People (IAC) Stock

All right. I think we'll get started here. My pleasure of having People Inc. this year at the conference, Neil Vogel, CEO.

Thank you for having us.

I have a brief bio. Hopefully, I don't embarrass you too much. But Neil Vogel, the CEO of People Inc., owner of People, America's largest publisher, holder of a significant minority stake in MGM Resorts and Turo, a leading car rental marketplace. In addition to serving as CEO, Mr. Vogel continues to lead the strategic direction and day-to-day operations of the People Inc. subsidiary, which under his leadership, has grown from what was IAC's acquisition of About.com to the largest digital and print publisher in the U.S., featuring 40-plus iconic brands.

So with that out of the way...

That's correct.

Great. Glad I got it right. Thanks for being part of the conference this year.

Thank you for having us.

I want to start big picture. Obviously, the company has been undergoing a pretty significant reorg over the last several months. And so -- but you've been part of this for a very long time. So for those investors that are getting reacquainted to the story, how would you frame People Inc.'s investment narrative and some of the reorg that's been going on?

Yes, I'll say -- I'll keep it simple because we'll probably get into more detail later. So we're really doing 3 things. We are focused on executing at a very high level at People Inc. And I think we've done a pretty good job as of late, 11 straight quarters of revenue growth, all kinds of things we talk about.

The second thing we're doing is focusing on the assets that matter most to us and investing behind our assets, which is People Inc. and which is MGM Grand, which we're very excited about. And obviously, there's a lot going on around there that we can maybe talk a little bit about.

And the third thing we're doing is we're taking a look at the rest of our portfolio and trying to rationalize the rest of the things, turn some things into cash, continue the integration and some saving of some corporate costs. And with all of it, we hopefully, once we're able to be buying back a bunch of shares, too.

So there should be -- there's a real clear path to value creation. It's executing People Inc., investing in the 2 big businesses we believe in, getting liquidity out of the rest of things we do, and just being opportunistic as we always have been.

Pretty significant shift away from the old IAC model. And so would you...

It is. I think it's definitely a little bit less of a holding company. But again, if you look at MGM and you look at People Inc., it continues the vision of what Barry likes, exceptional businesses in markets that are big and growing and exciting. And in the case of what we're doing now with a real focus on brands and real-life experiences, things that are hard to disintermediate in a world where everything is trying to disintermediate you.

Yes. That makes a lot of sense. I want to dig into some of those growth drivers. So you mentioned People as a subsidiary has shown really impressive growth. What have been sort of the key drivers of that growth? And how would you sort of frame the opportunity to continue that?

Well, the easiest way to understand People Inc. is you take a step back. And we -- 5 years ago, we put together what was Dotdash, which was our media business with Meredith, which was a combination of Time Inc. and Meredith. And at the time, we were very, very good at sort of like in media, the print to digital transition.

And this was a play on, let's get ourselves these iconic brands that Meredith owned, People, Food & Wine, Travel + Leisure, Southern Living, all these things. And let's take the expertise we've learned on the Internet and let's build great businesses.

And back then, all your traffic came from Google. We were very, very good at Google. And we kind of go to like the first phase of Internet media, which was print to digital transition. And then we very quickly, because we were very focused on Google, saw very early that Google was changing. And Google was beginning, it was even before AI, to send out less and less traffic. And we were like, well, this is going to be a problem.

So what we did is we focused and we very quietly invested in our own e-mails, TikTok, Instagram, YouTube. And because we have these wonderful brands, we had the power to build audiences in all these other places. So a year or 2 later, when AI, really commercial AI comes around and you're like, uh oh, we were -- we actually saw Sam Altman present ChatGPT about a month before the commercial launch. And I walked out of there with my CFO, and we just looked at each other like the world going forward is going to be different. Let's analyze the problems and the opportunities.

The problem is this is going to really accelerate the search disintermediation. It's a good thing we started doing these things, but we got to hit the gas on doing these new things because search is going to be very challenged. And there's going to be opportunities that we can talk about, of how to make our business better.

So what we were able to do is build all these new businesses because our brands are great. So what we call -- we went from sort of like the print era to the digital era, we're in what we now call the brand era. And the brand era is using the power of our brands and the ability that we have to do all of these things in all these different places and arenas to grow a business, and that's what we've done.

So the -- zooming out 5 years ago, our business was primarily a web business, 70-plus percent of the audience came from Google. Now, more than 40-plus percent to 43% of our business is not based on sessions. Only 20% of our web audience comes from Google, and we've grown 11 straight quarters.

So we've really managed to make this transition. And in many ways, we're out the other side. The Google Risk is out of the business. It's down to 20% of our just web audience, and we've built these really diverse audiences and really diverse revenue streams across some of the best brands in the world, and we're a very strong and healthy business where we sit right now.

That's great. I definitely want to touch on some of those non-session revenue streams and those opportunities going forward. But real quick on sort of search and the distribution landscape, how that's evolved. What have been some of the key channels for you outside of Google and outside of search that have been impactful for you?

So we look at our business in 2 ways. If you follow our earnings, there's sessions-based revenue and non-sessions-based revenue. Let's do the sessions first. It's easy. That is people come to the website and we sell ads or do some commerce or do something. That was 70% Google, now it's 20% Google.

That business in terms of volume in the last quarter was down 20-plus percent year-over-year, but revenue was flat because our brands are great, our ad execution is great. We're really good at that. That was going to be the stable part of our business.

The other part of our business is non-session-based revenue, the new things that you talked about that we refer to, that's growing 15% to 20% a quarter. And that is events, and it's all the things we're doing on social media across TikTok, Instagram, YouTube that is online video. We have now about 47 episodic shows that we run across different platforms, including something called The Intern and some of the biggest shows on the Internet we've created and we own and we're monetizing.

D/Cipher, some of the ad tech that allows us to use our incredible data to target ads around the web, and licensing, which for us is a 3-pronged thing, which for us, it's content licensing like Apple News and giving our content to other people.

Our content is exceptional. AI licensing, which I'm sure we'll talk about, which is OpenAI and Microsoft and Meta, as well as like real product licensing, like Better Homes & Gardens is one of, if not the biggest licensees inside of Walmart, and Southern Living is a very big licensee inside of Dillard's.

So this business is taking advantage of the power of our brands to touch people in new ways, whether it's an event, whether it's watching something on YouTube, it could be any number of things, but that business has real energy in it, and it is just new ways for our brands to connect to their audiences.

And I think the interesting thing is a lot of people -- this is not new to us. Like we've been doing this very quietly for a while. So when the world changed, we were ready. And we've got a lot of things wrong, but this is probably the thing we've done most right.

That's great. Maybe touch on a little bit in more detail some of those revenue opportunities on the non-session side and non-advertising side. So you talked about consumer-facing subscriptions in the past, obviously, live events and things like that.

So events are a big deal for us. We'll run 50 events. That's in that bucket over 50 events across all of our brands that we're really excited about. You just mentioned one other thing, subscriptions. We have launched 2, and we're launching a third major subscription efforts.

So subscriptions are new to us. We still have print magazines, about 11 million print subscribers. It's a smaller part of the business, but important. We've launched a subscription recipe product around something called MyRecipes, a 5 million member recipe locker business that we launched on the web. So we launched a value-added app that people can pay for.

We're about to launch something called PEOPLE VIP, a way to get more out of your relationship with People and get content early and get all kinds of stuff, and a super fan club for fans of Southern Living with big recipe lockers and all kinds of things.

Southern Living has this incredibly loyal active audience. So between events, between what we're doing on social, between what we're doing with video, between what we're doing with subscriptions, between with what we can do with D/Cipher, the opportunities are really, really broad, and it's a really big focus for us.

If you followed us on earnings, Barry calls these things inversion projects, taking the typical brand relationship we've had with people and inverting it. Like why can't we launch a sweet tea at Southern Living, which we're actually going to launch because we've been making it in our test kitchen for 50 years, and it's so good, we now want to sell it to people.

And we're doing all of these things because if you look at marketing, and we spend a lot of time looking at marketing, there are 3 things you need to do to market something. You have to have a list, you have to have an offer and you have to have some creative.

The offer and the creative, you can make. The lists are incredibly hard to find. That's why people have to buy media. But we have the list. Like that's what we do. We have millions -- we send out 3 billion or 4 billion e-mails a month just to people who want e-mails from us. And that's just the tip of the iceberg. So our ability to market these things we're really excited about.

That's great. What are some of the gating factors to launching some of those things? And what are the investment areas? Is it go-to-market and awareness? Is it more on the development side?

I think it's like anything, new things are hard. And we're at a place where -- one of the things our organization has done is we've navigated change really well. Like this -- we are an entirely different company than we were 2 years ago and a different company than we were 2 years before that. And I think we do one thing in particular that really anchors people and helps us do these things.

And new things are hard and expanding old things is hard and new events are hard, is with everything changing around us, we really focus people on our brands. Like the promise of People Magazine is the promise of People magazine, however it's delivered.

And if you look at People and you look at the woman who runs the editorial, Charlotte Triggs, she's amazing. People is -- ordinary people doing extraordinary things, extraordinary people doing ordinary things, focus on Royals, celebrity, gossips, beauty, style, whatever, whatever.

Her job is to figure out how that manifests itself across TikTok, Instagram, events, red carpets, you name it, the 15 things that we do. But the trick is the brand is constant. And when people are anchored in the brand, it makes it feel less stressful to do these new things because you always have this thing to fall back on.

So we're always saying to ourselves, make it nice, like make it nice. If you're doing a new thing, it's impossible to know something is going to work or not, but make something you want to use, throw an event you want to go to, make an app that you're willing to pay for. If you can do that, we're halfway home, and we have the privilege of having these incredible brands to work with, and that's like really fun.

So it's got to be fun. It's got to be fun. It's got to be brand-based, and you have to have people that embrace this stuff, and then you can solve these problems. Now every business I outlined before has opportunities and has problems and we can get super micro, but that'll be very boring. So I'll just keep it at the level where we were now.

I would think in a world of increasing AI and low-quality content and things like that, that the brand value and especially live events as well would...

So the unexpected thing of what is going on in the world, and we can talk a lot about AI, is the incredible expansion of crappy content and mediocre things created by and around AI has helped us immensely. So people -- if you're cooking dinner for your family on holiday, you want a food and wine or call it recipe.

If you're like redecorating your bathroom, you want that article on maybe Southern Living or maybe on Better Homes & Gardens. Like the brand promise of our brands has shined through, and you can see it in things like our ad rates. Like one of the things is we noticed, if you go back to our revenue, our simple, our session-based revenue, we're down more than 20% in sessions, but revenue is flat. That's simply because of ad rates because the content is great.

People are paying a premium for brands because they know it's real, brands like it and humans like it. So this -- there's been a true like flight to quality in the market, and we've seen a lot of it, and it's benefited us remarkably. And it's also going back to your last question, it's the thing -- it's the thread that runs through everything we're doing.

We make more content than anybody in our space by magnitudes. It is all made by people. Now we use AI to help processes. But like this human created -- when we make a recipe, you can watch the video, you can see the thing, you can read the comments, you can get all those. Like it's an incredible advantage we have. And we don't have an advantage in everything, but we have to lean in where we have advantages, and the humanity of what we do is a huge advantage.

Yes. That's great. I definitely want to touch on the advertising side of things. But just on that point, how do you balance the halo effect around the brands and increasing those consumer touch points and not extracting value, but monetizing those touch points with maintaining that level of brand quality, right, especially as you go into data licensing and content licensing partnerships.

We actually -- I actually think that's a false trade. Like the thing that makes us appealing for things like content licensing is the fact that our content is so good. The world doesn't need any more mediocre stuff. So let's talk about content licensing, right? And we do a lot of content licensing like we put content. We're a huge partner of Apple News and all these other -- like AOL and whoever, you name it.

But let's talk about it in the context of AI, which is what everybody wants to talk about, is our content is in great demand because we grew up with search, what we have content on is the most commercial stuff that people need. It's accurate, it's created, it's super high quality. And we know from crawling rates that we are among the most crawled websites in the world.

We are a top crawled by Google, by -- you name how it works. So the content is good. Now what we've been able to do is turn that into value. And part of how you turn that into value is you make it scarce. And we now have the ability to block this content for almost everyone. And what that does is that it has brought people to the table who are willing to pay for our content.

If you're making an AI model, call it just like a foundational model, you need 3 things. You need power, you need engineers in the model and you need inputs, where the inputs. We are incredibly important inputs to people because we are factually correct.

We're great for grounding. We're great for RAG. We make more new content every day than any other publisher. And whether it's what Kim Kardashian did or the latest diabetes thing that just came out yesterday or all these trending avocado recipes, we are what people need.

So we've been able to get deals done with the foundational models, which are very much sort of like all-you-can-eat deals. And increasingly, there's a lot of interest on pay-as-you-go models, like we have a deal with Microsoft and a couple of the smaller guys who are trying to put this together. But one of the most surprising things for us was when AI started, in quotes, or everyone saying, content is worthless, content is worthless.

All of the content in the world has been crawled and it has made our content incredibly valuable because the new stuff we make that is on these super commercial topics that is very accurate is incredibly valuable for both RAG and training. And in a consumer way, at least, AI is going to be search replacement, we're in the exact right spot. We're the answer.

And so it's been a really interesting time for us to be focused, exactly what you said, like make it nice. Everything has got to be nice. Like the world doesn't need mediocre -- we're not mediocre. Our brands are premium. What we do is premium, and we're getting premium pricing.

Now we have a different issue with Google because they use one crawler for search and for their -- all their AI, the search AI, and we can't block them, so we don't have any leverage with them, but that's going to resolve itself in some way.

Yes, I was going to say there might be some updates on the regulatory front...

Yes. There's -- I mean, for those of you who don't know, Google uses one crawler for search and for AI. And if you opt out of it, you will lose search. And we're -- 20% of our web traffic is still from Google. So we can't really opt out of it yet. But they will come a point we can, but I don't want to get that way. I want to get to an economic deal with them or whether it's on their own or whether it's something forced them to, we'd like to get that solved.

I think you bring up a really interesting point. There's been this realization of where the value is in terms of these content licensing partnerships, whether it's for the back-end backlog for training purposes, but really most of the value going for that inference, that new type of content.

Yes. It's a really interesting thing. In the pre-AI era, our most valuable content is not what our most valuable content is now. Now it is in some cases. In health content, it was incredibly valuable then and it's incredibly valuable now. But things like longer-tail finance content was very -- was worth a lot prior, isn't worth much now, and where that Kim Kardashian, what she did last night article probably didn't have that much worth in a prior world, that's now incredibly valuable.

And doing these things at scale on topics that humans are interested in is very valuable, and doing it at high quality and doing it like we do where we make thousands of pieces of content a day, it could be a very valuable thing. We'll see.

Yes. That's great. I want to touch on the advertising industry and health of the advertising ecosystem. I think on your last call, you framed it as sort of a 6 out of 10, right? And that's really just driven by you're very diversified in terms of the industries that you touch. So maybe just frame for us the health of the advertising ecosystem and the outlook.

I mean that wasn't that long ago. I think we're still a 6 out of 10. And I think from a macro sense, it's -- okay, not great. Good enough for us to do our job, like good enough for us to like hit the goals we'd like to hit. It's very category by category and that it could be very week by week. The political environment is very unsettled.

So that's been bad for anything, inflation-related, gas price-related CPG, consumer, all the stuff in the supermarket is bad. Travel is bad for obvious reasons because of what's going on in all parts of the world, no one is going to or coming from.

But there's other things that are super strong for us, like health is super strong. So it's a very mixed bag. Being -- having diverse sources of revenue for us is really helpful. I don't -- I wish -- I'm giving the same answer now on this for 2 years. The advertising hates uncertainty, and we live in nothing but uncertainty.

I think people are getting increasingly comfortable in uncertainty and then something gets even more uncertain. So we'll see what happens. But I think heading into the back half of the year, I think as of right now, we're fine.

Can you talk to us -- fair enough. Can you talk a little bit about what's inside of your control, right? Some of the improvements you've been making to the underlying ad tech stack, the targeting and measurement improvements...

Yes. We -- it's a good frame. We frame a lot of like what is in our control and what is out of our control. The biggest in our control is how we use AI and new things to make our org better. And like the easiest thing I can say is in our control is we make 50% more content, which includes a whole more types of content than we did 2 years ago at the same aggregate cost of 2 years ago, and we're making -- and it's arguably a better quality. That is entirely us internalizing and using AI type advancements to help our people to give them tools to make things.

And the easiest example of like what's in your control is we make a lot of recipes. We have, whatever, 40 or 50 test kitchens in Birmingham, Alabama, and we have recipe developers who will make a new recipe for Food & Wine or for Serious Eats or for whatever it's for.

They used to take them a week to research, get the ingredients, test, make the recipe shoot. We can now do 2 or 3 in a week. And when you can do that, you're like, wow, that's a major improvement. And what we've done is we have not used that to -- well, then we only need 3, same number. We make more. That allows us to really have advantages over everybody else making content that we just have so much good high-quality content that in a very good way, we can flood the zone on things.

And so far, it's working. And we are punching way above our weight or maybe punching at our weight now of where our content can go and what it can do, whether it's episodic shows on TikTok and Instagram, whether it's things on YouTube or whether it's just having the nth recipe that somebody really wants. It all really matters.

That's a very in control thing in a world where like AI feels out of control. And when you combine that with like, we have brands, we're getting better, we're getting more efficient, then you have room to make some mistakes, and then you got a punch of chance to come out the other side in a way that is very productive.

That's great. What are some of the investments that you are making to help facilitate that? Is it licensing of third-party models to be able to facilitate that? Is it more internal?

A little bit. I think at this point for -- we're not like a bleeding-edge technology company. I think for us, it's more cultural than anything, right? Well, we can buy all the tokens we want from the model. But it's -- we made a decision that we weren't going to have a central [ AI czar ]. We have a team that helps facilitate and teach people things, but everybody and every group is responsible for AI in their world.

And even if you're not using it for work, like I'm burning up tokens because I made for my son this trading card storage grading, propose a trade, should we do it for all of his basketball and football cards that we've vibe coded, and it's amazing and really fun because we need people to get comfortable with this and in their day jobs.

And the things we are producing by people you would have never thought would produce this stuff is incredible, and it -- nothing revolutionized to the business, but every single one of those things moves you 1 inch down the field and 1 inch down the field. And it makes people not fear the future when they understand the future, and that's a very big part of what we're doing.

That's great. Going back a little bit to the advertising business. You talked a little bit about D/Cipher, but what does that do for you? And what's that outlook?

So D/Cipher is a product for those of you who don't know. It's an ad product we developed, we did it. The best products are products you develop for yourself. D/Cipher was how we target it across our own sites, which is very simply if somebody lands on a page on Real Simple, what color do I paint my kids bedroom, we know from where they go next, pretty much everything about them.

We know they just have a kid. We know that obviously correlates to buying kids things like formula, but you very likely need a new car, a new house, new credit card, all the things that come with having a new family. So what that allows you to do is when Fidelity is an advertiser, you can put Fidelity on that piece of contextual content and it performs incredibly well.

This is the crux and the underpinning of how we built our on-site ad business. What we learned was we can go around the open web. We can look at all the other URLs and I mean, well, what URL does that match to on our site? The performance there is going to look like -- it's not going to be as good because it's not branded, but it will be really good. Can we use our data to help people buy the rest of the web?

And that's what we did, and we launched this product called D/Cipher. It's a little bit more complex, but you basically get the idea. And what we do is we will go out to a third-party site, and we can buy their ad for $1, and then we can resell to somebody with our data on top for like $5, where it would cost $9 if they bought a like thing on our site, and it performs in a way that's interesting. It's not branded, but it really, really works.

We're a couple of years into this, and we're really learning the use cases for this. This is very strong for political advertising, right? We don't take political ads on our own sites. But what those guys need to spend a lot of money in a short period of time against very tight profiles, we can really do that.

It's very good for CTV. It's very good for health and pharma. And we're learning and it's growing, and it's a very exciting thing for us to do. It opens up the TAM of the web. The one headwind in that is, as we've talked about, the open web is not merely -- is not growing like it once was. It may not even be growing at all, but the sentiment around the open web isn't great.

So that's a bit of a headwind. But what we're finding is we're finding these veins of people where this is a real capability that can really help them. And we're very excited about it. It's a big piece of our growth going forward. It's a big piece of what we're doing. And very importantly, the org, we built a real piece of ad tech that really works, and it proved to a lot of people that we can do new things, and that was really important for us.

And how much of it is based on contextual advertising versus more first-party data and especially as you increase the touch points with your end...

So what we say is our contextual data is first-party data. It's just not data on a person. Like our data is we 100% know how that page performs and who is going there based on first-party data. We just don't need to know who it is.

So that has been -- that's actually helpful for certain advertisers like pharma that can't target individuals and do things like that. But it has been a big unlock for what we think is a pool of really incredible data.

That's great. I have to ask and maybe touch a third rail, but around MGM. I know you're somewhat limited in what you can say there, or more so limited in what you can say there. But you've outlined a potential to increase your investment there. But maybe just talk about what the outlook is.

I obviously can't say a whole lot. We -- Barry and we believe MGM is undervalued, as we've said. We believe that more control on our part can help unlock value. We're very optimistic. And as Barry said on our earnings call, like maybe we get above 51%. In the event we don't, we're going to get there. It's going to be more slowly. We're going to buy it more slowly.

But we're big fans of MGM. It's a core investment for us. It's along with the thesis of people. These are real-world things, real brands and real fans and are real assets, and it fits the profile of what we do and what we're good at.

Barry looks at and we all look at, we want great businesses in vibrant scaled industries that have real moats. And Vegas and MGM, they have that with their brands and their properties. We think we have it with our brands, too, and that's where we are, and we'll see.

Great. Similar with Turo...

You did a good job with the third.

That was great. Yes, I didn't mean the same as the third row, more just limited in what you can say. So I recognize that, not to put you on the spot. Similar with Turo, you have that minority stake as well. What's your path to realize value?

I started out before I got this job as a very happy Turo customer. Turo, a couple of really good quarters in a row, double-digit growth, free cash flow, NPS scores, people really like using it. I think Turo's challenge now is they just got to get more people to use it. We've said, and Barry has said publicly, we'd love it to go public as a way of getting liquid. We're obviously not in a control position. We can't force that, but we would encourage that.

But we're very happy with Turo. And I'd say the same thing about some of the other assets. We have Bailey Day and Daily Beast, they're performing. I think those 2 in particular, would probably be better in another home, but everything is performing right now. And we don't -- we're not in any rush to do anything that's not optimal. But we have said and we've been very clear that we'd like to monetize the balance of this portfolio and free up the cash and the capital.

How do you think about -- as you take a step back and look at the portfolio of assets that you have, and maybe what might fit into your broader sort of thesis around live events and premium users and things like that. So anything out there that might fit that bill, not from a specific name standpoint, but more about industries or use cases that you think about or...

I'll start with People Inc., and then we can talk about the whole thing. We've done a couple of very small acquisitions that are a little bit of a head nod to where we're going. And one is we bought a food influencer network at the end of last year called Feedfeed, which is strategically important, not big. And earlier this year, we bought something called Hot Luck, a Gen Z barbecue event. And these are real life, real branded things that can accentuate things we're already doing.

I think going forward, our deals would be a bit bigger. We're going to try and move the needle. We're not a small business. In terms of PPLI overall, we're going to continue to invest behind People Inc. We're going to continue to invest one way or another behind MGM. We're going to try and unlock value in these other assets.

We've got a whole bunch of corporate savings that are going to run through in the next year. And we're going to hopefully shrink the shareholder base over time while we can. Now, we can't now with MGM going on. And we think there is a ton of value creation ahead for us.

How would you frame those sort of investment priorities and the balancing of leaning into making some of those investments to drive growth versus maybe realizing some of those corporate overhead savings?

Corporate overhead is going to come from the consolidation of the changes we made where we went from IAC to PPLI. I think we're just going to be opportunistic like we always have. And we are going to deploy capital in the way that we think is the best value, buying back shares is the best value, great, doing something for People Inc., the publisher's best value, great. And if it's MGM, great. And we're going to -- there's a very good chance we do all 3.

That's great. Only a minute or 2 left, maybe bring it all home. Hopefully, you'll be part of the conference next year. So if we're sitting here in 12 months from now, what do you see as the biggest opportunity to execute on the next 12 months? And then as you look out more broadly, what are you most excited about the business?

Again, I'll do People Inc. -- the publisher first, and then I'll do the whole thing second. We are incredibly excited at the publishing business with the power of our brands. And we have -- we talk a lot about planting seeds and growing trees.

We have planted so many seeds. We should see a lot of these things start to sprout out next year, whether it's some of the subscription things we talked about, whether it's our events growing, whether it's our content business, whether it's more AI licensing deals, whatever it is, I think we feel really good and optimistic about where we're going.

For the larger entity, PPLI, I think we're just going to be really disciplined on our plan of value creation. And it's People Inc., MGM, buy back shares, monetize stakes. All of a sudden, there's a lot of very obvious value to people that can close what is a sum of the parts discount to the market value that we see now.

That's great. Very compelling. Well, thank you so much.

Thank you. It was really fun.

Please join me in thanking People for being part of the conference here. Thank you.

All right. We can get started here. So great. Let's get started. My name is Ron Josey. I lead Internet coverage here at Citi, and I'm excited to have with us Tim Quinn. Tim is the CFO of People formerly known as IAC, as everybody knows, who is here today. And obviously, with us here today, there's a lot going on at People as we all know, from portfolio simplification, transformation of operating assets and businesses, investments, the opportunities around AI and licensing, the list goes on and on.

So Tim, thanks for joining us. I've got some questions. Maybe I'll kick off with like 1 or 2 icebreakers here. You wake up in the morning, what's your favorite -- what's your daily driver for your list of all the publishing assets that you have to get the news flow or the insights that keep you going?

I usually start with People, People the magazine still just because it's easy and it's digestible. And then I love Food & Wine.

Food & Wine, yes.

I go to sort of I get the magazine, I consume it online, I consume it socially. And I've started to actually pay a little bit of attention and follow InStyle, too. So we'll talk about that today.

I was going to ask where do you get the news? Do you go -- you've said magazine clearly and online. Do you go anywhere else?

I mean I start with the People app.

People app. Okay. Yes, that's why...

It's most accessible. It's on my phone. It's on my kind of my new desktop. There's no desktop really anymore. And then Instagram. I'd say a lot of Instagram.

Well, thanks for that. Appreciate it. It's always good to understand how we use the product, right? That's key. So let's say, you've been in the role, the CFO role for a little over a month now, but you've been with Meredith/IAC for more than a decade, 12-plus years. Is that right?

Yes.

So over the last 6 months, I just wanted to get your thoughts as People Inc has evolved into what it is now. Would love to hear your thoughts on just this evolution of the business, the simplification journey, things along those lines? What are you focused on? What's People focused on now?

Right. So the business is People. PPLI is the ticker. It is the former IAC. So that's what most people still know it by, and we almost use it interchangeably still, hopefully, not forever. The reason we changed the name was part of the simplification strategy that you just talked about. What we set out to do more than a year ago in partnership with Chris, the former CFO and the team and Mark Schneider, who's here, is really start to like simplify the story so investors could get their head and hands around sort of what the future of the business is.

The core assets that we hold are People, the media business, which we're going to talk a lot about today, and MGM, a 26%, 27% stake in MGM. We made an offer to acquire 100% of MGM in June. That work is still ongoing. There's not going to be a ton we can talk about that here today. But putting that aside, what PPLI is today are those 2 core assets as well as holdings in Vivian nursing marketplace, The Daily Beast, Turo, which is a ridesharing application, and a handful of other assets.

Importantly, what we've tried to do and really embarked on doing is really simplifying the holdco structure. Presumably, part of the holdco structure is what has caused sort of the valuation disconnect in the marketplace. And so we've consolidated the corporate overhead structure of IAC and the People operating business and on a pro forma basis, will reduce corporate overhead to about $45 million by Q1 next year. So significant simplification, selling down of assets, reducing corporate overhead and focusing on our core businesses, which again, are People, the media business, and MGM.

Got it. That's a lot going on. You've got MGM. So -- and I know we're not going to get too much in here, but would love to hear just the latest on the proposal. I think Barry talked during earnings, just maybe the benefits of increasing the ownership or at least owning the asset. But any insights on timelines from here? I thought there was a few mentions on -- during earnings. We're now a few weeks post that.

Yes. I mean it's been about a month since earnings. We continue to work through it. We can't really talk a lot about it today. We really are in a sort of a no discussion zone on it other than to say we made this offer on June 1. We think the business is undervalued, MGM. We have high confidence in the management team in any and all cases, whether we continue in the current state or own majority of the business, the management team would continue to operate that business as it does today.

We think there's a lot of value to unlock there, and we're excited to either maintain our current position or ideally extend our position to kind of a majority ownership stake. But that's about all we can say today.

Okay. And sticking with the simplification sort of focus here, let's get that out of the way before we talk about the operating assets and what's even more exciting. Just I'd love your thoughts on how do you balance investing in the people, the buybacks, potentially more acquisitions or selling noncore assets and, of course, potential M&A. Just how do you balance the mandate here or at least the focus?

Yes. I mean the thing I want to highlight for folks and investors in particular, is the strength of the balance sheet as we sit here today. So -- and that will address some of your other questions. We have about $1.3 billion of cash combined between the holding company and the operating company. We sold a venture stake late Q2 into early Q3. That deal has closed. So that helped too. We have about $1.4 billion of debt. So we're on the verge of or soon we'll be sort of net debt neutral. We have -- so we have borrowing capacity. We have revolvers. And most importantly, we're generating cash.

We're generating cash at the operating company level. Over the last 12 months, we generated $175 million of free cash flow after debt and taxes. And we're selling noncore assets. We're not done doing that either. So again, while we like the businesses, we think there are better homes for Vivian and The Daily Beast. We are excited about and hope to see an IPO of Turo in the not-too-distant future. And the collection of all those assets would add hundreds of millions of dollars of incremental cash to the business. In addition, we have some litigation pending against Google around their ad tech monopoly. We think that can generate, we've said, 9 figures of cash.

So you take sort of a business that is net neutral today with a lot of borrowing capacity, you add all those sort of sources of cash as well as most importantly, the ongoing operating business and you have something that's very healthy that the market is valuing today at 0, right? And so that's the core investment thesis.

What we will do about it is continue to simplify, continue to reduce the corporate overhead wherever we can, sell noncore assets, buy back stock when we can, both in PPLI and, if this transaction weren't to go through, potentially continue to increase our stake in MGM, reduce our debt levels and potentially and hopefully do some M&A at the operating company level. So it really is a strong story, a strong cash flow story, a strong balance sheet story, gives us a lot of optionality, and we're excited about where we can take it. But most importantly, it's about executing on the core business.

So that's a good segue for the core business here. As we get through simplification, a lot of work to do, understood. But what's fascinating is People is in the middle of a digital transformation. We all see the changes going on from a search perspective, from a sessions perspective as well. And of course, SEO and AI. But just talk to us a little bit more about the approaches in the business to acquire traffic to offset some of these challenges from an SEO and AI perspective to should we expect sessions to sort of level out here?

Yes. So to set the table for folks, we -- over the last 20 years, we've had -- we've got 20 quality brands, 10 really strong brands, I would say. Primarily, the business was built off of the dot-com, the traditional digital business. That paradigm has changed about 3 years ago, 3.5, 4 years ago when AI was introduced. I think we were early to see those changes coming. We were pretty forthright about it with investors and internally with our management team that we had to recreate this business and really kind of rethink how we are going to make the business evolve and make our brands evolve. And the way to do that is to put the brands first.

We talk about it internally, and I think it's a nice framing for people externally. There was the magazine era of 25-plus years ago. There was a digital era of the last 20 years, and it's going to be the brand era is what we're embarking on now. Brand era really means putting our brands back where they belong in the forefront of the consciousness of our consumers and building businesses and revenue -- products and revenue models off of those brands. So we've been able to do that while withstanding the changes that AI has brought to the search ecosystem.

That means over the last 2 to 3 years, our traffic to our dot-coms from search have gone from, call it, 65% of our traffic source to about 21% this last year. That's a precipitous decline in traffic.

Over that same period of time, we've been able to grow revenue for 11 consecutive quarters and improve margins for most of those quarters. So we really feel like we're on to something. We're going to talk, I know a little bit today about where we go from here and where we're investing and how we're doing that. But that's sort of the core of the vision, and we're excited about where we sit today.

