30,075
|
Amortization of
intangibles
|
|
14,411
|
13,406
|
|
26,966
|
25,385
|
Total operating costs
and expenses
|
|
708,363
|
660,625
|
|
1,445,756
|
1,329,160
|
|
|
|
|
|
|
|
Operating
income
|
|
62,769
|
95,690
|
|
97,888
|
167,402
|
|
|
|
|
|
|
|
Interest
expense
|
|
(15,214)
|
(14,046)
|
|
(29,278)
|
(28,110)
|
Other (expense)
income, net
|
|
(1,638)
|
(69,750)
|
|
5,350
|
(71,708)
|
Earnings from
continuing operations before income taxes
|
|
45,917
|
11,894
|
|
73,960
|
67,584
|
Income tax benefit
(provision)
|
|
11,968
|
(29,889)
|
|
5,788
|
(51,274)
|
Earnings (loss)
from continuing operations
|
|
57,885
|
(17,995)
|
|
79,748
|
16,310
|
Loss from
discontinued operations, net of tax
|
|
(153)
|
(868)
|
|
(28)
|
(1,682)
|
Net earnings
(loss)
|
|
57,732
|
(18,863)
|
|
79,720
|
14,628
|
Net loss attributable
to noncontrolling interests
|
|
1,573
|
867
|
|
5,990
|
3,261
|
Net earnings
(loss) attributable to IAC shareholders
|
|
$
59,305
|
$
(17,996)
|
|
$
85,710
|
$
17,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
information attributable to IAC shareholders:
|
|
|
|
|
|
|
Basic earnings (loss) per share
from continuing operations
|
|
$
0.72
|
$
(0.21)
|
|
$
1.03
|
$
0.24
|
Diluted earnings (loss) per share
from continuing operations
|
|
$
0.68
|
$
(0.21)
|
|
$
0.98
|
$
0.22
|
|
|
|
|
|
|
|
Basic earnings (loss) per
share
|
|
$
0.72
|
$
(0.22)
|
|
$
1.03
|
$
0.22
|
Diluted earnings (loss) per
share
|
|
$
0.68
|
$
(0.22)
|
|
$
0.97
|
$
0.20
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
0.34
|
$
0.24
|
|
$
0.68
|
$
0.48
|
|
|
|
|
|
|
|
Stock-based
compensation expense by function:
|
|
|
|
|
|
|
Cost of
revenue
|
|
$
294
|
$
459
|
|
$
539
|
$
451
|
Selling and marketing
expense
|
|
3,119
|
657
|
|
4,842
|
853
|
General and
administrative expense
|
|
20,039
|
13,707
|
|
34,637
|
21,659
|
Product development
expense
|
|
2,497
|
1,729
|
|
4,842
|
3,202
|
Total stock-based
compensation expense
|
|
$
25,949
|
$
16,552
|
|
$
44,860
|
$
26,165
|
IAC CONSOLIDATED
BALANCE SHEET
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
|
2015
|
2014
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
656,409
|
$
990,405
|
Marketable
securities
|
|
233,523
|
160,648
|
Accounts
receivable, net
|
|
223,106
|
236,086
|
Other current
assets
|
|
209,724
|
166,742
|
Total current
assets
|
|
1,322,762
|
1,553,881
|
|
|
|
|
Property and
equipment, net
|
|
297,158
|
302,459
|
Goodwill
|
|
1,778,830
|
1,754,926
|
Intangible
assets, net
|
|
472,082
|
491,936
|
Long-term
investments
|
|
131,385
|
114,983
|
Other
non-current assets
|
|
72,841
|
56,693
|
TOTAL
ASSETS
|
|
$
4,075,058
|
$
4,274,878
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
LIABILITIES
|
|
|
|
Current portion
of long-term debt
|
|
$
80,000
|
-
|
Accounts
payable, trade
|
|
79,434
|
81,163
|
Deferred
revenue
|
|
232,673
|
194,988
|
Accrued
expenses and other current liabilities
|
|
322,750
|
397,803
|
Total current
liabilities
|
|
714,857
|
673,954
|
|
|
|
|
Long-term
debt
|
|
1,000,000
|
1,080,000
|
Income taxes
payable
|
|
24,768
|
32,635
|
Deferred income
taxes
|
|
432,688
|
409,529
|
Other long-term
liabilities
|
|
59,182
|
45,191
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
28,177
|
40,427
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
Common
stock
|
|
254
|
252
|
Class B
convertible common stock
|
|
16
|
16
|
Additional
paid-in capital
|
|
11,452,662
|
11,415,617
|
Retained
earnings
|
|
354,099
|
325,118
|
Accumulated
other comprehensive loss
|
|
(130,295)
|
(87,700)
|
Treasury
stock
|
|
(9,861,350)
|
(9,661,350)
|
Total IAC
shareholders' equity
|
|
1,815,386
|
1,991,953
|
Noncontrolling
interests
|
|
-
|
1,189
|
Total
shareholders' equity
|
|
1,815,386
|
1,993,142
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
