IAC Inc.

The Company reports Adjusted EBITDA, which is a non-GAAP measure, as a supplemental measure to U.S. generally accepted accounting principles (“GAAP”). This measure is also our primary segment measure of profitability and among the metrics by which we evaluate the performance of our businesses, and our internal budgets are based and may also impact management compensation. We believe that investors and analysts 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 EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization) 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, if applicable. We believe this measure is useful for investors and analysts 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.

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 that are denominated in IAC common shares and expense related to awards denominated in the equity of 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; the related shares are included in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method. The Company currently settles all stock-based awards on a net basis whereby IAC remits from its current funds the required tax-withholding on behalf of employees for net-settled awards.

Depreciationis a non-cash expense relating to our buildings, equipment, leasehold improvements and capitalized software 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 assetsare non-cash expenses related primarily to acquisitions. At the time of acquisition, the identifiable definite-lived intangible assets of the acquired company 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 liabilities for the portion of the purchase price of acquisitions, if applicable, that is contingent upon the financial performance and/or operating targets of the acquired company at fair value that are recognized in “General and administrative expense” in the statement of operations. 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. The last such arrangement expired during the year ended December 31, 2022. Therefore, there were no gains or losses on contingent consideration arrangements in the three months ended March 31, 2026 and 2025.

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

(a) Other comprises unallocated corporate expenses.

(b) Includes a gain of $36.2 million resulting from an amendment to a lease, which provided for the surrender of certain office space early and is included in “General and Administrative expenses” in the statement of operations. Prior to this amendment, the lease for this office space would have expired in 2032. The ROU asset of the amended lease had been previously impaired in prior years.

(c) Corporate reflects the reversal of $49.8 million of previously recognized stock-based compensation expense related to the forfeiture of our former CEO’s restricted stock award pursuant to the Employment Transition Agreement, partially offset by $14.9 million of stock-based compensation expense related to the transfer of 5.0 million Class B shares of Angi held by the Company to our former CEO prior to the Distribution pursuant to the Employment Transition Agreement.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position

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

The Company’s consolidated debt of approximately $1.44 billion is the liability of People Inc. For a detailed description of long-term debt and interest rate swaps, see “Note 3—Long-term Debt” in the accompanying notes to the financial statements included in “Item 1. Consolidated Financial Statements.”

Cash Flow Information

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

Net cash provided by operating activities attributable to continuing operations consists of net loss adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include the unrealized (gain) loss on the investment in MGM, amortization of intangibles, depreciation, stock-based compensation expense, deferred income taxes, non-cash lease expense (including ROU asset impairments), net gains on amendments and early terminations of lease agreements, net downward adjustments to the carrying value of equity securities without readily determinable fair values and net gains on sales of investments and businesses, and gain on sale of an unutilized domain name in 2026.

Adjustments to net earnings attributable to continuing operations consist primarily of amortization of intangibles of $19.0 million, stock-based compensation expense of $16.4 million, non-cash lease expense of $7.5 million, depreciation of $7.3 million and net downward adjustments to the carrying value of equity securities without readily determinable fair values and net gains on sales of investments of $4.6 million, partially offset by an unrealized gain on the investment in MGM of $34.0 million, deferred income taxes of $15.1 million and gain on sale of an unutilized domain name of $7.5 million. The changes in working capital include a decrease in accounts receivable of $86.3 million, partially offset by a decrease in accounts payable and other liabilities of $61.6 million and a decrease in operating lease liabilities of $14.5 million. The decrease in accounts receivable is due primarily to a decrease in revenue in the first quarter of 2026 relative to the fourth quarter of 2025 at People Inc. The decrease in accounts payable and other liabilities is due primarily to a decrease in accrued employee compensation, due primarily to timing of payments, including the payment of 2025 bonuses in 2026, partially offset by an increase in accrued severance and related expense related to the reduction in workforce as the Company consolidates its corporate functions with those of People Inc., and a decrease in accrued advertising and related payables at People Inc. and Search. The decrease in operating lease liabilities is due to cash payments on leases, including the final remaining payment of $4.3 million related to an amendment of a lease in the prior year, which provided for the surrender of certain office space early at People Inc., net of interest accretion.