I like how you mentioned magazine era, the digital era, the brand era. And one of the things that I think is fascinating from a People perspective is the newer traffic sources. And you mentioned as we started out the conversation, magazine, online, the app, and of course, we have social media. Just talk to us when we are into -- we are now in the brand era, how do you build these brands? And maybe strategically, the importance of having a brand now more than ever, particularly as we're in an answer engine world.

Yes. The brands are the equity of this business, right? You can't create brands out of whole cloth sitting here today, it would be -- it's extremely expensive and highly risky. But yes, we have these brands that, in many cases, have lived in some cases, for over 100 years, and in most cases, over 50 years. So we're talking about People, Food & Wine, Travel + Leisure, Southern Living, Allrecipes and many others. So -- that's our core. That's our foundation on which we build.

We've started to reframe the discussion for investors to say we have session-based revenue streams and non-session-based revenue streams. Our session-based revenue streams are the, again, the dot-com era. That's about 56% of our business, and we've been able to roughly hold the line, give or take, on the session-based revenue streams.

The brand-led era really resides in the non-session-based revenue streams. So non-sessions in this context means everything from Apple News to licensing deals to TikTok and Instagram, sort of the breadth of places where consumers either read or interact with our brands. That 44% of our revenue that comes from non-session-based sources grew 19% in the first half of the year.

And so the future is the non-session-based part of the business. Each one of those brands has its own unique strategies, products and business models. So it makes it a little bit more complex, but there's a lot of commonality between what each of the brands are trying to do. And that is really going to be the future, and we'll talk a little bit more about sort of what some of those specific models are here as we go.

I mean I sort of want to dig into this now in terms of the non-session-based Apple News, licensing, TikTok, Instagram, you mentioned it, wherever people are. How do you -- every brand manages differently. But would it be fair to say because everybody, it seems, is on social media, there are Travel + Leisure aficionados. There are also People aficionados. There are also InStyle across all. So my question is, how do you leverage this? And how do you build it up across all these brands so you know maybe the secret sauce of one, you can maybe go to the next one?

Yes. That's a good question. So again, the brands -- today, we're making more content than we ever have at a lower per unit cost than we ever have, and that we're doing that using AI and tools and automation. Again, still 100% human created, right? We are then taking that content and we are customizing it or making it specifically for each -- each platform on which we distribute it. So content that goes to Apple News is separate, although it may have some commonality with the content that lives on YouTube or content that lives on TikTok or Instagram.

So you take Travel + Leisure, you mentioned as an example, again, making more content. That content is one of our best-performing brands across Apple News and distributed platforms. It has new YouTube series. It has a vibrant substack community, right? And so each one of those business or distribution approaches kind of puts that brand front and center in front of consumers and kind of perpetuates and continues to elevate that brand. What we have, which I think is unique is our sales force, right?

What our sales force allows us to do, our advertising and sponsorship sales force allows us to do is now take those audiences, package them up and sell them to advertisers. In the dot-com era, again, we own the ad ecosystem. We own the platform. We own where those ads were resided. We own the ad technology.

In the distributed network, we don't. And so what we've gotten really good at is taking advertisers who want to reach the Travel + Leisure audience and package an event with a social amplification with some -- potentially some magazine or some dot-com media, put that into a package that's highly performant for those advertisers. And that's what has allowed us to really accelerate this non-session-based revenue stream. Without the sales team, it would be virtually impossible to do.

And that was the revenue side that you said before, revenue growing non-session. Revenue...

Revenue -- yes, revenue, non-session-based revenue, 44% of revenue growing 20%. A significant portion of that, again, it's a combination of licensing and ad sales as ad sales in, I would call it, not necessarily nontraditional but new ways.

And I'm going to get to licensing and ad sales and the newer, call it, monetization efforts. But as we think about these newer -- as we're in the brand era and as you mentioned earlier, with Google accounting for 21% of, I think, People's traffic down from 65%. Talk to us about the debate internally of working with Google or blocking Google, if that's a fit. And when do you think we get to this sort of natural stabilization, understanding there's AI mode, AI summaries, AI over -- you know what I mean.

Yes. So the Google relationship is complicated, is complex. Historically, people know this, but I'll frame it this way. Google crawled the Internet, put results on a search page, blue links on a search page, built a giant ad business off of that model. And then the reciprocity was -- would refer traffic back to people like us or anybody else who provided content on the Internet. In the AI world, they don't do that any longer, right? And so they now take that content, crawl the content for AI purposes and then keep the user on the AI experience.

There is -- despite what others talk about or Google might say, there's virtually no traffic that comes from an AI experience back to the publisher or to any content creator. And so it puts us in this difficult position. It puts us -- it gives us the opportunity to create more durable models, which we just talked about, but it also puts us in a position where Google is now taking this content for free and using it to enrich its own business. So that gets to this question of, okay, where does it end? We don't know where traffic goes from here. I expect it will continue to decline. Our business models, our internal financial models are underwritten off of that expectation. So there's that.

We have some brands that are completely out the other side of it, meaning they are already -- they've lost 80% of their traffic. They're some of the most cited brands on AI overviews and yet they still get meaningful traffic from search. So we don't think it goes to 0. We think it's asymptotic to something. Call it, a year out, we would think we would get somewhere near there if the product experiences sort of persist as they do today.

So that's where we think it goes. The challenge then is what do we do about Google and its crawling of our content for AI overviews for their AI overviews, the Gemini product. And that's an ongoing debate that we're having internally. We think that it is unfair that Google continues to crawl our content without compensation back to us. Others pay us. OpenAI pays us, Meta pays us. So we have foundational model providers who recognize the bargain, yet Google does not. What makes Google unique is they formally did, right? And so that puts us in this interesting challenge, and we can go deeper into that if you want, but that's the debate that we're having now internally.

So maybe let's take that. I don't want to get into the debate too much on Google, but you do have the licensing deals that you mentioned with OpenAI and Meta. Is that the framework that you're using for others? And help us understand what is that framework?

The framework we're using is content is a critical raw material to AI full stop, as critical as electricity or compute or the models themselves. AI can't live without content. Yet for some reason, there's a position amongst some that they do not have to pay for that content or there should be no commercial relationship for the crawling of that content. We think that, that is wrong. We have good and valuable partners who are paying us, as I mentioned, OpenAI and Meta and others. And that's sort of the foundational model peer set.

We think the foundational model guys can pay folks for the crawling of their content and the learning that they're doing on that content. And then we see a second side of the marketplace evolving and developing that we're excited about, which is much more of a pay-per-use model, kind of a tolling model. It could be a CPM model, but something that says when you crawl our content and show our content in an AI overview or some sort of AI answer, then we and others who were the raw materials for that answer should be compensated for that answer.

There's a positive and I think growing movement to recognize that. It was precipitated by about a year ago, we and others started blocking crawlers and AI companies started to recognize that when content providers block them, especially at some scale, there's deterioration in the performance of the products. And so that's where we think it's going. Naturally, as a CFO, I am impatient. I want it to happen faster.

And the market?

And the market, yes, exactly. And so that's where we think it's going. So we think it's sort of bifurcated; 2 parts, foundational model guys can pay a license to kind of consume your content, train your content, build their giant businesses off your content and then pay-as-you-go for rights-cleared models, not dissimilar to maybe how the music and record industry evolved.

So it's an interesting comment on the pay-as-you-go. I think we understand on the learning to train the consumer side on the licensing. The pay-as-you-go is a little bit different and something that I guess Google hasn't ever done before, meaning that it's always sort of been sacred that the results are the results. They can still show the results, but now they have to...

Well, I think -- I would put Google in the category of foundational model. I would think of the pay-as-you-go guys is think about the application layer that's going to be built, is being built right now. I'm sure there's billions of dollars being invested in this application layer that's going to reside off of AI, both open and closed AI models, right? For people to build those applications, especially B2B applications or any real application, they should want and we think they will want rights-cleared content. They can't just take the content just like you can't -- it doesn't really -- that's not how the world works.

And so for rights-cleared content that, let's say, Bank of America or GEICO would want to use in their models or their applications rather, they should pay content providers for access to that content. That's what we think. We don't think it's got to be zillions of dollars, but on just a couple of pennies per transaction, it will add up very, very quickly, and it will keep the ecosystem vibrant, right? It will keep the content ecosystem vibrant. And that, as I said at the outset, the content ecosystem is a critical raw material to the overall health of the market.

And that's very different than surfacing results from People Inc. for able to brands.

Correct.

Got it. Let's talk a little bit. You talked to revenue per session growth accelerated in the quarter. I think we're growing 28%, if I'm not mistaken. And so a lot of that is just across digital ad targeting. I want to understand the driver that's driving that growth because we're driving the revenue, we need that session to sort of -- we're looking for sessions to stabilize for everything we just talked about. Would love more thoughts on how is that happening?

Yes. I mean, increasingly, revenue per session is becoming a little bit bifurcated from the story, and that's because of the sort of session, non-session framework that I outlined before. If sessions are going down and yet you're continuing to grow revenue, definitely your revenue per session is going up. How are we growing revenue becomes the more important question. And we're growing revenue by growing this non-session-based revenue. So let's just unpack that a little bit.

Non-session-based revenue, the fastest-growing biggest contributors to that are content licenses, not AI licenses, but actually content licenses, distributed licenses where we distribute our content to Apple News, to Yahoo! and AOL, still to NewsBreak and people like that. Again, that comes back to the fact that we are making more high-quality content today than we ever have, and I think there's a bit of a flight to quality. So that's one big part of it.

The second part is events. We talked about sort of bringing the real life, the manifestation of our brands to advertising partners and consumers, then packaging those experiences in a way that benefits the advertiser, that amplifies the advertisers' messages.

We were going through an example this morning of Guinness 0 and their launching of the nonalcoholic product at one of our events, amplifying those events across all of our social channels, across their social channels, creating content for them, YouTube, all of that. That's the new model -- example of the new model. So we're excited about that. We're creating more social series, social video series, that's going to be a meaningful multimillion-dollar contributor to growth this year. We created a programming called The Intern, for example. You asked where do I consume my media and why InStyle, sort of the joke; I am not a natural InStyle consumer necessarily but The Intern is a very, very funny show that you can find on Instagram that's had, I think it's in this kind of 20th season, kind of 5 or 6 short episodes. Super popular, super popular with advertisers and has rejuvenated a brand that was -- used to be a big fat book of pictures 10 years ago, a thick book of pictures.

So those are all the non-session-based revenue streams that we're building today, and we think are the foundation for the future. And I think we're going to talk a little bit about sort of like conversion and where we go from here. But we continue to grow sort of in this mid-single digits, mid- to high single digits range despite the traffic constraints. And we think by kind of continuing to invest in these brands, we can get that back to sort of 10% growth, which is our sort of long-term goal and aspiration.

And to that conversion side, I think subscriptions are a part of the business as well. Brand partnerships, I think you just talked about -- Guinness 0 as example. The question we get is, as you expand the monetization set of the content assets you have, just how big is the nontraditional advertising approach? Or how do we think about subscriptions and the brand partnerships?

Yes. We think it can be meaningful. Again, it takes some time to build. I'll give you -- the example I'll give you today is we launched a product a year ago last June, a little over a year ago called MyRecipes. MyRecipes is a web experience -- formerly a web experience where you can store all your favorite recipes from across all of our collection of brands and more broadly.

That product has 5 million registered users today. So from next to nothing 14 months ago, has a highly engaged and active user base, a user base that is contributing more content to it every day. So there's real switching costs and last month or 3 weeks ago, we launched a MyRecipes app.

The MyRecipes app is meant to be an upgradable subscription model where you can take the MyRecipes experience, the sort of recipe saving experience. Now you can apply it to Instagram, TikTok, social. You can do meal planning, prep, other things. So it becomes kind of your recipe hub.

So the idea was to take an ad-supported model of the last year, grow the subscription base or the member base or the download base, the user base substantially quickly using 100% of our own internal assets and then migrate it to a paid application or a paid product. We can -- we see that analog and we see we can apply it in different areas. We're excited to do the same thing for People. I said I consume the People app experience on my phone as part of my sort of daily routine. Today, again, that's a free ad-supported product and we're excited to launch something that will be more of a subscription product later this year.

Another example, Southern Living Insider?

Yes, Southern Living Insider is another great example. Southern Living, one of our most popular brands. I mean, huge following in the South. What we did is, in that example, take a package basically a membership model where you can get access to historical content, a recipe vault, special issues, some swag because everyone loves some swag and create a membership model off of that. And we can see that, that sort of can evolve again over time.

So each one of these are seeds that we're planting. We think that they -- that they will be -- what they ultimately will be direct relationships with our consumers that's going to create a much more durable model for the future.

One thing we get questions on is D/Cipher overall. So we've been talking a lot about the brands, but let's sort of talk a little bit more about what D/Cipher is doing and really the intent-based platform, I think, that's underneath it.

Yes. D/Cipher is an ad targeting capability. It uses first-party data of ours. Again, we've always been -- our brands have always commanded a very significant premium in the marketplace because our advertising performs. Real content made by real humans, consumed by real humans and a respectful ad experience, usually very high intention users. What we thought we could do is take our first-party data, both our user data and our traffic data or our content consumption data and apply it across the broader web.

So you take an ecosystem that is definitionally contained today because of the declines in search traffic and say, well, I no longer have to be constrained by that. I can find for you, GEICO or Guinness in the example we used before, the same audiences off platform. And so that's an exciting sort of opportunity for us to extend, to take a constraint away of our business that does now exist in an AI world and unconstrained it.

And so we're out using, again, that valuable ad sales team to do that. We've had notable success so far in CTV and extending our capabilities to CTV, an area we wouldn't be in today. Political advertising, we expect and hope to have a strong quarter, strong next 60 days on the political advertising side. And that's an example of sort of taking a capability and applying it again. And that would be non-session-based revenue.

That was the next question as we think about sessions and where that's going. So we have about 4 minutes left. Is there any questions from the audience. We have one here. I don't know if there's a mic or mic is coming your way.

With regards to Mr. Barry Diller's shares, he has control when he dies. And what will be the policy that will govern value?

Barry's stake is largely held in trust with his family. So they will pass -- it will pass -- economically, it will pass to his heirs. Sorry, the second part of the question was?

What's going to happen? Barry is a great builder. But if you get MGM, the back end is going to sell at a phenomenal discount. So the question is, what is the policy for the shareholders of PPL to realize value as opposed to being trapped, who knows what Barry's successors want to do?

Yes. I think IAC has always been and PPLI incarnation has always been particularly clever, I think, as you know, in monetizing assets that don't naturally fit together on their own, right, creating structures or spins or what have you.

So we'll see what the future holds with MGM. It's a little hard to know right now. If the transaction were to come to pass, I have to envision and we all envision that it will be -- it will look something like IAC has done for the last 5 or 10 years. We will find the right home for each asset to maximize the value of each asset. For a period of time, that might mean cohabitating, so to speak, and over time, splitting. Ultimately, I think from a governance perspective, you rely on the Board of PPLI and the Board of MGM to make sure that that's -- we're doing what's in the best interest of our shareholders.

How much do you care -- from a financial perspective is this decision of whether the models can train on your data versus whether they can actually cite the data directly. Is that -- what is the financial implication of that decision? If they can train on it, but they can't like cite the view of a good critic that -- but they can train on the -- what critic look like, what critic -- right, like how much does that impact litigation and other financials?

Again, we think that the training is not that it has happened, it's not over, but it's happened in the large part, right, because -- and that's where we want to go get paid properly. We want fair restitution from the foundational model providers, right? So that's going to be the OpenAIs, the Geminis, the Anthropics, the Metas, [ the axis of the world ]. The citation model is a little bit more what I was saying before, where you say, if you're going to use our content to specifically answer a question or to be -- generally speaking, you say there's 3 to 6 citations per AI answer. If we are one of those 3 to 6, then we should get paid 1/3 or 1/6 or some derivative portion off of that answer.

Our sites, the collection of PPLI sites or People Inc. sites, are cited top 5 or 6 in the world based on all available metrics, and there's increasingly more metrics available for that for the citation. So we think we should be paid either or both from the foundational model guys or on a pay-as-you-go citation basis.

We're working very hard to make that a reality. Again, it takes time. There's a lot of disparate interest. Of course, no one wants to pay for something that they get for free today. That's where the blocking comes in. The more we can block, the more leverage we have. So we'll see how that all plays out.

Great. There's a quick one up here. I've got one wrap-up question, too. So we're coming to time.

Yes, quickly here. As you think about maximizing the value of each asset and structurally profitability across the brands, what's People's AI playbook to either automate certain functions or adaptational?

Yes. We have done an amazing job of -- on the content side, specifically in this last year. That's where more content at a lower cost per unit than we ever had before, still human created. That's really like workflows, research, that type of thing. I think the next year or so, it's going to be a lot more about like RFP ingestion, response, targeting, ad targeting, using our data, consumer marketing, all of that.

So that's a little bit more of an optimistic view. I don't think it's all just that we all get automated to 0 or something as humans, but there's a lot more we can do and a lot of projects we run. We are now seeing unlike a year ago where it was theoretical, it is now practical. It's now happening.

And with that, maybe a quick wrap up here. You're 12 years into IAC Dotdash Meredith. What's -- talk to us about what gets you excited? What gets you out of bed every morning.

Yes. So it's reinventing ourselves every day, right? It's creating these durable models that we're talking about at the operating business. It's solving for the value disconnect at the parent company. It's working through the complexities that we just acknowledged around AI and our position in AI. It's getting educated about MGM, which is I started out doing some gaming investment banking 15 years ago with our CEO, Neil Vogel, almost 15 years ago, maybe 30 years ago. And now we're back full circle. I think it builds on -- that's where we started. And so yes, that's -- it's never dull. It's really exciting.

Well, that's great. It's a great way to end it. Thank you very much, Tim, for your time.

Thank you all.

Good morning, everyone, and thank you for joining us for the fireside chat with People Inc. Very excited to have Tim Quinn here, company's CFO. I've got a number of questions I'm going to ask Tim. To the extent I do not get your question, you can either put it in the chat below or feel free to e-mail me at [email protected]. So, Tim, thanks for spending time with us today.

So, before we get going, maybe just give us -- I think you may be new to some people who looked at the former IAC for a number of years, just give us some of your background and, kind of, how you, kind of, ended up in this role.

Yes. Thanks, Jason. It's great to be here with everybody. I've been with IAC, former IAC, Dotdash and Meredith, now People Inc., for going on 12 years now. So, I've been partnering with Neil, operating this business for a good long while. So, a lot of familiarity there, getting up to speed on the rest of the business, but obviously been very, very close with Chris and Mark and Barry and the team.

Prior to that, I spent more than a decade at American Express doing corporate development, investing, M&A integrations. There's a whole host of things there and once upon a time as an investment banker with a guy named Neil Vogel back in the '90s. So, that's actually how we know each other.

Got you. So let's start again just -- I think there are some newer investors to the story, just given some of the dynamics going on in particular in MGM, but just a quick overview. What is People Inc. today? What assets you own? And how should people think about the portfolio broadly?

Yes. Great. So, zooming out, People Incorporated is the former IAC, right? We own a significant interest -- minority interest in MGM. People, the operating asset as we'll call it today, that's the traditional, sort of, publisher media business and a handful of other assets, which we'll get into.

Our goal right now in this incarnation of People Incorporated is to simplify the overall structure -- ownership structure, and we've taken a couple of steps to do that: One, identified MGM and People -- the publisher, People Media business as our core assets. That's where we're going to allocate our capital both through share buyback, opportunistic M&A on the People side.

At the same time, we own 2 businesses, majority businesses called -- one called Vivian, one called The Daily Beast, both are performing well. We are looking for new homes for those. We won't -- we're not in any hurry to do something that's not economically rational, but we do think that they're probably a better home and a value play for us. And we own a minority interest in Turo, which is a ridesharing company that's also doing very well right now. So we feel pretty well positioned to continue to monetize non-core assets and redeploy those -- that money into the core.

Got you. So let's get the elephant out of the room before we get into the operating assets. So anybody just wants to hear it and then drop off, they're entitled to. So, as far as, like, holding company catalysts from here. So I guess, number one would be MGM, which on the most recent earnings call, Barry intimated to reach a resolution roughly soon. I don't know if some folks interpreted that in, like, 60 days, 90 days, et cetera. But you've got that. There's -- let's start with that and I can get to some of the other catalysts after.

Yes. I think what Barry said 60 days, we expect resolution. We -- on June 1, we put in an offer to buy out the rest of the MGM stake. We, and along with some other equity investors, would do that. That's working its way through that process, there's a special committee and all. We can't say much more about that other than we've been shareholders in MGM for 6 years. We like the management team.

I love the management team, like the assets, I think it's undervalued much like the People Incorporated story, the holding company story. And we saw an opportunity to take a bigger bite. Again, we'll see where that transaction goes. If it weren't to come to pass, then we'll go back to doing what we were doing, which is continuing to buy back stock in People Incorporated and opportunistically look to increase our position at MGM.

Right. Okay. And we will get back to People and catalysts later in the conversation. So let's get right on the main operating asset, People Inc., the former Dotdash. I could talk about what it was before Dotdash, but we're not going to do that to confuse people. So you guys have been trying to frame the discussion around how we grow the digital revenue faster than, kind of, like the mid-single digit to a breakdown of, like, sessions versus non-sessions revenue. So maybe just first start to explain what that means?

Yes. I'd say, like everyone in media these days, we are contending with the changes that AI has brought to the world. I think we've been pretty forthright in talking about it as long back as 2-plus years ago saying that the new world is going to look a lot different than the old world, search is being disintermediated by AI, and that's going to have an impact on the downstream traffic to people like us. We even called it Google Zero almost 2 years ago. We don't think it's going to 0, but that was, sort of, the internal rallying.

We're at 21% today. 21% of that...

We're at 21% today, down from 65% back, not too long ago. And so what that forced us to do is really recalibrate and think about our brands and put our brands back where they belong in the forefront and develop new strategies to monetize those brands and those audiences that those brands are unique in this, kind of, modern AI world, where it's still a human connection and a brand-led connection between our users and again, our assets. And so what we told Wall Street and have been telling Wall Street for the last few quarters is we, kind of, think about our digital business in 2 parts. We have, sort of, this -- we call session-based, so that's visitors to the dot-com, the session-based revenue stream is incurring and absorbing the headwinds from Google or from the decline in Google Search and continue to maintain revenue at about flat.

So that's about -- it was 57% this last quarter, and we were minus 1% in total revenue on that side of the house. The growth is coming from the other side of the house, what we call non-session-based revenue stream. So that includes everything from events to social series and social audiences to our licensing business.

It includes D/Cipher, our ad targeting capabilities, and that's where the vast majority of our investment is going. That -- I'm sorry, that 43% is growing about 20%. It grew 19% in the first half of the year. So the whole, sort of, recalibration around this audience disintermediation is, again, create direct relationships with consumers on that non-session-based category, that grouping of revenue streams and grow that, kind of, as fast as we can. As I said, that's where the vast majority of our investment is going.

So to the extent that, let's just say, the Google impact doesn't get worse relative to where it is today? Like, does that give you enough line of sight to see how digital revenue can get back to double digit? Or that's still, like, unclear even though that is the long-term goal.

Well, that is our rallying cry, right? We've always been -- and we say around the business here, double-digits growth, everything else will take care of itself and double-digits growth. I always add with strong margins, we'll take care of everything else. Right now, we're in the mid- to high single digits range. That's what we've guided to this year. That's what that, kind of, 40%, growing 20% and the rest flat gets us. What our commitment and obligation to do is to continue to invest in that non-session-based revenue streams to bridge the gap. And I do think we can do that. I think that takes some time.

No one is more impatient than me when it comes to that, but these things do take some time to build. And again, I think what Neil said on the most recent call, we've been saying pretty consistently is we rolling out new initiatives every quarter, multiple new initiatives every quarter, that are meant to feed that, sort of, growth. So we think we can get there. I don't want to put a time frame on it yet, but definitely, everyone should hear that our goal is double-digits revenue growth on the digital side.

And, like, when I look at the model as far as like breaking down the components, like brand revenue is still the biggest revenue bucket there. I think you said in the earnings call that the ad market was, like, 6 out of 10 with pullbacks in food beverages and CPG. I mean, broadly this quarter pretty much outside of one company, ad tech, everyone saw -- seem like, kind of, healthy and kind of better-than-expected results. I mean, I guess, like, what do you need to like rate the end market like an 8 or 9 out of 10?

Yes. I like the framing on 6 out of 10 because we sit in, say, roughly, not exactly, but roughly 10 markets, right? We touch beauty and we touch media and streamers, and we touch auto and we touch health care and pharma, and we touch -- so we travel all these different categories. It's rare that everyone's growing in the same direction at the same time. That's what it take to get to 8, 9, 10 out of 10, like a ripping economy and, sort of, everyone is strong. As you said, there are pockets of real strength like genuine real strength, and there are pockets that are a little bit more lukewarm.

And the lukewarm categories are tending to either have exposure to inflation-sensitive categories, maybe the lower-end consumer or structural headwinds. And so that's -- an example of that is the food and bev industry, right? Like in the "old days" of the magazine era, some of the biggest advertisers were industrial food. I don't want to name names because they are our valued clients.

Household names.

Yes. Household names. Yes, household names that we all ate their cereal every morning as kids. And those businesses are struggling right now. They're going through their own transition. And so, as a result, that ad budgets are not as robust as they were plus inflation, plus, plus, plus. So that's, sort of, how we get to the 6 out of 10. It is more healthy than not. It is certainly strong enough for us to deliver on the year that we've, sort of, committed to the investors and to The Street. Could be better, but we're happy with it.

I mean and then kind of maybe segue and maybe like we're seeing this because we've heard like CPG is healthy, let's say, out of companies that maybe have, like, a more performant type of like adding -- or it's not really brand, even though brand aligns on distinctions. But look, your performance marketing grew 13% in the quarter. I guess how much of this is also getting brands to think of you more on a performance basis in the way they just did in the past? In the past, it was, like, a -- page on a magazine, then a page -- a box on a web page, but the whole point of like you're bringing performance to the business and D/Cipher just getting these brands to look at you more the way they look at what are the kind of traditionally the performance digital platforms out there.

Yes, good question. We would consider ourselves, we're certainly upper funnel, mid-funnel for sure. We are highly performant for advertisers. I'm not suggesting that we are a Google search or something like that. That's true bottom of the funnel. But we offer a wide range of services to advertisers and we command a premium in the marketplace because our ads perform. And that's, sort of, like non-controversial and measurable, particularly in the programmatic ad markets where our inventory commands very significant premiums.

As it relates to performance marketing as a category on the face of our P&L, that is primarily our affiliate commerce business, which is super low end of -- low funnel. And that's basically where we do -- we test, rate and review products, I think Consumer Reports or Wirecutter and make recommendations to our users across all of our brands or across all of our primary brands.

That business has been a stalwart in terms of growth for years. It continues to perform really well. We've said publicly we sent over $1 billion at retail, well over $1 billion at retail to retailers, GMV. So we are valued partners to the Amazons of the world and the Nordstroms and the Wayfairs, and we partner with them now in new and kind of innovative ways even in the, sort of, face of what is declining search traffic to these -- to those content -- to that content to those assets.

So strong growth, deep partnerships measurable -- like actually measurable, so the highest performance marketing. We do expect that piece of the business to moderate and grow some in the back half of the year. Again, just incredible growth in the back half of last year. So one, the comp's harder, two, there's some things with like Prime Day was in Q3 last year, it straddled Q2 and Q3 this year. So you should expect some moderation in growth there. But I would say that the relationships with retailers have never been stronger or I think, and we're very valued and we value them, but we're very valued by the retailers.

Right? It's almost like a way that -- and we talked about this, kind of, the way that you, kind of, formally, kind of, segment the revenue isn't necessarily representative of actually, like, how this is like evolving, right, which is, like, kind of, getting to the sessions versus non-sessions, right, where, kind of, what a lot of people think of performance today is not actually the way you describe performance, right? You really have -- there's performance in brand, but it's like getting those brand advertisers to, kind of, like, engaged with more performance-oriented type of ad units, right?

Exactly right. Exactly right. I mean, again, there's super low funnel, and that's what this performance marketing business is. It used to have a large mortgage origination element under Investopedia and all that, that business is not as dynamic as it once was, but the consumer side is very strong and it points to that, sort of, the value of these audiences and the brands that we have.

So then, let's say, on licensing, that was very fast growth in the quarter, it was up 22%. You've got Apple News in there, there's syndication. The Meta partnership was signed at the end of last year. We'll get into Google in a second, but just like what's, I guess, still in the hopper as far as like future licensing deals? And I guess, repricing old deals higher, et cetera. What can you say there?

Okay. Let's just -- let's start with licensing because it is the fastest-growing piece of the P&L and get into that and then talk a little bit about AI as a, sort of, part B of it. We're making more content today than we've ever made at a lower per unit cost than we've ever had in the past. And it's also human created and brand on brand. That's accruing to our benefit in a lot of different places, but particularly in the licensing line. And so licensing can include everything from our distributed content across platforms like Apple News or even Yahoo! or AOL or NewsBreak and all these guys.

We're seeing strong, strong growth there because, again, I think there's a flight to quality content. We're making more of it. We have more brands than anyone else. And so we're seeing real growth there.

The second part of the business is product licensing. We talked -- I mentioned some before, but -- and the product licensing side, the biggest one of which is our Walmart relationship with Better Homes & Gardens, which has been many, many years standing or one of the largest, sort of, "private label" brands within the Walmart ecosystem. That's an important valuable partnership for us.

And then the third bucket, which is the newest bucket is the AI side of the licensing equation. For those who don't know the story, we have 2 deals with AI -- AI companies, AI foundational model companies, OpenAI and Meta at this point. We did not have deals with Google and Anthropic and the handful of the others, though we want them.

We think that our content and content in general, not just our content, our valuable inputs to these LLMs, to the AI companies as valuable as the models themselves or the compute on which they run. Without inputs, quality inputs, then there's no quality to the model. We started blocking AI crawlers recently, not -- almost a year ago now, so not that recently.

I really think that had a sea change in the industry a little bit. It starts to really get people to understand that point of view that I just laid out that, that content is critical. Without it, all of a sudden, the quality of the models deteriorate. And so we are optimistic. And so the way we see the world is that these AI deals will come in 2 parts.

There's the foundational model guys, and increasingly, that is, sort of, already consolidating to a handful of players. And then there will be applications built on those LLMs on the AI. We think that the application layer will be more of a pay-as-you-go, pay-per-use model for content providers, content creators where the application needs to go get specific information and bring it back to the application in which it is residing. And so we did do a deal with Microsoft around that late last year, and we see others coming. And so we basically see the AI universe forking into these 2 models or a foundational model, application layer, pay it -- all-you-can-eat, we call it on the foundational model, pay-as-you-go on the application layer.

Let's unpack that a little bit. So far, Anthropic is not paying anyone as far as we can tell. You could sue them, you're not. You are suing Google, but that relates more to the ad tech kind of trial where they were ruled monopoly. And you're -- but you're also in discussion with Google for this goes.

So maybe like, let's talk about the Google and then we can, kind of, talk about Anthropic. So just maybe remind everybody like what's going on with the Google lawsuit? And then like can you connect that at all to the comment that you've said, like, you could consider blocking Google, but the ramifications would be you lose out on the organic search, and they lose out on the AI because they have a consolidated scrape. So let's talk about Google and then we can go to after Anthropic.

Okay. So there's two totally distinct tracks on Google. There's an ad tech case. I just want to touch quickly on which is the government found that Google abused its market power to disadvantage the ad market over the last, call it, decade we and many others have sued or brought an action against Google. We expect that we were among the largest disadvantaged in the world because we had Time Inc. We had -- we -- our predecessors, Time Inc., Meredith, Dotdash among the biggest.

And so we think that, that's a very sizable claim that has already been proven by the government, and we're now talking like in 2027, we expect a sizable restitution for those damages. That's separate from the matter we're talking about now, which is AI and AI licenses and Google and Anthropic, but let's focus on Google have not cut deals, certainly with us. They've been sued by others, not us in this matter, including The New York Times. In the old world, search -- there's a benefit of the bargain.

We allow you, Google, to crawl our content and index our content and show it on the search page, build a gigantic ad business off of it, Google. And in return, reciprocity is we get traffic. In the AI world, that model is broken. Google and others are answering the question on the page, links are minimal, if ever, traffic back is de minimis. And so what we want and we have asked for is for Google to separate the search crawler from the AI crawler. Right now, they are commingled.

