As filed with the Securities and Exchange Commission on May ~~10, 2022~~9, 2023

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 March 31, ~~2022~~2023


☐			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~~IAC Inc.

(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 May ~~6, 2022,~~5, 2023, the following shares of the registrant's common stock were outstanding:


Common Stock			~~84,084,191~~80,065,465
Class B common stock			5,789,499
Total			~~89,873,690~~85,854,964

TABLE OF CONTENTS


		Page Number
PART I
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheet	3
	Consolidated Statement of Operations	4
	Consolidated Statement of Comprehensive Operations	5
	Consolidated Statement of Shareholders' Equity	6
	Consolidated Statement of Cash Flows	7
	Notes to Consolidated Financial Statements	8
	Note 1—The Company and Summary of Significant Accounting Policies	8
	Note 2—~~Income Taxes~~Dotdash Meredith Restructuring Charges and Transaction-Related Expenses	12


	Note ~~3—Discontinued Operations~~3 —Financial Instruments and Fair Value Measurements	13
	Note ~~4—Business Combination~~4 —Long-term Debt	1418
	Note 5—~~Financial Instruments and Fair Value Measurements~~Accumulated Other Comprehensive Loss (Income)	1721
	Note 6—~~Long-term Debt~~Segment Information	2221
	Note 7—~~Accumulated Other Comprehensive Income (Loss)~~Pension and Postretirement Benefit Plans	2427
	Note 8—~~(Loss) Earnings Per Share~~Income Taxes	2428
	Note 9—~~Segment Information~~Ear nings (L oss ) Per Share	2729
	Note 10—Financial Statement Details	3132
	Note 11—Contingencies	33
	Note 12—Related Party Transactions	33
	Note 13—~~Pension and Postretirement Benefit Plans~~Subsequent Events	34
	~~Note 14—Dotdash Meredith Restructuring Charges, Transaction-Related Expenses and Change-in-Control Payments~~	35

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3735
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5755
Item 4.	Controls and Procedures	5856
PART II
Item 1.	Legal Proceedings	5957
Item 1A.	Risk Factors	6057
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6160

Item 6.	Exhibits	6261
	Signatures	6463

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(In thousands, except par value amounts)					(In thousands, except par value amounts)
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	1,852,598	$	2,118,730	Cash and cash equivalents	$	1,398,836	$	1,417,390

Marketable securities	Marketable securities	59,012		19,788		Marketable securities	202,138		239,373
Accounts receivable, net of reserves		593,280		693,208
Accounts receivable, net						Accounts receivable, net	537,945		607,809

Other current assets	Other current assets	279,408		242,188		Other current assets	240,804		296,563
Total current assets	Total current assets	2,784,298		3,073,914		Total current assets	2,379,723		2,561,135

Buildings, capitalized software, leasehold improvements, equipment and land, net		576,787		570,525
Capitalized software, equipment, buildings, leasehold improvements and land, net						Capitalized software, equipment, buildings, leasehold improvements and land, net	461,871		510,614
Goodwill	Goodwill	3,221,041		3,226,610		Goodwill	3,030,953		3,030,168
Intangible assets, net of accumulated amortization	Intangible assets, net of accumulated amortization	1,357,479		1,414,892		Intangible assets, net of accumulated amortization	1,115,589		1,170,041
Investment in MGM Resorts International	Investment in MGM Resorts International	2,664,612		2,649,442		Investment in MGM Resorts International	2,875,022		2,170,182
Long-term investments	Long-term investments	322,925		327,838		Long-term investments	327,683		325,721
Other non-current assets	Other non-current assets	966,394		1,037,067		Other non-current assets	563,180		625,774
TOTAL ASSETS	TOTAL ASSETS	$	11,893,536	$	12,300,288	TOTAL ASSETS	$	10,754,021	$	10,393,635

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:	LIABILITIES:					LIABILITIES:
Current portion of long-term debt	Current portion of long-term debt	$	30,000	$	30,000	Current portion of long-term debt	$	30,000	$	30,000
Accounts payable, trade	Accounts payable, trade	184,084		203,173		Accounts payable, trade	114,863		133,105
Deferred revenue	Deferred revenue	178,061		165,451		Deferred revenue	172,847		157,124
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	939,399		980,574		Accrued expenses and other current liabilities	680,837		759,759
Total current liabilities	Total current liabilities	1,331,544		1,379,198		Total current liabilities	998,547		1,079,988

Long-term debt, net	Long-term debt, net	2,039,655		2,046,237		Long-term debt, net	2,013,107		2,019,759
Deferred income taxes	Deferred income taxes	308,178		385,890		Deferred income taxes	202,566		76,276
Other long-term liabilities	Other long-term liabilities	685,425		721,262		Other long-term liabilities	592,132		617,843

Redeemable noncontrolling interests	Redeemable noncontrolling interests	27,817		18,741		Redeemable noncontrolling interests	27,189		27,235

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies

SHAREHOLDERS' EQUITY:	SHAREHOLDERS' EQUITY:					SHAREHOLDERS' EQUITY:
Common Stock, $0.0001 par value; authorized 1,600,000 shares; 84,075 and 83,922 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		8		8
Class B common stock, $0.0001 par value; authorized 400,000 shares; 5,789 shares issued and outstanding at March 31, 2022 and December 31, 2021		1		1
Common Stock, $0.0001 par value; authorized 1,600,000 shares; 84,257 and 84,184 shares issued and 81,380 and 83,083 shares outstanding at March 31, 2023 and December 31, 2022, respectively						Common Stock, $0.0001 par value; authorized 1,600,000 shares; 84,257 and 84,184 shares issued and 81,380 and 83,083 shares outstanding at March 31, 2023 and December 31, 2022, respectively	8		8
Class B common stock, $0.0001 par value; authorized 400,000 shares; 5,789 shares issued and outstanding at March 31, 2023 and December 31, 2022						Class B common stock, $0.0001 par value; authorized 400,000 shares; 5,789 shares issued and outstanding at March 31, 2023 and December 31, 2022	1		1
Additional paid-in-capital	Additional paid-in-capital	6,249,328		6,265,669		Additional paid-in-capital	6,306,229		6,295,080
Retained earnings		669,353		905,151
Accumulated other comprehensive income		765		4,397
Retained earnings (accumulated deficit)						Retained earnings (accumulated deficit)	152,756		(265,019)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(14,641)		(13,133)
Treasury stock, 2,877 and 1,101 shares at March 31, 2023 and December 31, 2022, respectively						Treasury stock, 2,877 and 1,101 shares at March 31, 2023 and December 31, 2022, respectively	(177,052)		(85,323)
Total IAC shareholders' equity	Total IAC shareholders' equity	6,919,455		7,175,226		Total IAC shareholders' equity	6,267,301		5,931,614
Noncontrolling interests	Noncontrolling interests	581,462		573,734		Noncontrolling interests	653,179		640,920
Total shareholders' equity	Total shareholders' equity	7,500,917		7,748,960		Total shareholders' equity	6,920,480		6,572,534
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	11,893,536	$	12,300,288	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	10,754,021	$	10,393,635

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

Table of Contents

~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021					2023		2022
		(In thousands, except per share data)				(In thousands, except per share data)
Revenue	Revenue	$	1,325,345	$	786,570			Revenue	$	1,084,271	$	1,325,345
Operating costs and expenses:	Operating costs and expenses:							Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	Cost of revenue (exclusive of depreciation shown separately below)	537,103		228,994				Cost of revenue (exclusive of depreciation shown separately below)	342,084		533,604
Selling and marketing expense	Selling and marketing expense	490,488		312,538				Selling and marketing expense	404,141		488,463
General and administrative expense	General and administrative expense	238,355		163,160				General and administrative expense	269,526		240,471
Product development expense	Product development expense	80,787		53,083				Product development expense	88,338		84,195
Depreciation	Depreciation	30,236		19,186				Depreciation	61,172		30,236
Amortization of intangibles	Amortization of intangibles	57,190		16,839				Amortization of intangibles	54,606		57,190

Total operating costs and expenses	Total operating costs and expenses	1,434,159		793,800				Total operating costs and expenses	1,219,867		1,434,159
Operating loss	Operating loss	(108,814)		(7,230)				Operating loss	(135,596)		(108,814)
Interest expense	Interest expense	(21,912)		(6,617)				Interest expense	(38,172)		(21,912)
Unrealized (loss) gain on investment in MGM Resorts International		(187,330)		382,540
Unrealized gain (loss) on investment in MGM Resorts International								Unrealized gain (loss) on investment in MGM Resorts International	704,840		(187,330)
Other income, net	Other income, net	6,699		3,563				Other income, net	23,749		6,699
(Loss) earnings from continuing operations before income taxes		(311,357)		372,256
Income tax benefit (provision)		70,464		(53,311)
Net (loss) earnings from continuing operations		(240,893)		318,945
Earnings from discontinued operations, net of tax		—		9,956
Net (loss) earnings		(240,893)		328,901
Earnings (loss) before income taxes								Earnings (loss) before income taxes	554,821		(311,357)
Income tax (provision) benefit								Income tax (provision) benefit	(139,502)		70,464
Net earnings (loss)								Net earnings (loss)	415,319		(240,893)
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests	5,095		227				Net loss attributable to noncontrolling interests	2,456		5,095
Net (loss) earnings attributable to IAC shareholders		$	(235,798)	$	329,128
Net earnings (loss) attributable to IAC shareholders								Net earnings (loss) attributable to IAC shareholders	$	417,775	$	(235,798)

Per share information from continuing operations:
Basic (loss) earnings per share		$	(2.72)	$	3.60
Diluted (loss) earnings per share		$	(2.72)	$	3.36
Per share information attributable to IAC common stock and Class B common stock shareholders:								Per share information attributable to IAC common stock and Class B common stock shareholders:
Basic earnings (loss) per share								Basic earnings (loss) per share	$	4.72	$	(2.72)
Diluted earnings (loss) per share								Diluted earnings (loss) per share	$	4.57	$	(2.72)

Per share information attributable to IAC Common Stock and Class B common stock shareholders:
Basic (loss) earnings per share		$	(2.72)	$	3.70
Diluted (loss) earnings per share		$	(2.72)	$	3.46

Stock-based compensation expense by function:	Stock-based compensation expense by function:							Stock-based compensation expense by function:
Cost of revenue	Cost of revenue	$	25	$	12			Cost of revenue	$	19	$	5
Selling and marketing expense	Selling and marketing expense	1,508		1,216				Selling and marketing expense	1,743		1,508
General and administrative expense	General and administrative expense	25,371		15,744				General and administrative expense	22,844		25,371
Product development expense	Product development expense	2,783		1,343				Product development expense	4,335		2,803

Total stock-based compensation expense	Total stock-based compensation expense	$	29,687	$	18,315			Total stock-based compensation expense	$	28,941	$	29,687

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

Table of Contents

~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS

(Unaudited)

Three Months Ended March 31,
2022 2021
(In thousands)
Net (loss) earnings $ (240,893) $ 328,901
Other comprehensive (loss) income, net of income taxes:
Change in foreign currency translation adjustment (3,701) 11,017
Change in unrealized gains and losses on available-for-sale marketable debt securities — (2)
Total other comprehensive (loss) income, net of income taxes (3,701) 11,015
Comprehensive (loss) income, net of income taxes (244,594) 339,916
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net loss attributable to noncontrolling interests 5,095 227
Change in foreign currency translation adjustment attributable to noncontrolling interests 67 (691)
Comprehensive loss (income) attributable to noncontrolling interests 5,162 (464)
Comprehensive (loss) income attributable to IAC shareholders $ (239,432) $ 339,452


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Net earnings (loss)	$	415,319	$	(240,893)
Other comprehensive income (loss), net of income taxes:
Change in foreign currency translation adjustment	919		(3,701)
Change in unrealized gains and losses on available-for-sale marketable debt securities	(26)		—
Change in unrealized losses on interest rate swaps	(2,287)		—
Total other comprehensive loss, net of income taxes	(1,394)		(3,701)
Comprehensive income (loss), net of income taxes	413,925		(244,594)
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net loss attributable to noncontrolling interests	2,456		5,095
Change in foreign currency translation adjustment attributable to noncontrolling interests	(116)		67


Comprehensive loss attributable to noncontrolling interests	2,340		5,162
Comprehensive income (loss) attributable to IAC shareholders	$	416,265	$	(239,432)

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

Table of Contents

~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

(Unaudited)


		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				Redeemable Noncontrolling Interests					Common Stock, $0.0001 par value								Class B common stock, $0.0001 par value								Additional Paid-in-Capital					(Accumulated Deficit) Retained Earnings					Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Total IAC Shareholders' Equity			Noncontrolling Interests			Total Shareholders' Equity
				$		Shares	$		Shares	$		Shares		$		Shares																						$						Shares				$				Shares
				(In thousands)																															(In thousands)
Balance at December 31, 2021		$	18,741	$	8	83,922	$	1	5,789	$	—	$	—	$	—	—			$	6,265,669					$	905,151			$	4,397		$	7,175,226			$	573,734				$	7,748,960
Net loss		(34)		—		—	—		—	—		—		—		—	—					(235,798)			—				(235,798)			(5,061)				(240,859)
Other comprehensive loss, net of income taxes		—		—		—	—		—	—		—		—		—	—					—			(3,634)				(3,634)			(67)				(3,701)
Balance at December 31, 2022																					Balance at December 31, 2022		$	27,235			$	8			84,184			$	1				5,789				$	6,295,080			$	(265,019)			$	(13,133)			$	(85,323)			$	5,931,614				$	640,920				$	6,572,534
Net (loss) earnings																					Net (loss) earnings		(254)				—				—			—					—				—				417,775				—				—				417,775				(2,202)					415,573
Other comprehensive (loss) income, net of income taxes																					Other comprehensive (loss) income, net of income taxes		—				—				—			—					—				—				—				(1,510)				—				(1,510)				116					(1,394)
Stock-based compensation expense	Stock-based compensation expense	—		—		—	—		—	—		—		—		—	16,702					—			—				16,702			13,556				30,258		Stock-based compensation expense			—					—				—				—				—					16,063					—					—			—			16,063			13,870			29,933
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		153	—		—	—		—		—		—	(14,012)					—			—				(14,012)			—				(14,012)		Issuance of common stock pursuant to stock-based awards, net of withholding taxes		—					—				73				—				—					(1,850)					—					—			—			(1,850)			—			(1,850)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—		—		—	(1,775)					—			2				(1,773)			(700)				(2,473)		Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes		—					—				—				—				—				(4,699)					—					2			—			(4,697)			2,287			(2,410)
Purchase of Angi Inc. treasury stock		—		—		—	—		—	—		—		—		—	(8,144)					—			—				(8,144)			—				(8,144)
Purchase of IAC treasury stock																					Purchase of IAC treasury stock		—				—				—			—					—				—				—				—				(91,729)				(91,729)				—					(91,729)

Adjustment of noncontrolling interests to fair value	Adjustment of noncontrolling interests to fair value	9,136		—		—	—		—	—		—		—		—	(9,136)					—			—				(9,136)			—				(9,136)		Adjustment of noncontrolling interests to fair value		208					—				—				—				—				(208)					—					—			—			(208)			—			(208)
Adjustment to the liquidation value of Vivian Health preferred shares																					Adjustment to the liquidation value of Vivian Health preferred shares		—				—				—			—					—				1,812				—				—				—				1,812				(1,812)					—
Other	Other	(26)		—		—	—		—	—		—		—		—	24					—			—				24			—				24		Other		—					—				—				—				—				31					—					—			—			31			—			31
Balance at March 31, 2022		$	27,817	$	8	84,075	$	1	5,789	$	—	—		$	—	—	$	6,249,328				$	669,353		$	765			$	6,919,455		$	581,462			$	7,500,917
Balance at March 31, 2023																					Balance at March 31, 2023		$	27,189			$	8			84,257			$	1				5,789				$	6,306,229			$	152,756			$	(14,641)			$	(177,052)			$	6,267,301			$	653,179				$	6,920,480

Balance at 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 (loss) earnings (673) — — — — — — — — — 329,128 — 329,128 446 329,574
Other comprehensive income, net of income taxes 580 — — — — — — — — — — 10,324 10,324 111 10,435
Stock-based compensation expense — — — — — — — — — 20,668 — — 20,668 2,542 23,210
Issuance of common stock pursuant to stock-based awards, net of withholding taxes — — — — — — 366 — — (21,135) — — (21,135) — (21,135)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes — — — — — — — — — (49,476) — (5) (49,481) 1,430 (48,051)
Purchase of Angi Inc. treasury stock — — — — — — — — — (4,916) — — (4,916) — (4,916)
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 (22,938) — — — — — — — — — — — — — —
Adjustment of noncontrolling interests to fair value 453,099 — — — — — — — — (453,099) — — (453,099) — (453,099)
Other (4) — — — — — — — — 109 — — 109 — 109
Balance at March 31, 2021 $ 702,841 $ — — $ — — $ 83 83,342 $ 6 5,789 $ 5,660,730 $ 1,023,170 $ 4,149 $ 6,688,138 $ 557,882 $ 7,246,020


Balance at December 31, 2021	$	18,741	$	8	83,922	$	1	5,789	$	6,265,669	$	905,151	$	4,397	$	—	$	7,175,226	$	573,734	$	7,748,960
Net loss	(34)		—		—	—		—	—		(235,798)		—		—		(235,798)		(5,061)		(240,859)
Other comprehensive loss	—		—		—	—		—	—		—		(3,634)		—		(3,634)		(67)		(3,701)
Stock-based compensation expense	—		—		—	—		—	16,702		—		—		—		16,702		13,556		30,258
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		153	—		—	(14,012)		—		—		—		(14,012)		—		(14,012)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	(1,775)		—		2		—		(1,773)		(700)		(2,473)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	(8,144)		—		—		—		(8,144)		—		(8,144)
Adjustment of noncontrolling interests to fair value	9,136		—		—	—		—	(9,136)		—		—		—		(9,136)		—		(9,136)
Other	(26)		—		—	—		—	24		—		—		—		24		—		24
Balance at March 31, 2022	$	27,817	$	8	84,075	$	1	5,789	$	6,249,328	$	669,353	$	765	$	—	$	6,919,455	$	581,462	$	7,500,917

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

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~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
		(In thousands)					(In thousands)
Cash flows from operating activities attributable to continuing operations:
Net (loss) earnings		$	(240,893)	$	328,901
Less: Earnings from discontinued operations, net of tax		—		9,956
Net (loss) earnings from continuing operations		(240,893)		318,945
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities attributable to continuing operations:
Cash flows from operating activities:						Cash flows from operating activities:
Net earnings (loss)						Net earnings (loss)	$	415,319	$	(240,893)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:						Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Stock-based compensation expense	Stock-based compensation expense	29,687		18,315		Stock-based compensation expense	28,941		29,687
Amortization of intangibles	Amortization of intangibles	57,190		16,839		Amortization of intangibles	54,606		57,190
Depreciation	Depreciation	30,236		19,186		Depreciation	61,172		30,236
Provision for credit losses	Provision for credit losses	23,287		19,308		Provision for credit losses	24,826		23,287

Deferred income taxes	Deferred income taxes	(76,933)		51,748		Deferred income taxes	127,154		(76,933)
Unrealized loss (gain) on investment in MGM Resorts International		187,330		(382,540)
Gains on investments in equity securities, net		(34,820)		(1,457)
Unrealized (gain) loss on investment in MGM Resorts International						Unrealized (gain) loss on investment in MGM Resorts International	(704,840)		187,330
Losses (gains) on investments in equity securities and sales of businesses, net						Losses (gains) on investments in equity securities and sales of businesses, net	2,451		(35,891)
Unrealized increase in the estimated fair value of a warrant	Unrealized increase in the estimated fair value of a warrant	(7,985)		(12,775)		Unrealized increase in the estimated fair value of a warrant	(5,940)		(7,985)
Non-cash lease expense (including right-of-use asset impairments)	Non-cash lease expense (including right-of-use asset impairments)	13,727		6,550		Non-cash lease expense (including right-of-use asset impairments)	58,656		13,727
Pension and postretirement benefit expense	Pension and postretirement benefit expense	36,343		—		Pension and postretirement benefit expense	728		36,343
Other adjustments, net	Other adjustments, net	(717)		16,088		Other adjustments, net	(4,804)		(1,379)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:	Changes in assets and liabilities, net of effects of acquisitions and dispositions:					Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	Accounts receivable	75,272		(40,511)		Accounts receivable	43,023		75,562
Other assets	Other assets	5,341		8,006		Other assets	26,978		5,341
Operating lease liabilities	Operating lease liabilities	(17,224)		(6,907)		Operating lease liabilities	(19,723)		(17,224)
Accounts payable and other liabilities	Accounts payable and other liabilities	(84,049)		5,159		Accounts payable and other liabilities	(107,356)		(82,606)
Income taxes payable and receivable	Income taxes payable and receivable	5,786		(799)		Income taxes payable and receivable	8,610		5,786
Deferred revenue	Deferred revenue	11,324		17,061		Deferred revenue	15,366		11,324
Net cash provided by operating activities attributable to continuing operations		12,902		52,216
Cash flows from investing activities attributable to continuing operations:
Net cash provided by operating activities						Net cash provided by operating activities	25,167		12,902
Cash flows from investing activities:						Cash flows from investing activities:

Capital expenditures	Capital expenditures	(30,493)		(20,217)		Capital expenditures	(21,863)		(30,493)

Proceeds from maturities of marketable debt securities	Proceeds from maturities of marketable debt securities	—		225,000		Proceeds from maturities of marketable debt securities	137,500		—
Purchases of marketable debt securities						Purchases of marketable debt securities	(98,520)		—

Net proceeds from the sales of businesses and investments						Net proceeds from the sales of businesses and investments	1,179		1,317
Purchases of investment in MGM Resorts International						Purchases of investment in MGM Resorts International	—		(202,500)

Net proceeds from the sale of businesses and investments		1,317		1,089
Purchases of investment in MGM Resorts International		(202,500)		—
Purchases of investments		—		(7,180)
Proceeds from sales of assets						Proceeds from sales of assets	29,388		87
Other, net						Other, net	4,290		—
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	51,974		(231,589)
Cash flows from financing activities:						Cash flows from financing activities:

Principal payments on Dotdash Meredith Term Loans						Principal payments on Dotdash Meredith Term Loans	(7,500)		(7,500)

Other, net		87		(1,306)
Net cash (used in) provided by investing activities attributable to continuing operations		(231,589)		197,386
Cash flows from financing activities attributable to continuing operations:
Debt issuance costs						Debt issuance costs	—		(785)
Purchases of IAC treasury stock						Purchases of IAC treasury stock	(84,720)		—
Purchases of Angi Inc. treasury stock						Purchases of Angi Inc. treasury stock	—		(8,144)

Principal payments on Dotdash Meredith Term Loans		(7,500)		—
Principal payments on ANGI Group Term Loan		—		(6,875)

Debt issuance costs		(785)		—
Purchase of Angi Inc. treasury stock		(8,144)		(4,916)
Proceeds from the exercise of IAC stock options		—		1,471

Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	(14,890)		(18,264)		Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	(2,236)		(14,890)
Withholding taxes paid on behalf of Angi Inc. employees on net settled stock-based awards	Withholding taxes paid on behalf of Angi Inc. employees on net settled stock-based awards	(1,322)		(48,168)		Withholding taxes paid on behalf of Angi Inc. employees on net settled stock-based awards	(1,379)		(1,322)

Purchase of noncontrolling interests		—		(22,938)

Other, net	Other, net	5,159		526		Other, net	(140)		5,159
Net cash used in financing activities attributable to continuing operations		(27,482)		(99,164)
Total cash (used in) provided by continuing operations		(246,169)		150,438
Net cash provided by operating activities attributable to discontinued operations		—		1,656
Net cash provided by investing activities attributable to discontinued operations		—		7,633
Net cash provided by financing activities attributable to discontinued operations		—		293,577
Total cash provided by discontinued operations		—		302,866
Net cash used in financing activities						Net cash used in financing activities	(95,975)		(27,482)
Total cash used						Total cash used	(18,834)		(246,169)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(1,029)		(93)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	322		(1,029)
Net (decrease) increase in cash and cash equivalents and restricted cash		(247,198)		453,211
Net decrease in cash and cash equivalents and restricted cash						Net decrease in cash and cash equivalents and restricted cash	(18,512)		(247,198)
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	2,121,864		3,477,110		Cash and cash equivalents and restricted cash at beginning of period	1,426,069		2,121,864
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	1,874,666	$	3,930,321	Cash and cash equivalents and restricted cash at end of period	$	1,407,557	$	1,874,666

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

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~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Acquisition of Meredith~~

On December 1, 2021, Dotdash Media Inc. (formerly known as About Inc., and referred to herein as "Dotdash"), a wholly-owned subsidiary of IAC/InterActiveCorp ("IAC"), completed the acquisition of Meredith Holdings Corporation ("~~Meredith~~"), which holds Meredith Corporation's national media business, consisting of its digital and magazine businesses, and its corporate operations. The parent of the combined entity is Dotdash Meredith, Inc. ("Dotdash Meredith"). See “~~Note 4—Business Combinations” for a description of the acquisition of Meredith.~~

~~Vimeo Spin-off~~

On May 25, 2021, IAC completed the spin-off of its full stake in Vimeo, Inc. (formerly Vimeo Holdings, Inc. ("Vimeo")) to IAC shareholders (which we refer to as the “Spin-off”). Following the Spin-off, Vimeo became an independent, separately traded public company. Therefore, Vimeo is presented as a discontinued operation within IAC's financial statements for all periods prior to May 25, 2021. See “~~Note 3—Discontinued Operations” for additional details.~~

Nature of Operations

IAC today ~~is comprised~~consists of category leading businesses, including Dotdash Meredith, Angi Inc. and Care.com, as well as ~~a number of other businesses~~others ranging from early stage to ~~established.~~established businesses.

As used herein, ~~"IAC,"~~“IAC,” the ~~"Company," "we," "our" or "us"~~“Company,” “we,” “our,” “us” and other similar terms refer to ~~IAC/InterActiveCorp~~IAC Inc. and its subsidiaries (unless the context requires otherwise).

Basis of Presentation

The Company prepares its consolidated financial statements (collectively referred to herein as "financial statements") in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP"). The ~~consolidated~~ financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances between and ~~amongst~~among the Company and its subsidiaries have been eliminated.

The unaudited interim financial statements have been prepared in accordance with GAAP for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. In the opinion of management, the unaudited interim financial statements include all normal recurring adjustments considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The unaudited interim financial statements should be read in conjunction with the annual audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

~~COVID-19 Update~~

~~The impact on the Company from the COVID-19 pandemic and the measures designed to contain its spread has been varied and volatile.~~

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

As previously disclosed, the impact of COVID-19 on the businesses in IAC's Angi Inc. segment initially resulted in a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). While these businesses experienced a rebound in service requests from mid-2020 through early 2021, service requests started to decline in May 2021 and continued to decline into the first quarter of 2022 because of Angi Inc.'s brand integration that began in March 2021 and, in late 2021 and early 2022, the Omicron variant surge. Moreover, many service professionals’ businesses have been and continue to be adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which continues to negatively impact the ability of Angi Inc.'s businesses to monetize service requests. Although Angi Inc.'s ability to monetize service requests rebounded modestly in the second half of 2021 and first quarter of 2022, it still has not returned to levels experienced pre-COVID-19. No assurances can be provided that Angi Inc. will continue to be able to improve monetization, or that service professionals’ businesses and, as a consequence, our revenue and profitability will not continue to be adversely impacted in the future. In addition, in the first quarter of 2022, revenue at Dotdash, excluding Meredith, declined compared to the first quarter of 2021 due to lower traffic to its sites compared to prior year COVID-19 traffic highs, impacting both display advertising and performance marketing revenue.

The extent to which developments related to the COVID-19 pandemic and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.2022.

Accounting Estimates

Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its financial statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of assets and liabilities. Actual results could differ from these estimates.

On an ongoing basis, the Company evaluates its estimates, judgments and assumptions, including those related to: the fair values of cash equivalents and marketable debt and equity securities; the carrying value of accounts receivable, including the determination of the allowance for credit ~~losses and the determination of revenue reserves;~~losses; the determination of the customer relationship period for certain costs to obtain a contract with a customer; the ~~carrying value~~recoverability of right-of-use assets ("ROU assets"); the useful lives and recoverability of ~~buildings,~~ capitalized software, equipment, buildings and leasehold improvements and ~~equipment and~~ definite-lived intangible assets; the fair value of assets acquired and liabilities assumed as a result of an acquisition and the allocation of purchase price to the identifiable intangible assets acquired during the measurement period; the recoverability of goodwill and indefinite-lived intangible assets; the fair value of equity securities without readily determinable fair values; the fair value of interest rate swaps; contingencies; the fair value of acquisition-related contingent consideration arrangements; unrecognized tax benefits; the valuation allowance for deferred income tax assets; pension and postretirement benefit expenses, including actuarial assumptions regarding discount rates, expected returns on plan assets, inflation and healthcare costs; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates, judgments and assumptions on historical experience, its forecasts and budgets and other factors that the Company considers relevant.

~~Accounting for Investments in Equity Securities~~

Investments in equity securities, other than those of the Company's consolidated subsidiaries and those accounted for under the equity method, if applicable, are accounted for at fair value or under the measurement alternative of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-01, ~~Recognition and Measurement of Financial Assets and Liabilities~~, with any changes to fair value recognized in "Other income, net" in the statement of operations each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer; fair value is generally determined based on a market approach as of the transaction date. A security will be considered identical or similar if it has identical or similar rights to the equity securities held by the Company.

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~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Interest Rate Swaps

In March 2023, Dotdash Meredith entered into interest rate swaps for a total notional amount of $350 million to synthetically convert a portion of the Dotdash Meredith Term Loan B from floating rate to fixed rate to manage interest rate risk exposure. Dotdash Meredith designated the interest rate swaps as cash flow hedges and applies hedge accounting to these contracts in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 815, Derivatives and Hedging. As cash flow hedges, the interest rate swaps are recognized at fair value on the balance sheet as either assets or liabilities, with the changes in fair value recorded in "Accumulated other comprehensive loss" in the balance sheet and reclassified into “Interest expense” in the statement of operations in the periods in which the interest rate swaps affect earnings. Dotdash Meredith assessed hedge effectiveness at the time of entering into these agreements and determined these interest rate swaps are expected to be highly effective. Dotdash Meredith evaluates the hedge effectiveness of the interest rate swaps quarterly, or more frequently, if necessary, by verifying (i) that the critical terms of the interest rate swaps continue to match the critical terms of the hedged interest payments and (ii) that it is probable the counterparties will not default. If the two requirements are met, the interest rate swaps are determined to be effective and all changes in the fair value of the interest rate swaps are recorded in "Accumulated other comprehensive loss." The cash flows related to interest settlements of the hedged monthly interest payments are classified as operating activities in the statement of cash flows, consistent with the interest expense on the related Dotdash Meredith Term Loan B. See "Note 4—Long-term Debt" for additional information.

