IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands)
Net earnings (loss) $ 225,639
$ 52,340
$ 334,659
$ (130,268 )
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustment ^(a)
44,126
(4,808 ) 84,824
7,596
Change in unrealized gains and losses of available-for-sale securities (net of tax benefit of $3,846 for the nine months ended September 30, 2017, and net of tax benefits of $85 and $868 for the three and nine months ended September 30, 2016, respectively) ^(b)
—
(145 ) (4,026 ) 1,510
Total other comprehensive income (loss), net of tax 44,126
(4,953 ) 80,798
9,106
Comprehensive income (loss) 269,765
47,387
415,457
(121,162 )
Comprehensive income attributable to noncontrolling interests (52,897 ) (9,502 ) (76,727 ) (13,881 )
Comprehensive income (loss) attributable to IAC shareholders $ 216,868
$ 37,885
$ 338,730
$ (135,043 )



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In thousands)
Net earnings	$	159,772		$	171,577		$	419,548		$	540,270
Other comprehensive loss, net of income taxes:
Change in foreign currency translation adjustment	(23,053		)	(1,050		)	(20,647		)	(12,233		)
Change in unrealized gains and losses on available-for-sale securities ^(a)	—			(28		)	(5		)	(15		)
Total other comprehensive loss, net of income taxes	(23,053		)	(1,078		)	(20,652		)	(12,248		)
Comprehensive income, net of income taxes	136,719			170,499			398,896			528,022
Components of comprehensive income attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests	(31,228		)	(25,803		)	(88,842		)	(105,061		)
Change in foreign currency translation adjustment attributable to noncontrolling interests	4,664			549			4,348			2,632
Change in unrealized gains and losses of available-for-sale debt securities attributable to noncontrolling interests	—			—			1			—
Comprehensive income attributable to noncontrolling interests	(26,564		)	(25,254		)	(84,493		)	(102,429		)
Comprehensive income attributable to IAC shareholders	$	110,155		$	145,245		$	314,403		$	425,593

~~________________________~~_____________________


^(a)	~~The nine~~Net of income tax benefit of $4 for the three months ended September 30, ~~2017 and 2016 include amounts reclassified out of other comprehensive income into earnings. See~~ ~~Note 7—Accumulated Other Comprehensive Loss~~ ~~for additional information.~~


^(b)	~~The nine months ended September 30, 2017 and three and nine months ended September 30, 2016 include unrealized gains reclassified out of other comprehensive income into earnings. See~~ ~~Note 7—Accumulated Other Comprehensive Loss~~ ~~for additional information.~~ 2018.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three Months Ended September 30, 2019 and 2018

(Unaudited)



				IAC Shareholders' Equity
							Class B Convertible Common Stock $.001 Par Value
				Common Stock $.001 Par Value
															Accumulated Other Comprehensive Loss						Total IAC Shareholders' Equity
	Redeemable Noncontrolling Interests									Additional Paid-in Capital			Retained Earnings					Treasury Stock						Noncontrolling Interests			Total Shareholders' Equity
	Redeemable Noncontrolling Interests			$		Shares	$		Shares	Additional Paid-in Capital			Retained Earnings					Treasury Stock						Noncontrolling Interests			Total Shareholders' Equity
				(In thousands)
Balance at June 30, 2019	$	80,502		$	263	262,789	$	16	16,157	$	11,957,543		$	1,460,956	$	(125,705	)	$	(10,309,612	)	$	2,983,461		$	860,136		$	3,843,597
Net (loss) earnings	(1,270		)	—		—	—		—	—			128,544		—			—			128,544			32,498			161,042
Other comprehensive loss, net of income taxes	(365		)	—		—	—		—	—			—		(18,389		)	—			(18,389		)	(4,299		)	(22,688		)
Stock-based compensation expense	36			—		—	—		—	20,332			—		—			—			20,332			29,521			49,853
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			—		321	—		—	(55,036		)	—		—			—			(55,036		)	—			(55,036		)
Purchase of redeemable noncontrolling interests	(71		)	—		—	—		—	—			—		—			—			—			—			—
Adjustment of redeemable noncontrolling interests to fair value	(1,531		)	—		—	—		—	1,531			—		—			—			1,531			—			1,531
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—			—		—	—		—	(22,749		)	—		(510		)	—			(23,259		)	(9,369		)	(32,628		)
Purchase of Match Group and ANGI Homeservices treasury stock	—			—		—	—		—	(139,779		)	—		—			—			(139,779		)	—			(139,779		)
Equity component of exchangeable senior notes, net of deferred financing costs and deferred tax liabilities	—			—		—	—		—	(130		)	—		—			—			(130		)	—			(130		)
Other	1			—		—	—		—	(1		)	—		—			—			(1		)	—			(1		)
Balance at September 30, 2019	$	77,302		$	263	263,110	$	16	16,157	$	11,761,711		$	1,589,500	$	(144,604	)	$	(10,309,612	)	$	2,897,274		$	908,487		$	3,805,761

