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IAC/InterActive Corp. (NASDAQ:IACI)

Q1 2009 Earnings Call

April 29, 2009 11:00 AM ET

Executives

Thomas J. McInerney - Executive Vice President and Chief Financial Officer

Barry Diller - Chairman and Chief Executive Officer

Analysts

Jennifer Watson - Goldman Sachs

Ross Sandler - RBC Capital Markets

Jeetil Patel - Deutsche Bank

Justin Post - Banc of America-Merrill Lynch

Mark Mahaney - Citigroup

Jim Friedland - Cowen & Company

Jeffrey Lindsay - Stanford Bernstein

Jeffrey Shelton - Natexis Bleichroeder Inc.

Gene Munster - Piper Jaffray

Operator

Good morning. My name is Leslie and I will be your conference operator today. At this time, I would like to welcome everyone to the IAC Q1 2009 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you.

At this time I would like to turn today's conference over to Mr. Tom McInerney, Executive Vice President and Chief Financial Officer. Please go ahead.

Thomas J. McInerney

Thanks operator and everyone for joining us this morning for our first quarter 2009 earnings call. Barry will make some brief remarks after which I will come back to quickly highlight some issues.

But first, I will remind you that during this call, we may discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as; we expect, we believe, we anticipate, or similar statements.

These forward-looking statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our Q1 2009 press release and our periodic reports filed with the SEC. We will also discuss certain non-GAAP measures. I refer you to our press release and the Investor Relations section of our website for all comparable GAAP measures and full reconciliations.

With that, I'll turn it over to Barry.

Barry Diller

Thank you, Tom. Good morning to everybody. I'll make just a few comments, no great order and then we'll take questions for the majority of call.

First, to a cheer from great information we bought back some stock. We won't say anymore about that, that's our policy but of course, we'll report each quarter any stock purchases that we make.

In our Search sector, Ask isn't just ask.com. It's the Ask network, which is 173 million units (ph) worldwide, growth is about 33% year-over-year and 5% quarter-to-quarter. It's the sixth largest property on the web, up from the seventh last quarter.

As for queries in the U.S., we're closing slowly on the losses over the previous year, improving 9% this quarter. We've got all sorts of ideas and initiatives to grow our queries and share but this is a long process. Results come far slower than we'd like, though we've had ... we have held on pretty much to our share over these last years.

In local, Citysearch and ServiceMagic are doing quite well in this environment. More important than that, they are putting in to place, many initiatives for future leadership.

Our purse of business continues to grow and it continues to extend its leadership. We are everyday mindful of our bountiful capital. We talked about endless ideas day long, but we haven't yet found a compelling place to put it down. And we're going to continue to enforce patience until we do or until we find a way to repatriate it to shareholders.

With that, Tom and your comments and then we'll do Q&A.

Thomas J. McInerney

Thanks. The results are fully laid out in the release and I don't want to be repetitive. So let me just give you some supplemental information as it relates to Q1 as well as going forward.

In Media & Advertising, the reported revenue decline of 22% reflects about 10 points of decline from the phase out of certain sponsored listing distribution businesses when we put in place our new Google deal a little after a year ago. You'll remember there was some continuing activity in this in Q1 as we phased it out. So, Q1 this year will be our last quarter with this drag on the year-over-year comparisons.

Excluding this effect, revenue was down in the low double-digits on a percentage basis, reflecting weak general conditions but some of the changes we made to the Ask products at the beginning of Q4 which reduced monetization in return for a better consumer experience as we've discussed in the past.

On the profit side, we basically saw the revenue decline and flow through to OIBA and while we've made selective cost reductions, we increased marketing year-over-year and generally sustained investment levels in the business.

The last few weeks of the quarter continuing into April have been modestly better than earlier in the quarter in terms of volumes. So while we don't expect a dramatic improvement in trends in Q2, we also don't expect further deterioration either year-over-year or sequentially, although obviously external conditions, especially monetization, are very unpredictable.

