UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 2, 2017

IAC/INTERACTIVECORP

(Exact name of registrant as specified in charter)

Registrant’s telephone number, including area code: (212) 314-7300

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02              Results of Operations and Financial Condition.

Item 7.01              Regulation FD Disclosure.

On August 2, 2017, the Registrant announced that it had released its results for the quarter ended June 30, 2017.  The full text of the related press release, which is posted on the “Investor Relations” section of the Registrant’s website at http://www.iac.com/Investors and appears in Exhibit 99.1 hereto, is incorporated herein by reference.

Exhibit 99.1 is being furnished under both Item 2.02 “Results of Operations and Financial Condition” and Item 7.01 “Regulation FD Disclosure.”

Item 9.01              Financial Statements and Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  August 2, 2017

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Exhibit 99.1

IAC REPORTS Q2 2017

NEW YORK— August 2, 2017—IAC (NASDAQ: IAC) released its second quarter 2017 results today.  It also separately posted a letter to shareholders from CEO Joey Levin on the Investor Relations section of its website at www.iac.com/Investors.

SUMMARY RESULTS

($ in millions except per share amounts)

Q2 2017 HIGHLIGHTS

·                  HomeAdvisor revenue increased 39% to $180.7 million driven by a 38% increase in domestic revenue.  Domestic revenue growth was driven by a 41% growth in service requests and a 28% growth in paying service professionals to 164,000.

·                  Operating income and Adjusted EBITDA were $8.3 million and $14.7 million, respectively, both reflecting $3.7 million of costs related to the proposed Angie’s List transaction.

·                  The Hart-Scott-Rodino waiting period for the proposed Angie’s List transaction was terminated on July 13, 2017; the Company is on track to close the transaction in Q4 2017.

·                  Match Group revenue increased 12% to $309.6 million due to 15% growth in Average PMC to 6.1 million driven primarily by Tinder and PlentyOfFish.  Tinder Average PMC was 2.1 million in Q2 2017, increasing 224,000 sequentially.

·                  Operating income increased 7% to $83.0 million and Adjusted EBITDA increased 8% to $109.9 million.

·                  In the Video segment, Vimeo subscribers ended Q2 2017 at 828,000, up 15% year-over-year, with gross bookings increasing 20% year-over-year.

·                  Applications revenue increased 1% year-over-year (the first quarter of year-over-year revenue growth since Q3 2015) driven by 8% Consumer growth, including 37% growth at Apalon.

·                  Operating income increased 107% to $39.1 million and Adjusted EBITDA increased 39% to $40.5 million (the third and fourth consecutive quarter above $30 million, respectively).

·                  In the Publishing segment, Premium Brands revenue increased 9% year-over-year driven by 23% growth from Investopedia and 10% growth from Dotdash.  Q2 2017 marked the second consecutive quarter of positive Adjusted EBITDA at Publishing.  Operating loss was $2.9 million, reduced from $5.8 million in Q1 2017.

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DISCUSSION OF FINANCIAL AND OPERATING RESULTS

(a) Includes $3.7 million of costs related to the proposed Angie’s List transaction.

Match Group

Revenue increased 12% driven by higher Average PMC at both North America and International.  Average PMC increased 6% and 31% at North America and International, respectively, due mainly to Tinder and PlentyOfFish.

Operating income increased 7% to $83.0 million and Adjusted EBITDA increased 8% to $109.9 million due primarily to higher revenue and lower selling and marketing expense as a percentage of revenue.  Operating income also benefited from a decrease in amortization of intangibles of $4.5 million, due primarily to certain intangible assets from the PlentyOfFish acquisition becoming fully amortized, partially offset by expense of $3.0 million in Q2 2017 (resulting from changes in the amount of contingent consideration expected to be paid in connection with a previous acquisition) versus income of $0.8 million in the prior year and an increase of $3.0 million in stock-based compensation expense.  Revenue grew faster than operating income and Adjusted EBITDA due to higher operating expenses including increased in-app purchase fees, higher salary related costs due to hiring at Tinder and $2.7 million in professional fees related to the Tinder Equity Plan Settlement.

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Net cash flow from operations increased 27% to $153.2 million and Free Cash Flow increased 36% to $138.4 million for the six months ended June 30, 2017, respectively.