General Revenue Recognition

The Company accounts for ~~investments in~~a contract with a customer when it has approval and commitment from all parties, the ~~common stock or in-substance common stock of entities in which the Company has the ability to exercise significant influence over the operating and financial matters~~rights of the ~~investee, but does not have a controlling financial interest, using~~parties and payment terms are identified, the ~~equity method. At March 31, 2022~~contract has commercial substance and ~~December 31, 2021, the Company has 1 investment accounted for using the equity method, which~~collectability of consideration is ~~included in "Long-term investments" in the balance sheet.~~

~~See "Note 5—Financial Instruments and Fair Value Measurements" for additional information on investments in equity securities.~~

~~General Revenue Recognition~~

probable. Revenue is recognized when control of the promised services or goods is transferred to the Company's customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.

From January 1, 2020 through December 31, 2022, Services recorded revenue on a gross basis. Effective January 1, 2023, Angi Inc. modified the Services terms and conditions so that the service professional, rather than Angi Inc., has the contractual relationship with the consumer to deliver the service and Angi Inc.'s performance obligation to the consumer is to connect them with the service professional. This change in contractual terms requires revenue be reported as the net amount of what is received from the consumer after deducting the amounts owed to the service professional providing the service effective for all arrangements entered into after December 31, 2022. This change in accounting treatment resulted in a decrease in revenue of $25.7 million for the three months ended March 31, 2023. There is no impact to operating loss or Adjusted EBITDA from this change in revenue recognition.

The Company's disaggregated revenue disclosures are presented in "Note 9—6—Segment Information."

Deferred Revenue

Deferred revenue consists of payments that are received or are contractually due in advance of the Company's performance obligation. The Company’s deferred revenue is reported on a contract-by-contract basis at the end of each reporting period. The Company classifies deferred revenue as current when the remaining term ~~of the applicable subscription period~~ or expected completion of its performance obligation is one year or less. The current and non-current deferred revenue balances ~~are $165.5~~were $172.8 million and ~~$0.4~~$0.2 million, respectively, at March 31, 2023, and $157.1 million and $0.2 million, respectively, at December 31, ~~2021, and $137.7~~2022. During the three months ended March 31, 2023, the Company recognized $95.6 million ~~and $0.7 million, respectively,~~of revenue that was included in the deferred revenue balance at December 31, ~~2020.~~2022. During the three months ended March 31, 2022, the Company recognized $90.0 million of revenue that was included in the deferred revenue balance at December 31, 2021. ~~During the three months ended March 31, 2021, the Company recognized $66.1 million of revenue that was included in the deferred revenue balance at December 31, 2020.~~ The current and non-current deferred revenue balances ~~are $178.1~~were $165.5 million and ~~$0.5~~$0.4 million, respectively, at ~~March~~December 31, ~~2022, respectively.~~2021. Non-current deferred revenue is included in "Other long-term liabilities" in the balance sheet.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Practical Expedients and Exemptions

AsFor contracts that have an original duration of one year or less, the Company uses the practical expedient available under FASB Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, applicable to such contracts and does not consider the time value of money.

In addition, as permitted under the practical expedient available under ASU No. 2014-09~~Revenue from Contracts with Customers,~~, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is tied to sales-based or usage-based royalties, allocated entirely to unsatisfied performance obligations, or to a wholly unsatisfied promise accounted for under the series guidance and (iii) contracts for which the Company recognizes revenue at the amount which it has the right to invoice for services performed.

Costs to Obtain a Contract with a Customer

The Company uses a portfolio approach to assess the accounting treatment of the incremental costs to obtain a contract with a customer. The Company recognizes an asset ~~for these costs~~ if we expect to recover those costs. To the extent that these costs are capitalized, the resultant asset is amortized on a systematic basis consistent with the pattern of the transfer of the services to which the asset relates. The Company has determined that certain costs, primarily commissions paid to employees pursuant to certain sales incentive programs and mobile app store fees, meet the requirements to be capitalized as a cost of obtaining a contract.

~~Commissions Paid to Third-Party Agent Sales of Magazine Subscriptions~~

Dotdash Meredith uses third-party agents to obtain certain subscribers. The agents are paid a commission, which can be as much as the subscription price charged to the subscriber. Dotdash Meredith subscriptions do not have substantive termination penalties; therefore, the contract term is determined on an issue-by-issue basis. Accordingly, these costs do not qualify for capitalization because there is no contract with a customer until a copy is served to a customer; therefore these costs are expensed when the publication is sent to the customer. Dotdash Meredith recognizes a liability to the extent the commission is refundable to the third-party agent. Dotdash Meredith expenses additional amounts paid to agents (such as per subscriber bounties) to acquire subscribers as incurred.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Commissions Paid to Employees Pursuant to Sales Incentive Programs

The Company has determined that commissions paid to employees pursuant to certain sales incentive programs meet the requirements to be capitalized as the incremental costs to obtain a contract with a customer. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods. Capitalized commissions paid to employees pursuant to these sales incentive programs are amortized over the estimated customer relationship ~~period.~~period and are included in "Selling and marketing expense" in the statement of operations. The Company calculates the anticipated customer relationship period as the average customer life, which is based on historical data.

For sales incentive programs where the anticipated customer relationship period is one year or less, the Company has elected the practical expedient to expense the commissions as incurred. Effective October 1, 2022, the Ads business, within Angi Inc., began expensing commissions, rather than capitalizing them, based upon a review of the duration of the related customer relationship period which have been determined to be less than a year.

App Store Fees

The Company pays fees to the Apple App Store and the Google Play Store for the distribution of our paid mobile apps. The Company capitalizes and amortizes mobile app store fees related to subscriptions over the term of the applicable subscription. The amortization of mobile app store fees is included in "Cost of revenue" in the statement of operations.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table presents the capitalized costs to obtain a contract with a customer at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively:


		March 31, 2022						December 31, 2021				March 31, 2023								December 31, 2022
		Sales Commissions		App Store Fees		Total		Sales Commissions		App Store Fees			Total			Sales Commissions		App Store Fees		Total		Sales Commissions		App Store Fees		Total
		(In thousands)										(In thousands)
Current	Current	$	42,794	$	8,640	$	51,434	$	39,669	$	9,023		$	48,692	Current	$	36,157	$	7,749	$	43,906	$	39,590	$	8,266	$	47,856
Non-current	Non-current	5,987		—		5,987		6,086		—			6,086		Non-current	6,086		—		6,086		5,667		—		5,667
Total	Total	$	48,781	$	8,640	$	57,421	$	45,755	$	9,023		$	54,778	Total	$	42,243	$	7,749	$	49,992	$	45,257	$	8,266	$	53,523

The current and non-current capitalized costs to obtain a contract with a customer are included in "Other current assets" and "Other non-current assets," respectively, in the balance sheet.

Commissions Paid to Third-Party Agent Sales of Magazine Subscriptions

Dotdash Meredith uses third-party agents to obtain certain subscribers. The agents are paid a commission, which can be as much as the subscription price charged to the subscriber. Dotdash Meredith subscriptions do not have substantive termination penalties; therefore, the contract term is determined on an issue-by-issue basis. Accordingly, these commissions do not qualify for capitalization because there is no contract with a customer until a copy is served to a customer; therefore, these costs are expensed when the publication is sent to the customer. Dotdash Meredith recognizes a liability to the extent the commission is refundable to the third-party agent. Dotdash Meredith expenses additional amounts paid to agents (such as per subscriber bounties) to acquire subscribers as incurred. Expenses related to third-party agent sales of magazine subscriptions are included in "Selling and marketing expense" in the statement of operations.

Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement")

~~A meaningful portion of the Company's revenue (and a substantial portion of IAC's net cash from operating activities attributable~~The Company and Google are parties to ~~continuing operations that it can freely access) is attributable to the~~an amended Services ~~Agreement. In addition, the~~Agreement, which automatically renewed effective March 31, 2023 and expires on March 31, 2025. The Company earns certain other advertising revenue from Google that is not attributable to the Services Agreement. A meaningful portion of the Company’s net cash from operating activities that it can freely access is attributable to revenue earned pursuant to the Services Agreement and other revenue earned from Google.

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, total revenue earned from Google was ~~$193.4~~$172.9 million and ~~$171.8~~$193.4 million, respectively, representing ~~15%~~16% and ~~22%~~15%, respectively, of the Company's revenue. ~~The related accounts receivable totaled $66.8 million and $89.1 million at March 31, 2022 and December 31, 2021, respectively.~~

The total revenue earned from the Services Agreement for the three months ended March 31, 2023 and 2022 ~~and 2021~~ was ~~$147.1~~$138.8 million and ~~$152.5~~$147.1 million, respectively, representing ~~11%~~13% and ~~19%~~11%, respectively, of the Company's total revenue. The related accounts receivable totaled $70.9 million and $74.1 million at March 31, 2023 and December 31, 2022, respectively.

The revenue attributable to the Services Agreement is earned by Ask Media Group and the Desktop business, ~~both within~~which comprise the Search segment. For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, revenue earned from the Services Agreement was ~~$120.5~~$120.3 million and ~~$121.4~~$120.5 million, respectively, within Ask Media Group and ~~$26.6~~$18.5 million and ~~$31.0~~$26.6 million, respectively, within the Desktop business.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

The Company and Google are parties to an amended Services Agreement, which expires on March 31, 2024 and provides for an automatic renewal for an additional one year period absent a notice of non-renewal from either party on or before March 31, 2023. The Services Agreement requires that the Company comply with certain guidelines promulgated by Google. Google may generally unilaterally update its policies and guidelines without advance notice. These updates may be specific to the Services Agreement or could be more general and thereby impact the Company as well as other companies. These policy and guideline updates have in the past and could in the future require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, which have been and could be costly to address or negatively impact revenue and have had and in the future could have an adverse effect on our financial condition and results of operations. As described below, Google has made changes to the policies under the Services Agreement and has also made industry-wide changes that have negatively impacted the Desktop business-to-consumer ("B2C") business. Google may make changes in the future that could impact the revenue earned from Google, including under the Services Agreement.

~~Certain~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As a result of certain industry-wide policy ~~changes became effective on August 27, 2020. These industry-wide~~ changes combined with increased enforcement of policies under the Services Agreement ~~have had a negative impact on~~in prior periods, the results of operations of the B2C business. During the fourth quarter of 2020, Google suspended services with respect to some B2C's products and may do so with respect to other products in the future. As a result, the B2C business elected to modify certain marketing strategies in early January 2021. Subsequently, Google informed us of another policy change in the first quarter of 2021 that became effective on May 10, 2021. We anticipated that this Google policy change would eliminate our ability to successfully introduce and market new B2C products that would be profitable. Therefore, we undertook cost reduction measures and effectively eliminated all marketing of B2C products beginning in March 2021. This elimination of marketing has positively impacted profitability starting in the second quarter of 2021 because revenue from B2C products is earned over multiple periods beyond just the period in which the initial marketing is incurred. Following the cessation ofCompany discontinued the introduction of new products in ~~March 2021,~~2021. Therefore, the current B2C revenue stream relates solely to the then existing installed base of products. ~~In 2022 and beyond, we expect~~As a result, the revenue and profits of the B2C business have declined significantly and the Company expects that trend to ~~decline significantly.~~continue.

Recent Accounting Pronouncements

~~Accounting Pronouncements Not Yet Adopted by IAC~~

There are no recently issued accounting pronouncements ~~that have not yet been adopted~~ that are expected to have a material effect on the results of operations, financial condition or cash flows of the Company.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

In the fourth quarter of 2022, the Angi Inc. segment presentation was changed to reflect its four operating segments, which include: (i) Ads and Leads, (ii) Services, (iii) Roofing and (iv) International (consisting of businesses in Europe and Canada). Angi Inc.'s financial information for the first quarter of 2022 has been recast to conform to the current period presentation.

NOTE 2—DOTDASH MEREDITH RESTRUCTURING CHARGES AND TRANSACTION-RELATED EXPENSES

Restructuring Charges

During 2022, Dotdash Meredith management committed to several actions to improve efficiencies and better align its cost structure following the acquisition of Meredith on December 1, 2021. These actions included: (i) the discontinuation of certain print publications and the shutdown of PeopleTV, for which the related expense was primarily reflected in the first quarter of 2022, (ii) a voluntary retirement program announced in the first quarter of 2022, for which the related expense was primarily reflected in the first half of 2022, (iii) the consolidation of certain leased office space, for which the related expense was reflected in the third quarter of 2022 and (iv) a reduction in force plan, for which the related expenses were accrued primarily in the fourth quarter of 2022. These actions resulted in $80.2 million of restructuring charges incurred for the year ended December 31, 2022.

A summary of the costs incurred, payments and related accruals is presented below. The Company anticipates the estimated remaining costs associated with the 2022 restructuring events will be paid by December 31, 2023 from existing cash on hand.


			Three Months Ended March 31, 2023
	Accrued December 31, 2022		Charges Incurred		Reversal of Initial Cost		Payments		Accrued March 31, 2023		Cumulative Charges Incurred		Estimated Remaining Costs
	(In thousands)
Digital	$	10,950	$	859	$	(812)	$	(4,793)	$	6,204	$	39,272	$	—
Print	12,055		1,109		(1,201)		(4,314)		7,649		33,340		87
Other (a)	4,389		186		(182)		(1,504)		2,889		7,585		91
Total	$	27,394	$	2,154	$	(2,195)	$	(10,611)	$	16,742	$	80,197	$	178

_____________________

(a) Other comprises unallocated corporate expenses, which are corporate overhead expenses not attributable to the Digital or Print segments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Three Months Ended March 31, 2022
	Charges Incurred		Payments		Non-cash (b)		Accrued March 31, 2022
	(In thousands)
Digital	$	5,090	$	(394)	$	—	$	4,696
Print	15,625		(2,127)		(377)		13,121
Other (a)	1,722		(106)		—		1,616
Total	$	22,437	$	(2,627)	$	(377)	$	19,433

_____________________

(b) Includes $0.4 million related to the write-off of inventory.

The costs are allocated as follows in the statement of operations:


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Cost of revenue	$	557	$	12,182
Selling and marketing expense	(862)		5,599
General and administrative expense	243		4,313
Product development expense	21		343

Total	$	(41)	$	22,437

Transaction-Related Expenses

For the three months ended March 31, 2023 and 2022, Dotdash Meredith incurred less than $0.1 million and $4.0 million, respectively, of transaction-related expenses related to the acquisition of Meredith.

NOTE 3—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Marketable Securities

At March 31, 2023 and December 31, 2022, the fair value of marketable securities are as follows:


	March 31, 2023		December 31, 2022
	(In thousands)
Marketable equity securities	$	3,167	$	4,317
Available-for-sale marketable debt securities	198,971		235,056
Total marketable securities	$	202,138	$	239,373

At March 31, 2023, the Company has two investments in marketable equity securities, other than the investment in MGM Resorts International ("MGM"). These marketable equity securities are carried at fair value following the investees' initial public offerings ("IPO"). Prior to the IPOs, these investments were accounted for as equity securities without readily determinable fair values. The Company recorded net unrealized pre-tax losses and gains for these investments of $1.2 million and $34.4 million during the three months ended March 31, 2023 and March 31, 2022, respectively. The unrealized pre-tax losses and gains related to these investments are included in "Other income, net" in the statement of operations.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

At March 31, 2023 and December 31, 2022, current available-for-sale marketable debt securities are as follows:


	March 31, 2023								December 31, 2022
	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Treasury discount notes	$	198,935	$	39	$	(3)	$	198,971	$	234,987	$	75	$	(6)	$	235,056
Total available-for-sale marketable debt securities	$	198,935	$	39	$	(3)	$	198,971	$	234,987	$	75	$	(6)	$	235,056

The contractual maturities of debt securities classified as current available-for-sale at March 31, 2023 and December 31, 2022 were within one year. There were no investments in available-for-sale marketable debt securities that had been in a continuous unrealized loss position for longer than twelve months at March 31, 2023 and December 31, 2022.

Investment in MGM Resorts International


	March 31, 2023		December 31, 2022
	(In thousands)
Investment in MGM Resorts International	$	2,875,022	$	2,170,182

At March 31, 2023, the Company owns 64.7 million shares of MGM, including 4.5 million shares purchased in the first quarter of 2022 for $202.5 million, representing a 17.6% ownership. The fair value of the investment in MGM is remeasured each reporting period based upon MGM's closing stock price on the New York Stock Exchange on the last trading day in the reporting period and any unrealized gains or losses are included in the statement of operations. For the three months ended March 31, 2023 and 2022, the Company recorded an unrealized pre-tax gain and loss of $704.8 million and $187.3 million, respectively, on its investment in MGM. The cumulative unrealized net pre-tax gain through March 31, 2023 is $1.6 billion. A $2.00 increase or decrease in the share price of MGM would result in an unrealized gain or loss, respectively, of $129.4 million. At May 5, 2023, the carrying value of the Company's investment in MGM was $2.8 billion.

Long-term Investments

Long-term investments consist of:


	March 31, 2023		December 31, 2022
	(In thousands)
Equity securities without readily determinable fair values	$	322,707	$	323,530
Equity method investment	4,976		2,191
Total long-term investments	$	327,683	$	325,721

Equity Securities without Readily Determinable Fair Values

The following table presents a summary of unrealized pre-tax gains and losses recorded in "Other income, net" in the statement of operations as adjustments to the carrying value of equity securities without readily determinable fair values held at March 31, 2023. There were no unrealized pre-tax gains or losses recorded for the three months ended March 31, 2022.


	Three Months Ended March 31, 2023
		(In thousands)
Upward adjustments (gross unrealized pre-tax gains)		$	—
Downward adjustments including impairments (gross unrealized pre-tax losses)		(822)
Total		$	(822)

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The cumulative upward and downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held at March 31, 2023 were $36.9 million and $136.8 million, respectively.

Realized and unrealized pre-tax gains and losses for the Company's investments without readily determinable fair values for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Realized pre-tax gains, net, for equity securities sold		$	7	$	468
Unrealized pre-tax losses, net, on equity securities held		(822)		—
Total pre-tax (losses) gains, net recognized		$	(815)	$	468

All pre-tax gains and losses on equity securities without readily determinable fair values, realized and unrealized, are recognized in "Other income, net" in the statement of operations.

Equity Method Investment

The Company owns common shares of Turo Inc. ("Turo"), a peer-to-peer car sharing marketplace. This investment is accounted for under the equity method of accounting given the Company's ownership interest at March 31, 2023 of approximately 26.5% on a fully diluted basis in the form of preferred shares, which are not common stock equivalents. The Company accounts for the equity earnings (losses) for this investment on a one quarter lag. These equity earnings (losses) were immaterial.

Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

•Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

•Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the Company's Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.

•Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:


	March 31, 2023
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	1,007,765	$	—	$	—	$	1,007,765
Treasury discount notes	—		87,250		—		87,250
Time deposits	—		15,113		—		15,113
Marketable securities:
Marketable equity securities	3,167		—		—		3,167
Treasury discount notes	—		198,971		—		198,971
Investment in MGM	2,875,022		—		—		2,875,022
Other non-current assets:
Warrant	—		—		52,739		52,739
Total	$	3,885,954	$	301,334	$	52,739	$	4,240,027

Liabilities:
Interest rate swaps(a)	$	—	$	(2,996)	$	—	$	(2,996)

_____________________

(a) Interest rate swaps relate to the $350 million notional amount of Dotdash Meredith's Term Loan B and are included in "Other long-term liabilities" in the balance sheet. See "Note 1—The Company and Summary of Significant Accounting Policies" and "Note 4—Long-term Debt" for additional information. The fair value of interest rate swaps was determined using discounted cash flows derived from observable market prices, including swap curves, which are Level 2 inputs.


	December 31, 2022
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	862,829	$	—	$	—	$	862,829
Treasury discount notes	—		137,219		—		137,219
Time deposits	—		16,018		—		16,018
Marketable securities:
Marketable equity securities	4,317		—		—		4,317
Treasury discount notes	—		235,056		—		235,056
Investment in MGM	2,170,182		—		—		2,170,182
Other non-current assets:
Warrant	—		—		46,799		46,799
Total	$	3,037,328	$	388,293	$	46,799	$	3,472,420

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table presents the changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Three Months Ended March 31,
	2023		2022
	Warrant			Warrant		Contingent Consideration Arrangements
	(In thousands)
Balance at January 1	$	46,799		$	109,294	$	(612)

Total net gains:
Fair value adjustments included in earnings	5,940			7,985		612
Balance at March 31	$	52,739		$	117,279	$	—

Warrant

As part of the Company's investment in Turo preferred shares, the Company received a warrant that is recorded at fair value each reporting period with any change included in "Other income, net" in the statement of operations. The warrant is measured using significant unobservable inputs and is classified in the fair value hierarchy table as Level 3. The warrant is included in "Other non-current assets" in the balance sheet.

Contingent Consideration Arrangements

At March 31, 2023, the Company has no contingent consideration arrangements outstanding. In connection with the Meredith acquisition on December 1, 2021, the Company assumed a contingent consideration arrangement liability of $0.6 million, which was written off during the first quarter of 2022 due to a change in estimate of the liability related to this arrangement.

Assets measured at fair value on a nonrecurring basis

The Company's non-financial assets, such as goodwill, intangible assets, ROU assets, capitalized software, equipment, buildings and leasehold improvements, are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

During the first quarter of 2023, the Company recorded impairment charges related to unoccupied leased office space due to the continued decline in the commercial real estate market; a $44.7 million impairment of an ROU asset and a $25.3 million impairment of leasehold improvements, furniture and equipment, which are included in "General and administrative expense" and "Depreciation," respectively, in the statement of operations. The impairment charges represent the amount by which the carrying value of the asset group exceeded its estimated fair value, calculated using a discounted cash flow approach using sublease market assumptions of the expected cash flows and discount rate. The impairment charges were allocated between the ROU assets and related leasehold improvements, furniture and equipment of the asset group based on their relative carrying values.

The aggregate carrying value of goodwill for which the most recent estimate of the excess of fair value over carrying value is less than 20% is $153.6 million of goodwill at Mosaic Group. There is one indefinite-lived intangible asset at Dotdash Meredith Digital with a value of approximately $126.0 million for which the excess of fair value over carrying value is less than 20%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:


	March 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Current portion of long-term debt	$	(30,000)	$	(27,750)	$	(30,000)	$	(26,700)
Long-term debt, net(a)	$	(2,013,107)	$	(1,791,469)	$	(2,019,759)	$	(1,708,413)

_____________________

(a)At March 31, 2023 and December 31, 2022, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $19.4 million and $20.2 million, respectively.

At March 31, 2023 and December 31, 2022, the fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

NOTE 4—LONG-TERM DEBT

Long-term debt consists of:


	March 31, 2023		December 31, 2022
	(In thousands)
Dotdash Meredith Debt
Dotdash Meredith Term Loan A ("Dotdash Meredith Term Loan A") due December 1, 2026	$	328,125	$	332,500
Dotdash Meredith Term Loan B ("Dotdash Meredith Term Loan B") due December 1, 2028	1,234,375		1,237,500
Total Dotdash Meredith long-term debt	1,562,500		1,570,000
Less: current portion of Dotdash Meredith long-term debt	30,000		30,000
Less: original issue discount	5,100		5,310
Less: unamortized debt issuance costs	9,762		10,215
Total Dotdash Meredith long-term debt, net	1,517,638		1,524,475

ANGI Group Debt
3.875% ANGI Group Senior Notes due August 15, 2028 ("ANGI Group Senior Notes"); interest payable each February 15 and August 15	500,000		500,000


Less: unamortized debt issuance costs	4,531		4,716
Total ANGI Group long-term debt, net	495,469		495,284

Total long-term debt, net	$	2,013,107	$	2,019,759

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Dotdash Meredith Term Loans and Dotdash Meredith Revolving Facility

On December 1, 2021, Dotdash Meredith entered into a credit agreement ("Dotdash Meredith Credit Agreement"), which provides for (i) the five-year $350 million Dotdash Meredith Term Loan A, (ii) the seven-year $1.25 billion Dotdash Meredith Term Loan B (and together with Dotdash Meredith Term Loan A, the "Dotdash Meredith Term Loans") and (iii) a five-year $150 million revolving credit facility ("Dotdash Meredith Revolving Facility"). The Dotdash Meredith Term Loan A bears interest at an adjusted term secured overnight financing rate ("Adjusted Term SOFR") as defined in the Dotdash Meredith Credit Agreement plus an applicable margin depending on Dotdash Meredith's most recently reported consolidated net leverage ratio, as defined in the Dotdash Meredith Credit Agreement. The adjustment to the secured overnight financing rate is fixed at 0.10% for the Dotdash Meredith Term Loan A. The Dotdash Meredith Term Loan B has a varying adjustment of 0.10%, 0.15% or 0.25% based upon the duration of the borrowing period. At March 31, 2023 and December 31, 2022, the Dotdash Meredith Term Loan A bore interest at Adjusted Term SOFR plus 2.25%, or 6.94% and 5.91%, respectively, and the Dotdash Meredith Term Loan B bore interest at Adjusted Term SOFR, subject to a minimum of 0.50%, plus 4.00%, or 8.77% and 8.22%, respectively. Interest payments are due at least quarterly through the terms of the Dotdash Meredith Term Loans.

The Dotdash Meredith Term Loan A requires quarterly principal payments of approximately $4.4 million through December 31, 2024, $8.8 million through December 31, 2025 and approximately $13.1 million thereafter through maturity. The Dotdash Meredith Term Loan B requires quarterly payments of $3.1 million through maturity. The Dotdash Meredith Term Loan B may require additional annual principal payments as part of an excess cash flow sweep provision, the amount of which, in part, is governed by the applicable net leverage ratio. No such payment was required related to the period ended December 31, 2022.

In March 2023, Dotdash Meredith entered into interest rate swaps on the Dotdash Meredith Term Loan B for a total notional amount of $350 million with a maturity date of April 1, 2027. The interest rate swaps synthetically convert $350 million of the Dotdash Meredith Term Loan B for the duration of the interest rate swaps to a fixed rate of approximately 7.92% ((i) the weighted average fixed interest rate of approximately 3.82% on the interest rate swaps plus (ii) the adjustment to the secured overnight financing rate of 0.10% plus (iii) the base rate of 4.00%), beginning April 2023.

The interest rate swaps are expected to be highly effective. For the three months ended March 31, 2023, the unrealized loss recognized in "Accumulated other comprehensive loss" was $2.3 million, net of income tax benefit, and the related liability of $3.0 million is included in “Other non-current liabilities” in the balance sheet at March 31, 2023. There were no realized gains or losses reclassified into “Interest expense” in the three months ended March 31, 2023. At March 31, 2023, $3.0 million is expected to be reclassified into interest expense within the next twelve months as a realized gain.

There were no outstanding borrowings under the Dotdash Meredith Revolving Facility at March 31, 2023 and December 31, 2022. The annual commitment fee on undrawn funds is based on Dotdash Meredith's consolidated net leverage ratio, as defined in the Dotdash Meredith Credit Agreement, most recently reported and was 40 basis points at both March 31, 2023 and December 31, 2022. Any borrowings under the Dotdash Meredith Revolving Facility would bear interest, at Dotdash Meredith's option, at either a base rate or Adjusted Term SOFR, plus an applicable margin, which is based on Dotdash Meredith's consolidated net leverage ratio.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of the last day of any calendar quarter, if either (i) $1.00 or more of loans under the Dotdash Meredith Revolving Facility or Dotdash Meredith Term Loan A are outstanding, or (ii) the outstanding face amount of undrawn letters of credit, other than cash collateralized letters of credit at 102% of face value, exceeds $25 million, subject to certain increases for qualifying material acquisitions, then Dotdash Meredith will not permit the consolidated net leverage ratio, which permits netting of up to $250 million in cash and cash equivalents, as of the last day of such quarter to exceed 5.5 to 1.0. The Dotdash Meredith Credit Agreement also contains covenants that would limit Dotdash Meredith’s ability to pay dividends, incur incremental secured indebtedness, or make distributions or certain investments in the event a default has occurred or if Dotdash Meredith’s consolidated net leverage ratio exceeds 4.0 to 1.0, subject to certain available amounts as defined in the Dotdash Meredith Credit Agreement. This ratio was exceeded for both test periods ended March 31, 2023 and December 31, 2022. The Dotdash Meredith Credit Agreement also permits the Company to, among other things, contribute cash to Dotdash Meredith, which will provide additional liquidity to ensure that Dotdash Meredith does not exceed certain consolidated net leverage ratios for any test period, as further defined in the Dotdash Meredith Credit Agreement. In connection with these capital contributions, Dotdash Meredith may make distributions to IAC in amounts not more than any such capital contributions, provided that no default has occurred and is continuing. Such capital contributions and subsequent distributions impact the consolidated net leverage ratios of Dotdash Meredith. In March 2023, the Company contributed $135.0 million to Dotdash Meredith, which Dotdash Meredith subsequently distributed back to the Company in April 2023.

The obligations under the Dotdash Meredith Credit Agreement are guaranteed by certain of Dotdash Meredith's wholly-owned subsidiaries and are secured by substantially all of the assets of Dotdash Meredith and certain of its subsidiaries.

ANGI Group Debt

ANGI Group, LLC ("ANGI Group"), a direct wholly-owned subsidiary of Angi Inc., issued the ANGI Group Senior Notes on August 20, 2020. At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium. Thereafter, these notes may be redeemed at the redemption prices, plus accrued and unpaid interest thereon, if any, to the applicable redemption date as set forth in the indenture governing the notes.

