IAC (IAC) Q3 2025: Google Traffic Sinks to 24%, Off-Platform Revenue Surges as Content Model Inverts
IAC’s third quarter saw Google search traffic fall to just 24% of People, Inc.’s core sessions, but diversified audience strategies and off-platform monetization more than offset the decline, marking a pivotal shift in the business model. Strategic cost cuts and reinvestment are fueling new digital and direct-to-consumer initiatives, while capital allocation remains laser-focused on buybacks and MGM. Leadership’s conviction in content’s enduring value and the upside of AI licensing deals signal a business in transition, not retreat.
Summary
- Audience Diversification Accelerates: Off-platform distribution and new ad tech offset sharp Google session declines.
- Cost Discipline Funds Growth Bets: Layoffs and footprint rationalization free capital for high-ROI digital expansion.
- AI and Capital Allocation Drive Optionality: AI content licensing and opportunistic buybacks reshape IAC’s risk-reward profile.
Performance Analysis
IAC’s Q3 results showcased the company’s ability to adapt as Google-driven traffic erodes, with People, Inc. posting its eighth straight quarter of digital revenue growth. Digital revenue rose 9% year-over-year, driven by performance marketing, licensing, and especially off-platform channels such as Apple News, YouTube, and TikTok. These off-platform sources now account for over a third of revenue and grew 16% year-over-year, while sessions-based ad revenue declined 3%, reflecting the Google headwind. Print remains in secular decline but was managed for profitability, with adjusted EBITDA down only 10% on a 15% revenue drop.
Profitability held up well despite a $15 million severance charge from a 6% workforce reduction and a $5 million lease gain, with digital EBITDA margins at 27% and incremental margins of 26%. Excluding one-time items, People, Inc. delivered $75 million in adjusted EBITDA, above the high end of guidance. Corporate costs and other non-core segments were also trimmed, and IAC’s ongoing asset divestitures and cost rationalization further improved capital flexibility. The CARE segment saw mixed results, with consumer trends improving but enterprise revenue under pressure, leading to a modest guidance reduction.
- Google Traffic Decoupling: Core brand sessions from Google search dropped from 54% two years ago to 24% this quarter, yet overall audience scale was preserved by gains in alternative channels.
- Off-Platform Monetization: Off-platform views jumped 66% YoY, and Decipher, IAC’s first-party data ad product, is now the fastest growing revenue stream.
- Expense Cleanup and Legal Spend: One-time legal and severance costs are largely behind, except for ongoing Google ad tech litigation, which is expected to be ROI-positive given potential damages.
IAC’s operational execution and cost discipline are allowing for measured reinvestment in digital products and new business models, even as legacy revenue streams face structural headwinds.
Executive Commentary
"Yes, there's a transition in search. Yes, we're getting declining traffic from Google. But for some years, we've known these disruptions were coming, and we've been preparing and mastering for this rocky environment. Our results speak to that... we're transferring these great brands built over a century in the old media mold into digital powerhouses."
Barry Diller, Chairman and Senior Executive
"Off-platform audiences are accelerated 66% over a year, year over year. Over a third of this quarter's revenue is not based on user sessions, and this is our fastest growing revenue stream at 16%... Decipher is our fastest growing product by revenue growth, our fastest growing by investment."
Neil Vogel, CEO of People, Inc.
Strategic Positioning
1. Content Model Inversion
IAC is actively “inverting” its publishing model, shifting from legacy ad-driven content to launching new businesses anchored in its powerful brands. Leadership sees opportunities to create direct-to-consumer products, events, and even original IP, leveraging the deep cultural resonance of properties like People, Food & Wine, and Travel + Leisure.
2. Off-Platform and Data-Driven Monetization
Decipher, IAC’s proprietary first-party data ad tech, is now the fastest-growing product, enabling addressable advertising across the open web and connected TV. The FeedFeed acquisition marks a move into influencer networks, further expanding off-platform reach and diversifying revenue away from Google dependency.
3. AI Licensing and Platform Partnerships
IAC is a launch partner for Microsoft’s publisher content marketplace, a pay-per-use model for AI content licensing. Together with its existing OpenAI deal, IAC is positioned to monetize its content IP as generative AI platforms seek high-quality, authenticated data sources.
