IAC Interactive Has Gone On Sale With Catalysts Looming
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Alpha Gen Capital • 10 Comments
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Samuel Harrison • 17 Comments
IAC/InterActiveCorp Doing A Lot Of Good Things With Vimeo
InterActive Is Slowing Down
Wed, May 4, 5:19 PM
Wed, May 4, 11:42 AM
- Match Group (MTCH +22.9%) is soaring after beating Q1 estimates and providing in-line full-year sales guidance, and taking parent InterActiveCorp (IAC +9.7%) along for the ride.
- On its earnings call, the Match.com/OkCupid/Tinder parent guided for 2016 dating revenue of $1.1B-$1.14B, and for non-dating revenue to rise slightly from a 2015 level of $112M. When combined, the figures are in-line with a 2016 revenue consensus of $1.23B. Adjusted EBITDA is expected to rise to $410M-$425M from 2015's $278.7M.
- Match, which along with IAC was hammered following its Q4 report, saw dating revenue (lifted by Tinder's growth and the PlentyOfFish acquisition) rise 24% Y/Y to $260.4M. Paid members rose 36% Y/Y to 5.1M, with Tinder topping 1M paid members.
- Average daily revenue per paid member (ARRPU) fell 10% Y/Y to $0.54, and non-dating revenue was roughly flat due to lower-than-expected SAT test prep course volume. Free cash flow rose to $68.5M from $35.6M a year ago.
- IAC's Q1 report arrives this afternoon.
- Match: Q1 results, earnings release
Tue, May 3, 5:35 PM
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Sun, Apr. 17, 8:56 PM
- With tomorrow's deadline arriving for bidders for core assets of Yahoo (NASDAQ:YHOO), the long-shot bid of Time Inc. (NYSE:TIME) won't be among them, as the company decided fixing the business was too big a task, The Wall Street Journal reports. (It would have also faced severe leveraging trying to swallow the business.)
- With a number of bidders bowing out as expected, Verizon (NYSE:VZ) is indeed a front-runner among the few firms moving forward. Aligning somewhat with a number of other media reports (and rumors), now bowing out for sure are Alphabet (GOOG, GOOGL), Comcast (NASDAQ:CMCSA), AT&T (NYSE:T) and IAC/InteractiveCorp (NASDAQ:IAC), the Journal says.
- It appears Verizon's biggest competition may come from private equity (Bain Capital, TPG, Advent International), reinforcing the strength of Verizon's bid. It was unclear whether KKR would stay in the bidding, and the Daily Mail (OTCPK:DMTGY) may still be in, but with P-E help.
- Now read Why Verizon Is The Clear Front-Runner To Buy Yahoo »
Wed, Feb. 3, 7:30 PM
- Shortly after Yahoo (NASDAQ:YHOO) confirmed it's exploring "additional strategic alternatives" while pushing ahead with a reverse spinoff of its core business, the FT reports Bain, TPG, and other P-E firms are weighing potential bids for core Yahoo. The paper adds AT&T (NYSE:T) and InterActiveCorp (NASDAQ:IAC) "are also believed to be examining the company."
- Many firms are expected to make full or partial bids for core Yahoo. CFO Ken Goldman: "A number of companies have said they want to look at us, and there are a number of private equity firms that are interested in looking at us. I’m not saying that we’ve received offers ... I’m saying parties have expressed interest in us. And what we’re saying is that we’ll be open [to] that.”
- Re/code's Kara Swisher reports Yahoo has hired well-known tech i-banker Frank Quattrone to help it explore options; Goldman Sachs and Morgan Stanley are already on the payroll. "It is clear to us that what is happening inside is very dysfunctional," says an unnamed major investor talking to Swisher.
- Meanwhile, with a sale effort and job cuts already expected, Yahoo fell below $28 in regular trading following its Q4 report and myriad of job cut, writedown, and strategic review announcements. Weak guidance may have weighed: Yahoo guided in its earnings slides (.pdf) for Q1 GAAP revenue of $1.05B-$1.09B and 2016 revenue of $4.4B-$4.6B, below consensus estimates of $1.14B and $4.78B.