The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money in the event a default has occurred or ANGI Group’s secured leverage ratio exceeds 3.75 to 1.0 provided that ANGI Group is permitted to incur such liens under certain permitted credit facilities indebtedness notwithstanding the ratio, all as defined in the indenture. At March 31, 2023, there were no limitations pursuant thereto.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 5—ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table presents the components of accumulated other comprehensive (loss) income. There were no items reclassified out of accumulated other comprehensive (loss) income into earnings for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31, 2023								Three Months Ended March 31, 2022
	Foreign Currency Translation Adjustment		Unrealized Gains (Losses) On Available-For-Sale Marketable Debt Securities		Unrealized Losses On Interest Rate Swaps		Accumulated Other Comprehensive Loss		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income (Loss)
	(In thousands)
Balance at January 1	$	(13,186)	$	53	$	—	$	(13,133)	$	4,397	$	4,397
Other comprehensive income (loss)	803		(26)		(2,287)		(1,510)		(3,634)		(3,634)

Net current period other comprehensive income (loss)	803		(26)		(2,287)		(1,510)		(3,634)		(3,634)
Accumulated other comprehensive loss allocated to noncontrolling interests during the period	2		—		—		2		2		2
Balance at March 31	$	(12,381)	$	27	$	(2,287)	$	(14,641)	$	765	$	765

At March 31, 2023, there was $0.7 million of income tax benefit related to unrealized losses on interest rate swaps and less than $0.1 million of income tax provision related to net unrealized gains on available-for-sale marketable debt securities. At March 31, 2022, there was no income tax benefit or provision on the accumulated other comprehensive income.

NOTE 6—SEGMENT INFORMATION

The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent with the chief operating decision maker's view of the businesses. In addition, we consider how the businesses are organized as to segment management and the focus of the businesses with regards to the types of services or products offered or the target market. Operating segments are combined for reporting purposes if they meet certain aggregation criteria, such as the Search segment, which principally relate to the similarity of their economic characteristics, or, in the case of the Emerging & Other reportable segment, do not meet the quantitative thresholds that require presentation as separate reportable segments.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table presents revenue by reportable segment:


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Revenue
Dotdash Meredith
Digital		$	184,797	$	216,165
Print		207,016		289,978
Intersegment eliminations(a)		(4,231)		(5,672)
Total Dotdash Meredith		387,582		500,471
Angi Inc.
Domestic:
Ads and Leads		293,506		294,746
Services		32,059		76,450
Roofing		38,372		36,687
Domestic intersegment eliminations(b)		(1,462)		(1,677)
Total Domestic		362,475		406,206
International		29,932		29,953
Total Angi Inc.		392,407		436,159
Search		152,475		223,385
Emerging & Other		154,031		166,994
Intersegment eliminations		(2,224)		(1,664)
Total		$	1,084,271	$	1,325,345

The following table presents the revenue of the Company's segments disaggregated by type of service:


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Dotdash Meredith
Digital:
Advertising revenue		$	111,817	$	137,090
Performance marketing revenue		50,055		50,105
Licensing and other revenue		22,925		28,970
Total digital revenue		184,797		216,165
Print:
Subscription revenue		85,637		130,584
Advertising revenue		47,850		72,687
Newsstand revenue		32,246		31,239
Project and other revenue		28,109		33,025
Performance marketing revenue		13,174		22,443
Total print revenue		207,016		289,978
Intersegment eliminations(a)		(4,231)		(5,672)
Total Dotdash Meredith revenue		$	387,582	$	500,471

(a) Intersegment eliminations primarily related to Digital performance marketing commissions earned for the placement of magazine subscriptions for Print.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Angi Inc.
Domestic:
Ads and Leads:
Consumer connection revenue		$	212,935	$	214,347
Advertising revenue		67,181		63,902
Membership subscription revenue		13,199		16,237
Other revenue		191		260
Total Ads and Leads revenue		293,506		294,746
Services revenue		32,059		76,450
Roofing revenue		38,372		36,687
Domestic intersegment eliminations(b)		(1,462)		(1,677)
Total Domestic revenue		362,475		406,206
International:
Consumer connection revenue		24,745		21,803
Service professional membership subscription revenue		5,058		7,856
Advertising and other revenue		129		294
Total International revenue		29,932		29,953
Total Angi Inc. revenue		$	392,407	$	436,159

(b) Intersegment eliminations related to Ads and Leads revenue earned from sales to Roofing.

Search
Advertising revenue:
Google advertising revenue		$	140,734	$	149,652
Non-Google advertising revenue		10,973		71,989
Total advertising revenue		151,707		221,641
Other revenue		768		1,744
Total Search revenue		$	152,475	$	223,385

Emerging & Other
Subscription revenue		$	86,400	$	94,547
Marketplace revenue		58,419		66,117
Media production and distribution revenue		3,615		546
Advertising revenue:
Non-Google advertising revenue		2,899		3,723
Google advertising revenue		263		608
Total advertising revenue		3,162		4,331
Service and other revenue		2,435		1,453
Total Emerging & Other revenue		$	154,031	$	166,994

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived assets is presented below:


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Revenue:
United States		$	974,428	$	1,204,348
All other countries		109,843		120,997
Total		$	1,084,271	$	1,325,345


	March 31, 2023		December 31, 2022
	(In thousands)
Long-lived assets (excluding goodwill, intangible assets and ROU assets):
United States	$	455,240	$	502,977
All other countries	6,631		7,637
Total	$	461,871	$	510,614

The following tables present operating (loss) income and Adjusted EBITDA by reportable segment:


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Operating (loss) income:
Dotdash Meredith
Digital		$	(17,887)	$	(1,868)
Print		(5,756)		(38,335)
Other(c)(d)		(87,591)		(16,042)
Total Dotdash Meredith(e)		(111,234)		(56,245)
Angi Inc.
Ads and Leads		13,480		15,486
Services		(12,452)		(25,750)
Roofing		411		(6,150)
Other(c)		(14,939)		(13,022)
International		3,030		(4,521)
Total Angi Inc.		(10,470)		(33,957)
Search		10,770		25,079
Emerging & Other		11,445		(5,044)
Corporate		(36,107)		(38,647)
Total		$	(135,596)	$	(108,814)

_____________________

(d) Includes impairment charges of $70.0 million related to unoccupied leased office space for the three months ended March 31, 2023, of which $25.3 million is included in "Depreciation" in the statement of operations. See "Note 3—Financial Instruments and Fair Value Measurements" for additional information.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(e) Dotdash Meredith incurred restructuring charges of $22.4 million in the three months ended March 31, 2022. The three months ended March 31, 2022 also include transaction-related expenses of $4.0 million related to the acquisition of Meredith. See "Note 2 —Dotdash Meredith Restructuring Charges and Transaction-Related Expenses" for additional information.


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Adjusted EBITDA(f):
Dotdash Meredith(e)
Digital		$	24,403	$	34,800
Print		$	11,334	$	(10,480)
Other(c)(g)		$	(58,854)	$	(15,786)
Angi Inc.
Ads and Leads		$	39,851	$	34,325
Services		$	(2,168)	$	(18,567)
Roofing		$	821	$	(5,026)
Other(c)		$	(12,354)	$	(10,450)
International		$	4,354	$	(3,451)
Search		$	10,791	$	25,100
Emerging & Other		$	14,778	$	916
Corporate		$	(23,833)	$	(23,694)

_____________________

(f) The Company's primary financial measure and GAAP segment measure is Adjusted EBITDA, which is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets, if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements.

(g) Includes impairment charges of $44.7 million related to unoccupied leased office space for the three months ended March 31, 2023. See "Note 3—Financial Instruments and Fair Value Measurements" for additional information.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following tables reconcile operating (loss) income for the Company's reportable segments and net earnings (loss) attributable to IAC shareholders to Adjusted EBITDA:


	Three Months Ended March 31, 2023
	Operating (Loss) Income		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA(f)
	(In thousands)
Dotdash Meredith
Digital	$	(17,887)	$	1,695	$	5,244	$	35,351	$	24,403
Print	(5,756)		$	146	$	2,635	$	14,309	$	11,334
Other(c)	(87,591)		$	3,250	$	25,487	$	—	$	(58,854)
Angi Inc.
Ads and Leads	13,480		$	5,491	$	18,218	$	2,662	$	39,851
Services	(12,452)		$	4,209	$	6,075	$	—	$	(2,168)
Roofing	411		$	165	$	245	$	—	$	821
Other(c)	(14,939)		$	2,585	$	—	$	—	$	(12,354)
International	3,030		$	427	$	897	$	—	$	4,354
Search	10,770		$	—	$	21	$	—	$	10,791
Emerging & Other	11,445		$	352	$	697	$	2,284	$	14,778
Corporate(h)	(36,107)		$	10,621	$	1,653	$	—	$	(23,833)
Total	(135,596)
Interest expense	(38,172)
Unrealized gain on investment in MGM Resorts International	704,840
Other income, net	23,749
Earnings before income taxes	554,821
Income tax provision	(139,502)
Net earnings	415,319
Net loss attributable to noncontrolling interests	2,456
Net earnings attributable to IAC shareholders	$	417,775

_____________________

(h) Includes stock-based compensation expense for stock-based awards granted to employees of Corporate, Search and all Emerging & Other businesses other than Vivian Health.

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Three Months Ended March 31, 2022
	Operating (Loss) Income(e)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Acquisition-related Contingent Consideration Fair Value Adjustments		Adjusted EBITDA(e)(f)
	(In thousands)
Dotdash Meredith
Digital	$	(1,868)	$	4,196	$	7,489	$	25,595	$	(612)	$	34,800
Print	(38,335)		$	64	$	5,532	$	22,259	$	—	$	(10,480)
Other(c)	(16,042)		$	12	$	244	$	—	$	—	$	(15,786)
Angi Inc.
Ads and Leads	15,486		$	4,920	$	11,257	$	2,662	$	—	$	34,325
Services	(25,750)		$	4,540	$	1,668	$	975	$	—	$	(18,567)
Roofing	(6,150)		$	830	$	127	$	167	$	—	$	(5,026)
Other(c)	(13,022)		$	2,572	$	—	$	—	$	—	$	(10,450)
International	(4,521)		$	123	$	947	$	—	$	—	$	(3,451)
Search	25,079		$	—	$	21	$	—	$	—	$	25,100
Emerging & Other	(5,044)		$	25	$	403	$	5,532	$	—	$	916
Corporate(h)	(38,647)		$	12,405	$	2,548	$	—	$	—	$	(23,694)
Total	(108,814)
Interest expense	(21,912)
Unrealized loss on investment in MGM Resorts International	(187,330)
Other income, net	6,699
Loss before income taxes	(311,357)
Income tax benefit	70,464
Net loss	(240,893)
Net loss attributable to noncontrolling interests	5,095
Net loss attributable to IAC shareholders	$	(235,798)

NOTE 7—PENSION AND POSTRETIREMENT BENEFIT PLANS

The following table presents the components of net periodic benefit cost for the Dotdash Meredith pension and postretirement benefit plans:


	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
	Pension				Postretirement		Pension				Postretirement
	Domestic		International		Domestic		Domestic		International		Domestic
	(In thousands)
Service cost	$	53	$	—	$	1	$	982	$	—	$	2
Interest cost	871		4,777		58		699		3,275		67
Expected return on plan assets	(501)		(4,771)		—		(1,578)		(4,624)		—

Actuarial loss recognition	240		—		—		12,532		24,988		—


Net periodic benefit cost	$	663	$	6	$	59	$	12,635	$	23,639	$	69

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Settlements during the three months ended March 31, 2023 triggered a remeasurement of the pension plans in the U.S. The actuarial loss of $0.2 million was the result of an adjustment in plan demographics, partially offset by gains on investment performance.

Settlements during the three months ended March 31, 2022 triggered a remeasurement of the funded pension plans in the United Kingdom ("U.K.") and U.S. The U.K. actuarial loss of $25.0 million primarily relates to the decline in the fair value of the U.K. pension plan's assets exceeding the decline in the plan liabilities, in each case due to higher interest rates. The U.S. actuarial loss of $12.5 million was primarily due to the decline in the fair value of plan assets.

The following table summarizes the weighted average expected return on plan assets used to determine the net periodic benefit costs at March 31, 2023, following the remeasurement, and December 31, 2022, respectively:


	March 31, 2023		December 31, 2022
	Pension
	Domestic			Domestic
Expected return on plan assets	4.31	%		2.80	%

The components of net periodic benefit costs, other than the service cost component, are included in "Other income, net" in the statement of operations.

NOTE 8—INCOME TAXES

At the end of each interim period, the Company estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company's tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision or benefit in the quarter in which the change occurs.

~~Table~~For the three months ended March 31, 2023, the Company recorded an income tax provision of ~~Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

$139.5 million, which represents an effective income tax rate of 25%, which is higher than the statutory rate of 21% due primarily to state taxes and nondeductible compensation expense, partially offset by research credits. For the three months ended March 31, 2022, the Company recorded an income tax benefit of $70.5 million, which represents an effective income tax rate of 23%, which is higher than the statutory rate of 21% due primarily to state taxes and excess tax benefits generated by the exercise and vesting of stock-based awards, partially offset by nondeductible stock-based compensation expense. For the three months ended March 31, 2021, the Company recorded an income tax provision of $53.3 million, which represents an effective income tax rate of 14% which is lower than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards, partially offset by state taxes.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest and penalties are not material.

~~On December 19, 2019, IAC/InterActiveCorp ("Old IAC") entered into a Transaction Agreement (as amended, the "Transaction Agreement") with Match Group, Inc. ("Old MTCH"),~~

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IAC Holdings, Inc. ("New IAC" or the "Company"), a direct wholly-owned subsidiary of Old IAC, and Valentine Merger Sub LLC, an indirect wholly-owned subsidiary of Old IAC. On June 30, 2020, the businesses of Old MTCH were separated from the remaining businesses of Old IAC through a series of transactions that resulted in the pre-transaction stockholders of Old IAC owning shares in two, separate public companies—(1) Old IAC, which was renamed Match Group, Inc. ("New Match") and which owns the businesses of Old MTCH and certain Old IAC financing subsidiaries, and (2) New IAC, which was renamed IAC/InterActiveCorp, and which owns Old IAC's other businesses—and the pre-transaction stockholders of Old MTCH (other than Old IAC) owning shares in New Match. This transaction is referred to as the "MTCH Separation."INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The ~~Company is~~Company's income taxes are routinely under audit by federal, state, local and foreign authorities ~~in the area of income tax~~ as a result of previously filed separate company and consolidated tax returns ~~with Old~~for periods prior to the June 30, 2020 separation of IAC from Match Group (the "Match Separation") and for its tax returns filed on a standalone basis following the ~~MTCH~~Match Separation. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service ("IRS") has ~~substantially~~ completed its audit of ~~Old IAC’s~~the federal income tax returns for the years ended December 31, 2013 through ~~2017, and is currently auditing the years ended December 31, 2018 through~~ 2019, which include the operations of the Company. The settlement of these tax years has been submitted to the Joint Committee of Taxation for approval. The statute of limitations for the years 2013 through 2019 has been extended to December 31, 2023. Returns filed in various other jurisdictions are open to examination for tax years beginning with ~~2012.~~2014. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from the examination of prior year tax returns. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, unrecognized tax benefits, including interest and penalties, ~~are $18.7~~were $17.4 million and ~~$18.0~~$16.6 million, respectively. Unrecognized tax benefits, including interest and penalties, at March 31, ~~2022~~2023 increased by ~~$0.7~~$0.8 million due primarily to research ~~credits.~~credits, partially offset by settlements. If unrecognized tax benefits at March 31, ~~2022~~2023 are subsequently recognized, ~~$17.4~~$16.2 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable amount at December 31, ~~2021~~2022 was ~~$16.7~~$15.4 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by ~~$2.9~~$0.6 million by March 31, ~~2023~~2024 due to expected settlements of which ~~$2.6~~$0.5 million would reduce the income tax provision.

~~NOTE 3—DISCONTINUED OPERATIONS~~

~~On May 25, 2021, IAC completed~~The Company regularly assesses the ~~Spin-off. Following~~realizability of deferred tax assets considering all available evidence including, to the ~~Spin-off, Vimeo became an independent, separately traded public company. Therefore, Vimeo is presented as a discontinued operation within IAC's financial statements for all~~extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, ~~prior to May 25, 2021~~.

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~The components of the earnings from discontinued operations for the three months ended~~available tax planning and historical experience. At March 31, ~~2021 in~~2023, the ~~statement~~Company has a U.S. gross deferred tax asset of ~~operations consisted of the following:~~


	~~Three Months Ended March 31, 2021~~
	~~(In thousands)~~
~~Revenue~~	$	~~89,418~~
~~Operating costs and expenses:~~
~~Cost of revenue (exclusive of depreciation shown separately below)~~	~~24,956~~
~~Selling and marketing expense~~	~~32,053~~
~~General and administrative expense~~	~~13,528~~
~~Product development expense~~	~~21,475~~
~~Depreciation~~	~~114~~
~~Amortization of intangibles~~	~~1,887~~
~~Total operating costs and expenses~~	~~94,013~~
~~Operating loss from discontinued operations~~	~~(4,595)~~
~~Interest expense~~	~~(64)~~
~~Other income, net~~	~~10,085~~
~~Earnings from discontinued operations before tax~~	~~5,426~~
~~Income tax benefit~~	~~4,530~~
~~Earnings from discontinued operations, net of tax~~	$	~~9,956~~

~~NOTE 4—BUSINESS COMBINATION~~

On December 1, 2021, Dotdash acquired Meredith under the terms of an agreement (the "Merger Agreement") dated as of October 6, 2021. At the effective time of the merger, each outstanding share of common stock of Meredith (other than certain excluded shares) was converted into the right to receive $42.18 in cash. Pursuant to the Merger Agreement, Meredith equity awards were cancelled, and in exchange each holder received such holder’s portion of the merger consideration as set forth in the Merger Agreement, less the per share exercise price in the case of stock options. The Company accounted for this acquisition as a business combination under the acquisition method of accounting.

~~The total preliminary purchase price was calculated and allocated as follows:~~



	~~(In thousands)~~
~~Common stock of Meredith~~	$	~~1,931,376~~
~~Cash payment used to settle a portion of Meredith debt~~	~~625,000~~
~~Cash settlement of all outstanding vested equity awards and deferred compensation~~	~~130,089~~
~~Total preliminary purchase price~~	$	~~2,686,465~~

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:~~



	~~(In thousands)~~
~~Cash and cash equivalents~~	$	~~12,436~~
~~Accounts receivable~~	~~373,091~~
~~Other current assets~~	~~90,371~~
~~Property and equipment~~	~~283,319~~
~~Goodwill~~	~~1,564,929~~
~~Intangible assets~~	~~1,095,500~~
~~Other non-current assets~~	~~682,214~~
~~Total assets~~	~~4,101,860~~
~~Customer deposit liability~~	~~(140,690)~~
~~Other current liabilities~~	~~(457,549)~~
~~Deferred income taxes~~	~~(230,880)~~
~~Other non-current liabilities~~	~~(586,276)~~
~~Net assets acquired~~	$	~~2,686,465~~

The Company acquired Meredith because it is complementary to Dotdash. The purchase was based on the expected future financial performance of Meredith under Dotdash leadership, not on the value of the net identifiable assets at the time of acquisition. This resulted in a significant portion of the preliminary purchase price being attributed to goodwill. The purchase price attributed to goodwill is not tax deductible.

~~The preliminary fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:~~



	~~(In thousands)~~		Useful Life (Years)
~~Indefinite-lived trade names and trademarks~~	$	~~432,800~~	~~Indefinite-lived~~
~~Advertiser relationships~~	~~334,000~~		~~5-7~~
~~Licensee relationships~~	~~150,000~~		~~3-6~~
~~Trade name and trademarks~~	~~105,000~~		~~2-5~~
~~Subscriber relationships~~	~~73,700~~		~~1-2~~
~~Total identifiable intangible assets acquired~~	$	~~1,095,500~~

~~The allocation of the preliminary purchase price to certain assets acquired and liabilities assumed is provisional and is subject to review and revision during the measurement period, which~~$816.4 million that the Company expects to ~~extend through~~fully utilize on a more likely than not basis. Of this amount, $641.7 million will be utilized upon the ~~fourth quarter~~future reversal of ~~2022. In addition,~~deferred tax liabilities and the remaining net deferred tax asset of $174.7 million will be utilized based on forecasts of future taxable income. The Company's most significant net deferred tax asset that could expire relates to U.S. federal net operating loss ("NOL") carryforwards of $40.4 million. The Company ~~is still in the process~~expects to generate sufficient future taxable income of ~~identifying acquired assets and assumed liabilities, which may also result in an adjustment of the provisional amounts recorded. The subsequent adjustment of the provisional amounts may be material.~~

~~The provisional amounts for assets acquired and liabilities assumed include the fair value of:~~

1.~~accounts receivable and other receivables, which has been adjusted for an estimated $10.1~~at least $192.6 million ~~of gross contractual amounts not expected to be collected, may be subject to adjustment for reassessment of collectability as of the date of acquisition, collections and other adjustment subsequent~~prior to the ~~acquisition;~~

2.~~prepaid expenses~~expiration of these NOLs, the majority of which expire between 2033 and ~~other current and noncurrent assets, which will be subject~~2036, to ~~adjustment based upon a review of recoverability and consideration of other factors;~~

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

3.~~inventory;~~

4.~~property, plant and equipment, for which the preliminary estimates are subject to revision for:~~

a.~~identification of assets acquired;~~

b.~~finalization of preliminary appraisals; and~~

c.~~determination of useful lives;~~

5.~~right of use assets and lease liabilities, which will be subject to adjustment upon completion of the review of the inputs, including sublease assumptions, for the calculations;~~

6.~~accounts payable and accrued expenses, which will be subject to adjustment based upon subsequent payment and assessment of other factors;~~

7.~~indemnification liabilities, which include pre-acquisition income~~fully realize this deferred tax ~~and non-income tax liabilities, will be subject to adjustment for:~~

a. the reconciliation of the income tax return to the income tax provision for Meredith Corporation's fiscal year ended June 30, 2021 and the short period return from July 1, 2021 through the date of acquisition;

~~b. the assessment of the amounts of liabilities that existed at the date of acquisition based upon ongoing audits;~~

~~c. the assessment of applicable tax rates and other factors; and~~

~~d. the identification of other liabilities;~~

8.contingencies, the initial estimated recorded liability for which is approximately $100 million, including indemnification liabilities, will be subject to adjustment for additional items that are identified and for additional information obtained that will assist in the determination of liabilities as of the date of acquisition;

9.definite and indefinite-lived intangible assets acquired will be subject to adjustment as additional assets are identified, estimates and forecasts are refined and disaggregated, useful lives are finalized, and other factors deemed relevant are considered;

~~10.~~ deferred income taxes will be subject to adjustment based upon the completion of the review of the book and tax bases of assets acquired and liabilities assumed, applicable tax rates and the impact of the revisions of estimates for the items described above;

~~11.~~ ~~goodwill will be subject to adjustment for the impact of the revisions of estimates for the items described above; and~~

~~12.~~ the allocation of goodwill to reporting units, which is still in process of being assessed, will be subject to revision based upon the items described above and the finalization of the determination of fair value of the reporting units, which has not yet been completed.

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Unaudited pro forma financial information~~

The unaudited pro forma financial information in the table below presents the results of the Company and Meredith as if the Meredith acquisition had occurred on January 1, 2020. The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had this acquisition occurred on January 1, 2020. For the three months ended March 31, 2021, pro forma adjustments include an increase in amortization expense of $23.9 million related to intangible asset adjustments in purchase accounting.


	~~Three Months Ended March 31, 2021~~
	~~(In thousands, except per share data)~~
~~Revenue~~	$	~~1,254,571~~
~~Net earnings from continuing operations~~	$	~~371,736~~
~~Basic earnings per share from continuing operations~~	$	~~4.19~~
~~Diluted earnings per share from continuing operations~~	$	~~3.92~~
~~Net earnings attributable to IAC shareholders~~	$	~~381,919~~
~~Basic earnings per share attributable to IAC shareholders~~	$	~~4.29~~
~~Diluted earnings per share attributable to IAC shareholders~~	$	~~4.02~~

asset.

NOTE ~~5—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS~~

~~Marketable Securities~~

~~At March 31, 2022 and December 31, 2021, the fair value of marketable securities are as follows:~~

March 31, 2022 December 31, 2021
(In thousands)
Marketable equity securities $ 59,012 $ 19,788
Total marketable securities $ 59,012 $ 19,788

The Company has 2 investments in marketable equity securities at March 31, 2022, which are carried at fair value following the investees' initial public offerings, which took place in the third quarter of 2021 and the first quarter of 2022, respectively. Prior to the respective initial public offerings, these investments were accounted for as equity securities without readily determinable fair values. The Company recorded a net unrealized pre-tax gain of $34.4 million during the three months ended March 31, 2022 for these investments. The net unrealized pre-tax gain related to these investments is included in "Other income, net" in the statement of operations.

~~Investment in MGM Resorts International~~

March 31, 2022 December 31, 2021
(In thousands)
Investment in MGM Resorts International ("MGM") $ 2,664,612 $ 2,649,442

On February 16, 2022, the Company purchased an additional 4.5 million shares of MGM for $202.5 million. Following this purchase, the Company owns approximately 63.5 million shares, representing a 14.5%ownership interest in MGM as of February 23, 2022. The fair value of the investment in MGM is remeasured each reporting period based upon MGM's closing stock price on the New York Stock Exchange on the last trading day in the reporting period and any unrealized gains or losses are included in the statement of operations. For the three months ended March 31, 2022 and 2021, the Company recorded an unrealized pre-tax loss and an unrealized pre-tax gain on its investment in MGM of $187.3 million and $382.5 million, respectively. The cumulative unrealized net pre-tax gain through March 31, 2022 is $1.4 billion.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Long-term Investments~~

~~Long-term investments consist of:~~

March 31, 2022 December 31, 2021
(In thousands)
Equity securities without readily determinable fair values $ 319,727 $ 324,649
Equity method investment 3,198 3,189
Total long-term investments $ 322,925 $ 327,838

~~Equity Securities without Readily Determinable Fair Values~~

The following table presents a summary of unrealized pre-tax gains recorded in "Other income, net" in the statement of operations as adjustments to the carrying value of equity securities without readily determinable fair values held at March 31, 2021. There were no unrealized pre-tax gains or losses recorded for the three months ended March 31, 2022.

Three Months Ended
March 31, 2021

~~(In thousands)~~

~~Upward adjustments (gross unrealized pre-tax gains)~~

~~1,376~~

~~Total~~

~~1,376~~

The cumulative upward and downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held at March 31, 2022 were $28.7 million and $38.6 million, respectively.

~~Realized and unrealized pre-tax gains and losses for the Company's investments without readily determinable fair values for the three months ended March 31, 2022 and 2021 are as follows:~~

Three Months Ended March 31,
2022 2021
(In thousands)
Realized pre-tax gains, net, for equity securities sold $ 468 $ 81
Unrealized pre-tax gains, net, on equity securities held — 1,376
Total pre-tax gains, net recognized $ 468 $ 1,457

~~All pre-tax gains and losses on equity securities without readily determinable fair values, realized and unrealized, are recognized in "Other income, net" in the statement of operations.~~

~~Equity Method Investment~~

The Company owns common shares of Turo Inc. ("Turo"), a peer-to-peer car sharing marketplace. This investment is accounted for under the equity method of accounting given the Company's ownership interest at March 31, 2022 of approximately 26.9% on a fully diluted basis in the form of preferred shares, which are not common stock equivalents. The Company accounts for the equity losses for this investment on a one quarter lag.

~~Fair Value Measurements~~

•~~Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.~~

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:~~

March 31, 2022
Quoted Market
Prices for
Identical Assets in Active
Markets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Fair Value
Measurements
(In thousands)
Assets:
Cash equivalents:
Money market funds $ 1,214,018 $ — $ — $ 1,214,018
Treasury discount notes — 299,989 — 299,989
Marketable equity securities 59,012 — — 59,012
Investment in MGM 2,664,612 — — 2,664,612
Other non-current assets: —
Warrant — — 117,279 117,279
Total $ 3,937,642 $ 299,989 $ 117,279 $ 4,354,910
Liabilities:
Contingent consideration arrangement $ — $ —

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

December 31, 2021
Quoted Market
Prices for
Identical Assets in Active Markets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Fair Value
Measurements
(In thousands)
Assets:
Cash equivalents:
Money market funds $ 1,660,921 $ — $ — $ 1,660,921
Time deposits — 6,057 — 6,057
Marketable equity security 19,788 — — 19,788
Investment in MGM 2,649,442 — — 2,649,442
Other non-current assets:
Warrant — — 109,294 109,294
Total $ 4,330,151 $ 6,057 $ 109,294 $ 4,445,502
Liabilities:
Contingent consideration arrangement $ (612) $ (612)

~~The following table presents the changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):~~

Three Months Ended March 31,
2022 2021
Warrant Contingent
Consideration
Arrangement Warrant
(In thousands)
Balance at January 1 $ 109,294 $ (612) $ 5,276
Total net gains:
Fair value adjustments included in earnings 7,985 612 12,775
Balance at March 31 $ 117,279 $ — $ 18,051

~~Warrant~~

~~Contingent Consideration Arrangements~~

At March 31, 2022, the Company has two outstanding contingent consideration arrangements related to business combinations. The maximum contingent payments related to these arrangements is $7.0 million, however, as of March 31, 2022 the Company does not expect to make any further payments on these arrangements.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Assets measured at fair value on a nonrecurring basis~~

The Company's non-financial assets, such as goodwill, intangible assets, ROU assets and buildings, capitalized software, leasehold improvements and equipment, are adjusted to fair value only when an impairment is recognized. The Company's financial assets, comprising equity securities without readily determinable fair values, are adjusted to fair value when observable price changes are identified or an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

The Mosaic Group reporting unit fair value approximates its carrying value at March 31, 2022. To the extent there is a decline in the fair value of the reporting unit, a goodwill impairment would be recorded to the extent the carrying value exceeds the fair value. A 10% decline in the fair value of the Mosaic Group reporting unit would result in a goodwill impairment of approximately $25.0 million.

~~Financial instruments measured at fair value only for disclosure purposes~~

~~The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:~~

March 31, 2022 December 31, 2021
Carrying
Value Fair
Value Carrying
Value Fair
Value
(In thousands)
Current portion of long-term debt $ (30,000) $ (29,925) $ (30,000) $ (29,550)
Long-term debt, net(a)
$ (2,039,655) $ (1,980,958) $ (2,046,237) $ (2,061,450)

~~_____________________~~

~~(a)~~At March 31, 2022 and December 31, 2021, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $22.8 million and $23.8 million, respectively.