In a commingled world, we have no choice but to allow Google to continue to do what it does because as you said, the search traffic remains a lucrative part of our business. I don't think we will -- we would block the two of them if we had to -- actually have the option of blocking AI, the AI crawler, that is definitely something that we would consider. That's not an option today. There is talk of that coming due to some U.K. regulations that have come out. But we'll see. I'm a little bit skeptical that you'll really be able to ever separate the two.

All right. And so do you think that once -- are these tied at all that is Google waiting to resolve the antitrust suit before like it's completely [ connected ]?

No, I don't think so. I don't think so. I think, again, Google has New York Times, Penske, others have gone either after Google or OpenAI on these matters depending. And so there will be some -- there'll be a legal avenue and then we think there's a business avenue, but they're separate.

Got it. And our sense is like some of this is like connected, like obviously, Google has an OpenAI paid relationship with Reddit, like that means that expires March and April of next year. Reddit has publicly talked about, right, like wanting a lot more money or changing the policies, but it does seem like, again, this is all like precedent setting. So like would you generally view that, like, we will somehow end up in some, kind of, system where publishers to the extent we're broadly thinking about this group as publishers, digital publishers, there will be some, kind of, standard monetization at some point, like not where there's, I don't know, like averages that people are paid based on the scale that they -- of the content they have.

We would think so. That is certainly what we are angling for through legislative, through legal and through business channels. We, People Inc., the collection of our brands are among the top 5 or 6 most cited content providers in AI in both Gemini and OpenAI. The top being YouTube, not shockingly, Wikipedia, Reddit, as you mentioned, a few others. So we are in that category and the collective -- the New York Times, the collective of all of us, including Reddit, I believe we should be paid for that in some fashion. And so it will be interesting to see how it all develops, but that's certainly our point of view.

Got you. I mean, is there anything to say on Anthropic just while we're on it?

No. Not much. And that's philosophical -- I think it's still philosophical over there.

Yes. A very large class action at some point. But these lawsuits are not inexpensive and cash is king as Barry likes to say, right? Okay. So referring into margin just on the new initiatives, could any -- you know, I was going to say like Southern Living Insiders, People Premium bundle, [ Hot Lock ], The Netflix deal, can any of these like move the needle for next year in aggregate? Or like, yes, you, kind of, have to keep innovating, but like don't -- we shouldn't think about this from a model standpoint.

Well, I think in the aggregate, they can. I've said in the past that I think for the Southern Living is one of our best brands has magazine element, it has an on-site dot-com digital element, it has a social element. And what we're trying to do is take the best of all of those things, bundle it into a membership program. For Southern Living as a brand, the economics of that program will be meaningful, meaning it will take them from whatever growth to 20% growth, right? They're going to get good solid growth out of that.

If we can replicate that model 4 or 5 times, that's enough to be very meaningful in the aggregate People Inc. And so that is what we mean by when we say brand-led, brand era, right? Neil says we went from the magazine era to the dot-com era to the brand era.

The brand era is these brands now have to go find these direct connections and relationships and business models off of them. And we've got a whole -- you mentioned several -- we've got a whole list of them, a whole bunch more coming out. I don't think we're going to bat a 1,000, but I think in the aggregate, it's going to be meaningful. And we expect -- that's really the path you said earlier to getting back to double-digits growth. We're sitting here now in the, sort of, 6%, 7% range, we definitely believe that these projects collectively in the not-too-distant future will get us back to double digits.

So let's talk about margins. We did see digital margins expand to 26% from 23%. I guess just, like, where do you think steady-state digital margins play out over time.

I think we can -- Yes, I think we can continue to grow margins faster than we grow revenue. We were particularly good at that in Q2. There's some, sort of, episodic reasons for that, that we don't think it's sustainable, but we do think for the year, we can deliver, kind of, 30% to 40% digital EBITDA margin expansion. And so that's growing margins definitionally. The reason Q2 was particularly strong was our licensing business was really strong in Q2.

We actually had a particularly good quarter on performance marketing, again, that is at high margins. And we've gotten really good at redeploying our assets and getting more streamlined. I said before, we are making more content than ever at a lower cost per unit. We're using AI to do a lot of that, while the humans are still creating the content itself.

And so what we're doing is taking the efficiencies that we're generating through AI and other means and redeploying those dollars against these new growth initiatives. And so the timing maybe didn't line up perfectly for Q2, and it worked to our favor. We think we'll invest a little bit more in these new initiatives in the back half, and we'll continue to deliver in that, sort of, 30-plus percent, a 300 basis point plus percent -- 30, sorry, incremental margins up 30% or higher, it's 300 in Q2.

And so I mean do you feel like you've gotten past this point of like companies deploying AI and kind of overusing tokens because it's, kind of, hard to understand. You feel like you have a good understanding of like the cost of now AI and guardrails around like people using the most expensive model or something that just isn't necessary?

Yes, I think that that's a good well said, and that's, sort of, where we are. There was -- like every -- probably every other CFO, there was a 2-week period where there was an alarm bells went off. I think the spend was getting a little wild, and we had to put better controls around it and did. And now, yes, we're using different models for different purposes and optimizing token use efficiently. And I think we've got our hands pretty well around it. It definitely -- and it's definitely going to be an important part and a growing part of our investment going forward.

Just any -- so let's talk about print real quick. Print revenue was down 16% in the quarter. Adjusted EBITDA was down significantly to $9 million, but still positive. Third quarter print is expected to look like 2Q and not quite tough for the corporate overhead. Is there a line in the sand around print profitability? And obviously, like we get to a synergistic benefit because the content is used both places. It's -- the print supports the brand. But like -- and I guess, how do you think about, like, the line in the sand around print profitability in magazines.

Well, I understand the question. I don't -- we don't see a line in the sand. I mean, we will -- we are confident we can continue to deliver print at or around our corporate overhead cost, which means roughly $40 million, high $30 million, it's $40 million a year. We had a lot of moves yet to make there. We have 2 parts of that business. We have 3 parts. Really, we have healthy subscription and newsstand business that are reasonably stable and that we have a lot of control over. The advertising side of the house, a little more challenging in a world where, sort of, instant advertising gratification is more the norm. But yes, we can continue to manage it. We do think Q2, Q3. Q3 will be the low point for the year, and we still think despite that, we will deliver high 30s or $40 million of EBITDA for print and can do that for the foreseeable future.

I mean do you think like does the -- on the print side, I mean, we're, kind of, seeing it like some companies are toying with like more premium paper, raising the price, moving to quarterly like just, kind of, like evolving -- and look some titles, maybe that works with other titles that doesn't, you just -- I don't know.

No, that's a good observation. That's exactly what we have been doing since we put the businesses together. The first thing we did when we merged was increased the quality of the paper and the photography and the, kind of, the book quality and then a year or 2 later, started to increase prices relatively modestly. Those are the plays you make for sure. And we have a very, very healthy newsstand business that has not the traditional people. Think of it as a traditional, sort of, weekly on the newsstand, but it's actually a product that lives longer, maybe it lives for a month on the newsstand might be -- like a Knicks Special Edition Championship magazine type of thing. We still make those and make nice money off of those.

Anything else you want to talk about on corporate costs and outlook just broadly?

Well, what folks should understand is, and I understand it can be a little bit confusing, but the, kind of, People Incorporated, the former IAC had a corporate over -- corporate cost structure, right, in it that I think was part of the reason for the discount in the stock, right? You're carrying costs at the corporate level. We've taken steps and our predecessors took steps to significantly reduce that cost structure from something order of magnitude of $100 million a year to what we said publicly will be -- will be at a $45 million corporate cost run rate by Q2 next year and sort of diminishing from this period today through Q2.

We're continuing to look at other ways to reduce those costs. That's really what drove -- that was the impetus for the combination of the IAC team and our team. So one, we hear people; two, we're mindful of it; three, we're working to get the cost structure down. And so again, that's the main point.

We're looking for efficiencies across, sort of, the 2 corporate structures, right? People, the media business has 3,500 employees, has its own, sort of, corporate element. The holdco had its own, kind of, putting those together, getting the cost down, and that's all meant to lead to, kind of, maximizing free cash flow.

Okay. So just we have like 5 minutes left or so. I mean let's talk about like other potential catalysts. We kind of touched on the Google litigation, kind of, talked about 2Q. I mean maybe potential 2Q resolution next year. Cumulatively, how much have you spent on that lawsuit total? Or how much the company spent on that?

Probably 20 to 25. Well, we expect to spend 15 this year. We're on track to do that. So we're probably in the 10 to 15 range so far with another 7 to 8 come this year.

Okay. And so like it'd be fair to say that you would think settlement would be multiples of whatever you would spend on that, right? Or you wouldn't ...

Many multiples, yes.

Right. So to the extent of, that's -- to, kind of, frame obviously, we're not going to say like what you expect the settlement would be, but like that's how folks should think about it that like you'll be in this for whatever it is, $25 million or something like that at the end of the day, give or take, and you'd expect to get multiples of that in some, kind of, settlement at some point.

Yes. We said publicly 9 figures, yes.

Okay. And then -- and look -- so then I guess there is also -- again, at some point, do we see, kind of, again, this broad AI licensing, kind of, becoming unstuck. So again, I ask you to answer that, but that's like something I think now that sits out there for a lot of the companies. Turo, I think, kind of, Chris, a quarter ago, so not this earnings call or before it, talked about the business doing a bit better. I mean anything you just want to share on Turo and like the path to an exit. I think you guys have categorized it as like not a long-term asset for you. So a path to exit either through an IPO or I don't know if the company should be sold to, like, another entity or something?

Yes. I mean, Barry said on the earnings call for anyone who heard that he encouraged an IPO Turo sooner rather than later. I think the business performed again, very, very well in Q2. So it's now string together, strong growth quarters at good profitability. I think it's certainly realistic to think if they can do a few more of those quarters and, kind of, turn the page to 2027, it is an asset that is capable worthy of being in the public markets. So that's our preferred route.

We would be -- we would entertain a private sale, that's a little harder, more complicated, illiquid, all that stuff. So -- but the thing about both Turo as well as Vivian and The Daily Beast, our other operating assets is all three are worth more today than they were a year ago. And so again, we just have to find the -- sort of, the right time and the right partner and the right new home for them, and we think that there's real value to unlock there that's not being valued today.

I mean, do we think there's potentially a strategic buyer for Turo? I mean, we're definitely seeing, kind of, in the mobility space, more of the movement of super apps, broader -- try the way whether it's an Airbnb of the world, the way travel experiences, all that. And obviously, Turo's trying to cover multiple things. They want to be both, like, an everyday service for transportation and something you use both for leisure travel and business travel.

Yes. I mean I think strategically, that certainly makes sense. There are -- there should be, could be partners. The minority interest and all that needs to be worked out and so that probably scares a few people away. But all options are on the table, as you said, and we'll see where it goes. I mean the first step was to get the business healthy and operating well, and it is, and that's super encouraging.

Great. Okay. I think we're going to stop there. Tim, thank you very much for your time today. If anyone has got any follow-up questions, feel free to e-mail me, and we can either answer it or connect you with the company. Have a great day, everybody.

Great. Thanks, Jason. Thanks, everyone.

Good day, and welcome to the People Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Christopher Halpin, Executive Vice President, Chief Operating Officer and Chief Financial Officer of People Inc. Please go ahead.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the People Incorporated Second Quarter Earnings Call. Joining me today are Barry Diller, Chairman and Senior Executive of People Incorporated; Neil Vogel and Tim Quinn.

After close of business today, we will complete our leadership transition, making this my last call with you all, then I will pass the torch in this new chapter to Neil, who will be CEO of People Incorporated; and Tim, who will be CFO of People Incorporated. People Incorporated has published a presentation on the Investor Relations section of our website today entitled Q2 Earnings Presentation. On this call, Barry, Neil, Tim and I will provide some introductory remarks referencing that presentation and then opening it up to Q&A.

Before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent annual report on Form 10-K and in the subsequent reports we filed with the SEC. The information provided on this conference call should be considered in light of such risks.

We'll also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during the call. I'll also refer you to our earnings release, investor presentations, our public filings with the SEC and again, to the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all material non-GAAP measures.

And now I will hand it over to Barry.

Thanks, Chris. About 6 months ago, somewhere around then, we began to chart a new course for the company. We decided that us being in the general acquisition business was not going to produce results as it had for the past couple of decades. We just didn't think there were opportunities. But what we did have were 2 assets: People Inc. and our investment in MGM. We then determined to slim down our corporate operations and sell noncore assets, and we've mostly completed that. And today, before you is the management of People Incorporated or People Inc. or probably eventually would just refer to it as People.

I really do want to thank Chris Halpin and Kendall Handler, our outgoing senior executives. And I'd like you all to give an official gentle welcome to Neil Vogel and Tim Quinn, who are going to be conducting these calls today and in the future.

About MGM and our proposal to buy out many of the public shareholders, I got no news. We and our representatives and the special committee and their representatives, we've been and we continue to be in discussions. Whether it works or not, is speculative. But what isn't speculative is our very long-term belief in the management and in the business of MGM. And we're going to increase our ownership in MGM either in one swoop or slowly and either is really just fine with us. So I can't comment any more about it. I mean, unless there's some specific question I could comment on, which I doubt. And I can't tell you the timing of all this, but I would say, certainly within the next 60 days, I would say probably at the outset though, of course, that could change. But I really think in the next 60 days will come to a resolution.

So with that, let's proceed with the call. Chris, are you next with this?

I think I'm next. It's Neil. Thanks, BD...

Sorry, well, Neil, then, we're in 2 different locations, so this may be a bit squishy, but we'll do the best we can, and we'll certainly answer all your questions. So Neil, welcome to your first call.

Alright. It's great to be here again. There's no need to be gentle. I've been with you at these and I can handle non-gentle. But let's get right to it. And into our presentation, we can go to Page 3. As Barry just said, the game plan is consistent with what we've been outlining for the past few quarters. And again, what Barry just outlined, first, we're going to execute at a high level at People Inc., and we have another solid quarter here to detail. Second, we're going to opportunistically deploy capital in assets we know best. MGM, as Barry said, our publishing businesses, and should we choose our stock [ by ] share repurchases. And third, we're going to continue simplifying the noncore portfolio and monetizing assets. To that end, we're pleased to announce we've signed an agreement to sell our limited partner stake in a third-party fund to a group of private investors. We expect the transaction to close in the third quarter generating approximately $189 million in gross cash for People Incorporated's balance sheet.

Moving on to Page 4. This will be familiar to many of you. People Incorporated continues to trade at a discount to the value of its MGM holdings plus cash. That means investors are getting the media business people and all of our other stakes, including Turo, Daily Beast, Vivian as well as our real estate effectively for free. The game plan we outlined is clear, and the goal is to unlock the value shown.

Now on to our publishing results for the quarter. Going to Page 5. For Q2, our 6% digital revenue growth represents our 11th straight quarter of growth, and our drumbeat of solid execution continues. We continue to drive momentum in the face of major changes and disruptions in the market. Our performance highlights the diversity and quality of our brands, revenue streams and audience sources. As we increasingly shifted resources to new initiatives in the quarter, we're able to deliver not only on our revenue goals, but on our profitability goals as well. We grew digital adjusted EBITDA by 18% while expanding margins to 26% versus 23% last year.

Now there are 2 trends worth highlighting supporting our operating efficiency. First is AI gains. We are realizing significant benefits from AI across the company, including helping our edit teams streamline content production and efficiency gains in data science, ad sales, ad targeting and numerous other areas. This frees up people and assets to focus on growth initiatives where we are reinvesting these gains. Second is headcount optimization, which is ongoing. We continue to reallocate our existing teams and people to focus on our growth initiatives.

The next slide gives a little more color on the business evolution. So going to Slide 6. The trends of our recent quarters continue. Importantly, audiences and advertisers are increasingly seeking brands with high-quality content in a world that is more and more saturated with the opposite. Q2 clearly illustrates the momentum of our brand-led non-session-based revenues, which grew at 16% as well as the durability of our sessions-based business, which were nearly flat.

This is a growth dynamic for the foreseeable future. Non sessions growth was driven by Apple News, licensing, including our AI partnerships, social programs, events and D/Cipher. Non session-based revenue is anchored in our brand strength. We are creating more premium content in more formats, more efficiently than we ever have. Session based revenue was down only 1% in the quarter despite 22% declines in core sessions as our iconic brands and best-in-class sales team, ad tech stack and ad performance continue to drive both direct sold and programmatic rate growth. And our commerce business has also proven resilient. We expect our performance to continue in the second half of '26 with mid- to high single-digit digital revenue growth for the full year. And the next slide gives detail on some of our new projects.

So going to Page 7. We have a host of new initiatives that have recently launched are on deck for the next quarter or so. Some of these are what BD has referred to as inversion projects. This is not a comprehensive list, by no means is this comprehensive, and we expect a steady stream of new offerings over the coming quarters. We anticipate these projects will contribute to growth in '27 and beyond alongside our existing businesses. For illustration, let's look at a couple of these things. First, let's take a look at events. They are a meaningful driver of revenue growth for us. Our upcoming third Charleston Food & Wine Classic is on track to be one of the largest events we produce. We acquired Hot Luck in the quarter, a Gen-Z focused food and music festival, that's a real complement to our assets. It's founded in Austin, Texas. We plan a multicity expansion in 2027, anchoring our strategy for younger audiences, and we're kicking off our first stand-alone Southern Living Tailgate event also in Texas, with award-winning barbecue pit masters, live music, cocktails and college football, and I will be there. And if you would like to drink, feel free to join us.

The subscriptions business is another thing we're very excited about. We have the subscription know-how of other -- of over 10 million Print subscribers, and we're creating fresh new ways for our communities to connect with brands they love. In July, we launched Southern Living Insiders, the brand's first-ever premium paid membership program featuring 60 years over never before available vintage recipes and a host of other benefits. We now have 4.5 million My Recipes registered users using the free product. In August, we are launching a subscription app offering elevated features the community has been asking for. And in October, we expect to launch our People premium subscription bundle yet to be named, featuring exclusive content, special issues, games, app-only celebrity live chats and video series and a raft of other features.

On content distribution, our original social video series have become a key part of our offerings. We now have 47 original social series, including breakout hits like InStyle, [ The Intern and The Boss, People's Pop Take and Travel and Leisure Travel Unfiltered ] that resonate with both audiences and sponsors. More to come. We're part of the launch, which I believe was yesterday, of short-form video on Netflix. We licensed the curated library videos from a number of our brands and Apple News continues to grow and be a meaningful contributor.

And before I send it over to Tim to do financials, I'd like to echo Barry and thank Chris and Kendall for their partnership over the past years and for making this transition as smooth as possible. Now sending it over to Tim.

Great. Thank you, Neil. This quarter continues to demonstrate the strength and diversity of our brands and revenue streams. And importantly, with 11 straight quarters of digital revenue growth at People Inc., the durability of our business model, despite the pronounced changes AI has brought to the entire media landscape.

Looking at Slide 8. Digital revenue grew 6%. And as Neil said, we delivered strong profitability and cash flow in the quarter. Total People segment EBITDA grew 5%, while digital EBITDA grew 18% and our margins improved from 26% versus 23% last year. Ads revenue was about flat for the quarter, which is where we are absorbing the declines in core sessions. Our premium ad sales team by contrast, is executing really well, delivering performance for our ad partners through increasingly integrated session and nonsession-based tactics and campaigns. As a result, we continue to command a premium and growing ad rates across our entire ads business, helping us to hold the line on session-based revenue as we grow nonsession-based revenue.

Performance marketing, which is primarily affiliate commerce, grew 13% in the quarter and licensing grew 23%. Both are performing exceptionally well. This strong growth is underwritten by our continued large investment in high-quality human created content. Print revenue declined 18% in the quarter as we continue to navigate the ongoing secular declines in print advertising. Despite these challenges, we do expect full year Print EBITDA will offset People Inc. corporate overhead as it has by design for the last several years. I want to remind you, most of our top-performing brands [ have print ] as part of their media mix and magazines remain an important touch point connecting our brands with more than 10 million regular subscribers. Overall, we remain on track to deliver on our 2026 financial goals while simultaneously investing in new products and models that will define our brands futures.

Turning to Slide 9 in the deck. This addresses the strong free cash flow characteristics of People Inc. As a reminder, this is People, the operating company, and does not include the $800 million of cash held at the parent company. At People Inc., we continue to be disciplined and thoughtful about our investments, which, in turn, enables us to deliver strong EBITDA to free cash flow conversion. As you can see on the chart -- in the chart on the left, our cash position has been consistently improving over the last 2 years. And over the last 12 months alone, we generated $179 million of free cash flow. Every dollar of free cash flow reduces our net leverage ratio, and we expect to be under 3x net levered by year-end. This once again highlights the valuation disconnect we outlined on Page 4, with People Inc. being valued at [ 0 ] despite a building cash balance, strong and improving free cash flow and an overall healthy balance sheet.

With that, I now will turn it over to Chris.

Thank you. Moving to Page 12. Our corporate consolidation between the parent entity now named People Incorporated and our main operating business, People Inc., is proceeding well and on track. As I said before, Neil will become CEO of People Incorporated, and Tim will become CFO after the close of business today, and Kendall and I will leave our roles and become consultants through March of next year.

As we talked about last quarter, the full consolidation process will continue through Q1 of 2027. Based on the timing of employee departures and the elimination of duplicative vendor and technology costs between corporate and people, we expect Q3 corporate costs to be in line with this past quarter then step down to below $20 million in the fourth quarter and then down some more in the first quarter of 2027. We reaffirm our targets of $45 million of annual corporate run rate expense and $30 million of total company stock-based compensation expense following the completion of the consolidation. The second quarter of 2027 will be the first fully clean quarter, reflecting that new cost structure. Note that those numbers assume no reallocation of Tim, Neil and other executives' compensation from the subsidiary to People Incorporated. A reallocation of a portion of their time is likely to occur but would simply be a P&L geography change, increasing the subsidiary profitability by the amount moved up to corporate.

Turning to Page 13. We are adapting our definition of adjusted EBITDA starting this quarter to present what we believe is a clearer picture of the earnings power of the business. Historically, our adjusted EBITDA included the impact of gains and losses from lease impairments and buyouts, gains and losses on certain asset sales nonrecurring restructuring costs, large litigation expenses for discrete legal matters and costs related to M&A transactions. We have received feedback from investors that this was making our quarterly and annual performance and true earnings power harder to track, and we have considered for some time adapting the definition.

With the simplification of the broader company through the Angi spin, the Care.com sale and the search wind down and with Neil and Tim taking over at corporate, we thought at the right time to adapt the definition to exclude the items in the sub-bullets on Page 13. We believe these items are not representative of core operating performance and affect comparability and we believe the adaptive definition presents a clearer financial picture.

Page 14 lays out the impact of the revised definition by quarter for both our People operating subsidiary at the top and the total People Incorporated, formerly IAC at the bottom. Tim will go through guidance in a moment, and Page 16 bridges the impact on guidance from the adapted definition of adjusted EBITDA. And with that, I'll turn it back to Tim.

Right. So wrapping things up, Pages 15 and 16, we are confirming our guidance for the full year and again showing investors on Page 16 what has changed under the updated adjusted EBITDA definitions. The key takeaways are People Inc., the operating company, remains unchanged at $325 million to $355 million of expected EBITDA with the only adjustment under the new definition being the add-back of the $15 million of forecasted Google litigation expense.

Previously, the guide, including was $310 million to $340 million. We've increased the bottom of the range for Emerging & Other by $5 million, reflecting the strong first half performance at The Daily Beast and Vivian. The full year guide is now $10 million to $15 million. IAC parent corporate costs are $80 million under the new EBITDA definition, which excludes onetime costs to achieve the corporate restructuring. We expect, as Chris said, this number to be about $45 million on a run rate basis by the end of Q1 next year. That gets us to an overall guide for People Inc. of $255 million to $290 million for 2026.

With that, I think we're done, and we can turn it over to the operator for questions.

[Operator Instructions] And our first question for today will come from Justin Patterson with KeyBanc.

Great. Chris, it's been a pleasure working with you. Neil, welcome back to the call. I guess two for me. The first one just on latest initiatives and actions that you're using to mitigate the core session declines? And then secondly, I'm curious to hear about just how the licensing pipeline is building up for People. It seems like there's still more AI partnerships out there. You're just sort of signing content partnerships. So would love to hear how you're thinking about that opportunity set.

Sure. I think the second answer is quicker, so let's do that first. So licensing, when you look at licensing in our business, it's really 3 things. It's AI licensing, like our deals with OpenAI and Meta and Microsoft, it's content licensing, like we just did with Netflix and some other things we do out there. And it's also sort of some old-school product licensing, where we have better homes and gardens products inside of Walmart and Southern Living products inside of Dillard's, I think our focus going forward for the product is going to be much more do with ourselves, as BD has said, but that's a material part of the business right now.

I think we are seeing some we have nothing new to talk about now, but we're seeing real momentum, I think, in AI licensing for us. I think -- what has happened is if you look at the AI markets right now and what foundational model builders need, they need power, they need engineers and they need inputs. And increasingly, as AI gets more and more real time, they need our inputs. I think Tim and I were talking about this earlier. I can't think of any publisher that makes more high-quality content on the commercial topics that we cover than we do. So our new content is extremely valuable. And I think that's been reflected in the deals we've done and the level of activity we have talking about new deals.

Now the deals we can talk about there's two kinds. There's sort of the all you can eat deals of Meta or OpenAI and then there's the a la carte deal of Microsoft. But there's a lot of action around this. That being said, we have nothing new to tell you guys. But we are very optimistic that people are understanding the value of our content. It is worth noting people are understanding the value of our content because we are able to restrict almost everybody from using our content using our Cloudflare blocking. And they have to pay for it. And when people have to pay for it, it seems they're really coming to the table. I'm sure we'll talk about Google later. They're not paying for it, and we'll get into that.

The second question -- or the first question you asked was sort of about sessions durability and how we were going to maintain sessions growth. I think history is a good indication of what we're doing here. We've made 11 straight quarters of digital revenue growth in a very rapidly changing market. And our brands really are the foundation of all of this, like in a world where things are increasingly not real, our brands are about as real as it gets. And they have gravitas and they have history and they have real fan bases. And we spend so much energy, keeping them vibrant and putting them in new places and meeting users where they are, that we really have all of these new business opportunities that have emerged from that and whether it's TikTok or Apple News or our own products or Instagram or events or subscriptions or even like I'd like to talk about our new suite team we're going to launch at Southern Living. We have incredible opportunity in the nonsession-based revenue line based on these brands. And I think that's going to fuel the growth going forward. I think we've also been very good, and Tim has talked about it. We've been very good at taking advantage of the durability of our old school web businesses, which are still performing, and they're performing again because we have great brands, and because our ads and our marketing deals, we do really perform for advertisers.

So we feel very good. We feel very optimistic about our ability to reach audiences in new places, and we've never had more ways to reach audiences and to drive revenue in new ways, we've never had this many ways to drive revenue before. I don't know, Tim, if you have anything you want to add to that.

Just to highlight a couple of statistics, right? Google traffic, search traffic in the quarter was about 21% of our traffic. In the past, we've said it was roughly 2/3. So we're clearly closer to the other side of it, but we're not out the other side of it. And you can see the impact of declining the sessions in our numbers. They would be better but for it, but we're still working through it. What we are doing -- and we've always been on our front -- we have been on our front foot on this for a couple of years is we've been planning and preparing for this reality. This is not new news to us, as Neil outlined in the new growth initiatives, those are all year plus, 1.5 years in formulation, and we're now getting to the point where we can start to monetize it. So we're excited about that and being closer to the other side, but not out the other side of the traffic realities.

The next question will come from Dan Kurnos with Stone X.

All right. Neil, ask and you shall receive. So you did tell the Wall Street Journal recently that turning off and blocking Google was 100% on the table. So if you want to spend some time talking about what that means for People Inc., especially given other market commentary and some of the regulators mandating the Google split their AI and search crawlers?

Sure, I'm happy to. So the last thing you said is essentially what our objective is we would like Google to split its search and AI crawlers. And for people that are well versed in this, I can give a little background. Historically, Google obviously crawled all of our content to make its Search product. And we -- we're happy with them doing that because we received an economic benefit for the use of our content in the form of traffic. As they've developed the AI products and particularly AI summaries, which are a search replacement, we don't receive any consideration for the use of our content. And in fact, AI summaries compete with us because we no longer -- as you can see in the numbers, get the level of traffic from Google, not even close that we used to because they're using our content in search. We also know from data we use that we are very frequently searched in one of the more searched properties on the Internet by Google or crawled rather. And that's because our stuff is really good. Our content is excellent. It's accurate. It's scale. Again, we make more content than we ever have in incredibly commercial topics.

So what we would like to do is we would like to be able to -- like we do for everybody else, block Google from using our content in AI, just like we would to anybody else who doesn't have a deal with us. In this case, we can't because Google uses a single crawler for AI that they use for search. So if we were to turn off AI, we would turn off search. And as Tim said, we are nearly out the other side of search being a material driver of value for us. But we're not there yet. So we're clearly not turning this off now. But it is a tool that we can use, and it is something we will constantly be looking at. Like at the moment, scale definitely tips in the favor of maintaining the status quo. But this is a trade-off we'll monitor. Now we're not like galloping on a high horse trying to make a point here. What we're really trying to do is just get to a fair economic deal for the use of our content. We will use all the tools at our disposal to do that. We'll obviously be economically sensible in how we do that.

Got it. That's super helpful. And then can you guys just talk about the nature of the limited partner sale? Is there any tax exposure beyond the NOLs? And are there any other potential outside the box opportunities like that? How much could they total?

Sure. Thanks, Dan. So the interest we sold are limited partner stakes in [ HLVP ] funds, which have been a venture relationship of IAC for some time. We explored selling the liquid stakes as limited partners. [ Russ Barst ] and his team lead M&A for us, worked on it for some time, and we're able to strike a deal to sell those to a group of third-party basically secondary private equity investors for approximately $189 million. We expect that transaction to close relatively quickly and in the third quarter.

The -- as a reminder, when it comes to taxes, we generated a large taxable loss on capital loss on the sale of Care.com. Unfortunately, but the good news is we still have more than $250 million remaining on that capital loss. So we can more than offset the gain that we have embedded in the sale of these stakes. More broadly, we have said for some time and have been, but I said for some time that we are selling these other assets and there are the ones that we publicly laid out on the [ some ] of the parts slide. There are also some other assets in the business, nothing of the scale of these funds interest. But we talked about domains that we're selling and other assets, and we'll continue to find little pockets of money opportunistically across the portfolio.

Your next question will come from John Blackledge with TD Cowen.

Great. Maybe just going to People Digital results in 2Q revenue. Digital revenue was in line. EBITDA was better with pretty significant incremental margins. If you can just talk about the puts and takes of the 2Q Digital revenue and EBITDA? And then also if you could hit on how we should think about 3Q Digital revenue and EBITDA trajectory. And then secondly, just zooming out a little bit, if you could talk about broader ad market trends across different categories?

Great, John. I'll take the first one, and Neil and I will tag team the second probably. But Q2 came in where we expected and was led by our noncession-based revenue initiatives that Neil outlined and our ability to hold the line on the session-based revenue streams. We highlighted the nonsession-based revenue drivers already, but I will reiterate them. It's events [ or social extensions of social series ], D/Cipher and notably our really strong licensing business and performance.

Overall, we expect the second half and Q3 specifically to look a lot like the first half and the formula remains the same. It's grow the nonsession base, the 43% at roughly 20% and continue to hold the line on the session-based revenue drivers. We do expect to see some moderation in performance marketing in the second half. We had exceptionally strong performance second half last year about 25% growth in the second half. That will slow a bit. But we expect that to be offset by some acceleration on the ad side.

Just to make one point on Print. Print, we expect Q3 to look quite a bit like Q2. So a lower EBITDA, not quite covering the corporate overhead costs, but we expect to see an acceleration in Q4. And that's mostly seasonality. That's not a fundamental change in the macro outlook. You make a good point on margins, in particular, super pleased with our ability to deliver strong profitability in Q2, while we continue to invest. I keep making that point, but that's important, right? We're self-funding these new growth initiatives while maintaining and in fact, growing margins.