2016 ex-TAC revenue guidance of $3.4B-$3.6B is below 2015 ex-TAC revenue of $4.09B, which itself was below 2014's $4.4B. Non-GAAP op. income is expected to drop to $150M-$250M from 2015's $342M and 2014's $755M.
- Also of note: 1) $230M of Yahoo's $4.46B goodwill writedown was related to the $1.1B Tumblr acquisition. On the earnings call (transcript), Yahoo disclosed Tumblr failed to hit the company's $100M 2015 revenue target. 2) Along with everything else, Yahoo has begun exploring the sale of "non-strategic assets" such as patents and real estate. It estimates such sales could yield $1B-$3B in cash by year's end.
- Prior Yahoo coverage
Wed, Feb. 3, 2:13 PM
- InterActiveCorp (IAC -12%) has fallen towards $45 after posting a Q4 miss. Subsidiary Match Group (MTCH -13.5%) had made new post-IPO lows - shares fell below $10 before bouncing a little - after missing Q4 revenue estimates and beating on EPS.
Match's Q4: Match's dating revenue, lifted by Tinder's growth and the PlentyofFish acquisition (closed in early Q4) rose 14% Y/Y to $241.5M. Total revenue, which also includes the Princeton Review, rose 12% to $267.6M.
Tinder and PlentyofFish helped paid members rise by 430K Q/Q and 1.06M Y/Y to 4.61M. However, average daily revenue per paying user (ARPPU) fell by $0.09 Y/Y to $0.53. Match attributes the decline to a "shift towards lower ARPPU (but also lower marketing spend) brands such as Tinder, PlentyOfFish and OkCupid."
2.9M paid members were in North America, and 1.7M elsewhere. For the whole of 2015, Match's free cash flow rose 19% Y/Y to $179.9M.
IAC's Q4: Aside from Match's sales miss, IAC's Q4 sales were hurt by a 13% Y/Y drop in Publishing segment revenue to $179.5M, and an 8% drop in Applications segment revenue to $179.2M. A 28% drop in "Ask & Other" revenue (comes from Ask.com, CityGrid, and ASKfm) weighed on Publishing, and a 31% drop in business partnerships revenue weighed on Applications.
Premium brand publishing revenue rose 14%, and consumer Applications revenue 6%. HomeAdvisor revenue rose 27% to $91.8M (fueled by 51% U.S. growth), and video revenue 13% to $66M. Other revenue rose 7% to $64.8M.
Free cash flow fell 22% Y/Y in 2015 to $285.3M. GAAP operating costs/expenses rose 19% to $854.2M.
- Separately, the NY Post reports IAC is preparing to make a fresh bid for HomeAdvisor rival Angie's List (ANGI +10.9%). Angie's, which has surged above $9.30 today, rejected an $8.75/share IAC offer in November.
- IAC: Q4 results, details, earnings release
- Match Group: Q4 results, earnings release
Tue, Feb. 2, 5:10 PM
- Here's a breakdown of IAC's revenue and Ebitda per business unit:
- Match Group $267.6M (IAC owns ~86% of Match Group).
- Applications $179.2M.
- Publishing $179.5M.
- HomeAdvisor $91.8M.
- Video $66.0M.
- Other $64.8M.
- Adjusted Ebitda:
- Match Group $99.3M.
- Publishing $22.7M.
- Applications $41.7M.
- HomeAdvisor $5.8M.
- Video -$1.4M.
- Other $7.4M.
- Earnings call: Wed. morning at 8:45 AM ET.
- Previously: IAC/InterActive misses by $0.18, misses on revenue (Feb. 2)
Tue, Feb. 2, 4:44 PM
- IAC/InterActive (NASDAQ:IAC): Q4 EPS of $0.75 misses by $0.18.
- Revenue of $848.7M (+2.2% Y/Y) misses by $16.79M.