At March 31, 2022 and December 31, 2021, the fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~NOTE 6—LONG-TERM DEBT~~

~~Long-term debt consists of:~~

March 31, 2022 December 31, 2021
(In thousands)
Dotdash Meredith Debt
Dotdash Meredith Term Loan A ("Dotdash Meredith Term Loan A") due December 1, 2026 $ 345,625 $ 350,000
Dotdash Meredith Term Loan B ("Dotdash Meredith Term Loan B") due December 1, 2028 1,246,875 1,250,000
Total Dotdash Meredith long-term debt 1,592,500 1,600,000
Less: current portion of Dotdash Meredith long-term debt 30,000 30,000
Less: original issue discount 5,950 6,176
Less: unamortized debt issuance costs 11,625 12,139
Total Dotdash Meredith long-term debt, net 1,544,925 1,551,685
ANGI Group Debt
3.875% ANGI Group Senior Notes due August 15, 2028 ("ANGI Group Senior Notes"); interest payable each February 15 and August 15, which commenced February 15, 2021 500,000 500,000
Less: unamortized debt issuance costs 5,270 5,448
Total ANGI Group long-term debt, net 494,730 494,552
Total long-term debt, net $ 2,039,655 $ 2,046,237

~~Dotdash Meredith Term Loans and Dotdash Meredith Revolving Facility~~

On December 1, 2021, Dotdash Meredith entered into a credit agreement ("Dotdash Meredith Credit Agreement"), which provides for (i) the five-year $350 million Dotdash Meredith Term Loan A, (ii) the seven-year $1.25 billion Dotdash Meredith Term Loan B (and together with Dotdash Meredith Term Loan A, the "Dotdash Meredith Term Loans") and (iii) a five-year $150 million revolving credit facility ("Dotdash Meredith Revolving Facility"). The proceeds of the Dotdash Meredith Term Loans were used to fund a portion of the purchase price for the acquisition of Meredith and pay related fees and expenses. The Dotdash Meredith Term Loan A bears interest at an adjusted term secured overnight financing rate ("Adjusted Term SOFR") as defined in the Dotdash Meredith Credit Agreement plus an applicable margin depending on Dotdash Meredith's most recently reported consolidated net leverage ratio, as defined in the Dotdash Meredith Credit Agreement. At March 31, 2022 and December 31, 2021, the Dotdash Meredith Term Loan A bore interest at Adjusted Term SOFR plus 2.00%, or 2.29% and 2.15%, respectively. The Dotdash Meredith Term Loan B bore interest at Adjusted Term SOFR, subject to a minimum of 0.50%, plus 4.00%, or 4.50% at both March 31, 2022 and December 31, 2021. Interest payments are due at least quarterly through the terms of the Dotdash Meredith Term Loans.

The outstanding balances of the Dotdash Meredith Term Loan A and Dotdash Meredith Term Loan B were $345.6 million and $1.25 billion at March 31, 2022, respectively, and $350.0 million and $1.25 billion at December 31, 2021, respectively. The Dotdash Meredith Term Loan A requires quarterly principal payments of approximately $4.4 million through December 31, 2024, $8.8 million through December 31, 2025 and approximately $13.1 million thereafter through maturity. The Dotdash Meredith Term Loan B requires quarterly payments of $3.1 million through maturity. Commencing December 31, 2022, pursuant to the Dotdash Meredith Credit Agreement, the Dotdash Meredith Term Loan B may require additional annual principal payments as part of an excess cash flow sweep provision, the amount of which, in part, is governed by Dotdash Meredith's net leverage ratio.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

There were no outstanding borrowings under the Dotdash Meredith Revolving Facility at March 31, 2022 and December 31, 2021. The annual commitment fee on undrawn funds is based on the consolidated net leverage ratio, as defined in the Dotdash Meredith Credit Agreement, most recently reported and was 35 basis points at both March 31, 2022 and December 31, 2021. Any borrowings under the Dotdash Meredith Revolving Facility would bear interest, at Dotdash Meredith's option, at either a base rate or term benchmark rate, plus an applicable margin, which is based on Dotdash Meredith's net leverage ratio.

As of the last day of any calendar quarter ending on or after March 31, 2022, if either (i) $1.00 or more of loans under the Dotdash Meredith Revolving Facility or Dotdash Meredith Term Loan A are outstanding, or (ii) the outstanding face amount of undrawn letters of credit, other than cash collateralized letters of credit at 102% of face value, exceeds $25 million, subject to certain increases for qualifying material acquisitions, then Dotdash Meredith will not permit the consolidated net leverage ratio as of the last day of such quarter to exceed 5.5 to 1.0. The Dotdash Meredith Credit Agreement also contains covenants that would limit Dotdash Meredith’s ability to pay dividends or make distributions in the event a default has occurred or if Dotdash Meredith’s consolidated net leverage ratio (as defined in the Dotdash Meredith Credit Agreement) exceeds 4.0 to 1.0. There were no such limitations at March 31, 2022.

The obligations under the Dotdash Meredith Credit Agreement are guaranteed by certain of Dotdash Meredith's wholly-owned subsidiaries, and are secured by substantially all of the assets of Dotdash Meredith and certain of its subsidiaries.

~~ANGI Group Debt~~

The ANGI Group Senior Notes were issued on August 20, 2020. At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium. Thereafter, these notes may be redeemed at the redemption prices set forth in the indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the applicable redemption date.

The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money in the event a default has occurred or ANGI Group’s secured leverage ratio (as defined in the indenture) exceeds 3.75 to 1.0. At March 31, 2022 there were no limitations pursuant thereto.

The $250 million ANGI Group Revolving Facility, which otherwise would have expired on November 5, 2023, was terminated effective August 3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

During the three months ended March 31, 2021, ANGI Group prepaid $6.9 million of the ANGI Group Term Loan principal that was otherwise due in the first quarter of 2022 and, as of May 6, 2021, the outstanding balance of the ANGI Group Term Loan was repaid in its entirety.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~NOTE 7—ACCUMULATED OTHER COMPREHENSIVE INCOME~~9—EARNINGS (LOSS)

~~The following table presents the components of accumulated other comprehensive income (loss) and items reclassified out of accumulated other comprehensive income (loss) into earnings:~~

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
Foreign Currency Translation Adjustment Accumulated Other Comprehensive Income (Loss) Foreign Currency Translation Adjustment Unrealized Gains (Losses) On Available-For-Sale Marketable Debt Securities Accumulated Other Comprehensive (Loss) Income
(In thousands)
Balance at January 1 $ 4,397 $ 4,397 $ (6,172) $ 2 $ (6,170)
Other comprehensive (loss) income before reclassifications (3,634) (3,634) 294 (2) 292
Amounts reclassified to earnings — — 10,032 — 10,032
Net current period other comprehensive (loss) income (3,634) (3,634) 10,326 (2) 10,324
Accumulated other comprehensive loss (income) allocated to noncontrolling interests during the period 2 2 (5) — (5)
Balance at March 31 $ 765 $ 765 $ 4,149 $ — $ 4,149

The amounts reclassified out of foreign currency translation adjustment into earnings for the three months ended March 31, 2021 related to the substantial liquidation of certain international subsidiaries.

~~At both March 31, 2022 and 2021, there was no income tax benefit or provision on the accumulated other comprehensive income.~~

~~NOTE 8—(LOSS) EARNINGS~~ PER SHARE

The Company treats its common stock and Class B common stock as one class of stock for net earnings (loss) ~~earnings~~ per share ("EPS") purposes as both classes of stock participate in earnings, dividends and other distributions on the same basis. The restricted stock award granted to our Chief Executive Officer ("CEO") on November 5, 2020 is a participating security and the Company calculates basic EPS using the two-class method since those restricted shares are unvested and have a non-forfeitable dividend right in the event the Company declares a cash dividend on common shares and participate in all other distributions of the Company in the same manner as all other IAC common shares. Diluted EPS is calculated, on the most dilutive basis, which excludes awards that would be anti-dilutive, including the restricted stock award granted to our CEO.

Undistributed earnings allocated to the participating security is subtracted from earnings in determining earnings attributable to holders of IAC common stock and Class B common stock for basic EPS. Basic EPS is computed by dividing net earnings (loss) ~~earnings~~ attributable to holders of IAC common stock and Class B common stock by the weighted-average number of shares of common stock and Class B common stock outstanding during the period.

For the calculation of diluted EPS, net earnings (loss) ~~earnings~~ attributable to holders of IAC common stock and Class B common stock is adjusted for the impact from our public subsidiary's dilutive securities, if applicable, and the reallocation of undistributed earnings allocated to the participating security by the weighted-average number of common stock and Class B common stock outstanding plus dilutive securities during the period.

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Table of Contents

~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The numerator and denominator of basic and diluted EPS computations for the Company’s common stock and Class B common stock are calculated as follows:

Three Months Ended March 31,
2022 2021
(In thousands, except per share data)
Basic EPS:
Numerator:
Net (loss) earnings from continuing operations $ (240,893) $ 318,945
Net loss attributable to noncontrolling interests of continuing operations 5,095 1,036
Net earnings attributed to unvested participating security — (10,798)
Net (loss) earnings from continuing operations attributable to IAC Common Stock and Class B common stock shareholders $ (235,798) $ 309,183
Net earnings from discontinued operations, net of tax $ — $ 9,956
Net earnings attributable to noncontrolling interests of discontinued operations — (809)
Net earnings attributed to unvested participating security — (309)
Net earnings from discontinued operations attributable to IAC Common Stock and Class B common stock shareholders $ — $ 8,838
Net (loss) earnings attributable to IAC Common Stock and Class B common stock shareholders $ (235,798) $ 318,021
Denominator:
Weighted average basic IAC Common Stock and Class B common stock shares outstanding(a)
86,784 85,899
(Loss) earnings per share:
(Loss) earnings per share from continuing operations attributable to IAC Common Stock and Class B common stock shareholders $ (2.72) $ 3.60
Earnings per share from discontinued operations, net of tax, attributable to IAC Common Stock and Class B common stock shareholders $ — $ 0.10
(Loss) earnings per share attributable to IAC Common Stock and Class B common stock shareholders $ (2.72) $ 3.70


	Three Months Ended March 31,
		2023		2022
		(In thousands, except per share data)
Basic EPS:
Numerator:
Net earnings (loss)		$	415,319	$	(240,893)
Net loss attributable to noncontrolling interests		2,456		5,095
Net earnings attributed to unvested participating security		(14,156)		—
Net earnings (loss) attributable to IAC common stock and Class B common stock shareholders		$	403,619	$	(235,798)

Denominator:
Weighted average basic IAC common stock and Class B common stock shares outstanding(a)		85,534		86,784

Earnings (loss) per share attributable to IAC common stock and Class B common stock shareholders:
Earnings (loss) per share		$	4.72	$	(2.72)

2530

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~~IAC/INTERACTIVECORP~~IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Three Months Ended March 31,
2022 2021
(In thousands, except per share data)
Diluted EPS:
Numerator:
Net (loss) earnings from continuing operations $ (240,893) $ 318,945
Net loss attributable to noncontrolling interests of continuing operations 5,095 1,036
Net earnings attributed to unvested participating security — (10,089)
Impact from public subsidiaries' dilutive securities(b)
— (18)
Net (loss) earnings from continuing operations attributable to IAC Common Stock and Class B common stock shareholders $ (235,798) $ 309,874
Net earnings from discontinued operations, net of tax $ — $ 9,956
Net earnings attributable to noncontrolling interests of discontinued operations — (809)
Net earnings attributed to unvested participating security — (288)
Net earnings from discontinued operations attributable to IAC Common Stock and Class B common stock shareholders $ — $ 8,859
Net (loss) earnings attributable to IAC Common Stock and Class B common stock shareholders $ (235,798) $ 318,733
Denominator:
Weighted average basic IAC Common Stock and Class B common stock shares outstanding(a)
86,784 85,899
Dilutive securities(b)(c)(d)
— 6,239
Denominator for earnings per share—weighted average shares(b)(c)(d)
86,784 92,138
(Loss) earnings per share:
(Loss) earnings per share from continuing operations attributable to IAC Common Stock and Class B common stock shareholders $ (2.72) $ 3.36
Earnings per share from discontinued operations, net of tax, attributable to IAC Common Stock and Class B common stock shareholders $ — $ 0.10
(Loss) earnings per share attributable to IAC Common Stock and Class B common stock shareholders $ (2.72) $ 3.46


	Three Months Ended March 31,
		2023		2022
		(In thousands, except per share data)
Diluted EPS:
Numerator:
Net earnings (loss)		$	415,319	$	(240,893)
Net loss attributable to noncontrolling interests		2,456		5,095
Net earnings attributed to unvested participating security		(13,720)		—
Impact from public subsidiaries' dilutive securities(b)		—		—
Net earnings (loss) attributable to IAC common stock and Class B common stock shareholders		$	404,055	$	(235,798)

Denominator:
Weighted average basic IAC common stock and Class B common stock shares outstanding(a)		85,534		86,784
Dilutive securities(b)(c)(d)		2,819		—
Denominator for earnings per share—weighted average shares(b)(c)(d)		88,353		86,784

Earnings (loss) per share attributable to IAC common stock and Class B common stock shareholders:
Earnings (loss) per share		$	4.57	$	(2.72)

_____________________

(a) On November 5, 2020, IAC's CEO was granted a stock-based award in the form of 3.0 million shares of restricted common stock. The number of shares that ultimately vests is subject to the satisfaction of growth targets in IAC's stock price over the 10-year service condition of the award. These restricted shares have a non-forfeitable dividend right in the event the Company declares a cash dividend on its common shares and participate in all other distributions of the Company in the same manner as all other IAC common shares. Accordingly, the two-class method of calculating EPS is used. While the restricted shares are presented as outstanding shares in the balance sheet, these shares are excluded from the weighted average shares outstanding in calculating basic EPS and the allocable portion of net earnings are also excluded. Fully diluted EPS reflects the impact on earnings and fully diluted shares in the manner that is most dilutive.

(b) IAC has the option to settle certain Angi Inc. stock-based awards in its shares. The impact on net earnings relates to the settlement of Angi Inc.'s dilutive securities in IAC common shares. For the three months ended March 31, 2023, these Angi Inc. equity awards were anti-dilutive. For the three months ended March 31, 2022, ~~both~~ the Company ~~and Angi Inc.~~ had a loss from operations and as a result these awards were excluded from computing dilutive earnings per share because the impact would have been anti-dilutive.

(c)If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and subsidiary denominated equity and vesting of restricted common stock and restricted stock units ("RSUs"). For the three months ended March 31, ~~2021 it was more dilutive for IAC to settle these Angi Inc. equity awards. The impact on net earnings relates to the settlement of Angi Inc.'s~~2023, 3.3 million potentially dilutive securities ~~in IAC common shares.~~were excluded from computing diluted EPS because the impact would have been anti-dilutive.

~~(c)~~(d) For the three months ended March 31, 2022, the Company had a loss from ~~continuing~~ operations and, as a result, approximately 7.8 million potentially dilutive securities were excluded from computing diluted EPS because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute the EPS amounts for the three months ended March 31, 2022.

~~(d)~~If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and subsidiary denominated equity and vesting of restricted common stock, restricted stock units ("RSUs") and market-based awards ("MSUs"). For the three months ended March 31, 2021, 3.0 million potentially dilutive securities were excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~NOTE 9—SEGMENT INFORMATION~~

The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent with the chief operating decision maker's view of the businesses. In addition, we consider how the businesses are organized as to segment management and the focus of the businesses with regards to the types of services or products offered or the target market. Operating segments are combined for reporting purposes if they meet certain aggregation criteria, which principally relate to the similarity of their economic characteristics, or, in the case of the Emerging & Other reportable segment, do not meet the quantitative thresholds that require presentation as separate reportable segments. The determination of operating segments for Dotdash Meredith following the acquisition of Meredith is provisional; therefore, it is possible that a different level of segment reporting may be required following the completion of this determination.

~~The following table presents revenue by reportable segment:~~

Three Months Ended March 31,
2022 2021
(In thousands)
Revenue
Dotdash Meredith
Digital $ 216,165 $ 65,421
Print 289,978 —
Intra-segment eliminations(a)
(5,672) —
Total Dotdash Meredith 500,471 65,421
Angi Inc. 436,159 387,029
Search 223,385 181,034
Emerging & Other 166,994 153,156
Inter-segment eliminations (1,664) (70)
Total $ 1,325,345 $ 786,570

~~The following table presents the revenue of the Company's segments disaggregated by type of service:~~

Three Months Ended March 31,
2022 2021
(In thousands)
Dotdash Meredith
Digital:
Display advertising revenue $ 137,090 $ 37,171
Performance marketing revenue 50,105 27,593
Licensing and other revenue 28,970 657
Total digital revenue 216,165 65,421
Print:
Subscription revenue 132,607 —
Advertising revenue 72,687 —
Project and other revenue 33,025 —
Newsstand revenue 31,239 —
Performance marketing revenue 20,420 —
Total print revenue 289,978 —
Intra-segment eliminations(a)
(5,672) —
Total Dotdash Meredith revenue $ 500,471 $ 65,421
(a) Includes $5.6 million of intra-segment eliminations related to digital performance marketing revenue.
Angi Inc.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Three Months Ended March 31,
2022 2021
(In thousands)
North America
Angi Ads and Leads:
Consumer connection revenue(b)
$ 212,796 $ 221,430
Advertising revenue(c)
63,776 60,747
Membership subscription revenue(d)
16,237 16,882
Other revenue 5,226 7,278
Total Angi Ads and Leads revenue 298,035 306,337
Angi Services revenue(e)
113,137 54,704
Total North America revenue 411,172 361,041
Europe
Consumer connection revenue(f)
21,803 22,351
Service professional membership subscription revenue 2,890 3,328
Advertising and other revenue 294 309
Total Europe revenue 24,987 25,988
Total Angi Inc. revenue $ 436,159 $ 387,029
(b) Includes fees paid by service professionals for consumer matches through Angi Ads and Leads platforms.
(c) Includes revenue from service professionals under contract for advertising.
(d) Includes membership subscription revenue from service professionals and consumers.
(e) Includes revenue from pre-priced offerings and revenue from Angi Roofing.
(f) Includes fees paid by service professionals for consumer matches.
Search
Advertising revenue
Google advertising revenue: $ 149,652 $ 155,418
Non-Google advertising revenue 71,989 21,534
Total advertising revenue 221,641 176,952
Other revenue 1,744 4,082
Total Search revenue $ 223,385 $ 181,034
Emerging & Other
Subscription revenue $ 94,547 $ 83,566
Marketplace revenue 66,081 56,271
Media production and distribution revenue 546 7,788
Advertising revenue:
Non-Google advertising revenue 3,723 3,393
Google advertising revenue 608 571
Total advertising revenue 4,331 3,964
Service and other revenue 1,489 1,567
Total Emerging & Other revenue $ 166,994 $ 153,156

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived assets is presented below:~~

Three Months Ended March 31,
2022 2021
(In thousands)
Revenue:
United States $ 1,204,348 $ 655,035
All other countries 120,997 131,535
Total $ 1,325,345 $ 786,570

March 31,
2022 December 31,
2021
(In thousands)
Long-lived assets (excluding goodwill, intangible assets, and ROU assets):
United States $ 569,411 $ 562,628
All other countries 7,376 7,897
Total $ 576,787 $ 570,525

~~The following tables present operating (loss) income and Adjusted EBITDA by reportable segment:~~

Three Months Ended March 31,
2022 2021
(In thousands)
Operating (loss) income:
Dotdash Meredith
Digital $ (1,944) $ 18,127
Print (38,271) —
Other(g)
(16,030) —
Total Dotdash Meredith (56,245) 18,127
Angi Inc. (33,957) 109
Search 25,079 18,386
Emerging & Other (5,044) 994
Corporate (38,647) (44,846)
Total $ (108,814) $ (7,230)

~~_____________________~~

~~(g)~~ ~~Other comprises unallocated corporate expenses, which are corporate overhead expenses not attributable to the Digital or Print segments.~~

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Three Months Ended March 31,
2022 2021
(In thousands)
Adjusted EBITDA(h):
Dotdash Meredith
Digital $ 34,800 $ 19,922
Print $ (10,480) $ —
Other $ (15,786) $ —
Angi Inc. $ (3,169) $ 23,186
Search $ 25,100 $ 18,386
Emerging & Other $ 916 $ 11,964
Corporate $ (23,694) $ (26,348)

~~_____________________~~

~~(h)~~ The Company's primary financial measure is Adjusted EBITDA, which is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets, if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements.

~~The following tables reconcile operating (loss) income for the Company's reportable segments and net (loss) earnings attributable to IAC shareholders to Adjusted EBITDA:~~

Three Months Ended March 31, 2022
Operating
(Loss) Income Stock-based
Compensation
Expense Depreciation Amortization
of Intangibles Acquisition-related Contingent Consideration Fair Value Adjustments Adjusted
EBITDA
(In thousands)
Dotdash Meredith
Digital $ (1,944) $ 4,272 $ 7,489 $ 25,595 $ (612) $ 34,800
Print (38,271) $ — $ 5,532 $ 22,259 $ — $ (10,480)
Other (16,030) $ — $ 244 $ — $ — $ (15,786)
Angi Inc. (33,957) $ 12,985 $ 13,999 $ 3,804 $ — $ (3,169)
Search 25,079 $ — $ 21 $ — $ — $ 25,100
Emerging & Other (5,044) $ 25 $ 403 $ 5,532 $ — $ 916
Corporate(i)
(38,647) $ 12,405 $ 2,548 $ — $ — $ (23,694)
Total (108,814)
Interest expense (21,912)
Unrealized loss on investment in MGM Resorts International (187,330)
Other income, net 6,699
Loss before income taxes (311,357)
Income tax benefit 70,464
Net loss (240,893)
Net loss attributable to noncontrolling interests 5,095
Net loss attributable to IAC shareholders $ (235,798)

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Three Months Ended March 31, 2021
Operating
Income (Loss) Stock-based
Compensation
Expense Depreciation Amortization
of Intangibles Adjusted
EBITDA
(In thousands)
Dotdash Meredith $ 18,127 $ — $ 549 $ 1,246 $ 19,922
Angi Inc. 109 $ 2,034 $ 15,969 $ 5,074 $ 23,186
Search 18,386 $ — $ — $ — $ 18,386
Emerging & Other 994 $ 25 $ 426 $ 10,519 $ 11,964
Corporate(i)
(44,846) $ 16,256 $ 2,242 $ — $ (26,348)
Total (7,230)
Interest expense (6,617)
Unrealized gain on investment in MGM Resorts International 382,540
Other income, net 3,563
Earnings from continuing operations before income taxes 372,256
Income tax provision (53,311)
Net earnings from continuing operations 318,945
Earnings from discontinued operations, net of tax 9,956
Net earnings 328,901
Net loss attributable to noncontrolling interests 227
Net earnings attributable to IAC shareholders $ 329,128

~~(i)~~ ~~Includes stock-based compensation expense for awards denominated in the shares of certain subsidiaries of the Company.~~

NOTE 10—FINANCIAL STATEMENT DETAILS

Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet to the total amounts shown in the statement of cash flows:


		March 31, 2022		December 31, 2021		March 31, 2021		December 31, 2020			March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2021
		(In thousands)									(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	1,852,598	$	2,118,730	$	3,599,244	$	3,366,176	Cash and cash equivalents	$	1,398,836	$	1,417,390	$	1,852,598	$	2,118,730
Restricted cash included in other current assets	Restricted cash included in other current assets	21,183		1,941		14,116		448		Restricted cash included in other current assets	1,081		1,165		21,183		1,941
Restricted cash included in other non-current assets	Restricted cash included in other non-current assets	885		1,193		433		449		Restricted cash included in other non-current assets	7,640		7,514		885		1,193
Cash, cash equivalents, and restricted cash included in current assets of discontinued operations		—		—		316,528		110,037

Total cash and cash equivalents and restricted cash as shown on the statement of cash flows	Total cash and cash equivalents and restricted cash as shown on the statement of cash flows	$	1,874,666	$	2,121,864	$	3,930,321	$	3,477,110	Total cash and cash equivalents and restricted cash as shown on the statement of cash flows	$	1,407,557	$	1,426,069	$	1,874,666	$	2,121,864

Restricted cash included in "Other current assets" in the balance sheet at March 31, 2023 and December 31, 2022 primarily consists of cash held related to insurance programs at Care.com.

Restricted cash included in "Other current assets" in the balance sheet at March 31, 2022 primarily consists of cash received from ~~customers at~~ Care.com’s payment solutions ~~business, representing funds collected~~customers for payroll and related taxes, which were ~~not~~ remitted ~~as of the~~subsequent to period end, and cash held in escrow related to the funded pension plan in the ~~Company assumed in connection with the acquisition of Meredith.~~U.K.

Restricted cash included in "Other current assets" in the balance sheet at December 31, 2021 primarily consists of cash held in escrow related to the funded pension plan ~~the Company assumed in connection with the acquisition of Meredith.~~

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Restricted cash included in "Other current assets"~~ in the balance sheet at March 31, 2021 primarily consists of cash received from customers at Care.com’s payment solutions business, representing funds collected for payroll and related taxes, which were not remitted as of the period end.

Restricted cash in "Other current assets" in the balance sheet at December 31, 2020 primarily consists of funds collected from service providers for payments in dispute, which are not settled as of the period end, and cash reserved to fund insurance claims at Angi Inc.U.K.

Restricted cash included in "Other non-current assets" in the balance sheet at March 31, ~~2022~~2023 and December 31, ~~2021 consisted~~2022 primarily consists of cash held in escrow related to the funded pension plan in the U.K as well as a check endorsement guarantee at the Roofing segment and deposits related to ~~leases and an endorsement guarantee related to insurance at Angi Roofing.~~ leases.

Restricted cash included in "Other non-current assets" ~~in the balance sheet for all other periods presented consists of~~at March 31, 2022 and December 31, 2021 include deposits related to ~~leases.~~leases and a check endorsement guarantee at the Roofing segment.

Credit Losses

The following table presents the changes in the allowance for credit losses for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively:


		2022		2021			2023		2022
		(In thousands)					(In thousands)
Balance at January 1	Balance at January 1	$	36,637	$	27,178	Balance at January 1	$	50,971	$	36,556
Current period provision for credit losses	Current period provision for credit losses	23,287		19,308		Current period provision for credit losses	24,826		23,287
Write-offs charged against the allowance	Write-offs charged against the allowance	(20,383)		(20,762)		Write-offs charged against the allowance	(29,308)		(20,518)
Recoveries collected	Recoveries collected	—		757		Recoveries collected	1,489		—
Other						Other	(466)		216
Balance at March 31	Balance at March 31	$	39,541	$	26,481	Balance at March 31	$	47,512	$	39,541

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IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Accumulated Amortization and Depreciation

The following table provides the accumulated amortization and depreciation within the balance sheet:


Asset Category	Asset Category	March 31, 2022		December 31, 2021		Asset Category	March 31, 2023		December 31, 2022
		(In thousands)					(In thousands)
Right-of-use assets included in other non-current assets	Right-of-use assets included in other non-current assets	$	100,878	$	87,089	Right-of-use assets included in other non-current assets	$	216,264	$	157,650
Buildings, capitalized software, leasehold improvements and equipment		$	521,935	$	496,887
Capitalized software, equipment, buildings and leasehold improvements						Capitalized software, equipment, buildings and leasehold improvements	$	295,702	$	274,473
Intangible assets	Intangible assets	$	334,546	$	278,831	Intangible assets	$	636,829	$	582,063

Other ~~Income,~~income, net


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
			(In thousands)						(In thousands)
Unrealized gain related to investments following initial public offering			$	34,352	$	—
Interest income							Interest income		$	16,930	$	698
Unrealized increase in the estimated fair value of a warrant	Unrealized increase in the estimated fair value of a warrant		7,985		12,775		Unrealized increase in the estimated fair value of a warrant		5,940		7,985

Unrealized (loss) gain related to marketable equity securities							Unrealized (loss) gain related to marketable equity securities		(1,150)		34,352
Net periodic pension benefit costs, other than the service cost component (a)	Net periodic pension benefit costs, other than the service cost component (a)		(35,359)		—		Net periodic pension benefit costs, other than the service cost component (a)		(674)		(35,359)
Foreign exchange losses, net (b)			(1,574)		(11,632)
Upward adjustment to the carrying value of equity securities without readily determinable fair values			—		1,376

Other	Other		1,295		1,044		Other		2,703		(977)
Other income, net	Other income, net		$	6,699	$	3,563	Other income, net		$	23,749	$	6,699

_____________________

(a) Includes pre-tax actuarial losses of ~~$35.4~~$0.2 million in total related to Meredith's funded pension plans in the United Kingdom ("U.K.") and the U.S. The U.K. loss of $23.6 million primarily relates to the decline in the fair value of the U.K. pension plan's assets exceeding the decline in the plan liabilities in each case due to higher interest rates. The U.S. loss of $11.7 million was primarily due to the decline in the fair value of plan assets.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~(b)~~ ~~Includes $10.0 million in foreign exchange losses primarily related to the substantial liquidation of certain foreign subsidiaries in~~for the three months ended March 31, ~~2021.~~2023 related to the pension plans in the U.S. and $37.5 million for the three months ended March 31, 2022 related to the funded pension plans in the U.K. and U.S. See "Note 7—Pension and Postretirement Benefit Plans" for additional information.

NOTE 11—CONTINGENCIES

In the ordinary course of business, the Company is a party to various lawsuits. The Company establishes ~~reserves~~accruals for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Management has also identified certain other legal matters where the Company believes an unfavorable outcome is not probable and, therefore, no ~~reserve~~accrual is established. Although management currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management's view of these matters may change in the future. The Company also evaluates other contingent matters, including uncertain income tax positions and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the Company. See "Note 2—8 —Income Taxes" for ~~additional~~ information related to uncertain income tax ~~contingencies.~~positions.

NOTE 12—RELATED PARTY TRANSACTIONS

IAC and Angi Inc.

Allocation of CEO Compensation and Certain Expenses

Joseph Levin, CEO of IAC and Chairman of Angi Inc., was appointed CEO of Angi Inc on October 10, 2022. As a result, for the three months ended March 31, 2023, IAC allocated $2.3 million in costs to Angi Inc. (including salary, benefits, stock-based compensation and costs related to the CEO's office). These costs were allocated from IAC based upon time spent on Angi Inc. by Mr. Levin. Management considers the allocation method to be reasonable. The allocated costs also include costs directly attributable to Angi Inc. that were initially paid for by IAC and billed by IAC to Angi Inc.

Table of Contents

IAC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Combination and Related Agreements

The Company and Angi Inc., in connection with the transaction resulting in the formation of Angi Inc. in 2017, which is referred to as the "Combination", entered into a contribution agreement; an investor rights agreement; a services agreement; a tax sharing agreement; and an employee matters agreement.

