SEC Filing

View:

Download DOC

Download PDF

Download XLS

Download XBRL

iaci-20210930

Table of Contents

As filed with the Securities and Exchange Commission on November 5, 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________

Commission File No. 001-39356

IAC/INTERACTIVECORP

(Exact name of registrant as specified in its charter)


Delaware						84-3727412
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

555 West 18th Street, New York, New York 10011

(Address of registrant's principal executive offices)

(212) 314-7300

(Registrant's telephone number, including area code)

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

Title of each class

Trading Symbol

Name of exchange on which registered

Common stock, par value $0.0001

IAC

The Nasdaq Stock Market LLC

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

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2021, the following shares of the registrant's common stock were outstanding:


Common Stock			83,777,441
Class B common stock			5,789,499
Total			89,566,940

TABLE OF CONTENTS


		Page Number
PART I
Item 1.	Consolidated and Combined Financial Statements	3
	Consolidated Balance Sheet	3
	Consolidated and Combined Statement of Operations	4
	Consolidated and Combined Statement of Comprehensive Operations	5
	Consolidated Statement of Shareholders' Equity	6
	Combined Statement of Parent's Equity and Consolidated Statement of Shareholders' Equity	7
	Consolidated and Combined Statement of Cash Flows	8
	Note 1—The Company and Summary of Significant Accounting Policies	9
	Note 2—Income Taxes	14
	Note 3—Discontinued Operations	16
	Note 4—Business Combination	17
	Note 5—Financial Instruments and Fair Value Measurements	18
	Note 6—Long-term Debt	24
	Note 7—Accumulated Other Comprehensive Income (Loss)	25
	Note 8—Earnings (Loss) Per Share	26
	Note 9—Segment Information	28
	Note 10—Financial Statement Details	34
	Note 11—Contingencies	36
	Note 12—Related Party Transactions	38
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	66
Item 4.	Controls and Procedures	67
PART II
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72

Item 6.	Exhibits	73
	Signatures	76

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Consolidated and Combined Financial Statements

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


	September 30, 2021		December 31, 2020
	(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	3,404,913	$	3,366,176

Marketable securities	26,794		224,979
Accounts receivable, net	322,757		257,668

Other current assets	158,164		140,022
Current assets of discontinued operations	—		130,477
Total current assets	3,912,628		4,119,322

Building, capitalized software, leasehold improvements and equipment, net	289,794		274,930
Goodwill	1,659,808		1,660,102
Intangible assets, net	350,105		394,986
Investment in MGM Resorts International	2,547,313		1,860,158
Long-term investments	328,090		297,643
Other non-current assets	339,987		288,021
Non-current assets of discontinued operations	—		266,547
TOTAL ASSETS	$	9,427,725	$	9,161,709

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:

Accounts payable, trade	$	117,892	$	88,849
Deferred revenue	172,683		137,658
Accrued expenses and other current liabilities	458,061		340,406
Current liabilities of discontinued operations	—		183,988
Total current liabilities	748,636		750,901

Long-term debt, net	494,373		712,277
Income taxes payable	292		6,444
Deferred income taxes	178,388		78,789
Other long-term liabilities	203,809		227,406
Non-current liabilities of discontinued operations	—		2,972

Redeemable noncontrolling interests	26,084		231,992

Commitments and contingencies

SHAREHOLDERS' EQUITY:
Common Stock, $0.0001 par value; authorized 1,600,000 shares; 8,352 issued and outstanding at September 30, 2021	8		—
Class B common stock, $0.0001 par value; authorized 400,000 shares; 579 issued and outstanding at September 30, 2021	1		—
Common Stock, $0.001 par value; authorized 1,600,000 shares; 82,976 shares issued and outstanding at December 31, 2020	—		83
Class B common stock, $0.001 par value; authorized 400,000 shares; 5,789 shares issued and outstanding at December 31, 2020	—		6
Additional paid-in-capital	6,312,370		5,909,614
Retained earnings	892,179		694,042
Accumulated other comprehensive income (loss)	4,627		(6,170)
Total IAC shareholders' equity	7,209,185		6,597,575
Noncontrolling interests	566,958		553,353
Total shareholders' equity	7,776,143		7,150,928
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	9,427,725	$	9,161,709

