IAC Shows Signs Of Life In Third Quarter, Revenues Jump 25 Percent
Barry Diller realizes that his Ask search engine isn’t going to gain market share anytime soon, but search can still power growth for IAC if it just keeps up with the growth in the overall search market. IAC released third quarter earnings this morning. Total revenues were up 25 percent to $422 million. Operating income quadrupled to $36 million, and adjusted earnings per share came in at $0.32 versus Wall Street estimates of $0.27. (However, after stripping out the adjustments due to one-time sales of stock and other assets a year ago, net income was actually down 19 percent).
Search represented nearly half of revenues ($205 million). The search business grew 20 percent, goosed primarily by a 55 percent increase in active toolbars to 97 million. IAC’s toolbar business is its secret distribution weapon, but those searches tend to generate lower revenue per query than those on Ask.com. CityGrid Media’s new local advertising network also contributed to overall search revenues.
But search wasn’t the fastest growing part of IAC’s business. Revenues for its media and other properties (such as CollegeHumor, The Daily Beast, Electus, Evite, and Vimeo) grew 44 percent to $63 million. Match’s revenues jumped 31 percent to $106 million, with paying subscribers up 30 percent to 1.8 million (“organic” growth in subscribers, though, was 16 percent). The rest of IAC’s revenues came from ServiceMagic, up 10 percent to $48 million.
In terms of operating profits, the two biggest contributors were Match ($38 million) and search ($29 million). The media businesses showed an operating loss of $4.6 million. The company also bought back $125 million worth of shares during the quarter. The stock is up about 5 percent this morning to $27.85 on the earnings news.
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