4. Capital Allocation and Asset Streamlining
Buybacks are prioritized, with $300 million deployed year-to-date (8% of shares), and further asset sales are expected to add $1 billion or more in capital. M&A is on hold unless valuations become compelling, and the company is focused on People, Inc. and MGM as its core pillars.
5. MGM Stake as Strategic Hedge
IAC’s 24% stake in MGM offers exposure to unduplicable live entertainment and travel assets, which management frames as a counterweight to digital disintermediation risks. Leadership is vocal about the “emergency multiple” at which MGM trades and sees value realization as inevitable over time.
Key Considerations
This quarter crystallizes IAC’s transformation from a legacy publisher to a diversified digital content and data platform, with capital discipline and opportunistic AI monetization as key levers.
Key Considerations:
- Google Dependency Mitigated: Rapid decline in Google search traffic was offset by strategic pivot to off-platform channels and proprietary ad tech.
- AI Monetization Optionality: Early partnerships with Microsoft and OpenAI could unlock new, recurring revenue streams as AI content demand accelerates.
- Cost Rationalization Enables Growth: Workforce reduction and real estate optimization free up $60 million in run-rate savings, with half reinvested in digital bets.
- Capital Allocation Remains Conservative: Buybacks and MGM accumulation prioritized over speculative M&A, reflecting management’s view of deep undervaluation.
- Legal Claims as Upside Catalyst: Ongoing ad tech litigation against Google could result in significant damages, with near-term legal costs justified by potential recovery.
Risks
Persistent Google search volatility remains a structural risk, as further declines in sessions-based revenue could pressure growth if off-platform momentum stalls. The pace and terms of AI content licensing deals are uncertain, and legal recoveries are not guaranteed. Macroeconomic headwinds in lower-end consumer segments and enterprise softness in CARE may weigh on near-term results. Asset sales could take longer or fetch lower prices than anticipated, and the market’s discount on MGM/IAC sum-of-the-parts could persist if catalysts do not materialize.
Forward Outlook
For Q4, IAC guided to:
- People, Inc. digital revenue growth of 7% to 10% and continued robust EBITDA margins.
- CARE segment revenue decline of 7% to 9%, with recovery expected in the second half of 2026.
For full-year 2025, management slightly lowered the bottom end of EBITDA guidance to $325 to $340 million (excluding one-time items), reflecting ongoing Google search disruption and legal expenses. Leadership expects capital deployment to remain focused on buybacks and MGM, with further asset streamlining in the next three to six months. AI licensing and off-platform growth are positioned as key drivers for 2026 and beyond.
- Continued Google search headwinds factored into guidance
- Legal spend on Google ad tech litigation to persist but viewed as ROI-positive
Takeaways
IAC’s Q3 underscores a business in active transition, with decisive moves to offset legacy risk and embrace new digital and AI-driven monetization. Investors should weigh the durability of off-platform growth, the optionality of AI deals and legal claims, and the value realization potential in MGM and future asset sales.
- Business Model Shift: IAC’s pivot to off-platform, data-driven, and AI-monetized content is now central, with legacy Google dependency sharply reduced.
- Cost and Capital Discipline: Management is executing on overhead reduction, asset sales, and disciplined capital allocation, with buybacks and MGM at the forefront.
- Watch for AI and Legal Catalysts: The pace of AI licensing deals and outcomes of Google litigation will be key value drivers into 2026.
Conclusion
IAC’s third quarter marks a critical inflection point, as the company leverages brand strength and diversified distribution to counter structural digital headwinds. Leadership’s focus on capital discipline, AI monetization, and asset optimization positions IAC for asymmetric upside if execution continues and catalysts materialize.
Industry Read-Through
IAC’s experience highlights the accelerating secular shift in digital publishing, with Google search traffic erosion forcing publishers to build resilient, multi-channel distribution and develop proprietary data and ad tech. The rise of AI content licensing deals signals a new revenue stream for high-quality content owners, but also raises the bar for authenticity and brand trust. The off-platform monetization playbook—spanning social, CTV, and influencer networks—will become increasingly critical industry-wide. Finally, IAC’s capital discipline and focus on core assets serve as a template for media conglomerates navigating disruption and undervaluation.