We'll discuss more the metrics and like in the Q&A. Just quickly on the couple of the other businesses; for Match, please note we expect to close the sale of Match Europe to Meetic in early June following which Matches Europe revenue and OIBA, which were roughly 50 million and eight million respectively from June '08 through year end last year, will be excluded from results remainder of this year and we'll own a 27% interest in Meetic and a promissory note with a total current value of approximately $140 million.

ServiceMagic had a difficult first quarter. The weakness in housing and by extension home improvement drove margin pressure as the company had to spend more to generate consumer demand than in previous quarters and revenue per service request declined as the mix shifted to more inexpensive projects.

In addition to macro headwinds, the company had a few operational challenges which we think were largely addressed by the end of the quarter. As such, we think while Q2 will still be down year-over-year, we're hopeful that it will be a smaller decline in Q1 and we're set up for a still quite profitable year despite conditions.

And also just note that the number of paying service providers is still growing. As there is just no question that local businesses are moving to pay for performance, online marketing and ServiceMagic's competitive position and long-term opportunity remain great.

With respect to our emerging businesses, we continue to rationalize this sector and hone our efforts around fewer businesses which laid to sale of ReserveAmerica and 236 (ph) during the quarter. Q1 aggregate net losses in this segment were down sequentially from Q4 and I expect that trend to continue all year.

ReserveAmerica was a profit maker and Pronto, another profit maker, is being materially impacted by declining market CPCs. Right now we believe it's unlikely that we'll get to our previously stated goal to reduce our 2008 aggregate emerging business loss by about half this year. But I do believe we'll continue to drive it down sequentially.

Finally on cash, you see we ended Q1 with approximately $2 billion and we expect to be modestly free cash flow positive over the balance of the year and in addition to receive a $76 million tax credit in Q4, which will benefit actual cash flow although just as a footnote, not free cash flow as we've defined it.

With that operator, let's take questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Jennifer Watson of Goldman Sachs. Your line is open.

Jennifer Watson - Goldman Sachs

Great. Thank you. I wanted to ask a question on Fun Web Products. They have been performing rather well, probably up until this quarter when it sounds like some of the queries declined there. Can you discuss some of the dynamics and how that contributed to proprietary revenue down 10% year-over-year relative to CitySearch and Ask?

Barry Diller

Yeah sure, Jennifer. I think it's starting in the middle of last year, the back half of the last year we started to see a number of effects that it was a mix of external and kind of certain internal operational issues. I think the premise of Fun Web which is to provide great creative products in order to drive a toolbar download, continues to be a strong general premise but there is no question there's increasing competition for control of that toolbar and control of the other search experience through the browser and related affects.

So, there were a number of kind of competitive actions we think we've solved many of those. So the business was stronger in the last third of the quarter and into April than it was in the early parts of the quarter. And we look to launch new products and continue to drive these operational experiences around the search experience.

So, we think the business is still fundamentally sound but there is no question it's competitive.

Jennifer Watson - Goldman Sachs

And then if you can just comment a little bit on the direction of this display relative to search in the quarter and have you saw Search hold out better as one would expect seeing that its ROI driven?

Barry Diller

We did. I mean display, as you know, is only about 3%, 2% to 3% of our revenue, but we did see display impact us in the Citysearch and Evite businesses which were in the immediate segment as you know, and we were down 37% in display year-over-year. And we do not obviously see that kind of impact. As I said, our Search businesses were down low double-digits if you adjust to that one business we got out of a year ago.

So there is no question Search is holding up more strongly than display at least for us, although obviously still impacted.

Jennifer Watson - Goldman Sachs

Thank you.

Operator

Thank you. Our next question comes from the line of Ross Sandler of RBC Capital Markets. Your line is open.

Ross Sandler - RBC Capital Markets

Hi. Guys just two questions. First, can you state the metrics question out of the way? Where do you think they are going (ph) to RPQ and CPC trends across the search businesses?

And then second; on the margin, the Media & Advertising margins came in much better than expected. Was that driven by some of the structures you're talking about in terms of a pick up has cone web (ph) or was there something else there that contributed? And how do you think about margins in that segment as we look into the next few quarters of '09?

And then the same thing on ServiceMagic, and clearly we're having an impact from the economy on lower revenue per request, but do you expect to see margins kind of stabilize its level or should it pick up as we move throughout '09? Thanks.