With respect to incremental margins, we do manage it over the course of the year. We do see some acceleration in investing in the back half of the year. So we're not going to deliver the 60%, 70% incremental margins again, but we do expect to continue to have strong margins and sort of we've been targeting 30% to 40% incremental margins overall for the year, and I think we're on track to deliver that. So overall, really happy with the performance on both sides of the ledger, particularly on the margin side, and we'll continue to be thoughtful about it and balance investing with margin expansion.

Broader ad market, we can go through quickly. Again, I think last quarter, we said 6 out of 10, if you had to rate the home market, I would again say 6 out of 10. Tim, you can -- Tim will get in some of the categories that are performing and some that are more challenged.

Yes. I mean I think the strength we're seeing -- continue to see strength in health and pharma, beauty, media and entertainment, we've seen some pockets of advertisers pulled back. We saw some in Q2, Q3 that are more exposed to either geopolitical or inflation and specifically in categories like food, beverage and CPG. So we're continuing to sort of manage through it. I think that the overall market is good to very good, but there are definitely pockets of caution. And so that's where Neil comes up with this sort of 6 out of 10, but we're continuing to see strength, and we think that the back half will be good to very good on the ad side.

6 out of 10, we don't get 7. It's a 6 or an 8, so we put it into 6.

The next question will come from Jason Helfstein with Oppenheimer.

I'm going to try one at MGM and then just a business question on people. So I think at the time, Barry, that the deal was announced the math that we were doing something like the transaction implies something like 3.5x core EBITDAR, which is something like a 50% discount to where peers are trading at. And so understand the logic of why you think MGM as a portfolio is undervalued. If you are not successful in this, I guess, maybe -- how do you think MGM on their own can narrow that gap, right, relative to what is the fair value. And so that -- I don't know, maybe you can comment on that. And then just second, Neil or Tim, can you just talk about like what is the glide path to get back to kind of double-digit digital growth at People? And like how long do we think it takes potentially?

The way for MGM is to do what they have been doing, which is operate the business as they have been extremely well. They have, as you all know, bought back a huge amount of the capitalization over the last several years. So it's smart capital allocation and it's excellent operations, and they'll continue to do that, notwithstanding anything.

Glide path -- the math on the glide path is pretty easy. I mean, you guys can see it. It's -- we have 40% of the business, 40-plus percent that is nonsession-based revenue, which is growing nicely, and we have a little less than 60% that we're maintaining, which is a sessions-based business. To the extent we get real momentum, and I think we will, in all of our efforts to really grow the nonsession-based business at a rate that the math works to get us above that 10%. That is a goal of ours. Now I don't want to give you a time frame of when it's going to happen, but you can see all the investments we're making, all the "inversion type" projects, all the new projects, all the brand extensions, all the licensing deals, we feel like we have good momentum. We've got a good amount of confidence here, and we'll see. I don't know if you want to add anything to do that.

The only thing I would add is that each one of the projects that we outlined and the projects that we will be launching in the coming weeks and months are important to the brands themselves. And if you look at any one brand, the growth that they contribute to those brands would be meaningful and impressive. We think we can ladder those up to something that's meaningful for growth in 2027 and beyond for the company. And that's sort of the play is to take that high single digits formula that Neil outlined at the top and start layering in these new growth vectors. That's how we get back to 10-plus percent.

And just one clarifying point, Jason. One clarifying point, Jason. MGM stock, would you go back by their own math was trading about 3.5x EBITDA. EBITDAR obviously is a higher number when you capitalize rent.

Can I add to the previous question?

Sure, go ahead.

Thank you so much. I would just tell you all that I can't pinpoint this in time, but I'd be very disappointed. All of you should be disappointed. We'd be very disappointed if we didn't get above that mark, again, relatively soon. without a pinpoint in time. But of course, we should -- you can go to the next question.

The next question will come from Eric Sheridan with Goldman Sachs.

Maybe 2, if I could. Just turning to Turo, even though you have more of a minority interest there. Any update in terms of the operating performance in Turo and how you think about the prospects for that business over the medium to long term? And then the second would be, you saw some very strong revenue growth in Emerging & Other. Can we unpack some of the drivers of that as well?

Sure. Thanks, Eric. Turo continues to execute well. We talked about it last quarter. They had a strong second quarter. Revenue grew 17% year-over-year with strong performance across trip days, GBV, and they are scaling on EBITDA margins. We talked about last quarter, EBITDA positive free cash flow positive. When we look at the public rental car comps, where we -- and we would argue, Turo is more than just rental car, but we believe they're growing, we know they're growing faster than what we're seeing for those players and outperforming the broader travel market. Marketplace fundamentals remain healthy, growing supply, which is always what we look for in terms of attractive ROI for hosts and geographical diversity. So it's a very solid story.

And BD, anything you would add on Turo or...

I would only add the following. The business is now solid and growing. I urge Turo to go public. I think that's the best form for that company. I hope it happens. I can't predict it. But I hope so, which would give us liquidity. This is not a long-term asset for this company, but we're certainly not going to do anything with it until we get, I think, the fullest value, which I think can really most likely somebody comes over the horizon, will be achieved by the company going public, which is record in the future really indicates it should.

And then on -- the second question was Emerging & Other, Eric, right?

Yes.

That's correct. Just the strength there.

Yes. So two elements, Daily Beast, the management team there, Ben, Joanna, Keith continue to execute and their colleagues continue to execute really well in I guess, what we described as a multichannel media and news business. And their innovation and expansion into podcasts, into video, into new categories, combined with strong monetization, strong content and good product has led to the exceptional results there, not just strongly double-digit revenue growth, but scaling margins, and we feel great about the performance there. And then Vivian is one where -- for a while, Bill Kong, the CEO; Parth, the Chairman and Founder; and Eric, their performance was masked by a challenging macro as the nursing segment really just had so many headwinds while health care companies cut back on their spend during that time, they would be the absolute tip of the spear across our portfolio, but also within their industry of implementation of AI into their products, into their marketplace matching, into their clinician servicing, and they're really benefiting from it on the other side as the headwinds abate and then their position and superior product and also clinician liquidity with 2.7 million clinicians. I got it right for once right on the way out. 2.7 million clinicians puts them in a very special spot both for health systems and staffing agencies. And then their EBITDA margins are scaling because they have fantastic gross margins and real OpEx scale. So 2 good stories.

Yes. I would add though -- neither -- these are small businesses and neither of them are core to us and neither of them will be part of us in the future. At what point, we can't say, but we are as we said, and consistently have done so, we're going to sell all of our noncore assets over time.

Thank you, BD.

The next question will come from James Heaney with Jefferies.

I think just a quick modeling question for me. Just how should we be thinking about corporate expenses going forward? Anything you can share there would be helpful.

They're going to come down. That's what we can share with you. And over time, they'll come down much more than we've already stated. So that's what's going to happen to the last...

Yes. Yes. Just for modeling, we were about $20 million this quarter. We said roughly around the same next quarter, below $20 million and dropping in the fourth quarter. Down even more in the first quarter of '27. That slope is as corporate employees are depart and are consolidated across that period. The biggest period of departure is the first quarter of next year after we file the Q and the -- sorry, the K and the tax return and the audit, so below $20 million in the fourth quarter and then down again in the first quarter of next year. And then the second quarter, we said we'd be clean at $45 million run rate. So you can think about it simplistically as $11.25 million a quarter at that point. And about $7.5 million -- yes, fair enough.

The next question will come from Stephen Ju with UBS.

Chris, I enjoyed working with you over the years and best of luck with the next gig. And Neil and Tim, I was wondering if we can talk about the content creation that lives in Print versus the Digital side of things that People -- and what plans there may be to house all of the expenses in one segment, particularly as the Print segment EBITDA dollars are now down to single-digit millions on a quarterly basis now? I guess another way to ask the question is about the transport of content from Print to Digital and Digital to Print, et cetera, for consumption and how seamless that might be now?

Yes. let's talk about Print for a second, and then we'll talk about the editorial side of it. But as I said at the outset, our best brands have a print element and sizable paying audiences. We have 10 million subscribers. They pay us over $150 million a year. So we have a healthy subscription business that is remarkably stable. The challenge with Print is the advertising side of the house. I move the belief that the subscribers we have for Print are one of our most valuable assets as we make this transition to the future. They are our super users. They consume our content and our media across print, digital, social and all other mediums. And I think that's going to be an asset that we leverage going forward.

As it relates specifically to content. A couple of years ago, we put all of our content operations under one editor-in-chief for our main brands. We think that, that was an important decision than it turned out to be a good decision to really unify the brand and get people to stop thinking about the systems that they live in and all of that. For the most part, our magazine content still lives in the magazine. It's not ads...

It's fairly distinct.

Yes. So there are distinct cost structures in each. For now, we're going to live in these segments. But I think as the world evolves and as we start to leverage these subscribers in new ways, there's a potential to start to see it all as one business. I mean ultimately, our goal is to grow total revenue, not just digital revenue, but total revenue. And I can start to see that path now as the print advertising dollars become relatively immaterial. Now again, we have to manage through all of that. It's not a tomorrow thing, but that's how the kind of crystal ball, that's how I see the future. I don't know if you add anything to that, that's...

The next question will come from Youssef Squali with Truist.

This is Robert on for Youssef. Congrats, Chris and Neil and Tim. On the session-based revenue, so the implied session -- the monetization, the revenue per session is a pretty remarkable number. So I know you guys spoke about it a little bit on the call, but hoping that we could just unpack it a little bit more.

Yes. I mean on the session-based revenue, right, the way to think about it is a session creates an ad impression that ad impression gets monetized through the programmatic markets. So that's what we lose when we lose on the volume side. What we gain and what we've gotten good at is packaging our session-based and non-session-based ad assets and programs and campaigns with growing rates. And so basically, we're saying to the advertiser, you get the session based, the web and you get social and you get events and you get all these other assets. And that's really been a key part to the future.

The second part is a flight to quality. We like to think of as a flight to quality, which is there's a decreasing supply of quality content on the web. That which is quality is commanding a premium. We've always commanded a premium in the programmatic market. That premium has increased and is growing. And so the shorthand answer is our rates are up. While our sessions are down, our rates are up significantly, our rates are up as a function of the quality of our content and the performance of our sale.

It's important. I'll just add one thing. There's no tricks in that. We're not like overloading pages with ads. It's pure rate. And as Tim said, if value is accruing to these brands that are meaningful in a world where people are looking for clarity and meeting in their content, and that's really helping us.

Next question will come from Tom Champion with Piper Sandler.

Question for Mr. Diller you referenced the old acquisition model is no longer viable in your introductory remarks. And I'm just curious if you could elaborate on why that's the case and maybe what's structurally changed in the market. And then maybe for Neil, can you just remind us the time line ahead or the goalposts we should keep in mind in the Google litigation upcoming?

This company was really built on being very early at virtual models and Internet life -- and that field was fertile for at least 20 years, building, buying various entities all in areas of e-commerce, et cetera. In the last years, obviously, that there is -- just like any area where you're there at the beginning of the revolution and participating through it, less opportunities. And the opportunities that we saw were -- I felt, overpriced. and just nowhere is interesting. And we spent really a couple of years really scour and trying to chart a new acquisition path, a new have growth path based on investing, et cetera, and decided that it really wasn't there for us.

And so we then, I think, took this very dramatic strong pivot to 2 companies that we knew well that were, in our opinion, forever assets, scale down the company appropriately and of to executing, particularly as you've heard, the excellent management of Neil and Tim and all of the people who work at people who've outperformed their industry in large measures and have big opportunity ahead of -- and creation of whole new businesses where I think there is virgin territory. So that's sketchy, but it's the reason why we decided we would really change our trajectory. And we have, and thank you all for being with us on this kind of first official call of this new area for what is now people very hard for me to lose the word IAC and my vocabulary and in my e-mails and in all other parts where I can somewhat identified with IAC over the last years. But we've changed actually our name since the very beginning is Silver King. We've changed it, I think it's 4 or 5x each time has been the kind of beginning of new successful chapter. So anyway, there we are. Thank you. And unless my colleagues have anything else to add, we will address you in the next quarter.

Yes. Let me just answer really quickly. I'll answer your Google question. Let me get quick. This is an easy one. The estimates will resolve in 2027. Again, we believe we're relying on government findings that Google engage in anticompetitive practices in the ad tech business. There's no material updates in this past quarter, but we believe the settlement could and should be material, and we expect it to resolve next year. Thank you. Thank you, operator. .

Thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon, everyone. Thanks for joining. We're happy to have Chris Halpin, COO and CFO of IAC and Tim Quinn, CFO of People Inc., here for a fireside chat. I'll leave a little bit of time at the end for if people have questions. But to kick off, Chris, maybe and Tim, if you could talk about the recent corporate actions, the consolidation, the rebrand and the management transition, maybe a good place to start.

Yes, certainly, and thanks for having us, John. So we announced in late April headed into Q2 -- Q1 earnings, I should say, a corporate consolidation, which was really a continuation of what we've been doing to simplify IAC to distill down value in the portfolio and shrink what we perceive as a large discount in our share price. It continues what we've talked about previously of noncore asset divestitures. Most notably, we sold Care.com, which we talked about previously, but we closed that in the first quarter, raising about $300 million of cash.

And we continue -- we have a game plan to continue to liquidate assets. And we've said we'd prioritize the capital allocation out of the $1 billion of cash now on our balance sheet and what we hope to build and also the cash flow that People Inc. generates, as Tim will talk about, we'll prioritize that to IAC stock, and we bought back 13% of the company over the last 5 quarters to MGM stock. We bought 1 million shares there last -- each of the last 2 quarters as well as to strategic M&A at People Inc.

One of the key parts, and we had been scoping this out for a while, was as you get down to the core operating business, which is People Inc. plus the MGM shares, you don't need 2 levels of corporate. And it was a clear cost-saving opportunity. We talked a lot with investors of how we were rationalizing IAC corporate, but the big step would be really collapsing the 2. And then eliminating duplicative functions, retaining those activities such as Investor Relations, internal audit, SEC reporting and consolidation, et cetera, retain those that are in IAC corporate that don't exist at People Inc., but really eliminate the rest.

And our -- we scoped it out. We worked with Neil Vogel, CEO at People Inc. and Tim Quinn, my partner as CFO, aligned it and then got Board approval and we announced it. It is not a rapid consolidation. It is really like 2 businesses merging through a merger. And we also want to be thoughtful about maintaining mission-critical services, software platforms, et cetera. But it will be -- all be done by February of '27 is our goal. We've talked about we expect to generate $40 million plus of OpEx cash savings relative to the corporate expense at IAC, which was running at about $85 million. We also expect to save $20 million to $25 million of stock-based comp on an ongoing basis. And that will -- the first clean quarter will be the second quarter of 2027 but we expect to fully see those -- that improvement in free cash flow dilution, et cetera, at that point.

So every employee of corporate is either staying a small subset or leaving on a specific date. Our Chief Legal Officer, Kendall Handler and I are going to stay through Q2 earnings. And then the expectation is hand off to Neil and Tim. And we think it's going to produce a leaner, faster, more efficient IAC, which will also be rebranded People Incorporated to the benefit of shareholders. Anything you'd add?

No, I think that's well said. People Inc. today has about 3,600 employees. So we do have the infrastructure to absorb it. As Chris said, we're being really thoughtful about how we do that, and there are definitely some functions that we are picking up like IR tax and other areas that we don't have the competency, but feel pretty confident that we can do this thoughtfully and seamlessly.

Okay. Great. Let's move to People Digital revenue, the 3 line items. I just want to drill into each one to start. And so we'll start with advertising. That grew 1% year-over-year in 1Q. It's a little under 60% of total People Digital revenue. Can you talk about the strengths and offsets in the quarter and how things may trend for the advertising line over the rest of the year?

Sure. So we had another solid quarter in Q1 at People Inc. I think it was a 10th consecutive or 11th consecutive quarter of growth, grew total digital revenue about 8%. As you said, John, advertising grew 1%. There are 2 kind of countervailing trends that are underlying that 1% growth. On the one hand, strong performance by our premium sales team, selling capabilities, selling off-platform, what we call off-platform advertising. I'd say the ad market is solid, not spectacular, but solid sector-specific, but strong. And that's counteracting the softness we're seeing from traffic to our owned and operated sites or traffic to, I'll call it, dot-coms today to distinguish. And so that has been a headwind for the last 1.5 years or so. It's something we've seen. It's something we underwrote in our financial models this year, but it's something that we're kind of contending with right now. And so the combination of those 2 things have advertising roughly flat or up a little bit in Q1.

Okay. And then performance marketing grew mid-teens. It's about 1/4 of People Digital revenue. 25% of that was monetized via off-session views. Will that mix shift continue within performance marketing? And how should we think about the key growth drivers for that segment?

Yes, it will continue, as you suggest. But performance marketing is basically specifically the largest piece is referring users, consumers to retailer sites using our guides, ratings and reviews and other techniques that we have. We think it's a valuable service to consumers. It is certainly a valuable service to the retailers themselves. We drive over $1.5 billion at retail to the likes of Amazon, Walmart, Nordstrom, Wayfair and so forth. That business has the same -- some of the same drivers as the advertising business in the sense that 2, 3 years ago, the predominance of that business was search-based referrals to our dot-coms.

We've been able to diversify that business to a more distributed content model, getting those same or similar call to actions to consumers around retail products to Apple News and Discover and e-mail and off-platform marketing and all those types of things. So that's what you're picking up in that 25% that is in the non-session-based revenue. It's been a really strong performer for us, the performance marketing line. I think Q2 will continue to be strong. Back half, the comps get quite a bit harder, but we still continue to expect to grow.

Okay. And then licensing had another great quarter, and that's about 15% of the mix. Could you talk about the key drivers and your partners there that's driving super strong growth?

Yes. As you say, licensing has been particularly strong for us. We had a really good quarter in Q1. The way to think about the licensing line is there's 3 sort of subsets to it. There's content licensing, which is the biggest and fastest growing. That's where we distribute our content across different platforms. Again, Apple News, Meta, Facebook, even Yahoo!, MSN, all those types of guys. I think we have an advantage there because we're continuing to make high-quality branded content that's resonating and the economics certainly support that and the revenue supports that.

Second line within licensing is our AI licensing, or data licensing. That's where you see the OpenAI deal or the growth this year is coming from the Meta deal, to a lesser extent, a smaller Microsoft AI deal that we have there. So that's contributing.

And then the third piece is sort of more standard product and brand licenses and the biggest of which in that category -- revenue category is our Walmart BHG license, which is one of the largest kind of private label brands in Walmart. And you can think about that as growing roughly in line with Walmart. So e-commerce strong, in-store, not as strong, but kind of a flattish to modest growth piece of business.

Okay. That's super helpful. And I know you touched on this, but let's maybe dig a little further into the traffic and monetization. So if you can just kind of talk about the flow of traffic with the advent of AI and chatbots and how people has pivoted to growing off-platform views amidst the Google Search traffic declines with the introduction of AI overviews and AI mode.

Sure. I'll tell a quick story. Chris and I and a bunch of other folks, Neil and others were in Las Vegas in Q4 of 2022, the week that Sam Altman launched ChatGPT. So we saw, sort of like the version 1.0, as in, before it was hitting the market. And I think like probably all of us, the first time we saw it, we were like, this is totally different paradigm, right? It's going to -- this is going to change sort of everything. We were literally looking behind the curtain to see if this was real and so even back then, we started to think like the business is going to change. It's going to have to evolve. The way people are going to consume media, research topics do all those types of things are going to be very different.

And we started then to lean into our brands. We organized, first and foremost, one leader in charge of each brand. And basically, that leader had the mandate to publish content or create content for the magazine, for the dot-com, maybe the same, maybe different content for YouTube or TikTok or Instagram. What that allowed us to do is start to grow -- create native content and grow audiences off platform, again, not within our owned and operated or within our dot-com. It's been, what, 3.5 years since then. It's been kind of slow to emerge and then fast quickly came upon us. And so we have, again, 2 counter trends within our business. Our owned and operated dot-com traffic is in decline and has been for several quarters. We're down 16%, 17% in Q1. We expect that to maybe get a little bit worse even in Q2.

We have the other side of the house, the off-platform views, the off-platform audiences grew nearly 40% on a kind of 2-year CAGR in Q1. What we've gotten really good at is monetizing those off-platform audiences through any number of means. We have events. We have sponsorships. We're creating original programming. And so to frame this out for everyone now with that context, 60% of our revenue comes from a visit is derived from a visit to one of our dot-coms to one of our branded sites. That grew or shrank rather 1% was basically flat in Q1. 40% of our revenue grew 24% in Q1, and that's revenue that was derived from all other sources, anything that is not traffic to our dot-com.

So we really think that, that's a good mental model for the future of the business. We need to hold serve on the dot-coms, sort of accept and acknowledge the reality of the current environment, continue to grow and lean into the brand-led experiences that are off platform.

That makes sense. And I mean, to that point, will there be a point where the traffic from Google Search stabilizes? Is that -- do we...

That's the debate we always have. It's where we discuss...

Asymptotic.

Asymptotic to something. The way I would think about it is there are brands that are out the other side of it already. They have literally no exposure, de minimis exposure, less than $1 million, say, of exposure to search-based traffic. InStyle is a fast-growing site in our portfolio that has virtually no search exposure. By contrast, there are certainly brands that do have some exposure and will have to go through sort of the same transformation that InStyle has done. And I think those are the ones that you'll see some traffic headwinds on. And kind of the most obvious example I can give right now is our recipe traffic.

I think we probably get collectively more recipe-based audiences or traffic than anybody in media. And while that is 50% penetrated by our estimates with AI overviews, there's still a ways to go there. Now we think that that's not the ideal use case for AI, but Google and others may have a different view. And so we'll see. So it's really a portfolio approach. We certainly do think it levels off. We think we're closer to the other side of this than the beginning, but we're not totally out of the other side yet either.

Yes. And I think keep me honest, but there's a cohort in the middle of brands where they are now at pretty much max potential 95% AI overview frequency. So they have gone through that. And whereas InStyle maybe getting 0 search, partly because of the changing behaviors of their users, those that -- there are those that have gotten and they are still getting some search. So -- it's sort of these 3 groups. And the debate is that third group I'm saying, is there some baseline of search that top brands will get even when you pound the user with AI mode. We're not so aggressive as to assume that will happen, but that is -- it is very logical to assume it's asymptotic to something, but we're not going to make any predictions.

Okay. On the -- just going back to the -- sticking with the traffic and the views, engagement. On the off-traffic views, just remind us like the key platforms, #1, but -- and I think you mentioned them, but just -- and then are there some platforms that you don't have relationships like scaled that you don't have relationships with that.

I mean we try to be anywhere where a consumer wants to consume content, right? And we've tried to modify our content formats through those platforms. The biggest of which today are Apple News, Meta, Instagram, TikTok, for sure, YouTube. Each one has their own monetization ecosystem, none of which we control, unfortunately, like we did our dot-coms, but we have figured out ways and each one is different. And so we figured out ways, I think, very clever ways and successful for brands, ways to monetize those audiences off platform.

So yes, that's the play. I don't think there's specifically places that we aren't at or aren't in or having a lot of success today. And as new entrants emerge, we're pretty quick to get involved.

And I would say, Tim has talked about it, but I forget if it's a terrible or Aesop's fable of the ant and the grasshopper about who gets ready for winter and who doesn't and how they perform. But it is really true and that they massively pivoted their strategy in the '23 period. We were talking about it, but investments in video, investments in developing content for those -- for these new platforms and the reps to customize the content by platform for optimal performance. And this isn't like old SEO. This is actually -- is it video? How is it structured, sentence length, all these things and then to sell against it, as Tim said.

So it is -- I don't know if it's too late, it is too strong, but it's probably too late for so many of the competition to make this pivot and be able to do it, and it is reflected in our numbers and Neil and Tim's performance relative to many other content producers and engagement-dependent web platforms.

That makes sense. And maybe sticking with the AI kind of theme. But from the content creation perspective, just how is People leveraging AI across its major brands?

Yes. I think I mentioned earlier, we're making more content today than we ever have before. It's all human made -- always has been and will always be human made at a lower cost per unit than we've ever had before. That is definitely accruing to our benefit. We talked about the licensing line, but across the entire business. We are aggressively using and have for now a year plus AI tools and got more efficient using AI tools to help us write that content. So anything from topic selection, brief writing, workflows. Now again, there's still a human on the other side writing something that is specifically kind of curated and picked by them.

But that's helped a lot, and we have those that ability at scale. I think there are certainly other applications -- many applications, obviously, for AI within the business, the next largest of which is ad targeting. We have always commanded a premium in the marketplace for our ads. Our ads perform. We can use that -- create that intelligence to make the targeting even better, both on platform and off platform. I think that the buy side is getting more sophisticated in finding the value in our inventory and paying more for it. And so again, these are advantages that are, I think, pretty unique to us and certainly unlocked with AI. So we debate honestly, internally at this point, is there more risk to AI than downside on the traffic side, it's like some days, it feels like, yes, there's more upside and some days, maybe a little less so. But there's certainly a much more balanced view of sort of what AI brings to our company today than 2 years ago.

That's great. Just maybe pivoting to margins. The People Digital, the EBITDA in 1Q was better than expected. I think it was like 45% incremental margins, which is higher than we had. So just curious like call out on key drivers there and how to think about 2Q and the rest of the year for People?

Yes. I mean we've always been and continue to be hyper focused on being smart and prudent with our capital. Neil says ruthless in some respects, yes, ruthless with what we continue to do versus what we stop doing and reinvest in other areas. We had particular strength in Q1, as you noted, 200 basis points of improvement in margin as a result of the strength we're seeing primarily in licensing and these off-platform advertising products, both of which, I mean, licensing has exceptionally strong margins. The input is the content creation we just talked about, which we're doing very efficiently. And the off-platform advertising also has extremely strong margins. So those 2 things or that collection of lots of little things, but we put in those 2 buckets, we're able to offset the headwinds from traffic, which has a margin deterioration -- deteriorating margin impact.

So we feel really good about the discipline we brought to the table, the mix of businesses we have, the brand environments that supported premium. We think Q2 should continue to be solid in terms of margins, and we think the year will be at least comparable to last year, if not a little bit margin expansion. So we're on the right track.

Maybe zooming out to total company margins, I think the guide for total IAC, $210 million to $260 million EBITDA this year. How should we think about free cash flow conversion? And looking into '27, I know Chris mentioned the savings that will be worked in as the year goes on next year. But yes, just free cash flow conversion with the nice kind of EBITDA generation.

Yes, you want to talk about People Inc.

People Inc. has very, very strong free cash flow characteristics. We would expect at least 50% of our EBITDA to drop through to free cash flow, if not more. We're delevering pretty quickly at this point. And so we've said kind of publicly at least $150 million of that guide of the broader IAC guide is People Inc., and we're on track for that. In fact, we had a very strong cash generative quarter in Q1.

Yes. And then overall IAC, I mean, clearly, People Inc. is the free cash flow machine. We guided corporate to about $96 million to $105 million, I think, which is -- doesn't reflect the savings. It actually reflects the onetime costs. We'll have about $15 million of onetime costs across the year associated with severance, some retention bonuses, related costs, et cetera. And many of the exits are back-end weighted in the year. So you don't get the full impact. that will pull down a little bit.

One other note, you talked about AI-generated content. Unfortunately, the AI bots came out and said we missed earnings last quarter because Care became a discontinued op. So they only believe People created content, not AI facilitated content. But we will have -- Care is now a discontinued op since we sold that. And then we have wound down our search business, which will also be reflected as a discontinued op. I would note we are looking to sell the domains that underlie that search business, and we've started that process. And we know we have some quite valuable ones, including Ask.com that maybe in the current market context could be even more valuable. But we shall see what the market will bear.

So the numbers will be cleaner of People Inc. and then our Emerging & Other, where both businesses are free cash flow generative and profitable, both The Daily Beast and Vivian. And then as you get into Q2 of next year, we'll be chugging along at hopefully $45 million of corporate costs.

That's great. We -- I have some more questions. And you kind of touched on the capital allocation a bit. And so this will take us into kind of MGM and Turo and other areas. But I don't know if anyone has -- in the audience has a question or if anyone has a question on MGM. I don't know if we have a mic, but I'll repeat the question. So...

Happy to answer. I think for those not in the room, the question is really I think how do we think about MGM Japan for the Osaka project for the value of our MGM holding where we own 26% of MGM Resorts and then talk through the dynamics at play in the MGM.

Okay. We got it. We got it.

No, no, I'm saying I got it. We're just -- so what I'll say about MGM Osaka is this. It is an incredible opportunity to build what will be the only legally licensed gaming integrated resort in Japan. And we've seen what's happened in Macau and Singapore, where legalized gaming is brought to cultures where there is a high propensity to wager and also high incomes. And this will be in Japan. It will also benefit from international travel, and they are building and with our partner, ORIX, MGM is building an extraordinary first-class facility. You raised questions about currency. You can go through the game theory of is it better to have which way the yen moves versus the dollar when you're building versus when you're moving money out, all of that.

MGM Resorts has been very thoughtful around hedging, although it is a very long-dated project. So if anybody knows currency hedging, if you start going out 8 years, the vol kills you, so you can't really do that. But very thoughtful about hedging around local financing and also on tax structuring. We are strong believers in the project. MGM management continues to work well and refine it. And when we look at the projected yields and the opportunity to own and manage with ORIX, the single integrated resort in a market like Japan, we think it's incredibly attractive and investors as we get closer to the launch date of autumn of 2030, we will realize that even more.

Okay. Maybe one more. Well, 2 more quick. Speed around.

Yes. Great. Turo, just stake and...

Yes. We own 32% of Turo. We very much like the business. It was a huge pandemic winner. And by their own admission, they probably in the tail end of it, didn't seize on all the momentum they could. There also were headwinds in the rental car sector, and there just wasn't enough awareness of those who hadn't experienced it. The team, they've hired a great CMO who's focused on all the right actions. They've improved the marketplace dynamics. As we said in earnings, they are back to double-digit growth, and we see further momentum. They're EBITDA and free cash flow positive. Barry said -- I think he said on the call, I wouldn't expect to own it in 4 years, but he sees real continued room to run, and they have a great market opportunity in front of them.

Maybe last, talked about Google during this discussion, and then there's this lawsuit as a potential monetization event. Can you just talk about the timing and how you guys have discussed the size of the potential events?

Yes. We think it will take the entirety of this year into next year to resolve optimistically. I think that there's a chance, of course, could settle, but that doesn't usually seem to be Google's way. We believe we can -- for the benefit of the room, Google is found to be -- have used this monopolistic power to disadvantage advertisers and suppliers, publishers in the ad tech space. We think and we -- that we can rely on the government's findings and the ruling. And then we're really talking about, at this point, damages and the debate for the next several quarters will be about how far the look back is and what size damages.

We think as People Inc., predecessors, Dotdash Meredith, the Time properties, we are among the largest plaintiffs in this action. And we've said publicly $100 million plus, and we think it could be even meaningfully more than that, but we'll have to wait and see.

And the only thing I'd add because we've gotten this question, the appeal Google made of the finding on the search monopoly end of last week or this week is not related to this case. It is related to the overall search behavior/SEM world. This is the ad tech case, the old double-click, Google 360, all that. They are not appealing that. They've already lost.

Okay. Great. All right. Thank you all for joining.

Appreciate it.

All right. Good afternoon, everyone. Thanks for joining. Cory Carpenter, Internet Analyst at JPMorgan. Pleased to have IAC, soon to be People Inc. with us today. Chris and Tim, thanks for joining.

Glad to be here.

Soon to be People Incorporated.

So Chris, maybe we'll start with you. So I see in the midst of a significant transformation. You're going from a holdco to People Incorporated. Maybe just to start, walk us through the changes you're making and why now?

Certainly. So we announced the consolidation of corporate and a number of actions we'll talk about, but it really is the continuation of the strategy that we publicly articulated since end of year '24 earnings, so February '25, where Barry was on the call and talked about, we were spinning Angi and our CEO, Joey Levin, went with it as Chairman.

We said we were going to continue to sell noncore assets. We were going to rationalize corporate costs. And we cut them down significantly to get to a run rate of mid- to low 80s. And then we disclosed this quarter that we were fully consolidating IAC corporate at the holdco into the corporate operations of People Inc., where Tim has been CFO; and Neil and Tim are CFO. And as we said on the earnings call, when you're down to one core operating business, a key step in this was selling care and closing that in March as well as winding down our Search business and other things that simplified the drains on corporate, it made no sense to have 2 levels of corporate for 1 operating business plus our MGM stake plus some smaller sake.

