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):  November 8, 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 November 8, 2017, the Registrant announced that it had released its results for the quarter ended September 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.

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Exhibit 99.1

IAC REPORTS Q3 2017

NEW YORK— November 8, 2017—IAC (NASDAQ: IAC) released its third quarter 2017 results today.  It also separately posted a letter to shareholders from IAC’s CEO Joey Levin on the Investor Relations section of its website at www.iac.com/Investors.

IAC SUMMARY RESULTS

($ in millions except per share amounts)

See reconciliations of GAAP to non-GAAP measures beginning on page 15.

Q3 2017 HIGHLIGHTS

·                  The combination of HomeAdvisor and Angie’s List to create ANGI Homeservices was completed on September 29, 2017.  Operating loss reflects $96.9 million in stock-based compensation expense resulting from the transaction and $26.0 million of other transaction-related expenses (the latter also impacts Adjusted EBITDA).  Excluding these expenses, IAC operating income would have been $104.3 million (up 22% year-over-year) and Adjusted EBITDA would have been $163.6 million (up 18% year-over-year).

·                  ANGI Homeservices revenue increased 36% to $181.7 million driven by 34% growth at HomeAdvisor Domestic and 75% growth in Europe.  Excluding the transaction-related expenses and $1.0 million of incremental quarterly public company costs, operating income would have been $11.4 million and Adjusted EBITDA would have been $24.8 million, which represents a 14% Adjusted EBITDA margin.

·                  Match Group revenue growth accelerated to 19% driven by 18% growth in paid members to 6.6 million.  Tinder average paid member count exceeded 2.5 million in Q3 2017, increasing 476,000 sequentially.  Operating income was $91.0 million and Adjusted EBITDA increased 12% to $119.6 million, both including $11.3 million in expenses related to the Tinder equity plan settlement.

·                  Video revenue increased 31% due to the sale of a film in the quarter as well as Vimeo subscribers increasing 14% year-over-year to 847,000, with gross bookings growth accelerating to 24% year-over-year.  On October 18, 2017, Vimeo acquired Livestream, a leading live video solution that powers millions of events a year.

·                  Applications delivered another quarter of healthy cash flow with operating income of $29.4 million and Adjusted EBITDA of $31.1 million.

·                  Publishing was profitable on both operating income and Adjusted EBITDA with Premium Brands (Dotdash, Investopedia, Dictionary.com and The Daily Beast) revenue growth accelerating to 16%.

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DISCUSSION OF FINANCIAL AND OPERATING RESULTS

(a) Q3 2017 operating loss of $112.5 million at ANGI Homeservices includes $96.9 million in stock-based compensation expense related primarily to the modification of previously issued HomeAdvisor vested awards and the acceleration of certain Angie’s List awards in connection with the transaction, as well as $26.0 million of costs related to the transaction and $1.0 million of incremental quarterly public company costs; excluding the transaction-related expenses and $1.0 million of incremental quarterly public company costs, operating income would have been $11.4 million and Adjusted EBITDA would have been $24.8 million.

Match Group

Revenue increased 19% to $343.4 million driven by 18% growth in average paid member count to 6.6 million, primarily at Tinder, and a 1% increase in ARPPU.

Operating income was $91.0 million, flat to Q3 2016 due to 12% Adjusted EBITDA growth and $3.0 million lower amortization of intangibles, partially offset by $9.2 million higher stock-based compensation expense.

Adjusted EBITDA growth was driven by higher revenue and lower selling and marketing expense as a percentage of revenue, partially offset by higher operating expenses including $11.3 million in expenses related to the Tinder equity plan settlement as well as higher in-app purchase fees and salary-related costs (increased headcount at Tinder).

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Please refer to the Match Group Q3 2017 earnings release and the related investor presentation referenced therein for further detail and reconciliations.

ANGI Homeservices

With the completed combination of HomeAdvisor and Angie’s List on September 29, 2017, the financial results of ANGI Homeservices for Q3 2017 consists of a full quarter of results for HomeAdvisor and one day of results for Angie’s List.  For periods prior to Q3 2017, ANGI Homeservices financial results are those of IAC’s previously reported HomeAdvisor segment (adjusted to reflect corporate allocations from IAC).

