What happened
Shares of IAC (IAC -2.48%) were up 14% as of 12:44 p.m. ET on Wednesday following better-than-expected results for the first quarter. The company delivered revenue and earnings per share that were ahead of the consensus analyst estimate.
Year to date, the stock is now up 38% after the postearnings jump. However, IAC remains well off its previous highs.
So what
IAC owns many online brands and media publications that may be familiar to some investors, including Angi, People, Daily Beast, and Food & Wine, to name a few. Across all these businesses, revenues fell 18% year over year, partly due to lower online traffic from the Dotdash Meredith media sites compared to year-ago pandemic-driven levels.
On an adjusted basis, Angi grew revenue by 1% year over year and is the company's largest business, with $392 million in revenue for the quarter.
The stock's performance might have responded mostly to the massive beat on the bottom line. IAC's earnings per share came in at $4.57, exceeding analyst estimates that called for a loss of $1.00. However, the earnings beat reflects the unrealized gains from shares of MGM Resorts International, in which IAC holds a $2.8 billion stake, so the performance here isn't as great as it seems.
Excluding those investment gains, the company's operating loss widened to $135.6 million, compared to $108.8 million in the year-ago quarter.
Now what
IAC still has work to do to improve financial results, but management at least cast their vote of confidence in the company's long-term value, repurchasing the most shares it has bought since 2016.
IAC should emerge in a stronger position down the road. The Angi business generated positive free cash flow for the first time in almost two years.
That doesn't take away from the near-term problem of declining revenues in media reflecting a weak ad market. Investors might want to remain on the sidelines until the dust clears. The trade-off with that approach is the stock will likely trade higher before the company actually returns to growth again.