Barry Diller

Okay. Let me take these in order. I think on CPCs, we operate a number of search properties as you know and we are seeing and I think we were through the first quarter and really through till today, anywhere down kind of five to 20% year-on-year. And that's a wide range because it really depends on the property, a property like Pronto which relied heavily on commercial shopping terms, we're CPC year-over-year declines in the 20, even above 20 sometimes.

In other businesses, other search properties we have, it's closer to five but it is down across the board and I'd say April is the same as Q1 which is not good, not really better, not really worse, just continuing to show those sorts of decline.

In terms of long-term margins in the Media & Advertising segment, these businesses continue to have pretty strong operating leverage. We probably spend close to 30%, cost 30% in marketing, which include all sorts of online, offline pay per performance marketing, etcetera in these businesses. They don't have large kind of fixed cost structures generally other than in the Citysearch business obviously you have a big sales force.

But there is no question that I think longer term we can get back to 20% plus margins. But obviously you got to get that top line moving and we have got to see better comparisons and more benign environment, just not going to do it in this kind of environment.

Finally, on ServiceMagic, was there a specific question on ServiceMagic? I don't recall.

Ross Sandler - RBC Capital Markets

Just how you think about the margins in ServiceMagic through the economy having an impact on the revenue for request and...

Barry Diller

Yeah I say again there is nothing that changed secularly in that business. I think its competitive position is as strong or stronger. I think it will come out of this cycle stronger than it was going into it. The business did 21% margin last year on a business which was still growing quite strongly and at early stages is relevant.

So, I don't think there is any reason it can't get back to that and beyond when conditions are more favorable. That's not going to be in Q2, it probably won't be this year. But there is no reason it can't get back there.

Ross Sandler - RBC Capital Markets

Thank you.

Operator

Thank you. Our next question comes from the line of Jeetil Patel from Deutsche Bank. Your line is open.

Jeetil Patel - Deutsche Bank

Thank you. Two questions. First of all on the proprietary query trend side, it seems like April if you back out the Easter effect, you may be ... just can you comment on whether you're close to getting to flat, may be positive on the query trend on the proprietary side of the business as you look at April thus far?

And then secondly, I guess that you made a comment about Pronto being may be down 20% or more on CPCs and that's why it speaks more to retail keywords where the other properties are more non-retail oriented keywords or a mix of non-retail and retail. But I guess is there something you are doing inside monetization in terms of lowering ad coverage that is basically keeping your overall monetization lower, given that you're probably seeing better pricing if you look on an aggregate CPC basis because of the other properties performing better than Pronto.

I guess can you just comment on what you're doing outside of CPC to drive or kind of adjust from monetization in the business?

Barry Diller

On the half, yes. April is essentially flat so far.

Thomas McInerney

Yeah, the only thing I'd like add to that is in the two of our businesses, because our download's going into the period, here is a lag effect, right? So, your queries are a function on the Ask proper business of kind of just daily activity on the toolbar business is how many downloads you had over the trailing two, four, six months, and downloads were lower because of those competitive force as I sited earlier.

So, queries will take a bit of time to catch up in that category but we've seen improved lifetime values there as well. And I'm sorry Jeetil, I just -- I didn't understand the Pronto question.

Jeetil Patel - Deutsche Bank

I guess you're seeing greater pressure on low price keywords more retail oriented, so -- product oriented versus non-retail keywords seems to be holding up better in terms of pricing. I guess, are you doing something after you look at all the CPC to you kind of get to the aggregate RPQ out there taking down the ad coverage or kind of taking down ad lengths as a way to kind of manage to a certain RPQ number?

Thomas McInerney

Well I think, on data everybody's data is probably different. I'm not sure what Google's been on this point. Our data suggests that the year-over-year declines on the CPC, RPQ side in the search business are substantial and comparable for both commercial terms and non-commercial terms. And so, you're seeing in both places. There is a lot of things you can do to address monetization and we are pulling all the tricks, they are not enough to compensate for those broader trends.

