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 7, 2019

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))

Securities registered pursuant to Section 12(b) of the Act:

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 7, 2019, the Registrant announced that it had released its results for the quarter ended June 30, 2019. 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 Q2 2019 – Q2 REVENUE INCREASES TO $1.2 BILLION

NEW YORK— August 7, 2019—IAC (NASDAQ: IAC) released its second quarter results today and 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 14.

Q2 2019 HIGHLIGHTS

·                  IAC disclosed its intention to explore the possibility of a distribution of its interests in Match Group and ANGI Homeservices to its shareholders.

·                  Match Group revenue increased 18% to $498.0 million and Average Subscribers increased 18% to 9.1 million.  Tinder Average Subscribers increased 503,000 sequentially and 1.5 million year-over-year to 5.2 million.

·                  ANGI Homeservices revenue increased 17% to $343.9 million and Pro Forma Revenue increased 20%.

·                  Marketplace service requests increased 17% to 7.9 million and Marketplace and Advertising paying service professionals totaled 260,000 at the end of Q2 2019.

·                  Pro Forma Revenue in Q2 2018 excludes deferred revenue write-offs in connection with the Angie’s List transaction and revenue from Felix, which was sold on December 31, 2018.

·                  Vimeo Platform Revenue increased 26% to $45.7 million due to average revenue per subscriber growth of 11% and subscriber growth of 31% to 1.2 million (including Magisto which was acquired on May 28, 2019).

·                  Dotdash revenue increased 23% to $37.7 million.  Operating income increased to $7.0 million (from $1.3 million in Q2 2018) and Adjusted EBITDA increased to $8.4 million (from $2.0 million in Q2 2018).

·                  Mosaic Group revenue increased to $48.1 million, comprising 36% of total Applications revenue in the quarter (up from 20% in Q2 2018), and ended Q2 2019 with 3.8 million subscribers.  Total Applications operating income was $21.0 million and Adjusted EBITDA was $25.3 million.

·                  For the six months ended June 30, 2019, net cash provided by operations was $355.8 million and Free Cash Flow was $279.2 million.

·                  IAC completed its initial investment in Turo, the world’s largest peer-to-peer car sharing marketplace in July 2019.  Turo has a community of over 10 million members and nearly 400,000 listed vehicles and has grown 2x year-over-year in each of the last 2 years.

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DISCUSSION OF FINANCIAL AND OPERATING RESULTS

IAC disclosed its intention to explore the possibility of a distribution of its equity interest in Match Group and ANGI Homeservices to its shareholders.  No decisions have been made as to the details of, or whether to pursue or consummate, either such transaction.

Match Group

·                  Revenue growth was due primarily to increased subscribers and ARPU at Tinder, partially offset by unfavorable foreign exchange effects.

·                  Operating income and Adjusted EBITDA grew slightly slower than revenue due to higher cost of revenue, due primarily to in-app purchase fees as revenue is increasingly sourced through mobile app stores, and higher legal costs, partially offset by lower selling and marketing expense as a percentage of revenue.  Operating income was further impacted by $5.3 million higher stock-based compensation expense.

Please refer to the Match Group Q2 2019 earnings release and the related investor presentation referenced therein for further detail.

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ANGI Homeservices

·                  Revenue increased 17% to $343.9 million driven by:

·                  27% Marketplace growth due to:

·                  a 17% increase in service requests to 7.9 million

·                  an 11% increase in paying service professionals to 223,000

·                  a 14% increase in revenue per paying service professional

·                  13% growth in Europe, impacted by $1.3 million unfavorable foreign exchange effects (20% growth in local currency)

·                  Pro Forma Revenue increased 20% (excluding Q2 2018 deferred revenue write-offs of $1.8 million in connection with the Angie’s List transaction and revenue of $10.0 million from Felix, which was sold on December 31, 2018).

·                  Operating income decreased $11.9 million to $11.4 million due to 23% lower Adjusted EBITDA, partially offset by $4.5 million lower stock-based compensation expense and $2.1 million lower amortization of intangibles.

·                  Adjusted EBITDA decreased due to higher selling and marketing expense as a percentage of revenue and investment at Handy and Fixd Repair, partially offset by $2.6 million Angie’s List transaction-related items in Q2 2018

Please refer to the ANGI Homeservices Q2 2019 earnings release and the IAC Q2 2019 shareholder letter for further detail.