Please refer to the Match Group Q2 2017 earnings release and the related investor presentation referenced therein for further detail and reconciliations.

HomeAdvisor

Revenue increased 39% to $180.7 million driven by a 38% growth at the domestic business and 66% growth in Europe.  Domestic revenue growth was driven by a 41% increase in service requests and a 28% increase in paying service professionals to 164,000.  Revenue growth in Europe was driven by the acquisitions of controlling interests in MyHammer Holding AG on November 3, 2016 and MyBuilder Limited on March 24, 2017, as well as organic growth across other regions.  Operating income declined from $11.9 million to $8.3 million and Adjusted EBITDA declined from $15.0 million to $14.7 million due primarily to $3.7 million in costs related to the proposed Angie’s List transaction as well as a 39% increase in total selling and marketing expense driven by both the domestic and European businesses (including 65% growth in TV marketing) and higher European losses.  Operating income also reflects an increase in amortization of intangibles and depreciation of $2.0 million and $1.3 million, respectively.

Video

Revenue increased 17% to $55.2 million driven by growth at Electus and accelerating growth at Vimeo.  Operating loss increased 55% to $7.8 million due to 72% higher Adjusted EBITDA losses to $6.8 million.  The higher Adjusted EBITDA losses were due to lower profits at Daily Burn and increased losses at Electus.

Applications

Revenue increased 1% to $144.0 million due to an 8% increase in Consumer, partially offset by a 23% decrease in Partnerships.  The Consumer growth was driven by strong growth at Apalon (driven by higher advertising and subscription revenue) and SlimWare (higher subscription revenue) as well as a return to growth at the B2C desktop applications business due to higher revenue per query.

Operating income increased 107% to $39.1 million due to a 39% increase in Adjusted EBITDA to $40.5 million, the inclusion of expense of $7.6 million in Q2 2016 (resulting from changes in the amount of contingent consideration expected to be paid in connection with a previous acquisition) and a decrease of $1.0 million in amortization of intangibles versus the prior year.  Adjusted EBITDA growth was driven primarily by a $2.9 million favorable legal settlement in Q2 2017, lower operating costs resulting from restructurings in 2016 and Q1 2017 and improved profitability at Apalon and SlimWare.  This marked the fourth consecutive quarter with Adjusted EBITDA above $30 million.  Operating income was $29.2 million, $33.8 million and $32.8 million in Q3 2016, Q4 2016 and Q1 2017, respectively.

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Publishing

Revenue decreased 8% to $78.1 million due to 16% lower Ask & Other revenue, partially offset by 9% higher Premium Brands revenue.  Ask & Other revenue decreased due to declines in paid search traffic, mainly attributable to the renewal of the Google contract, which became effective April 1, 2016, as well as declines in revenue at certain other legacy businesses.  Premium Brands revenue increased due primarily to 23% growth from Investopedia and 10% growth from Dotdash.  In Q2 2017, the About.com performance marketing business was moved to Ask & Other from Premium Brands to align with how the Company views these businesses internally (all prior periods have been recast to reflect the move).  Premium Brands now includes Dotdash, Dictionary.com, Investopedia and The Daily Beast.

Operating loss improved $314.1 million to $2.9 million due to the inclusion in Q2 2016 of a goodwill impairment charge of $275.4 million, a decrease of $22.9 million in amortization of intangibles as well as positive Adjusted EBITDA of $2.7 million versus an $11.8 million loss in the prior year.  Q2 2017 marked the second consecutive quarter of positive Adjusted EBITDA (Q1 2017 operating loss was $5.8 million).  The Adjusted EBITDA improvement was due to lower operating costs resulting from restructurings in 2016 including $4.5 million in restructuring costs across Publishing in Q2 2016.  The decrease in amortization of intangibles was due to lower expense in 2017 related to a trade name that is now fully amortized and the inclusion in Q2 2016 of an $11.6 million impairment charge of certain indefinite-lived trade names.  The Q2 2016 goodwill and indefinite-lived intangible asset impairment charges were driven by the impact from the Google contract, traffic trends and monetization challenges.

Other

The Other segment consists of the results of PriceRunner, ShoeBuy and The Princeton Review for periods prior to the sale of these businesses, which occurred on March 18, 2016, December 30, 2016 and March 31, 2017, respectively.  Beginning in Q2 2017, as a result of the sale of these businesses, the Other segment does not include any financial results.

