IAC Results Strong as Company Prepares for Big Changes
Revenue growth was led by financial services businesses, along with local and media services.
IAC/InterActiveCorp reported an 80 percent jump in profits, which rose to $69.4 million, on revenues of $1.6 billion in the first quarter. The company saw 14 percent growth in first quarter revenues as compared to the year-ago period, led by its financial services business, along with its local and media services units.
IAC’s LendingTree and RealEstate.com units brought in $105.8 million in revenues, a 166 percent increase over the $39.7 million a year ago.
Its local and media services businesses, made up of Citysearch, Evite, ServiceMagic, and Entertainment Publications Inc. (EPI), grew revenues by 29 percent to $41.2 million. During an analyst call to discuss the earnings, Barry Diller, IAC chairman and CEO, reiterated his belief Citysearch is on track to break even in the second quarter this year.
“The biggest issue for our local services is getting to the breakeven goal for Citysearch. We increasingly believe it will happen next quarter, and it will be sustainable,” Diller said. “The next issue is to expand the ServiceMagic network. EPI is tinkering with its basic book and doing very well with its rewards program and fledgling online efforts.”
Citysearch grew revenue by 50 percent due to strong results in the pay-for-performance business. EPI revenue decreased by 6 percent, due to declines in the fundraising channel that were partially offset by growth in the online businesses.
Big changes are afoot for the company, which is in the midst of spinning off its travel-related businesses and acquiring search player Ask Jeeves.
IAC announced in March plans to acquire Ask Jeeves for $1.85 billion. Last week, Jeeves reported double profits on higher ad revenues.
When the deal was announced, Diller said he intends to invest in marketing to drive new users to Ask.com from other IAC sites and rely on Ask’s technology to keep them. He said today that after digging deeper into Jeeves’ business to prepare for the acquisition, he was pleasantly surprised by what was found.
“There’s even more there than we thought. They have a complete set of products, and they have internally all the tools they need,” Diller said. “All of the planning is underway, and we plan to hit the ground running the day the acquisition is approved.”
The company is formulating a 100-day and first-year plan for the combined business, with performance metrics that will be made public once the deal closes. Ask Jeeves execs are today addressing the leaders of IAC’s 18 business lines to begin talking about how each unit can add traffic and share for Ask Jeeves, Diller said. The transaction is currently expected to close late in the second quarter or early in the third.
IAC is also in the midst of spinning out its Expedia travel businesses into a separate company. When the first quarter results are broken out along the future dividing line, IAC companies contributed $1.2 billion in revenue, up 13 percent from the prior year. Revenue from Expedia companies grew 17 percent to $485 million.
The plans, announced in December, will include 13 travel-related sites — including Expedia.com, Hotels.com, Hotwire, TravelNow.com, and TripAdvisor. The spinoff is expected to take place soon after the Ask Jeeves deal is completed.