Balance at June 30, 2018	$	75,719		$	262	261,757	$	16	16,157	$	12,008,684		$	921,268	$	(112,717	)	$	(10,241,434	)	$	2,576,079		$	660,869		$	3,236,948
Net (loss) earnings	(275		)	—		—	—		—	—			145,774		—			—			145,774			26,078			171,852
Other comprehensive loss, net of income taxes	(424		)	—		—	—		—	—			—		(529		)	—			(529		)	(125		)	(654		)
Stock-based compensation expense	284			—		—	—		—	16,748			—		—			—			16,748			38,331			55,079
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			—		283	—		—	9,012			—		—			—			9,012			—			9,012
Purchase of IAC treasury stock	—			—		—	—		—	—			—		—			(68,178		)	(68,178		)	—			(68,178		)
Purchase of redeemable noncontrolling interests	59			—		—	—		—	—			—		—			—			—			—			—
Purchase of noncontrolling interests	(3,562		)	—		—	—		—	—			—		—			—			—			(418		)	(418		)
Adjustment of redeemable noncontrolling interests to fair value	(2,221		)	—		—	—		—	2,221			—		—			—			2,221			—			2,221
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—			—		—	—		—	(74,480		)	—		391			—			(74,089		)	3,251			(70,838		)
Purchase of Match Group treasury stock	—			—		—	—		—	(6,433		)	—		—			—			(6,433		)	—			(6,433		)
Other	(50		)	—		—	—		—	(123		)	—		—			—			(123		)	124			1
Balance at September 30, 2018	$	69,530		$	262	262,040	$	16	16,157	$	11,955,629		$	1,067,042	$	(112,855	)	$	(10,309,612	)	$	2,600,482		$	728,110		$	3,328,592

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Nine Months Ended September 30, ~~2017~~2019 and 2018

(Unaudited)