Corporate

Operating loss increased 32% due primarily to an increase in stock-based compensation expense of $8.0 million due to the modification of a certain subsidiary denominated equity award and a 7% increase in Adjusted EBITDA losses driven primarily by higher compensation costs and consulting fees.

OTHER ITEMS

Interest expense decreased due primarily to redemptions and repurchases of IAC 4.875% Senior Notes, repurchases of IAC 4.75% Senior Notes as well as the Q4 2016 partial prepayment and repricing of the Match Group term loan facility, partially offset by the issuance of the Match Group 6.375% Senior Notes in June 2016.

Other income, net in Q2 2017 includes $21.2 million related to the gain on sales of certain investments.

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Other expense, net in Q2 2016 included a non-cash charge of $11.1 million related to the write-off of a proportionate share of original issue discount and deferred financing costs associated with the prepayment of $400 million of the Match Group term loan facility.

The Q2 2017 income tax benefit of $19.4 million for GAAP was primarily due to the effect of adopting Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU No. 2016-09), on January 1, 2017 and the realization of certain deferred tax assets in the current period.  Under ASU No. 2016-09, excess tax benefits generated by the settlement or exercise of stock-based awards are recognized as a reduction to the income tax provision rather than additional paid-in capital.  The effective income tax rate for GAAP was 34% in Q2 2016, lower than the statutory rate due primarily to the non-deductible portion of the goodwill impairment charge at the Publishing segment, partially offset by state taxes.  The effective income tax rate for Adjusted Net Income was 24% in Q2 2017, lower than the statutory rate due primarily to the realization of certain deferred tax assets in the current period and foreign income taxed at lower rates.  The effective income tax rate for Adjusted Net Income was 25% in Q2 2016, lower than the statutory rate due primarily to foreign income taxed at lower rates.

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LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2017, IAC had 79.5 million common and class B common shares outstanding and had 8.6 million shares remaining in its stock repurchase authorization.  IAC may purchase shares over an indefinite period on the open market and in privately negotiated transactions, depending on those factors IAC management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

As of June 30, 2017:

·                  The Company had $1.5 billion in cash and cash equivalents and marketable securities, of which IAC held $1.0 billion and Match Group held $492.7 million.

·                  The Company had $1.6 billion in long-term debt, of which IAC owed $396.7 million and Match Group owed $1.2 billion.

·                  IAC has a $300 million revolving credit facility and Match Group has a $500 million revolving credit facility.  Both credit facilities were undrawn as of June 30, 2017 and currently remain undrawn.

As of June 30, 2017, IAC’s economic ownership interest and voting interest in Match Group were 81.1% and 97.7%, respectively.

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OPERATING METRICS

See notes on following page

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OPERATING METRICS NOTES

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DILUTIVE SECURITIES

IAC has various tranches of dilutive securities.  IAC options are exercised on a gross basis with the number of shares issued equal to the number of options exercised and the Company receiving proceeds based upon the number and strike price of the options exercised.  IAC RSUs and subsidiary denominated equity awards, upon vesting or exercise, respectively, are settled on a net basis such that the award holder receives IAC common shares equal to the intrinsic value of the award, less, in each case, the amount required to cover the withholding taxes, which are remitted to the government in cash by the Company on behalf of the award holder.

The table below details these securities as well as potential dilution at various stock prices (shares in millions; rounding differences may occur).

The dilutive securities calculation in the above table is based on the following:

For options — that the cash generated from the exercise of all options (both vested and unvested awards), consisting of (a) the option exercise price and (b) the estimated income tax benefit from the tax deduction received upon the exercise of IAC options, is used to repurchase IAC shares.

For RSUs and subsidiary denominated equity awards — As mentioned above, these awards are settled on a net basis; therefore, the dilutive effect is presented as the net number of shares actually expected to be issued upon vesting or exercise in each case assuming a withholding tax rate of 50%.  Based on IAC’s common stock price on July 28, 2017 of $106.21 and our assumed withholding tax rate, the cash payment that the Company would be required to make to cover the withholding taxes on behalf of the award holders is approximately $127 million.  We expect a reduction in future corporate income taxes equal to a substantial portion of any such withholding tax payments by virtue of the income tax deduction received based on the intrinsic value of the awards at vesting or exercise, which would be approximately $94 million based upon our estimated tax rate of 37% and the IAC’s common stock price on July 28, 2017.  However, there will be some delay in the timing of the realization of the cash benefit of the income tax deduction because it will be dependent upon the amount and timing of future taxable income and the timing of estimated tax payments.

