IAC's Mixed 2Q23 Results: Spotlight on Angi's Struggles and Dotdash Meredith's Upswing

Citigroup analyst Ygal Arounian reiterated a Buy on IAC Inc IAC and lowered the price target from $71 to $69.

IAC reported mixed 2Q23 results as revenue underdelivered from continued headwinds to Angi Inc's ANGI revamp and DDM softness, while overall EBITDA was better as DDM saw progress despite macro headwinds. 

2Q23 saw challenges from multiple vectors across IAC's portfolio, including its core drivers, Angi and DDM. Angi's revenue and EBITDA continue to be challenged with more short-term pain management takes to improve the business long-term. 

A still unfavorable macro limits DDM's return to a growth trajectory, though profitability remains on track, and he expects a better 4Q. 

Oppenheimer analyst Jason Helfstein maintained an Outperform and lowered the price target from $75 to $70.

Dotdash and ANGI missed the top line, though Dotdash's profitability is beginning to improve. 

While Dotdash comps get easier in the second half, the analyst expects weaker media & entertainment spending on extended Hollywood strikes. 

Angi continues to eliminate low-value jobs. 

Services is now profitable, and SP acquisition is improving with LTV: CAC +22% Y/Y.

Benchmark analyst Daniel Kurnos reiterated a Buy and lowered the price target from $120 to $115.

Shareholder letter and recent call did not provide much positive news for IAC. Angi was a significant factor in the disappointing performance.

Dotdash Meredith (DDM) also underperformed, expecting flat to down digital revenue growth in 3Q after missing the 2Q consensus.

Earnings in 2Q were better due to lower revenue, reflecting the business's ultimate earnings potential.

Credit Suisse analyst Yoni Yadgaran maintained an Outperform and lowered the price target from $123 to $112.

A critical development in Dotdash Meredith's Digital segment, down 10% YoY but returned to growth in June.

The introduction of the D/Cipher platform in May positions DDM for wallet share gain opportunities and resilience to privacy changes.

Angi faced challenges as management pulled back on lower/negative margin revenue. The Search segment outperformed Consumer Services (CSe) due to growth in Desktop Application offerings.

IAC is cautiously optimistic about improving its digital ad outlook. Expects DDM Digital to accelerate through 2H23 driven by seasonal demand.

The rerating reflects exposure to multiple attractive end-markets, including online advertising, online gambling, P2P ridesharing, and several online marketplaces – with a proven track record of opportunistic capital deployment, a significant stake in Angi provides another way to gain exposure to a large underpenetrated ~$900 billion TAM.

Price Action: IAC shares traded higher by 2.01% at $57.27 on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.