IACI

IAC/InterActiveCorp (IACI)

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IAC/InterActiveCorp (IACI)

Q3 2012 Earnings Call

October 24, 2012 11:00 am ET

Executives

Jeffrey W. Kip – Executive Vice President and Chief Financial Officer

Barry Diller – Chairman and Senior Executive

Gregory R. Blatt – Chief Executive Officer

Analysts

Mark Mahaney – Citigroup

Ross Sandler – Deutsche Bank AG

Peter C. Stabler – Wells Fargo Securities LLC

Jason Helfstein – Oppenheimer & Company

Kerry Rice – Needham & Company

Brian P. Fitzgerald – Jefferies & Co., Inc.

Stephen Ju – Credit Suisse

Mark Alan May – Barclays Capital, Inc.

Nat Schindler – Bank Of America Merrill Lynch

Presentation

Operator

Good morning. My name is Kirk, and I will be your conference operator today. At this time, I’d like to welcome everyone to the IAC’s Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. CFO, Mr. Jeff Kip, you may begin your conference.

Jeffrey W. Kip

Thanks. Good morning, everyone. Welcome to our third quarter 2012 earnings call. Barry and Greg will make some brief remarks, after which I’ll return with some detail on each of our businesses and then we’ll go to Q&A.

But first, let me remind you that, during this call, we may discuss our outlook and future performance. These forward-looking statements typically proceeds by words such as we expect, we believe, we anticipate or similar statements. These forward-looking comments 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 third quarter 2012 press release and our periodic reports filed with the SEC. We will also discuss certain non-GAAP measures today. I refer you to our press release in 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. The figures kind of speak for themselves. I guess that should mean goodbye, but we are here for a while to answer questions et cetera, but it might be interesting simply to highlight the consistency of the company, which is that for 11 quarters our average growth is about 28%. We are a solid dividend paying company. We return cash to shareholders. Over 50% of the stock is repurchased over the last several years and this year-to-date repurchased about 9 million shares over $400 million.

We are acquiring and investing, acquiring in this quarter $350 million of acquisitions and investing in our businesses and creating new businesses. All these are consistent actions; I think they are fairly rare in terms of just box up these attributes of this somewhat unique enterprise. And I think that this consistency has a lot of runway in front of it. So I think now what we do is I turn it over to Mr. Blatt and he will tell you details about what’s happened and what will happen.

Gregory R. Blatt

Thanks, Barry. Actually we’re going to focus on sort of following up on what Barry said, I’m going to focus on sort of the two biggest acquisitions that we’ve done in recent times and that’s About and Meetic. About, we obviously, I think announced and closed during this quarter and About really is one of those rare acquisitions where there is a two-way mutual synergies. I know people like to tout that all the time, I’m not sure it’s usually true, here it really is an strict value to, you will be talking about our search strategy for a while, the Ask is really differentiating itself based on its search attributes, but also its characteristics of the Q&A content provider.

And About is a rare collection of very wide breath high quality content, and what that enables is that we can actually through distributing about content on the Ask experience. We improve the quality of the user experience on Ask, which is obviously very important, and we also increased the distribution of About, in doing so we sort of increased the returns on both products.

Going the other way, we’ve obviously become pretty good at distributing content across the web. As you’ve seen from the Ask results, and we know bring that expertise to About, which again will lift those results.

Finally, here is a small acquisition that we did; I’m actually not sure whether it was this last quarter and quarter before called nRelate, which is a small product that we bought relatively cheap. What that product does is it effectively, if you go to a site like CBSNews.com, which is one of our clients and you go to the bottom of the page, it would typically have something that says something like more stories from CBS, more stories from the web. And it’s a widget that we provide and it enables publishers to redirect people to other pages on their own site, but also to effectively direct people to paid content from other sites.

And as such it needs both publishers and content distributors and About now along with Ask become O&O publishers and advertisers on that network. And together with CBS interactive, which we sort of did the deal with this quarter, becomes three real anchor tenants to give us the scale to play in this area, which we think is exciting for us. So together these attributes drive near term incremental profits, which are exciting, but also serve long-term strategic initiatives, and that’s really just the kind of acquisition we want to be doing at the kind of multiple that we paid.

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