Net cash provided by investing activities attributable to continuing operations includes net proceeds from the sale of Care.com of $295.7 million and proceeds from the sale of an unutilized domain name of $7.5 million, partially offset by the purchase of 1.0 million common shares of MGM for $37.2 million and capital expenditures of $8.0 million.

Net cash used in financing activities attributable to continuing operations includes $123.6 million for the repurchase of 3.3 million shares of common stock, on a settlement date basis, at an average price of $37.70 per share, withholding taxes paid on behalf of employees for net settled stock-based awards of $18.0 million and principal payments on the Term Loans of $6.1 million, partially offset by a distribution from Angi Inc. pursuant to the tax sharing agreement of $6.5 million.

Adjustments to net loss attributable to continuing operations consist primarily of an unrealized loss on the investment in MGM of $324.3 million, amortization of intangibles of $22.4 million, depreciation of $11.2 million, non-cash lease expense (including ROU asset impairments) of $8.7 million and net downward adjustments to the carrying value of equity securities without readily determinable fair values and net gains on sales of investments and businesses of $7.5 million, partially offset by deferred income taxes of $63.8 million, net gains on amendments and early terminations of lease agreements of $36.0 million and stock-based compensation expense of $21.4 million. The changes in working capital include a decrease in accounts payable and other liabilities of $35.6 million, a decrease in operating lease liabilities of $34.0 million and an increase in other assets of $32.7 million, partially offset by a decrease in accounts receivable of $76.6 million. The decrease in accounts payable and other liabilities is due primarily to a decrease in accrued employee compensation, due primarily to payment of 2024 bonuses in 2025, a decrease in accrued payroll due to timing of payments and a decrease at People Inc. due to severance payments, partially offset by the accrual of separation benefits to our former CEO under the Employment Transition Agreement, and a decrease in accrued traffic acquisition costs and related payables at Search, partially offset by an increase in a liability related to the settlement of a legal matter. The decrease in operating lease liabilities is due to cash payments on leases, including $26.1 million related to an amendment of a lease, which provided for the surrender of certain office space early at People Inc., net of interest accretion. The increase in other assets is due primarily to a receivable related to insurance coverage for the aforementioned legal matter. The decrease in accounts receivable is due primarily to a decrease in revenue in the first quarter of 2025 relative to the fourth quarter of 2024 at People Inc.

Net cash used in investing activities attributable to continuing operations includes $386.6 million related to the allocation of Angi Inc. cash in the Distribution and capital expenditures of $4.1 million, partially offset by net proceeds from the sales of investments of $10.1 million and proceeds from the sale of a portion of the retirement investment fund of $5.2 million at People Inc.

Net cash used in financing activities attributable to continuing operations includes $179.4 million for the repurchase of 3.9 million shares of common stock, on a settlement date basis, for an average price of $45.71 per share, withholding taxes paid on behalf of employees for net settled stock-based awards of $45.2 million and principal payments on the Term Loans of $8.8 million.

Net cash used in discontinued operations of $5.4 million for the three months ended March 31, 2026 relates to the operations of Care.com and the net cash provided by discontinued operations of $2.8 million for the three months ended March 31, 2025 relates to the operations of both Care.com and Angi. The Company does not expect significant cash flows from Care.com after its sale or from Angi following the Distribution.

Liquidity and Capital Resources

Financing Arrangements

At March 31, 2026, the Term Loan A-1 bore interest at SOFR plus 2.00%, or 5.67% and the Term Loan B-2 bore interest at SOFR, subject to a minimum of 0.50%, plus 3.50%, or 7.17%.

People Inc. holds interest rate swaps that synthetically convert $350 million of the Term Loan B-2 from a variable rate to a fixed rate through April 1, 2027. Should SOFR continue to equal or exceed 0.50%, then the fixed rate for the Term Loan B-2 will be approximately 7.32% ((i) the weighted average fixed interest rate of approximately 3.82% on the interest rate swaps and (ii) the base rate of 3.50%). In the event SOFR becomes less than or equal to 0.50%, then the interest rate swaps would be fixed in a range from approximately 7.32% to 7.42% as determined by the governing agreements.