So we think we've mitigated some of these year-over-year declines but they are all swamped by the general market conditions as well as by threshold issue, which we launched a new product today asked in Q4 last year and it's a much better search experience which causes people to use the algorithmic links more and the sponsored links lasts. And so, that -- those two factors, macro and that are just too big to overcome with the other things, although we're pointing at the leverage as best we can.

Jeetil Patel - Deutsche Bank

Thanks.

Barry Diller

Thank you, next question?

Operator

Thanks, your next question comes from the line of Justin Post of Merrill Lynch. Your line is open.

Justin Post - Banc of America-Merrill Lynch

Thanks. A couple of questions. Barry you did buy some stock back in the quarter, I guess you cannot talk about forward but what prompted you to do that? Tom maybe you could talk about why this is total number of shares increased during the quarter? And then on the outside and maybe you could talk about the cost benefit of the new NASCAR deal and is that helping your overall query trends? Thanks.

Barry Diller

Stock, we've always said we are opportunistic. We saw there was an opportunity so we bought some. We don't obviously talk about it beyond that, but yes it was change for us but we're there because we thought it was a good investment.

Thomas McInerney

The share change reflects the fact that they were just under 12 million warrants exercised into shares which were right before they expired. We talked about that on the last call for $30 a share there was nothing we could do about it. We couldn't force any kind of ... we had had take the cash for the terms of the agreement. So that added 11 million, 12 million to the share account and then netting against that was the buyback shares we did.

There is no other big of tranch of warrants, these are very old warrants from an old deal. There is nothing else that's closed in the money that that would be eminent in that regard.

As far as NASCAR is concerned, I think it's definitely had some benefits. We ... you can't really cost evaluate it probably for another few months to determine whether it will essentially be cost positive. It has of course gained to some queries. But we're going to in the next 90 days, open up two more vertical areas that we think will bring us queries. We got a lot of initiatives to do exactly that. And as I said, the next two will come out over the next 90 days.

Justin Post - Banc of America-Merrill Lynch

Okay. Thank you.

Barry Diller

Next question please.

Operator

Thank you. Our next question comes from the line of Mark Mahaney of Citi. Your line is open. Sir your line is open.

Mark Mahaney - Citigroup

Can you hear me now? I apologize about that. Tom I want to ask about the Match Europe contribution or a takeaway in second half of this year, based on those numbers you gave out earlier, is it around 25 million in quarterly revenue and around four million in quarterly OIBA we should about is the adjustment post the sale of that asset?

Thomas McInerney

It was yeah I think a slight mix ... call it 20ish million revenue. I think we'll see a third of that impact in Q2 because it will close in early June. So, it'll have a six or seven point probably impact on Q2 revenue just because of the past quarter effect and than 20ish million in Qs three and four. And the business was generally inline with profits of the business overall, slightly lower margin. I think it was up 30 million of OIBA for the full year last year and you can assume flattish to this year. So you're loosing a couple of million dollars to two or three million a quarter.

Mark Mahaney - Citigroup

And then in the emerging businesses segment, you have a lot of businesses in there, when you think about...

Thomas McInerney

Now when we did last quarter and less than we did the quarter before Mark, but yes do have some.

Mark Mahaney - Citigroup

Yes and how should ... are there particular ones in there that you want to put a stake in the ground and say these will be core to IAC in the future and once that seem less core, any hints you want to give us as to which of those whether if the trend continues and you continue to shed which ones will be shed?

Barry Diller

I think it's inappropriate for us to do it with a sense we haven't informed the people involved. It's certainly not appropriate to involve others or to inform others. I do think that you can look to see that we will continue to lesson the number and probably lesson the investment in merging businesses. There will be a few that I think are going to emerge to be core but look for options the next quarters to do what we have done in the last few quarters which is to continue to refine and continue to invest only in those things we think can be core could be large businesses for us, but specifics are inappropriate.

Mark Mahaney - Citigroup

Thank you, Barry. Thank you, Tom.

Barry Diller

You're welcome. Next question.