Revenue increased 36% to $181.7 million driven by 34% growth at HomeAdvisor Domestic and 75% growth in Europe.  HomeAdvisor Domestic revenue growth was driven by a 36% increase in service requests to 5.0 million and a 25% increase in paying service professionals to 172,000.  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 by organic growth.

Q3 2017 reflects an operating loss of $112.5 million compared to operating income of $10.1 million in Q3 2016 due primarily to the following:

·                  An increase of $101.6 million in stock-based compensation expense including $96.9 million due primarily to the consummation of the Angie’s List transaction in Q3 2017, comprising $78.0 million related to the modification of previously issued HomeAdvisor vested equity awards, which were converted into ANGI Homeservices equity awards, and $19.0 million related to the acceleration of previously issued Angie’s List equity awards resulting from the termination of employees in connection with the combination.

·                  A $17.6 million decline in Adjusted EBITDA to a loss of $2.3 million (from profits of $15.3 million in Q3 2016) as described below.

Q3 2017 Adjusted EBITDA reflects $26.0 million of severance, retention, transaction and integration-related costs and deferred revenue write-offs related to the Angie’s List transaction as well as $1.0 million of incremental quarterly public company costs.  Q3 Adjusted EBITDA was also impacted by higher selling and marketing expense driven by both the North America and European businesses (including 35% growth in TV marketing) and higher European losses.

Excluding the transaction-related expenses and $1.0 million of incremental quarterly public company costs, operating income would have been $11.4 million and Adjusted EBITDA would have been $24.8 million.

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Video

Revenue increased 31% to $78.3 million driven by the sale of The Meyerowitz Stories (New and Selected) at IAC Films and strong growth at Vimeo, partially offset by declines at Electus.  Operating loss improved to $1.8 million driven by lower Adjusted EBITDA losses to $0.8 million and $0.5 million lower stock-based compensation expense.  The lower Adjusted EBITDA losses were primarily due to the contribution from IAC Films during the quarter, partially offset by lower profits from Electus and higher losses from Vimeo (including $0.9 million of transaction costs related to the Livestream acquisition).

Applications

Revenue decreased 5% to $136.3 million due to a 23% decrease in Partnerships, partially offset by a 1% increase in Consumer.  Consumer growth was driven by growth at Apalon (higher advertising and subscription revenue) and SlimWare (higher subscription revenue), partially offset by declines at the B2C desktop applications business due to lower revenue per query.

Operating income of $29.4 increased slightly from Q3 2016 reflecting the following:

·                  The inclusion of $2.7 million expense in Q3 2016 (related to changes in the amount of contingent consideration expected to be paid in connection with a previous acquisition).

·                  A decrease of $1.0 million in amortization of intangibles.

·                  A 10% decrease in Adjusted EBITDA to $31.1 million driven by the lower Partnerships revenue and higher marketing expenses at Apalon.

Publishing

Revenue increased 18% to $88.8 million due to 20% higher Ask & Other revenue and 16% higher Premium Brands revenue.  Ask & Other revenue increased due to higher paid search traffic as Ask has now fully anniversaried the renewal of the Google contract, which became effective April 1, 2016.  Premium Brands revenue increased due to 20% growth at both Dotdash and Investopedia as well as growth at The Daily Beast and Dictionary.

Operating income improved $20.2 million to $5.7 million (from a loss of $14.6 million in Q3 2016) due to the following:

·                  Adjusted EBITDA of $7.1 million as compared to a $6.2 million loss in the prior year.  The Adjusted EBITDA improvement was due to higher revenue and lower operating costs resulting from restructurings in 2016, including $1.1 million in restructuring costs in Q3 2016.

·                  A decrease of $6.0 million in amortization of intangibles due to lower expense in 2017 related to a trade name that is now fully amortized.

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Corporate

Operating loss increased $3.5 million due primarily to a $3.4 million increase in Adjusted EBITDA losses driven primarily by higher compensation costs and consulting fees and an increase in stock-based compensation expense of $0.9 million.

OTHER ITEMS

Interest expense decreased due to lower average debt balances and lower average interest rates versus the prior year.

