Joey Levin – Chief Executive Officer Glenn Schiffman – Executive Vice President and Chief Financial Officer

Jason Helfstein – Oppenheimer Brian Fitzgerald – Jefferies John Blackledge – Cowen Peter Stabler – Wells Fargo Dan Salmon – BMO Capital Markets Paul Bieber – Credit Suisse Kerry Rice – Needham & Company

Good day, and welcome to the IAC Reports Q1 2017 Results Conference Call. At this time, I would like to turn the conference over to Mr. Glenn Schiffman, CEO. Please go ahead, sir.

Thank you, Operator. Good morning everyone. Glenn Schiffman here and welcome to our first quarter earnings call. Joining me today is Joey Levin, our CEO. We’ve taken a lot of time this week, so appreciate you given us a little more here. As you know Match Group held their first quarter earnings call yesterday morning. The focus of this call will be IAC ex-Match. Similar to last quarter supplemental to our quarterly earnings release, we have also published our quarterly shareholder letter. We will not be reading our shareholder letter on this call. It is currently available on the Investor Relations section of our website. I will shortly turn the call over to Joey to make a few brief introductory remarks and then we will open it up to Q&A. Before we get to that, I'd like to remind you that during this call, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as, we expect, we believe, we anticipate, or similar statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed here today. Some of the risks have been set forth in our fourth quarter press release and reports filed with the SEC. We'll also discuss certain non-GAAP measures, which as a reminder include adjusted EBITDA, which we'll refer to today as EBITDA, for simplicity during the call. I'll also refer you to our press release and, again, to the Investor Relations section of our website for all comparable GAAP measures and a full reconciliation for all material non-GAAP measures. Finally, in connection with the proposed Angie's List transaction we expect to file documents with the SEC, you are urged to read those documents once filed because they will contain important information about the proposed transaction. You can obtain free copies of the documents we filed with the SEC by contacting Investor Relations or from the SECs website. Now let's jump right into it, Joey?

Good morning, everybody. I'm cognizant of the fact that this is your third hour with us this week so let's try and be brief and I know its much more for me to say, but let’s get right into questions. Operator?

Yes. You're ready for questions?

I am.

Thank you. [Operator Instructions] And we’ll take our first question from Jason Helfstein with Oppenheimer.

Thanks. Kind of I guess two related and then one housekeeping. So first question how does HomeAdvisor being or soon to be a separate entity makes you think about the rest of IAC in your decisions around allocating capital with respect to the rest of the stub. Number two, what are the risks to integrate both businesses as you intend to hit your $270 million EBITDA target. And then just lastly, more of a housekeeping, I assume that stock comp will be a significant component for the senior management at Angie HomeAdvisor. Could you help us understand the dilution if Chris and his team are successful? Thanks.

Sure. All good questions. On the rest of IAC and allocating capital, I don't think anything changes with this trend, I think you know will certainly start to focus more on the other businesses as kind of whenever we've done a transaction like this it highlights one business in a very specific unique way and then allow us to focus on the earlier stages, smaller businesses. So we’ll in terms of attention, you know, we’ll start focusing a lot of energy and attention on those businesses, but I don't think anything changes as it relates to capital allocation or any of the big sort of corporate organization capitalization decisions. The you know, we've got a great set of businesses still in that IAC seen out excluding both Match and HomeAdvisor, Video the kind of biggest most interesting - sorry not biggest, but biggest sort of long term potential we think but applications still a great consistent stable business and publishing with a really now I think now having stabilized potentially interesting future. So there's a bunch of you know where I say interesting call options in their advisee on the integration risk obviously feels like this deal for this deal of complexity. There are a lot of integration risk and there's things that we will discover that we can expect and all of that. When I think about this deal and we've done a lot of deals similar to this one. You know we have this one is pretty tight as it relates to the work we've done up in advance and exactly what we have to do and knowing what we have to do and how we do it. I don't think we would have been able to say that you know 18 months ago when we made the unsolicited offer aid and we were flying blind then but be homebuyer's it was in a different state then and we got a lot bigger target for rational network now. And we've gotten you know more things light on the products. I think we're in a very. Healthy place to be able to do something like that if you want to think about it in just the most conservative way. Jason which is not the way I think about it but you might think about it and just purely the most conservative way you think about the every list and is a very big affiliate for home advisor and you know how I think that audience that very brand conscious audience very specific highly qualified high quality audience. I think that audience will perform relative to say are we qualified affiliate or our best qualified affiliates. I imagine that it did meaningfully better than our best affiliate and we know how to deal with traffic like that offer that there is a huge amount of traffic that we think is kind of underutilized at any in the sense that they still haven't got the pay wall but that opened up a lot of opportunities. I think there's still opportunities to unlock in that transition. But if you say okay and get comfortable that the traffic is there and the that that - that other knows what to do with traffic like that and how to convert traffic like that in a way that is you know delivers a great consumer experience and delivers a great service professional experience that will open your service rational network absorb that kind of traffic. And we take a lot of comfort in the fact that we had two hundred million of unused cash last year in 2016. Now I don't know the traffic lined up perfectly with all that crap but I do think that that is the best. Give us a lot of comfort and kind of how we can handle that traffic. And on the cost side you know we've been looking at this for a while we've been studying this business for a while and we've dug in very deep with Angie's List and we've built this from the ground up and so I think we're reasonably confident and what we can deliver there. But like I said all of this has risk and all deals have risk and I am certain that notwithstanding everything I did said we were buying things we didn't expect.