Vimeo

·                  Revenue increased 16% to $45.7 million driven by 26% higher Platform Revenue, partially offset by the sale of the hardware business in Q1 2019.

·                  Platform Revenue growth was driven by an 11% increase in average revenue per subscriber and a 31% increase in ending subscribers to 1.2 million, including the addition of subscribers from Magisto, which was acquired on May 28, 2019.  Ending subscribers increased 8% year-over-year excluding Magisto.

·                  Operating loss increased 21% to $11.6 million and Adjusted EBITDA loss increased 24% to $9.5 million due primarily to higher marketing costs.

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Dotdash

·                  Revenue increased 23% to $37.7 million due to 28% higher traffic resulting in strong advertising revenue growth, as well as growth in affiliate commerce commissions.

·                  Operating income increased $5.7 million to $7.0 million and Adjusted EBITDA increased $6.4 million to $8.4 million.

Applications

·                  Revenue decreased 7% to $132.9 million due to a 26% decrease at Desktop, partially offset by a 68% increase at Mosaic Group.

·                  Mosaic Group revenue growth of 68% was driven by:

·                  37% growth related to the ongoing transition to subscription products, increased marketing efforts and new products

·                  The acquisition of TelTech in Q4 2018

·                  The decrease in Desktop revenue was driven by lower Consumer queries and continued Partnerships declines.

·                  Operating income decreased 37% to $21.0 million and Adjusted EBITDA decreased 28% to $25.3 million.

Emerging & Other

·                  Revenue decreased 1% to $128.5 million due primarily to the sales of Electus, Dictionary.com and CityGrid in Q4 2018, partially offset by higher revenue from Ask Media Group and growth at Bluecrew.

·                  Operating loss was $1.8 million in Q2 2019 compared to a profit of $6.1 million in Q2 2018 and Adjusted EBITDA loss was $1.5 million in Q2 2019 compared to a profit of $8.3 million in Q2 2018.  The profit declines were due primarily to lower margins at Ask Media Group, investment in College Humor Media and Bluecrew and the sale of Dictionary.com.

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Corporate

Operating loss increased $8.7 million driven by a $5.4 million increase in stock-based compensation expense due primarily to the issuance of new equity awards and modification charges in 2019, and a $3.0 million increase in Adjusted EBITDA losses driven primarily by higher professional fees and compensation costs.

Other income, net

The Company has an investment in Pinterest, which became a publicly-traded company in Q2 2019.  With effect from Pinterest’s initial public offering, our investment has been accounted for as a marketable security.  Other income, net in Q2 2019 includes a $29.8 million unrealized gain to reflect our investment at the closing market price of Pinterest for Q2 2019.  Other income, net in Q2 2018 includes a $26.8 million realized gain on the sale of certain Pinterest shares held by the Company and a $128.8 million unrealized gain to adjust our remaining interest in Pinterest to fair value.

Income Taxes

The Company recorded income tax provisions of $16.3 million in Q2 2019 and $31.4 million in Q2 2018 for effective tax rates of 10%.  The effective tax rates were lower than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards in both periods.

While the Company does not expect to be a full US federal cash income tax payer until 2022, which is in line with previous estimates, the ultimate timing is dependent upon a number of factors, including the Company’s performance, other components of pre-tax income (including realized gains and losses) and the amount and timing of tax deductions related to stock-based awards.

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Free Cash Flow

For the six months ended June 30, 2019, Free Cash Flow decreased $60.9 million to $279.2 million due primarily to an increase in accounts receivable, due to the timing of certain cash receipts and higher revenue, and higher capital expenditures.

CONFERENCE CALL

IAC executives will participate in the ANGI Homeservices quarterly conference call to answer questions regarding IAC on Thursday, August 8, 2019, 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 or ir.angihomeservices.com.

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LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2019:

·                  IAC had 84.2 million common and Class B common shares outstanding.

·                  On a consolidated basis, the Company had $3.3 billion in cash and cash equivalents and marketable securities, of which IAC held $2.7 billion, Match Group held $266.4 million and ANGI Homeservices held $380.6 million.