So it really is just a natural evolution of what we laid out as our go-forward strategy a year and change ago, also on the capital allocation front, buy back stock. We bought back 13% of the company in the intervening 15 months, own more MGM both through their buybacks and direct cash from us. We're up to 26% and then do M&A through People. So it just is further implementation and we think is the absolute right thing for shareholders.

So the 2 primary assets going forward are People and then the MGM equity stake, the 26% equity stake at MGM, you just mentioned. What's the benefit of keeping those 2 assets together? Why not separate them out, given there still seems to be a pretty big value disconnect with the stock price?

Certainly. The -- Barry as our Chairman and our Board view real value in both businesses. I think you could argue in the case of People and Tim can talk to it better than I can, their outperformance relative to peers and the thoughtfulness and innovation and execution quality of their strategy has enabled them to be in a differentiated position as a media company, although the market wouldn't probably acknowledge that right now. So they are our cash flow engine. It's a good thing to be inside IAC as they continue to execute and we'll talk through all their growth vectors and the inversion strategy.

And then on MGM, we are real believers that the public markets are undervaluing the asset and a number of components there. And to be fair to the public markets, they tend to have a -- they can buy anything and they tend to have a shorter horizon. And so it makes sense to continue to support MGM drive it forward, see a number of these initiatives and macro dynamics come to fruition or resolve themselves respectively, and there will be a real re-rating there. And for now, the plan is to keep both of them together.

So you recently sold Care, you mentioned that earlier. What's the plan for the other noncore assets like Turo and Vivian?

We have -- if you think holistically, we've had a pretty focused liquidation plan across the portfolio going back a year. Now they tend to be private transactions, so they always take longer than, I think, public investors would hope are used to. Getting Care done was key. Also, we are -- with closing down our Search business, we're going to be selling our URLs that underpin or domain names that underpin that business, and we have a lot of real value there. So that will be ongoing.

We have a few other asset sales on Turo. Barry said on the call that he -- with the business doing better and them on a strong strategy of growth and execution, we sort of said, I don't expect the Turo to be part of IAC in 4 years, but he's not racing to sell it. It's also 32% sake in a private company. We think they're executing well. We talked about getting back to low double-digit growth in profitability and free cash flow in the first quarter, and they've got a whole strategy. So that one as well as Vivian, which is a great little business and a strategic asset in the health care staffing space, it's more around opportunistically the right time to sell their growth, their performance, which would, in certain cases, lead you to hold them longer versus the way we're trading and the fact that a number of these assets are valued at 0, seeking to shrink the discount as rapidly as possible or as reasonably as possible for our shareholders.

All right, Tim, let's shift to you. So I think this is your first investor conference since the announcement that you're going to become the consolidated CFO shortly. So I thought it would be helpful just for investors to hear maybe a bit about your background to start.

Sure. Thanks, Cory. Yes, I started out after school as an investment banker, probably like a lot of people in this building today. I met 2 really important people there, my wife and Neil Vogel, our CEO. And so I did that for a number of years. I then joined American Express. I was at American Express for more than 10 years, running or operating out of their corporate development team. There were only 3 of us when we started. We had our hands and fingers in a little bit of everything, strategy, acquisitions, divestitures, minority investments and all that type of stuff.

I left that after 10 or 11 years. There were about 35 of us, I think, at that point. So we really had gotten involved in the entirety of the global business there. I went on to be a CFO, my first CFO gig at a JV that we helped to create at American Express. And then Neil came calling about 4 years later and had an opportunity he had just been hired by IAC to operate about.com, which was the predecessor to Dotdash and now the predecessor to People Inc. and we'll get into that whole story today, but that's the 30 years in a nutshell.

So shifting to the business. Maybe could you give us a brief overview of People's properties, the scale and just the state of the business today?

Yes. We are America's largest publisher by pretty much any measure. We are, as I said, we created out of the combination of Dotdash, which was formerly about.com, Time Inc. and Meredith. And so we have some of the best, most venerable brands out there. We own People Mag, Better Homes & Gardens, Food & Wine, Travel and Leisure, Southern Living, Allrecipes, a whole host of brands. Back in the day, those were -- many of those brands were rooted in magazines. They have 50, 75-year histories in magazines. Today, 70% of the business is -- revenue of the business is actually digital media. 90% of the profitability is digital media. We still do have a magazine business, of course, but it's a smaller subset of the brands. And the brands really live across all mediums at this point. They live, again, in magazines, they live on our owned dot-coms. They live on Instagram, TikTok and Apple News and all these other distributed platforms that we'll talk about today.

So the financials have actually been pretty steady, kind of mid- to high single-digit grower for the digital business at least in recent quarters, but a lot of moving parts under the surface. So I think investors are often surprised, you've been able to grow at that rate, given just the traffic headwinds from AI overviews. So maybe talk a bit about how have you been able to grow through that headwind? How are you thinking about like traffic going forward?

Yes. It's a lot of different moves. The first thing we did is we set up our brands to be operated under one owner, one General Manager. And so those folks are -- they're managing all the distributed platforms, the content and the distributed platforms on which they reside. So I think that, that was an important move for us. AI overview has certainly been a challenge. It's something we saw early on. We kind of coined a phrase called Google Zero, which was an internal rallying cry to say, if there's no traffic coming from Google, where do these brands live in the universe. That helped to sort of rally our troops and our thinking. And we've really sort of started to frame this out as the -- 20 years ago, this was a magazine business. For the last 10 years, it's been a digital dot-com business and we think the next 10 years are going to be all about the brands. And the brands can live anywhere in the real world across media, through AI, whatever that takes.

And so we'll talk a little bit about the strategies that we've undertaken to get us there, but the fastest-growing part of our business today is non-session-based, we call it, meaning not on the dot-com digital revenue.

Could you talk more about that non-session-based revenue? What is it? Kind of what are some of the components under there?

Yes. Again, if you think about it, we're trying to get -- rather than force people to come to our brands, we're trying to bring our brands, our content, our offerings to people wherever they want to consume media. And so that's an important sort of mental distinction. When we do that, we are aggregating large brands and growth brands or growth audiences across Apple News, which is -- I think we're one of the largest publishers within the Apple News ecosystem, again, on Instagram, TikTok and so on.

The second piece of the puzzle is we have to be able to come and bring advertising solutions to those audiences for our advertisers on behalf of our advertisers to our audiences. On the dot-com, we own the ad experience. On Instagram, Meta owns the ad experience. And so we've really gotten clever at adopting our models to those platforms and really delivering those value again to the advertisers.

The third piece is D/Cipher. D/Cipher is -- we'll talk about it a little bit today, but it's an ad targeting capability that we take sort of this great premium performance that we've had on our brands for many, many years. It's always been sort of a premium buy for advertisers and we can find that same great performance off platform. So that sort of addresses the traffic constraint challenge that we have and kind of uncaps the TAM or significantly expands the TAM.

And then the final piece of that off-platform puzzle are these AI -- licensed AI deals that we'll talk a little bit about today, which we think is -- we think we're well positioned for that to be a meaningful piece of our growth story going forward.

So a few more on -- actually, I want to go deeper on D/Cipher and then also on the licensing deal. So maybe on D/Cipher, you kind of said what it was. I still think people are fairly unfamiliar with it. It's a fairly nascent product. So maybe give us an overview of why you're excited about it? How big is it? How big do you think it can be?

Yes. So D/Cipher is an ad-targeting capability. It is borne out of -- our is proprietary to us, and that is our own first-party data. And it basically allows us to map the performance that we see on our sites, the ad performance that we see on our sites using AI and other tools off platform. And so we can buy that same and extend the buy for the audience, for the advertiser to audiences that are not necessarily resident on a People Inc. brand.

What that allows us to do, again, is uncap sort of the TAM, but it also allows us to take these solutions and apply them to CTV, to social and to everything else. I think one part of the story that resonates for folks helps to bring it home is we tend to sell all of this as a package, right? We go to an advertiser. We go to the agency on behalf of the advertiser, and we're selling the combination of on-platform, off-platform with D/Cipher and our events, sponsorship and other sort of capabilities. And we think that, that's, again, unique to us.

When you think about a world of platforms where so many advertising dollars are going through Google and Amazon and Facebook. There's a place in the ecosystem for branded advertising solutions with a high degree of service that can be customized to what the advertiser wants and needs. And we're doing that and we've seen really great growth as a result.

So we think to answer your question on size, it's still relatively early in the D/Cipher+ that's sort of the off-platform application, but growing. And we've said publicly, we think it will add 2 to 3 basis points to our growth in the back half of this year. So meaningful.

100 basis points.

And then on licensing. So you've entered a number of deals, OpenAI, obviously, one of them. Maybe there's others you have not entered into yet. So I think 2 questions on licensing is, first, what's the monetization model that the industry is kind of coalescing or models that the industry is coalescing around? And then how do you think about the longer-term revenue opportunity?

Yes. We're optimistic about the revenue opportunity. There's 2 models that have emerged. The first generation of this was a couple of years ago, foundational models came into being, OpenAI and others, Google. And we were able to cut a deal with OpenAI that was effectively what we call all-you-can-eat, meaning they can train on our content, they can display our content, they can use our content. We -- then about a year ago, we actually started to block the AI crawlers that we didn't have a deal with. We did that through Cloudflare and some of the other CDNs. And so that really sort of changed the leverage point a little bit for us where as a couple of years ago, everyone was saying, do I have to pay for this? Why don't you start blocking folks from being able to actually access your content in real time, especially as these models have evolved and emerged, I think that's really brought people back to the table.

So the second model that has evolved is a more of a pay-per-use model. Microsoft announced something with us and some other publishers late last year that was sort of on the forefront of that. I think there are other models or other business models like that, that are emerging. I think the way to think about it is as the applications and products start to get built on top of the AI layer, they are going to need access to content. If that content is inaccessible or blocked or whatever, they will be willing to pay for it. And I think where we are now is we're obviously all waiting for that application product layer to find some legs and grow. And we're now in the conversations with folks really talking more about price than whether or not they're going to do it, but what -- at what price is our content going to clear. And so we're excited about it. We think that the AI at this point -- from this point forward, again, is more of an opportunity than a threat for our business.

So I think Barry introduced this concept of inversion, a couple of quarters ago, clearly, something you guys are excited about. I think you have 19 projects underway across the company. What are these? Why is that a strategy you're going after?

Yes. So we talked about this off-platform revenue growth, right? And just to frame this up for a little bit for folks who are less familiar with the story. 40% of our revenue, 41% of our revenue is non-session-based, meeting it does not come to our dot-coms. That piece of our revenue grew 24% in Q1, and that's a continuation of strong growth we saw in Q4. 60% of our revenue still comes through a session, a visit to our owned and operated websites. That piece of the business was flat, right? And so if you think about that sort of 60-40 dynamic and the math involved, that sort of generated the 8% revenue growth that we generated in Q1.

Inversion is sort of the next layer of growth, the layer of growth that's not captured in that 8% that we think can ride and live on top of it. It's Barry's way of sort of saying and challenging us to think completely differently about our business models. And we, our group, as stewards of these sort of iconic brands, like how do we bring these brands into the next 10 years of media? What does that look like? And we've debated different business models. As Chris said, Barry has gotten more involved in our business, more familiar with our business, and he's sort of challenging us to, again, think differently and say, well, why would you take 1% on a license deal for a licensed product or a small percent on an international deal when you could own the whole thing? Now in some cases, it makes sense to take the 1%. But in other cases, we can build and -- build upon and start to build businesses off of these new models that we're envisioning.

So I'll give you something to make it a little bit more concrete as examples. And I think some of the things that we're going to build, in fairness, are going to be a little bit more adjacent than completely revolutionary, and that's where a little bit of the confusion comes in.

But as an adjacency, as an example of an adjacency, we launched a product called MyRecipes a year ago, a little over a year ago. Think of it as a digital cookbook. You can save any recipe across the web to this digital cookbook and sort, organize, find other recipes like it and so on. We'll be launching, kind of, a version 2.0 of that product later this summer and a lot more capabilities and will incorporate AI, will allow you to save recipes across Instagram and TikTok and so forth.

In the first year, as the sort of version 1.0 product, we signed up over 3 million customers. 3 million registered customers for this product, all 100% on our owned and operated properties, right? And so if you think about sort of how this is going to evolve in our minds is, first, we build products. We won't bat 1,000 or we won't shoot 100% of our free throws, but we'll hit more than we won't. And we can use our assets, our distribution channels, our marketing channels, whether that's e-mail or magazine page or a digital ad or D/Cipher to feed those businesses with customers. And then we will grow those customer bases and those revenue models off of them.

And so the inversion, sort of, has come to embody all of that, that kind of concept of how do we bring these brands into the next generation of media? How do we create new sustainable, durable business models that are not disintermediatable by Google or AI or anyone else? And so that's what we're working on now. Yes. And it's nice to be able to say, okay, I think, that's the growth that's sort of on top of the growth we're already delivering.

And I should have mentioned at the beginning, if anyone has a question, feel free to raise your hand or submit it online, and we'll get around to you.

Okay. So let's see. How should we think about -- so one question on margins, and I want to get back to capital allocation, macro and a few other topics. But for People Digital margins, so 45% incremental margins last quarter, 60% of your revenue -- I mean 40% of your revenue. How are the margin profiles different for the sessions versus non-session-based revenue? And how much investment is required in some of these inversion shifts?

Yes. I mean we had really strong margins in Q1, 200 basis points of margin improvement year-over-year. We expect that to continue in Q2. It's coming because the -- each of the revenue models in the non-session-based bucket, the ones that are growing, have very attractive margins, definitionally; otherwise, we wouldn't be able to do it.

Certainly, licensing, as everyone knows, is very, very high margin. And that's been growing, helpful. Most folks think the fastest-growing bit of that is the AI licensing. It's actually not. It's the content syndication, the content licensing that we're doing, again, across Apple News and other syndication partners, although the AI is certainly high margin and helpful.

The other key point is these non-session-based ad, the ad side of it, meaning the D/Cipher and these sponsorships and these social extensions, all these events, all these things that we do for advertisers, is also very high margins, a very premium product against premium brands that we're able to charge for.

So the margin profile is strong. We are, definitionally and always have been, very cost disciplined about all of this, all of our endeavors, all of our ventures. We do think that AI is benefiting us. We're getting more efficient, particularly at product development, targeting at kind of testing and creating ad copy. So there certainly are some efficiencies coming from all of that. So we think that margins will continue to be strong.

As we think about inversion, the inversions that -- inversion projects, these new projects, again, we're using -- that's the key point. We're using our assets, our owned and operated assets, to seed these businesses. Once we see success, then we invest behind them, then we can start to really accelerate them. And so there's not a big capital outlay today. We're reallocating resources from slowing parts of the business to growth parts of the business. We're investing in our -- using our owned and operated assets to grow. And then once we find success, then we can hit the accelerator and go. So I think we can continue to deliver strong margins while we make these -- navigate all these currents.

I think this is the longest we've ever gone in IAC fireside without asking about capital allocation because you finally had someone interesting.

So I do, Chris, I have a question for you on that. I mean, look, obviously, IAC has historically been very acquisitive, but you're transitioning from a holdco to -- away from a holdco, I guess. So how should we think about your capital allocation priorities and how they're going to change going forward?

Sure. So Barry touched on this directly on the earnings call. Really 3 priorities he said. He said the M&A market is not that interesting to him. He said that for a while. Also, as part of our consolidation, we're going to have less resources running around looking at deals. Our prioritization on capital allocation is our own stock at IAC, MGM shares. The former, we bought back 13% of the company over $400 million over the last 15 months. The latter, we bought about 1 million shares each of the last 2 quarters. And then the third would be strategic M&A through People Inc. And so that's how we've articulated it. That's how he's thinking about it. And it is a cleaner, clearer capital allocation strategy than we've had in some time.

I think that is a natural segue to you, Tim. So third one was M&A and People Inc. So what would be of interest to you?

Anything that would further our ambitions to have direct relationships with the end consumer is the #1 priority for us right now. Anything that can get us there faster or at scale already would be amazing, where we can bring our channels to bear and really accelerate. We are always in the market for brands, new brands. It would only be for A+ brands. That's the future of this segment.

We have many good quality brands that are not A+ brands that, while we have a nice kind of cash annuity, cash flow annuity coming off of them, they're not the future. So A+ brands, of which there are a few, direct connections to advertisers or consumers, consumers first and advertisers second, maybe a little bit of ad tech would be areas. I'd say we're more active than we've been in years, but there's nothing imminent yet that we've really found that sort of all the -- checks all the boxes.

I want to come back to MGM just for a little bit, and maybe we'll wrap on People. So 26% stake, you're well in the green since your 2020 investment. What's -- you've kind of given your rationale, I think, for holding MGM shares, but is there anything -- what could lead you to divest over time? Would you ever consider divesting? And how big of a stake would you be willing -- how high can you go from an ownership perspective?

Sure. So a few elements in there. Would we ever divest? I mean, it really is up to our Chairman and the Board on that. Nothing has been part of IAC forever, except maybe The Daily Beast, but that -- so there is an opportunism, but there is a real commitment to MGM and real belief in it, and Barry has called it a forever asset.

In terms of a natural or targeted ceiling to our stake, I wouldn't articulate any such level. We did agree to a voting agreement with MGM. And between Barry and the Board, which really caps our voting interest at 25.7%, I think, any voting interest we have over that will just be voted proportionately with the shareholder base. So I think it's going to be more around as MGM allocates capital -- continues to allocate capital to their own stock and such where our voting interest would go or our ownership would go.

Look, when you think about MGM, there are a number of factors that will create growth or clarity in the valuation story that are either midstream right now or are uncertain. Uncertain would be the forward environment in Las Vegas. Clearly, we're in a K-shaped economy where the high end is doing extremely well and the low end is under pressure. You can see that manifest in Las Vegas across a variety of earnings. I think when there's clarity around that, given the quality and positioning of their facilities, we think there will be a re-rating there.

Secondly, their digital assets between BetMGM or its 50-50 JV with Entain, they flipped from money with cash flow losing to cash flow generative. They dividended it out last year and have given public guidance for this year; feel good about their position and the solidity of their iGaming business as one of the leaders there.

The wholly owned digital assets at MGM internationally, LeoVegas, the JV in Brazil, we think that will show real growth and profitability improvement over time as they execute on their business. China, which is a very large holding in MGM China. And then the Japan project, which was an unusually large and long-dated capital project. But as we get closer to its opening date, investors, we think, will be as excited about that likely as they were about Macau opening up and Singapore and the other monopoly or close to monopoly Asian gaming assets that have been out there. So we are believers in MGM and the management team and the strategy. And part of the goal is to continue to simplify the story to make clear the value that's inherent in the assets.

Any questions in the audience?

Perfect. What are you guys doing in international markets with the traffic? With the content?

We've never -- we're -- about 85% of our traffic is U.S.-based. So internationally, we rely predominantly on programmatic markets to clear our inventory. We certainly have a lot of -- or several magazine editions throughout Europe and the Middle East that we're excited about and are good partners for us.

You guys have a lot of iconic brands that touch on the same areas that you're seeing creator economy. How do you think about that going forward as something that you are going to co-opt or something that you're going to compete with? But specifically around a lot of your premium brands, there are people getting that same kind of guidance and interaction outside of that ecosystem.

Yes. Good question. We did -- we actually did a little acquisition last year called Feedfeed, which is a creator economy, sort of influencer network around the food space. It was something we kind of easily could plug into our premium sales team, has a lot of resonance with the advertisers. That's one model.

The other is, I mean, we think that we can create those same capabilities, products, personalities ourselves, either resident inside our 4 walls, and we've done -- we have examples of that where what formerly would have been, I don't know, a junior editor or somebody was like a star is now really a social media star or sensation or creating products. And so a little bit of co-opting in, I guess, in that sense has really been the model.

We have brands like InStyle, which some of you are probably familiar with, which was a thick magazine 20 years ago, doesn't even publish a magazine anymore, has virtually no traffic from Google, is our fastest-growing property, is creating original video content, is creating sort of influencer-like characteristics. And so I think for some brands, particularly a brand like that in the beauty fashion space, is really kind of creating its own space within that kind of the context of the creator economy. Yes. It's a good question.

Chris, I'm going to give you your last question, I think. So you've been doing this for 5 years coming to all these conferences, meeting with investors. So you've had a lot of IAC questions and talk. I'd be curious, what do you think, from the inside, like what are the biggest investor misperceptions around the business? Or what surprised you the most over the last 5 years?

Well, I mean, look, we clearly underperformed for investors when I came in and the portfolio was in more challenging shape than I realized, but more importantly than Barry and Joey realized at the time. And the mandate when I was coming in was to help rebuild IAC with the cash balance that was there at the time post-Match and Vimeo spin and then it honestly rapidly moved to triage given the state of Angi and the Meredith Dotdash integration and a few other things.

I think we've gotten it to a clear place, and these guys have done a great job getting People Inc. integrated and executing and really leading the category. I think things that are underappreciated is how hungry and focused Barry is, how active he is, how intellectually curious he is and just his engagement on People Inc. and MGM. The -- I think the performance of People Inc., I think, is underappreciated. And then we've been focused on executing in a disciplined way, and that will likely continue under Neil and Tim's management.

And then maybe, Tim, for you, in our final minute, as you kind of step into the consolidated CFO role, CFO of People. What are you most excited about? What do you think can be most transformative to the business in the years ahead?

Yes. I mean we're obviously excited to take over from the good work that Chris and Joey before him and others have done and step into that seat. That will be an experience for us. Notably, about People Inc., as Chris said also, like, it's been a journey since the merger. We put the former Dotdash and Meredith together about 4 years ago, now 5 years ago, going on 5 years ago. We had to get through the integration, which is always harder than you expect. There was an ad recession, which is never great for an advertising-supported business, and then AI emerged, right?

And so we think we've, sort of, largely, shook off all of those challenges, outperformed all of our competitors, have grown now for 10 straight quarters, solidly expanded margins. And so I'm excited to get sort of that story out there and that narrative past and get past the AI overhang narrative and really start to get people focused on the future of what this business can be.

Great. Thank you, both.

Thanks, Cory.

Thanks, Cory.

Good day, and welcome to the IAC First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Christopher Halpin, COO and CFO. Please go ahead, sir.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC First Quarter Earnings Call. Joining me today are Barry Diller, Chairman and Senior Executive of IAC; Neil Vogel, CEO of People Inc.; and Tim Quinn, CFO of People Inc.

IAC has published a presentation on the Investor Relations section of our website today entitled Q1 Earnings Presentation as well as a letter from our Chairman published last week. On this call, Barry, Neil, Tim and I will provide some introductory remarks referencing that presentation and letter and then open it up to Q&A.

Before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent annual report on Form 10-K and in the subsequent reports we filed with the SEC. The information provided on this conference call should be considered in light of such risks.

We'll also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during the call. I'll also refer you to our earnings release, investor presentations, our public filings with the SEC and again to the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all material non-GAAP measures.

And now I will turn it over to Barry.

Thank you, Chris. Good morning, everyone. I wrote a letter that I hope everyone has read because it says it far better than I can say about this transition that we're undergoing. A lot of people ask why now? Well, the truth is this is really been going on for the last couple of years as we simplified -- want to simplify our operations. We've been through -- since this organization started 30 years ago. We've been through 4 cycles. Each time we've gone through one of those cycles, we've been a smaller enterprise because we spun off so many public entities. I like that because I think that gives us kind of energy and focus to build up again. I also think that the 2 principal assets probably, hopefully, the only assets that the company will have in the future.

I'm talking about the -- actually the present rather than the future, people and our interest in MGM Resorts. In a way, as I wrote, I think there's a perfect hedge. One is in the virtual world primarily, that certainly prints a lot of magazines as well, but it's very much in the digital world and the other is very hard assets of resorts in the United States and in China, and a building in Japan. But rather than me [indiscernible] around, I hope you'll just take a second to read the letter. I'm not -- actually, I should do the thing that they do with Amazon, which is, all right. Now we'll take 5 minutes for everyone to read the letter and be silent, but I'm not going to do that.

I would like though to be sure to thank Mr. Halpin, who has been with us for many years outstandingly. And is this the last call which you will be on or you'd be on the next one, too?

It's sort of a coin flip. So we'll figure it out at [indiscernible].

We'll have one more of you, but thanks for a great information.

Thank you.

And with that, let's move on. It's much better, actually, I think for all of us, if you just ask pointed questions and we'll respond pointedly.

Fair enough. We're just going to do a few prepared remarks just to lay out some key pages. So Neil, do you want to kick it off?

Sure. Everyone goes on to Slide 5. And you can see we, again, at People Inc., we had a very solid quarter. We delivered 8% digital revenue growth, our tenth consecutive quarter of growth and digital adjusted EBITDA margins expanded to 20% from 18% in Q1 of last year.

Our performance is underpinned by diversified audience and revenue mix, a real diverse audience and real diverse revenues and a laser focus on meeting our audiences where they are now. To that end, in the quarter, we continue to invest in a host of new products and services including what BD calls or inversion projects and what we've called our inversion projects. These are businesses built off of our iconic brands that extend and transcend traditional publishing models, accelerating our nonsession-based revenue. We have a few updates on the early projects we've talked about and some highlights of what's to come. There's real traction around our [indiscernible], our recipe locker tool, the People App and InStyle breakout series, the intern and the boss on social media.

We expect to roll out in Q2 a membership club for a super fans of Southern Living among our strongest audiences and plan to follow with a similar program for food and wine. And something very exciting for us. We're launching a new social shopping tool based on the learnings of our scaled commerce business, where shoppers can easily save and store their pics for future purchases in a very innovative way, that's to come as well.

We plan on a drumbeat of product launches through the coming quarters. So you can expect that from us. And look, our focus is meeting audiences on their terms and the next slide further illustrates this.

So if everyone flip to Slide 6. You'll see the trends over the last few years continue. As you can see, our opportunity is clearly on the right side of this page, core web sessions continue to be challenged. Google search traffic declined as expected, and we expect that will continue. Traffic from the Open Web also declined a bit as a substitution rate from core web sessions to off-platform audiences increases. The driver of our growth continues to be though these off-platform audiences, which grew 27% in Q1. We see strong performance across Apple News, TikTok, Instagram, YouTube and syndication partners.

And our audience trends align with where users are today and how advertisers and marketers want to connect with them. As you can see in our numbers, the strategy is working. That takes us to Page 7.

Our big story continues to be our nonsessions-based revenue, which grew 24% year-over-year in Q1. Non sessions-based revenue continues to grow as a percentage of our digital revenue. We're now at 41% versus 35% in the first quarter versus the first quarter last year. Similar to last quarter, this is led by Decipher, our AI-powered targeting tool, ad-targeting tool by our social and custom ad programs by Apple News and by strong licensing performance, including the addition of our Meta deal.

We also maintained a healthy business in sessions based revenue by delivering a solid quarter and continued strong monetization of these audiences. The strength of our brands is really driving premium rates. And look, the model for our future is clear and in focus. One, strong growth from our non-session-based revenue streams; two, executing against our sessions-based businesses; and three, connecting directly with our audiences and advertisers and meeting them where they are, including our big focus on our version projects. We're very proud of the quarter, and I'd like to welcome Tim to the call who's going to give a rundown of the financials.

Great. Thanks, Neil. It's great to be here, and I'm excited to have a chance to work with everyone. I, along with almost the entirety of our management team have been in our positions for over a decade, both working with and for Neil and under the leadership of IAC. So this continuity is a big part of the success that we've had together and something that we think is -- it gives us a lot of confidence as we undertake what's going to be an exciting transition. So we look forward to that.

Referencing Slide 8 for a second and refocusing on the financials. As Neil said, we had a really strong quarter in Q1. Digital revenue grew 8%, and we saw digital margin expansion of about 200 basis points, generating solid 45% digital -- incremental digital margins. This is a testament to the strength of our brands, the diverse revenue models that they support and the continued discipline we bring to all of our investment decisions. Print EBITDA declined in the quarter, which was expected. There is some quarter-to-quarter volatility there, but we reiterate our expectation that full year print EBITDA will cover people in corporate overhead with the caveat this year, excluding the estimated $15 million of Google litigation expense.

Finally, I want to highlight that we continue to generate really solid and predictable free cash flow of almost $50 million in the quarter, putting us on track to exceed $150 million of free cash flow this year. That's on net debt of about $1.1 billion. So we feel really good about the balance sheet and the opportunity to continue to delever rather quickly.

Moving on to Page 9. I want to highlight some changes we made to our segment repeating. We transitioned the management of a business we call M&I, which is a legacy media agency business, previously captured within our Print segment, which now operates under the decipher team in Jim Lawson. As a result, we reclassified the business from print to digital, both for Q1 and over historical periods.

The reason for this is it unlocks 2 exciting new opportunities for us. Number one, it opens up a new distribution channel for Decipher, notably independent agencies and political advertisers previously untapped by our sales team. The second opportunity is by putting this business and operations under Decipher, we can offer these advertisers a more advanced product delivering superior performance and at better margins to People Inc., and you saw some of that benefit -- some of that accrued to our benefit in Q1.

One point on political advertising. Historically, People Inc., has not run political ads on our branded properties, but we can now target this ad category on third-party sites using Decipher. These political ad cycles create a little bit of volatility in the numbers, especially related to the 2024 presidential election cycle. Excluding those political dollars, just to give you a baseline, M&I was -- revenue was flat, excluding political. So that's the business we're bringing over.

This change in segment reporting resulted in about a 200 basis points drag in digital revenue growth in Q1. So the 8% growth would have been 10%, but for the change. Ultimately, however, this move is expected to accelerate growth and adoption of December, particularly in the second half of this year.

This change -- all these changes did not impact our guidance for the year, which remains in reiterating digital revenue growth of mid- to high single digits, delivering total company adjusted EBITDA in the $3.10 to $3.40 range.

With that, I'll hand it back over to Chris to take you through the IAC changes.

Thanks, Tim. Moving to Slide 11, we'll talk through financial performance beyond People Inc. this past quarter. It was a busy quarter on a number of fronts as we continue to execute on our core strategy of simplifying IAC and building our cash balances. First off, we completed the sale of Care.com in March, generating $296 million in net proceeds. Following closing, Care.com is now presented as a discontinued operation in our consolidated financials. We think this caused a little bit of confusion overnight, which we'll talk about more later.

I mean I hope it's the thing that caused a lot of confusion given how banged up we got just from people not being able to add properly.

We'll work with them on it, BD. We continue to allocate capital to the 2 companies we know best and believe in, IAC and MGM. We repurchased 2.9 million shares of IAC for $111 million since our last earnings call, and we've now bought back 13% of IAC since the beginning of 2025. We also purchased 1 million incremental shares of MGM for $37 million, increasing our ownership to 26%. As Barry said in his letter, we continue to view both stocks as the priority areas of capital allocation.

Our Emerging and Other segment showed strong performance this quarter as both Vivien and the Daily Beast continued their momentum with both seen accelerating revenue growth in the 2 companies combining to generate about $4 million of adjusted EBITDA in the quarter. We also closed operations in our Search segment in April. As many of you know, this was a noncore business that had frankly lived on well past many expectations. As previously disclosed, Google notified us late last year that it would not renew our search contract under the existing terms. Following negotiations across the first quarter, we came to the conclusion that we could not confidently operate the business profitably on the new terms on offer from Google.

As part of the shutdown, we incurred $7 million in costs from severance and the write-off of prepaid software and the search business will also now be shown as a discontinued operation starting in our second quarter financials.

One other note, we sold an unutilized domain name for $7.5 million this past quarter. With the search business now closed, we will look hard at monetizing the portfolio of domains that underpin that business including [ ask.com ] creating cash raising opportunities.

Finally, there's a lot of noise in comparing year-over-year profitability in the first quarter. So we laid out on the bottom right of the page, some key onetime items, including last year, a large noncash lease gain at People Inc. and the costs associated with our CEO separation and this year notable severance transaction and litigation expenses.

Moving to Slide 12. Last week, in parallel with Barry's letter, sharing his rationale for a planned rebrand of IAC as People Inc., we issued an 8-K summarizing the key elements of the consolidation of the corporate functions of IAC parent and the People Inc. subsidiary. The underlying principle is with 1 core operating business in People Inc., 2 layers of corporate expense, 1 at IAC and 1 at People Inc. are no longer necessary and don't make sense. When we managed a number of operating businesses, the IAC corporate layer provided strategic oversight, shared services and M&A support to the individual companies enabling them to operate independently and positioning them for growth and success. But with the sale of Care.com and the narrowing of our focus to People Inc. and MGM Resorts, the opportunity presented itself to eliminate duplicative functions and generate significant savings.