4,075,058
|
$
4,274,878
|
IAC CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2015
|
2014
|
|
|
|
|
Cash flows from
operating activities attributable to continuing
operations:
|
|
|
|
Net
earnings
|
|
$
79,720
|
$
14,628
|
Less: loss from
discontinued operations, net of tax
|
|
(28)
|
(1,682)
|
Earnings from
continuing operations
|
|
79,748
|
16,310
|
Adjustments to
reconcile earnings from continuing operations to net cash provided
by
operating activities attributable to continuing
operations:
|
|
|
|
Stock-based
compensation expense
|
|
44,860
|
26,165
|
Depreciation
|
|
31,068
|
30,075
|
Amortization of
intangibles
|
|
26,966
|
25,385
|
Impairment of
long-term investments
|
|
500
|
64,281
|
Excess tax benefits
from stock-based awards
|
|
(36,465)
|
(32,889)
|
Deferred income
taxes
|
|
7,260
|
5,849
|
Equity in losses of
unconsolidated affiliates
|
|
477
|
8,785
|
Acquisition-related
contingent consideration fair value adjustments
|
|
(16,946)
|
500
|
Other adjustments,
net
|
|
8,369
|
5,362
|
Changes in assets and
liabilities, net of effects of acquisitions:
|
|
|
|
Accounts
receivable
|
|
2,710
|
(5,718)
|
Other
assets
|
|
(6,458)
|
(19,238)
|
Accounts payable and
other current liabilities
|
|
(33,231)
|
(31,242)
|
Income taxes
payable
|
|
(63,304)
|
29,299
|
Deferred
revenue
|
|
40,407
|
25,851
|
Other changes in
assets and liabilities, net
|
|
(182)
|
(4)
|
Net cash provided
by operating activities attributable to continuing
operations
|
|
85,779
|
148,771
|
Cash flows from
investing activities attributable to continuing
operations:
|
|
|
|
Acquisitions, net of
cash acquired
|
|
(43,286)
|
(103,380)
|
Capital
expenditures
|
|
(26,816)
|
(26,557)
|
Proceeds from
maturities and sales of marketable debt securities
|
|
14,613
|
998
|
Purchases of
marketable debt securities
|
|
(93,134)
|
(78,380)
|
Purchases of
long-term investments
|
|
(12,840)
|
(14,701)
|
Other, net
|
|
8,599
|
2,187
|
Net cash used in
investing activities attributable to continuing
operations
|
|
(152,864)
|
(219,833)
|
Cash flows from
financing activities attributable to continuing
operations:
|
|
|
|
Purchase of treasury
stock
|
|
(200,000)
|
-
|
Dividends
|
|
(56,729)
|
(40,086)
|
Issuance of common
stock, net of withholding taxes
|
|
(20,656)
|
(13,823)
|
Excess tax benefits
from stock-based awards
|
|
36,465
|
32,889
|
Purchase of
noncontrolling interests
|
|
(15,338)
|
(30,000)
|
Funds returned from
escrow for Meetic tender offer
|
|
-
|
12,354
|
Acquisition-related
contingent consideration payments
|
|
(5,705)
|
(7,630)
|
Other, net
|
|
430
|
(141)
|
Net cash used in
financing activities attributable to continuing
operations
|
|
(261,533)
|
(46,437)
|
Total cash used in
continuing operations
|
|
(328,618)
|
(117,499)
|
Total cash used in
discontinued operations
|
|
(243)
|
(157)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(5,135)
|
4,538
|
Net decrease in
cash and cash equivalents
|
|
(333,996)
|
(113,118)
|
Cash and cash
equivalents at beginning of period
|
|
990,405
|
1,100,444
|
Cash and cash
equivalents at end of period
|
|
$
656,409
|
$
987,326
|
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
IAC RECONCILIATION
OF OPERATING CASH FLOW FROM CONTINUING OPERATIONS TO FREE CASH
FLOW
|
($ in millions;
rounding differences may occur)
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2015
|
2014
|
Net cash provided by
operating activities attributable to continuing
operations
|
|
$
85.8
|
$
148.8
|
Capital
expenditures
|
|
(26.8)
|
(26.6)
|
Tax refunds related
to sales of a business and an investment
|
|
(1.9)
|
(0.4)
|
Free Cash
Flow
|
|
$
57.0
|
$
121.9
|
For the six months ended June 30,
2015, consolidated Free Cash Flow decreased $64.8 million due to lower Adjusted EBITDA and
higher income tax payments.