~~There were no shares of Angi Inc. Class A or Class B common stock issued to IAC during the three months ended March 31, 2022.~~

For the three months ended March 31, 2021, 2.6 million shares of Angi Inc. Class A common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement as reimbursement for IAC common stock issued in connection with the exercise and settlement of certain Angi Inc. stock appreciation rights.

For the three months ended March 31, 2021, 0.1 million shares of Angi Inc. Class B common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by Angi Inc. employees.

IAC and Vimeo Inc. ("Vimeo")

Following the ~~Spin-off,~~spin-off of Vimeo from IAC, the relationship between IAC and Vimeo is governed by ~~a number of agreements. These~~several agreements, which include a separation ~~agreement;~~agreement, a tax matters ~~agreement;~~agreement, a transition services ~~agreement;~~agreement, an employee matters ~~agreement;~~agreement and an office lease ~~agreement.~~agreements. The Company and Vimeo are related parties because Mr. Diller is the beneficial owner of more than 10% of the voting interests in both IAC and Vimeo.

AtThe Company has an outstanding receivable of $0.8 million at both March 31, ~~2022~~2023 and December 31, ~~2021, Vimeo had no outstanding payables or receivables~~2022 due ~~to or due from the Company pursuant to the tax sharing agreement. There were no payments to or refunds~~ from Vimeo pursuant to ~~this agreement for~~ the ~~three months ended March 31, 2022.~~separation agreement. This amount is included in "Other current assets" in the balance sheet.

For the three months ended March 31, 2023 and 2022, Vimeo was charged less than $0.1 million and $0.1 million, respectively, by IAC for services rendered pursuant to the transition services agreement. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were 0no outstanding receivables or payables pursuant to the transition services agreement.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Vimeo has an outstanding payable due to the Company of less than $0.1 million at March 31, 2022 related primarily to reimbursements due to the Company for Vimeo’s participation in the Company’s employee benefit plans following the Spin-off, and had an outstanding payable due to the Company of $6.4 million at December 31, 2021 related primarily to reimbursements due to the Company for the exercise of Vimeo equity awards held by employees of the Company and Vimeo's participation in the Company's employee benefit plans. These amounts are included in “Other current assets" in the balance sheet at March 31, 2022 and December 31, 2021, respectively. The respective amounts were paid in full in April 2022 and January 2022, respectively.

For the three months ended March 31, 2023 and 2022, Vimeo was charged ~~$1.1~~$0.9 million and $1.6 million, respectively, of rent pursuant to the lease ~~agreement.~~agreements. At March 31, ~~2022 and~~2023, the Company has an outstanding receivable of $0.1 million due from Vimeo pursuant to the lease agreements. This amount is included in "Other non-current assets" in the balance sheet. At December 31, ~~2021,~~2022, there were no outstanding receivables due from Vimeo pursuant to the lease ~~agreement.~~agreements.

IAC and Expedia

~~The~~At March 31, 2023, the Company and Expedia each ~~have~~had a 50% ownership interest in 3two aircraft that may be used by both companies. Members of the aircraft flight crews are employed by an entity in which the Company and Expedia each have a 50% ownership interest. The Company and Expedia have agreed to share costs relating to flight crew compensation and benefits pro-rata according to each company’s respective usage of the aircraft, for which they are separately billed by the entity described above. The Company and Expedia are related parties because Mr. Diller serves as Chairman and Senior Executive of both IAC and Expedia. For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, total payments made to this entity by the Company were not material.

In addition, ~~in December 2021, the Company and Expedia entered into agreements pursuant to which~~ Expedia may use ~~additional~~certain aircraft owned 100% by a subsidiary of the Company on a cost basis. For the three months ended March 31, 2023 and 2022, ~~total~~the payments made by Expedia to the Company pursuant to this arrangement were not material.

NOTE 13—~~PENSION AND POSTRETIREMENT BENEFIT PLANS~~SUBSEQUENT EVENTS

~~The following table presents the components of net periodic benefit costs for the pension and postretirement benefit plans~~In April 2023, the Company ~~assumed in connection with~~completed the acquisition of ~~Meredith:~~the formerly leased land under its New York City headquarters building for a purchase price of $80.0 million.

Three Months Ended March 31, 2022
Pension Postretirement
Domestic International Domestic
(In thousands)
Service cost $ 982 $ — $ 2
Interest cost 699 3,275 67
Expected return on plan assets (1,578) (4,624) —
Actuarial loss amortization 12,532 24,988 —
Net periodic benefit costs $ 12,635 $ 23,639 $ 69
In April 2023, the Company purchased additional shares of Turo for $103.6 million. Following the purchase, IAC's aggregate percentage ownership in Turo is approximately 31%.

~~Settlements during the three months ended March 31, 2022 triggered~~From April 1, 2023 through May 5, 2023, IAC repurchased 1.3 million shares of its common stock, on a ~~remeasurement~~trade date basis, at an average price of ~~Meredith’s funded pension plans~~$50.47 per share, or $67.2 million in ~~the U.K. and U.S. The U.K. loss of $23.6~~aggregate. At May 5, 2023, IAC has 3.8 million ~~primarily relates to the decline~~shares remaining in the fair value of the U.K. pension plan's assets exceeding the decline in the plan liabilities, in each case due to higher interest rates. The U.S. loss of $12.6 million was primarily due to the decline in the fair value of plan assets.

The following table summarizes the weighted average expected return on plan assets used to determine the net periodic benefit costs at March 31, 2022, following the remeasurement, and December 31, 2021, respectively:

March 31, 2022 December 31, 2021
Pension
Domestic International Domestic International
Expected return on plan assets 1.00 % 1.90 % 6.00 % 1.90 %
its share repurchase authorization.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~The components of net periodic benefit costs, other than the service cost component, are included in "Other income, net" in the statement of operations.~~

~~NOTE 14—DOTDASH MEREDITH RESTRUCTURING CHARGES, TRANSACTION-RELATED EXPENSES AND CHANGE-IN-CONTROL PAYMENTS~~

~~Restructuring Charges~~

In the first quarter of 2022, Dotdash Meredith announced its plans to discontinue certain print publications and the shutdown of PeopleTV to focus the portfolio and further enable investments toward digital growth. The discontinued print publications consist of Entertainment Weekly, InStyle, EatingWell, Health, Parents, and People en Español, with the April 2022 issues of these publications being their final print editions. Dotdash Meredith also announced a voluntary retirement program to its employees who met certain age and service requirements. For the three months ended March 31, 2022, the Company incurred $22.4 million of related restructuring charges, including $20.5 million of severance and related costs.

~~A summary of the costs incurred, payments made and related accruals at~~ ~~March 31, 2022~~ ~~is presented below:~~

March 31, 2022
Digital Print Other Total
(In thousands)
Restructuring charge accruals
Charges incurred (a)
$ 5,090 $ 15,248 $ 1,722 $ 22,060
Payments (394) (2,127) (106) (2,627)
Restructuring accrual as of March 31, 2022 $ 4,696 $ 13,121 $ 1,616 $ 19,433

~~_____________________~~

~~(a)~~ ~~Excludes $0.4 million related to the write-off of inventory.~~

~~The costs are allocated as follows in the statement of operations:~~


	~~Three Months Ended March 31, 2022~~
	~~(In thousands)~~
~~Cost of revenue~~	$	~~9,520~~
~~Selling and marketing expense~~	~~5,599~~
~~General and administrative expense~~	~~6,975~~
~~Product development expense~~	~~343~~
~~Total~~	$	~~22,437~~

Dotdash Meredith anticipates the estimated remaining costs will approximate $9.4 million and will be paid by December 31, 2023 from existing cash on hand. A summary of the remaining costs is presented below:

As of March 31, 2022
Digital Print Other Total
(In thousands)
Remaining estimated restructuring costs $ 3,558 $ 4,740 $ 1,065 $ 9,363

~~Transaction-Related Expenses~~

~~For the three months ended March 31, 2022, Dotdash Meredith incurred $4.0 million of transaction-related expenses related to the acquisition of Meredith.~~

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Change-in-Control Payments~~

~~In December 2021, Dotdash Meredith recorded~~ ~~$60.1 million~~ ~~in change in control payments, which were triggered by the acquisition and the terms of certain former executives’ contracts.~~Dotdash Meredith will make approximately $69.3 million in change in control payments, which includes amounts previously accrued, such as supplemental pension benefits, on or about July 1, 2022 with the remaining payments of approximately $3.0 million being made in the fourth quarter of 2022.

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

GENERAL

~~Acquisition of Meredith~~

On December 1, 2021, Dotdash Media Inc. (formerly known as About Inc., and referred to herein as "Dotdash"), a wholly-owned subsidiary of IAC/InterActiveCorp ("IAC"), completed the acquisition of Meredith Holdings Corporation ("Meredith"), which holds Meredith Corporation's national media business, consisting of its digital and magazine businesses, and its corporate operations. The parent of the combined entity is Dotdash Meredith, Inc. ("Dotdash Meredith").

~~Vimeo Spin-off~~

Management Overview

As used herein, "IAC," the "Company," "we," "our" or "us" and similar terms refer to ~~IAC/InterActiveCorp~~IAC Inc. and its subsidiaries (unless the context requires otherwise).

For a more detailed description of the Company's operating businesses, see "Description of IAC Businesses" included in "Item 1—Business" to the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Defined Terms and Operating Metrics:

Unless otherwise indicated or as the context otherwise requires, certain terms used in this quarterly report, which include the principal operating metrics we use in managing our business, are defined below:

Reportable Segments (for additional information see "Note 9—6—Segment Information" to the financial statements included in "Item 1—Consolidated Financial Statements"):

•Dotdash Meredith - one of the largest digital and print publishers in America. From mobile to magazines, nearly 200 million people trust us to help them make decisions, take action and find inspiration. Dotdash Meredith's over 40 iconic brands include PEOPLE, Better Homes & Gardens, Verywell, FOOD & WINE, The Spruce, Allrecipes, Byrdie, REAL SIMPLE, Investopedia and Southern Living.

•Angi Inc. - a publicly traded company that connects quality home service professionals with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping. In the fourth quarter of 2022, the Angi Inc. segment presentation was changed to reflect its four operating segments, which include: (i) Ads and Leads, (ii) Services, (iii) Roofing and (iv) International (consisting of businesses in Europe and Canada). Angi Inc.'s financial information for the first quarter of 2022 has been recast to conform to the current period presentation. At March 31, ~~2022,~~2023, the Company’s economic interest and voting interest in Angi Inc. were ~~84.5%~~83.9% and ~~98.2%~~98.1%, respectively.

•Search - consists of Ask Media Group, a collection of websites providing general search services and information, and Desktop, which includes our direct-to-consumer downloadable desktop applications and our business-to-business partnership operations.

•Emerging & Other - consists of:

•Care.com, a leading online destination for families to ~~easily~~ connect with caregivers for their children, aging parents, pets and homes and for ~~a wide variety of~~ caregivers to ~~easily~~ connect with ~~families.~~families seeking care services. Care.com's brands include Care For Business, Care.com offerings to enterprises and HomePay;

~~Table of Contents~~

•Mosaic Group, a leading developer and provider of global subscription mobile applications. Mosaic Group has a portfolio of some of the largest and most popular applications in the following verticals: Communications (RoboKiller, TapeACall, Trapcall), Language (iTranslate, ~~Grammatica~~Speak & Translate), Weather (Clime: NOAA Weather Radar Live, Weather Live), Business (PDF Hero, Scan Hero)~~, Health (Daily Burn~~, ~~Window - Intermittent Fasting~~) and Lifestyle (Blossom, Pixomatic); and

•~~Bluecrew~~, Vivian Health, The Daily Beast, IAC Films, ~~and~~ Newco (an IAC incubator) and, for periods prior to its sale on November 9, 2022, Bluecrew.

Dotdash Meredith

•Digital Revenue -~~consists principally of display~~ includes advertising revenue, performance marketing revenue and licensing and other revenue.

•Table of Contents

◦~~Dotdash Display~~ Advertising ~~Revenue~~ revenue- primarily includes revenue generated from display advertisements sold both directly through our sales team and via programmatic exchanges.

•◦~~Dotdash~~ Performance ~~Marketing Revenue~~ marketing revenue- primarily includes revenue generated through affiliate commerce, affinity marketing channels and performance marketing ~~commissions~~commissions. Affiliate commerce commission revenue is generated when ~~consumers are directed from our properties~~Dotdash Meredith refers users to ~~third-party service providers. Affiliate~~ commerce ~~commissions are generated when a consumer completes~~partner websites resulting in a purchase or transaction. Affinity marketing programs market and place magazine subscriptions for both Dotdash Meredith and third-party publisher titles. Performance marketing commissions are generated on a cost-per-click or cost-per-action basis.

◦Licensing and Other revenue - primarily includes revenue generated through brand and content licensing agreements. Brand licensing generates royalties from multiple long-term trademark licensing agreements with retailers, manufacturers, publishers and service providers. Content licensing royalties are earned from our relationship with Apple News + as well as other content distribution relationships.

•Print Revenue - primarily includes subscription, advertising, newsstand ~~advertising,~~ and performance marketing revenue.

Angi Inc.

•~~Angi~~ Ads and Leads Revenue - primarily reflects domestic ads and leads revenue, including consumer connection revenue for consumer matches, revenue from service professionals under contract for advertising and membership subscription revenue from service professionals and consumers.

•~~Angi~~ Services Revenue - primarily reflects domestic revenue from pre-priced offerings by which consumers request services through an Angi Inc. platform and Angi Inc. connects them with a service professional to perform the service. From January 1, 2020 through December 31, 2022, Services recorded revenue on a gross basis. Effective January 1, 2023, Angi Inc. modified the Services terms and conditions so that the service professional, rather than Angi Inc., has the contractual relationship with the consumer to deliver the service and Angi Inc.'s performance obligation to the consumer is to connect them with the service professional. This change in contractual terms requires revenue be reported as the net amount of what is received from the consumer after deducting the amounts owed to the service professional providing the service effective for all arrangements entered into after December 31, 2022. This change in accounting treatment resulted in a decrease in revenue of $25.7 million for the three months ended March 31, 2023. There is no impact to operating loss or Adjusted EBITDA from this change in revenue recognition.

•RoofingRevenue- primarily reflects revenue from the roof replacement business offering by which the consumer purchases services directly from Angi Inc. and Angi Inc. engages a service professional to perform the ~~service and includes revenue from Total Home Roofing, Inc. ("Angi Roofing"), which was acquired on July 1, 2021.~~service.

•~~Angi Service Requests ("Service Requests")~~International Revenue - ~~are fully completed~~ primarily reflects revenue generated within the International segment (consisting of businesses in Europe and ~~submitted domestic customer~~Canada), including consumer connection revenue for consumer matches and membership subscription revenue from service ~~requests~~professionals and ~~includes Angi Services requests in the period.~~consumers.

Operating Costs and Expenses:

•Cost of revenue (exclusive of depreciation) - consists primarily of traffic acquisition costs, which ~~includes~~include (i) payments made to partners who direct traffic to our Ask Media Group websites and who distribute our business-to-business customized browser-based applications and (ii) the amortization of fees paid to Apple and Google related to the distribution of apps and the facilitation of in-app purchases of product features. Traffic acquisition costs include payment of amounts based on revenue share and other arrangements. Cost of revenue also includes production, distribution and editorial costs at Dotdash Meredith, payments made to independent third-party service professionals who ~~perform~~performed work contracted under ~~Angi~~ Services arrangements that were entered into prior to January 1, 2023 and the change to net revenue reporting, compensation expense (including stock-based compensation expense) and other employee-related costs, roofing material and third-party contactor costs associated with ~~Angi~~ Roofing arrangements, credit card processing fees, payments made to workers staffed by Bluecrew for periods prior to its sale on November 9, 2022, hosting fees and payments made to care providers for Care For Business.

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•Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including fees paid to search engines, ~~and~~ social media sites, ~~offline~~other online marketing ~~which is primarily television advertising,~~platforms, app platforms and partner-related payments to those who direct traffic to the brands within our Angi Inc. segment, offline marketing, which is primarily television advertising, compensation expense (including stock-based compensation expense) and other employee-related costs for sales force and marketing personnel, subscription acquisition costs related to Dotdash Meredith, ~~and~~ outsourced personnel and consulting ~~costs.~~costs and service guarantee expense at Angi Inc.

~~Table of Contents~~

•General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions (except for Care.com, which includes customer service costs within "Cost of revenue" in the statement of operations), fees for professional services (including transaction-related costs related to the acquisition of Meredith ~~the Spin-off~~Holdings Corporation ("Meredith") and other acquisitions), provision for credit losses, rent expense and facilities cost, software license and maintenance costs and acquisition-related contingent consideration fair value adjustments (described below). The customer service function at Angi Inc. includes personnel who provide support to its service professionals and consumers.

•Product development expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs and third-party contractor costs that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology and software license and maintenance costs.

•Acquisition-related contingent consideration fair value adjustments - relate to the portion of the purchase price of certain acquisitions that is contingent upon the financial performance and/or operating metric targets of the acquired company. The fair value of the liability is estimated at the date of acquisition and adjusted each reporting period until the liability is settled. Significant changes in financial performance and/or operating metrics will result in a significantly higher or lower fair value measurement. The changesChanges in the estimated fair value of the contingent consideration arrangements are recognized during each reporting period ~~including the accretion of the discount if the arrangement is longer than one year, are recognized~~ in "General and administrative expense" in the statement of operations.

Long-term debt (for additional information see "Note 6—4—Long-term Debt" to the financial statements included in "Item 1—Consolidated Financial Statements"):

•Dotdash Meredith Term Loan A - due December 1, 2026. ~~The~~At March 31, 2023 and December 31, 2022, the outstanding balance of the Dotdash Meredith Term Loan A ~~is $345.6~~was $328.1 million and ~~$350.0~~$332.5 million, ~~at March 31, 2022 and December 31, 2021,~~ respectively, and bore interest at an adjusted term secured overnight financing rate ("Adjusted Term SOFR") plus ~~2.00%~~2.25%, or ~~2.29%~~6.94% and ~~2.15%~~5.91%, ~~at March 31, 2022 and December 31, 2021,~~ respectively. The Dotdash Meredith Term Loan A has quarterly principal payments.

•Dotdash Meredith Term Loan B - due December 1, 2028. ~~The~~At March 31, 2023 and December 31, 2022, the outstanding balance of the Dotdash Meredith Term Loan B ~~is $1.25~~was $1.23 billion and $1.24 billion, respectively, and bore interest at Adjusted Term SOFR, subject to a minimum of 0.50%, plus 4.00%, or ~~4.50%~~8.77% and 8.22%, ~~at both March 31, 2022 and December 31, 2021.~~respectively. The Dotdash Meredith Term Loan B has quarterly principal payments.

•Dotdash Meredith Revolving Facility - Dotdash Meredith's $150.0 million revolving credit facility expires on December 1, 2026. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were no outstanding borrowings under the Dotdash Meredith Revolving Facility.

•ANGI Group Senior Notes - on August 20, 2020, ANGI Group, LLC ("ANGI Group"), a direct wholly-owned subsidiary of Angi Inc., issued $500 million of its 3.875% Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year.

Non-GAAP financial measure:

•Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") - is a non-GAAP financial measure. See "Principles of Financial Reporting" for the definition of Adjusted EBITDA and a reconciliation of net earnings (loss) ~~earnings~~ attributable to IAC shareholders to operating loss to Adjusted EBITDA for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

~~Angi Inc.'s Brand Integration Initiative~~

In March 2021, ANGI Homeservices Inc. changed its name to Angi Inc. and updated one of its leading websites and brands, Angie’s List, to Angi, and since then, has concentrated its marketing investment in the Angi brand in order to focus its marketing, sales, and branding efforts on a single brand.

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Angi Inc. relies heavily on free, or organic, search results from search engine optimization and paid search engine marketing to drive traffic to its websites. This brand integration initiative has adversely affected the placement and ranking of Angi Inc. websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List. In addition, Angi Inc. shifted marketing to support Angi, away from HomeAdvisor, powered by Angi, which has negatively affected the efficiency of its search engine marketing efforts.

Since the beginning of the integration process, these efforts have had a pronounced negative impact on service requests from organic search results, which in turn has resulted in increased paid search engine marketing to generate service requests. These factors have increased marketing spend and reduced revenue materially more than expected at the launch of the brand initiative in March 2021. Angi Inc. expects the pronounced negative impact to organic search results, increased paid search engine marketing costs, and reduced monetization from our mobile applications to continue until such time as the new brand establishes search engine optimization ranking and consumer awareness is established.

~~Angi Services Investment~~

Angi Services was launched in August 2019 and Angi Inc. has invested significantly in Angi Services and expects to continue to do so going forward. Since the launch of Angi Services, Angi Inc. has experienced and expects significant future revenue growth as it expands the business, refines the overall experience, and increases penetration in certain geographies and service categories. This increased investment in Angi Services has contributed to losses for Angi Inc. for the three months ended March 31, 2022 and this investment is expected to continue through at least 2023.

Dotdash Meredith Restructuring and Other Charges

~~In the first quarter of~~During 2022, Dotdash Meredith ~~announced~~management committed to several actions to improve efficiencies and better align its ~~plans to discontinue~~cost structure following the acquisition of Meredith on December 1, 2021. These actions included: (i) the discontinuation of certain print publications and the shutdown of PeopleTV, ~~to focus~~for which the ~~portfolio and further enable investments toward digital growth. The discontinued print publications consist~~related expense was primarily reflected in the first quarter of ~~Entertainment Weekly, InStyle, EatingWell, Health, Parents, and People en Español, with the April~~ 2022, ~~issues of these publications being their final print editions. Dotdash Meredith also announced~~(ii) a voluntary retirement program announced in the first quarter of 2022, for which the related expense was primarily reflected in the first half of 2022, (iii) the consolidation of certain leased office space, for which the related expense was reflected in the third quarter of 2022 and (iv) a reduction in force plan, for which the related expenses were accrued primarily in the fourth quarter of 2022. These actions resulted in $80.2 million of restructuring charges incurred for the year ended December 31, 2022.

During the first quarter of 2023, Dotdash Meredith continued to ~~its employees who met certain age~~incur costs related to the voluntary retirement program and ~~service requirements. For~~recorded adjustments to previously accrued amounts related to the reduction in force. Dotdash Meredith incurred restructuring charges of $2.2 million and $22.4 million in the three months ended March 31, 2023 and 2022, ~~the Company incurred $22.4~~respectively, including $2.2 million ~~of related restructuring charges, including~~and $20.5 million, respectively, of severance and related costs. Dotdash Meredith ~~anticipates the estimated remaining~~recorded reversals of previously accrued costs of ~~$9.4~~$2.2 million, ~~will be paid by December~~resulting in a net reversal of expense of less than $0.1 million, in the three months ended March 31, 2023.

During the first quarter of 2023, ~~from existing cash on hand.~~Dotdash Meredith reassessed the sublease market assumptions and recorded impairment charges related to certain unoccupied leased office space due to the continued decline in the commercial real estate market; a $44.7 million impairment of a right-of-use asset ("ROU asset") and a $25.3 million impairment of leasehold improvements, furniture and equipment, which are included in "General and administrative expense" and "Depreciation," respectively, in the statement of operations.

See "Note ~~14—~~2—Dotdash Meredith Restructuring Charges and Transaction-Related ~~Expenses~~Expense s" and ~~Change-in-Control Payments~~"Note 3—Financial Instruments and Fair Value Measurements" to the financial statements included in "Item 1. 1—Consolidated Financial Statements" for additional information on Dotdash Meredith restructuring ~~charges.~~and impairment charges, respectively.

Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement")

A meaningful portion of the Company's revenue (and a substantial portion of IAC's net cash from operating activities attributable to continuing operations that it can freely access) is attributable to the Services Agreement. In addition, the Company earns certain other advertising revenue from Google that is not attributable to the Services Agreement. For the three months ended March 31, 2022 and 2021, total revenue earned from Google was $193.4 million and $171.8 million~~, respectively,~~ ~~representing 15% and 22%, respectively, of the Company's revenue. The related accounts receivable totaled $66.8 million and $89.1 million at March 31, 2022 and December 31, 2021, respectively.~~

The total revenue earned from the Services Agreement for the three months ended March 31, 2022 and 2021 was $147.1 million and $152.5 million, respectively, representing 11% and 19%, respectively, of the Company's total revenue.

The revenue attributable to the Services Agreement is earned by Ask Media Group and the Desktop business, both within the Search segment. For the three months ended March 31, 2022 and 2021, revenue earned from the Services Agreement was ~~$120.5 million and $121.4 million, respectively, within Ask Media Group and $26.6 million and $31.0 million, respectively, within the Desktop business~~.

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The Company and Google are parties to an amended Services Agreement, which automatically renewed effective March 31, 2023 and expires on March 31, ~~2024 and provides for an automatic renewal for an additional one year period absent~~2025.

As a ~~notice~~result of ~~non-renewal from either party on or before March 31, 2023. The Services Agreement requires that the Company comply with~~ certain guidelines promulgated by Google. Google may generally unilaterally update its policies and guidelines without advance notice. These updates may be specific to the Services Agreement or could be more general and thereby impact the Company as well as other companies. These policy and guideline updates have in the past and could in the future require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, which have been and could be costly to address or negatively impact revenue and have had and in the future could have an adverse effect on our financial condition and results of operations. As described below, Google has made changes to the policies under the Services Agreement and has also made industry-wide changes that have negatively impacted the Desktop business-to-consumer ("B2C") business. Google may make changes in the future that could impact the revenue earned from Google, including under the Services Agreement.

~~Certain~~ industry-wide policy ~~changes became effective on August 27, 2020. These industry-wide~~ changes combined with increased enforcement of policies under the Services Agreement ~~have had a negative impact on~~in prior periods, the results of operations of the B2C business. During the fourth quarter of 2020, Google suspended services with respect to some B2C's products and may do so with respect to other products in the future. As a result, the B2C business elected to modify certain marketing strategies in early January 2021. Subsequently, Google informed us of another policy change in the first quarter of 2021 that became effective on May 10, 2021. We anticipated that this Google policy change would eliminate our ability to successfully introduce and market new B2C products that would be profitable. Therefore, we undertook cost reduction measures and effectively eliminated all marketing of B2C products beginning in March 2021. This elimination of marketing has positively impacted profitability starting in the second quarter of 2021 because revenue from B2C products is earned over multiple periods beyond just the period in which the initial marketing is incurred. Following the cessation ofCompany discontinued the introduction of new products in ~~March 2021,~~2021. Therefore, the current B2C revenue stream relates solely to the then existing installed base of products. ~~In 2022 and beyond, we expect~~As a result, the revenue and profits of the B2C business have declined significantly and the Company expects that trend to ~~decline significantly.~~continue.

~~COVID-19 Update~~

See "Note 1—The ~~impact~~Company and Summary of Significant Accounting Policies" to the financial statements included in "Item 1—Consolidated Financial Statements" for additional information on the ~~Company from the COVID-19 pandemic and the measures designed to contain its spread has been varied and volatile.~~Services Agreement with Google.

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Results of Operations for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022

Revenue


		Three Months Ended March 31,					Three Months Ended March 31,
			2022		$ Change			% Change	2021			2023		$ Change		% Change	2022
			(Dollars in thousands)									(Dollars in thousands)
Dotdash Meredith	Dotdash Meredith										Dotdash Meredith
Digital	Digital		$	216,165	$	150,744		230%	$	65,421	Digital	$	184,797	$	(31,368)	(15)%	$	216,165
Print	Print		289,978		289,978			N/A	—		Print	207,016		(82,962)		(29)%	289,978
Intra-segment eliminations			(5,672)		(5,672)			N/A	—
Intersegment eliminations											Intersegment eliminations	(4,231)		1,441		25%	(5,672)
Total Dotdash Meredith	Total Dotdash Meredith		500,471		435,050			665%	65,421		Total Dotdash Meredith	387,582		(112,889)		(23)%	500,471
Angi Inc.	Angi Inc.		436,159		49,130			13%	387,029		Angi Inc.
Domestic											Domestic
Ads and Leads											Ads and Leads	293,506		(1,240)		0%	294,746
Services											Services	32,059		(44,391)		(58)%	76,450
Roofing											Roofing	38,372		1,685		5%	36,687
Domestic intersegment eliminations											Domestic intersegment eliminations	(1,462)		215		13%	(1,677)
Total Domestic											Total Domestic	362,475		(43,731)		(11)%	406,206
International											International	29,932		(21)		0%	29,953
Total Angi Inc.											Total Angi Inc.	392,407		(43,752)		(10)%	436,159
Search	Search		223,385		42,351			23%	181,034		Search	152,475		(70,910)		(32)%	223,385
Emerging & Other	Emerging & Other		166,994		13,838			9%	153,156		Emerging & Other	154,031		(12,963)		(8)%	166,994
Inter-segment eliminations			(1,664)		(1,594)			(2,279)%	(70)
Intersegment eliminations											Intersegment eliminations	(2,224)		(560)		(34)%	(1,664)
Total	Total		$	1,325,345	$	538,775		68%	$	786,570	Total	$	1,084,271	$	(241,074)	(18)%	$	1,325,345

~~________________________~~

~~N/A = Not applicable~~

•Dotdash Meredith revenue ~~increased 665%~~decreased 23% to ~~$500.5~~$387.6 million due primarily to ~~the contribution~~decreases of ~~$438.9 million from Meredith, acquired December 1, 2021, partially offset by a decrease of $4.1~~$83.0 million, or ~~14%~~29%, from Print and $31.4 million, or 15%, from Digital. The decrease from Print was driven by restructuring activities in the first quarter of 2022, which included the discontinuation of several publications and the reduction in circulation of others. The decrease from Digital was due primarily to decreases of $25.3 million, or 18%, in ~~Dotdash Performance Marketing.~~Advertising Revenue and $6.0 million, or 21%, in Licensing and Other Revenue. The decrease in ~~Dotdash Performance Marketing~~Advertising Revenue was due primarily to traffic declines ~~in both affiliate commerce commission revenue and performance marketing commission revenue due primarily to lower traffic~~ to its sites compared to COVID-19 supported traffic levels in the prior year ~~COVID-19 traffic highs.~~period, declines in premium advertising sold through its sales team and lower rates across programmatic channels. The decrease in Licensing and Other Revenue was due primarily to lower revenue share from syndication partner sites and lower licensing fees from retail partners.