Operator

Thank you. Our next question comes from the line of Jim Friedland of Cowen & Company, your line is open

Jim Friedland - Cowen & Company

Thanks. First question on Match, if you pull out the one-time charge for the Meetic deck or Meetic deal expense, its look like labor margins were up over three percentage points on a year-over-year basis and was wondering were there any kind of one-time benefits in the quarter or some sort of marketing dollar shifts that we should be thinking about or are you just gaining more leverage there?

And secondly, you talked a lot about successful iPhone downloads; things like dictionary.com, is there any kind of a meaningful monetization business plan there? Could that actually turn into a revenue stream or is it just building used to the brand or awareness of the brand? Thanks.

Barry Diller

One the ... the short answer is no. There were no unusual benefiting items and we've always said with Match, the strategy is not to drive margins but we do think there will be opportunities as the brands grow in their scale and leverage and those good things. And we just saw a real good marketing efficiency and registration to subscription conversion, you pay to get people to the side and if you can convert a slightly higher percentage, you see margin benefits to all day long. So, nothing unusual at one-time, just a good quarter and a good execution.

On mobile, I don't think anybody knows yet. There are of course we see the statistics that show that downloadable apps that are paid for or they're on a subscription basis or very robust. There is an awful lot of activity there, doesn't relate to huge amount of income yet, but there is expect for Apple ... but there is a lot of paid activity. And so, I think that it's hopeful. I mean this isn't there yet and it does certainly for Urbanspoon which I think we're announcing that we bought today, which is just a great application Urbanspoon.

It is been all over the iPhone. It has huge uptake. It's a 4.2 million iPhone downloads, up huge, I mean that's really ridiculous.

Anyway, we just purchased that as part of our Citysearch network and Dictionary just started to zooming. I think we can't tell yet whether it's going to be advertising base and/or a subscription base no, what we the world would like of course is to have to a revenue streams on these products and particularly two of revenue streams are going to be increasingly necessary for I think any content site. And certainly a content site that is not just an aggregate of the content site that actually makes content, is not going to be I think survive or I shouldn't say survive.

It's not going to be profit contributor until you get to revenue streams and mobile because of the billing nature, because the practices etcetera, is potentially a gateway to that. I gave you a longer answer than you wanted but that is our thinking on mobile.

Thomas McInerney

I would just add that, on the subscription side we are already seeing Match.com generate real revenue. We don't disclose the specifics but the subscription product is an add on product and then our local businesses, mobile is a key distribution point for both Citysearch and ServiceMagic and merchants will clearly pay for leads generated via mobile app. So we are in the right part of the market assuming that's the way it develops that you'd expect.

Jim Friedland - Cowen & Company

Hey, great and thank you.

Barry Diller

Next question please.

Operator

Thank you. Our next question comes from the line of Emran Khan of JP Morgan, your line is open.

Unidentified Analyst

Hi. This is Bridgette (ph) in for Emran. On the Urbanspoon, what is the monetization model right now and specifically what synergies do you see with Citysearch? And then as a follow up to that, I think you've mentioned before that you see smaller acquisitions such as Urbanspoon being more of your strategy than large acquisitions; do you continue to think that way? Thank you.

Barry Diller

Yup. We definitely think that the one area, not one area, but the area we're assured of investing and when we think there is value there, is behind or as part of the product services that we now offer. If we can increase our competition, if we can bolt on, that is a very good strategy for us. We're going to continue to do it. It does not, at least at this stage, can't see where it will take large amounts of capital, but certainly Urbanspoon was not a large capital acquisition.

Thomas McInerney

And in terms monetization, what we do at ServiceMagic and Citysearch and its simplest terms is we sell leads. The exact pricing mechanisms and the way they're bundled tracked on what's a very (ph), but in general we sell X numbers of leads for Y dollars a month and there is no reason those leads can't be ... in fact they are today and Urbanspoon will just be an additional outlet for this. There is no reason those leads can't be driven through mobile devices.

So ultimately, all our local businesses are going to be pulling in merchant spend from a variety of places and a variety of categories and then distributing that spend driving traffic from both our own properties as well as partner properties. And in the case of Urbanspoon, we just thought it was such a great property that they a distribution point when we choose to own as opposed to partner but we'll do both.

Unidentified Analyst

Great, thanks.