The Q3 2017 income tax benefit of $279.5 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.  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 25% in Q3 2016, lower than the statutory rate due primarily to foreign income taxed at lower rates.  The effective income tax rates for Adjusted Net Income in Q3 2017 and Q3 2016 were 34% and 30%, respectively.  The Q3 2017 effective income tax rate was higher than at Q3 2016 due primarily to the nondeductible foreign exchange losses in the current period and both the Q3 2017 and Q3 2016 effective rates were lower than the statutory rate due primarily to foreign income taxed at lower rates.

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LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2017, IAC had 81.9 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 September 30, 2017:

·                  On a consolidated basis, the Company had $1.3 billion in cash and cash equivalents, of which IAC held $1.0 billion, Match Group held $157.6 million and ANGI Homeservices held $59.5 million.

·                  On a consolidated basis, the Company had $1.7 billion in long-term debt, of which IAC owed $396.7 million, Match Group owed $1.3 billion and ANGI Homeservices had no third-party debt.  ANGI Homeservices had $79.5 million of debt under revolving credit and term loan lines with IAC and its subsidiaries; this amount eliminates in consolidation.

·                  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 September 30, 2017 and currently remain undrawn.

Pro forma for (a) the $517.5 million 0.875% Exchangeable Senior Notes due 2022 issued on October 2, 2017, net of related fees and expenses and the net premium paid on the Exchangeable Notes hedging transactions, (b) discharging the full outstanding balance of IAC’s 4.875% Senior Notes due 2018 immediately prior to the issuance of the Exchangeable Notes and (c) a $275 million Term Loan A at ANGI Homeservices, which closed on November 1, 2017, and the use of a portion of the proceeds to retire related party debt and pay fees and expenses:

·                  On a consolidated basis, the Company had $1.6 billion in cash and cash equivalents, of which IAC held $1.2 billion, Match Group held $157.6 million and ANGI Homeservices held $255.0 million.

·                  On a consolidated basis, the Company had $2.1 billion in long-term debt, of which IAC owed $552.4 million, Match Group owed $1.3 billion and ANGI Homeservices owed $275.0 million, excluding $3.0 million of debt under revolving credit and term loan lines with IAC and its subsidiaries, which eliminates in consolidation.

As of September 30, 2017, IAC’s economic ownership interest and voting interest in:

·                  Match Group were 81.3% and 97.6%, respectively.  IAC held 222.0 million Class A and B common shares.

·                  ANGI Homeservices were 87.1% and 98.5%, respectively.  IAC held 414.8 million Class B common shares.

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OPERATING METRICS

See notes on following page

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OPERATING METRICS - continued

(a)              Direct Revenue is revenue that is directly received from an end user of our products.

(b)              North America consists of our businesses for customers located in the United States and Canada.

(c)               International consists of our businesses for customers located outside of the United States and Canada.

(d)              Average PMC is calculated by summing the number of paid subscribers, or paid member count (PMC), at the end of each day in the relevant measurement period and dividing it by the number of calendar days in that period.  PMC as of any given time represents the number of users with a paid membership at that time.

(e)               ARPPU, or Average Revenue per Paying User, is defined as Direct Revenue from subscribers in the relevant measurement period (whether in the form of subscription payments or à la carte payments) divided by the Average PMC in such period divided by the number of calendar days in such period.

(f)                 Reflects the HomeAdvisor domestic branded marketplace service.  It excludes other North America operating subsidiaries within the segment.

(g)              Includes Angie’s List revenue (revenue from service professionals under contract for advertising during the period and Angie’s List non-advertising revenue) as well as revenue from mHelpDesk, HomeStars and Felix.

(h)              Pro forma results reflect the inclusion of Angie’s List revenue for all periods and excludes a deferred revenue write-off of $0.1 million in Q3 2017 related to the combination of HomeAdvisor and Angie’s List.

(i)                 Fully completed and submitted domestic customer service requests on HomeAdvisor.

(j)                 The number of HomeAdvisor domestic service professionals that had an active membership and/or paid for consumer matches in the last month of the period.

(k)               Reflects the total number of Angie’s List service professionals under contract for advertising at the end of the period (excludes e-commerce-only service professionals).

(l)                 The number of subscribers to Vimeo with a Plus, Pro or Business subscription at the end of the period.