Thu, Jan. 21, 8:52 AM
- InterActiveCorp (NASDAQ:IACI) is restructuring into six business units: Online dating property owner Match Group (recently went public), home services marketplace HomeAdvisor, a Video unit (contains Vimeo, DailyBurn, CollegeHumor, and other properties), a Publishing unit (contains About.com, Dictionary.com, The Daily Beast, and other properties), an Applications unit (includes desktop software provider SlimWare, iOS app developer Apalon, and IAC's "partner-facing" app business), and an Other segment featuring ShoeBuy and PriceRunner. (8-K filing)
- Barry Diller's company is also changing its symbol from IACI to IAC. CEO Joey Levin: "This year will see IAC focused on continuing its track record of accelerating growth in new markets, assembling strong companies, and backing the leaders who drive them."
- The shakeup comes ahead of IAC's Feb. 2 Q4 report. It also follows remarks from Publishing unit chief Doug Leeds indicating IAC is planning Web media-related acquisitions, and a (rejected) bid for HomeAdvisor rival Angie's List.
Dec. 23, 2015, 3:33 PM
- A source close to the matter tells Seeking Alpha major Angie’s List (ANGI -1.7%) shareholder TCS Capital could obtain four board seats as part of a settlement with the local services marketplace.
- According to the source, TCS founder Eric Semler would join the board, as would three “highly regarded” current and former Internet company CEOs. A settlement would likely feature a standstill agreement, and would remove the threat of a proxy battle for the four board seats up for election next year (out of a total of nine). TCS is said to be planning to publicly announce its board slate, should a settlement not be reached in the next few weeks.
- The source adds TCS, which had a 10.7% Angie’s List stake as of November, still considers a merger between Angie’s and InterActiveCorp.’s (IACI -0.1%) HomeAdvisor unit (with Angie’s issuing shares to IAC for HomeAdvisor) an optimal outcome, and would push the board to hire a bank to explore strategic options. The firm is also said to believe its director slate would add needed industry expertise to Angie’s board.
- Last month, TCS rejected an offer for a single board seat, and urged Angie’s board to “hire a financial advisor to pursue strategic alternatives,” including IAC’s $8.75/share ($512M) buyout offer, which Angie’s officially rejected on Nov. 17. Angie’s currently trades 2% above IAC’s offer price.
Dec. 22, 2015, 9:18 AM
- As previously announced, Match Group (NASDAQ:MTCH) chairman Greg Blatt will become the online dating leader's chairman and CEO, effective Dec. 31. Blatt replaces Sam Yagan, who will join the board as vice chairman.
- Princeton Review chief Mandy Ginsberg will become Match's North American chief, thus putting her in charge of Match.com, OkCupid, PlentyOfFish, and "overall North American expansion." Princeton Review CFO Kate Walker is the learning service provider's new CEO.
- Alexandre Lubot, CEO of European dating site Meetic, is now CEO of Match Group Europe, leaving him in charge of Meetic, Twoo, and other European brands.
- Also: 1) Match COO Navin Ramachandran is now CEO of Match Group Asia/Latin America, leaving him responsible for Pairs, Couples, ParPerfeito, and Match Asia. He'll remain COO. 2) Princeton Review chief product officer Shar Dubey is now president of Match Group North America. 3) Emerging Brands GM Hesam Hosseini is now GM of PlentyOfFish.
- Sean Rad will remain Tinder's CEO in spite of his recent PR gaffe, and Blatt the mobile dating app's chairman.
- InterActiveCorp (NASDAQ:IACI) owns ~86% of Match post-IPO. The company's Match stake is currently worth $2.9B.
Dec. 9, 2015, 12:41 PM
- With the Match Group IPO taken care of and having yielded ~$400M in proceeds, InterActiveCorp (IACI -1.4%) has created IAC Publishing, a unit that contains About.com, The Daily Beast, Dictionary.com, Investopedia, and other online media assets. Doug Leeds, formerly Ask.com's chief, is the division's CEO.
- IAC asserts its online media properties reach 100M+ U.S. monthly unique users, and that the restructuring will give the properties more flexibility to expand and tap each others' R&D and ad resources. Publishing will also contain "a labs division focused on accelerating growth for its portfolio of websites and incubating new digital publishing sites in emerging verticals."