Both positive and negative. On StarCraft it's a great question. The there will be...

Dilution for the management team for sure I get it is probably in a typical range growth 3 4 % something like that to the team. And you know that we see that that's over time and come into play over time but they will definitely quite deservedly have a nice piece of the company and be paid well. I think that answers your questions Jason The only thing is look in terms of execution of execution rest our confidence in our management team given what they've done over the last couple of years couldn't be better placed. Next question please

Thank you. We'll move to Brian Fitzgerald with Jefferies.

Thanks guys. A couple of questions on video. First we saw that you're shifting the video channel launch to. That's right. Can you provide more color there and maybe an updated plan around those initiatives. And then historically you shun advertising on DeMeo, but what would you consider maybe a 30 second pre-roll medrol [ph] in the future to further monetize content. You know you have some great longer form caught up there and we feel and I would absolutely be palatable at least from our perspective.

On the shifting in the US but basically we hired a woman who is handling programming and a lot of Mayo who we think is fantastic she came in a few weeks into the job and my office and she said I can deliver you great content by the end of 17. But if I want to deliver you the best content I'm going to be delivering you that slate in 2018 for the 2018. And I said were let's go to that and we're not harassed until little will launch that in 2018 see that take down the law or reduces the law in 2017 in that business and everything else is going great video. And I think on paper in terms of building the technology and product that we need we're on a good pace there. And the creator math business is doing incredibly well and today and to accelerate growth in both bookings so that's all I think a strong positive. And the answer unfortunately is the same. We are not focused on and in this business right now. I think YouTube does a very nice job in Google and YouTube to a very nice job in that ad supported video product and that's just not our focus. I suppose that could change at some point. I don't think that's likely but I would never say never and we're always open to what makes sense for the business and our customers. And we will always think about it but I continue to say that's pretty unlikely.

Thanks Joe.

Thank you. Mr. John Blackledge with Cowen.

Thanks. Two questions kind of similar topic. First question. If you take iciest current share price back out it still can match back out our estimates Archdeacon Angie home services back out to net net cash to us it implies a negative cost a billion dollars which seems absurd. Joe Andrew Glenn question is kind of like what's your take you on the math and how do you solve this on your side. And then similar topic to Jason's question Joy. In a letter you mentioned you're going to continue to find build manage and grow great companies to come around compound capital for shareholders. Do you think you have another match it or homemade bombs simmering at and I see at the moment? Thanks.

Thank you. Yeah I mean it's hard to have I think you're in the neighbourhood. I get blasted this morning and chuckle because that's always the case thinking of how I met with a celebrated analyst and I see right after we did the next IPO and he was saying well you know part of the story how we got there like the one we just you know do an IPO math and we are not today. Well what about that. Look, I mean it's something we have we have you know now the other company out of the one I see at some point I hope we get credit for a pattern here but maybe we never will. I don't know if I don't lose too much sleep over it. But the math is whatever the math is. I mean I think we argue every day having to prove ourselves on what the business is and what the potential is. And we're where there again I see. I mean we talk about this in the last letter on where we were in 2009 everyone thought we are losers in 2009 and you know we've turned that into quite a bit. I feel as confident now as we did that there is lots of potential in what remains we are so maybe surprised by things in there some of the things you know obviously been the it is probably the most interesting here but we're nowhere near. I mean that's a long time I think before we're in that position for mimeo. You know there's - we like to have a lot of optionality.

I think we're in that position right now. Other than the portfolio what was it, I didn't grow up yet.

No I think that that's that will be answered by then that too.