We've mapped out a careful consolidation plan in which over the course of the coming quarters, more than half of the corporate employees of IAC, including much of senior leadership will transition their responsibilities to counterparts at People Inc. and exit the company. Key areas in this consolidation are accounting, tax, internal audit, legal, M&A, among others. Each employee has a specific exit date and a retention plan in place to ensure they remain engaged until the consolidation is complete. The full transition process is planned to run through February 2027. We expect annual run rate operating expense savings of $40 million and a reduction in stock-based compensation of $20 million to $25 million. These savings will phase in over the coming quarters as employees depart, with the second quarter of 2027 being the first clean quarter where the P&L will show the full savings of the consolidation.

Total onetime expense of the rationalization is $63 million, comprising $15 million in cash severance and related expenses, of which $10 million was recognized this past quarter and then $48 million of stock-based compensation expense, which will be recognized over the next 4 quarters.

Kendall Handler, our superb Chief Legal Officer, and I will leave in mid-August, following the filing of second quarter financials and then will remain on as advisers through March 2027. Further, we expect that Neil will become CEO of the parent company, newly renamed People Inc., and Tim will become CFO in that same mid-August timing. All of us are working together to have a smooth transition to set up People Incorporated for continued success.

Finally, moving to Slide 13. This will be the last slide we present before going to Q&A. I know you're happy about that. On guidance, we reaffirmed People Inc. adjusted EBITDA guidance at $310 million to $340 million while raising emerging and other guidance to $5 million to $15 million of adjusted EBITDA based on the strength at Vivien and the Daily Beast. As a reminder, Care.com is now a discontinued operation, so it is removed from both our financials and our guidance. We saw a couple of reactions overnight that cited a Q1 IAC consolidated miss and reduced guidance. But our analysis is that those market commentators and a number of analysts failed to adjust for Care's revenue and EBITDA being removed as discontinued ops.

As a reminder, search will also be classified as such and will not be in our reported or historical revenue and prospective revenue and adjusted EBITDA and is not part of our guidance. We've raised corporate expense guidance to $95 million to $105 million due entirely to the severance that I just mentioned before and other onetime charges. Following completion of the consolidation, we expect annual run rate IAC corporate costs to be around $45 million and stock-based comp for the entire companies declined to $30 million. These figures are prior to any future reallocation of People Inc. leadership cost to the corporate level, which may occur. However, any such shift in cost allocations would have no impact on expected consolidated expense savings. With that, let's go to Q&A. Operator, first question, please.

The first question will come from James Heaney with Jefferies.

Can you just talk about the next chapter of IV? Like what do you think the next 5 years are going to look like? And what are the key areas of capital allocation going forward? And then would you still look to do M&A and select new areas? And then I have a follow-up.

Well, I can't tell you what the next 5 years. I can't tell you -- I mean, I can tell you with the next year, maybe or months are going to be. 5 years, who the [indiscernible] knows. What we have is, I think, extraordinary opportunity with what we got. I mean, what Chris has just gone over really is kind of a great cleansing. And that cleansing, as I said, has been going on for a while now. The combination of it was actually this quarter, changing our name, doing all of the tasks continuing to shed noncore assets, core assets, as we said before are hopefully going to be just 2.

We've got plenty of capital. We've got a very good balance sheet. We can go in whatever direction that there is opportunity. I think that biggest -- probably the biggest opportunity we have in front of us is the work that is being done in our publishing business and people and what we call [indiscernible] inversion, which is -- we've got 19 different initiatives, having nothing to do with standard advertising or subscription revenue. Out of this, I think we can build wholly owned or partnered extremely large businesses in all sorts of categories. The thing that I came to understand about people is across the -- how many -- actual -- I mean, I always get this figure wrong. How many magazines do we have [indiscernible]?

We have about 40 brands and 9 or 10 significant brands, so invested.

Throughout this, there is so much we know about so many things that no one actually else knows. And instead of being in the kind of tried and true publishing model of licensing, your brands and licensing all this knowledge and all that stuff for other people to exploit, we're going to exploit it. And out of that, I would be -- I'd be giantly disappointed if we are not able to build real substantial businesses having nothing to do with advertising, having nothing to do with subscriptions, but having to do with goods, services, products, et cetera, that out of the corpus of our understanding in all these areas, we have a better advantage than anyone else. And the other thing -- one other little note is, we published, what, $300 million or so actual hard copy things that are in people's homes or whatever, an additional page cost us 0.

How many actual other digital impressions do we have? [indiscernible] so if we come up with and if we don't come up with it, we're really [indiscernible]. But if we come up with good ideas, we can promote them at not a dollar really additional cost to us. What a megaphone that is for the future. So I -- that's the work that we're going to do. Wherever else, what [indiscernible] we're going to use our cash flow, we're going to continue to opportunistically buy our stock. We'll continue to invest in MGM Resorts, which I also couldn't be more excited about its future. So this is -- again, it's been worked on for the last almost 2 years. But this moment forward is a clean, clear, simple sheet that we get to write on, and we got, I think, all the necessary tools. So a bit long-winded, but there it was. Next question.

Great. And I actually just had one follow-up on just the macro environment [indiscernible] sorry, just from environment across people and other businesses, just kind of what you're seeing from geopolitical any other macro factors would be great?

Yes, I'll do a quick take on the ad market. I think last quarter, we told you guys on a 10-point scale, it was a 6 out of 10, I think it's still a 6 out of 10. There's opportunities, there's risks. Tim is here with us now. He can give us some color across industry.

Yes, there's certainly strength in places like health and pharma, tech, telco, areas that are exposed to the consumer are a little bit soft or particularly the average consumer, I would say, things like CPG, food, bev. And we did see a little bit of a slowdown in planning related to the Iran issue and conflict. We think that's abating a little bit now, but it's still a little bit touch and go. But overall, as Neil said, the market is strong, but it's not -- I wouldn't call it ripping.

Good enough to do our job unless something changes.

Yes. And I would just say, across the portfolio, we've been talking about the divergence between high income and low income for a while. I didn't know that was called K-shape but now that's called K-shape. I think that's just only continued and maybe probably unfortunately being exacerbated for the country, what's going on right now.

Your next question will come from John Blackledge with TD Cowen.

Could you talk about the key drivers of the 1Q People Digital revenue line items saw the outsized growth at performance marketing and licensing and other revenue? And just any color on revenue trends in the second quarter. And then on digital EBITDA, that was better than expected. Just any -- any color on the drivers of the upside to margins? And how should we think about 2Q and the rest of the year? And if you -- and just lastly, if you can give some color on like 1 or 2 of the separate initiatives as part of the inversion process, that would be great.

Let me do the inversion first, and then Tim can take the string of other questions. So the emergent stuff that [indiscernible], look, most importantly, it has energized our organization. We are really in a great spot where we own these brands that are iconic and pillars of sort of [indiscernible] culture at American a couple of stats, some updates on things we've talked about. One of the first things we did is we launched this recipe Locker. We're probably more than half of the recipe traffic on the Open Web right now. We launched it a little more than a year ago. We have 3.5 million registered users. We have 40 million recipe saved. We have a lot of momentum and a whole bunch of new product initiatives launching in the next couple of months.

The People app, which we've talked about before, again, the real win here is how we're engaging people. Visit to the app is about 3x as long as a visit to the web. If we get people playing games, which is the most popular thing on the app, it's a 20-minute visit. We're up to 430,000 users since the last call. And I think the important thing to note about both MyRecipes and the People app, which have taught us how to engage users directly and all of these new skills is, as BD said, we have not gone outside our own assets at all to grow these things. And as we roll out and as we tighten up financial models around these, that's a really big opportunity.

Another thing worth mentioning is we've really looked at social video and social video series is sort of like the new TV. And we have a real breakout hit on our hands in style with 2 properties called the intern and the boss. They were -- the first property the interim was launched about a year ago across all these episodes, which are 3-minute long episodes, 4 minute long episodes. We've got 45 million views in a year, and a robust sponsor business has grown around...

Just one side that a while ago that just on internal 1 package, 1 series alone, which is they do multiple series a year, multiple [indiscernible] one episode was like [indiscernible]...

We have been very fortunate that we've been able to sell a season is about 20 minutes long in total 6 or 7, 3-minute episodes and we have sold full seasons in that neighborhood, some more, some less. So there's a lot of interest in what we're doing and different...

Completely homegrown.

Completely homegrown, completely made by us. We own all the rights. We own everything, and it's a really successful venture that we're now modeling across people and a whole bunch of other properties...

So Southern Living, Southern Living one of our strongest [indiscernible] hello, if somebody cough, whatever. There are a couple of things in Southern Living that I think are really interesting. It's such a loyal base. So a couple of [indiscernible]...

Yes, Southern Living is a really big important property for us. Culturally, it is incredibly important in a big part of the country...

One of the things that I learned about and for those people who are the follower of South. Now from [indiscernible], which is a particular southern drink, it is. Southern Living is going to -- has developed. You keep saying that you're going to let me taste this...

We are going to let you taste it, but not right now...

That we are making our own team, our own brand, which we are going to manufacture and distribute and under the Southern Living branded Southern Living Suite T. That -- who knows where that actually goes. If it emerges out of the South, and so many of these beverages have been geographical in where they've started and then they go nation and worldwide. Who knows what that can become. Also, Southern Living does these houses. And I mean, they build every year...

We sell architectural plans to build Southern style houses, really high end houses. They're very, very beautiful houses.

Yes. And also, this community, I mean, we may develop a Southern Living actual housing community, branded Southern Living for that kind of lifestyle that, again, we'll own and hopefully operate.

So when BD mentioned before, 19 different ideas, there are actually probably more than 19 ideas floating around. And we are really chasing these down. I think going back to the tea, it's a really good example.

We can do each one, it can be a separately organized, finance business, whether our capital or other people's capital, that is a stand-alone P&L of its very own separate and apart from this historic publishing business that can spin off -- span off individual profit P&L businesses that have their own revenue, their own structure, et cetera. And you say what can happen again, it won't happen in a year. But in the next years, as I say, 5 years out, this could -- this is the fertile ground for dozens of businesses as we're looking at this because we got the intellectual property that can give us an edge in this that I think no one else has once we begin to concentrate on it, which is what we started to set [indiscernible] I guess we should go to the next question.

Well, let me just -- I'll tackle the financial questions as well.

What was that?

Which was how do we get through Q1, [indiscernible]

I mean that's [indiscernible] people want to hear about our future rather than enabling little figures that no one pays attention to. Look, if you all paid attention to what happened to Care.com, and how it affected this what last quarter or whatever the confusion in guidance and all of that, that would have been, I would say, paying attention to the business.

What I would just say is that Q1 was a continuation of Q4, which was really strength -- incredible strength in licensing and commerce, in particular, with the ads business roughly flat as we navigate these volume challenges. What I think the future is, is what BD is saying and Neil is saying, which is these non session-based revenue models, which currently comprise about 40%, 41% of our revenue, grew 24% in Q1. And that is the future while we kind of hold the line on the traditional sort of session-based media model, as it relates...

I mean, we've lost -- how much of our traffic have we lost from Google?

From Google, 65%.

Okay. What publisher has navigated this transition anywhere close to how you have all navigated this. We have transitioned from depending -- everyone has been -- and I said for a decade more that we all kind of our surf on the property and land of the monopoly of Google. And this transition out of depending upon someone else to give you traffic, which is what every animal has done in this digital world for the last almost 20 years. And we have now transitioned out of it into 2 positive territory of our own traffic with our own hands, not dependent on anyone else. I find it incredible that no one really recognizes that feat for what it has been. [indiscernible]

We think that's the future. And we're going to -- we think we see that 40% that is the traditional model grow meaningfully over the coming quarters and years.

And it's our. We don't have to -- we don't have to beg or borrow or getting these end of conversations with the monopolist. And we're really on our own firm ground, which is completely different than I think almost -- not almost -- it would be every other publisher other than the New York Times and the Wall Street Journal that have strong subscription revenues.

Your next question will come from Cory Carpenter with JPMorgan.

I wanted to ask about MGM in Turo. Maybe Barry for you with MGM. Could you just talk to what you see as the benefit of keeping MGM within People Inc., why not split that out separately? And then on Turo, any update you guys can provide on how that's performing? And is that a business that you plan to hold on or also are looking to divest?

I don't do the MGM thing. Yes. The answer is, of course, it is. Look, this corpus used to house 50, 60 different businesses. We can certainly handle 2. And MGM -- the prospects for MGM, I think our outstanding. MGM -- once we get closer to, we're building a large resort in Japan and each year that we get closer to its opening. I mean the only gaming resort -- and some great size, a $12 billion project that will open in Japan and, I don't know, [indiscernible]. The closer we get to it, the closer people will understand how discounted MGM is. I'm quite happy for it to be discounted now because it allows us -- MGM has bought back 45 -- almost -- we have a little 45% of its stock over the last 5 years. Its operations have been solid.

People talk about Las Vegas. [indiscernible] through also endless cycles. Nobody is killing Las Vegas. Their current conditions that bother going into that have particularly for instance, Canada, we're, I think, down -- I may get the stat wrong, 40%, something like that, from Canada, which was a very good draw for Las Vegas because of the policies of the administration and other onetime items and things. And it's just, I'm kind of glad it's been discounted because it has allowed us to buy back so much of the stock, which I think -- that -- the discount that it currently has will close at some point. I'm not anxious for it to close too soon.

Turo has executed well on its strategic effort to return to growth. We've talked previously that Turo experienced a real slowdown in volumes coming out of the froth of the pandemic. And that, combined with industry pricing pressures due to both working off pandemic highs and also some mistakes in electronic vehicles made by competitors. So the confluence of those 2 drove Turo revenue growth to mid-single digits at one point.

Company generated over $1 billion of revenue in 2025, but management really focused last year with the Board on driving substantially more growth reinvigorating marketing and improving cost efficiency. They hired a new CMO and David Cornes, who we believe is making the right steps to drive greater brand awareness. We've always said with Turo awareness in testing the product in many ways is the biggest challenge, repeat rate, NPS reviews are excellent. So David and team are focused at getting more people into the funnel and trying it and we're excited to see that play out. They also promoted Cedric Matthew to Chief Business Officer in order to improve pricing, matching and execution across the marketplace. These efforts have borne fruit with Turo returning to double-digit revenue growth year-over-year in the first quarter, really led by increases in volumes.

Rental car market pricing is no longer a headwind, and the company really has a clear game plan to drive more new users in. And we think it's an experience that blows away any [indiscernible].

If you asked us 6 months ago, I don't know whatever we'd say. I would have said okay, let's sell our interest in this. We're not going to increase it. We're not going to take over control of it, et cetera, et cetera. But it's now performing very well. I doubt in a year or 2 or 3, it will be part of this corpus because it will probably go public at some point or get sold by some strategic player or whatever, but it's now operating solidly. And my attitude is, unless somebody comes along and so it's a big little brick on our table, we'll keep it as it grows and it will spin itself out in some form, and we'll take the cash.

Yes. The only thing I'd say is I totally agree. They continue to improve gross margins and adjusted EBITDA margins solidly profitable with free cash flow. So full agree.

Your next question will come from Ross Sandler with Barclays.

Neil or Tim, just wanted to go back to the off-platform revenue. Could you just talk a little bit more about how you're diversifying the traffic to off-platform and what you're doing to kind of drive monetization and better margins in that business and kind of what you see for the medium-term kind of growth rate there. And then second question is somewhat related, but any update on the Google ad tech litigation like a time line for remedies and what we might hope to have as an impact to our business?

Yes, I'll do the lawsuit piece, and then I'll let Tim go through the numbers. As we've said before, the lawsuit that you're referring to is sort of what people call the Google Ad Tech lawsuit, it's building on [indiscernible] that Google legally uses dominance to monopolize the ad server and ad exchange markets. We believe we can fully rely on the government's findings here, and we believe damages will be significant given our scale and level of participation in these markets.

I mean it's not really a lawsuit in the sense of law suit because the ruling has already taken place. They've already said that Google is guilty of this [indiscernible] other thing. We and a bunch of other people have based on that huge claims, I mean, they are [indiscernible], they are legitimately huge. I mean -- and to me, it's like, okay, we will just wait for this process, which I guess is like a year or 2 or something like that...

We intend to invest between $10 million and $15 million in it this year. We expect that it will take the entirety of this year into next year optimistically to resolve in the first half of next year, unless we were able [indiscernible].

Yes, I mean it's just a money trough. How big, we don't know.

Yes. And then to transition to Tim's answer, by the way, very high margins.

Yes, correct. That's correct.

You can walk across the street with your check, the cash [indiscernible].

I would like to catch that, [indiscernible]. I'll do a quick background on the off-platform and I'll let Tim take the numbers. The -- just if you zoom out, the reason why our offering [indiscernible] the reason why our off-platform business is working is if you zoom out, we bolted is because we have these terrific iconic brands. And since we bought Meredith 5 years ago, we've worked incredibly hard to put our brands in a position where they can do all of these new things and where their permission to come into people's lives different ways. And whether it's some of the inversion projects or whether it's things like our historical events and things we've done, we've got real momentum because our brands are so strong, particularly the 7, 8, 9 brands that we talk about the most.

And I'll let Tim get into talking about the specific drivers, but this is the underpinning of everything we're doing going forward.

as we were saying before, 41% of our revenue grew 24% in Q1. That revenue is comprised of licensing, which is everything from Apple News to our AI deals to content syndication, as we've been saying and Neil has said a few times, we're creating more content today than we ever have in the past and distributing it across more platforms with success than we've ever had in the past. What is unique to us, we think, as we've highlighted a little bit here, is we have the combination of brands, audience size and reach, data about those audiences. And in the current incarnation, a sales team to go out and access advertisers to sell into those audiences. And so that's where we can control our own destiny, and grow, again, the nonsession-based revenue streams at, we think, really attractive rates, and that's the future for us. And we -- and it's not all speculative. We actually did it in Q1.

The next question will come from Justin Patterson with KeyBanc.

Two for Neil, if I can. First, I would love to hear more about your top priorities for Decipher for the year? And then second, just as you step back and look at how AI has changed the traffic funnel, what are some of your latest learnings there and how you think you can continue standing up a durable business for the next few years?

Sure. I'll do the AI question first, and then we can talk about the other question, Tim can help with that. If you look at where AI is for us from here, we feel very strongly about this. We have more opportunities going forward than we believe we have risks. If you go back in time 1 year or 2 years and you look at the risk of AI for us, they all had to do with search. And is AI going to disintermediate our audience sources. That already happened. And we came off the -- other side of it with a more diversified business and I believe is a stronger business. Now we're looking at AI as opportunity.

And I'll just dovetail back to what Tim just said. We are making 50% more content than we made 3 years ago at the same cost, and I would argue at an incredibly -- at a way higher quality and everything is still made by humans. We are able to do that because all of our processes, we are able to streamline with AI. We are able to use AI and Decipher to really tighten our ad targeting. We're able to use AI in our commerce business to really understand what makes people respond to offers. And AI for us, and people -- we are embracers of the future. We are deeply unsentimental about processes of how we've done things. And we've taught our 3,500-person organization, how do you use AI, -- like we don't have an AI [indiscernible] it is your job in your seat to understand who AI applies to you, and it's really, really working.

And the thing that people think is somehow AI is in congressive brands. What has happened with us is in a world where people's output is now increasingly confused as to, is this real, this is not really mistake. Brands are the -- they're there -- it's a value now. People trust us. They know what they're going to get. And we can now harness AI to make our brands and our brand offerings stronger. We think the opportunities are massive. And look, we are AI optimists at our place. And I think that is really important. And again, dovetails into all the things we're doing with inversion and all the things we do day-to-day to sell ads, like putting AI in your business when you have these incredible brands and they're all powered by humans is an incredible opportunity.

I think that's really well said. I will just add one thing about what I said earlier about what a wonderful situation is. I also have a natural hedge inside your own house. AI at MGM is actually meaningless. It is obviously being used internally to make the systems better in all sorts of ways. But nothing is going to get no AI until we get into the final simulation, whenever that comes. But nobody is going to get between a customer and one of our resorts is not possible to happen. And so it's this wonderful kind of hedge in the world. If everybody worrying about how AI is going to change the story their business, et cetera. At MGM, guess what, people are going to come to our places. There's not going to be a way for AI to in any way to disintermediate them. And I truly love that one.

It's really the fundamental reason I got interested in that area is because I was worried a few years ago about all sorts of areas of ours being dependent upon other people's control and here is this place where if you offer customers a great experience they're going to come to it. All right, end of that.

Quickly on the Decipher. Look, we're very optimistic about the Decipher. It really expands our TAM across the Open Web and CTV. And most importantly, it works. We have incredible first-party data. We have all kinds of AI powering going on, and I'll let Tim [indiscernible].

Yes, I just think I want to reiterate what you'll say is our capabilities are getting more sophisticated. We're getting our products are better. We have now our premium sales team selling it to existing advertisers. We have this M&I sales team selling it to the middle market independent agencies and political advertisers. We're really excited about it. And again, I reiterate what we said last time, we think it adds 200 to 300 basis points of growth to our growth rate back half of this year and into next year.

The next question will come from Youssef Squali with Truist.

So Neil, maybe just a follow-up to the advertising question. Can you maybe talk about the level of visibility you guys have in performance marketing and licensing revenues within people in particular? And any chance of seeing maybe additional licensing deals announced? And then Barry, given the very high free cash flow nature of the business and the cash you have on hand, et cetera, any interest in maybe starting a dividend to attract some yield-seeking investors at this point?

I'll go first. I'm assuming you mean AI licensing deals, very quickly, these seem to be bucketing into 2 categories. One, the All You Can Eat deal, which is sort of like the foundational LMs like our Meta deal and like our OpenAI deal. And then there are the more marketplace deals like our Microsoft deal, which will be pay-per-use deals. We -- since we started locking traffic, we have found -- we've entered into very productive discussions with all kinds of players, both expected and unexpected in this market with the exception -- exception of Google.

And what we are seeing is we're entering a phase of AI where the Internet -- the available source of information have been crawled and what's really valuable is people who are making new information. We make an awful lot of new information, and it's really valuable to people. So I would expect we will have more to report on this in the future. I've got nothing now [indiscernible] it's just -- it's also early. It's really -- also early on all of it. But the key thing we've done, and we believe this is the right thing to do is we want to be early and we want to seed at the table with everybody, and that is our take. And so far so good. We'll obviously keep you guys updated as things develop.

The only thing I'd add is the pivot, the strategic shift that Neil and Tim have already talked about of moving all of the content development overwhelmingly from evergreen to new content makes us even with so many other content sources getting washed out to see in the competitive pressures really positions people link even better with all of the AI models as a constant producer of new information, which is what they need...

High-quality volume of quality...

Sorry. As far as the dividend is concerned, sure. I hope as we build up cash, I think we should be a dividend-paying operation. So I would expect that to happen in the future.

The next question will come from Jason Helfstein with Oppenheimer.

I guess as a follow-on on capital allocation. Given the healthy forecast for free cash flow this year, should we just assume that, that is basically deployed between a combination of buybacks, MGM purchases and potentially a dividend? Or is there kind of a desire to see that kind of just build up on the balance sheet for optionality?

Well, I mean, listen -- no, sorry, let me start again, which is -- the answer is yes, which is we're kind of use our cash to continue to shrink the capitalization of this company opportunistically. I think we'll continue to invest in MGM. And yes, I would think -- I'm not so sure we'll do it within -- I don't people do it within the next few quarters. But sure, we will pay an appropriate dividend. I don't have any -- I think the investments we're going to make are going to be inside the operations of people. I don't see anything. We're not -- we're actually collapsing our -- we had a very large M&A group. We will have a very small M&A group out of this. I'm not seeing that as a -- like as we operated historically, we were out there for all of the opportunities that came along with being very early into e-commerce and Internet activity.

So so we were always on the lookout, always in any sector, in any place. We're not that anymore. I don't want us to be bad. We have so much opportunity in-house. That's where we should direct our capital.

And the next question will come from Matt Condon with Citizens Bank.

I just want to ask on affiliate commerce growth. It seemed like you guys had a healthy quarter there. Can you just talk about the drivers and just the future potential there to sustain growth?

I would just say that the commerce business has been remarkably consistent and resilient for quarters and really years. It's a testament to our team and their ability to drive growth, meaning [indiscernible] growth to recaptures, otherwise, that business wouldn't be growing. We're doing that by creating more [indiscernible] as Neil highlighted, and deepening the partnerships and relationships with the retailers. So there was an earlier question about visibility. We have solid visibility there. Obviously, the consumer is performing well, and we feel good about it and kind of sites. We have some new products coming out soon that we're excited about.

The only thing I would add is in by, and we'll see you in a while. Thanks, Chris again. So please [indiscernible] your income probably will be with us the next thing is that I hope that out of this in the coming days, we straighten out these numbers so that what was a very good first quarter won't be misinterpreted as something other than that, which it seems to have been at least overnight.

Which is the Care discontinued app.

Yes, yes, yes. Other than that, I wish you all well. Thank you all, and we'll see you -- well we don't see, but you'll hear from us.

Thanks all.

Thank you, operator.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Welcome to the IAC Fourth Quarter 2025 Earnings Conference Call.

[Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Christopher Halpin, COO and CFO. Please go ahead.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC Fourth Quarter Earnings Call. Joining me today are Barry Diller, the Chairman and Senior Executive of IAC; and Neil Vogel, CEO of People Inc. IAC has published a presentation on the Investor Relations section of our website today entitled Q4 Earnings Presentation. On this call, Barry, Neil and I will provide some introductory remarks referencing that presentation and then open it up to Q&A.

Before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent annual report on Form 10-K and in the subsequent reports we filed with the SEC. The information provided on this conference call should be considered in light of such risks.

We'll also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during the call. I'll also refer you to our earnings releases, investor presentations, our public filings with the SEC and again, to the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for material non-GAAP measures.

And now I will hand it over to Barry.

Good morning, everyone. We had a solid fourth quarter at the company. It was a confident finish to a year that was defined by focus and execution. People grew digital revenue by 14%, defying the expectations of all the digital publishing doubters. People's financial performance amid increasing AI disruption speaks really loudly. AI overviews are now appearing on most of our queries, and we're delivering record results.

As I've said before, People has prepared for this disruption for years and with brands able to travel where the audiences are, not just our sites and apps but across all social media, news platforms, video, events. We're expanding with the surge of new products and experiences wherever audiences engage. But at its core, our strategy at People is not to rely on the daily grind of conventional digital publishing to propel our future.

As I talked about last time that I was on this call, we're in the process of inverting these iconic traditional content businesses into entirely new consumer businesses. Products that stand on their own and revenue streams with stronger immunity against disintermediation. This isn't hypothetical. We're on our way right now working through several concepts. At Southern Tea, this iconically wonderful magazine that is beloved by its audience and has a product -- not a product, but often describes the experience of Southern Tea, a particular kind of tea that you only get in the South, we're going to do introduce Southern Tea's Southern Tea as a product that we will own and then distribute.

At Food & Wine, we're going to do a project with best chefs. We know the best chefs every place in the world. And we're going to organize those chefs in a way no one has done before and create a product line through that. At Travel & Leisure, we're going to do our own White Lotus. After all, we know every great destination in the world. We have the most beautiful pictures of everything that the White Lotus creators would have creamed over if they had access to that in creating different places. So we're going to do that. We're going to -- every single one of our books has opportunities for us to essentially invert the process and come up with products and services that we can brand and then we can promote through our -- how many books do we distribute, Neil, a year, like 350 million?

Yes. In the neighborhood, yes.

In the neighborhood, why did I get this wrong?

No, that's right. That's exactly right. Yes.

So we -- not only do we have that, so we have these books. Adding a page, 2 pages, 3 pages costs virtually nothing. So we can sell through in unique ways almost anything that no one else can do. And we've got -- that's just for -- we want to do stand-alone page ads but we also can do editorial about these products of ours. So if we get -- it seems inconceivable to me that we can't take these books that know more about their domains than anybody else anywhere until ChatGPT knows everything and if it does out of it long before, we will have figured out new business lines, which can't disintermediate by AI. But what I'm saying is we know so much about all these domains, and we can use that creatively to say, all right, what is possible for us to do out of that knowledge that we can create a new product or service. I think that is the gold mine of people in the ensuing years.

The other pillar is MGM. And as we had said, we increased our ownership in MGM. We repurchased more IAC in the quarter. We bought about 1%, I think it is of MGM. So we could get to 25%, which is an important actual accounting milestone for us. We've bought stock back of $337 million in '26. We're going to continue to evaluate buybacks as we always do, opportunistically. And we are ever mindful of this huge discount in the value of IAC.

We really do have a formative -- I really do believe -- deeply believe we have a real growth engine in People. We are outcompeting anyone else in digital publishing. And with all the headwinds and all the things that are going to happen to digital publishing and publishing in general that are downsides for us, every one of them seem to be upside. That's our different distinction. Anyway, if anything obvious, I am bullish on what '26 has in store.

And with that, I'm anxious to get to your questions, and I hope Chris will be relatively brief in his remarks.

Thank you, BD. I'll start talking on Page 5 of the presentation about People's financial performance. It was a strong quarter across the board with the business delivering 14% Digital revenue growth, driven by solid execution across all 3 revenue categories: Advertising; Performance Marketing and Licensing. Advertising grew 9% in the quarter, returning to growth and doing so despite a 13% decline in core sessions. Neil will go in more depth on this front but this highlights the success of the off-platform strategy and the strength of People's brands amidst AI headwinds.

Performance Marketing grew 17% in the quarter over the important holiday period, reflecting both excellent execution by Neil's team and the strength of the consumer. Finally, Licensing grew 36%, driven by robust engagement with our content across Apple News and content syndication partners and the new AI content partnership with Meta contributed a little bit to growth as well.

The Print segment declined 23% as expected, due partly to $20 million of revenue in the prior period from political advertising, which we flagged previously, and partly to the continued sectoral decline in print. Adjusted EBITDA was solid in the quarter, growing 9% in Digital when you adjust for severance expense a year ago and with incremental Digital margins at 26%. Print produced $13 million of adjusted EBITDA in the quarter, down from a year ago for the reasons stated earlier but more than enough to offset $9 million of corporate expenses.

So the fourth quarter capped a solid year, $1.8 billion of revenue, $1.1 billion of that Digital revenue growing 10%. Aggregate adjusted EBITDA was $331 million for the year, reflecting the exclusion of the $41 million in gains from lease buyouts and the $15 million in third quarter severance. And Digital full year EBITDA margins were essentially flat year-over-year at 28%.

With that, I will hand it to Neil to go deeper into people, strategy and performance.

Guys. Thanks, Chris. Thanks, Barry. I too will go against my nature and be as brief as I can and hit the highlights here. We had a really strong quarter. As you guys all know, the publishing and web ecosystem has been changing dramatically, and we've been working hard to change along with it. The strategies we've outlined to you and have been talking about, they're working. As Chris and Barry said, we had 14% digital revenue growth in the quarter. It's a testament to the strength of the brands, truly the strength of the brands and our team's execution.

Key is the diversity of our revenue models and the breadth of the industry sectors in which we compete is also a real strength. And I think importantly, in Q4, alongside our growth, we continued to invest heavily in a raft of new products and services, some of which you can see here on this slide, which I believe is Page 6 in your deck. The new Food & Wine Classic in Charleston exceeded our expectations. We had our most successful media cycle in the history of the Rejuvenated Seepixus Manali franchise, a very important franchise for People. And InStyle popular, the Intern social video franchise has become a real blueprint for what we're able to do our platform.

And we made solid progress, which I'm sure we'll get to in the Q&A on initiatives we discussed like D/Cipher and MyRecipes and the PEOPLE app, and there's a lot more to come, as BD said. We are energized. We feel really good about where we are. And we did all this in the face of a lot of disruption.

Let's go to the next slide, and we can talk through that. We delivered this quarter in despite of a very challenging environment to core web sessions. Looking at the core sessions, we're down 13% year-over-year in the quarter. The biggest contributor to that is a 50% drop in Google search referrals over the last 2 years. This quarter, we also saw a little softness in non-search traffic sources, mainly driven by declines in Google Discover, which is their version of Apple News, which had been a contributor to non-search growth earlier in the year.