For a detailed description of long-term debt and interest rate swaps, see “Note 3—Long-term Debt” in the accompanying notes to the financial statements included in “Item 1. Consolidated Financial Statements.”

Investment in MGM

At March 31, 2026, the Company owns 66.8 million common shares of MGM, including 1.0 million common shares purchased in the first quarter of 2026 for $37.2 million, which represents approximately 26.1% of MGM's common shares outstanding.

Investment in Turo

At March 31, 2026, IAC’s ownership interest in Turo is approximately 33%.

Share Repurchase Activity and Authorization

During the three months ended March 31, 2026, the Company repurchased 3.3 million shares of its common stock, on a trade date basis, at $37.71 per share, or $123.8 million in aggregate, under the 10 million share repurchase authorization approved by the board of directors of IAC on March 16, 2025 (the “2025 Share Authorization”). From April 1, 2026 through May 1, 2026, the Company repurchased an additional 0.2 million shares of its common stock, on a trade date basis, at an average price of $40.35 per share, or $8.3 million in aggregate. At May 1, 2026, IAC has 2.5 million shares remaining in the 2025 Share Authorization. Share repurchases can be made over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, price and future outlook.

Contractual Obligations

At March 31, 2026, there have been no material changes to the Company’s contractual obligations disclosures as previously disclosed in our Annual Report.

Capital Expenditures

The Company anticipates that it will need to continue to make capital expenditures in connection with the development and expansion of its operations. The Company’s 2026 capital expenditures are expected to be higher than its 2025 capital expenditures of $17.7 million by approximately 50% to 60%, due primarily to leasehold improvements primarily related to the optimization of the remaining space under certain amended leases.

Liquidity Assessment

On a consolidated basis, the Company generated positive cash flows from operating activities of $10.0 million for the three months ended March 31, 2026; excluding the positive cash flows from operating activities of $55.7 million generated by People Inc., the Company generated negative cash flows from operating activities of $45.7 million.

At March 31, 2026, the Company’s consolidated cash and cash equivalents were $1.1 billion, of which $315.8 million was held by People Inc., and the consolidated debt at March 31, 2026 of approximately $1.44 billion is solely the liability of People Inc. If defined consolidated net leverage ratios are exceeded or if an event of default has occurred, the governing agreements contain additional covenants that would limit People Inc.’s ability to pay dividends, incur incremental secured indebtedness or make distributions or certain investments. As a result, the Company may not be able to freely access People Inc.’s cash. People Inc.’s consolidated net leverage ratio was in compliance for the test period ended March 31, 2026.

The governing agreements allow the Company to contribute cash to People Inc., which the Company has done in the past and may do so in the future, to provide, among other things, additional liquidity to improve People Inc.’s consolidated net leverage ratios for any test period, which may result in improved interest rates on the Term Loan A-1 and reduced commitment fees on the Revolving Facility. The governing agreements also allow People Inc. to make distributions to the Company in amounts not to exceed these capital contributions, provided that no default has occurred and is continuing. No quarterly contributions have been made to People Inc. since the contribution that the Company made in September 2025, which People Inc. distributed back to the Company in October 2025; therefore, there were no pending contributions or distributions outstanding as of March 31, 2026 and December 31, 2025.

The Company’s liquidity could be negatively affected by a decrease in demand for its products and services resulting from adverse market, macroeconomic or geopolitical conditions, including declines in consumer confidence or spending, high or volatile interest rates, inflationary pressures, labor market disruptions or other factors that reduce customers’ willingness or ability to pay for our offerings.

The Company believes People Inc.’s existing cash, cash equivalents and expected positive cash flows from operations, and the Company’s existing cash and cash equivalents, excluding People Inc., will be sufficient to fund their respective normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes on behalf of employees for net-settled stock-based awards and investing and other commitments for the next twelve months, and thereafter for the foreseeable future. The Company may need to raise additional capital through future debt or equity financing to refinance its existing capital structure and make acquisitions and investments. Additional financing may not be available on terms favorable to the Company, or at all, and may also be impacted by any disruptions or volatility in the financial markets. The indebtedness at People Inc. could further limit the Company’s ability to raise additional financing.