From IAC to People: A Pivot to Bet on Two Forever Assets

A New Chapter: The 'People' Pivot

IAC's second quarter call opened with a striking declaration from Barry Diller: “us being in the general acquisition business was not going to produce results as it had for the past couple of decades.” — Barry Diller, Chairman and Senior Executive · 2026-08-04 That frank admission sets the stage for a deliberate transformation. The company is renaming itself People Inc., consolidating around two core assets—the publishing arm (now People Inc.) and its stake in MGM Resorts—while aggressively selling non-core holdings. This is not a quiet repositioning; it is a strategic pivot that marks the end of IAC as a conglomerate. Leadership is changing too, with Neil Vogel and Tim Quinn stepping into CEO and CFO roles after this call. As Vogel put it in his opening remarks, “First, we're going to execute at a high level at People Inc., and we have another solid quarter here to detail.” — Neil Vogel, Chief Executive Officer (CEO) · 2026-08-04 The growth initiative now centers on brand-led, non-session-based revenue streams—events, subscriptions, licensing, and social video—rather than chasing search traffic.

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.

The Numbers Behind the Transition

The financial structure is being overhauled to reflect the new model. Christopher Halpin announced a change to adjusted EBITDA definitions, excluding items like lease impairments, asset sale gains, and nonrecurring restructuring costs to present "a clearer picture of the earnings power of the business." This is accompanied by sharp cost discipline: corporate run-rate expenses are targeted at $45 million annually, and the company just signed a deal to sell its limited partner stake in a fund for $189 million in cash. The core publishing business continues to prove its resilience. Digital revenue grew 6% in the quarter, with non session based revenue up 16%, while adjusted EBITDA expanded 18% and Digital margins rose from 23% to 26%. Tim Quinn highlighted “we grew digital adjusted EBITDA by 18%, while expanding margins to 26% versus 23% last year” — Timothy Quinn, Chief Financial Officer (CFO) · 2026-08-04 and reiterated the expectation of mid- to high-single-digit digital revenue growth for the full year. The improved profitability is a direct result of scale and incremental margins, with management guiding to 30-40% incremental EBITDA margins. Yet the top line still reflects industry-wide challenges: Total Revenue fell 26% year-over-year to $423M, although much of that is the arithmetic of divestitures and print contraction. Free cash flow generation at People Inc. remains strong—$179M over the last 12 months—and net leverage is expected to be under 3x by year-end.

AI, Google, and the Fight for Content Value

The most contentious issue on the call was Google. Management reiterated that they are fighting for compensation for the use of their content in AI summaries. Neil Vogel explained why they are reluctant to block Google entirely: "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." But the company is aggressively pursuing AI licensing deals—with OpenAI, Meta, and Microsoft already signed—and sees more opportunities ahead. "I think we are seeing real momentum in AI licensing," said Vogel, and as AI licensing becomes a meaningful revenue stream, the company is also working to transition away from its dependence on search traffic. Core sessions declined 22% in the quarter, but the company partially offset that with strong ad rates and a 23% increase in licensing revenue. The company is also still pursuing its Google ad-tech litigation, which could be a significant payday, with resolution expected in 2027.

Ahead: MGM, Turo, and the Path to 10%

Finally, management elaborated on the investment portfolio and growth trajectory. Barry Diller emphasized the long-term belief in MGM and their willingness to increase ownership: "we're going to increase our ownership in MGM either in one swoop or slowly." Turo is performing strongly, growing revenue 17% and nearing profitability. The company aims to get back to double-digit digital growth by layering new initiatives—events like the Charleston Food & Wine Classic, the MyRecipes community, and a premium subscription bundle—onto its existing base. On a prior call, Neil Vogel had set a target of 10% digital growth, and the new initiatives are meant to bridge that gap. As Tim Quinn put it, "We think we can ladder those up to something that's meaningful for growth in 2027 and beyond." In the past, management had said, “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... we can control our own destiny, and grow, again, the nonsession-based revenue streams at, we think, really attractive rates.” — Unknown Executive, Executive · 2026-05-05 Barry had also noted earlier, “What we have is, I think, extraordinary opportunity with what we got.” — Barry Diller, Chairman and Senior Executive · 2026-05-05 The transition is not without risk, but the company is trading at a steep discount to the value of its MGM stake plus cash, implying the entire publishing business is essentially valued at zero. With a clearer strategy and a simplified corporate structure, the market may begin to re-rate the shares.