However, offsetting the effects of core sessions decline is the continued rapid growth in our off-platform and distributed audiences. You can see off-platform views have nearly doubled in the last 2 years and grew 43% last quarter year-over-year. There's real momentum here. This is a continuation of a pronounced shift in our business. We are aligning our efforts and resources to connect with audiences where they are now. We are going where the people are. Our brands have great momentum across everything from Instagram to Apple News to TikTok to YouTube as well as real cultural cloud in our tentpole events and our operated properties.

And the non-session-based growth is underpinning our financial story. And the next slide really gets some color on that. If you go to Slide 8 in the IAC deck, this slide clearly shows that our non-session-based revenue sources are now the fastest-growing part of our business. Again, non-session-based revenue, revenue not based on web sessions, now comprises about 38% of total digital revenue, and it grew 37% year-over-year in Q4. This growth is led by D/Cipher, our events businesses, creator and social models, including the Feedfeed acquisition, our deep partnership with Apple News and our AI licensing deals.

At the same time, sessions-based revenue was 62% of total revenue and grew at 4% year-over-year. We absorbed the declines in Google referral traffic by delivering great premium sales quarter across our brands and showed continued strength in our Performance Marketing business. The brands are still super strong and advertisers and marketers are really interested in these brands, both in the new environments and the traditional environments.

Look, this is the model for our future. Strong growth from non-session-based revenue streams led by our growth in off-platform audiences at D/Cipher and executing against our session-based businesses while absorbing continued declines in referral traffic from Google and other platforms. We're super proud of this quarter. We have a solid model, as BD talked about. We got a lot of seeds planted, and we're excited and we got a clear path in front of us. We've got a ton to do, but we got the teams, and we think we have a real strategy to succeed.

So with that, I will kick it back to Chris.

Thanks, Neil. Moving to Page 10. Let's talk through performance at our other consolidated businesses. Care saw 9% revenue declines in the quarter, driven by softness in Enterprise, which we highlighted last quarter. Consumer revenue declined 4%, steady with last quarter, and we continue to see the benefits of Care's product improvements, marketing investment and add-on offerings bearing fruit.

On the Enterprise side, as employers have tightened their benefit spend, many have adjusted their existing programs, leading to a 13% Enterprise revenue decline for the quarter. This decline is exacerbated by some particularly robust client usage and out-of-period client true-ups in Q4 '24. We believe both Consumer and total Care revenue in aggregate will return to growth by midyear.

Care adjusted EBITDA was excellent at $19 million for the quarter, generating 22% EBITDA margins. Normalized on a year-over-year basis, profitability was essentially flat as Care incurred $9 million in legal charges and $2.5 million in severance in the fourth quarter last year.

Emerging & Other revenue grew 18% and flipped to profitability with $3 million in adjusted EBITDA. The revenue growth was the output of strong performance at the Daily Beast, where revenues grew 50% and at Vivian, which grew in the fourth quarter for the first time since Q3 '24 and has regained its momentum. Both businesses were profitable in the quarter and the year-over-year picture further improved due to the resolution of the legacy legal matter we mentioned on our last earnings call. Finally, Corporate adjusted EBITDA was $23 million, down from a year ago and last quarter as we continue to reduce our overhead and get back into the mid-$80 million range on an annualized basis.

Turning to the next page, we'll talk about guidance. IAC has always managed our businesses for the long term, not on a quarterly basis. At a high level, we will stop providing quarterly guidance as we do not believe it's productive for our businesses to focus on short-term results, particularly people as it navigates fundamental shifts in its industry. We want our businesses to remain focused on execution and long-term value creation, and this change also reflects proactive feedback from some investors.

As in the past, we make changes to our guidance based on what we believe is best for the businesses and our shareholders. We will, however, continue to provide annual guidance as summarized on Page 11. For People Inc., we expect both digital revenue and digital adjusted EBITDA to grow mid- to high single digits for the year. We are forecasting approximately $15 million in litigation expenses this year related to our Google Ad tech litigation, which will result in corporate expense exceeding print adjusted EBITDA by that amount.

Absent the litigation expense, we would expect them to offset. When rolled up, that produces our guidance range of $310 million to $340 million of total adjusted EBITDA for People Inc. I would note, this range implies digital adjusted EBITDA of $325 million to $355 million for the year compared to $315 million in 2025. We are expecting Care adjusted EBITDA of $45 million to $55 million with consumer returning to top line growth by the middle of the year.

Our Search segment, which comprises Ask Media or AMG, a search monetization business, has innovated while navigating a complex and challenging search ecosystem for more than a decade. A reminder that our Search segment is managed for margin, not growth and has not been an area of strategic focus at IAC for a long time as it has steadily shrunk in size and materiality.

As disclosed in our recent 8-K, we are in negotiations with Google, which supplies paid listings to AMG to extend our relationship and the outcome of those negotiations will likely determine the future of the business. At present, we are guiding to a range of negative $5 million to positive $10 million of adjusted EBITDA, and we expect to know a lot more over the next 90 days.

Emerging & Other should continue to grow top line, thanks to Vivian and The Daily Beast, and we are expecting $0 million to $10 million of EBITDA there. And finally, Corporate expense is expected to be $80 million to $90 million, and we will continue to work to come in at the bottom of that range.

Finally, Page 12 summarizes our continued buyback activities, as Barry mentioned. With our purchases since last earnings, we have bought back $337 million of our shares over the past 12 months and reduced our share count by 10%.

With that, let's go to questions. Operator, first question.

[Operator Instructions] Our first question comes from Ross Sandler with Barclays.

Neil, could we go back to Slide 8 and the non-session-based revenue growing 37%. Could you just elaborate on like what are the key drivers of that line? And how do we feel about that in 2026 in the context of the mid- to high single growth rate for People overall?

Wait, wait, wait. Neil, before you do, I just want to say one thing about the growth in people for next year. Yes, we're conservative. And when we come out with guidance, a silly process that why all of us engage in it, I do not know. But nevertheless, there we are. I would be very disappointed if People did not exceed that number. People has momentum. It is getting -- these areas that we're developing are going to take time to develop but that machine is so well run, and I think it's going to produce more than you are saying in your guidance. So I know you'll all get mad at me but that is what life is for.

It's we. It's we.

And look, the truth is we want expectations. Expectations are good. And Ross, to go back to your question, what is fueling that is from a high level, we're going where the audiences are. And if you look back like 5 years ago, this is going to be probably longer than you wanted, we were like 70% of our traffic from Google Search. Now it's like 30%, right? People would look at the Internet that we compete in and they would say, "Oh my God, you guys are too much Google. How can this say you're not diversified enough?" We would look at the market and say, 90% of the web started at Google, we're bad at this. Like we're not good enough at 70%, we should be better. And what that did was gave us a really tight and close view into Google, and we instrumented our business to work with Google, which at the time was the dominant source.

Now that gave us 2 skills. One, we realized very, very quickly when Google started to change, and that wasn't going to be the best source. And two, we were very early on it. So what we were able to do 2, 2.5 years ago is we were jumping up and down and saying Google Zero internally. And what it gave us to do is we developed all of these new skills. And the payoff of these new skills is now. We developed all these new distribution channels for our content, for our audiences, whether it's social, whether it's reaching people through events, whether it's reaching people through things like D/Cipher, we had a sense of where the market was going and we're going with it. The audiences are going in that direction and the advertisers are going in that direction, and we're going in that direction. And we feel like we've put together a really, really interesting pool of assets. It's different for every brand to address this.

And again, the proof is in the numbers, and we feel really good about what we've done. So that would be my answer.

And the next question comes from Jason Helfstein with Oppenheimer.

Just 2 questions for Barry. First, on M&A, without being specific but maybe in generalities, what are the types of assets that IAC is interested in? And obviously, we've all read about speculation of your potential interest in CNN. And would that -- if that was something, would that be done through IAC or outside of IAC but just generally talk about M&A aspirations.

And then just secondly, maybe, Barry, just review your investment thesis on MGM and why you felt that, that was a good deployment of capital right now as opposed to saving that capital for buybacks or M&A.

I'll start with MGM. It's kind of self-evident. We bought the stock at what dollar level, Chris?

$40 million.

No, no, no.

$40 million.

No, our total purchase of MGM stock. Our total equity in MGM how much.

We bought $1.3 billion.

And it's valued at what?

$2.2 billion.

So that's the answer to that. That's not the full answer. Yes, we've done very well. We bought it at the right time. We recognized it as something that we had interest in. But since we bought it, and we bought more since that initial purchase, I have become absolutely convinced that this collection of extraordinary properties, 40% of Las Vegas is owned by MGM. The infrastructure of Las Vegas can never be duplicated. Every piece of what they do is something that you can iterate on, that you can improve, that you can innovate without huge, huge amounts of capital and give people the experience that somewhat actually been hurt in the last couple of years but by its own hand, I think.

Las Vegas always said to people, you come here and there is value here. We've all heard of inexpensive hotel rooms, et cetera. There are some inexpensive. But I think the town really overplay gouge in certain areas. And I'm pretty sure that pretty sure that that's going to turn. Value will come back at the value area of part of the business. We are very much in the luxury part of the business, and that has done well.

And as we begin this period, I think, of innovation, I think we're going to turn the town on in a way it has not been turned on at least in the most exciting way other than the wonderful sphere that has been planted here. So my belief in Las Vegas in that no one is going to get between the excitement and entertainment of Las Vegas by any technical means of AI unless we are all in a simulation and nothing else matters. So that's Las Vegas. Then we are developing a resort in Osaka in Japan, only gaming resort of huge, huge $12 billion scale that it's long dated. It won't come into play until '29, '30. But when it does, it's going to be one of those golden assets.

So I am -- I can't -- if I look around and you say, what would interest me in M&A would be to find another opportunity like this one. By the way, I haven't found it. I don't think it's on the horizon, by the way. I don't really think that right now is the time for us to be, I wouldn't -- we never squander around but putting like bets down on things that are not -- that do not have -- it's kind of a bromide, you never want to do it if you don't have potential. But right now, I really don't see anything at a price that would be rational to pay. And I don't see anything that's really particularly exciting. We've got a company that's got People, which I can only overdue, so I'll not do more than I did before in what I think of the potential of People. And we've got MGM, and we've got cash to continue to increase our ownership in both of those. And yes, an opportunity may come along. But I like the hand we have right now.

So that's a long-winded answer. Did I answer the first part of your question? Oh, Well, you asked about CNN. I've been interested in CNN for years. I think it's less than 50-50. I'll get the opportunity but the hand could play that way. We'll know in the next months as the Paramount Skydance, Warner Discovery, Netflix diorama plays out. I suspect that if it happened, it would be on the personal side, not through IAC but that's really unpredictable at the moment. I think that's the rather fulsome answer to your question.

Thank you, BD. Yes, just one point I'd add for investors, great results released by BetMGM today, reflecting the performance there and solidity. So another leg to the MGM.

What I don't get is how you all people -- I'm not all God here. I sound like that person God forbid. What I don't understand of the entire investment community is here you have a situation where we invested -- not a huge amount but we invested hundreds of millions of dollars in BetMGM. BetMGM lost and people were critical of it for several years. And it took us -- of course, it took us some time to get it together. We go from like $170 million -- or you can correct me with the exact figures or loss or a $200 million loss in 1 year to $170 million profit the next year. Why hasn't everybody say, "Oh my f***ing God, that is a turn." And this year's projections, are much higher than that. Nobody pays attention to it. I truly don't get it. But eventually, truth speaks. What I am assuming nationally.

The next question comes from Justin Patterson with KeyBanc.

You're clearly excited about a lot of these transformations going on at People. How scalable are some of these new curated experiences? How do you think that changes your relationships with audiences and monetization opportunities? And how should we think about just the investment levels to support this transformation in the AI era?

And then separately, just one on Vivian. Bill Kong was recently named CEO. Could you talk about some of his top priorities in that role?

Yes, I'll go first and Chris will go second. So what I would say is the key to our business is we need direct relationships with our audiences and direct relationships with our advertisers. And the things we are most excited about in the business are the things that you highlight, the new things that we've launched. And look, we're -- the roots of our company are 100 years old. So it was not a given we would be great at these things and launching new things. But so far, so good. We feel very good about the momentum we have and some of the headline things we've talked to you about.

So first, let's just go through a couple of them. MyRecipes, which we launched a little bit less than a year ago, which is a recipe locker or place to store recipes. I think most of you guys know we are by far the largest player in food and recipes on the Internet. We have in under a year with very little to no outside marketing, we've got 3 million registered users who've saved 24 million recipes. And we're perfecting that experience. This is an audience that advertisers love. It's a service that people love, and there is no Google between us and these audiences. It's really, really effective, and it's teaching us a skill set, and this has an incredibly bright future. It's got a great team running it also.

We've talked a little bit about the PEOPLE app with you guys. The PEOPLE app for us, I think, and I'm not sure if BD has ever brought this up before, the PEOPLE app can eventually be the hub of the entire People brand. And what we have really focused on with our investment dollars is getting that experience right. So we're -- we launched it again a little less than a year ago. We've got about 300,000 downloads. Our expenditure has not been on getting downloads made but 300,000 is a pretty good number.

What we're really focused on is engagement and how can we change people's relationship lower case P with upper case P People. And here's the key stat that's interesting. And the thing that gets us so enthusiastic about this. On the web, when someone goes to people's -- sort of people.com, People's website, the average visit is 2 minutes long. If you are in the app and you open the app and you start playing around the web experience, which is not anywhere near as good as it's going to get with the plans we have, that's a 6-minute duration. So we are 3x the amount of time spent in the app than on the site for typical visit.

Then we launched a bit ago a suite of games. We launched something called the People puzzler, which was historically in the magazine, a crossword puzzle, and we launched 2 new games since. These games have been a huge hit. People who are in the app and play a game have a 20-minute duration in the app. So you can see real traction. And you can see maybe subscriptions go out of this thing, maybe a big ad business goes out of this thing, maybe sponsorships do. I'm not sure but delighting an audience with a great product is great. And what I would say is with 2 of these things, building new products is not a skill every company has. We've worked very, very hard at this. We've pivoted a ton of resources away from what we've done traditionally into these 2 projects.

And I'll just -- I'll highlight one more while we're at it because it's something we're really proud of. At InStyle, we've got kind of a hit on our hands. We do a lot of social-first video. And we did a social-first video series we're currently doing called the Intern. And it's almost -- it's very like the Office E. Every one that appears in the intern actually works for us and works on the team with the exception of 2 people who play interns at InStyle. And it has captured a zeitgeist of sort of like the Gen Z experience in an incredible way.

Neo, when we started doing the Intern, and we do, I don't know, 6 a season and we do how many seasons -- how many of these do we do a year?

Yes. So there's -- so far last year, we've done 7 seasons, but a season is just 3-minute episodes.

Fine. What I'm trying to do is just educate people. So the first few, they -- first, they cost nothing but you'd made 50,000 or 80,000 or whatever. Now for -- I think it's for a given season, you're up to sponsorships at the 500,000, 700,000 level?

That's correct, yes.

I mean when you think about that, again, out of nothing at no real cost. This is done in-house basically on an iPhone or it has been done on an iPhone. And they are genuinely funny, and they have reached a genuine audience. That is that we now have, as what Neil has done is redeploying his forces into these new and productive areas. With the brands that we have, when you are doing that and you're dealing with ideation, you create new things that have nothing to do with search, with the issues of digital advertising or the problems of digital advertising, they're their own products, and we are producing them at real scale now. That's really exciting.

Yes.

It's quite enough for now. Next question.

Yes. Let me -- and I'll just cover Vivian. Vivian is an exciting business within emerging and other. We announced last week that Vivian Founder and CEO, Parth Bhakta, has moved to Chairman and Bill Kong, our COO, is taking over as CEO. Parth has done a great job building this business. It is a clinician marketplace.

I am not seeing [indiscernible] right now. Can you...

Excuse me, operator.

And the next question comes from...

Operator, please stop. Operator, I'm answering a question quickly. Vivian is a marketplace that sits between 2.7 million nurses on the one side and health care staffing agencies and providers on the other. It is really a great moment. It is -- the business has returned to growth last quarter after facing some major sectoral headwinds. It is driving forward in taking share and its AI products, we think, are industry changing. So Bill is the ideal leader. He's grown -- he's developed across product, marketing and other channels and has really performed extremely well. Parth is excited for him to take over as CEO, and it's really about driving our AI products deeper into our customers.

Operator, next question please.

The next question comes from John Blackledge with TD Cowen.

Great. Maybe 2 for Chris. One on the People 2026 EBITDA outlook. At the midpoint of the range, it looks like kind of flattish EBITDA. Can you unpack the guide a little bit, Chris, and how we should think about drivers of EBITDA at People this year?

And then second question, just on IAC's free cash flow conversion. So you guys guided to '26 EBITDA range of $260 million to $335 million. How should we think about free cash flow conversion of EBITDA this year?

Yes. Thanks, John. On EBITDA guidance, we definitely want to explain this in detail to investors at People. So when you compare 2025 adjusted EBITDA for People to our '26 guidance, there are 2 key countervailing trends you need to understand. As background, '25 adjusted EBITDA, when you remove the $41 million in lease gains and the $15 million in severance expense was $331 million. That comprises $315 million of digital adjusted EBITDA and then an incremental $16 million deriving from the excess of print EBITDA over corporate expense. So $315 million and then a $16 million incremental.

In our 2026 guidance, we are guiding to mid- to high single-digit EBITDA growth off of the $315 million generated in 2025. On the other hand, our guidance assumes $15 million in Google litigation expense hitting corporate. Without that litigation cost, we expect print EBITDA to equal corporate expense. So with the litigation, what you're seeing is a $31 million net swing from '25 actuals to '26 guidance in the relationship between Print and Corporate. It's that swing that leads the guidance to be in the $310 million to $340 million range and to look flattish year-over-year. Our most important line item in our mind is Digital revenue and EBITDA, and that is growing solidly. And as we said before, if you adjust for the Google litigation expense, we are guiding to $325 million to $355 million on Digital EBITDA.

Going to IAC adjusted free cash flow. Simply, there are 4 line items between EBITDA and free cash flow that you should think about in your models. CapEx, change in working capital, net interest expense, taxes. CapEx for IAC is minor. It was $20 million last year, probably $20 million to $30 million in the '26 range. Net cash interest expense is the difference between the interest expense on the People debt and the interest income we make on our cash balances. Last year, it was $64 million of net interest expense. We would expect net interest expense to be around that same number, assuming flat yields on cash.

Cash taxes are minimal due to our NOLs. So that leaves working capital. That was a major use of cash last year due to 2 items. One were the lease buyouts that we talked about, north of $40 million as well as some unfavorable timing this past year of vendor payments and receivables. Looking ahead, we don't expect any similar large outflows like the lease buyouts and then working capital should normalize. So when you roll that up, we'd guide to 50% plus EBITDA to free cash flow conversion across IAC in 2026.

Thanks, John. Operator, next question.

Next question comes from Cory Carpenter with JPMorgan.

I had 2. I wanted to ask, you called out the $15 million spend on the Google litigation. Maybe just update us on where you're at with that and kind of how you're thinking about the range of outcomes.

And then, Barry, I think last quarter, you talked a lot about also the simplification of IAC. So maybe if you could just give us an update on how you're thinking about that and any progress you've made.

I'll do the litigation thing quickly, and then I'll kick to BD. So again, just to refresh everybody, the lawsuit builds on the government's antitrust case against Google, where Google was found to monopolize the ad server and ad exchange markets, right? Two major publishers, Gannett and Daily Mail already sued. And in their cases, the court ruled that they don't need to again prove what the government approved. We expect to rely on that ruling. Again, the costs are about $50 million. Chris has gone in great detail about that. Damages will be proved in this litigation in this phase. We seek to recover hundreds of millions of dollars in damages. Again, it all depends on where this lands. But we look at this as an investment. They've already been found to be sort of, again, I don't know the legal term in violation of these laws. So we'll see where it lands.

BD, you want...

It has the potential to land very big. So as far as simplification, we've been doing this for really the last couple of years as we've cleaned up many, many things inside IAC, closed, transferred, et cetera. We're going to continue to do it. We're bringing down our overhead, which we should. Our overhead was large because we had so many businesses that we were responsible for and so much infrastructure. We're now really down to a couple of key businesses. So you're going to see simplification throughout the year.

Thank you, Cory. Operator, next question.

The next question comes from Eric Sheridan with Goldman Sachs.

Maybe 2, if I could. First, with respect to the Ad business, any mark-to-market views in terms of the overall macro environment, either verticals or the way in which advertisers are spending their money, brand versus direct response in terms of how that's impacting the business right now? And then I wanted to revisit the comments you made about the forward guidance in your prepared remarks in terms of maybe going a little bit deeper on what you think it might do to impact the operations, freeing people up to think a little more medium to longer term and whether the investment community could also expect some sort of at least qualitative commentary mark-to-market on a quarter-to-quarter basis.

Sure. I'll do the ad market first, and I'll kick to Chris. So I think we do this a lot around here. I think we put the market at a 6 out of 10 where it is now. It's healthy, remained generally favorable in Q4. It's pretty solid for us. I think particular to us, we have some real advantages, right? Brands matter and in an AI world where everything is uncertain and everything is a platform and everything is UGC. The strength of brands really resonate. We're in a lot of markets. That helps. Our programs really perform, both the traditional on-platform and off-platform. Our ad relationships are good. And we're very much with some of the new things we're doing, we're in the ad side guest. Not only do we have like the real nuts and bolts to deliver but we've got the cool stuff, too. And it's really helped us.

And I think the strongest sectors -- and again, I can only really speak to us but some of this does trickle out to the broader market. Health and pharma has been good for us, travel, tech. Some of the weaker sections for us or some of the stuff you're seeing macro exposed like food and beverage, CPG, in a large way has been very challenged. I'm sure you guys have heard about that. That's really our take. Look, we -- the market right now is good enough for us to execute, and that's our main concern.

And then on guidance, look, the -- it's a few things. One, there are a lot of -- especially in People Inc., which is our biggest business, there is a lot of volatility in the underlying market. Neil has talked about everything they're doing to guide the ship successfully through the choppy waters and they're proving that out in the data but stressing about quarter-to-quarter metrics on sessions, individual revenue line items, et cetera, we thought -- we came to the conclusion it's a long walk for a short drink. And that doesn't necessarily mean downside. We surprised to the upside last quarter with very strong revenue. It's really around head down execution to drive the strongest, best digital businesses. And we'll do that on with an annual basis and tell you what we're working towards.

And then to your point, we will talk -- or to your second question, we will give guidance qualitatively -- not guidance, we'll give views qualitatively of what's happening in the markets, what's happening in the dynamics and our strategy.

Thank, Eric. Operator, next question.

And the next question comes from Dan Kurnos with StoneX.

Maybe first for Neil, any directional way to think about sizing or helping us think about D/Cipher+ this year? And should we think of any announcements coming the way that Roku used Nielsen ACR as a data and conversion layer with Amazon DSP? Are there any ways that we could think about major partnerships?

And then I guess for Chris, just on Care, maybe just unpack the growth a little bit, how you think it could trend over the course of the year and then more longer -- and then longer term, just what are the aspirations for growth at Care?

I'll go first with Decipher. So we're obviously very excited about Decipher. It's our fastest-growing off-platform business in terms of headcount, in terms of revenue. It's going to be a big driver for us. Again, it opens up a lot of TAM for us, right? We can do CTV. We can basically target using our data, which is fantastic. the Open Web. I think to dimension it for you guys, I think we'd say of the growth, the mid- to high single-digits growth, 2 to 3 points of that this year will be D/Cipher+. It's got real momentum. And I think we're at a place now where Jim Lawson, who I believe who I know that you know, has really found its footing. We have a real team behind this, and this is a -- it's go time on this business. And I think you're going to see real results in it this year. We're very, very excited about it.

Again, it's all about our strategy. We're going where the people are there, and we're bringing advertisers with us, we're bringing our content with us, and this is a really big part of it. And Jim is doing a great job. There's a lot of energy around this.

And I'll pump to Chris for the rest of it.

Yes. And on Care, the consumer business really was in a multiyear slowdown post -- partly driven by post-pandemic dynamics and then also driven by challenges or underperformance on the product and in our marketing. We've taken steps and Brad Wilson and team have taken steps on a number of those in the consumer -- this consumer platform starting second quarter last year that we've talked before about. We're seeing the stability in sign-ups. We know our comps, we start to get back to more normalized levels and lap some easier comps starting in Q2. So as we've talked about, we expect to get back to consumer growth midyear revenue and then drive on from there.

And then Enterprise, we're working through some macro challenges as employers cut back. But there's also opportunities to grow employers and new entrant -- new customers that can come in. So our goal is to get back to revenue growth next -- this coming year. We believe we're going to get there and have line of sight. Margins, we feel good about and the underlying profitability. On an ongoing basis, care should be growing 15% to 20% given its market position, given the opportunities in both its segments and just the ever-increasing need for care, both for consumers who are really struggling with it across child, senior, adult, pet and also employers who are increasingly view it as a base benefit.

Let's do the last question, please.

And the last question comes from James Heaney with Jefferies.

Yes. Great. I think a lot of them have been addressed. But just on -- maybe just on the slowdown in digital revenue growth into the mid- to high singles next year. Curious like any conservatism in that guide? Any comping dynamics that you'd call out driving that? Or is that more of an organic slowdown? Just anything on that? And if you can talk about phasing, I know you're not thinking of it on a quarterly basis but anything we should think about for the year?

Certainly. If you look broadly across '25, Digital revenue grew 10%. Our guidance of mid- to high single digits reflects some conservatism as we continue to navigate broader search disruptions. As Barry and Neil have said, we feel good about our positioning. We feel great about the robustness of our monetization and the off-platform strategy and the scale and freshness of our content. But we always want to be thoughtful at the beginning of the year on our outlook. So that would be the background.

Thank you, James. Thank you, everyone.

Thank you all. Nice to be with you.

Thank you, operator. We can conclude the call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the IAC Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Christopher Halpin, COO and CFO. Please go ahead, sir.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC Third Quarter Earnings Call. Joining me today are Barry Diller, Chairman and Senior Executive of IAC; and Neil Vogel, CEO of People Inc. IAC has published a presentation on the Investor Relations section of our website today entitled Q3 Earnings Presentation.

On this call, Barry, Neil and I will provide some introductory remarks referencing that presentation and then open it up to Q&A. Before we get to that, I'd like to remind you that during this call, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on current expectations and on information currently available to us.

Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent annual report on Form 10-K and in the subsequent reports we filed with the SEC. The information provided on this conference call and in the presentation should be considered in light of such risks. We'll also discuss certain non-GAAP measures, which, as a reminder, includes adjusted EBITDA, to refer to today as EBITDA for simplicity during the call.

I'll also refer you to our earnings release, investor presentations, our public filings with the SEC and again, to the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all material non-GAAP measures.

And now I will hand it over to Barry Diller.

Thank you. I'm very glad to be with you all today. I've been talking to investors lately and I more than get everyone's desire for more clarity about IAC's future. With the departure of our CEO and the spin-off of Angie, it's understandable that there are questions about our direction and our future. And I'm going to address those this morning, both in my remarks and in answering any of your questions. There are 2 core parts to IAC today. They're underpinned by a strong cash position and our balance sheet. They are people and our investment in MGM.

Broadly, we have been, and we will continue to slim down IAC's assets and our overhead. We'll get lean and crystal clear that People and MGM are IAC until something else wildly compelling comes along. What we want to do is, first, reimagine People Inc. from defense to offense. Second, help MGM's excellent management teams simplify its businesses and change its pitiful multiple. Next, we'll divest our noncore holdings and reduce our overhead and finally, continue to be opportunistic on share purchases -- repurchases. It certainly seems to be that opportunistic is now, as is increasing our ownership of MGM. There's this huge discount in the value of our shares and a mind-blowing discount in the value of MGM. I mean it's selling at an emergency multiple. There's no chance that is going to continue to infinity.

Time will correct this, but we won't let time stand still. So let's start talking about People Inc.. As for transparency, changing the name from the awkward DDM was a good first step. We are the largest digital and print publisher in America. We way outperform our peers with our brands and our content and our technology. The market narrative says content is dead, given all the AI talk of disintermediation and Google's continuing drive to shrink the revenue it shares with publishers. It's all a giant overreaction, and it ain't our reality.

Yes, there's a transition in search. Yes, we're getting declining traffic from Google. But for some years, we've known these disruptions were coming, and we've been preparing and mastering for this rocky environment. Our results speak to that as Neil Vogel and Chris Halpin will soon detail. If you just play the old game, like most publishers and yes, you're in trouble. We've been doing the opposite for several years now, and we're transferring these great brands built over a century in the old media mold into digital powerhouses.

We built out a massive modern content engine behind these brands that allows us to reach consumers wherever they are on our sites and apps via social media and news platforms through video, at events actually everywhere. And for monetization, no one comes close to us. But beyond all that excellent execution from the great people at People, there is the evolution we're conducting beyond the hide-bound publishing industry. What we're going to do is invert the base publishing model. I've used the following examples to my colleagues like what if 5 years ago at Travel & Leisure, which has always had these great pictures every place in the world, covers vacation spots, just some of the best photography and best experiences. What if they thought of white LOTUS and produced it.

What if our Food & Wine magazine, knowing so much about all that, food and wine and stuff, they thought, why don't we invent [indiscernible]. Why didn't Investopedia, one of our sites and then Shark Tank. There's just -- and the other thing is at People, we test an astonishing 16,000 products a year. It's just got to be a pony in that. It goes on and on from there to every property we've got and all these incredible opportunities to invert our content businesses into a whole stream of new businesses.

If we get that going, there's really no ceiling to what we can create, and it is to create and not be on the back foot like almost every other publisher seems to be these days. That's what we'll be doing while we continue to execute on the day-to-day grind of today's publishing business. Neil has got more to tell you. But for the first time, since we've acquired these assets, I am jointly excited about their future, frankly, if we spent all our time on this one asset of ours, we can create a giant octopus of owned and operated companies and businesses to the future.

All right. MGM, here we're dealing with the opposite of the fear of disintermediation. MGM is a giant hedge against this intermediation. I use that a lot, because it's in the genuine and proper because it really is the genuine and proper scare word for the disruption from artificial intelligence. For sure, AI will affect everything other than live entertainment and travel experiences, as there is no simulation that's going to get between MGM and its worldwide customers. Please think on this. These assets can never be disintermediated. Las Vegas can never be disintermediated and no one, nowhere is ever going to build the depth and scale of Las Vegas.

It's now and it's forever going to be the entertainment capital of the world. It's got more infrastructure per square inch than anywhere else, sports, gaming, performances from every big time interior, the best food, on and on. It may ebb and flow given macroeconomic issues from time to time. But it's been a constant build over 30 years or 30 years really when Steve Wynn kind of reinvented the city. Las Vegas is actually almost 100 years old. And MGM's footprint in Las Vegas with 9 resorts is so violently strong that it has 0 comparison.

Back in 2020 at the height of COVID, we invested in MGM. We bought it right, understanding extraordinary position in Las Vegas that had a superb management team, exciting digital opportunities and was building a truly most extraordinary resort in Japan. Our expectations have been realized [indiscernible] rebounded from the lows of the pandemic. Digital operations scaled to profitability and have bought astounding 45% of its shares. Shockingly, despite all this, MGM share prices declined 29% since the beginning of '22. As management said on the last earnings call, if you back out the value of MGM's publicly traded holdings in MGM China and the value of its 50% stake in MGM, everything else in MGM is trading at less than 3x EBITDA.

It's extraordinary to say the least, and it will not continue. Think about what we got at them, Jim. Just think about it without all the gnarling on this and that individual stat, 9 casinos, 40,000 hotel rooms, convention centers at scale that no one else has anywhere, restaurants, hundreds, 400-or-so restaurants, 120 music halls, arenas, et cetera, upcoming F1 and more sports teams coming along in the next years. it just can't be duplicated anywhere. Our ownership at MGM is now at 24%, and I believe it will increase over time, both by our direct purchases as well as MGM stock purchases.

I'm continually awestruck that the stock market seems beyond too focused, I have always does, I guess, in the short term. But Bayer's point to the economic overhang of Las Vegas after this massive post-pandemic bounce, the 50-50 JV structure at MGM, BetMGM and the fact that Japan is going to take some years before it comes online. When Japan comes online, the only casino in the entire country of Japan, I mean, can you imagine? Well, all these people may say in MGM, they're all wrong and time will certainly tell. On IAC capital allocation, which I telegraphed earlier, we purchased an additional $100 million of shares since our earnings call in early August, which brings our total year-to-date purchases to $300 million, which is 7 million shares or 8% or so of our shares outstanding.