IAC RECONCILIATION
OF GAAP EPS TO ADJUSTED EPS
|
|
|
|
|
|
|
(in thousands
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
2014
|
|
2015
|
2014
|
Net earnings
(loss) attributable to IAC shareholders
|
|
$
59,305
|
$
(17,996)
|
|
$
85,710
|
$
17,889
|
Stock-based
compensation expense
|
|
25,949
|
16,552
|
|
44,860
|
26,165
|
Amortization of
intangibles
|
|
14,411
|
13,406
|
|
26,966
|
25,385
|
Acquisition-related
contingent consideration fair value adjustments
|
|
(9,950)
|
527
|
|
(16,946)
|
500
|
Gain on sale of VUE
interests and related effects
|
|
-
|
986
|
|
-
|
1,954
|
Discontinued
operations, net of tax
|
|
153
|
868
|
|
28
|
1,682
|
Impact of income
taxes and noncontrolling interests
|
|
(15,234)
|
(11,161)
|
|
(27,616)
|
(18,768)
|
Adjusted Net
Income
|
|
$
74,634
|
$
3,182
|
|
$
113,002
|
$
54,807
|
|
|
|
|
|
|
|
GAAP Basic
weighted average shares outstanding
|
|
82,416
|
83,178
|
|
82,932
|
82,833
|
Options and RSUs,
treasury method
|
|
4,674
|
-
|
|
4,989
|
5,150
|
GAAP Diluted
weighted average shares outstanding
|
|
87,090
|
83,178
|
|
87,921
|
87,983
|
Options and RSUs,
treasury method not included in diluted shares above
|
|
-
|
5,579
|
|
-
|
-
|
Impact of
RSUs
|
|
434
|
308
|
|
380
|
295
|
Adjusted EPS
weighted average shares outstanding
|
|
87,524
|
89,065
|
|
88,301
|
88,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
earnings (loss) per share
|
|
$
0.68
|
$
(0.22)
|
|
$
0.97
|
$
0.20
|
|
|
|
|
|
|
|
Adjusted
EPS
|
|
$
0.85
|
$
0.04
|
|
$
1.28
|
$
0.62
|
For Adjusted EPS purposes, the impact of RSUs on shares
outstanding is based on the weighted average number of RSUs
outstanding, including performance-based RSUs outstanding that the
Company believes are probable of vesting. For GAAP diluted
EPS purposes, RSUs, including performance-based RSUs for which the
performance criteria have been met, are included on a treasury
method basis.
IAC RECONCILIATION
OF SEGMENT NON-GAAP MEASURE TO GAAP MEASURE
|
|
($ in millions;
rounding differences may occur)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended June 30, 2015
|
|
Adjusted
EBITDA
|
Stock-based
compensation expense
|
Depreciation
|
Amortization of
intangibles
|
Acquisition-related contingent consideration fair
value adjustments
|
Operating income
(loss)
|
Search &
Applications
|
$
72.9
|
$
-
|
$
(3.7)
|
$
(6.9)
|
$
6.3
|
$
68.6
|
The Match
Group
|
64.8
|
(2.1)
|
(6.6)
|
(5.9)
|
1.2
|
51.4
|
Media
|
(15.5)
|
(0.1)
|
(0.2)
|
(0.4)
|
2.4
|
(13.8)
|
eCommerce
|
2.7
|
(0.4)
|
(2.1)
|
(1.2)
|
-
|
(1.0)
|
Corporate
|
(16.3)
|
(23.3)
|
(2.9)
|
-
|
-
|
(42.5)
|
Total
|
$
108.7
|
$
(25.9)
|
$
(15.5)
|
$
(14.4)
|
$
10.0
|
$
62.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended June 30, 2014
|
|
Adjusted
EBITDA
|
Stock-based
compensation expense
|
Depreciation
|
Amortization of
intangibles
|
Acquisition-related contingent consideration fair
value adjustments
|
