IAC, the prominent internet and media holding company, has exceeded expectations with its financial performance for the fourth quarter. Notably, this success can be attributed to the improved results at Dotdash Meredith and a significant unrealized gain from its holdings in MGM Resorts International.

According to CEO Joey Levin's letter to shareholders, IAC's year concluded on a positive note, surpassing initial hopes. Levin expressed satisfaction in the company's "healthy profit growth," primarily driven by its three largest consolidated businesses: publisher Dotdash Meredith, home services platform Angi, and home-care provider Care.com.

Levin acknowledged the continuous nature of their work but emphasized the remarkable progress made over the past year.

Despite a 15% decrease in revenue compared to the previous year, IAC posted impressive fourth-quarter revenue of $1.058 billion, aligning with Street estimates. Dotdash Meredith contributed $475.9 million to this total, maintaining stability from the previous year and surpassing Wall Street's consensus estimate of $458 million, as reported by FactSet. IAC noted that Dotdash Meredith's digital revenues saw a 9% increase, reaching $284 million and marking a return to growth since acquiring Meredith in late 2021.

Meanwhile, revenue at Angi, a majority-owned publicly traded unit of IAC, amounted to $300.4 million, showing a decline of 27% from the previous year but falling just short of the consensus call of $303 million. Although Angi reported an adjusted loss of one cent per share during the quarter, it performed better than anticipated, with analysts predicting a two-cent loss.

In conclusion, IAC has demonstrated its resilience and ability to adapt in the ever-evolving digital landscape. With Dotdash Meredith's growth resurgence and promising performances by Angi and Care.com, IAC is poised for continued success in the future.

Angi Reports Strong Earnings for the Quarter

Angi, a leading online marketplace for home services, announced its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter, surpassing expectations. The company reported adjusted EBITDA of $41.4 million, representing a substantial 96% increase from the previous year. This result also exceeded the Street consensus forecast of $29 million.

Looking ahead, Angi expects its full-year 2024 adjusted EBITDA to range between $120 million and $150 million, reflecting a notable increase from its 2023 earnings of $118 million. Although the Street consensus had previously projected adjusted EBITDA of $127 million, Angi remains optimistic about its future growth prospects.

Revenue from IAC's Search Business Falls Short

Meanwhile, IAC's search business faced some challenges in the quarter, with revenue declining by 13% to $133.5 million. This figure fell below the consensus call of $151 million. However, the company's adjusted EBITDA showed promising growth, reaching $156.8 million, a remarkable 57% increase compared to the previous year. The consensus estimate for adjusted EBITDA stood at $125 million.

MGM Stake Boosts Net Income for Angi

Notably, Angi's net income for the quarter amounted to an impressive $327.8 million, or $3.70 per share. This significant increase in earnings can be attributed to an unrealized gain of $512.6 million from the company's stake in MGM. At the end of 2023, IAC held an approximate 20% stake in the casino gambling company, valued at around $3 billion. This stake represents roughly two-thirds of IAC's market capitalization, which currently stands at $4.4 billion.

Evaluating Capital Allocation and Focus on Existing Businesses

In a shareholder letter, IAC's CEO emphasized the company's financial strength, noting that its market capitalization is equivalent to its cash reserves and holdings in publicly traded companies. This implies that the rest of the business is essentially valued at zero. The positive state of the company's affairs now puts IAC in a favorable position to strategically allocate capital and focus on further improving its existing businesses.

CEO Levin stated, "The state of our business puts us back on the front foot, able to evaluate capital allocation offensively while building our cash balance. In the meantime, job number one is our existing businesses, and if we continue the progress from 2023 into 2024, we'll be in good shape."

Positive Outlook for 2024

Looking ahead to 2024, Angi anticipates total adjusted EBITDA to range between $320 million and $420 million. This projection includes an estimated contribution of $280 million to $300 million from Dotdash Meredith. The company also expects its operating income for the full year to range from a profit of $50 million to a loss of $80 million. With a positive trajectory from the previous year and exciting growth prospects, Angi is poised for success in 2024.

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