IAC Shares Drop as Revenue Misses Analysts’ EstimatesCrayton Harrison
IAC/InterActiveCorp, owner of websites such as About.com and Match.com, slid the most in a year after reporting third-quarter sales that missed analyst estimates on lower-than-forecast search-advertising revenue.
Total sales in the period were $756.9 million, the New York-based company said in a statement yesterday. That fell short of the $803.3 million average estimate of 16 analysts, according to data compiled by Bloomberg. The shares dropped 12 percent to $50.99 at 9:36 a.m. in New York after earlier slipping as much as 13 percent, the biggest intraday decline since October 2012.
While the search-and-applications business, IAC’s biggest division, grew 10 percent from a year earlier, that was mostly due to the acquisition of About.com and the transfer of CityGrid Media from another unit. IAC spent $300 million on About.com last year to make a bigger bet on advertising for Internet searches.
IAC had said in July that it expected the search-and-applications unit to have only “modestly lower” growth than the 23 percent expansion it had in the second quarter.
The company had assumed that search-advertising prices from Google Inc. would remain constant, Chief Executive Officer Greg Blatt said on a conference call yesterday.
“That didn’t happen,” he said. “We’re confident we’ll grow the business from here. The rollout from this change ended in early October, and as we’ve rapidly adjusted our systems to the new pricing model, we’ve already seen growth resuming.”
Third-quarter adjusted earnings per share of $1.29 beat the average estimate of 93 cents. Net income more than doubled to $96.9 million, or $1.13 a share, from a year earlier.
The company shut down its Newsweek magazine’s print edition last year and then sold the digital version this year to IBT Media. That left IAC’s media division with revenue of $51 million in the third quarter, down 3.2 percent from a year earlier.
Revenue of Match.com, the dating website that’s IAC’s second-biggest division, gained 13 percent to $201.1 million. Fourth-quarter sales will grow at a similar pace for the unit, Chief Financial Officer Jeff Kip said on the conference call.