				IAC Shareholders' Equity																																				IAC Shareholders' Equity
									Class B Convertible Common Stock $.001 Par Value																																					Class B Convertible Common Stock $.001 Par Value
				Common Stock $.001 Par Value																																				Common Stock $.001 Par Value
														Class B Convertible Common Stock $.001 Par Value						Accumulated Other Comprehensive (Loss) Income						Total IAC Shareholders' Equity																										Class B Convertible Common Stock $.001 Par Value							Accumulated Other Comprehensive Loss								Total IAC Shareholders' Equity
	Redeemable Noncontrolling Interests																		Treasury Stock						Noncontrolling Interests				Total Shareholders' Equity			Redeemable Noncontrolling Interests						Treasury Stock																				Total IAC Shareholders' Equity						Noncontrolling Interests						Total Shareholders' Equity
	Redeemable Noncontrolling Interests					$		Shares			Additional Paid-in Capital		Retained Earnings						Treasury Stock				Total IAC Shareholders' Equity		Noncontrolling Interests				Total Shareholders' Equity			Redeemable Noncontrolling Interests						Treasury Stock			$				Shares		Additional Paid-in Capital				Retained Earnings													Noncontrolling Interests						Total Shareholders' Equity
				(In thousands)																								(In thousands)																							Retained Earnings
Balance at December 31, 2016	$	32,827		$	256		255,672		$	16	Additional Paid-in Capital		Retained Earnings								16,157			$	11,921,559		$	290,114		$	(166,123	)		$	(10,176,600			)	$		1,869,222		$	141,448		$	Additional Paid-in Capital		2,010,670
Balance at December 31, 2018																																					$	65,687			$	262			262,303		$	16			16,157		$	12,022,387		$	1,258,794			$	(128,722	)		$	(10,309,612	)		$	2,843,125		$	708,676		$	3,551,801
Net earnings	3,857			—			—		—			—		—			272,120			—			—			272,120			58,682				330,802			4,625				—				—		—				—		—			330,706				—				—				330,706			84,217			414,923
Other comprehensive income, net of tax	831			—			—		—			—		—			—			66,610			—			66,610			13,357				79,967
Other comprehensive loss, net of income taxes																																				(514		)		—				—		—				—		—			—				(16,303		)		—				(16,303		)	(3,835		)	(20,138		)
Stock-based compensation expense	1,577			—			—		—			—		53,491			—			—			—			53,491			136,079				189,570			113				—				—		—				—		63,387			—				—				—				63,387			116,252			179,639
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			4			4,203		—			—		11,881			—			—			—			11,885			—				11,885			—				1				807		—				—		(78,059		)	—				—				—				(78,058		)	—			(78,058		)
Purchase of treasury stock	—			—			—		—			—		—			—			—			(50,121		)	(50,121		)	—				(50,121		)
Purchase of redeemable noncontrolling interests	(12,428		)	—			—		—			—		—			—			—			—			—			—				—			(6,192		)		—				—		—				—		—			—				—				—				—			—			—
Adjustment of redeemable noncontrolling interests to fair value																																				8,607				—				—		—				—		(8,607		)	—				—				—				(8,607		)	—			(8,607		)
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes																																				—				—				—		—				—		(200,661		)	—				421				—				(200,240		)	3,004			(197,236		)
Purchase of Match Group and ANGI Homeservices treasury stock																																				—				—				—		—				—		(220,636		)	—				—				—				(220,636		)	—			(220,636		)
Noncontrolling interests created in acquisitions																																				5,009				—				—		—				—		—			—				—				—				—			—			—
Purchase of exchangeable note hedges																																				—				—				—		—				—		(303,428		)	—				—				—				(303,428		)	—			(303,428		)
Equity component of exchangeable senior notes, net of deferred financing costs and deferred tax liabilities																																				—				—				—		—				—		320,998			—				—				—				320,998			—			320,998
Issuance of warrants																																				—				—				—		—				—		166,520			—				—				—				166,520			—			166,520
Other																																				(33		)		—				—		—				—		(190		)	—				—				—				(190		)	173			(17		)
Balance at September 30, 2019																																				$	77,302			$	263			263,110		$	16			16,157		$	11,761,711		$	1,589,500			$	(144,604	)		$	(10,309,612	)		$	2,897,274		$	908,487		$	3,805,761

Balance at December 31, 2017																																				$	42,867			$	261			260,624		$	16			16,157		$	12,165,002		$	595,038			$	(103,568	)		$	(10,226,721	)		$	2,430,028		$	516,795		$	2,946,823
Cumulative effect of adoption of ASU No. 2014-09																																				—				—				—		—				—		—			36,795				—				—				36,795			3,410			40,205
Net earnings																																				34,481				—				—		—				—		—			435,209				—				—				435,209			70,580			505,789
Other comprehensive loss, net of income taxes																																				(710		)		—				—		—				—		—			—				(9,616		)		—				(9,616		)	(1,922		)	(11,538		)
Stock-based compensation expense																																				1,084				—				—		—				—		52,763			—				—				—				52,763			118,159			170,922
Issuance of common stock pursuant to stock-based awards, net of withholding taxes																																				—				1				1,416		—				—		34,902			—				—				—				34,903			—			34,903
Purchase of IAC treasury stock																																				—				—				—		—				—		—			—				—				(82,891		)		(82,891		)	—			(82,891		)
Purchase of noncontrolling interests	—			—			—		—			—		—			—			—			—			—			(633		)		(633		)	(3,562		)		—				—		—				—		—			—				—				—				—			(1,236		)	(1,236		)
Adjustment of redeemable noncontrolling interests to fair value	2,977			—			—		—			—		(2,977		)	—			—			—			(2,977		)	—				(2,977		)	(372		)		—				—		—				—		372			—				—				—				372			—			372
Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes, and impact to noncontrolling interests in Match Group	—			—			—		—			—		(436,831		)	—			—			—			(436,831		)	(3,970		)		(440,801		)
Acquisition of Angie's List and creation of noncontrolling interests in ANGI Homeservices	—			—			—		—			—		645,475			—			—			—			645,475			133,996				779,471
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes																																				—				—				—		—				—		(213,440		)	—				329				—				(213,111		)	7,695			(205,416		)
Purchase of Match Group treasury stock																																				—				—				—		—				—		(86,239		)	—				—				—				(86,239		)	—			(86,239		)
Noncontrolling interests created in acquisitions	17,692			—			—		—			—		—			—			—			—			—			—				—			2,261				—				—		—				—		—			—				—				—				—			14,246			14,246
Other	(6,352		)	—			—		—			—		47			—			—			—			47			823				870			(6,519		)		—				—		—				—		2,269			—				—				—				2,269			383			2,652
Balance at September 30, 2017	$	40,981		$	260		259,875		$	16		16,157		$	12,192,645		$	562,234		$	(99,513	)	$	(10,226,721	)	$	2,428,921		$	479,782			$	2,908,703
Balance at September 30, 2018																																				$	69,530			$	262			262,040		$	16			16,157		$	11,955,629		$	1,067,042			$	(112,855	)		$	(10,309,612	)		$	2,600,482		$	728,110		$	3,328,592