- Leeds tells the WSJ making acquisitions "is 100% part" of Publishing's strategy. Sources talking with the WSJ, meanwhile, state IAC "would be interested in exploring a possible acquisition of core Internet properties."
- The WSJ recently called IAC one of the companies that would "likely explore a purchase" of Yahoo's core Internet assets if they were on sale. However, Yahoo stated today its board hasn't yet signed off on a sale effort.
Dec. 2, 2015, 1:44 PM
- At least three unnamed P-E firms have explored buying Yahoo's (YHOO +6.5%) core Internet business in recent months, the FT reports. No formal talks have been held.
- The paper joins the WSJ in reporting Yahoo's board is exploring the sale of the core business this week amid tax concerns regarding the planned Alibaba stake spinoff. The business, pressured by display ad share loss and tough search competition from Google/Bing, had 2014 revenue (ex-TAC) $4.4B and op. income of $755M. Thanks in part to the restructuring of the Microsoft search deal, Q3 revenue fell 8% Y/Y to $1B.
- Re/code, for its part, downplays the WSJ's report. Though it says Yahoo's board will mull the status of the Alibaba spinoff following pressure from Starboard Value to sell the core business instead, it adds the spinoff remains set for early January for the time being, and that a CEO has been selected.
- The site also states Yahoo, which was recently reported to have hired McKinsey to help decide which businesses to keep/shutter, plans to "unload a number of units and cut resources to others also remaining in place."
- Yahoo remains sharply higher in response to the WSJ's report. Shares are still down 29% YTD.
- Update: Sources tell the WSJ Verizon (NYSE:VZ) and InterActiveCorp (NASDAQ:IACI) are among the companies that would "likely explore a purchase" of core Yahoo. P-E firm TPG Capital has reportedly "looked at buying media properties within Yahoo."
Nov. 30, 2015, 2:56 PM
- Angie's List's (ANGI +0.3%) offer of a board seat "seems futile in light of the board's demand for onerous standstill provisions and its refusal to explore whether shareholder value can be maximized in a negotiated transaction," says TCS Capital Management's Eric Semler.
- An owner of 10.7% of ANGI, Semler warns against ignoring IAC/InterActive's (IACI -0.4%) $8.75 per share bid for the company in favor of a "risky bet" on an "unformed" growth plan.
- "As a longtime shareholder of ANGI even before it was a public company, I can assure you that this is not the first time the board and senior management have become prematurely and unduly excited about a new product and plan."
- Previously: Angie's List rejects IAC/InterActive bid (Nov. 17)
Nov. 19, 2015, 10:58 AM
- After pricing its 33.3M-share IPO at $12 (the low end of a $12-$14 range), Match Group (NASDAQ:MTCH) opened at $13.50 and is now at $13.10, up 9.2%.
- The dating site owner and Tinder parent is worth $3.14B, or ~3x trailing sales. InterActiveCorp (IACI -0.5%), which has an 86.1% post-IPO stake, is down slightly.
- Prior Match Group coverage
- Prospectus, IPO analysis
Nov. 18, 2015, 10:51 PM
- Amid a cooling tech IPO market, Match Group (Pending:MTCH) has priced its 33.3M-share offering at $12, the low end of a $12-$14 range. That spells a valuation of $2.9B, with parent InterActiveCorp's (NASDAQ:IACI) 206.7M-share (86.1%) stake worth $2.5B. Shares begin trading on Thursday.
- Match, the parent of Match.com, OkCupid, PlentyofFish, Tinder, and The Princeton Review, is raising $400M. Underwriters hold a 5M-share overallotment option.
- Ahead of the IPO, Tinder CEO Sean Rad provided a cringe-inducing interview to the London Evening Standard. Match went out of its way to publish an SEC filing stating the interview "was not approved or condoned by, and the content of the article was not reviewed by, the Company or any of its affiliates."
- Prior Match Group coverage
- Prospectus, IPO analysis
IAC/InterActiveCorp. is a 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... More
Industry: Internet Information Providers
Country: United States
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