Barry Diller

Next question please.

Operator

Thank you. Our next question comes from the line of Doug Anmuth of Barclays Capital. Your line is open.

Unidentified Analyst

Hi, this is actually Ron Jesse (ph) calling in for Doug and a quick question on Match and the recent Meetic transaction. We're wondering if there is a potential of match to being acquire in the U.S. I believe Yahoo! has said in the past of setting some of the non-core core assets potentially as there is something with the Yahoo! Personal.

And a quick clarification I believe it was mentioned that Search was essentially flat thus far in April, I'm wondering if that's a year-over-year? Thank you.

Barry Diller

It is year-over-year, isn't that Tom?

Thomas McInerney

Yeah. But I think you're referring to and I think the reference was to on volumes, so queries ad Ask.com specifically. So we have seen good traction ad Ask specifically on the query side. We're still seeing very negative trends year-over-year again inline with Q1 not better not worse on the monetization side and then there is that lag effect that's two of our side.

Unidentified Analyst

Great, thank you. That's helpful.

Barry Diller

On Match, we are very interested. We'd love to at Yahoo! Personal and I think there is some initial discussions about that, whether they're going away or not is of course enormously speculative. But I think, Yahoo! has said that it's not an absolute core asset their future and it is core to us personal, we're, the question is a leader in the category. And our Meetic association is I think in going to make us undisputed leader in Europe.

So, we're very aggressive behind Match and any possibilities for increasing its future money in the world.

Unidentified Analyst

Great, thank you very much.

Barry Diller

Next question.

Operator

Thank you. Our next question comes from the line of Jeffrey Lindsay of Stanford Bernstein. Your line is open.

Jeffrey Lindsay - Stanford Bernstein

Thank you. Yes, two questions. First one; is there more you can do to deploy your Ask.com development team up on the paid switch side. Because it seems like that's a talented team and as they develop the algorithm side, if you see undermining the page search side of the business, are you expected in what if you could agree to with Google for that, or is it possible that you could redeploy that team to focus more on the page to drive out the page fit side?

And then my second question is in Match.com, are you seeing the industry trends towards more of an unsupported business or is Match.com immune from that? Thank you.

Thomas McInerney

Yes, we've better than increasing we have a nice business on the paid fix (ph) side. We don't talk about it so much. But Ask-sponsored listing has been a very nice grow or it operates in a part of the market where Google and the other large players are not as focused. It still serves a minority of the sponsored listings on our own search properties but it's up to probably about 4% or something like that.

And our Google deal does not prohibit that. So, we've long said that we view our participation in the paid search site in the sponsored listings business is opportunistic. We don't think and have a desire to try and compete with the larger players. But we think there is very good money to be made and we'll keep doing that.

On Match, Match is a paid service. It will always be I believe a paid service. It is with there to some new offerings to the customer little bit of traction on a great deal. I said more in the previous paging area, whatever you take to mean by that and I don't mean in that to be paid list version. But the overwhelming world of personals is on the subscription paid side, I think it'll continue.

Jeffrey Lindsay - Stanford Bernstein

Thank you.

Barry Diller

Next question.

Operator

Thank you. Our next question comes from the line of Jeff Shelton of Natexis. Your line is open.

Jeffrey Shelton - Natexis Bleichroeder Inc.

Thanks. Barry you've commented from a couple of quarters of there is been a lot of compelling places to put your cash. Have you seen any movement on asking prices or it seems to be that they are is still too high for your taste?

Barry Diller

I've seen no movement.

Jeffrey Shelton - Natexis Bleichroeder Inc.

No movement. Do you have any fears that we've hit the bottom and that perhaps you may miss it?

Barry Diller

I don't know. I would probably be the only person in the world to say that I'm fearful if this economic period is over. Unfortunately, on whatever standpoint you said, I do not think it is over. I think we have a lot more to come and I particularly think in a lot of sectors that they are going to affect prices for the future.

I still think... I think there in many, many, many things we look at, the prices are irrational primarily because they are private market prices of people sitting around a room agreeing what their value is based upon nothing other than hopes and dreams. I think that comes to reality sometime in the near future, but I can predict one.

