IAC Sees Growth, Looks Inward for 2006

IAC will continue to invest in its businesses in 2006, re-launching Ask.com and making internal investments to grow market share.

Revenues were up at IAC/InterActiveCorp’s media and advertising properties, with Ask.com growing revenue and search share in the U.S., and Citysearch reaching profitability for the full year for the first time.

Media and advertising revenue, comprised mainly of Ask Jeeves and Citysearch, reached $109.5 million in the quarter, compared with $9.9 million a year ago, which did not include Ask Jeeves, which it acquired in July. Ask.com revenue was up 9 percent year-to-year, mainly due to increased queries in North America. Ask.com grew its share of U.S. search queries to 6.3 percent in December, a 20-percent gain over the past year.

Revenue per query was down in the U.S. and U.K., partly due to a decision in August to cut back its paid listings. IAC’s Citysearch maintained its tenth consecutive quarter of revenue growth, and for the first time, the local search site was profitable for the full year.

IAC/InterActiveCorp will continue to invest in its businesses for 2006, eschewing a race to meet quarterly numbers in order to grow the business long-term, Diller said. “We’re not looking to grow revenue this year,” he said, but added that the company will see some growth. He stressed that the investments in the IAC properties were not defensive, but offensive, with the intent to increase each property’s market share. “If we grow market share, the money will follow.”

A major investment for Ask.com will be marketing and re-launching the Ask.com brand. A new multi-channel ad push is expected at the end of February. For Citysearch, Diller said the company plans to “hugely grow” the sales force to increase the number of local business advertisers.

Diller said that IAC’s network of more than 30 vertical search and content sites is uniquely positioned to benefit from the growing convergence of the Internet, video and commerce being led by broadband adoption. IAC has already begun efforts to integrate vertical properties like Citysearch, Ticketmaster and Gifts.com into the Ask.com search results.

“Search is going to help people navigate the endless options available to them,” he said.

IAC’s overall revenue rose 45 percent to $1.79 billion for the quarter, and grew 37 percent to $5.75 billion for the year. Net earnings for the quarter rose to $113.1 million on the quarter, compared to a loss of $45.9 million a year ago. For the full year, earnings rose from $151.8 million in 2004 to $868.2 million in 2005.

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