I mean we obviously have a cat bounce and we'll look to deploy that capital and we'll never stop looking to the political that's the

Next move on to Peter Stabler with Wells Fargo

Well our security. Good morning. A couple on Angie’s and HomeAdvisor. First, with regard to kind of the differences between the models. Joe what makes you think that this list model still work. How do you look at it when you compare it to that data intensive lead gen model that buys or has these thoughts there? And then secondly the commentary around the 200 million unused - unless I've been asleep a possibility over the last couple years I haven't really heard that talked about in terms of home advisors having unused spend or under utilized spend on Access spend. So just wondering can you give a little more color there for investors what you're talking about. Is this is commentary we're going to hear regularly going forward is it going to be something that we can track etc.. Thanks so much.

Sure. Let me do the second one first which is this is something that we looked at for forever. It's now when we talked about it because the you know your growing supply and demand at the same time in this marketplace. And so you're always kind of constrained by one or the other. And then it can go back and forth but there isn't. There hasn't been a moment where you for example have a monumental leap in demand and the transaction enabled they've had a monumental leap and demanded that you be a monumental demand and that news kept coming into play. The concept of the capital service vessels that I'm willing to do you know I'm willing to buy three hundred dollars worth of plumbing leads every month in one Double-O 1:04 and we may only have 200 dollars worth of f those leads, and so a hundred dollars goes unspent. Now that number will never go to zero because for example you know I use this one all the time but a snow plough company might have a large cap in the summer months of were left wanting to plough in there. We're not going to find a lot of demand in the summer for those snow plough companies. But when we look at the map there are a lot of demand that we think he can fulfil in sorry when we look at that supply and escape. I think there's a lot that we think we can't fulfil with demand that we're coming from that. I don't think that the number that we report on every quarter likely I don't think it's a - it's not the driver of the business. It is an opportunity when you think about this when you have these monumental leaps in demand on the question of does the listening model work. I think the answer is yes it works for some portion of the service professional population. There we think that is the sort of larger - please those folks have working with a lot of uncomfortable things model and like that. And we're going to continue to enable that for those customers. I think that that although we presume some declines in the listings model over time I think that realistically, what happens here is the consumer decides. And I think there is a consumer. We've talked about this a lot. There is a consumer who likes the list and the model or variations on the listing model which is to get a set of choices. And for the consumer to be able to make that choice I think that long term the consumer is less interested in making those choices themselves and more interested in the platform helping them choose and getting game master actually to take the action out of that process. But we'll see. We will work to enable the product to the consumers and we're going to let the consumers decide how they want to find the service professionals. But ultimately it's going to be the really the consumer's decision of the model when and if it's a $400 billion market in the US. And so there is a lot of products that can work in a 400 billion dollar market. A lot of customers and a lot of different ways of interacting and so will try and enable all of them. Appear on and use the stairs to do better. Jason's question a little bit earlier. We have our network is growing and our business is growing. The gap is growing. So that give us more confidence are around the synergies and a lot of evidence around the execution risk. You know that phone use cap ranks right up there. And you heard me say on Tuesday you know we don't get 100 % of our budget you know for espies so.

Thanks, guys

And next to Dan Salmon with BMO Capital Markets.

Hey guys good morning Joe. Maybe one on HomeAdvisor. One on video on home advisories and talking at length about the 400 billion dollar addressable market in the U.S. and in the letter you know you mentioned. You are seeing a similar figure in Europe. Could you maybe expand as you know the international footprint is largely focused there on North America and Europe right now but talk a little bit about what the long term opportunity may be in emerging markets as you build a little bit of scale. And then second if you could just expand a little bit more on what really I guess on its suggestion to delay launching the service into 2018 I'm just in no doubt to be in her team was with getting a slate up and running fairly quickly and so just simply having a little bit more time makes sense. But I'm just curious as to - is this about giving her chance to get through a full development cycle. Is there an opportunity you know for her to learn a little bit more about the community that you have there already. I would imagine engaging in some of your more prolific creators on the platform already would be a priority so just if you could take us a little layer deeper on that decision.

Thanks. Sure. On the market in the rest of the world I think. So right now we only have exposure to North America and the US and Canada and I think five markets in Europe and it is I think that realistically for the near to medium term that's about a big enough footprint. That's a lot of work for us to do. And I don't want to spread too thin. It's hard to say I wouldn't eliminate the possibility that we may open up a new market either through the organically but I don't think it's likely just as we get ready.

But right now we look at America and Asia I think that some of the demographic information in Latin America doesn't really work for us or at least that it will just be a little bit more complicated right now. And you know you look at things like homeownership and against condominiums or apartments or rentals where they may be where a lot of work is done by the building super.