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The presentation of dilutive securities reflects how the Company’s management generally thinks about dilution and is, we believe, the best reflection of the true economic cost of the Company’s equity compensation programs.  This presentation differs from the GAAP treasury stock method used for calculating fully diluted earnings per share, which is described below:

For options — GAAP assumes that the total proceeds used to repurchase shares is equal to the sum of (a) the exercise price for all IAC options (both vested and unvested awards) and (b) the unamortized grant date fair value of unvested awards.

For RSUs and subsidiary denominated equity awards — Since these awards are net settled, no cash proceeds are received by the Company upon vesting or exercise and the total assumed proceeds to repurchase shares for GAAP is only the unamortized grant date fair value of unvested awards.

Conversion of Tinder Denominated Equity Awards and the Treatment of the Related Dilutive Effect

In early July, Tinder, Inc. (“Tinder”) denominated equity awards were converted into Match Group, Inc. (“Match Group”) tandem stock options (“tandem awards”).  The dilutive securities calculation in the table above assumes the Match Group tandem awards are settled in shares of Match Group common stock; therefore, no dilution from these awards is included in the table above.  The Match Group tandem awards may be exercised on a gross or net basis at the election of the award holder.  If the award holder elects to exercise the award on a gross basis, the award holder is obligated to tender cash for the strike price and the withholding taxes due upon exercise and receives a number of Match Group common shares equal to the number of options exercised.  If the award holder elects to exercise the award on a net basis, the award holder will receive, at the Company’s discretion, either (i) IAC common shares or (ii) Match Group common shares equal to the intrinsic value of the Match Group tandem award, in each case, less the amount required to cover the withholding taxes, which are remitted to the government in cash by Match Group on behalf of the award holder.

In the event that IAC common shares are issued in settlement, Match Group will issue its common shares or pay cash to IAC as reimbursement for the IAC common shares issued to the award holders pursuant to the Employee Matters Agreement.  If these awards were to be settled in IAC shares, using IAC’s and Match Group’s common stock price on July 28, 2017 and an assumed 50% withholding tax rate, the number of shares of IAC common stock that would be required to net settle the vested and unvested tandem awards is 3.2 million common shares.  Assuming Match Group reimburses IAC in Match Group common shares, IAC’s economic ownership interest in Match Group would increase to 82.5%.

CONFERENCE CALL

IAC will audiocast a conference call to answer questions regarding the Company’s second quarter 2017 results on Thursday, August 3, 2017, at 8:30 a.m. Eastern Time.  This call will include the disclosure of certain information, including forward-looking information, which may be material to an investor’s understanding of IAC’s business. The live audiocast will be open to the public at www.iac.com/Investors.

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GAAP FINANCIAL STATEMENTS

IAC CONSOLIDATED STATEMENT OF OPERATIONS

($ in thousands except per share amounts)

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IAC CONSOLIDATED BALANCE SHEET

($ in thousands)

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IAC CONSOLIDATED STATEMENT OF CASH FLOWS

($ in thousands)

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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

IAC RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW

($ in millions; rounding differences may occur)

For the six months ended June 30, 2017, Free Cash Flow increased $67.8 million due to higher Adjusted EBITDA, lower income tax payments and lower interest payments.

IAC RECONCILIATION OF GAAP EPS TO ADJUSTED EPS

(in thousands except per share amounts)

For GAAP diluted EPS purposes, RSUs, as well as performance-based RSUs and market-based awards for which the applicable performance or market condition(s) have been met, are included on a treasury method basis.  For Adjusted EPS purposes, the impact of RSUs on shares outstanding is based on the weighted average number of RSUs outstanding, including performance-based RSUs outstanding that the Company believes are probable of vesting.  Adjusted EPS does not include any shares issuable in settlement of Match Group subsidiary denominated equity as such equity is assumed to be settled with Match Group common stock.

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IAC RECONCILIATION OF SEGMENT GAAP MEASURE TO NON-GAAP MEASURE

($ in millions; rounding differences may occur)