IAC Inc. (IAC) Income Statement

The reported revenue trajectory shows a persistent deceleration, with year-over-year declines ranging from -8.1% in 2025Q3 to -42.9% in 2024Q2. The most recent quarter's -25.6% growth (sequential improvement from -25.9% in Q1) suggests the rate of decline may be stabilizing, but the absolute level remains far below the $989.3M seen in 2024Q4. This contraction likely reflects the deconsolidation of spun-off entities and ongoing pressure in the Search segment, which may be losing traffic to AI-driven alternatives. Investors should monitor whether the revenue base can find a floor, as the absence of forward guidance limits visibility.

The gross margin expansion from 58.4% in 2024Q1 to 64.2% in 2026Q2 indicates that the company is shedding lower-margin print and legacy businesses, which may be a positive structural development. However, the margin is still below the 73.4% achieved in 2024Q4, which included a one-time benefit from the Dotdash Meredith integration. The persistence of print costs and the high variable costs of the Angi marketplace likely cap margin expansion. If the revenue decline continues, gross profit dollars will shrink even as margins improve, limiting the absolute profitability potential.

The company's operating leverage is currently negative: while revenue fell by $150.2M year-over-year, SG&A only decreased from $303.2M to $234.3M, a reduction of 22.7% versus a 25.6% revenue drop. This suggests that fixed overhead costs, particularly in the Angi and Dotdash Meredith segments, are not being cut fast enough to offset top-line pressure. The positive operating income in 2025Q2 was an anomaly, as most quarters show losses. Achieving positive operating leverage would require either a stabilization of revenue or more aggressive cost rationalization, but the data suggests management is still investing in growth areas, which may delay profitability.

The cost structure reveals that SG&A is the primary driver of operating losses, as it consistently exceeds gross profit in most quarters. For example, in 2026Q2, SG&A of $234.3M consumed 83.6% of gross profit, leaving little to cover R&D and other costs. R&D spending has also been reduced from $63.2M in 2024Q1 to $33.7M in 2026Q2, which may indicate a pullback in innovation that could hurt long-term competitiveness. The company's ability to manage costs is critical, but the data suggests that fixed costs in the marketplace and publishing segments are sticky. If revenue continues to decline, further cost actions may be necessary, but they could impair growth initiatives.

The 2024Q4 results likely included the full contribution of Dotdash Meredith and possibly a one-time benefit from the sale of a stake or asset. The subsequent drop to $642.0M in 2024Q3 (which is actually before Q4) and then to $646.0M in 2025Q4 suggests that the Q4 figure was an anomaly, possibly due to a one-time revenue recognition or the inclusion of a business that was later divested. The gross margin of 73.4% in 2024Q4 versus the 60-65% range in other quarters indicates a mix shift that has not been sustained. This inflection point highlights the difficulty of comparing periods with significant corporate actions, and investors should focus on the underlying run-rate rather than the peak.