(m)            Consumer revenue is composed of the direct-to-consumer downloadable desktop applications, including Apalon, which houses our mobile operations, and SlimWare.

(n)              Partnerships revenue is composed of our business-to-business partnership operations.

(o)              Premium Brands revenue is composed of Dotdash (formerly About.com), Dictionary.com, Investopedia and The Daily Beast.

(p)              Ask & Other revenue is principally composed of Ask.com, the About.com performance marketing business and CityGrid.

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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).

(a)         The 0.875% Exchangeable Senior Notes issued on October 2, 2017 are exchangeable into IAC common shares at an initial conversion price of $152.18 per share.  In connection with this debt offering, the Company purchased call options with a strike price of $152.18 per share, covering the entire 3.4 million shares that would be issuable upon the conversion of these notes, and sold warrants for 3.4 million shares with a strike price of $229.70 per share.  From a GAAP standpoint, the notes and warrants only become dilutive once the price of IAC stock exceeds the $152.18 per share conversion price and $229.70, respectively.  The call options are anti-dilutive and would never be included in GAAP dilution.  The dilution table above will reflect dilution related to the warrants once they are in the money and the dilution from the notes will be assumed to be entirely offset by the purchased call options.

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

For options — 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

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exercise, in each case assuming a withholding tax rate of 50%.  Based on IAC’s common stock price on November 3, 2017 of $129.15  and our assumed withholding tax rate of 50%, the cash payment that the Company would be required to make to cover the withholding taxes on behalf of the award holders is approximately $34 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 $25 million based upon the assumptions in the preceding sentence.  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.

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 tandem awards may be exercised on a gross or net basis at the election of the award holder.  During the third quarter of 2017, Match Group made cash payments of approximately $500 million to cover both withholding taxes paid on behalf of employees who exercised these awards on a net basis and the purchase of certain vested tandem awards.  In connection with the net settlement of the tandem awards, during the third quarter of 2017, the Company issued 1.9 million of its common shares to Tinder employees and Match Group issued 10.6 million of its common shares to IAC as reimbursement for the IAC shares issued to the award holders pursuant to their Employee Matters Agreement.

If the remaining tandem awards were settled in IAC shares, using IAC’s and Match Group’s common stock price on November 3, 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 0.8 million common shares.  Match Group’s subsequent reimbursement of IAC in its common shares would increase IAC’s economic ownership interest in Match Group to 81.6%.  The dilutive securities calculation in the table above assumes the tandem awards are settled in shares of Match Group common stock; therefore, no dilution from these awards is included in the table above.

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ANGI Homeservices Equity Awards and the Treatment of the Related Dilutive Effect

In connection with the combination of HomeAdvisor and Angie’s List under ANGI Homeservices, previously issued stock appreciation rights that related to common stock of HomeAdvisor (US) were converted into stock appreciation rights that are exercisable for Class A shares of ANGI Homeservices (the “SARs”).  IAC has the right to settle these awards using shares of IAC common stock.  To the extent shares of IAC common stock are issued in settlement of these awards, ANGI Homeservices will reimburse IAC for the cost of those shares by issuing to IAC additional Class B common shares of ANGI Homeservices.  If the SARs were settled in IAC shares, using IAC’s and ANGI Homeservices common stock prices on November 3, 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 SARs is 1.6 million shares.  ANGI Homeservices subsequent reimbursement of IAC in its common shares would increase IAC’s economic ownership interest in ANGI Homeservices to 87.4%.  The dilutive securities calculation in the table above assumes the SARs are settled in shares of ANGI Homeservices common stock; therefore, no dilution from these awards is included in the table above.

CONFERENCE CALL

IAC will audiocast a conference call to answer questions regarding both IAC’s and ANGI Homeservices third quarter 2017 results on Thursday, November 9, 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 and ANGI Homeservices 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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IAC 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 nine months ended September 30, 2017, Free Cash Flow increased $109.6 million due to higher Adjusted EBITDA, lower income tax payments, lower interest payments and lower capital expenditures.

FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION

IAC RECONCILIATION OF GAAP EPS TO ADJUSTED EPS

($ in thousands except per share amounts)