IAC misses quarterly revenue estimates on continued decline in search unit

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(Reuters) -IAC missed Wall Street expectations for quarterly revenue on Monday, missed Wall Street revenue estimates on Monday as traffic to its ad‑supported search and content sites fell, sending its shares down 9% in after‑hours trading.

The media and internet firm said its search unit’s third‑quarter revenue fell 41%, citing Google algorithm changes and policy updates that reduced marketing via affiliate channels.

The growing use of Google AI Overviews, which display answers directly on the search results page, has reduced traffic to traditional organic search listings. This decline in organic traffic resulted in fewer ad impressions and, as a result, lower programmatic advertising revenue at IAC’s People unit.

Overall revenue declined 8% to $589.8 million, below estimates of $601.6 million, according to data compiled by LSEG.

However, IAC’s largest unit People reported a 9% increase in digital revenue, driven by strong growth in performance marketing and licensing.

The segment, which is the largest digital and print publisher in the U.S., signed a new AI licensing deal with Microsoft to allow its Copilot assistant to use its content.

“We believe publishers deserve fair compensation for their quality IP,” said Jonathan Roberts, chief innovation officer at People, regarding the deal with Microsoft.

IAC’s adjusted core profit in third quarter fell 59% to $29.1 million, primarily due to several one-time expenses including about $15 million in severance-related costs at the People unit.

(Reporting by Harshita Mary Varghese and Juby Babu in Bengaluru; Editing by Tasim Zahid)