IAC Inc (IAC) 2025 Q4 法說會逐字稿

Welcome to the IAC fourth quarter 2025 earnings conference call. (Operator Instructions) 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, two pages, three 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 three 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.

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 continue 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 and Wine classic control in exceeded our expectations. We had our most successful media cycle in the history of the rejuvenated sexiest franchise, a very important franchise for people. And in styles popular, the interim 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 Q&A on initiatives we discussed like Decipher, and my recipes 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 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 two years.

This quarter, we also saw a little softness in nonsearch traffic sources, mainly driven by declines in Google Discover, which is their version of Apple News, which had been a contributor to nonsearch growth earlier in the year. However, Offsetting the effects of Corcept's decline is a continued rapid growth in our off-platform and distributed audiences. You can see off-platform views have nearly doubled in the last two 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 Tik-Tok to YouTube as well as real cultural cloud in our tentpole events and our operated properties. And the nonsession-based growth is underpinning our financial story.

And the next slide really gets some color on that. If you go to slide 8, the IC 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 Decipher, our events businesses, creator and social models, including the fee feed 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 nonsession-based revenue streams led by growth in all platform audiences and Decipher 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 and 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 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 is 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 and other should continue to grow top line, thanks to Vivian and the Daily Beast, and we are expecting $0 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 door 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) Ross Sandler, Barclays.

Neil, could we go back to slide 8 and the nonsecsion-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, 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 a we --

And look, the truth is we want expectations. Expectations are good. And Rob, 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 five 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 you're not diversified enough? We would look at the market and say, we 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 it 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 two 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 -- whether it's social, whether it's reaching people through events, whether it's reaching people through things like Decipher, 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.

Jason Helfstein, Oppenheimer.

Just two 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 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 it felt that was a good deployment of capital right now as opposed to saving the capital for buybacks or M&A?

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

$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?

$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 one year to $170 million profit the next year. Why hasn't everybody say, oh my friggin 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.

Justin Patterson, KeyBanc.

Great. You 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 Colin was recently named CEO. Could you talk about some of these 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 is 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 at some of the headline things we've talked to you about. So first, let's just go through a couple of them. My recipes, 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 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 at with you guys. The People app for us, I think, and I'm not sure if BD ever propped up before, the people app can eventually be the hub of the entire People brand.

And what we've 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 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 two minutes wow. If you're 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 six-minute duration. So we are 3x the amount of time spent in the app than on the site to 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 crossroad puzzle, and we launched two 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 grow out of this thing.

Maybe a big ad business goes out of this thing. Maybe sponsorships do. I'm not sure, but delighting in audience with a great product is great. And what I would say is the two 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 two 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, but 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, every one that appears in the intern actually works for us and works on the team, with the exception of two people who play intern s at InStyle.

And it has captured Ziggy of sort of like the Gen Z experience in an incredible way.

Neil, when we started doing the intern and we do, I don't know, six 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 seven seasons, but a season is episodes be fine.

What I'm trying to do is just to 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 -- essentially, 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 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, all problems of digital advertising. They're their own products, and we are producing them at real scale now.

That's really exciting. Enough for now. Next question.

Yes, let me -- and I'll just cover Vivian. Vivien is an exciting business with within Emerging and Other. We announced last week that Vivian Founder and CEO of Harthbocta has moved to Chairman; and Bill Kong, our COO, is taking over as CEO.

The next question comes from --

Operator, I'm answering the question quickly. Vivien is a marketplace that sits between 2.7 million nurses on the one side in healthcare 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. Parts is excited for him to take over and it's really about driving our AI products deeper into our customers.

John Blackledge, TD Cowen.

Maybe two for Chris. One on the People 2026 EBITDA outlook. At the midpoint, of the range. It looks like kind of flattish EBITDA. Can you impact the guide a little bit, Chris, and how we should think about drivers of EBITDA 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 two 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. And 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. At our most important line item in our mind is digital revenue 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 four 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 and 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 two 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.

Cory Carpenter, JPMorgan.

I wanted to ask, you called out a $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 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 Daily Mal already sued -- and in their cases, the court ruled that they don't need to again prove what the government proved. 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 and 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.

It has potential to land very big. So as far as simplification, we've been doing this for the -- 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 are responsible for and so much infrastructure.

We're now really down to a couple of key businesses. So you're going to see simplification for it throughout the year.

Eric Sheridan, Goldman Sachs.

Maybe two, 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 then 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, remain generally favorable in Q4. It's pretty solid for us.

I think particular to us, we have some real advantages right? Brands matter 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 which some of the new things we're doing. We're in the ad side cut. 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, 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.

Perfectly -- and then .

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 -- 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.

Dan Kurnos, StoneX.

Yes. Maybe first for Neil, any directional way to think about sizing or helping us think about the Cipher Plus this year? And should we think of any announcements coming, the way that Roku use Nielsen ACR is 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 PetCare?

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-digit growth, 2 to 3 points of that this year will be Decipher Plus. It's got real momentum. And I think we're at a place now where Jim Lawson, who I believe I know that you know has really found his footing.

We have a real team behind this, and this is 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.

They're -- 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 then I'll punt 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 the team have taken steps on a number of those in this consumer platform starting second quarter last year that we 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 entrants -- or 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.

James Heaney, Jefferies.

Yes. Great. 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 of 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 all. Nice to be with you. Thank you, operator. We can conclude the call.

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