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

~~IAC/INTERACTIVECORP~~

~~CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~(Unaudited)~~

Nine Months Ended September 30,
2017 2016
(In thousands)
Cash flows from operating activities:
Net earnings (loss) $ 334,659
$ (130,268 )
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Stock-based compensation expense 207,362
82,610
Depreciation 55,490
51,321
Amortization of intangibles 22,151
65,062
Goodwill impairment —
275,367
Deferred income taxes (344,120 ) (99,955 )
Acquisition-related contingent consideration fair value adjustments 4,945
7,993
Gain from the sale of businesses and investments, net (24,031 ) (13,416 )
Impairment of long-term investments 7,746
4,894
Acquisition-related contingent consideration payment (11,140 ) —
Bad debt expense 20,935
12,493
Other adjustments, net 22,975
(5,619 )
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable (78,612 ) 32,950
Other assets (17,534 ) (19,775 )
Accounts payable and other current liabilities 47,547
(63,669 )
Income taxes payable and receivable 4,433
(37,081 )
Deferred revenue 44,791
31,352
Net cash provided by operating activities 297,597
194,259
Cash flows from investing activities:
Acquisitions, net of cash acquired (69,113 ) (2,524 )
Capital expenditures (56,519 ) (62,739 )
Investments in time deposits —
(87,500 )
Proceeds from maturities of time deposits —
87,500
Proceeds from maturities and sales of marketable debt securities 114,350
79,210
Purchases of marketable debt securities (24,909 ) (229,246 )
Purchases of investments (9,105 ) (7,211 )
Net proceeds from the sale of businesses and investments 125,220
110,536
Other, net 1,319
5,562
Net cash provided by (used in) investing activities 81,243
(106,412 )
Cash flows from financing activities:
Purchase of IAC treasury stock (56,424 ) (247,256 )
Proceeds from Match Group 6.375% Senior Notes offering —
400,000
Proceeds from Match Group Term Loan 75,000
—
Principal payment on Match Group Term Loan —
(410,000 )
Debt issuance costs (2,637 ) (5,048 )
Repurchases of IAC Senior Notes (31,590 ) (126,271 )
Proceeds from the exercise of IAC stock options 69,065
19,536
Withholding taxes paid on behalf of IAC net settled stock-based awards (57,180 ) (26,684 )
Proceeds from the exercise of Match Group stock options 57,705
30,246
Cash payments to purchase fully vested equity awards and pay withholding taxes on behalf of Match Group employees on net settled stock-based awards (501,437 ) (29,779 )
Purchase of noncontrolling interests (13,011 ) (2,529 )
Acquisition-related contingent consideration payments (27,289 ) (2,180 )
Funds returned from escrow for MyHammer tender offer 10,604
—
Decrease in restricted cash related to bond redemptions 20,141
20,000
Other, net (5,002 ) (766 )
Net cash used in financing activities (462,055 ) (380,731 )
Total cash used (83,215 ) (292,884 )
Effect of exchange rate changes on cash and cash equivalents 9,345
1,221
Net decrease in cash and cash equivalents (73,870 ) (291,663 )
Cash and cash equivalents at beginning of period 1,329,187
1,481,447
Cash and cash equivalents at end of period $ 1,255,317
$ 1,189,784

~~The accompanying~~ ~~Notes to Consolidated Financial Statements~~ ~~are an integral part of these statements.~~

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)



