JAT Capital and IAC/InterActiveCorp
JAT Capital’s third-quarter 13F filing reveals new positions in Baidu Inc. (BIDU), Activision Blizzard, Inc. (ATVI), SanDisk Corporation (SNDK), and Micron Technology (MU). The fund sold its positions in Time Warner Inc. (TWX), IAC/InterActiveCorp (IACI), and Zillow (Z). JAT Capital also added to its positions in Ctrip.com International, Ltd. (CTRP) and Stratasys (SSYS), while it reduced its stake in Melco Crown Entertainment Ltd. (MPEL) and Comcast Corporation (CMCSA).
JAT Capital sold its position in IAC/InterActiveCorp (IACI). The stock accounted for 1.46% of the fund’s portfolio for the quarter ending in June.
IAC/InterActiveCorp: Media and Internet company
IAC/InterActiveCorp (IACI) is a media and Internet company controlled by billionaire Barry Diller. It’s comprised of more than 150 brands and products, including Ask.com, About.com, Dictionary.com, Match.com, HomeAdvisor, and Vimeo. Its websites focus on search, applications, online dating, local, and media.
IAC’s website businesses also include the results of CityGrid, an advertising network that integrates local content and advertising for distribution to both affiliated and third-party publishers across web and mobile platforms. IAC’s applications include business-to-consumer (or B2C) downloadable applications operations and business-to-business (or B2B) partnership operations. It works closely with partners in software, media, and other industries to design and develop customized browser-based search applications.
The company owns Match.com, OKCupid, and Tinder. It gets its revenue from advertising, media production, subscriptions, and other fees. The company gets a substantial portion of its revenue from online advertising through its services agreement with Google, which expires on March 31, 2016. For 2013, it earned $1.5 billion of its revenue from Google.
3Q14 revenue, driven by dating/e-commerce sites, beats estimates
IAC/InterActiveCorp (IACI) posted a quarterly profit of $326.8 million, or $3.68 per share, versus a year-earlier profit of $96.9 million, or $1.13 per share. Excluding certain items, the company’s earnings dropped to $0.92 per share from $1.29 per share.
The company’s total revenue gained 3.3%, to $782.2 million. However, analysts were expecting earnings of $0.66 per share on revenue of $752 million. The increase was driven by solid growth at The Match Group and strong growth at Vimeo and HomeAdvisor, partially offset by a modest decline at Search & Applications.
The Match Group revenue increased 12%, driven by 9% growth in Dating paid subscribers to more than 3.6 million globally and contributions from The Princeton Review and FriendScout24, acquired on August 1, 2014, and August 31, 2014, respectively. In the Media segment, Vimeo revenue grew more than 30% and surpassed 530,000 paid subscribers, while in the eCommerce segment, HomeAdvisor revenue grew 20% with domestic service requests increasing 17%.
In the company’s Search & Applications segment, websites revenue decreased 3% due to a decline in revenue at Ask.com, partially offset by growth at About.com and the contribution of the owned and operated website businesses of ValueClick Inc. acquired in January 2014. Applications revenue decreased 3% due to lower queries in B2B partnership operations, partially offset by strong query growth in B2C.
IAC on acquisition spree
Mindspark Interactive Network, an operating business of IAC, acquired Apalon, a Top 10 developer of iOS applications worldwide as measured by monthly downloads in September 2014, according to the App Annie Index. As a leading provider of mobile applications to the Apple App Store, Google Play, and the Amazon Appstore, Apalon reaches 20 million monthly active users. Its applications, many of which rank in the Apple App Store Top 5 in categories such as lifestyle and weather, have been downloaded more than 100 million times in the last year. The deal took place in the first week of November 2014.
In early September, HomeAdvisor, a leading marketplace for connecting homeowners with local home service professionals and an operating business of IAC, acquired a majority stake in Mhelpdesk, a Cloud-based workflow application that helps small- to medium-sized field service businesses streamline their operations.
In January 2015, HomeAdvisor plans to begin offering, through a membership package, Mhelpdesk’s software to professionals using its home services marketplace. Mhelpdesk is adding 1,000 new business users per month. HomeAdvisor, which competes against Angie’s List, claims a base of 80,000 field service businesses.
Over the last five months, IAC has bought Ask.fm, The Princeton Review, and HowAboutWe.
In the next section of this series, we will discuss JAT Capital’s sold-out position in Zillow (Z).