The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands, except per share data)
Revenue	$	924,068	$	713,248	$	2,540,185	$	1,999,491
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	331,384		184,888		802,408		501,854
Selling and marketing expense	348,187		315,220		1,001,760		881,382
General and administrative expense	183,299		158,286		521,170		551,356
Product development expense	61,403		51,725		183,929		145,175
Depreciation	17,795		18,647		54,093		50,583
Amortization of intangibles	14,067		53,538		44,542		119,562
Goodwill impairment	—		53,173		—		265,146
Total operating costs and expenses	956,135		835,477		2,607,902		2,515,058
Operating loss	(32,067)		(122,229)		(67,717)		(515,567)
Interest expense	(6,032)		(5,807)		(18,463)		(9,579)
Unrealized gain on investment in MGM Resorts International	29,517		289,097		687,155		264,379
Other income (expense), net	79,539		1,602		133,388		(52,475)
Earnings (loss) from continuing operations before income taxes	70,957		162,663		734,363		(313,242)
Income tax (provision) benefit	(9,910)		25,060		(151,046)		96,440
Net earnings (loss) from continuing operations	61,047		187,723		583,317		(216,802)
Loss from discontinued operations, net of tax	—		(1,862)		(1,831)		(21,972)
Net earnings (loss)	61,047		185,861		581,486		(238,774)
Net (earnings) loss attributable to noncontrolling interests	(357)		(944)		3,089		(625)
Net earnings (loss) attributable to IAC shareholders	$	60,690	$	184,917	$	584,575	$	(239,399)

Per share information from continuing operations:
Basic earnings (loss) per share	$	0.68	$	2.19	$	6.58	$	(2.55)
Diluted earnings (loss) per share	$	0.65	$	2.06	$	6.16	$	(2.55)

Per share information attributable to IAC Common Stock and Class B common stock shareholders:
Basic earnings (loss) per share	$	0.68	$	2.17	$	6.56	$	(2.81)
Diluted earnings (loss) per share	$	0.65	$	2.04	$	6.14	$	(2.81)

Stock-based compensation expense by function:
Cost of revenue	$	18	$	8	$	52	$	111
Selling and marketing expense	1,449		2,467		3,766		4,543
General and administrative expense	11,762		24,385		48,695		132,536
Product development expense	2,209		1,761		5,291		4,671
Total stock-based compensation expense	$	15,438	$	28,621	$	57,804	$	141,861

The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE OPERATIONS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)
Net earnings (loss)	$	61,047	$	185,861	$	581,486	$	(238,774)
Other comprehensive (loss) income, net of income taxes:
Change in foreign currency translation adjustment	(1,560)		3,513		11,260		1,049
Change in unrealized gains and losses on available-for-sale marketable debt securities	—		4		(2)		3
Total other comprehensive (loss) income, net of income taxes	(1,560)		3,517		11,258		1,052
Comprehensive income (loss), net of income taxes	59,487		189,378		592,744		(237,722)
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net (earnings) loss attributable to noncontrolling interests	(357)		(944)		3,089		(625)
Change in foreign currency translation adjustment attributable to noncontrolling interests	477		(1,565)		(474)		(608)

Comprehensive loss (income) attributable to noncontrolling interests	120		(2,509)		2,615		(1,233)
Comprehensive income (loss) attributable to IAC shareholders	$	59,607	$	186,869	$	595,359	$	(238,955)

The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and nine months ended September 30, 2021

(Unaudited)


			IAC Shareholders' Equity
	Redeemable Noncontrolling Interests		Common Stock, $0.0001 par value			Class B common stock, $0.0001 par value			Common Stock, $0.001 par value			Class B common stock, $0.001 par value			Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total IAC Shareholders' Equity		Noncontrolling Interests		Total Shareholders' Equity
			$		Shares	$		Shares	$		Shares	$		Shares
			(In thousands)
Balance as of June 30, 2021	$	24,193	$	8	8,344	$	1	579	$	—	—	$	—	—	$	6,341,667	$	831,489	$	5,686	$	7,178,851	$	566,297	$	7,745,148
Net earnings (loss)	2,778		—		—	—		—	—		—	—		—	—		60,690		—		60,690		(2,421)		58,269
Other comprehensive loss, net of income taxes	(74)		—		—	—		—	—		—	—		—	—		—		(1,083)		(1,083)		(403)		(1,486)
Stock-based compensation expense	—		—		—	—		—	—		—	—		—	6,626		—		—		6,626		8,816		15,442
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		8	—		—	—		—	—		—	(8,792)		—		—		(8,792)		—		(8,792)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—	—		—	4,081		—		24		4,105		(5,171)		(1,066)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		—	—		—	(29,766)		—		—		(29,766)		—		(29,766)
Distribution to and purchase of noncontrolling interests	—		—		—	—		—	—		—	—		—	—		—		—		—		(570)		(570)
Adjustment of noncontrolling interests to fair value	1,061		—		—	—		—	—		—	—		—	(1,061)		—		—		(1,061)		—		(1,061)

