(Reuters) -IAC missed Wall Street expectations for quarterly revenue on Monday, as fewer visitors reached its ad-supported search and content websites amid the rise of AI-generated summaries, sending its shares down 10% in trading after the bell.
The media and internet firm’s search unit reported a 41% decline in third-quarter revenue, hurt by reduced traffic to traditional organic search listings as users got answers directly from Google AI Overviews without clicking through to the websites.
Overall revenue declined 8% to $589.8 million, below estimates of $601.6 million, according to data compiled by LSEG.
Revenue from its Care.com segment fell 5% due to lower subscriptions on its platform.
However, IAC’s largest unit People reported a 9% increase in digital revenue, driven by strong growth in performance marketing and licensing.
The segment, which is the largest digital and print publisher in the U.S., signed a new AI licensing deal with Microsoft to allow its Copilot assistant to use its content.
“We believe publishers deserve fair compensation for their quality IP,” said Jonathan Roberts, chief innovation officer, People, regarding the deal with Microsoft.
IAC’s adjusted core profit in Q3 fell 59% to $29.1 million, primarily due to several one-time expenses including about $15 million in severance-related costs at the People unit.
The company now expects its adjusted earnings before interest, taxes, depreciation and amortization to be between $234 million and $258 million for 2025, compared with its prior forecast of between $247 million and $285 million.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Tasim Zahid)
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