Operating income
(loss)
|
Search &
Applications
|
$
91.3
|
$
-
|
$
(5.1)
|
$
(8.4)
|
$
-
|
$
77.8
|
The Match
Group
|
69.4
|
(0.2)
|
(5.6)
|
(1.7)
|
(0.7)
|
61.2
|
Media
|
(8.9)
|
(0.2)
|
(0.2)
|
(0.7)
|
0.2
|
(9.8)
|
eCommerce
|
4.5
|
-
|
(1.9)
|
(2.6)
|
-
|
0.0
|
Corporate
|
(14.8)
|
(16.2)
|
(2.5)
|
-
|
-
|
(33.5)
|
Total
|
$
141.4
|
$
(16.6)
|
$
(15.3)
|
$
(13.4)
|
$
(0.5)
|
$
95.7
|
IAC RECONCILIATION
OF SEGMENT NON-GAAP MEASURE TO GAAP MEASURE
|
|
($ in millions;
rounding differences may occur)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended June 30, 2015
|
|
Adjusted
EBITDA
|
Stock-based
compensation expense
|
Depreciation
|
Amortization of
intangibles
|
Acquisition-related contingent consideration fair
value adjustments
|
Operating income
(loss)
|
Search &
Applications
|
$
151.8
|
$
-
|
$
(7.3)
|
$
(13.9)
|
$
2.3
|
$
132.9
|
The Match
Group
|
90.7
|
(2.7)
|
(13.7)
|
(9.8)
|
12.2
|
76.8
|
Media
|
(30.0)
|
(0.3)
|
(0.4)
|
(0.8)
|
2.4
|
(29.1)
|
eCommerce
|
(0.5)
|
(0.8)
|
(4.1)
|
(2.5)
|
-
|
(7.9)
|
Corporate
|
(28.2)
|
(41.1)
|
(5.6)
|
-
|
-
|
(74.8)
|
Total
|
$
183.8
|
$
(44.9)
|
$
(31.1)
|
$
(27.0)
|
$
16.9
|
$
97.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended June 30, 2014
|
|
Adjusted
EBITDA
|
Stock-based
compensation expense
|
Depreciation
|
Amortization of
intangibles
|
Acquisition-related contingent consideration fair
value adjustments
|
Operating
income (loss)
|
Search &
Applications
|
$
173.3
|
$
-
|
$
(9.5)
|
$
(15.7)
|
$
-
|
$
148.1
|
The Match
Group
|
116.8
|
(0.2)
|
(11.4)
|
(3.5)
|
(0.7)
|
101.0
|
Media
|
(16.8)
|
(0.3)
|
(0.5)
|
(1.0)
|
0.2
|
(18.4)
|
eCommerce
|
7.3
|
-
|
(3.6)
|
(5.2)
|
-
|
(1.6)
|
Corporate
|
(31.2)
|
(25.7)
|
(5.0)
|
-
|
-
|
(61.8)
|
Total
|
$
249.5
|
$
(26.2)
|
$
(30.1)
|
$
(25.4)
|
$
(0.5)
|
$
167.4
|
IAC'S PRINCIPLES OF FINANCIAL
REPORTING
IAC reports Adjusted EBITDA, Adjusted Net Income, Adjusted EPS
and Free Cash Flow, all of which are supplemental measures to GAAP.
These measures are among the primary metrics by which we
evaluate the performance of our businesses, on which our internal
budgets are based and by which management is compensated. We
believe that investors should have access to, and we are obligated
to provide, the same set of tools that we use in analyzing our
results. These non-GAAP measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for or superior to GAAP results.
IAC endeavors to compensate for the limitations of the
non-GAAP measures presented by providing the comparable GAAP
measures with equal or greater prominence and descriptions of the
reconciling items, including quantifying such items, to derive the
non-GAAP measures. We encourage investors to examine the
reconciling adjustments between the GAAP and non-GAAP measures,
which are included in this release. Interim results are not
necessarily indicative of the results that may be expected for a
full year.
