IAC/InterActive Q1 2009 Earnings Call Transcript

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IAC/InterActive Corp. (IACI)

Q1 2009 Earnings Call

April 29, 2009 11:00 AM ET

Executives

Thomas J. McInerney - Executive Vice President and Chief Financial Officer

Barry Diller - Chairman and Chief Executive Officer

Analysts

Jennifer Watson - Goldman Sachs

Ross Sandler - RBC Capital Markets

Jeetil Patel - Deutsche Bank

Justin Post - Banc of America-Merrill Lynch

Mark Mahaney - Citigroup

Jim Friedland - Cowen & Company

Jeffrey Lindsay - Stanford Bernstein

Jeffrey Shelton - Natexis Bleichroeder Inc.

Gene Munster - Piper Jaffray

Presentation

Operator

Good morning. My name is Leslie and I will be your conference operator today. At this time, I would like to welcome everyone to the IAC Q1 2009 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you.

At this time I would like to turn today's conference over to Mr. Tom McInerney, Executive Vice President and Chief Financial Officer. Please go ahead.

Thomas J. McInerney

Thanks operator and everyone for joining us this morning for our first quarter 2009 earnings call. Barry will make some brief remarks after which I will come back to quickly highlight some issues.

But first, I will remind you that during this call, we may discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as; we expect, we believe, we anticipate, or similar statements.

These forward-looking statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our Q1 2009 press release and our periodic reports filed with the SEC. We will also discuss certain non-GAAP measures. I refer you to our press release and the Investor Relations section of our website for all comparable GAAP measures and full reconciliations.

With that, I'll turn it over to Barry.

Barry Diller

Thank you, Tom. Good morning to everybody. I'll make just a few comments, no great order and then we'll take questions for the majority of call.

First, to a cheer from great information we bought back some stock. We won't say anymore about that, that's our policy but of course, we'll report each quarter any stock purchases that we make.

In our Search sector, Ask isn't just ask.com. It's the Ask network, which is 173 million units (ph) worldwide, growth is about 33% year-over-year and 5% quarter-to-quarter. It's the sixth largest property on the web, up from the seventh last quarter.

As for queries in the U.S., we're closing slowly on the losses over the previous year, improving 9% this quarter. We've got all sorts of ideas and initiatives to grow our queries and share but this is a long process. Results come far slower than we'd like, though we've had ... we have held on pretty much to our share over these last years.

In local, Citysearch and ServiceMagic are doing quite well in this environment. More important than that, they are putting in to place, many initiatives for future leadership.

Our purse of business continues to grow and it continues to extend its leadership. We are everyday mindful of our bountiful capital. We talked about endless ideas day long, but we haven't yet found a compelling place to put it down. And we're going to continue to enforce patience until we do or until we find a way to repatriate it to shareholders.

With that, Tom and your comments and then we'll do Q&A.

Thomas J. McInerney

Thanks. The results are fully laid out in the release and I don't want to be repetitive. So let me just give you some supplemental information as it relates to Q1 as well as going forward.

In Media & Advertising, the reported revenue decline of 22% reflects about 10 points of decline from the phase out of certain sponsored listing distribution businesses when we put in place our new Google deal a little after a year ago. You'll remember there was some continuing activity in this in Q1 as we phased it out. So, Q1 this year will be our last quarter with this drag on the year-over-year comparisons.

Excluding this effect, revenue was down in the low double-digits on a percentage basis, reflecting weak general conditions but some of the changes we made to the Ask products at the beginning of Q4 which reduced monetization in return for a better consumer experience as we've discussed in the past.

On the profit side, we basically saw the revenue decline and flow through to OIBA and while we've made selective cost reductions, we increased marketing year-over-year and generally sustained investment levels in the business.

The last few weeks of the quarter continuing into April have been modestly better than earlier in the quarter in terms of volumes. So while we don't expect a dramatic improvement in trends in Q2, we also don't expect further deterioration either year-over-year or sequentially, although obviously external conditions, especially monetization, are very unpredictable.

We'll discuss more the metrics and like in the Q&A. Just quickly on the couple of the other businesses; for Match, please note we expect to close the sale of Match Europe to Meetic in early June following which Matches Europe revenue and OIBA, which were roughly 50 million and eight million respectively from June '08 through year end last year, will be excluded from results remainder of this year and we'll own a 27% interest in Meetic and a promissory note with a total current value of approximately $140 million.

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