•Angi Inc. revenue ~~increased 13%~~decreased 10% to ~~$436.2~~$392.4 million driven by an increase of $58.4 million, or 107%, in Angi Services Revenue, partially offset by decreases of $8.3 million, or 3%, in Angi Ads and Leads Revenue and $1.0 million, or 4%, at the European businesses. The increase in Angi Services Revenue is due primarily to Angi Roofing, acquired July 1, 2021, and, to a lesser extent, organic growth. The decrease in Angi Ads and Leads Revenue is due primarily to a decrease of ~~13% in Service Requests. The~~$44.4 million, or 58%, from Services resulting from the change to net revenue reporting as described above under "Services Revenue" and a decrease ~~at the European businesses was~~of $18.0 million due primarily to the ~~unfavorable impact of the strengthening of the U.S. dollar relative to the Euro~~shift away from complex and ~~British Pound.~~less profitable Services offerings.

•Search revenue ~~increased 23%~~decreased 32% to ~~$223.4~~$152.5 million due to ~~growth~~decreases of ~~$50.0~~$61.4 million, or ~~35%~~32%, from Ask Media Group ~~partially offset by a decrease of $7.6~~and $9.5 million, or ~~21%~~32%, from Desktop. The ~~increase in~~decrease from Ask Media Group ~~revenue~~ was due to ~~higher and more efficient~~a reduction in marketing from affiliate partners driving ~~increased~~fewer visitors to ad supported search and content websites. The decrease infrom Desktop ~~revenue~~ was due primarily to the Google policy changes ~~announced in~~and the ~~prior year~~subsequent cessation of new products described above under "Services Agreement with Google (the "Services Agreement")."

•Emerging & Other revenue ~~increased 9%~~decreased 8% to ~~$167.0~~$154.0 million due primarily to the inclusion of Bluecrew in the prior year period, which was sold on November 9, 2022, and a ~~17% increase~~decrease in revenue at ~~Care.com~~Mosaic Group, partially offset by growth of 5% and ~~growth from Bluecrew~~51% at Care.com and Vivian Health, ~~partially offset by $7.2 million lower~~respectively, and increased revenue at IAC ~~Films due to the delivery~~Films.

Table of ~~a film in the first quarter of 2021.~~Contents

Cost of revenue (exclusive of depreciation shown separately below)


		Three Months Ended March 31,					Three Months Ended March 31,
			2022		$ Change			% Change	2021			2023		$ Change		% Change	2022
			(Dollars in thousands)									(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)	Cost of revenue (exclusive of depreciation shown separately below)		$	537,103	$	308,109		135%	$	228,994	Cost of revenue (exclusive of depreciation shown separately below)	$	342,084	$	(191,520)	(36)%	$	533,604
As a percentage of revenue	As a percentage of revenue		41%						29%		As a percentage of revenue	32%					40%

Cost of revenue in 2023 decreased from 2022 due to decreases of $60.3 million from Search, $59.8 million from Dotdash Meredith, $57.0 million from Angi Inc. and $14.5 million from Emerging & Other.

•The Search decrease was due primarily to a decrease in traffic acquisition costs of $58.4 million at Ask Media Group due primarily to a decrease in the proportion of revenue earned from affiliate partners who direct traffic to our websites.

•The Dotdash Meredith decrease was due primarily to decreases of $43.0 million from Print and $16.9 million from Digital. The decrease from Print was due primarily to a decrease of $27.7 million in production and distribution costs (postage, printing, paper and content) due to the discontinuation of several publications in the first quarter of 2022 and the reduction in circulation of others. Print was further impacted by a decrease of $11.9 million in compensation expense resulting from a voluntary retirement program in the first quarter of 2022 and the reduction in force described above under "Dotdash Meredith Restructuring and Other Charges." The decrease from Digital was due primarily to a decrease of $7.2 million in traffic acquisition costs driven by lower revenue and a decrease of $5.9 million in compensation expense due to the reduction in force.

•The Angi Inc. decrease was due primarily to a decrease of $53.5 million from Services due primarily to a $47.7 million decrease in payments to third-party professional service providers due primarily to a decrease of $25.7 million resulting from the change to net revenue reporting effective January 1, 2023, described above. Additionally, payments to third-party professional service providers decreased as a result of the shift away from complex and less profitable Services offerings.

•The Emerging & Other decrease was primarily due to the inclusion in the prior year period of $13.4 million in expense from Bluecrew, which was sold on November 9, 2022.

Selling and marketing expense


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Selling and marketing expense		$	404,141	$	(84,322)	(17)%	$	488,463
As a percentage of revenue		37%					37%

Selling and marketing expense in 2023 decreased from 2022 due to decreases of $54.2 million from Dotdash Meredith, $20.9 million from Angi Inc. and $11.5 million from Emerging & Other.

•The Dotdash Meredith decrease was due primarily to decreases of $37.5 million in subscription acquisition costs and $12.4 million in compensation expense from Print. The decrease in subscription acquisition costs was driven by lower commission payments made to third-party agents to sell magazine subscriptions resulting from the discontinuation of several publications in the first quarter of 2022 and the reduction in circulation of others. The decrease in compensation expense was due to a voluntary retirement program in the first quarter of 2022 and the reduction in force described above under "Dotdash Meredith Restructuring and Other Charges."

•The Angi Inc. decrease was due primarily to decreases of $8.2 million from International, $6.1 million from Services and $4.4 million from Ads and Leads.

◦The International decrease was due primarily to a decrease of $8.9 million in advertising expense due primarily to decreases of $4.8 million and $4.4 million in television spend and online marketing spend, respectively.

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◦The Services decrease was due primarily to decreases of $4.3 million in professional fees, $3.4 million in compensation expense and $1.1 million in advertising expense, partially offset by an increase of $3.5 million in service guarantee expense. The decrease in professional fees was primarily due to decreases in consulting fees and outsourced personnel costs of $3.6 million due to lower phone-based sales wages primarily resulting from increased reliance on more profitable digital conversion channels and $1.3 million due to streamlined fulfillment operations driven, in part, by fewer complex services, respectively. The decrease in compensation expense was due primarily to lower headcount. The decrease in advertising expense was primarily due to a decrease in service professional marketing spend. The increase in service guarantee expense is due to the aforementioned change in contractual terms and conditions such that this expense is no longer a component of cost of revenue, which is where the expense was recorded prior to January 1, 2023.

◦The Ads and Leads decrease was due primarily to decreases of $10.7 million in advertising expense and $1.7 million in consulting fees, partially offset by an increase of $7.6 million in compensation expense. The decrease in advertising expense was due primarily to a decrease of $11.4 million in online marketing spend. The decrease in consulting fees was due primarily to a decrease in marketing and branding consultancy fees. The increase in compensation expense was due primarily to increased sales commissions driven by sales growth and the immediate expensing of commissions for certain transactions beginning October 1, 2022, rather than recording commissions as an asset to be amortized over the duration of the related customer relationship period due to the average customer relationship being assessed as less than one year.

•The Emerging & Other decrease was due primarily to decreases of $6.7 million in online marketing spend at Mosaic Group and $4.2 million in expense at Bluecrew, which was sold on November 9, 2022.

General and administrative expense


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
General and administrative expense		$	269,526	$	29,055	12%	$	240,471
As a percentage of revenue		25%					18%

General and administrative expense in 2023 increased from ~~2021~~2022 due to increases of ~~$211.0~~$31.7 million from Dotdash Meredith ~~$48.0~~and $5.6 million from ~~Search and $45.2~~Emerging & Other, partially offset by a decrease of $7.1 million from Angi Inc.

•The Dotdash Meredith increase was due primarily to an impairment charge at Other (unallocated corporate costs) of $44.7 million of an ROU asset related to unoccupied lease space recognized in the first quarter of 2023, partially offset by a decrease of $4.1 million in restructuring costs ($0.2 million in 2023 compared to $4.3 million 2022) related to activities described above under "Dotdash Meredith Restructuring and Other Charges" and the inclusion in 2022 of $4.0 million in transaction-related costs related to the acquisition of Meredith.

•The Emerging & Other increase was due primarily to an increase in expense of $3.3 million at IAC Films related to certain participation rights, the inclusion in the prior year period of a $3.2 million gain at Care.com related to the termination of a lease and an increase of $1.6 million in compensation expense at Vivian Health, partially offset by a decrease in expense of $2.0 million at Bluecrew, which was sold on November 9, 2022.

•The Angi Inc. decrease was due primarily to a decrease of $6.7 million from Ads and Leads due primarily to decreases in compensation expense of $7.3 million and recruitment fees of $1.4 million, partially offset by an increase in the provision for credit losses of $3.1 million due primarily to lower collection rates. The decrease in compensation expense is due primarily to a reduction in headcount.

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Product development expense


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Product development expense		$	88,338	$	4,143	5%	$	84,195
As a percentage of revenue		8%					6%

Product development expense in 2023 increased from 2022 due to increases of $7.5 million from Angi Inc. and $2.6 million from Dotdash Meredith, partially offset by $6.1 million from Emerging & Other.

•The Angi Inc. increase was due primarily to an increase of $6.2 million from Ads and Leads due primarily to an increase in compensation expense of $6.8 million related primarily to increased spend on projects that did not meet capitalization requirements.

•The Dotdash Meredith increase was due primarily to an increase of $2.9 million from Digital due primarily to an increase in compensation expense of $4.1 million related primarily to an increase in headcount and a decrease in compensation expense that qualified for capitalization.

•The Emerging & Other decrease was due primarily to decreases in outsourced personnel costs of $3.6 million and compensation expense of $1.7 million at Care.com, and a decrease in expense of $2.6 million at Bluecrew, which was sold on November 9, 2022, partially offset by an increase in compensation expense of $2.4 million at Vivian Health. The decreases in outsourced personnel costs and compensation expense at Care.com was due primarily to costs incurred in 2022 to enhance product offerings and develop new products, and lower headcount, respectively. The increase in compensation expense at Vivian Health was due primarily to an increase in headcount.

Depreciation


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Depreciation		$	61,172	$	30,936	102%	$	30,236
As a percentage of revenue		6%					2%

Depreciation increased in 2023 from 2022 due primarily to increases of $20.1 million at Dotdash Meredith and $11.4 million at Angi Inc. The increase at Dotdash Meredith was due primarily to the impairment of leasehold improvements and furniture and equipment of $25.3 million related to unoccupied leased space, partially offset by a decrease of $4.5 million in depreciation as a result of the reclassification of certain acquired capitalized software from depreciable assets to intangible assets in connection with the completion of purchase accounting related to the acquisition of Meredith. The increase at Angi Inc. was due primarily to capitalized software projects placed in service after the first quarter of 2022.

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•~~The Dotdash Meredith increase was~~ ~~due primarily to~~ ~~$206.0 million of expense from the inclusion of Meredith and an increase of $4.6 million in compensation expense related to increased content creation headcount at Dotdash. Included in Meredith's expense is~~ ~~$9.5 million~~ ~~of restructuring costs primarily related to the reorganization of the Dotdash Meredith business described above under "Dotdash Meredith Restructuring Charges."~~Operating (loss) income

•~~The Search increase was primarily due to an increase of $39.9 million in traffic acquisition costs at Ask Media Group resulting from the increase in revenue.~~


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Dotdash Meredith
Digital		$	(17,887)	$	(16,019)	(857)%	$	(1,868)
Print		(5,756)		32,579		85%	(38,335)
Other		(87,591)		(71,549)		(446)%	(16,042)
Total Dotdash Meredith		(111,234)		(54,989)		(98)%	(56,245)
Angi Inc.
Domestic
Ads and Leads		13,480		(2,006)		(13)%	15,486
Services		(12,452)		13,298		52%	(25,750)
Roofing		411		6,561		NM	(6,150)
Other		(14,939)		(1,917)		(15)%	(13,022)
Total Domestic		(13,500)		15,936		54%	(29,436)
International		3,030		7,551		NM	(4,521)
Total Angi Inc.		(10,470)		23,487		69%	(33,957)
Search		10,770		(14,309)		(57)%	25,079
Emerging & Other		11,445		16,489		NM	(5,044)
Corporate		(36,107)		2,540		7%	(38,647)
Total		$	(135,596)	$	(26,782)	(25)%	$	(108,814)

As a percentage of revenue		(13)%					(8)%

•The Angi Inc. increase was due primarily to growth of Angi Services, including $27.2 million of costs attributable to the inclusion of Angi Roofing, primarily for roofing materials and third-party contractors. The remaining increase represents payments to third-party service professionals for other Angi Services arrangements.

~~Selling and marketing expense~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Selling and marketing expense $ 490,488 $ 177,950 57% $ 312,538
As a percentage of revenue 37% 40%

~~Selling and marketing expense in 2022 increased~~ ~~from~~ ~~2021~~ ~~due to increases of $155.6 million from Dotdash Meredith and $20.0 million from Angi Inc.~~

•~~The Dotdash Meredith increase was due principally to $154.0 million o~~f expense from the inclusion of Meredith. Included in Meredith's expense is $5.6 million of restructuring costs primarily related to the reorganization of the Dotdash Meredith business described above under "Dotdash Meredith Restructuring Charges."

•The Angi Inc. increase was due primarily to an increase in advertising expense of $9.9 million, expense of $6.2 million from the inclusion of Angi Roofing, and increases in consulting costs of $2.8 million and software maintenance costs of $1.6 million, partially offset by decreases in lease expense and compensation expense of $1.5 million and $1.4 million, respectively. The increase in advertising expense was due primarily to an increase of $11.3 million in television spend, partially offset by a decrease of $2.6 million in online marketing spend. The increase in television spend reflects the return to historical spending levels as compared to the cost cutting initiatives during 2021 due to the impact of COVID-19 and is consistent with 2020 spend prior to COVID-19. The increase in consulting and software maintenance costs was due primarily to various sales initiatives at Angi Services. The decrease in lease expense was primarily due to Angi Inc. reducing its real estate footprint in 2021. The decrease in compensation expense was due primarily to decreased commission expense.

~~General and administrative expense~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
General and administrative expense $ 238,355 $ 75,195 46% $ 163,160
As a percentage of revenue 18% 21%

~~General and administrative expense in 2022 increased from 2021 due to increases of $61.3 million from Dotdash Meredith and~~ ~~$21.5 million from Angi Inc., partially offset by a decrease of $6.1 million from Corporate~~.

•~~The Dotdash Meredith increase was due primarily to $55.0 million of expense from the inclusion of Meredith and $4.2 million in compensation expense at Dotdash.~~ ~~During the first quarter of 2022, Dotdash Meredith incurred $7.0 million~~ in ~~restructuring costs at Meredith related to the reorganization of Dotdash Meredith's business described above under "Dotdash Meredith Restructuring Charges" a~~nd $4.0 million in transaction-related costs, of which $3.3 million was incurred at Meredith, associated with its acquisition. The increase in compensation expense at Dotdash was due primarily to an increase in stock-based compensation expense.

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•The Angi Inc. increase was due primarily to an increase of $8.0 million in compensation expense, $6.9 million of expense from the inclusion of Angi Roofing, and increases of $4.7 million in professional fees and $1.9 million in software and maintenance costs. The increase in compensation expense was due primarily to increases in stock-based compensation expense of $8.9 million and wage-related expenses of $3.8 million, partially offset by a $6.0 million charge in the first quarter of 2021, related to the acquisition of an additional 21% interest in MyBuilder at a premium to fair value. The increase in stock-based compensation expense was due primarily to a net decrease of $7.7 million due to the reversal of previously recognized expense related to unvested awards that were forfeited due to management departures in the first quarter of 2021 and new awards granted since the first quarter of 2021. The increase in wage-related expenses was due primarily to an increase in headcount. The increase in professional fees was due primarily to an increase in legal fees and outsourced personnel costs, and to a lesser extent, recruiting fees. The increase in outsourced personnel costs is due primarily to an increase in call volume related to Angi Inc.'s customer service function. The increase in software licenses and maintenance costs is due to increased investment in software to support Angi Inc.'s customer service function.

•~~The Corporate decrease was due primarily to the inclusion in the first quarter of 2021 of $4.1 million of transaction-related costs~~ ~~in connection with the Spin-off~~.

~~Product development expense~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Product development expense $ 80,787 $ 27,704 52% $ 53,083
As a percentage of revenue 6% 7%

Product development expense in 2022 increased from 2021 due to increases of $22.1 million from Dotdash Meredith and $8.5 million from Emerging & Other, partially offset by a decrease of $2.4 million from Search.

•~~The Dotdash Meredith increase was due primarily to $21.1 million of expense from the inclusion of Meredith.~~

•The Emerging & Other increase was due primarily to increases of $4.0 million and $3.1 million in outsourced personnel costs and compensation expense, respectively, at Care.com. The increase in outsourced personnel costs and compensation expense at Care.com is primarily due to enhancing existing product offerings and developing new products, and an increase in headcount.

•The Search decrease was due primarily to a decrease of $2.3 million in compensation expense due primarily to the reduction in headcount following the cessation of new B2C products described above under "Services Agreement with Google (the "Services Agreement")."

~~Depreciation~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Depreciation $ 30,236 $ 11,050 58% $ 19,186
As a percentage of revenue 2% 2%

Depreciation increased in 2022 from 2021 due primarily to $12.7 million of expense from the inclusion of Meredith, partially offset by a decrease of $2.0 million at Angi Inc. due primarily to the write-off of certain capitalized software projects in the first quarter of 2021.

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~~Operating loss~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Dotdash Meredith
Digital $ (1,944) $ (20,071) NM $ 18,127
Print (38,271) (38,271) N/A —
Other (16,030) (16,030) N/A —
Total Dotdash Meredith (56,245) (74,372) NM 18,127
Angi Inc. (33,957) (34,066) NM 109
Search 25,079 6,693 36% 18,386
Emerging & Other (5,044) (6,038) NM 994
Corporate (38,647) 6,199 14% (44,846)
Total $ (108,814) $ (101,584) (1,405)% $ (7,230)
As a percentage of revenue (8)% (1)%

~~________________________~~_____________________

NM = Not meaningful

Operating loss increased ~~$101.6~~$26.8 million to a loss of ~~$108.8~~$135.6 million due primarily to an increase of ~~$40.4~~$30.9 million in depreciation and income of $0.6 million in 2022 related to an acquisition-related contingent consideration fair value adjustment, partially offset by decreases of $2.5 million in amortization of intangibles ~~a decrease in Adjusted EBITDA of $39.4 million, described below,~~ and ~~increases of $11.4~~$0.8 million in stock-based compensation expense and ~~$11.0~~an increase in Adjusted EBITDA of $1.4 million, described below. The increase in depreciation was due primarily to the impairment of leasehold improvements and furniture and equipment at Dotdash Meredith of $25.3 million related to unoccupied leased space and an increase in expense at Angi Inc. primarily related to capitalized software projects placed in service after the first quarter of 2022, partially offset by ~~income~~a decrease in depreciation at Dotdash Meredith as a result of ~~$0.6 million~~the reclassification of certain acquired capitalized software from depreciable assets to intangible assets in ~~an acquisition-related contingent consideration fair value adjustment.~~ connection with the completion of purchase accounting related to the acquisition of Meredith. The ~~increase~~decrease in the amortization of intangibles was due primarily to ~~the acquisition of Meredith, partially offset by~~ lower expense at Dotdash Meredith Print and Care.com due to certain intangible assets becoming fully amortized. The increase in stock-based compensation expense was due primarily to the reversal of previously recognized stock-based compensation expense due to forfeitures from management departures in the first quarter of 2021 and new awards granted since the first quarter of 2021 at Angi Inc. The increase in depreciation was due primarily to expense from the inclusion of Meredith,amortized, partially offset by an increase at Dotdash Meredith Digital as a result of the ~~write-off~~reclassification of certain acquired capitalized software ~~projects~~from depreciable assets to intangible assets described above.

The aggregate carrying value of goodwill for which the most recent estimate of the excess of fair value over carrying value is less than 20% is $153.6 million of goodwill at ~~Angi Inc in~~Mosaic Group. There is one indefinite-lived intangible asset at Dotdash Meredith Digital with a value of approximately $126.0 million for which the ~~first quarter~~excess of ~~2021.~~fair value over carrying value is less than 20%.

At March 31, ~~2022,~~2023, there was ~~$414.2~~$319.1 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately ~~4.9~~4.4 years.

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Adjusted EBITDA


		Three Months Ended March 31,					Three Months Ended March 31,
			2022		$ Change			% Change	2021			2023		$ Change		% Change	2022
		(Dollars in thousands)					(Dollars in thousands)
Dotdash Meredith	Dotdash Meredith										Dotdash Meredith
Digital	Digital		$	34,800	$	14,878		75%	$	19,922	Digital	$	24,403	$	(10,397)	(30)%	$	34,800
Print	Print		(10,480)		(10,480)			N/A	—		Print	11,334		21,814		NM	(10,480)
Other	Other		(15,786)		(15,786)			N/A	—		Other	(58,854)		(43,068)		(273)%	(15,786)
Total Dotdash Meredith	Total Dotdash Meredith		8,534		(11,388)			(57)%	19,922		Total Dotdash Meredith	(23,117)		(31,651)		NM	8,534
Angi Inc.	Angi Inc.		(3,169)		(26,355)			NM	23,186		Angi Inc.
Domestic											Domestic
Ads and Leads											Ads and Leads	39,851		5,526		16%	34,325
Services											Services	(2,168)		16,399		88%	(18,567)
Roofing											Roofing	821		5,847		NM	(5,026)
Other											Other	(12,354)		(1,904)		(18)%	(10,450)
Total Domestic											Total Domestic	26,150		25,868		9,230%	282
International											International	4,354		7,805		NM	(3,451)
Total Angi Inc.											Total Angi Inc.	30,504		33,673		NM	(3,169)
Search	Search		25,100		6,714			37%	18,386		Search	10,791		(14,309)		(57)%	25,100
Emerging & Other	Emerging & Other		916		(11,048)			(92)%	11,964		Emerging & Other	14,778		13,862		1,513%	916
Corporate	Corporate		(23,694)		2,654			10%	(26,348)		Corporate	(23,833)		(139)		(1)%	(23,694)
Total	Total		$	7,687	$	(39,423)		(84)%	$	47,110	Total	$	9,123	$	1,436	19%	$	7,687

As a percentage of revenue	As a percentage of revenue		1%						6%		As a percentage of revenue	1%					1%

For a reconciliation of net earnings (loss) ~~earnings~~ attributable to IAC shareholders to operating loss to Adjusted EBITDA, see "Principles of Financial Reporting." For a reconciliation of operating ~~(loss) income~~loss to Adjusted EBITDA for the Company's reportable segments, see "Note 9—6—Segment Information" to the financial statements included in "Item 1—Consolidated Financial Statements."

•Dotdash Meredith Adjusted EBITDA decreased ~~57%~~$31.7 million to ~~$8.5~~a loss of $23.1 million ~~despite higher revenue,~~due to an increase in Adjusted EBITDA losses of $43.1 million from Other (unallocated corporate costs) and a decrease in Adjusted EBITDA of $10.4 million from Digital, partially offset by an increase in Adjusted EBITDA of $21.8 million from Print.

◦The Other (unallocated corporate costs) Adjusted EBITDA loss increase was due primarily to ~~$22.4~~an impairment charge of $44.7 million of an ROU asset related to unoccupied lease space recognized in the first quarter of 2023.

◦The Digital Adjusted EBITDA decrease was due primarily to lower revenue and an increase in product development expense described above, partially offset by the inclusion in 2022 of $5.8 million of restructuring charges and ~~$4.0~~transaction-related expenses.

◦The Print Adjusted EBITDA increase was due primarily to a decrease in operating costs and expenses driven by the inclusion in 2022 of $16.4 million inof restructuring charges and transaction-related ~~costs associated with the Meredith acquisition.~~ expenses.

See "Note ~~14—~~2—Dotdash Meredith Restructuring Charges and Transaction-Related Expenses" to the financial statements included in "Item 1—Consolidated Financial Statements" for additional information on Dotdash Meredith restructuring charges.

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•Angi Inc. Adjusted EBITDA increased $33.7 million to $30.5 million from a loss of $3.2 million due to decreases in Adjusted EBITDA losses of $16.4 million from Services, $5.8 million from Roofing and ~~Change-in-Control Payments~~$7.8 million from International and an increase in Adjusted EBITDA of $5.5 million from Ads and Leads, partially offset by increased Adjusted EBITDA losses of $1.9 million from Other (unallocated corporate costs).

◦The Services Adjusted EBITDA loss decrease was due primarily to pricing and fulfillment optimization efforts over the past year and lower operating expenses due to a reduced overall cost base as a result of exiting complex services and less profitable Services offerings.

◦The Roofing Adjusted EBITDA loss decrease was due primarily to higher revenue and margin optimization efforts (both labor and material efficiencies).

◦The International Adjusted EBITDA loss decrease was due primarily to lower selling and marketing expense, described above.

◦The Ads and Leads Adjusted EBITDA increase was due primarily to lower selling and marketing expense due to improved marketing efficiency and lower general and administrative expense due to lower compensation expense and other operating expenses.

◦The Other (unallocated corporate costs) Adjusted EBITDA loss increase was due primarily to an increase in lease expense due to the repurposing of its real estate for general and administrative functions in 2022.

•Search Adjusted EBITDA decreased 57% to $10.8 million due primarily to lower revenue.

•Emerging & Other Adjusted EBITDA increased $13.9 million to $14.8 million due primarily to higher profits at Care.com and Mosaic Group and the sale of Bluecrew, which had losses in the prior year period, partially offset by higher losses at IAC Films, Vivian Health, Newco and Daily Beast.

Interest expense


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Interest expense		$	38,172	$	16,260	74%	$	21,912

Interest expense in 2023 increased from 2022 due primarily to an increase in interest rates on the Dotdash Meredith Term Loans.

Unrealized gain (loss) on investment in MGM Resorts International ("MGM")


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Unrealized gain (loss) on investment in MGM Resorts International		$	704,840	$	892,170	NM	$	(187,330)

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The Company's investment in MGM is accounted for as a marketable equity security and the unrealized pre-tax gain and loss of $704.8 million and $187.3 million in the three months ended March 31, 2023 and 2022, respectively, were due to changes in the price of MGM as reported on the New York Stock Exchange. As of March 31, 2023, the Company owns approximately 64.7 million shares in MGM.

Other income, net


	Three Months Ended March 31,
		2023			2022
		(Dollars in thousands)
Interest income		$	16,930		$	698
Unrealized increase in the estimated fair value of a warrant		5,940			7,985


Unrealized (loss) gain related to marketable equity securities		(1,150)			34,352
Net periodic pension benefit costs, other than the service cost component (a)		(674)			(35,359)


Other		2,703			(977)
Other income, net		$	23,749		$	6,699

$ Change		$	17,050
% Change		255		%

_____________________

(a) Includes pre-tax actuarial losses of $0.2 million for the three months ended March 31, 2023 related to the pension plans in the U.S. and $37.5 million for the three months ended March 31, 2022 related to the funded pension plans in the U.K. and U.S. See "Note 7—Pension and Postretirement Benefit Plans" to the financial statements included in "Item 1. Consolidated Financial Statements" for additional ~~information on Dotdash Meredith restructuring charges.~~

•Angi Inc. Adjusted EBITDA decreased $26.4 million to a loss of $3.2 million, despite higher revenue, due primarily to an increase of $45.2 million in cost of revenue due primarily to the growth of Angi Services, including $27.2 million of costs attributable to the inclusion of Angi Roofing, and an increase of $9.9 million in advertising expense, due primarily to a return to historical spending levels as compared to the cost cutting initiatives during 2021 due to the impact of COVID-19, and the consolidation under a single brand on March 17, 2021, which has adversely affected both free and paid search engine marketing efforts.

•Search Adjusted EBITDA increased 37% to $25.1 million due to an increase in Ask Media Group revenue and a decrease in marketing at Desktop as it substantially reduced marketing of its B2C products in January 2021 and the subsequent elimination of all marketing of B2C products beginning in early March 2021 as a result of Google policy changes.

•~~Emerging & Other Adjusted EBITDA decreased 92% to $0.9 million due primarily to lower profits at IAC Films, Mosaic Group and Care.com.~~

•~~Corporate Adjusted EBITDA loss decreased 10% to $23.7 million due primarily to~~ ~~the inclusion in the first quarter of 2021 of $4.1 million of transaction-related costs~~ ~~in connection with the Spin-off.~~

~~Interest expense~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Interest expense $ 21,912 $ 15,295 231% $ 6,617

~~Table of Contents~~information.

Interest expense in 2022 increased from 2021 due primarily to the borrowings of the Dotdash Meredith Term Loans, partially offset by the repayment of the ANGI Group Term Loan during the second quarter of 2021.

~~Unrealized (loss) gain on investment in MGM Resorts International~~

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Unrealized (loss) gain on investment in MGM Resorts International $ (187,330) $ (569,870) NM $ 382,540

During the three months ended March 31, 2022 and 2021, the Company recognized an unrealized pre-tax loss and an unrealized pre-tax gain of $187.3 million and $382.5 million, respectively. During the first quarter of 2022, the Company purchased an additional 4.5 million shares of MGM for $202.5 million. Following this purchase, the Company owns approximately 63.5 million shares, representing a 14.5%~~ownership interest in MGM as of February 23, 2022.~~

~~Other income, net~~

Three Months Ended March 31,
2022 2021
(Dollars in thousands)
Unrealized gain related to investments following initial public offering $ 34,352 $ —
Unrealized increase in the estimated fair value of a warrant 7,985 12,775
Net periodic pension benefit costs, other than the service cost component (a)
(35,359) —
Foreign exchange losses, net (b)
(1,574) (11,632)
Upward adjustment to the carrying value of equity securities without readily determinable fair values — 1,376
Other 1,295 1,044
Other income, net $ 6,699 $ 3,563
$ Change $ 3,136
% Change 88 %

~~_____________________~~

~~(a)~~ Includes pre-tax losses of $35.4 million in total related to Meredith's funded pension plans in the U.K. and the U.S. The U.K. loss of $23.6 million primarily relates to the decline in the fair value of the U.K. pension plan's assets exceeding the decline in the plan liabilities in each case due to higher interest rates. The U.S. loss of $11.7 million was primarily due to the decline in the fair value of plan assets.

~~(b)~~ ~~Includes $10.0 million in foreign exchange losses primarily related to the substantial liquidation of certain foreign subsidiaries in the three months ended March 31, 2021.~~

Income tax (provision) benefit ~~(provision)~~


		Three Months Ended March 31,					Three Months Ended March 31,
			2022		$ Change			% Change	2021			2023		$ Change		% Change	2022
			(Dollars in thousands)									(Dollars in thousands)
Income tax benefit (provision)			$	70,464	$	123,775		NM	$	(53,311)
Income tax (provision) benefit											Income tax (provision) benefit	$	(139,502)	$	(209,966)	NM	$	70,464
Effective income tax rate	Effective income tax rate		23%						14%		Effective income tax rate	25%					23%

For further details of income tax matters, see "Note 2—8 —Income Taxes" to the financial statements included in "Item 1. Consolidated Financial Statements."