Our cash balances are over $1 billion and they will be enhanced when we sell these noncore assets. I don't intend for our capital sit idle, nor to be spent on acquisitions at high prices and speculatively questionable concepts. We've been inventing and building businesses at IAC for over 30 years. We had a green field for decades in Internet and e-commerce. That period has pretty much ended, but it doesn't take a birdbrain to be sure there are going to be opportunities in the future and in our future. But I'm patient. Well, I'm not really very patient about almost anything. But I'm cautious now of the pricing of assets, and I've got no intention of splurging.

And if needs more saying, I will say it again, People and MGM have enough opportunity to fully engage us. So now Neil Vogel will give you more detail on People Inc.

Thanks. Hello, everyone. I share BD's confidence and optimism around our business. We had a strong quarter. It was our 8th consecutive quarter of digital revenue growth. The 9% digital revenue growth in Q3 was the second quarter in a row at 9% and high end of our guidance range. We've talked to you guys a lot about what drives our performance, and it remains consistent. Our performance resulted from 3 things: our iconic portfolio of brands, the scaled audiences we've built and our superior execution around those 2 things. We've continued to focus, as we said we would, on diversifying our sources of revenue and audience in the quarter.

And you can see the evidence of that and the strong results in our licensing and performance marketing revenue streams and our continued extremely strong off-platform audience growth. We've got real traction, and we're excited about it. Even with our investments in the quarter, we saw improved profitability, $72 million of digital EBITDA, 27% margins and 26% incremental margins around that. And we're positioned to grow as we evolve the business. And as BD said, we're doing this on our front foot, not our back foot, and we feel very good about that.

So going to the next slide. Our core asset and advantage is our iconic brands. These are incredible brands with real gravitas, real cultural resonance and real history. People, Food & Wine, Travel & Leisure, household names. And each has scale that puts us near the top in audience size or at the top in audience size of every category that we participate Fun fact, we reach over half the U.S. population each month with our assets. And importantly, for our brands and the type of content we do in an era where content feels increasingly artificial and manufactured and is, in fact, increasingly artificial and manufactured. We are authentic. And our audiences want more of what is authentic. You see it in our growing audiences, and we see it in the responses to our offerings. We have a real relationship between our audiences and our brands. It's been built over decades. That is the core, and that is the underpinning of the opportunity to grow the medium business and do a lot of the things BD talked about.

So if we go to the third slide of our presentation, an important concept is we are where audiences are and where audiences are going. Diverse sources of audience have become a real strength of ours and have been a real focus of ours for a longer time than it's been sexy. We've -- what we've been doing across audience categories is exactly what drove our growth over the last 8 quarters. And let's talk about our different categories, just so everybody understands what we do. The first is sort of the left side of the slide, which are owned and operated assets. These are assets obviously we own, they're scaled, it's diverse ways to reach audiences, everything from events to websites to e-mails to our direct-to-consumer properties, off-platform where our content lives on other platforms and increases the value of those platforms. It is where audiences are increasingly online and we're there with them.

Apple News, YouTube, TikTok, these are our recent Feedfeed acquisition, we'll talk about, et cetera, et cetera. And then the third category is addressable audiences. an addressable audience for us is how can we take our assets and our skills and extend them across the open web. What -- and we do that with something called D/Cipher+, which we've talked a lot to you guys about -- we can leverage our trove of proprietary first-party data around consumer intent and use that to target ads not only on our sites, but around the web, our ads perform in a superior way to almost anything we can find online, and we can extend that across the Internet. This allows us to 4 and 5x the addressable market for our ad products and unlocks the ability for us to target CTV as well, which we're very excited about.

D/Cipher is our fastest-growing product by revenue growth, our fastest growing by investment since its launch, it has grown every quarter sequentially and we're excited. It's going to be a meaningful contributor in 2026 and really expands what we can do with our audiences.

Slide 4 outlines our audience trends. And let's specifically talk about changes in Google search traffic and what that has meant to us. As you can see from the first chart on the left, and this is the first time we've shared this, the rise of AI overviews on the Google search results page for searches that we compete has been rapid and dramatic. Google Search as a traffic source for our core brands has gone from 54% of our traffic 2 years ago even more than that, if you go back to the time we put Dotdash and Meredith together to 24% of our traffic this past quarter.

The good news, and this is the good news is we've maintained our scaled audiences despite this because we were prepared for it, as BD said. We were very early to recognize changes in Google, and we are very early to recognize AI, and that is why every other meaningful source of traffic has increased for us over the past 2 years. We expect the Google Search challenges will continue, but believe our strategy and investments are going to enable us to maintain our overall growth. If you look at core sessions, as we mentioned at the Goldman conference a bit ago, we expect it to be down this quarter in the range of 4% to 6%. We're down about 6%. That was due to some tough comps. We lapped the Olympics last year and the lead up to the election and obviously, the Google challenges. This is the primary reason our ad revenue declined 3% in the quarter, which was very much volume-related, not rate related, but we expect to return to growth in Q4 despite continued pressure on Google sessions.

And off-platform use has been a bright spot. Again, it's something we've been focused on for a long time. And again, I can't say this enough times. It is where consumers are and it's where consumers are growing, off-platform audiences accelerated 66% year-over-year. Over 1/3 of this quarter's revenue is not based on user sessions and this is our fastest-growing revenue stream at 16%, our fastest growing -- faster growing than the outset based revenue. And I want to talk a little bit about our Feedfeed acquisition. Feedfeed, as I think most of you know now, is a leading food influencer network. It's the first time we have bought of capability and not just a media property, it just shows our focus on how we're going to monetize audiences off platform and how we're going to play in an influencer marketplace, which is increasingly important as a media mix, particularly when selling to advertisers social advertising is the fastest-growing sector, digital, and this really put some wind in our sales in that area.

In regard to the last slide, we can talk about our execution, where we go from here. The first thing we should probably talk about is a bit of news that was in the release last night. Our AI conversations are heating up. As you saw in the release, we have an agreement with Microsoft to be a launch partner of what they're calling their publisher content marketplace, it is essentially a pay-per-use market where AI players directly can compensate publishers for use of their content on sort of like an a la carte basis. As we've said, we intend to have a seat at the table as these content markets develop, and we work directly with Microsoft. We are physically in the room with Microsoft, helping to concept this marketplace. The really interesting thing about this is Microsoft has committed to paying for content to support its AI efforts and Microsoft's CoPilot is going to be the first buyer in this marketplace. It's a very strong endorsement of us to be in the room with them and a very strong endorsement of the publishing marketplace and the value of content to make AI that is of high value. If you zoom out a little bit and you take a look at the broader Ideal landscape, which is obviously of great interest to us and to many of you guys.

There seems to be 2 types of deals happening in the world, sort of like this deal, the a la carte Microsoft type deal, which is a marketplace, a vibrant marketplace where people can buy content as they need it, or broad use deals like we have with OpenAI, kind of the all-you-can-eat deal, where people can access our content as much as they would like. We are very happy in either model. Both can be viable as long as our content is respected and paid for. we can work in our model. Now let's briefly talk about where we're focusing and we've talked about this on past calls as well. We are doing 2 things. We're trying to connect directly with our consumers and we're trying to connect directly with our advertisers and our marketers.

In key investments and growth initiatives, we have a deep pipeline, again, as BD alluded to, of direct-to-consumer ideas that we are going to be trying, running down, and we're very excited about them. We call it inversion ideas around here, but these are new ideas, harnessing the power of our brands. We've done some of this already. We've discussed my recipes and the People app. We recently launched something called Review, which is a new commerce offering based on our great commerce relationships for product categories that our brands don't typically cover.

And we've got real momentum around these direct-to-consumer properties. We're also very focused on editorial tentpoles that can drive multiple revenue streams, we just launched something called Red Plate Cafe, [indiscernible] and Gardens and most of you have heard of best new chefs and traveling or wealth best in food and wine. Moving down the page, we talked about Feedfeed, and off platform, we talked about D/Cipher+ and all the different networks that our content lives.

And to close, we've made some hard decisions this past quarter. We laid off about 6% of our workforce. We did that essentially to free up capital to make all these investments and to be very mindful of our profitability goals. So to close, we had a strong quarter. Our brands are great. Our audience are strong. Our execution has been pretty good, and we've got all the ingredients we need for a bright future. I'll now turn it over to Chris.

Thanks, Neil. I'll be efficient so we can get to Q&A, but there was some expense noise in the quarter, which on first blush Cloud's results we were quite happy with. Just turning to Slide 11. Let's quickly walk through People Inc.'s third quarter financial performance. As Neil said, we realized 9% digital revenue growth at the top end of our previous range. Strong growth in performance marketing and licensing offsetting decline in advertising revenue. I'm sure we'll talk about that more in Q&A.

Focusing on profitability. These numbers are pro forma excluding the 2 major onetime impacts in the quarter. $15 million of severance expense deriving from People Inc. reduction in force and a $5 million favorable gain for the buyout of a lease on attractive terms as we rationalize our real estate footprint. Reconciliations for both the one-timers are in the appendix. Digital adjusted EBITDA grew 9% pro forma in the quarter to $72 million. Incremental margins were in line with total margins. Continued cost management in the print division led to only a 10% decline in adjusted EBITDA and a 15% revenue decline, which we are happy with, and corporate costs declined 15% pro forma.

So in aggregate, excluding the 2 onetime items mentioned before. People Inc. produced $75 million in adjusted EBITDA in the quarter, above the high end of our previous guidance range, which had specifically excluded the effective severance.

Looking forward, we expect digital revenue growth in the 7% to 10% range and the usual strong adjusted EBITDA margins in the fourth quarter. For the year, we've slightly lowered the bottom end of our adjusted EBITDA guidance range to $325 million to $340 million. Note, this excludes both the $15 million in severance and $41 million of lease gains year-to-date. The wider reflection under -- reflects -- the wider range reflects some uncertainty around the continued disruptions in Google Search as well as approximately $4 million of legal expenses for our ad tech litigation at Google.

The timing of this litigation has accelerated due to favorable judge's decisions and we view this spend as worthwhile given the magnitude of the sought damages underlying our claims. But it will have a negative impact on profitability in the fourth quarter this year and going into next year.

Turning to Page 12. We wanted to highlight some large onetime items that impacted the quarter beyond those at People Inc. Cares profitability was impacted by $3.5 million of nonrecurring charges deriving from a lease impairment and severance. Additionally, our emerging and other segments swung to negative $20 million of EBITDA this quarter driven entirely by $21 million in legal expenses for litigation that concluded in the quarter related to a legacy business. We had included costs for this litigation in our guidance, but the final costs increased over prior estimates.

Importantly, we would note that the total expense for this legal matter for the year were $34 million that future expenses related to the matter will be negligible and that the rest of emerging and other is profitable.

Going to -- are the company's Care as mix performance. Good news is consumer continues to return to growth, great work by Brad Wilson and team on product, marketing, and we're seeing improvement in sign-ups and retention. Unfortunately, enterprise business has slowed significantly over the past few months due to employers tightening their spend with care. For the fourth quarter, driven by those enterprise pressures, we expect 7% to 9% revenue declines in care. We expect consumer and have line of sight to return to growth in the second quarter next year and then the whole business to grow in the back half of the year.

For the full year, we're -- modifying our adjusted EBITDA range for Care to $45 million to $50 million. reflecting the aforementioned $3.5 million in onetime severance and lease impairment costs as well as a little bit from enterprise revenue headwinds. And then finally, turning to Page 14. As Barry said, we bought back $100 million in the quarter. We bought back $300 million, about 8% of the company year-to-date. As Barry said, buybacks continue to be a core part of our capital allocation strategy and our shares at present would seem to be even more attractively priced than earlier this year and there's a high bar on M&A.

With that, let's go to Q&A. Operator, first question, please.

The first question will come from Dayton Helfstein with Oppenheimer.

Barry, nice to have you on the call. I was going to ask about your current thinking on MGM's valuation, what the market is missing, but I think you've covered that pretty thoroughly. So I guess it's really, I guess, why would an investor want to invest in MGM through you? Why wouldn't they just buy it directly, intellectually wouldn't and inherently trade at a discount, like under IAC, and I guess you'd say, that's -- you get it cheaper if you buy it through IAC, but then over time, how do you close the discount and obviously, the RF community is involved here and they find ways to make money. But I guess -- it just feels like fundamental investors are struggling with the IAC stock with MGM just such a big piece of the value. You can look out the stock trades. It literally mirrors the MGM stock price. So that's question number one, I guess, is just like what you can do to get kind of IAC to separate from the performance of MGM. That's question one.

And then question do, Chris, how should we think about the onetime expense cleanup in 3Q? Is there more to come as far as in the P&L? Or should we think about just the numbers should be clean going forward?

Well, I mean I don't think the issue is separate from MGM. As I said before, IAC is now will be primarily People Inc. and MGM. One, by the way, is, as we talked about, we are -- this, I believe, and increasingly going to become this publishing content and businesses that come out of that. And I would think any acquisitions we make, I wouldn't say any, but certainly, acquisitions in line with that, we just made a very small acquisition, but one, I think what was it? Total purchase price was?

We didn't disclose it, but not material.

Well, fine. So like around $10 million, disclose it or not. There it is disclosed, Neil. But, acquisitions in line with where we're kind of inverting this publishing business where we're going to create new businesses out of publishing. So that's kind of -- that is in the world of disintermediated media. I think we're going -- we are dodging it better than our competitors, and we're going to continue to dodge it on that side of it.

And then we've got this absolute disintermediated asset of MGM. The one is -- I wouldn't call it a hedge against the other. But there's -- you can certainly go out and buy MGM, when you buy IAC, you are getting our ambitions in publishing and you're getting MGM. And I think that, that is a very good balance. I don't think that's going to hold forever. I think new things are going to come out of that over time. But it is what it is. Well, you can buy MGM on its own, as they say, we're a twofer.

Yes. I think the -- I'll just quickly add to that, you are owning MGM, in our view, even cheaper through buying it through IAC than owning MGM. We fully support you buying MGM directly. We think both stocks as Barry said are outrageously discounted. But within IAC, you're getting as evidenced on the first slide on our private assets, all our holdings, People Inc., Care, Vivian or little search business that keeps chugging, Daily Beast and other holdings at a discount at a negative value. So embedded, you have even more value upside and optionality in the IAC stock if you believe in MGM.

With respect to the one-timers, and we do feel like we cleaned up a ton this quarter. we don't expect the severance or lease gains. We don't see anything of that continuing to people. We'll always be optimizing our cost structure, but large onetime charges at people, we see a clean path forward care, the lease impairment and severance there were onetime. And then on the emerging and other legal case, that is fully behind us. And as we said, we expect any future costs associated with that to be negligible -- we also had an adverse ruling on a real estate dispute that showed up in other expense and income, and that was settled through previously escrowed funds.

So we really cleaned up a lot in the quarter. Looking forward, the only thing in my mind that I'd highlight would be the Google litigation, where we said we're spending about $4 million this quarter and expect to spend a little bit. But in that case, we are plaintiff seeking damages. So again, it's what we believe is an ROI...

And the range of damages, potentially.

We're seeking hundreds of millions of dollars in damages.

Yes, from any point of view that we've looked at we went into this and said, is it really worth it for us to do it. It was almost as if because I don't like lawsuits, if we actually couldn't have done it, I wouldn't have done it, but we had no choice. There are hundreds and hundreds of millions of dollars that are potentially to be gained here.

The question will come from Cory Carpenter with JPMorgan.

Maybe for you, Neil, just thanks for the background on People. You had a busy quarter, the risk, the Feedfeed acquisition, the Microsoft IPO. Maybe pulling all together, just latest thoughts on the state of the business and what this indicates about your kind of view on the future, recognizing you covered some of that already. And then I want to follow up on the People litigation, which you just referenced. What's the update on that, Chris, I think you mentioned there was another ruling that has implication that came through recently. So how should we think about that going forward?

I'll go first, and then I'll pass it to Chris. I think in aggregate the things you mentioned are all reasons for confidence and optimism. The first is the Microsoft deal, which we talked about the mechanics of it. But I think what it is, is an indication that these deals are happening now. this summer, we started to block AI crawlers. It was very effective. It brought almost everyone to the table. I expect, and I think the pundetreate also expects there will be more deals happening. Hopefully, we'll have some news for you over the coming months and quarters over deals, that could be both sort of the all-you-can-eat deals any a la carte. So we feel very good about that.

The value of our content is becoming clear to people. That is very important. Second feed seed is just an evidence of how well we're doing off-platform and how important that is to our future. We're going to continue to look to ways to monetize these audiences. And I think it's worth noting, and it's something that Chris has talked about before. Our relationships with platforms like Instagram and TikTok and YouTube are very different than our relationship with Google. Google, took and use our content and then had to send traffic out to us, right? So there's an inherent conflict built into that, that they lose value in theory when they send us traffic. These other platforms, our content makes better. We make excellent content, excellent video. We have very close relationships with these, and our content makes these platforms better. So the state of the relationships and nature of the relationships is stronger, and it allows us to do things like Feedfeed, and I think there'll be more things like that in the future.

And then on litigation, just to give the background, the lawsuit builds on the government's antitrust case against Google from an ad tech perspective, where Google was found to have monopolized the ad server and ad exchange markets, harming online publishers. We Dotdash and Meredith combined into People Inc. today are and were one of the largest of those publishers who were harmed. And we, like several other publishers, brought suit to hold to Google accountable and recover the lost revenue resulting from Google's anti-competitive behaviors.

Now damages will be proved in the litigation, but we seek to recover hundreds of millions of dollars and damages. And to your question, Corey, you likely saw the recent ruling in favor of the Gannett and Daily Mail cases where the court ruled that the publishers in those cases don't need to prove again what the government has already proved that Google engaged an anticompetitive conduct. Just what are the specific claims and the damages there. The timing of our case was accelerated by our judge, which we view as a positive. So we now expect to spend about $4 million in the quarter and continue to spend in the coming quarters after that, total magnitude of spend or the pace of it is hard to predict. We'll keep you guys updated. But we believe, as Barry was saying, the spend is more than warranted by the opportunity to cover significant damages we believe we're on.

That is demanded, given what's there for the -- kind of what the government has already found, it's not just a question of saying, totaling up all our stuff. And I think just sending out checks, but I simplify things. All right, let's go on. .

Next question will come from James Heaney with Jefferies.

Just can you give us an update on what you're currently seeing in the macro environment so far in Q4 across the different IAC businesses? And then I had another one.

I think just for environment, everything is good at the middle and upper end, not so great at the lower end. And you can make any prediction you want about what's going to happen in the future. But -- it's been this for a while. Again, for exome exogenous event, I suspect that will continue for a while.

Yes. I'd say if you look at our performance marketing and credit to Neil and his team, but it's growing strongly. The consumer -- the U.S. consumer is hanging in there and spending. It is skewed to the high end. On the Care enterprise side, we have seen corporations belt tightening probably due to a bit to reducing head count and also due to pressures on health care costs and others. So we have seen some pressures on the corporate benefit side. But broadly, things seem in the macro economy seem pretty good.

Yes. I mean I'll just add one thing. I think looking at the ad markets in the macro sense, I think it's in line with what BD said. I think if you had a 10-point rating scale, they're probably at 6, healthy moving ahead, but there are challenged categories. The challenged categories aligned with what BD said, CPG, food and beverage, there's real momentum in some of the higher-end categories like travel and tech and some other things. But I think the ad market is solid, not fantastic, but solid.

No, I was just going to add. I'm also involved in share of Expedia and Expedia in the general travel market with some exceptions, Canadian travel to the U.S., some other little things, but Travel is exceptionally strong. And we've been double-digit growing at Expedia now, I don't know, 12 quarters, and it only accelerates. So anyway. I'm not on all that. Next question.

And then the second part of my question was just around capital allocation going forward. We saw the $100 million buyback in the quarter. Curious how to think about that going forward as you kind of think about potentially M&A or other uses of cash?

Well, I mean, I kind of think I talked about that. I don't know what we call it, a signal or a giant flag, green flag going down or saying, we're opportunistic. The opportunity is now. We're going to be buying stock in IAC. We're going to be buying stock in MGM. That's what we're going to do with our capital at this point as far as acquisitions go. I've said before, I said it earlier, a lot of things are too pricey. .

And we're not anxious. We're always interested. We're always curious. We're always digging around and seeing what's on what's around the next corner, which we've been doing fairly interestingly for 30 years. I expect there'll be more of that being out there banging at things that are overpriced, of which many are. We are wildly underpriced. So I want to stay on that track.

Your next question will come from Eric Sheridan with Goldman Sachs.

Maybe 2 with respect to People Inc. Can you talk a little bit about the building blocks of growth, both the headwinds and the tailwinds that you're seeing with respect to digital revenue that inform your forecast for Q4 and how we should be thinking about those broadly going into '26 and the second part of the question that maybe feeds back into it would be how should we be thinking about the growth trajectory of off-platform traffic and revenue for People Inc. and the resulting margin impact from that traffic and revenue going forward?

I'll take a crack at the first and then I'll hand it over to Chris. I feel like going forward, I think we're in a pretty good position. I think we expect a solid Q4 despite the session challenges. The session challenges is what I would say is the primary headwind in the business. ads will improve. We're a very good sales team. We have very happy clients. We have very good premium sales. off-platform is going to improve. D/Cipher is going to start to kick in. Commerce will continue to be strong, although due to the timing of some payments, it might not be as year-over-year strong in fourth quarter, licensing continues to perform and be strong. .

Our brands are really resonating. They're resonating on our own assets including a lot of the new stuff like People app and the events we're launching and all this other stuff, they're still resonating with sessions. It's still a big number, even though it's not growing. And again, it's really working off platform, and it's really working in all these other places. So we feel really good about the formula for Q4. I think it's going to be the same formula for 2026 roughly. The mix is all going to change. Again, I think in 2026, you're going to see real improvement -- real growth, not just improvement in D/Cipher+, and some other things and get some real traction on some of these new things we've launched. And we'll go to Chris.

Yes. And to talk about margins, there are multiple different components of our off-platform traffic, including Apple News Plus, social media, as Neil said, a D/Cipher+, they have different margins, but I think for simplicity and this is, in many ways, probably a modeling question that you guys would have as you forecast higher growth in off platform. for simplicity and conservatism, incremental digital EBITDA margins on off platform, you can assume are neutral to slightly accretive to our aggregate annual digital EBITDA margins of plus/minus 28%, 29%, maybe a little more.

So I would think of it as around 30%, maybe a little bit more of incremental digital adjusted EBITDA margins on off-platform and then on platform, as we've said before, is higher.

Next question will come from Ross Sandler with Barclays.

Great. Just following up on that last question, Neil, like there's some crazy forecast out there. I think Forrester just put something out that said Open Web display is going to decline 30% next year because of the shift to Gen AI. I doubt that's what's going to happen. But as you're talking with agencies and brands about outlook, what are you hearing? And how should we think about the context of people growth relative to the industry in '26. And if we strip out like the impact from Google, which is down to mid-teens of revenue from that traffic, is the rest of People going to grow in line, faster or slower than the broader open web display industry?

What I'll say is we are not hearing down 30%. We -- again, we are the biggest publisher in America. We have scale. We have terrific brands. We have a history of ad performance. We have great assets we're launching a whole host of new things. There's a lot of energy around everything we're doing from events to off platform to influence things. So we're actually hearing the opposite. There's a lot of energy around our business and our ability to reach audiences. I can't speak to the long tail open web, I don't know where this information comes from, but it is inconsistent with what we are hearing look, we feel pretty good about next year.

And I think when you get the mix of brands and trust and the new things we're doing at our history of performance and our history performance advertisers I think we're much more likely to be share takers in this market than anything else.

We have been going to be. I mean, you can narrow at this or that little fat or that, whatever. But this business, for the last, I don't know, how many quarters that we've been growing, and despite everything that has been thrown at it, this People Inc. and this group that Neil has -- and how many people you got in this thing?

3,500 plus

I mean, they've been executing just such an outstanding way through this while at the same time, we're going to build new businesses inside and out of all the content reboost and all the knowledge that we've got in almost every sector. How many books do we publish?

I mean we've got 40 brands. We actually in print. We have 6 books still in print.

How many print?

6.

How many...

More than 200 million actual books printed a year.

That sit on People's tables that -- you look at Southern Living, which I see all [indiscernible] been in the South. I was in Savannah last weekend. It's all around. Every place you go, you see Southern Living it has such great influence, but not only from the south, but beyond it. So you've got all these things cooking. And as you say, I don't know, how do you say it any better? You say you're confident in the fourth quarter and your projections for next year are solid and good. Plus, we're building all these new businesses. It seems to me like pretty good. it.

Next question is from John Blackledge with TD Cowen.

Two questions. First, could you talk about corporate costs and how we should think about trajectory into the fourth quarter? .

I can think about corporate costs going lower.

Keep going, John.

Yes. Into fourth quarter in 2026. And then second question is, how should we think about the timing of slimming down the IAC's assets? And should we consider everything outside of people and MGM is noncore? .

Okay, Chris, you [indiscernible] answer .

On corporate overhead, we talked about how we've been rationalizing over the year right now, we're at a run rate of basically $22 million to $23 million on a quarterly run rate basis. That is -- there's a little bit of onetime noise in the last quarter that we're still working through. As we've said before, Q1 was highly elevated due to spin costs, CEO separation, et cetera. We expect to be in the mid-80s range from there and we'll -- next year, and we'll continue to look to rationalize costs. .

Yes, it's going to come down. What was the second thing?

Just the approach to Exiting or strategic...

Look, not going to do it, dumbly. I mean we're going to get good prices for everything that we've got. But we are going to -- anything, frankly, other than really -- other than not really, other than MGM and People, those are the core, right? No more. So -- and we've got several other businesses that have real value in them.

Yes. We know we have strategic assets and inbounds from time to time.

So timing, 3 months, 6 months at the most. And then we'll probably have another, I don't know, $1 billion or so of capital.

Well, we're not going to speculate too much, but we will...

I said around that. I just speculated.

Your next question will come from Dan Kurnos with the Benchmark Company.

Chris, can you maybe just talk a little bit about on the run rate savings from the RF. How much do you expect to reinvest, how much will flow through to the bottom line? And then Neil, I guess, sort of a 2-parter. I've asked you before a lot about communitizing your properties. Obviously, Feedfeed looks like more of a move in that direction. And I still think people don't get the value of the off-platform interactivity that you're building. So is there a way to throw more gas on that fire and are there any creative new channels to expand distribution on?

I'll do savings first. So we said it's about $60 million of run rate savings. I think you can think about half of that being realized in profitability and margins than half being reinvested in high ROI digital activities. We've called out previously the drag on our incremental margins that have been occurring Q2, Q3 with our investments in D/Cipher+, my Recipes and People app, et cetera. So we do have these investments we can make as well as content. We're conservatively saying we'll reinvest about half as we go, but we'll be thoughtful as we look at the performance of the market and our growth to make sure we drive profitability and margins using the savings. .

Yes. So I think your question is how do we poor gas on some of the off-platform stuff we're doing. And what I would say is we're really focused on doing that. Our brands are uniquely permission to play in these places. People love them. And again, I go to in a world where things are fake and artificial and no one as who's made what. When you see things from our editors, our influencers, our brands on social. The response is great, and the stats of them are great. Like -- for instance, last night on Jimmy Fallon, we announced this year's Sexiest Man Alive, the 40th Sexiest Man Alive. That will be...

Who is it?

Jonathan Billy from Licken. Okay. I think it's a great show. I wanted to take an Barkley, but they gave me...

You guys were 2 finalist, I wasn't on the run.

But -- so -- but where you will see that, today, is there will be so much in and around social on that from just a simple release to almost like reality type event type buildups for how we got here. Another great example of what we're doing is in, in style, we launched a series of you called the intern, which is like a mock reality show, 3-, 4-minute episodes. We are getting millions of use per episode on this, and it's a bit of a phenomenon among like the Gen Z female crowd, and it's been a huge hit.

We are -- if you're in the target market of our brands, I am very sure and you're active on social, you will see us everywhere in all kinds of ways. And it's part of what Chris has talked about, we are pivoting our resources to where the audiences are, and you're going to see much more from us here.

Your next question will come from Youssef Squali with Truist.

This is Robert on for Youssef Squali. Just one. Sorry if I missed this. Curious what the deal with Microsoft looks like, how long it's for and the unit economics there. And any prospects for new deals on any of the other businesses?

I'll answer it as quick because we already covered it. Yes, I anticipate there will be new deals coming forward. And two, we didn't disclose any terms of the Microsoft deal. Those are confidential. But again, it is a pay-per-use marketplace. So it's a little more a la carte where something like our open AI deal is much more all you can eat, much more of a blanket deal.

The next question will come from Stephen Ju with UBS.

This is [indiscernible] on for Stephen. So just a couple of questions. the LLM that have been designated as high-value content seems to be changing and publishers are making the change in real time to adjust away from traditional SEOs. So can you just talk more about the steps that you have taken so far -- and the other question is in the deck, it mentions that Google search now accounts for 24% of core sessions.

And it seems like the rate of decline has been accelerating, but at the same time, it's also de-indexed from being half your traffic from 2 years ago. So the headwinds have to dissipate over the coming quarters. So can you talk more about the steps you're taking to control what you control, especially as it regards to the traffic you're getting from elsewhere?

So let's do the second question first. I didn't totally understand the first question. So I'm going to reask that after I answer the second. Yes, you did -- I mean, you did the math right. We have we're down from at the time of our merger, 60-ish percent of our traffic came from Google Search and now it's down to 2. So we can see the other side of this. We know what the world looks like, where Google is a very limited source I don't know where it ends. It's definitely not going to 0. I mean we still get traffic from searches where there is an overview.

So we still do pretty well, and they're not in every category. So I don't know where it ends up, but we're confident we can deal with it. In terms of -- I think what you're asking is how do we fill the sessions gap to keep sessions healthy as part of our mix. That's a combination of a whole bunch of things. It's our own e-mails, it's Google Discover, which is their version of Apple News.

It's traffic from direct, it's referral traffic. It's traffic from our direct consumer things we've built, like my recipes and some of the people app stuff. There's a whole host of things we're doing to keep sessions healthy that we'll continue to do. Can you ask your...

That's enough.

Last question will come from Matt Condon with Citizens.

I'll just ask one here. Barry, you talked about launching our standing up businesses based on people's content and brands. Just what stage are we in today with that? Would we expect the products to be launched during the coming quarters.

I don't know about coming -- well, certainly, quarter-by-quarter. What I can tell you and Neil can talk about this, but we started this process this inversion idea, a month or 2 ago, we're going like book by book as deep as we can in sessions where given how much we know about these things. it seems to me, at least probable that we'll be able to invent take out of that knowledge, new products that we own, whether they're new shows, as I've ripped on white LOTUS.

But it seems just very obvious to me. If you got travels, you know so much about travel and you're sitting around looking at all those pictures and you say, "Well, you know a show about a resort, not hard to think about. It's just the skim of the surface. -- in every one of the categories. And we can cover -- I mean, almost every category of content. So looking at our content, as a way to drive out of it, all sorts of new things that we can start that we can own seems so juicy to me. We can spend mean the next forever, just doing that deep and wide. So I would say it isn't going to come kind of next quarter, but -- we're in it now. But I want to be clear, we do -- we have a roster and pipeline of ideas that are like the people up and like my recipes, ideas that are a little closer to fundamentally what we do now that we are going to roll out over the coming quarters.

Yes, there's not going to be a quiet period Yes, no, no. These ideas are coming up. The fundamentals and all the stuff that is natural. -- has been done -- is being done will come out in the next quarters. The stuff I'm talking about, which is real invention here, I think, is going to take a while. But that's why I think it's got I think there's more future in this. I talked earlier about the greenfield of e-commerce that we've exploited for 20-some-odd years. I think there's greenfield here from now to forever.

Or the strength of the brands because of how much -- what's it -- look, just in the initial sessions, Neil, that we had with our colleagues, -- we just came up with this, that and the other .

It's incredibly energizing to have these brands that have permission to do these things, and it's fun and it's going to be exciting. .

Yes. But -- so I really do think -- and I don't think I'm overhyping it, but this inversion concept of dealing with our brands in this way, we are out impeding everybody else in publishing and chugging through to the other side of the search all these search downtrends, I think that's just puts us in a just fantastic issue. Anyway, with that, thank you, Neil. Thank you, Chris, certainly. And glad to be somewhat noisily with you on this call, and I hope that I will be able to continue that. So thank you all for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.