·                  On a consolidated basis, the Company had $3.6 billion in long-term debt, of which IAC had $1.7 billion, Match Group had $1.6 billion and ANGI Homeservices had $254.4 million.

·                  In Q2 2019, the Company, through two wholly-owned subsidiaries, issued $575 million 0.875% Exchangeable Senior Notes due 2026 and $575 million 2.00% Exchangeable Senior Notes due 2030.  The net proceeds, after deducting fees, expenses and the net premium paid for Exchangeable Senior Note hedges and warrants were approximately $1.0 billion.

·                  IAC has a $250 million revolving credit facility, Match Group has a $500 million revolving credit facility and ANGI Homeservices has a $250 million revolving credit facility.  The IAC, Match Group and ANGI credit facilities were undrawn as of June 30, 2019 and currently remain undrawn.

IAC has 8.0 million shares remaining in its stock repurchase authorization.

Between May 6, 2019 and August 2, 2019, Match Group repurchased 0.9 million common shares at an average price of $69.75.  Match Group has 1.4 million shares remaining in its stock repurchase authorization.

ANGI Homeservices has 15.0 million shares remaining in its stock repurchase authorization.

IAC, Match Group and ANGI Homeservices may purchase shares over an indefinite period on the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

As of June 30, 2019, IAC’s economic interest in Match Group was 80.4% and IAC’s voting interest was 97.5%.  IAC held 226.1 million shares of Match Group.

As of June 30, 2019, IAC’s economic interest in ANGI Homeservices was 83.1% and IAC’s voting interest was 98.0%.  IAC held 421.5 million shares of ANGI Homeservices.

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OPERATING METRICS

(rounding differences may occur)

See notes on following page

8

OPERATING METRICS (continued)

(a)         Direct Revenue includes both subscription and à la carte revenue that is received directly from an end user of our products.

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

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

(d)         Average Subscribers is calculated by summing the number of Subscribers at the end of each day in the relevant measurement period and dividing it by the number of calendar days in that period.  A Subscriber is a user who purchases a subscription to one of our products.  Users who purchase only à la carte features do not qualify as Subscribers.

(e)          ARPU, or Average Revenue per Subscriber, is Direct Revenue from Subscribers in the relevant measurement period (whether in the form of subscription or à la carte revenue from Subscribers) divided by the Average Subscribers in such period divided by the number of calendar days in such period.  Direct Revenue from users who are not Subscribers and have purchased only à la carte features is not included in ARPU.

(f)            Reflects the HomeAdvisor and Handy domestic marketplace, including consumer connection revenue for consumer matches, membership subscription revenue from service professionals and revenue from completed jobs sourced through the Handy platform.  It excludes revenue from Angie’s List, mHelpDesk, HomeStars, Fixd Repair and Felix.

(g)         Includes Angie’s List revenue (revenue from service professionals under contract for advertising and membership subscription fees from consumers) as well as revenue from mHelpDesk, HomeStars, Fixd Repair (acquired on January 25, 2019) and Felix prior to its sale on December 31, 2018.

(h)         Pro Forma Revenue in Q2 2018 excludes deferred revenue write-offs of $1.8 million in connection with the Angie’s List transaction and revenue of $10.0 million from Felix, which was sold on December 31, 2018.

(i)            Fully completed and submitted domestic customer service requests to HomeAdvisor and completed jobs sourced through the Handy platform.

(j)            The number of HomeAdvisor and Handy domestic service professionals that had an active subscription and/or paid for consumer matches or completed a job sourced through the Handy platform in the last month of the period.  An active HomeAdvisor subscription is a subscription for which HomeAdvisor was recognizing revenue on the last day of the relevant period.

(k)          Marketplace quarterly revenue divided by Marketplace Paying Service Professionals.

(l)            Reflects the total number of Angie’s List service professionals under contract for advertising at the end of the period.

(m)       Platform Revenue primarily includes subscription SaaS and other related revenue from Vimeo subscribers.

(n)         Hardware Revenue includes sales of our live streaming accessories.  Vimeo sold its hardware business in Q1 2019.

(o)         The number of subscribers to Vimeo’s SaaS video tools at the end of the period.

(p)         Desktop is comprised of revenue generated by applications distributed through both direct-to-consumer marketing and business-to-business partnerships.