Definitions of Non-GAAP Measures
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA) is defined as operating income
excluding: (1) stock-based compensation expense; (2) depreciation;
and (3) acquisition-related items consisting of (i) amortization of
intangible assets and goodwill and intangible asset impairments and
(ii) gains and losses recognized on changes in the fair value of
contingent consideration arrangements. We believe Adjusted
EBITDA is a useful measure for analysts and investors as this
measure allows a more meaningful comparison between our performance
and that of our competitors. Moreover, our management uses
this measure internally to evaluate the performance of our business
as a whole and our individual business segments. The above
items are excluded from our Adjusted EBITDA measure because these
items are non-cash in nature, and we believe that by excluding
these items, Adjusted EBITDA corresponds more closely to the cash
operating income generated from our business, from which capital
investments are made and debt is serviced.
Adjusted Net Income generally captures all items on the
statement of operations that have been, or ultimately will be,
settled in cash and is defined as net earnings attributable to IAC
shareholders excluding, net of tax effects and noncontrolling
interests, if applicable: (1) stock-based compensation expense, (2)
acquisition-related items consisting of (i) amortization of
intangibles and goodwill and intangible asset impairments and (ii)
gains and losses recognized on changes in the fair value of
contingent consideration arrangements, (3) income or loss effects
related to IAC's former passive ownership in VUE, and (4)
discontinued operations. We believe Adjusted Net Income is
useful to investors because it represents IAC's consolidated
results taking into account depreciation, which management believes
is an ongoing cost of doing business, as well as other charges that
are not allocated to the operating businesses such as interest
expense, income taxes and noncontrolling interests, but excluding
the effects of any other non-cash expenses.
Adjusted EPS is defined as Adjusted Net Income divided by fully
diluted weighted average shares outstanding for Adjusted EPS
purposes. We include dilution from options and warrants in
accordance with the treasury stock method and include all
restricted stock units ("RSUs") in shares outstanding for Adjusted
EPS, with performance-based RSUs included based on the number of
shares that the Company believes are probable of vesting.
This differs from the GAAP method for including RSUs, which
are treated on a treasury method, and performance-based RSUs, which
are included for GAAP purposes only to the extent the performance
criteria have been met (assuming the end of the reporting period is
the end of the contingency period). Shares outstanding for
Adjusted EPS purposes are therefore higher than shares outstanding
for GAAP EPS purposes. We believe Adjusted EPS is useful to
investors because it represents, on a per share basis, IAC's
consolidated results, taking into account depreciation, which we
believe is an ongoing cost of doing business, as well as other
charges, which are not allocated to the operating businesses such
as interest expense, income taxes and noncontrolling interests, but
excluding the effects of any other non-cash expenses.
Adjusted Net Income and Adjusted EPS have the same
limitations as Adjusted EBITDA, and in addition, Adjusted Net
Income and Adjusted EPS do not account for IAC's former passive
ownership in VUE. Therefore, we think it is important to
evaluate these measures along with our consolidated statement of
operations.
IAC'S PRINCIPLES OF FINANCIAL REPORTING -
continued
Free Cash Flow is defined as net cash provided by operating
activities, less capital expenditures. In addition, Free Cash
Flow excludes, if applicable, tax payments and refunds related to
the sales of certain businesses and investments, including IAC's
interests in VUE, an internal restructuring and dividends received
that represent a return of capital due to the exclusion of the
proceeds from these sales and dividends from cash provided by
operating activities. We believe Free Cash Flow is useful to
investors because it represents the cash that our operating
businesses generate, before taking into account non-operational
cash movements. Free Cash Flow has certain limitations in
that it does not represent the total increase or decrease in the
cash balance for the period, nor does it represent the residual
cash flow for discretionary expenditures. For example, it
does not take into account stock repurchases. Therefore, we
think it is important to evaluate Free Cash Flow along with our
consolidated statement of cash flows.
Non-Cash Expenses That Are Excluded From Our Non-GAAP
Measures
Stock-based compensation expense consists principally of expense
associated with the grants, including unvested grants assumed in
acquisitions, of stock options, restricted stock units and
performance-based RSUs. These expenses are not paid in cash,
and we include the related shares in our fully diluted shares
outstanding using the treasury stock method; however,
performance-based RSUs are included only to the extent the
performance criteria have been met (assuming the end of the
reporting period is the end of the contingency period). We
view the true cost of stock options, restricted stock units and
performance-based RSUs as the dilution to our share base, and such
awards are included in our shares outstanding for Adjusted EPS
purposes as described above under the definition of Adjusted EPS.
Upon the exercise of certain stock options and vesting of
restricted stock units and performance-based RSUs, the awards are
settled, at the Company's discretion, on a net basis, with the
Company remitting the required tax-withholding amount from its
current funds.
