People 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 (Earnings Before Interest, Taxes, Depreciation and Amortization) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements; and (4) other specific items, including subsequent true-up adjustments related to such items, that management believes are not representative of the Company’s core ongoing operating performance and certain items that affect comparability between periods, including, but not limited to, certain (i) restructuring costs, including certain severance and employee separation benefits; (ii) gains and losses from lease impairments, terminations and amendments and certain asset sales; (iii) transaction-related costs; and (iv) litigation-related gains and losses associated with specific matters.

The above items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or because the amount and timing of these items is unpredictable, not driven by core operating results and render comparisons with prior periods and competitors less meaningful. Management uses Adjusted EBITDA to evaluate the Company’s performance and facilitate comparisons of the Company’s operating results between periods. We believe Adjusted EBITDA is a useful measure for analysts and investors to evaluate our future on-going performance as this measure allows a more meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments. Adjusted EBITDA has certain limitations because it excludes the impact of these items.

Prior to the second quarter of 2026, Adjusted EBITDA was 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, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements. Beginning with the second quarter of 2026, the Company revised its definition of Adjusted EBITDA to also exclude (4) other specific items, including subsequent true-up adjustments related to such items, that management believes are not representative of the Company’s core ongoing operating performance and certain items that affect comparability between periods. Adjusted EBITDA for prior periods has been recast to conform to the current period presentation.

Items Excluded from Our Non-GAAP Measure

Stock-based compensation expense consists principally of expense associated with awards that were granted under various stock and annual incentive plans that are denominated in the Company’s common shares. This expense is 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 the Company 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 and six months ended June 30, 2026 and 2025.

Restructuring costs, including certain severance and employee separation benefits relate to certain discrete strategic actions taken by the Company to improve operating efficiencies and to better align its cost structure. Ordinary course severance and employee separation benefits are not considered restructuring costs.

Gains and losses from lease impairments, terminations and amendments and certain asset sales relate to certain activity to surrender leased space prior to its original lease expiration and the sale of certain assets. 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.

Transaction-related costs reflect third-party costs incurred in connection with acquisitions, dispositions and spinoffs that are not part of the Company’s core operating activities.

Litigation matters reflect settlements, judgments, insurance recoveries and related third-party legal costs arising from certain litigation matters, including gains and losses that management determines, based on their nature and circumstances, are outside of the ordinary course of business and not representative of the Company’s core ongoing operating performance.

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

(a)The three and six months ended June 30, 2026 at Corporate principally represents costs related to a reduction in force as the Company consolidates its corporate function with those of People Inc. as further described under “Management Overview—Corporate Restructuring” above.

(b)The three and six months ended June 30, 2026 at People Inc. Digital and People Inc. Other (unallocated corporate costs) represents third-party costs primarily related to accruals for certain legal matters, including the antitrust litigation against Google Inc.

(c)The three and six months ended June 30, 2025 at Corporate primarily represents separation benefits to our former CEO under his employment transition agreement.

(d) The three and six months ended June 30, 2025 at Emerging & Other represents third-party costs related to litigation that concluded in the third quarter of 2025 related to a legacy business.

(e) The six months ended June 30, 2026 at Corporate includes third-party costs related to the sale of Care.com on March 16, 2026 and other transaction-related costs.

(f) The six months ended June 30, 2025 at Corporate reflect 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 his employment transition agreement.

(g) The six months ended June 30, 2025 at People Inc. Other (unallocated corporate costs) is principally related to a gain 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.

(h) The six months ended June 30, 2025 represents third-party costs related to the Distribution.

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 $1.43 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, the Company’s cash flows are as follows:

Net cash provided by (used in) operating activities attributable to continuing operations consists of net earnings (loss) attributable to continuing operations 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 an unrealized gain on the investment in MGM of $755.7 million and gain on sale of an unutilized domain name of $7.5 million, partially offset by deferred income taxes of $166.7 million, stock-based compensation expense of $51.4 million, amortization of intangibles of $38.1 million, non-cash lease expense of $15.1 million, depreciation of $14.8 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. The changes in working capital include a decrease in accounts receivable of $77.5 million, partially offset by a decrease in accounts payable and other liabilities of $40.0 million and a decrease in operating lease liabilities of $23.4 million. The decrease in accounts receivable is due primarily to a decrease in revenue in the second 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 employee separation benefits related to the reduction in workforce as the Company consolidates its corporate functions with those of People Inc., and a decrease in accrued advertising at People Inc. 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 $19.1 million.