In 2023, the effective income tax rate is higher than the statutory rate of 21% due primarily to state taxes and nondeductible compensation expense, partially offset by research credits.

In 2022, the effective income tax rate is higher than the statutory rate of 21% due primarily to state taxes and excess tax benefits generated by the exercise and vesting of stock-based awards, partially offset by nondeductible stock-based compensation expense.

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~~In 2021, the effective income tax rate was lower than the statutory rate~~ ~~of 21% due~~ ~~primarily to excess tax benefits generated by the exercise and vesting of stock-based awards, partially offset by state taxes.~~

Net loss attributable to noncontrolling interests

Three Months Ended March 31,
2022 $ Change % Change 2021
(Dollars in thousands)
Net loss attributable to noncontrolling interests $ 5,095 $ 4,868 2,149% $ 227


	Three Months Ended March 31,
		2023		$ Change		% Change	2022
		(Dollars in thousands)
Net loss attributable to noncontrolling interests		$	2,456	$	(2,639)	(52)%	$	5,095

Net loss attributable to noncontrolling interests in ~~2022~~2023 and ~~2021~~2022 primarily represents the publicly-held interest in Angi Inc.'s ~~earnings.~~losses.

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PRINCIPLES OF FINANCIAL REPORTING

The Company reports Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ("GAAP"). This measure is one of the primary metrics by which we evaluate the performance of our businesses, ~~on which~~and our internal budgets are based and ~~by which~~may impact management ~~is compensated.~~compensation. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The Company endeavors to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure, which we discuss below.

Definition of Non-GAAP Measure

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets, if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

The following table reconciles net earnings (loss) ~~earnings~~ attributable to IAC shareholders to operating loss to Adjusted EBITDA:


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
			(In thousands)						(In thousands)
Net (loss) earnings attributable to IAC shareholders			$	(235,798)	$	329,128
Net earnings (loss) attributable to IAC shareholders							Net earnings (loss) attributable to IAC shareholders		$	417,775	$	(235,798)
Add back:	Add back:						Add back:
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests		(5,095)		(227)		Net loss attributable to noncontrolling interests		(2,456)		(5,095)
Loss from discontinued operations, net of tax			—		(9,956)
Income tax (benefit) provision			(70,464)		53,311
Other expense (income), net			(6,699)		(3,563)
Unrealized loss (gain) on investment in MGM Resorts International			187,330		(382,540)
Income tax provision (benefit)							Income tax provision (benefit)		139,502		(70,464)
Other income, net							Other income, net		(23,749)		(6,699)
Unrealized (gain) loss on investment in MGM Resorts International							Unrealized (gain) loss on investment in MGM Resorts International		(704,840)		187,330
Interest expense	Interest expense		21,912		6,617		Interest expense		38,172		21,912
Operating loss	Operating loss		(108,814)		(7,230)		Operating loss		(135,596)		(108,814)
Add back:	Add back:						Add back:
Stock-based compensation expense	Stock-based compensation expense		29,687		18,315		Stock-based compensation expense		28,941		29,687
Depreciation	Depreciation		30,236		19,186		Depreciation		61,172		30,236
Amortization of intangibles	Amortization of intangibles		57,190		16,839		Amortization of intangibles		54,606		57,190
Acquisition-related contingent consideration fair value adjustments	Acquisition-related contingent consideration fair value adjustments		(612)		—		Acquisition-related contingent consideration fair value adjustments		—		(612)

Adjusted EBITDA	Adjusted EBITDA		$	7,687	$	47,110	Adjusted EBITDA		$	9,123	$	7,687

For a reconciliation of operating loss to Adjusted EBITDA for the Company's reportable segments, see "Note 9—6—Segment Information" to the financial statements included in "Item 1—Consolidated Financial Statements."

Non-Cash Expenses That Are Excluded from Our Non-GAAP Measure

Stock-based compensation expense consists of expense associated with awards that were granted under various IAC stock and annual incentive plans and expense related to awards issued by certain subsidiaries of the Company. These expenses are not paid in cash and we view the economic costs of stock-based awards to be the dilution to our share base; we also include the related shares in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method. The Company is currently settling all stock-based awards on a net basis; IAC remits the required tax-withholding amounts for net-settled awards from its current funds.

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Depreciation is a non-cash expense relating to our ~~buildings,~~ capitalized software, equipment, buildings and leasehold improvements ~~and equipment~~ and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.

Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as advertiser relationships, technology, licensee relationships, trade names, ~~technology, subscriber relationships,~~content, service professional relationships, customer lists and user base ~~memberships,~~ and ~~content,~~subscriber relationships, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.

Gains and losses recognized on changes in the fair value of contingent consideration arrangements are accounting adjustments to report contingent consideration liabilities at fair value. These adjustments can be highly variable and are excluded from our assessment of performance because they are considered non-operational in nature and, therefore, are not indicative of current or future performance or the ongoing cost of doing business.

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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
							(In thousands)
Angi Inc. cash and cash equivalents and marketable debt securities:						Angi Inc. cash and cash equivalents and marketable debt securities:
United States						United States	$	304,521	$	311,422
All other countries						All other countries	10,439		9,733
Total cash and cash equivalents						Total cash and cash equivalents	314,960		321,155
Marketable debt securities (United States)						Marketable debt securities (United States)	12,495		—
Total Angi Inc. cash and cash equivalents and marketable debt securities						Total Angi Inc. cash and cash equivalents and marketable debt securities	327,455		321,155
		(In thousands)
Dotdash Meredith cash and cash equivalents:	Dotdash Meredith cash and cash equivalents:					Dotdash Meredith cash and cash equivalents:
United States	United States	$	212,972	$	218,612	United States	262,498		109,000
All other countries	All other countries	16,916		14,781		All other countries	13,321		14,866
Total Dotdash Meredith cash and cash equivalents	Total Dotdash Meredith cash and cash equivalents	229,888		233,393		Total Dotdash Meredith cash and cash equivalents	275,819		123,866

Angi Inc. cash and cash equivalents:
United States		364,703		404,277
All other countries		26,583		23,859
Total Angi Inc. cash and cash equivalents		391,286		428,136

IAC (excluding Dotdash Meredith and Angi Inc.) cash and cash equivalents and marketable securities:	IAC (excluding Dotdash Meredith and Angi Inc.) cash and cash equivalents and marketable securities:					IAC (excluding Dotdash Meredith and Angi Inc.) cash and cash equivalents and marketable securities:
United States	United States	1,188,258		1,408,828		United States	780,690		939,168
All other countries	All other countries	43,166		48,373		All other countries	27,367		33,201
Total cash and cash equivalents	Total cash and cash equivalents	1,231,424		1,457,201		Total cash and cash equivalents	808,057		972,369
Marketable securities (United States)	Marketable securities (United States)	59,012		19,788		Marketable securities (United States)	189,643		239,373
Total IAC (excluding Dotdash Meredith and Angi Inc.) cash and cash equivalents and marketable securities	Total IAC (excluding Dotdash Meredith and Angi Inc.) cash and cash equivalents and marketable securities	1,290,436		1,476,989		Total IAC (excluding Dotdash Meredith and Angi Inc.) cash and cash equivalents and marketable securities	997,700		1,211,742

Total cash and cash equivalents and marketable securities	Total cash and cash equivalents and marketable securities	$	1,911,610	$	2,138,518	Total cash and cash equivalents and marketable securities	$	1,600,974	$	1,656,763


Dotdash Meredith Debt:	Dotdash Meredith Debt:					Dotdash Meredith Debt:
Dotdash Meredith Term Loan A	Dotdash Meredith Term Loan A	$	345,625	$	350,000	Dotdash Meredith Term Loan A	$	328,125	$	332,500
Dotdash Meredith Term Loan B	Dotdash Meredith Term Loan B	1,246,875		1,250,000		Dotdash Meredith Term Loan B	1,234,375		1,237,500
Total Dotdash Meredith long-term debt	Total Dotdash Meredith long-term debt	1,592,500		1,600,000		Total Dotdash Meredith long-term debt	1,562,500		1,570,000
Less: current portion of Dotdash Meredith long-term debt	Less: current portion of Dotdash Meredith long-term debt	30,000		30,000		Less: current portion of Dotdash Meredith long-term debt	30,000		30,000
Less: original issue discount	Less: original issue discount	5,950		6,176		Less: original issue discount	5,100		5,310
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	11,625		12,139		Less: unamortized debt issuance costs	9,762		10,215
Total Dotdash Meredith long-term debt, net	Total Dotdash Meredith long-term debt, net	1,544,925		1,551,685		Total Dotdash Meredith long-term debt, net	1,517,638		1,524,475

ANGI Group Debt:	ANGI Group Debt:					ANGI Group Debt:
ANGI Group Senior Notes	ANGI Group Senior Notes	500,000		500,000		ANGI Group Senior Notes	500,000		500,000
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	5,270		5,448		Less: unamortized debt issuance costs	4,531		4,716
Total ANGI Group long-term debt		494,730		494,552
Total ANGI Group long-term debt, net						Total ANGI Group long-term debt, net	495,469		495,284

Total long-term debt, net	Total long-term debt, net	$	2,039,655	$	2,046,237	Total long-term debt, net	$	2,013,107	$	2,019,759

The Company's international cash can be repatriated without significant tax consequences.

For a detailed description of long-term debt, see "Note 6—4—Long-term Debt" to the financial statements included in "Item 1. Consolidated Financial Statements."

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Cash Flow Information

In summary, IAC's cash flows are as follows:

Three Months Ended March 31,
2022 2021
(In thousands)
Net cash provided by (used in):
Operating activities attributable to continuing operations $ 12,902 $ 52,216
Investing activities attributable to continuing operations $ (231,589) $ 197,386
Financing activities attributable to continuing operations $ (27,482) $ (99,164)


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Net cash provided by (used in):
Operating activities	$	25,167	$	12,902
Investing activities	$	51,974	$	(231,589)
Financing activities	$	(95,975)	$	(27,482)

Net cash provided by operating activities ~~attributable to continuing operations~~ consists of net earnings adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include the unrealized ~~loss (gain)~~(gains) losses on the investment in MGM, deferred income taxes, depreciation, non-cash lease expense (including ROU impairments), amortization of intangibles, pension and postretirement benefit expense, ~~net gains~~losses (gains) on sales of businesses and investments in equity securities, ~~depreciation,~~ stock-based compensation expense, provision for credit losses ~~non-cash lease expense (including right-of-use asset impairments),~~ and unrealized increase in the estimated fair value of a warrant.

2023

Adjustments to net earnings consist primarily of an unrealized gain on the investment in MGM of $704.8 million and an unrealized increase in the estimated fair value of a warrant of $5.9 million, partially offset by deferred taxes of $127.2 million, depreciation of $61.2 million, non-cash lease expense of $58.7 million, amortization of intangibles of $54.6 million, stock-based compensation expense of $28.9 million, provision of credit losses of $24.8 million and net losses on sales of businesses and investments in equity securities of $2.5 million. The decrease from changes in working capital include decreases in accounts payable and other liabilities of $107.4 million and operating lease liabilities of $19.7 million, partially offset by a decrease in accounts receivable of $43.0 million, a decrease in other assets of $27.0 million and an increase in deferred revenue of $15.4 million. The decrease in accounts payable and other liabilities is due primarily to decreases in (i) accrued employee compensation due primarily to payment of 2022 bonuses in 2023, a decrease in accrued payroll due to timing of payments and restructuring related severance payments at Dotdash Meredith and (ii) decreases in accounts payable at Dotdash Meredith, due primarily to a decrease in spend in the first quarter of 2023 relative to the fourth quarter of 2022 and timing of payments, and at Care.com, due primarily to timing of payments. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion. The decrease in accounts receivable is due primarily to a decrease in revenue in the first quarter of 2023 relative to the fourth quarter of 2022 at Dotdash Meredith, partially offset by an increase at Angi Inc., due primarily to timing of cash receipts for credit card transactions. The decrease in other assets is due, in part, to a decrease in prepaid hosting services at Angi Inc., Dotdash Meredith and Corporate. The increase in deferred revenue is due primarily to timing of annual subscription renewals at Care.com.

Net cash provided by investing activities includes maturities of marketable debt securities of $137.5 million and proceeds from the sales of assets of $29.4 million, including $28.9 million related to the sale of a building at Dotdash Meredith, partially offset by $98.5 million for the purchases of marketable debt securities and capital expenditures of $21.9 million primarily related to investments in capitalized software at Angi Inc. to support its products and services and payment of $8.1 million related to the acquisition of the formerly leased land under IAC's New York City headquarters building. The purchase of the land was completed in April 2023.

Net cash used in financing activities includes the repurchase of 1.7 million shares of IAC common stock, on a settlement date basis, for $84.7 million at an average price of $51.16 per share, principal payments on Dotdash Meredith Term Loan A and Dotdash Meredith Term Loan B of $7.5 million, withholding taxes paid on behalf of IAC employees, excluding Angi Inc., for stock-based awards that were net settled of $2.2 million and withholding taxes paid on behalf of Angi Inc. employees for stock-based awards that were net settled of $1.4 million.

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2022

Adjustments to net ~~losses attributable to continuing operations~~loss consist primarily of an unrealized loss on the investment in MGM of $187.3 million, amortization of intangibles of $57.2 million, pension and postretirement benefit expense of $36.3 million, depreciation of $30.2 million, stock-based compensation expense of $29.7 million, provision of credit losses of $23.3 million and non-cash lease expense of $13.7 million, partially offset by deferred taxes of $76.9 million, net gains on investments in equity securities of ~~$34.8~~$35.9 million and an unrealized increase in the estimated fair value of a warrant of $8.0 million. The decrease from changes in working capital include decreases in accounts payable and other liabilities of ~~$84.0~~$82.6 million and operating lease liabilities of $17.2 million, partially offset by a decrease in accounts receivable of ~~$75.3~~$75.6 million and an increase in deferred revenue of $11.3 million. The decrease in accounts payable and other liabilities is due primarily to a decrease in accrued employee compensation due, in part, to payment of 2021 bonuses in 2022 and payment of commissions, partially offset by an increase in restructuring charges at Dotdash Meredith, and a decrease in accrued traffic acquisition costs at Search. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion. The decrease in accounts receivable is due primarily to a decrease in revenue in the first quarter of 2022 relative to the fourth quarter of 2021 at Dotdash Meredith and Search, partially offset by revenue growth at Angi Inc., primarily attributable to Angi Services. The increase in deferred revenue is due primarily to ~~the growth in~~timing of annual subscription ~~sales~~renewals at Care.com.

Net cash used in investing activities ~~attributable to continuing operations~~ includes $202.5 million for the purchase of an additional 4.5 million shares of MGM and capital expenditures of $30.5 million primarily related to investments in capitalized software at Angi Inc. to support its products and services.

Net cash used byin financing activities ~~attributable to continuing operations~~ includes withholding taxes paid on behalf of IAC employees, excluding Angi Inc., for stock-based awards that were net settled of $14.9 million, the repurchase of 1.0 million shares of Angi Inc. Class A common stock, on a settlement date basis, for $8.1 million at an average price of $7.80 per share, principal payments on Dotdash Meredith Term Loan A and Dotdash Meredith Term Loan B of $7.5 million and withholding taxes paid on behalf of Angi Inc. employees for stock-based awards that were net settled of $1.3 million.

~~Table of Contents~~

~~2021~~

Adjustments to net earnings attributable to continuing operations consist primarily of $382.5 million of unrealized gain on the investment in MGM and an unrealized increase in the estimated fair value of a warrant of $12.8 million, partially offset by $51.7 million of deferred income taxes, $19.3 million of provision for credit losses, $19.2 million of depreciation, $18.3 million of stock-based compensation expense, $16.8 million of amortization of intangibles, and non-cash lease expense (including right-of-use asset impairments) of $6.6 million. The decrease from changes in working capital primarily consists of an increase in accounts receivable of $40.5 million and a decrease in operating lease liabilities of $6.9 million, partially offset by an increase in deferred revenue of $17.1 million, a decrease in other assets of $8.0 million and an increase in accounts payable and other liabilities of $5.2 million. The increase in accounts receivable is due primarily to revenue growth at Angi Inc. and the timing of cash receipts at Mosaic. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion. The increase in deferred revenue is due primarily to growth in subscription sales at Care.com. The decrease in other assets is due primarily to decreases in capitalized downloadable search toolbar costs at Search and prepaid hosting services at Corporate and Angi Inc. The increase in accounts payable and other liabilities is due primarily to an increase in accrued advertising and related payables at Angi Inc. and an increase in payroll and related tax liabilities related to Care.com's payment solution business, partially offset by a decrease in accrued employee compensation related to the payment of 2020 cash bonuses in 2021 and payment of commissions, and payment related to the termination of a production at IAC Films.

Net cash provided by investing activities attributable to continuing operations includes maturities of marketable debt securities of $225.0 million, partially offset by capital expenditures of $20.2 million, primarily related to investments in capitalized software at Angi Inc. to support its products and services, and purchases of long-term investments of $7.2 million, primarily related to Turo.

Net cash used in financing activities attributable to continuing operations includes $48.2 million for withholding taxes paid on behalf of Angi Inc. employees for stock-based awards that were net settled, $22.9 million for the purchase of redeemable noncontrolling interests, $18.3 million for withholding taxes paid on behalf of IAC employees for stock-based awards that were net settled, $6.9 million for the prepayment of the ANGI Group Term Loan required quarterly payment that was otherwise due in the first quarter of 2022, $4.9 million for the repurchase of 0.4 million shares of Angi Inc. Class A common stock, on a settlement date basis, at an average price of 11.85 per share.

~~Discontinued Operations~~

Net cash provided by discontinued operations of $302.9 million for the three months ended March 31, 2021 relates to the operations of Vimeo. The Company does not expect cash flows from discontinued operations following the Spin-off.

Liquidity and Capital Resources

Financing Arrangements

~~Dotdash Meredith Term Loans and Dotdash Meredith Revolving Facility~~

~~On December 1, 2021,~~In March 2023, Dotdash Meredith entered into interest rate swaps for a ~~credit agreement ("~~total notional amount of $350 million with a maturity date of April 1, 2027 to manage interest rate risk exposure. Dotdash Meredith ~~Credit Agreement"), which provides for (i)~~designated the ~~five-year~~interest rate swaps as cash flow hedges and applies hedge accounting to these contracts. The interest rate swaps synthetically convert $350 million Dotdash Meredith Term Loan A, (ii) the seven-year $1.25 billion Dotdash Meredith Term Loan B and (iii) the five-year $150 million Dotdash Meredith Revolving Facility. The proceeds of the Dotdash Meredith Term Loans were used to fund a portion of the purchase price for the acquisition of Meredith and pay related fees and expenses.

~~The outstanding balances~~ of the Dotdash Meredith Term Loan ~~A and Dotdash Meredith Term Loan~~ B ~~were $345.6 million and $1.25 billion and bore interest at 2.29% and 4.50% at March 31, 2022, respectively. Interest payments are due at least quarterly through~~for the ~~terms~~duration of the ~~Dotdash Meredith Term Loans. The Dotdash Meredith Term Loan A requires quarterly principal payments~~interest rate swaps to a fixed rate of approximately ~~$4.4 million through December 31, 2024, $8.8 million through December 31, 2025 and~~7.92% ((i) the weighted average fixed interest rate of approximately ~~$13.1 million thereafter through maturity. The Dotdash Meredith Term Loan B requires quarterly payments of $3.1 million through maturity. Commencing December 31, 2022, pursuant~~3.82% on the interest rate swaps plus (ii) the adjustment to the ~~Dotdash Meredith Credit Agreement,~~secured overnight financing rate of 0.10% plus (iii) the Dotdash Meredith Term Loan B may require additional annual principal payments as part of an excess cash flow sweep provision, the amount of which, in part, is governed by Dotdash Meredith's net leverage ratio.

~~Table of Contents~~

There were no outstanding borrowings under the Dotdash Meredith Revolving Facility at March 31, 2022. The annual commitment fee on undrawn funds is based on the consolidated net leverage ratio, as defined in the Dotdash Meredith Credit Agreement, most recently reported and was 35 basis points at March 31, 2022. Any borrowings under the Dotdash Meredith Revolving Facility would bear interest, at Dotdash Meredith's option, at either a base rate ~~or term benchmark~~of 4.00%), beginning April 2023.

For a detailed description of long-term debt and interest rate ~~plus an applicable margin, which is based on Dotdash Meredith's net leverage ratio.~~

Asswaps, see "Note 1—The Company and Summary of the last day of any calendar quarter ending on or after March 31, 2022, if either (i) $1.00 or more of loans under the Dotdash Meredith Revolving Facility or Dotdash Meredith Term Loan A are outstanding, or (ii) the outstanding face amount of undrawn letters of credit, other than cash collateralized letters of credit at 102% of face value, exceeds $25 million, subject to certain increases for qualifying material acquisitions, then Dotdash Meredith will not permit the consolidated net leverage ratio as of the last day of such quarter to exceed 5.5 to 1.0. There were no such limitations at March 31, 2022.

~~The obligations under the Dotdash Meredith Credit Agreement are guaranteed by certain of Dotdash Meredith's wholly-owned subsidiaries,~~Significant Accounting Policies" and ~~are secured by substantially all of the assets of Dotdash Meredith and certain of its subsidiaries.~~

~~ANGI Group~~"Note 4—Long-term Debt

~~The ANGI Group Senior Notes were issued on August 20, 2020. At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal~~" to the ~~sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium. Thereafter, these notes may be redeemed at the redemption prices set forth~~financial statements included in ~~the indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the applicable redemption date.~~"Item 1—Consolidated Financial Statements."

~~The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money~~Investment in ~~the event a default has occurred or ANGI Group’s secured leverage ratio (as defined in the indenture) exceeds 3.75 to 1.0.~~ MGM

At March 31, 2023, the Company owns 64.7 million shares of MGM, including 4.5 million shares purchased in the first quarter of 2022 ~~there were no limitations pursuant thereto.~~for $202.5 million, representing a 17.6% ownership.

Investment in Turo

In April 2023, the Company purchased additional shares of Turo for $103.6 million. Following the purchase, IAC's aggregate percentage ownership in Turo is approximately 31%.

Share Repurchase Authorizations and Activity

~~The $250 million ANGI Group Revolving Facility, which otherwise would have expired on November 5,~~ 2023, ~~was terminated effective August 3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.~~

~~Investment in MGM Resorts International~~

~~On February 16, 2022, the Company purchased an additional 4.5~~IAC repurchased 1.8 million shares of ~~MGM for $202.5 million. Following this purchase, the Company owns approximately 63.5 million shares, representing a 14.5%ownership interest in MGM as of February 23, 2022.~~

~~Share Repurchase Authorizations and Activity~~

~~At March 31, 2022, IAC has 8.0 million shares remaining in~~ its ~~share repurchase authorization.~~

~~During the three months ended March 31, 2022, Angi Inc. repurchased 1.0 million shares of its Class A~~ common stock, on a trade date basis, at an average price of ~~$7.80~~$51.16 per share, or ~~$8.1~~$90.9 million in aggregate. From April 1, 2023 through May 5, 2023, IAC repurchased an additional 1.3 million shares of its common stock, on a trade date basis, at an average price of $50.47 per share, or $67.2 million in aggregate. At ~~March 31, 2022~~May 5, 2023, IAC has 3.8 million shares remaining in its share repurchase authorization.

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At May 5, 2023 Angi Inc. has 15.0 million shares remaining in its share repurchase authorization.

IAC and Angi Inc. may purchase their shares and debt instruments over an indefinite period of time 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.

~~Table of Contents~~

Outstanding Stock-based Awards

IAC and Angi Inc. may settle stock options, stock settled stock appreciation rights, restricted stock units ("RSUs") and restricted stock on a gross or a net basis based upon factors deemed relevant at the time. To the extent that equity awards are settled on a net basis, the holders of the awards receive shares of IAC or Angi Inc., as applicable, with a value equal to the fair value of the award on the vest date for RSUs and restricted stock and with a value equal to the intrinsic value of the award upon exercise for stock options or stock settled appreciation rights less, in each case, an amount equal to the required cash tax withholding payment, which will be paid by IAC or Angi Inc., as applicable, on the employee's behalf. All awards are being settled currently on a net basis.

~~Certain previously issued Angi Inc. stock appreciation rights are settleable in either shares of Angi Inc. common stock or shares of IAC common stock at IAC's option.If settled in IAC common stock, Angi Inc. reimburses IAC in shares of Angi Inc.'s common stock.~~

The following table summarizes (i) the aggregate intrinsic value of IAC options, Angi Inc. options, Angi Inc. stock settled stock appreciation rights, IAC and Angi Inc. non-publicly traded subsidiary denominated stock settled stock appreciation rights and (ii) the aggregate fair value (based on stock prices as of May ~~6, 2022)~~5, 2023) of IAC and Angi Inc. RSUs and IAC restricted stock outstanding as of that date; assuming these awards were net settled on that date, the withholding taxes that would be paid by the Company on behalf of employees upon exercise or vesting that would be payable (assuming these equity awards are net settled with a 50% tax rate), and the shares that would have been issued are as follows:


		Aggregate intrinsic value / fair value of awards outstanding		Estimated withholding taxes payable on vested shares and shares that will vest by March 31, 2023		Estimated withholding taxes payable on shares that will vest after March 31, 2023		Estimated IAC shares to be issued		Aggregate intrinsic value / fair value of awards outstanding		Estimated withholding taxes payable on vested shares and shares that will vest by March 31, 2024		Estimated withholding taxes payable on shares that will vest after March 31, 2024		Estimated IAC shares to be issued
		(In thousands)								(In thousands)
IAC	IAC								IAC
Stock settled stock appreciation rights denominated in shares of certain non-publicly traded IAC subsidiaries other than Angi Inc. subsidiaries (a)	Stock settled stock appreciation rights denominated in shares of certain non-publicly traded IAC subsidiaries other than Angi Inc. subsidiaries (a)	$	38,473	$	13,928	$	5,308	249	Stock settled stock appreciation rights denominated in shares of certain non-publicly traded IAC subsidiaries other than Angi Inc. subsidiaries (a)	$	27,921	$	11,568	$	2,392	263
IAC denominated stock options (b)	IAC denominated stock options (b)	182,865		91,432		—		1,185	IAC denominated stock options (b)	108,721		54,360		—		1,024
IAC RSUs (c)	IAC RSUs (c)	117,443		1,490		55,200		787	IAC RSUs (c)	91,943		2,658		42,136		888
IAC restricted stock (d)	IAC restricted stock (d)	—		—		—		—	IAC restricted stock (d)	—		—		—		—
Total IAC outstanding employee stock-based awards	Total IAC outstanding employee stock-based awards	338,781		106,850		60,508		2,221	Total IAC outstanding employee stock-based awards	228,585		68,586		44,528		2,175

Angi Inc.	Angi Inc.								Angi Inc.
Angi Inc. RSUs									Angi Inc. RSUs	61,800		7,586		22,801
Angi Inc. stock appreciation rights	Angi Inc. stock appreciation rights	943		471		—		See footnote (f) below	Angi Inc. stock appreciation rights	—		—		—		See footnote (f) below
Other Angi Inc. equity awards (a)(e)	Other Angi Inc. equity awards (a)(e)	88,069		12,275		31,362		See footnote (f) below	Other Angi Inc. equity awards (a)(e)	46		23		—		See footnote (f) below
Total Angi outstanding employee stock-based awards		89,012		12,746		31,362
Total Angi Inc. outstanding employee stock-based awards									Total Angi Inc. outstanding employee stock-based awards	61,846		7,609		22,801
Total outstanding employee stock-based awards	Total outstanding employee stock-based awards	$	427,793	$	119,596	$	91,870		Total outstanding employee stock-based awards	$	290,431	$	76,195	$	67,329

~~_______________~~_____________________

(a) The number of shares ultimately needed to settle these awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant subsidiary at the time of exercise. In addition, the number of shares required to settle these awards will be impacted by movement in the stock price of IAC.

(b) The Company has the discretion to settle these awards net of withholding tax and exercise price (which is represented in the table above) or settle on a gross basis and require the award holder to pay its share of the withholding tax, which he or she may do by selling IAC common shares. Assuming all IAC stock options outstanding on May ~~6, 2022~~5, 2023 were settled on a gross basis ~~i.e.~~(i.e., through the issuance of a number of IAC common shares equal to the number of stock options ~~exercised,~~exercised) the Company would have issued ~~2.9~~2.8 million common shares and would have received ~~$40.5~~$39.2 million in cash proceeds. ~~These amounts reflect adjustments made to IAC awards upon the completion~~

Table of ~~the Spin-off.~~Contents

(c) Approximately ~~80%~~70% of the estimated withholding taxes payable on ~~shares that will~~RSUs, which vest after March 31, ~~2023~~2024, is related to awards that are scheduled to cliff vest in 2025, the five-year anniversary of the grant date.

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(d) On November 5, 2020, the Company granted 3.0 million shares of IAC restricted common stock to its CEO, that cliff vest on the ten-year anniversary of the grant date based on satisfaction of IAC's stock price targets and continued employment through the vesting date. The IAC stock price is currently below the minimum price threshold to earn the award.

(e) Includes Angi Inc. stock options ~~RSUs~~ and subsidiary denominated equity.

(f) Pursuant to the employee matters agreement between IAC and Angi Inc., certain stock appreciation rights of Angi, Inc. and equity awards denominated in shares of Angi Inc.'s subsidiaries may be settled in either shares of Angi Inc. common stock or IAC common stock. To the extent shares of IAC common stock are issued in settlement of these awards, Angi Inc. is obligated to reimburse IAC for the cost of those shares by issuing shares of Angi Inc. common stock.

Contractual Obligations

In March 2023, the Company entered into an agreement to acquire the formerly leased land under its New York City headquarters building, which purchase was completed in April 2023 for a total purchase price of approximately $80.0 million, including $8.1 million paid in March 2023. At March 31, ~~2022,~~2023, there have been no other material changes to the Company's contractual obligations since the disclosures for the year ended December 31, ~~2021,~~2022, included in the Company's Annual Report on Form 10-K.