Jeffrey Shelton - Natexis Bleichroeder Inc.

And if I could re-ask a question that was asked earlier, you've been acquiring a lot of smaller assets, would you consider something in the 500 million or $1 billion dollar range? Is that possibly on the plate of things to do?

Barry Diller

It would be on a plate, but I mean yes, I mean on the plate. Here is the plate. There's nothing on it. And the problem is, things that are key to what we do, add-ons, bolt-ons, et cetera, there is the ability to rationally acquire. When you get up into the nine figures, it's ... there just haven't been opportunity. I wouldn't rule out on acquisition actually of any size but I'm not particularly optimistic that we're going to find one. And I am certainly not going to simply ... we're not going to perpetuate in the sense what IAC did for the first 10 years of life, which is open up sector after sector acquisitions after acquisitions.

We did that, we got up to a very large size and then we started spinning them out. I don't think we're going to start that cycle again. I don't think that's in the interest of this company. So, while I can't say what we'll do obviously other than invest in the businesses we have, because we believe they are worthy of investment, relatively small scale. We are open but I'm actually not optimistic about being able sensibly spend these enormously large amount of cash that we have, could change on a dime, but there it is at the moment.

Jeffrey Shelton - Natexis Bleichroeder Inc.

Thank you.

Barry Diller

You're welcome. Next question please.

Operator

Thank you. Our next question comes from the line of Gene Munster of Piper Jaffray. Your line is open.

Gene Munster - Piper Jaffray

Hey good morning and just a follow for the Match question as far as the customers ads were substantial in the quarter, was that related to any sort of increased marketing spend, their microenvironments...

Barry Diller

No.

Gene Munster - Piper Jaffray

And do you think that that trend is going to continue?

Barry Diller

No, it wasn't ... it means, it was business as usual for Match.

Thomas McInerney

Got it. And just good conversion improvements, good marketing efficiency which variety of kind of plumbing work, you can speculate and its fun to speculate as the weak macro environment help the business to a degree because people are looking for love and may be there is some of that. But there is no big one factor to point to.

Barry Diller

(inaudible)

Thomas McInerney

We have said or are being I think now for almost 10 years that this is a category which is still under-penetrated relative to its addressable market. Match had seven million active registrants in the last six months. It still only has a million and that just the domestic figure by the way. So there is still remains opportunity and if the business has for 10 years and probably will continue to grow and fits and start as it figures our product wrinkles and marketing efficiency and the like.

Barry Diller

Next question.

Operator

Thank you our final question comes from the line of Mark Mahaney of Citi. Your line is open.

Mark Mahaney - Citigroup

Great, just want to get back to the Match business, Barry, could you just remind us again rationale for the sale of the Europe, Match Europe business if would given your interest in Yahoo! Personals and the strength, relative strength of that business, what was it about that segment that you didn't want or was is it just the price of the offering was too attractive to pass up? Thank you.

Barry Diller

Well first of all, we didn't sell so to speak. I mean we converted into a larger entity. We own 27% I think of the French public company, the issue was that Meetic was stronger than Match outside the ... in Europe. Had done a stupendously good job in various Western European markets. Match had done okay, the synergy savings by putting these together were very, very large and what we decided to do really is take and convert our ownership into the ownership of a company that we thought could exploit the world better. We have the opportunity in the future to increase our ownership.

And the other principle reason for all of this is as that Chief Executive, Marc Simoncini of Meetic is just the kind of person that is going to grow that category. So we thought putting it together made more sense than competing on our nothing to do with our point of view in the United States relative to acquisitions, relative to anything else.

I again just reiterate one thing, we did no sell. We sold into a larger entity that we think we're going to profit from over the years.

Mark Mahaney - Citigroup

Do you have the option to take a majority stake?

Barry Diller

No, we don't have the options of complicated process like we can fill you in on later. That is our certain to right to acquire one stock et cetera at certain moments down the road.

Mark Mahaney - Citigroup

Thank you very much Barry.

Barry Diller

You're welcome. Thank you all and we will see you at the next quarter.

Operator

Thank you. And this concludes today's conference call, you may now disconnect.

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