You look at things like GDP and the middle class and all this and which kind of maps of the world. And I think we like our footprint right now.

There is a market certainly there are many more markets of course outside of Europe and North America. But I think right now we pick our battles and we're going to focus there and its market that rate up to a little over 300 billion of TAM just for sex. International markets we have. So far...

And then on video and timing. Yes, absolutely spending time 14:00 spending time looking at our existing creator base. Speaking for this angry base out in the community understanding what people can make or decision making is all these things go into the equation. I don't think we have - we don't need to be on a typical schedule a typical development cycle. You know we don't have seasons and we don't have any of concepts that carry over from where we don't want are constrained by format time of year time of day any of these things. So it is open feel then and you know that on the one hand a incredible opportunity on the other hand is it's very a very you know located problem to think about in terms of where you want to focus. And we are and no one is spending a lot of time thinking about that. But we just now started to deploy capital.

And I think that 2018 looks good right now. Great.

Thank you. And on Paul Bieber with Credit Suisse

Good morning thanks for taking my questions. We're hoping you get some color in return the growth in the consumer part of the application and then give us an update on the rebranding of dot calm and the vertical content strategy what you're seeing in terms of traffic growth for the sites.

Sure. Can you do on the on applications you call our longer about 64 % year over year? And we're also our business there grew as well. The partnership business as you know is in a slow decline. And then on our core market my Sparc business we just saw - from Q in the fourth quarter. We also have had some stronger BQ in the first quarter not as strong as the as in the fourth quarter and you see a guy you know in and around that 30 million is seasonally DRP. Q Is this a little weaker in the in the second quarter but we go great about that million. The third quarter in a row that this business has exceeded 30 million there. Again given the puts and takes the growth parts of the business we're in line more than making up for the shrinking base.

And I already forgot the second question. Oh yes we got that. This is really so far exceeded our expectations. I don't have a number that is going to be a number you can throw him out there based basically what happened here is we split it out of six different pieces the every single one of them that it launched I think it's now in traffic and certainly relative to line. But I believe even now you're over here right. Yeah. We have a nice fast growing new public here. And as the devil you read the weather do we pull that off and I think we and check that box that the next black flies do advertisers pay attention and do advertisers understand and get excited about it. Advertisers are meaningfully move still by comScore data and our comScore car for that looks pretty exceptional right now. And these are all new branded great content with new looks. And so we've got kind of a little puddle of hair here and a pretty face. I don't have the growth numbers.

To put in context 90 % of our r sessions will now be in the verticals that will rise to 100 %. When we launched Savion May 15th we go through each of them very well. Q One sessions are up 10 % year over year. The balance of 80 % year over year life - 100 % year over year dis-proofs is up 100 % since last the last was very recent as you guys know in February. So we're not quite up a year there. And then Flocco is up 30 % since launch. So exciting numbers indeed.

Okay. Thank you.

Sure.

And then move on to Kerry Rice with Needham & Company

Thank you. You don't want to put words in your mouth but it sounds now that you would be willing or maybe the opportunity for you guys to look for acquisitions may be increasing now with this spin out of home advisor maybe some comments on that. And then just kind of a housekeeping question. Other income was down quite considerably. I don't know if there's anything to call out from that or anything that you can give us to think about how we think about that line going forward. This is beyond the interest expenses other than seven point seven million going up there.

Yeah. When do the other thing I will say if anything has changed. I say on a scale of 1 to 10 our appetite for acquisitions in general is 10. It has always been from prior history. You know obviously we can work on a big project. And so that's the - that's taking up a lot of our time and energy and energy. But that is you know we're always looking for acquisitions and that doesn't mean we rush into things we're very patient. We only go after things really on a high level of confidence but our desire to learn is always going to be as high as it could be I think that's central to what we do. You know the other is in the fourth quarter we had a $15 million gain from the sale price from the first quarter of 3:44 quarter of 16. We are about 35 million dollar gain in respect to the sale of Chubais by 16 with really high. The other thing that flows through there from an accounting perspective is fair game the net loss is in 16 games in either of the temporary basis the mortgage market and 70. We have significant losses there and then you know any trade later or early earnings and consolidate them and roll them off not based on the functional currency of that accounting unit that translates up there's an accounting an ethics game or an ethics law again from the county perspective. The big difference as I said earlier is after sales gains and losses through flow through their end 2016 with operationalised so far as we have price runner and issue about.

Is the Princeton Review sale in that bucket for Q1 or is that that falls into Q2.

Actually in Q1.

Okay. Thank you.