Capital ~~and Other~~ Expenditures

The Company anticipates that it will need to make capital ~~and other~~ expenditures in connection with the development and expansion of its operations. The Company's ~~2022~~2023 capital expenditures are expected to be higher than ~~2021~~its 2022 capital expenditures of ~~$90.2~~$139.8 million by approximately ~~20%~~5% to ~~30%~~10%, due primarily ~~due~~to the acquisition of the formerly leased land described above, partially offset by lower capital expenditures related to the development of capitalized software ~~to support products~~at Angi Inc. and ~~services at~~Care.com.

Liquidity Assessment

On a consolidated basis, the Company generated positive cash flows from operating activities of $25.2 million for the three months ended March 31, 2023; excluding the positive cash flows from operating activities of $19.1 million generated by Angi Inc. and negative cash flows from operating activities of $5.8 million generated by Dotdash Meredith, ~~and Angi Inc.~~

~~Liquidity Assessment~~the Company generated positive cash flows from operating activities of $11.9 million.

At March 31, ~~2022,~~2023, the Company's consolidated cash, cash equivalents and marketable ~~equity~~ securities, excluding MGM, ~~was $1.9~~were $1.6 billion, of which ~~$391.3~~$327.5 million and ~~$229.9~~$275.8 million was held by Angi Inc. and Dotdash Meredith, respectively. The Company's consolidated debt includes approximately $1.6 billion, which is a liability of Dotdash Meredith, Inc., ~~a subsidiary of IAC,~~ and $500.0 million, which is a liability of ANGI Group, a subsidiary of Angi Inc. The ~~Company generated $12.9 million of operating cash flows~~Dotdash Meredith Credit Agreement contains covenants that would limit Dotdash Meredith’s ability to pay dividends, incur incremental secured indebtedness, or make distributions or certain investments in the event a default has occurred or if Dotdash Meredith’s consolidated net leverage ratio, as defined in the Dotdash Meredith Credit Agreement, exceeds 4.0 to 1.0; this ratio was exceeded for the ~~quarter~~test period ended March 31, ~~2022, of which $10.1 million was generated by~~2023. The Dotdash Meredith Credit Agreement also permits the Company to, among other things, contribute cash to Dotdash Meredith, which will provide additional liquidity to ensure that Dotdash Meredith does not exceed certain consolidated net leverage ratios for any test period, as further defined in the Dotdash Meredith Credit Agreement. In connection with these capital contributions, Dotdash Meredith may make distributions to IAC in amounts not more than any such capital contributions, provided that no default has occurred and ~~$0.7~~is continuing. Such capital contributions and subsequent distributions impact the consolidated net leverage ratios of Dotdash Meredith. In March 2023, the Company contributed $135.0 million ~~was used by Angi Inc., respectively.~~to Dotdash Meredith, which Dotdash Meredith subsequently distributed back to the Company in April 2023. Angi Inc. is ~~a separate and distinct legal entity~~an independent public company with its own public shareholders and board of directors and has no obligation to provide the Company with funds. As a result, the Company cannot freely access the cash of Angi Inc. and its subsidiaries. In addition, the Dotdash Meredith Credit Agreement contains covenants that would limit Dotdash Meredith’s ability to pay dividends or make distributions in the event a default has occurred or if Dotdash Meredith’s consolidated net leverage ratio (as defined in the Dotdash Meredith Credit Agreement) exceeds 4.0 to 1.0. There were no such limitations at March 31, 2022.

The Company's liquidity could be negatively affected by a decrease in demand for its products and services due to ~~COVID-19~~economic or other factors.

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The Company believes ~~its~~Angi Inc.'s and Dotdash Meredith's existing cash, cash equivalents and expected positive cash flows ~~generated~~ from operations, and ~~that of~~the Company's existing cash and cash equivalents, excluding Angi Inc. and Dotdash Meredith, ~~and Angi Inc.,~~ will be sufficient to fund their respective normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards and investing and other commitments for the next twelve months. The Company may need to raise additional capital through future debt or equity financing to make ~~additional~~ acquisitions and ~~investments beyond the next twelve months.~~investments. Additional financing may not be available on terms favorable to the Company, or at all, ~~which~~and may also be impacted by any disruptions in the financial ~~markets caused by COVID-19 or otherwise.~~markets. The indebtedness at Dotdash Meredith and Angi Inc., could further limit the Company's ability to raise ~~incremental~~additional financing.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

At March 31, 2022, there have been no material changes to the Company's instruments or positions that are sensitive to market risk since the disclosure for the year ended December 31, 2021 included in the Company's Annual Report on Form 10-K, other than the Company's long-term investment in MGM described below.

Equity Price Risk

~~On February 16, 2022, the Company purchased an additional 4.5 million shares of MGM for $202.5 million. Following this purchase,~~At March 31, 2023, the Company owns approximately ~~63.5~~64.7 million shares ~~representing a 14.5%~~of MGM. For the three months ended March 31, 2023 and 2022, the Company recorded an unrealized pre-tax gain and loss of $704.8 million and $187.3 million, respectively, on its investment in MGM.

~~ownership interest~~The cumulative unrealized net pre-tax gain through March 31, 2023 is $1.6 billion. At March 31, 2023 and December 31, 2022, the carrying value of the Company's investment in MGM, aswhich includes the cumulative unrealized pre-tax gains, was $2.9 billion and $2.2 billion, or approximately 27% and 21% of ~~February 23, 2022.~~the Company's consolidated total assets, respectively. A $2.00 increase or decrease in the share price of MGM would result in an unrealized gain or loss, respectively, of $129.4 million. At May 5, 2023, the carrying value of the Company's investment in MGM was $2.8 billion. The Company's results of operations and financial condition have in the past been and may in the future be materially impacted by increases or decreases in the price of MGM common shares, which are traded on the New York Stock Exchange. ~~The Company recorded an unrealized pre-tax loss~~

Interest Rate Risk

At March 31, 2023, the principal amount of ~~$187.3~~the Company's outstanding debt totals $2.1 billion, of which $1.6 billion is the Dotdash Meredith Term Loans, which bear interest at a variable rate, and $500.0 million ~~and an unrealized pre-tax gain of $382.5 million for~~is the ANGI Group Senior Notes, which bear interest at a fixed rate.

During the three months ended March 31, ~~2022 and 2021, respectively. The cumulative unrealized net pre-tax gain through~~2023, Adjusted Term SOFR for the Dotdash Meredith Term Loans increased an average of approximately 65 basis points relative to December 31, 2022. As a result of the increase in Adjusted Term SOFR during the three months ended March 31, ~~2022 is $1.4 billion.~~ 2023, the interest expense on Dotdash Meredith Term Loans was $2.0 million higher as compared to what interest expense would have been if the Adjusted Term SOFR been unchanged during 2023. At March 31, 2023, the outstanding balance of $1.23 billion related to the Dotdash Meredith Term Loan B bore interest at Adjusted SOFR, subject to a minimum of 0.50%, plus 4.00%, or 8.77%, and the outstanding balance of $328.1 million related to the Dotdash Meredith Term Loan A bore interest at Adjusted Term SOFR plus 2.25%, or 6.94%. If Adjusted Term SOFR were to increase or decrease by 100 basis points, the annual interest expense on the Dotdash Meredith Term Loans would increase or decrease by $15.7 million, excluding the impact of our interest rate swaps. In March 2023, we entered into interest rate swaps for a total notional amount of $350 million to synthetically convert a portion of the Dotdash Meredith Term Loan B from floating rate to fixed rate to manage interest rate risk exposure and applies hedge accounting to these contracts. See "Note 1—The ~~carrying~~Company and Summary of Significant Accounting Policies" and "Note 4—Long-term Debt" to the financial statements included in "Item 1—Consolidated Financial Statements" for more information. The fair value of the ~~Company's investment~~interest rate swaps is estimated based on discounted cash flows the Company would pay or receive to terminate the swap agreements. The Company intends to continue to meet the conditions for hedge accounting, however, if these interest rate swaps were not highly effective in ~~MGM, which includes~~offsetting cash flows attributable to the ~~cumulative unrealized pre-tax gains, was $2.7 billion and $2.6 billion at March 31, 2022 and December 31, 2021, respectively, which represents approximately 22%~~hedged risk, the changes in the fair value of ~~IAC's consolidated total assets at both March 31, 2022 and December 31, 2021.~~the interest rate swaps used as hedges could have a significant impact on our future results of operations.

If market rates decline relative to interest rates on the ANGI Group Senior Notes, the Company runs the risk that the related required interest payments will exceed those based on market rates. A ~~$2.00~~100-basis point increase or decrease in the ~~share price~~level of ~~MGM~~interest rates would, respectively, ~~result~~decrease or increase the fair value of the fixed-rate debt by $22.9 million. Such potential increase or decrease in fair value is based on certain simplifying assumptions, including an ~~unrealized pre-tax gain~~immediate increase or ~~loss~~decrease in the level of ~~$127.1 million.~~interest rates with no other subsequent changes for the remainder of the period, nor changes in the credit profile.

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Item 4. Controls and Procedures

The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over financial reporting in order to improve their overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), ~~the Company’s~~ management, including our ~~principal executive~~Chairman and ~~principal financial officers, or persons performing similar functions, evaluated~~Senior Executive, Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), conducted an evaluation, as of the end of the period covered by this quarterly report, of the effectiveness of the Company's disclosure controls and procedures as defined by Rule 13a-15(e) under the Exchange Act. Based on this evaluation, ~~management has~~our Chairman and Senior Executive, CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

~~There were~~The Company monitors and evaluates on an ongoing basis its internal control over financial reporting in order to improve its overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.

During the quarter ended March 31, 2023, there have been no changes to our internal control over financial reporting ~~during the quarter ended March 31, 2022~~ that have materially affected, or are reasonably likely to materially affect, ~~our~~the Company's internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Overview

In the ordinary course of business, IAC and its subsidiaries may become parties to litigation involving property, personal injury, contract, intellectual property and other claims, as well as stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. The litigation ~~matters~~matter described below ~~involve~~involves issues or claims that may be of particular interest to IAC's stockholders, regardless of whether ~~any of these matters~~such matter may be material to IAC's financial position or operations based upon the standard set forth in the rules of the Securities and Exchange Commission.

Shareholder Litigation Arising Out of the MTCH Separation

~~On June 24, 2020, a~~This shareholder class action and derivative lawsuit ~~was filed~~pending in Delaware state court against then IAC/InterActiveCorp (now Match Group, Inc.), then IAC Holdings, Inc. (now IAC/InterActiveCorp), IAC's Chairman and Senior Executive, Barry Diller, former Match Group (as a nominal defendant only), andis described in detail under the ~~ten members~~captions Part I-Item 3-Legal Proceedings of ~~former Match Group's board of directors at~~our annual report on Form 10-K for the ~~time of the MTCH Separation, challenging, on behalf of a putative class of then Match Group public shareholders, the agreed-upon terms of the MTCH Separation.~~ fiscal year ended December 31, 2022 (page 34). See David Newman v. IAC/InterActiveCorp et al., No. 2020-0505 (Delaware Chancery Court)~~. The gravamen of~~, and Construction Industry & Laborers Joint Pension Trust for Southern Nevada Plan A v. IAC/InterActiveCorp et al. (Delaware Chancery Court), which have been consolidated under the ~~complaint is~~caption In re Match Group, Inc. Derivative Litigation,No. 2020-0505. This lawsuit alleges that the terms of the MTCH Separation (as defined on page 28 of this quarterly report) are unfair to the former Match Group public shareholders and unduly beneficial to IAC as a result of undue influence by IAC and Mr. Diller over the then Match Group directors who unanimously approved the ~~transaction. The complaint asserted~~transaction and asserts a variety of direct and derivative claims for: (i) breach of fiduciary duty against IAC and Mr. Diller as former controlling shareholders of Match Group, (ii) breach of fiduciary duty against the Match Group directors who unanimously approved the MTCH Separation, (iii) breach of contract (i.e., a provision of former Match Group's charter), (iv) breach of the implied covenant of good faith and fair dealing, and (v) tortious interference with contract against IAC. The complaint sought various declarations and damages in an unspecified amount.

On September 24, 2020, the defendants filed motions to dismiss the complaint. On January 8, 2021, instead of responding to the motions to dismiss, the plaintiff, joined by another plaintiff, Boilermakers National Annuity Trust, filed an amended complaint. In addition, on January 7, 2021, another complaint challenging the MTCH Separation was filed against substantially the same defendants in the same court. ~~See Construction Industry & Laborers Joint Pension Trust for Southern Nevada Plan A v. IAC/InterActiveCorp et al.~~ ~~(Delaware Chancery Court). The two cases have been consolidated under the caption~~ ~~In re Match Group, Inc. Derivative Litigation~~,~~No. 2020-0505. On March 15, 2021,~~claims. As previously reported, the court ~~issued an order appointing Construction Industry~~dismissed the action in September 2022, and Laborers Joint Pension Trust for Southern Nevada Plan A as lead plaintiff in the litigation and directing it to file a consolidated complaint by April 14, 2021, and on that date the lead plaintiff filed the consolidated complaint.

~~On June 22, 2021, the defendants filed motions to dismiss the consolidated complaint. On September 3, 2021, instead of responding to the motions,~~ the plaintiffs filed motions to add City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust as a co-lead plaintiff and to amend and supplement the consolidated complaint, which latter motion the defendants opposed. On October 27, 2021, the court issued an order granting the motions. On November 2, 2021, the plaintiffs filed an amended and supplemented consolidated complaint.

On December 10, 2021, the defendants filed motions to dismiss the amended and supplemented consolidated complaint. On January 25, 2022, the plaintiffs filed their opposition to the motions. On February 24, 2022, the defendants filed reply briefs in support of the motions.appealed. On May ~~4, 2022,~~3, 2023, the ~~court held~~Delaware Supreme Court heard oral argument on the ~~motions,~~appeal, which ~~remain~~remains pending.

IAC believes that the allegations in this litigation are without merit and will continue to defend vigorously against them.

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Item 1A. Risk Factors

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains "forward‑looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipates," "estimates," "expects," "plans" and "believes," among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: IAC's future financial performance, IAC's business prospects and strategy, anticipated trends and prospects in the industries in which IAC's businesses operate and other similar matters. These forward-looking statements are based on IAC management's expectations and assumptions about future events as of the date of this quarterly report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

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Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others: (i) our ability to market our products and services in a successful and cost-effective manner, (ii) the display of links to websites offering our products and services in a prominent manner in search results, (iii) changes in our relationship with (or policies implemented by) Google, (iv) our continued ability to market, distribute and monetize our products and services through search engines, digital app stores, advertising networks and social media platforms, (v) the failure or delay of the markets and industries in which our businesses operate to migrate online and the continued growth and acceptance of online products and services as effective alternatives to traditional products and services, (vi) our continued ability to develop and monetize versions of our products and services for mobile and other digital devices, (vii) adverse economic events or trends that adversely impact advertising spending levels, (viii) the ability of our Digital business to successfully expand the digital reach of our portfolio of publishing brands, (ix) risks related to our Print business (declining revenue, increased paper and postage costs, reliance on a single supplier to print our magazines and ~~increased~~potential increases in pension plan obligations), ~~(ix) the ability of our Digital business to successfully expand the digital reach of our portfolio of publishing brands,~~ (x) our ability to establish and maintain relationships with quality and trustworthy service professionals and caregivers, (xi) the ability of Angi Inc. to successfully implement its brand initiative and expand Angi Services (its pre-priced offerings), while balancing the overall mix of service requests and directory services on Angi platforms, (xii) our ability to access, collect and use personal data about our users and subscribers, (xiii) our ability to engage directly with users, subscribers, consumers, service professionals and caregivers on a timely basis, ~~(xiii) our ability to access, collect and use personal data about our users and subscribers,~~ (xiv) the ability of our Chairman and Senior Executive, certain members of his family and our Chief Executive Officer to exercise significant influence over the composition of our board of directors, matters subject to stockholder approval and our operations, (xv) risks related to our liquidity and indebtedness (the impact of our indebtedness on our ability to operate our business, our ability to generate sufficient cash to service our indebtedness and interest rate risk), (xvi) our inability to freely access the cash of Dotdash Meredith and/or Angi Inc. and their respective subsidiaries, (xvii) dilution with respect to ~~our investment~~investments in IAC and Angi Inc., (xviii) our ability to compete, (xix) adverse economic events or trends (particularly those that adversely impact consumer confidence and spending behavior), either generally and/or in any of the markets in which our businesses operate, as well as geopolitical conflicts, (xx) our ability to build, maintain and/or enhance our various brands, (xxi) the adverse impact of ~~the~~ COVID-19 ~~outbreak~~and other similar outbreaks on our businesses, (xxii) our ability to protect our systems, technology and infrastructure from cyberattacks and to protect personal and confidential user information (including credit card information), as well as the impact of cyberattacks experienced by third parties, (xxiii) the occurrence of data security breaches and/or fraud, (xxiv) increased liabilities and costs related to the processing, storage, use and disclosure of personal and confidential user information, (xxv) the integrity, quality, efficiency and scalability of our systems, technology and infrastructure (and those of third parties with whom we do business) and (xxvi) changes in key ~~personnel..~~personnel.

Certain of these and other risks and uncertainties are discussed in our filings with the SEC, including under the caption Part I-Item 1A-Risk Factors of our annual report on 10-K for the fiscal year ended December 31, ~~2021.~~2022, as well as below. Other unknown or unpredictable factors that could also adversely affect IAC's business, financial condition and operating results may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of IAC management as of the date of this quarterly report. IAC does not undertake to update these forward-looking statements.

Risk Factors

In addition to the other information set forth in this quarterly report, you should carefully consider the risk factors discussed under the caption Part I-Item 1A-Risk Factors of our annual report on 10-K for the fiscal year ended December 31, ~~2021,~~2022, and the risk factor below, any or all of which could materially and adversely affect IAC's business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect IAC's business, financial condition and/or operating results.

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Marketing efforts designed to drive visitors to our various brands and businesses may not be successful or cost-effective.

Traffic building and conversion initiatives involve considerable expenditures for online and offline advertising and marketing. We have made, and expect to continue to make, significant expenditures for search engine marketing (primarily in the form of the purchase of keywords, which we purchase primarily through Google and, to a lesser extent, Microsoft and Yahoo!), social media advertising and other online display advertising and traditional offline advertising (including television and radio campaigns) in connection with these initiatives, which may not be successful or cost-effective. Also, to continue to reach consumers and users, we will need to continue to identify and devote more of our overall marketing expenditures to newer digital advertising channels (such as online video, social media, streaming, OTT and other digital platforms), as well as target consumers and users via these channels in a cost-effective manner. As these channels continue to evolve relative to traditional channels (such as television), it could continue to be difficult to assess returns on related marketing investments. Historically, we have had to increase advertising and marketing expenditures over time in order to attract and convert consumers, retain users of our various products and services and sustain our growth.

Our ability to market our brands and businesses on any given property or channel is subject to the policies of the relevant third-party seller, publisher (including search engines, web browsers and social media platforms with extraordinarily high levels of traffic and numbers of users) or marketing affiliate. As a result, we cannot be certain that these parties will not limit or prohibit us or our affiliate marketing partners from purchasing certain types of advertising (including the purchase by us of advertising with preferential placement or for certain of our products and services) and/or using one or more current or prospective marketing channels in the future. If a significant marketing channel took such an action generally, for a significant period of time and/or on a recurring basis, our business, financial condition and results of operations could be adversely affected. In addition, if we fail to comply with the policies of third-party sellers, publishers and/or marketing affiliates, our advertisements could be removed without notice and/or our accounts could be suspended or terminated, any of which could adversely affect our business, financial condition and results of operations. In addition, any phasing out (or blocking) of third-party cookies by web browsers could adversely affect our business, financial condition and results of operations.

We rely heavily on free search engine marketing to drive traffic to our properties. The display, including rankings, of search results can be affected by a number of factors, many of which are not in our direct control, and may change frequently. Search engines have made changes in the past to their ranking algorithms, methodologies and design layouts that have reduced the prominence of links to websites offering our products and services, and negatively impacted traffic to such websites, and we expect that search engines will continue to make such changes from time to time in the future. However, we may not know how (or otherwise be in a position) to influence actions of this nature taken by search engines. With respect to search results in particular, even when search engines announce the details of their methodologies, their parameters may change from time to time, be poorly defined or be inconsistently interpreted.

Our failure to respond successfully to rapid and frequent changes in the operating and pricing dynamics of search engines, as well as changing policies and guidelines applicable to keyword advertising (which may be unilaterally updated by search engines without advance notice), could adversely affect our paid and free search engine marketing efforts. Specifically, such changes could adversely affect paid listings (both their placement and pricing), as well as the ranking of links to websites offering our products and services within search results, any or all of which could increase our marketing costs (particularly if free traffic is replaced with paid traffic) and adversely affect the effectiveness of our marketing efforts overall. In addition, the failure to respond successfully to policy updates with respect to the phasing out (or blocking) of third party cookies by web browsers (which may be done unilaterally by web browsers without notice), as well as consumers increasingly choosing to use browsers that do not support third party cookies, could also adversely affect the effectiveness of our marketing efforts at those of our businesses that rely on cookies as a meaningful part of their overall marketing strategy.

Moreover, changes in the usage and functioning of search engines as a result of the development of generative artificial intelligence technology (“GAI”) and/or general disruption to the technologies and platforms upon which our businesses rely to provide and market their digital content, products and services, could negatively impact our ability to drive traffic to our properties and monetize our digital content, products and services generally. GAI-powered chatbots and other tools could change the way people access and consume information, and if they supplant traffic to the websites of our businesses (in particular, the Digital business within our Dotdash Meredith financial reporting segment), we could experience decreased traffic and advertising revenues, which could adversely impact our business, financial condition and results of operations. In addition, GAI has the potential to generate digital content and information and develop digital products and services at a much greater scale and in a more cost-effective manner relative to traditional efforts, which could result in increased competition. The failure to adopt or otherwise adapt to evolving GAI capabilities could adversely affect our ability to compete generally, which could adversely affect our business, financial condition and results of operations.

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Lastly, certain of our businesses also enter into various arrangements with third parties (including advertising agencies) to drive traffic to their various brands and businesses and generate leads, which arrangements are generally more cost-effective than traditional marketing efforts. If these businesses are unable to renew existing (and enter into new) arrangements of this nature, sales and marketing costs as a percentage of revenue would increase over the long-term, which could adversely affect our business, financial condition and results of operations. In addition, in the case of traffic and leads generated through third party arrangements, the quality, validity (generated by real users with genuine interest and otherwise acquired in a manner that complies with contractual obligations in place with paid listings providers and/or advertisers) and convertibility of such traffic and leads are dependent on many factors, most of which are not in our control. If the quality, validity and/or convertibility of traffic and leads we acquire via third parties do not meet the expectations of the users of our various products and services, our paid listings providers and/or advertisers (as well any third parties who may acquire such traffic or leads from our paid listings providers and/or advertisers), our business, financial condition and results of operations could be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

The Company did not issue or sell any shares of its common stock or any other equity securities pursuant to unregistered transactions during the quarter ended March 31, ~~2022.~~2023.

Issuer Purchases of Equity Securities

The following table sets forth purchases by the Company ~~did not purchase any~~of shares of ~~its~~IAC common stock during the quarter ended March 31, ~~2022. As~~2023:


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs (2)
January 2023	—	—		—	6,934,494
February 2023	245,000	$	52.08	245,000	6,689,494
March 2023	1,531,000	$	51.01	1,531,000	5,158,494
Total	1,776,000	$	51.16	1,776,000	5,158,494

_____________________

(1) Reflects repurchases of ~~that date, 8,036,226~~IAC common stock made pursuant to the Company’s previously announced June 2020 repurchase authorization (the "Repurchase Authorization").

(2) Represents the total number of shares of IAC common stock that remained available for repurchase as of March 31, 2023 under the Repurchase Authorization. From April 1, 2023 through May 5, 2023, IAC repurchased an additional approximately 1.3 million shares of IAC common stock at an average price paid per share of $50.47 pursuant to the Repurchase Authorization. As of May 5, 2023, there were approximately 3.8 million shares of IAC common stock that remained available for repurchase under the ~~Company's previously announced June 2020 repurchase authorization. The Company~~Repurchase Authorization.

IAC may ~~repurchase~~purchase shares of IAC common stock pursuant to ~~this repurchase authorization~~the Repurchase Authorization over an indefinite period of time in 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.

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Item 6. Exhibits

The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith, incorporated by reference to the location indicated or furnished herewith.


Exhibit Number	Description	Location
3.1	Restated Certificate of Incorporation of IAC Inc.	Exhibit 3.1 to the ~~Registrant.~~Registrant's Annual Repo rt on Form 10-K for the f iscal year ended D ecember 31, 2022.
3.2	Restated Certificate of Incorporation of IAC/InterActiveCorp.	Exhibit 3.1(c) to the ~~Registrant's~~Registrant ’s Current Report on Form 8-K filed on July 2, 2020.
~~3.2~~3.3	Certificate of Amendment toof Restated Certificate of Incorporation of ~~the Registrant.~~IAC/InterActiveCorp.	Exhibit 4.2 to ~~the Registrant's~~ Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4 (File No. 333-251656), filed by the Re gistrant on May 26, 2021.
~~3.3~~3.4	Certificate of Amendment of Restated Certificate of Incorporation of IAC Inc.	Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 12, 2022.
3.5	Certificate of Designations of Series A Cumulative Preferred ~~Stock of the Registrant.~~Stock.	Exhibit 3.2 to the ~~Registrant's~~Registrant ’s Current Report on Form 8-K filed on July 2, 2020.
~~3.4~~3.6	Amended and Restated By-Laws of ~~the Registrant.~~IAC Inc.	Exhibit ~~3.1~~3.2 to the ~~Registrant's~~Registrant's Current Report on Form 8-K, filed on ~~April 9, 2021~~August 12, 2022.
10.1	Amendment No. 1 to Employment Agreement, dated as of March 1, 2023, between IAC Inc. and Mark Stein.(1)(2)
10.2	Form of Notice and Terms and Conditions for 2023 Restricted Stock Unit Awards.(1)(2)
31.1	Certification of the Chairman and Senior Executive pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.(1)
31.2	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.(1)
31.3	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.(1)
32.1	Certification of the Chairman and Senior Executive pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.~~(2)~~(3)

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32.2	Certification of the Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.~~(2)~~(3)
32.3	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.~~(2)~~(3)
101.INS	Inline XBRL Instance.(1)	The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema.(1)
101.CAL	Inline XBRL Taxonomy Extension Calculation.(1)
101.DEF	Inline XBRL Taxonomy Extension Definition.(1)
101.LAB	Inline XBRL Taxonomy Extension Labels.(1)
101.PRE	Inline XBRL Taxonomy Extension Presentation.(1)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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(1)Filed herewith.

(2)Reflects management contracts and management and director equity award agreements related to a management and director compensatory plan.

(3)Furnished herewith.

6362

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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, thereunto duly authorized.

Dated:

May ~~10, 2022~~9, 2023

~~IAC/INTERACTIVECORP~~IAC INC.

By:

/s/ CHRISTOPHER HALPIN

Christopher Halpin

Executive Vice President, Chief Financial Officer and Chief ~~Financial~~Operating Officer



Signature	Title	Date

/s/ CHRISTOPHER HALPIN	Executive Vice President, Chief Financial Officer and Chief ~~Financial~~Operating Officer	May ~~10, 2022~~9, 2023
Christopher Halpin

6463


Balance at 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 (loss) earnings	(673)		—		—	—		—	—		—	—		—	—		329,128		—		329,128		446		329,574
Other comprehensive income, net of income taxes	580		—		—	—		—	—		—	—		—	—		—		10,324		10,324		111		10,435
Stock-based compensation expense	—		—		—	—		—	—		—	—		—	20,668		—		—		20,668		2,542		23,210
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		366	—		—	(21,135)		—		—		(21,135)		—		(21,135)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—	—		—	(49,476)		—		(5)		(49,481)		1,430		(48,051)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		—	—		—	(4,916)		—		—		(4,916)		—		(4,916)
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	(22,938)		—		—	—		—	—		—	—		—	—		—		—		—		—		—
Adjustment of noncontrolling interests to fair value	453,099		—		—	—		—	—		—	—		—	(453,099)		—		—		(453,099)		—		(453,099)




Other	(4)		—		—	—		—	—		—	—		—	109		—		—		109		—		109
Balance at March 31, 2021	$	702,841	$	—	—	$	—	—	$	83	83,342	$	6	5,789	$	5,660,730	$	1,023,170	$	4,149	$	6,688,138	$	557,882	$	7,246,020


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income (Loss)		Foreign Currency Translation Adjustment		Unrealized Gains (Losses) On Available-For-Sale Marketable Debt Securities		Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance at January 1	$	4,397	$	4,397	$	(6,172)	$	2	$	(6,170)
Other comprehensive (loss) income before reclassifications	(3,634)		(3,634)		294		(2)		292
Amounts reclassified to earnings	—		—		10,032		—		10,032
Net current period other comprehensive (loss) income	(3,634)		(3,634)		10,326		(2)		10,324
Accumulated other comprehensive loss (income) allocated to noncontrolling interests during the period	2		2		(5)		—		(5)
Balance at March 31	$	765	$	765	$	4,149	$	—	$	4,149


	March 31, 2022		December 31, 2021
	(In thousands)
Long-lived assets (excluding goodwill, intangible assets, and ROU assets):
United States	$	569,411	$	562,628
All other countries	7,376		7,897
Total	$	576,787	$	570,525


	Three Months Ended March 31, 2021
	Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
Dotdash Meredith	$	18,127	$	—	$	549	$	1,246	$	19,922
Angi Inc.	109		$	2,034	$	15,969	$	5,074	$	23,186
Search	18,386		$	—	$	—	$	—	$	18,386
Emerging & Other	994		$	25	$	426	$	10,519	$	11,964
Corporate(i)	(44,846)		$	16,256	$	2,242	$	—	$	(26,348)
Total	(7,230)
Interest expense	(6,617)
Unrealized gain on investment in MGM Resorts International	382,540
Other income, net	3,563
Earnings from continuing operations before income taxes	372,256
Income tax provision	(53,311)
Net earnings from continuing operations	318,945
Earnings from discontinued operations, net of tax	9,956
Net earnings	328,901
Net loss attributable to noncontrolling interests	227
Net earnings attributable to IAC shareholders	$	329,128


	As of March 31, 2022
	Digital		Print		Other		Total
	(In thousands)
Remaining estimated restructuring costs	$	3,558	$	4,740	$	1,065	$	9,363