Other	(1,874)		—		—	—		—	—		—	—		—	(385)		—		—		(385)		410		25
Balance as of September 30, 2021	$	26,084	$	8	8,352	$	1	579	$	—	—	$	—	—	$	6,312,370	$	892,179	$	4,627	$	7,209,185	$	566,958	$	7,776,143






Balance as of December 31, 2020	$	231,992	$	—	—	$	—	—	$	83	82,976	$	6	5,789	$	5,909,614	$	694,042	$	(6,170)	$	6,597,575	$	553,353	$	7,150,928
Net earnings (loss)	3,487		—		—	—		—	—		—	—		—	—		584,575		—		584,575		(6,576)		577,999
Other comprehensive income (loss), net of income taxes	515		—		—	—		—	—		—	—		—	—		—		10,746		10,746		(41)		10,705
Stock-based compensation expense	—		—		—	—		—	—		—	—		—	45,914		—		—		45,914		22,836		68,750
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		16	—		—	—		382	—		—	(37,866)		—		—		(37,866)		—		(37,866)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—	—		—	(53,366)		—		13		(53,353)		(2,454)		(55,807)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		—	—		—	(35,403)		—		—		(35,403)		—		(35,403)
Issuance of Vimeo common stock and creation of noncontrolling interests, net of fees	40,785		—		—	—		—	—		—	—		—	258,965		—		—		258,965		—		258,965
Distribution to and purchase of noncontrolling interests	(24,085)		—		—	—		—	—		—	—		—	—		—		—		—		(570)		(570)
Adjustment of noncontrolling interests to fair value	777,592		—		—	—		—	—		—	—		—	(777,592)		—		—		(777,592)		—		(777,592)
Recapitalization of IAC upon Vimeo spin-off	—		8		8,336	1		579	(83)		(83,358)	(6)		(5,789)	80		—		—		—		—		—
Spin-off of IAC's investment in Vimeo	—		—		—	—		—	—		—	—		—	(38)		(386,438)		38		(386,438)		—		(386,438)
Elimination of Vimeo noncontrolling interest	(1,002,324)		—		—	—		—	—		—	—		—	1,002,324		—		—		1,002,324		—		1,002,324
Other	(1,878)		—		—	—		—	—		—	—		—	(262)		—		—		(262)		410		148
Balance as of September 30, 2021	$	26,084	$	8	8,352	$	1	579	$	—	—	$	—	—	$	6,312,370	$	892,179	$	4,627	$	7,209,185	$	566,958	$	7,776,143

The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

COMBINED STATEMENT OF PARENT'S EQUITY AND CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and nine months ended September 30, 2020

(Unaudited)


			IAC Shareholders' Equity
	Redeemable Noncontrolling Interests		Common Stock $0.001 par value			Class B common stock, $0.001 par value			Additional Paid-in-Capital		Retained Earnings		Invested Capital		Accumulated Other Comprehensive Loss		Total IAC Invested Equity and Shareholders' Equity		Noncontrolling Interests		Total Shareholders' Equity
			$		Shares	$		Shares
			(In thousands)
Balance as of June 30, 2020	$	43,583	$	79	79,343	$	6	5,789	$	4,661,231	$	—	$	—	$	(13,781)	$	4,647,535	$	498,792	$	5,146,327
Net (loss) earnings	(30)		—		—	—		—	—		184,917		—		—		184,917		974		185,891
Other comprehensive income, net of income taxes	920		—		—	—		—	—		—		—		1,952		1,952		645		2,597
Stock-based compensation expense	—		—		—	—		—	20,865		—		—		—		20,865		13,846		34,711
Adjustment of redeemable noncontrolling interests to fair value	(243)		—		—	—		—	243		—		—		—		243		—		243
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	(46,336)		—		—		11		(46,325)		7,855		(38,470)
Proceeds from the sale of Old IAC Class M common stock	—		—		—	—		—	1,408,298		—		—		—		1,408,298		—		1,408,298
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		1		206	—		—	(22,654)		—		—		—		(22,653)		—		(22,653)
Purchase of noncontrolling interests	—		—		—	—		—	—		—		—		—		—		(1,115)		(1,115)
Other	(66)		—		—	—		—	(602)		—		—		—		(602)		690		88
Balance as of September 30, 2020	$	44,164	$	80