	Nine Months Ended September 30,
	2019			2018
	(In thousands)
Cash flows from operating activities:
Net earnings	$	419,548		$	540,270
Adjustments to reconcile net earnings to net cash provided by operating activities:
Stock-based compensation expense	179,922			172,006
Amortization of intangibles	65,576			60,293
Depreciation	63,152			56,987
Bad debt expense	50,507			35,521
Deferred income taxes	(85,040		)	(36,866		)
Unrealized gains on equity securities, net	(24,181		)	(126,444		)
Losses (gains) from the sale of investments and businesses, net	6,028			(27,240		)
Other adjustments, net	29,381			12,677
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	(133,492		)	(78,665		)
Other assets	11,324			(48,935		)
Accounts payable and other liabilities	53,957			57,891
Income taxes payable and receivable	(2,951		)	1,971
Deferred revenue	55,035			52,234
Net cash provided by operating activities	688,766			671,700
Cash flows from investing activities:
Acquisitions, net of cash acquired	(200,338		)	(17,635		)
Capital expenditures	(103,645		)	(60,113		)
Proceeds from maturities of marketable debt securities	163,500			125,000
Purchases of marketable debt securities	(39,740		)	(326,906		)
Net proceeds from the sale of businesses and investments	24,757			28,630
Purchases of investments	(250,095		)	(32,180		)
Other, net	(1,733		)	9,646
Net cash used in investing activities	(407,294		)	(273,558		)
Cash flows from financing activities:
Proceeds from issuance of IAC debt	1,150,000			—
Repurchases of IAC debt	(35,035		)	(363		)
Purchase of exchangeable note hedges	(303,428		)	—
Proceeds from issuance of warrants	166,520			—
Borrowings under Match Group Credit Facility	40,000			—
Proceeds from Match Group 2019 Senior Notes offering	350,000			—
Principal payments on Match Group Credit Facility	(300,000		)	—
Principal payments on ANGI Homeservices Term Loan	(10,313		)	(10,313		)
Debt issuance costs	(27,815		)	(532		)
Purchase of IAC treasury stock	—			(82,891		)
Purchase of Match Group and ANGI Homeservices treasury stock	(209,715		)	(86,239		)
Proceeds from the exercise of IAC stock options	10,225			38,903
Proceeds from the exercise of ANGI Homeservices stock options	573			2,876
Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	(88,269		)	(3,011		)
Withholding taxes paid on behalf of Match Group and ANGI Homeservices employees on net settled stock-based awards	(197,222		)	(208,962		)
Purchase of noncontrolling interests	(6,192		)	(4,798		)
Other, net	(3,799		)	(4,526		)
Net cash provided by (used in) financing activities	535,530			(359,856		)
Total cash provided	817,002			38,286
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(2,534		)	(207		)
Net increase in cash, cash equivalents, and restricted cash	814,468			38,079
Cash, cash equivalents, and restricted cash at beginning of period	2,133,685			1,633,682
Cash, cash equivalents, and restricted cash at end of period	$	2,948,153		$	1,671,761

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

IAC ~~is a leading media~~has majority ownership of both Match Group, which includes Tinder, Match, PlentyOfFish, OkCupid and ~~Internet company comprised of widely known consumer brands such as Vimeo, Dotdash (formerly About.com), Dictionary.com, The Daily Beast~~Hinge, and ~~Investopedia, along with~~ ANGI Homeservices, ~~Inc.,~~ which ~~operates~~includes HomeAdvisor, ~~and Angie's~~Angie’s List and Handy, and operates Vimeo and Dotdash, among many other online businesses.

On October 10, 2019, IAC made a preliminary proposal to a special committee of disinterested directors formed by the Match ~~Group's online dating portfolio, which includes~~Group Board of Directors for a transaction that would result in the full separation of Match ~~Tinder, PlentyOfFish~~Group from IAC. The proposed separation transaction (the "Separation"), if completed, would result in two independent public companies, referred to herein as "New Match" and ~~OkCupid.~~"New IAC." IAC would no longer have an ownership stake in Match Group following the Separation and IAC stockholders would receive shares of both New Match and New IAC in the transaction.

~~All references to~~As used herein, "IAC," the "Company," "we," "our" or "us" and similar terms refer to IAC/InterActiveCorp and its subsidiaries (unless the context requires otherwise).

As of September 30, 2019, IAC’s economic and voting interest in:

Match Group were 80.8%, and 97.5%, respectively. All references to "Match Group" or "MTCH" in this report are to ~~IAC/InterActiveCorp.~~Match Group, Inc.