Depreciation is a non-cash expense relating to our property and
equipment and is computed using the straight-line method to
allocate the cost of depreciable assets to operations over their
estimated useful lives.
Amortization of intangible assets and goodwill and intangible
asset impairments are non-cash expenses relating primarily to
acquisitions. At the time of an acquisition, the identifiable
definite-lived intangible assets of the acquired company, such as
content, technology, customer lists, advertiser and supplier
relationships, are valued and amortized over their estimated lives.
Value is also assigned to acquired indefinite-lived
intangible assets, which comprise trade names and trademarks, and
goodwill that are not subject to amortization. An impairment
is recorded when the carrying value of an intangible asset or
goodwill exceeds its fair value. While it is likely that we
will have significant intangible amortization expense as we
continue to acquire companies, we believe that intangible assets
represent costs incurred by the acquired company to build value
prior to acquisition and the related amortization and impairment
charges of intangible assets or goodwill, if applicable, are not
ongoing costs of doing business.
Gains and losses recognized on changes in the fair value of
contingent consideration arrangements are accounting adjustments to
report contingent consideration liabilities at fair value.
These adjustments can be highly variable and are excluded
from our assessment of performance because they are considered
non-operational in nature and, therefore, are not indicative of
current or future performance or ongoing costs of doing
business.
Income or loss effects related to IAC's former passive ownership
in VUE are excluded from Adjusted Net Income and Adjusted EPS
because IAC had no operating control over VUE, which was sold for a
gain in 2005, had no way to forecast this business, and did not
consider the results of VUE in evaluating the performance of IAC's
businesses.
Free Cash Flow
We look at Free Cash Flow as a measure of the strength and
performance of our businesses, not for valuation purposes. In
our view, applying "multiples" to Free Cash Flow is inappropriate
because it is subject to timing, seasonality and one-time events.
We manage our business for cash and we think it is of utmost
importance to maximize cash – but our primary valuation metrics are
Adjusted EBITDA and Adjusted EPS.
OTHER INFORMATION
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
This press release and our conference call, which will be held
at 8:30 a.m. Eastern Time on
July 29, 2015, may contain
"forward‑looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The use of words
such as "anticipates," "estimates," "expects," "intends," "plans"
and "believes," among others, generally identify forward-looking
statements. These forward-looking statements include, among
others, statements relating to: IAC's future financial performance,
IAC's business prospects and strategy, anticipated trends and
prospects in the industries in which IAC's businesses operate and
other similar matters. These forward‑looking statements are
based on management's current expectations and assumptions about
future events, which are inherently subject to uncertainties, risks
and changes in circumstances that are difficult to predict.
Actual results could differ materially from those contained in
these forward‑looking statements for a variety of reasons,
including, among others: changes in senior management at IAC and/or
its businesses, changes in our relationship with, or policies
implemented by, Google, adverse changes in economic conditions,
either generally or in any of the markets in which IAC's businesses
operate, adverse trends in the online advertising industry or the
advertising industry generally, our ability to convert visitors to
our various websites into users and customers, our ability to offer
new or alternative products and services in a cost-effective manner
and consumer acceptance of these products and services, operational
and financial risks relating to acquisitions, changes in industry
standards and technology, our ability to expand successfully into
international markets and regulatory changes. Certain of these and
other risks and uncertainties are discussed in IAC's filings with
the Securities and Exchange Commission ("SEC"). Other unknown
or unpredictable factors that could also adversely affect IAC's
business, financial condition and results of operations may arise
from time to time. In light of these risks and uncertainties,
these forward‑looking statements may not prove to be accurate.
Accordingly, you should not place undue reliance on these
forward‑looking statements, which only reflect the views of IAC
management as of the date of this press release. IAC does not
undertake to update these forward-looking statements.
About IAC
IAC (NASDAQ: IACI) is a leading media and Internet company. It
is organized into four segments: The Match Group, which consists of
dating, education and fitness businesses with brands such as
Match.com, OkCupid, Tinder, The Princeton Review and DailyBurn;
Search & Applications, which includes brands such as About.com,
Ask.com, Dictionary.com and Investopedia; Media, which consists of
businesses such as Vimeo, Electus, The Daily Beast and
CollegeHumor; and eCommerce, which includes HomeAdvisor and
ShoeBuy. IAC's brands and products are among the most
recognized in the world reaching users in over 200 countries.
The Company is headquartered in New York
City and has offices worldwide. To view a full list of IAC
companies, please visit www.iac.com.
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SOURCE IAC