Next I move on to [indiscernible] Q – Unidentified Analyst: Great. Thank you guided to a 35 % margin for the combined adviser company is there. I'm just curious is there another lead generation company and a category that you're using as a guide they're just trying to connect the dots between that and the single digit or so margins that the companies have been posting for the teen years or so. And then if you could any update on the web.

I know we've talked about this before. I don't consider it like a lead generation company I consider that a marketplace that matches consumers and home service professionals. We are not in the business of buying and selling leads. That's just a fundamental misunderstanding. So when you look at marketplace businesses yet you do see the marketplaces as they get those margins. Now I don't think we're in a rush to get to those margins as we said for a while but I do certainly believe bargains like that are possible. And we've been expanding the margins of the business recently as you've seen. And on that last page I think the answer is still the same which is this is not something we're spending time day about we think is absolutely without merit. We're going to fight it vigorously. And look I think you said Mark sorry if you say we can businesses that single digit margins. I mean we've already shown that even on a consolidated basis with our losses internationally our margins are in excess of that and it's you know if you look at our domestic business I mean Joe we called out the letter argument to keep it simple every year and our domestic margins are obviously a lot higher and therefore a lot higher than single digits. Q – Unidentified Analyst: Okay. And I encourage you to use the product and get a sense experience which is not a region prior to the consumer side in the marketplace.

I think that's the mistake from our approach with some security advisor and Angie's List and on outline for service providers on call my visor. Oh that compares. Yes. Thank you. Q – Unidentified Analyst: How are all the conversion compares to show it.

That it's a very good question and difficult question because the - it's very easy to track home with. And it's more complicated to track it. And you live with the leasing model. It's something that we are looking into deeply. I mean we've made some estimates on that and we think that both platforms provide a very healthy our life for service professionals. And we know kind of exactly what that looks like on the home advisor side. And one of our very near term objectives is to understand better and prove what that looks like on the Angie's List. In the letter Q Does it does a great job in talking about our allies to us based on you know based on the way we're going to take Leighton the relationship there too. And you know we estimate your base are 3 to 4 per cent. That is to 29 times return on a dollar and spends with us that is to stamp in with pride. Q – Unidentified Analyst: Great thanks for taking the questions. Joe we on the new leadership just give us an update on how you're viewing that and whether or not you're seeing yourself playing the role as CEO for the foreseeable future do you think that will at some point have a standalone CEO. And then secondly you also took the words you don't. I'm just wondering is there anything for us read on battery intentions to expand their relationship there.

Sure. I definitely will not be in that role. Terry I will not be in that or ever to the - we went in a choice of.

Making some changes in organizing the strategy in which case with the sometime for any of those things. So for some bring somebody right away and let that person make all those changes. And we opted for the former and the latter pushed out the timeline a bit and we've been having this deal for a little while right now I'm going back to focus on finding the right person for the me also. So we are taking up that that searches to be on. A lovely man. Boy there's a lot of interest. I mean I know that a lot of interest in a lot of interest and very high quality people which is more in a position really to make a decision previously and now we're focused on doing that. Ruben there's absolutely nothing to read into that. From Chicago the Groupon offices are directly across the street from my parent’s apartment. I've known the leadership of Groupon for a long time and of those guys and I think they have a big opportunity and so I thought I could go on to Chicago and I could also chip in a group identity of I could be helpful and that's all there is to the Groupon story. Operator, thank you, great. We can do one more thing. We got a lot of these people's time this week. Q – Unidentified Analyst: Thank you. Excellent. Thanks. And we got to follow up on the acquisition question earlier so you know what sort of businesses would you contemplate point forward as a marketplace this is as big as it was.

I didn't return profile that you were looking for. Would you consider growth have to turn around businesses. And second I was intrigued with this discussion a hundred miles or so I'm just curious what specifically are you plan to take make sure acquisitions. The answer is all of the above you know. Where we look for opportunity not constrained by any of the sort of parameters that you listed. But will we consider any of those options on take rate. We got this a lot later the way you in the same grade as you increase our life for service professionals you make you get closer and closer to the transaction and you continue to prove that there they deliver value from the participating on the platform in the marketplace. So the better we do that and the more we deliver that the more we can make their job easier by taking work off their plate and putting it on our plate letting them then do the work they love to do which is whatever their particular trade is because we get there. I think the better we can do the take rate and the same thing when you look at other marketplaces that is that folks who have gotten to higher take rates you know delivered the closest thing to have are actual transactions or something much closer to an actual transaction.

Thank you. Thank you. And I think that is. I appreciate all the time everyone is back with us this week. And it is a busy week. So we're grateful and we'll talk to you next quarter.

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And that will conclude today's column. Thank you for your time.