Net cash used in financing activities attributable to continuing operations includes $133.3 million for the repurchase of 3.5 million shares of common stock, on a settlement date basis, at an average price of $37.88 per share, withholding taxes paid on behalf of employees for net settled stock-based awards of $19.5 million and principal payments on the Term Loans of $12.3 million, partially offset by a distribution from Angi Inc. pursuant to the tax sharing agreement of $8.5 million.

Adjustments to net loss attributable to continuing operations consist primarily of amortization of intangibles of $44.8 million, 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 $18.8 million, depreciation of $18.5 million, non-cash lease expense (including ROU asset impairments) of $17.0 million and an unrealized loss on the investment in MGM of $16.8 million, partially offset by net gains on amendments and early terminations of lease agreements of $36.1 million, stock-based compensation expense of $3.1 million and deferred income taxes of $2.6 million. The changes in working capital include a decrease in operating lease liabilities of $63.9 million, a decrease in accounts payable and other liabilities of $29.0 million, an increase in other assets of $26.5 million and a decrease in deferred revenue of $5.2 million, partially offset by a decrease in accounts receivable of $67.2 million. The decrease in operating lease liabilities is due to cash payments on leases, including $43.1 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 decrease in accounts payable and other liabilities is due, in part, to a decrease in accrued employee compensation, due primarily to payment of 2024 bonuses in 2025 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 interest on People Inc.’s long-term debt due to timing of payments following the Term Loans refinancing completed in the second quarter of 2025, partially offset by an increase in a liability related to the settlement of a legal matter. The increase in other assets is due primarily to a receivable related to insurance coverage for the aforementioned legal matter, partially offset by a decrease in prepaid hosting services at People Inc. The decrease in deferred revenue is due primarily to the timing of shipments of certain magazine titles at People Inc. The decrease in accounts receivable is due primarily to a decrease in revenue in the second 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.’s cash in the Distribution and capital expenditures of $8.2 million, partially offset by net proceeds from the sales of investments of $9.9 million and proceeds from the sale of a portion of the retirement investment fund of $8.5 million at People Inc.

Net cash used in financing activities attributable to continuing operations includes principal payments on the Term Loans of $1.4 billion and debt issuance and deferred financing costs of $9.9 million, partially offset by the net proceeds from the Term Loans refinancing of $991.5 million and proceeds from the issuance of the 2032 Notes of $400.0 million. Net cash used in financing activities attributable to continuing operations also includes $200.0 million for the repurchase of 4.5 million shares of common stock, on a settlement date basis, for an average price of $44.56 per share, and withholding taxes paid on behalf of employees for net settled stock-based awards of $54.6 million.

Net cash used in discontinued operations of $10.7 million for the six months ended June 30, 2026 relates to the operations of Care.com and Search and the net cash provided by discontinued operations of $1.2 million for the six months ended June 30, 2025 relates to the operations of Care.com, Search and Angi. The Company does not expect significant future cash flows to be used in or provided by its discontinued operations.

Liquidity and Capital Resources

Financing Arrangements

At June 30, 2026, the Term Loan A-1 bore interest at SOFR plus 2.00%, or 5.65% and the Term Loan B-2 bore interest at SOFR, subject to a minimum of 0.50%, plus 3.50%, or 7.12%.

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 June 30, 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 26.6% of MGM's common shares outstanding.

Investment in Turo

At June 30, 2026, the Company’s ownership interest in Turo is approximately 33%.

Share Repurchase Activity and Authorization

During the six months ended June 30, 2026, the Company repurchased 3.5 million shares of its common stock, on a trade date basis, at $37.86 per share, or $132.2 million in aggregate, under the 10 million share repurchase authorization approved by the board of directors of the Company on March 16, 2025. On June 16, 2026, the board of directors of the Company approved an authorization for the Company to repurchase an additional 10 million shares of the Company’s common stock. At July 31, 2026, the Company has 12.5 million shares remaining under its 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 June 30, 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 60% to 70%, 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 $55.6 million for the six months ended June 30, 2026; excluding the positive cash flows from operating activities of $97.6 million generated by People Inc., the Company generated negative cash flows from operating activities of $42.0 million.

At June 30, 2026, the Company’s consolidated cash and cash equivalents were $1.1 billion, of which $330.3 million was held by People Inc., and the consolidated debt at June 30, 2026 of approximately $1.4 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 June 30, 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 June 30, 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.