(q)         Mosaic Group (formerly Mobile) includes Apalon, iTranslate, TelTech and Daily Burn (with effect from Q2 2018) and is comprised primarily of revenue generated by mobile applications distributed through iOS and Android.

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DILUTIVE SECURITIES

IAC has various dilutive securities.  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 presentation is calculated using the methods and assumptions described below, which are different from those used for GAAP dilution, which is calculated based on the treasury stock method.

RSUs and non-publicly traded subsidiary denominated equity awards — These awards are settled on a net basis, with the Company paying in cash any taxes required to be withheld from the employees upon settlement of the awards; therefore, the dilutive effect is presented as the net number of shares expected to be issued upon vesting or exercise assuming a withholding tax rate of 50%.  In addition, the estimated income tax benefit from the tax deduction received upon the vesting or exercise of these awards is assumed to be used to repurchase IAC shares.  Withholding taxes paid by the Company on behalf of the employees upon net settlement would be $58.2 million, assuming a stock price of $236.77 and a 50% withholding rate.  The table above assumes no change in the fair value estimate of the non-publicly traded subsidiary denominated equity awards from the values used at June 30, 2019.

Options — During the first quarter of 2019, the Company started to settle stock options on a net basis; therefore, the dilutive effect is presented as the net number of shares expected to be issued assuming no proceeds received by the Company upon exercise and withholding taxes (at a rate of 50%) are paid by the Company on behalf of the employees upon net settlement.  In addition, the estimated income tax benefit from the tax deduction received upon the exercise of these awards is assumed to be used to repurchase IAC shares.  Withholding taxes paid by the Company on behalf of the employees upon net settlement would be $461.5 million ($370.4 million for vested options and $91.1 million for unvested options), assuming a stock price of $236.77 and a 50% withholding rate.

Exchangeable Senior Notes — The Company has three series of Exchangeable Senior Notes outstanding.  In the event of an exchange, each series of Exchangeable Senior Notes can be settled in cash, shares or a combination of cash and shares.    At the time of each Exchangeable Senior Notes issuance, the Company purchased call options with a strike price equal to the exchange price of each series of Exchangeable Senior Notes (“Note Hedge”), which can be used to offset the dilution of each series of the Exchangeable Senior Notes.  No dilution is reflected in the table above for the $517.5 million 0.875% Exchangeable Senior Notes due October 1, 2022, which is the only series of Exchangeable Senior Notes that is currently exchangeable, because it is the Company’s intention to settle the Exchangeable Senior Notes with cash equal to the face amount of the notes; any shares issued would be offset by shares received upon exercise of the Note Hedge.

Warrants — At the time of the issuance of each series of Exchangeable Senior Notes the Company also sold warrants for the number of shares with the strike prices reflected in the table above.  The cash generated from the exercise of the warrants is assumed to be used to repurchase IAC shares and the net dilution is reflected in the table above.

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

Certain ANGI Homeservices and Match Group equity awards can be settled either in IAC common shares or the common shares of these subsidiaries, at IAC’s election.  For purposes of the dilution calculation above, these awards are assumed to be settled in shares of ANGI Homeservices and Match Group common stock; therefore, no dilution from these awards is included.

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GAAP FINANCIAL STATEMENTS

IAC CONSOLIDATED STATEMENT OF OPERATIONS

($ in thousands except per share data)

11

IAC CONSOLIDATED BALANCE SHEET

($ in thousands)

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842).  The adoption resulted in the recognition of right-of-use assets and related lease liabilities. At June 30, 2019, the Company has $180.3 million of right-of-use assets and $234.3 million of lease liabilities ($32.6 million included in Accrued expenses and other current liabilities and $201.7 million in Other long-term liabilities).  There was no impact on the Company’s consolidated statement of operations and cash flows.

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IAC CONSOLIDATED STATEMENT OF CASH FLOWS

($ in thousands)

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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

($ in millions; rounding differences may occur)

ANGI HOMESERVICES REVENUE TO PRO FORMA REVENUE RECONCILIATION

ANGI HOMESERVICES EUROPE RECONCILATION OF GAAP REVENUE TO NON-GAAP REVENUE, EXCLUDING FOREIGN EXCHANGE EFFECTS