~~On September 29, 2017, the Company completed its previously announced combination (the "Combination") of the businesses~~ANGI Homeservices were 83.7%, and 98.1%, respectively. All reference to "ANGI Homeservices" or "ANGI" in ~~the Company's HomeAdvisor segment and Angie's List, Inc. ("Angie's List") under a new publicly traded company called~~this report are to ANGI Homeservices Inc. ~~("ANGI Homeservices"). At September 30, 2017, IAC owned 87.1% and 98.5% of the economic and voting interest, respectively, of ANGI Homeservices. See "Note 3—Business Combination~~" for further information. In connection with the transaction, the Company changed the name of the HomeAdvisor segment to ANGI Homeservices and year-over-year comparisons for financial results for this segment are to the historical results of the HomeAdvisor segment (adjusted to reflect corporate allocations from IAC).

In connection with the Combination and in consideration for the transfer by USANi LLC, a wholly-owned subsidiary of the Company ("USANi"), to the Company of all common membership units of HomeAdvisor International, LLC held by USANi, on September 29, 2017, the Company issued a total of 67,633 shares of Series C Cumulative Preferred Stock (the “Series C Preferred Stock”) to USANi. The Company established the Series C Preferred Stock, par value $0.01 per share, on September 28, 2017. The Series C Preferred Stock is entitled to receive a cash dividend of $75.00 per share per annum, payable quarterly in arrears. The outstanding Series C Preferred Stock eliminates in the Company's consolidated financial statements.

On March 31, 2017, Match Group sold its non-dating business, consisting of The Princeton Review. The non-dating business does not meet the threshold to be reflected as a discontinued operation at the IAC level. The Company moved the non-dating business to its “Other” segment effective March 31, 2017 and prior period segment data has been recast to conform to this presentation.

Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP").

~~Basis of Consolidation and Accounting for Investments~~

The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. Intercompany transactions and accounts have been eliminated.

Investments in the common stock or in-substance common stock of entities in which the Company has the ability to exercise significant influence over the operating and financial matters of the investee, but does not have a controlling financial interest, are accounted for using the equity method and are included in "Long-term investments" in the accompanying consolidated balance sheet.

In management's opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018.

Accounting for Investments and Equity Securities

Investments in equity securities, other than those of our consolidated subsidiaries and those accounted for under the equity method, are accounted for at fair value or under the measurement alternative of the Financial Accounting Standards Board's ("FASB") issued Accounting Standards Update ("ASU") No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, following its adoption on ~~Form 8-K dated July 18, 2017.~~January 1, 2018, with any changes to fair value recognized within other income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer; value is generally determined based on a market approach as of the transaction date. A security will be considered identical or similar if it has identical or similar rights to the equity securities held by the Company. The Company reviews its investments in equity securities without readily determinable fair values for impairment each reporting period when there are qualitative factors or events that indicate possible impairment. Factors we consider in making this determination include negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. When indicators of impairment exist, the Company prepares quantitative assessments of the fair value of our investments in equity securities, which require judgment and the use of estimates. When our assessment indicates that the fair value of the investment is below its carrying value, the Company writes down the investment to its fair value and records the corresponding charge within other income (expense), net.

Accounting Estimates

Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including those related to: the ~~recoverability~~fair values of ~~goodwill~~cash equivalents and ~~indefinite-lived intangible assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the fair value of long-term investments;~~marketable debt securities; the carrying value of accounts receivable, including the determination of the allowance for doubtful accounts; the determination of revenue reserves; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the recoverability of goodwill and indefinite-lived intangible assets; the fair value of equity securities without readily determinable fair values; contingencies; the fair value of acquisition-related contingent consideration arrangements; ~~the liabilities for uncertain~~unrecognized tax ~~positions;~~benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates and judgments on historical experience, its forecasts and budgets and other factors that the Company considers relevant. ~~Actual results could differ~~

General Revenue Recognition

Revenue is recognized when control of the promised services or goods is transferred to our customers and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.

The Company's disaggregated revenue disclosures are presented in "Note 8—Segment Information."

Deferred Revenue

Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company's performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of each reporting period. The Company classifies deferred revenue as current when the term of the applicable subscription period or expected completion of our performance obligation is one year or less. The current and non-current deferred revenue balances at December 31, 2018 are $360.0 million and $1.7 million, respectively. During the nine months ended September 30, 2019, the Company recognized $346.5 million of revenue that was included in the deferred revenue balance as of December 31, 2018. During the nine months ended September 30, 2018, the Company recognized $317.2 million of revenue that was included in the deferred revenue balance as of January 1, 2018. The current and non-current deferred revenue balances at September 30, 2019 are $414.3 million and $1.4 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

Practical Expedients and Exemptions

As permitted under the practical expedient available under ASU No. 2014-09, Revenue from ~~these estimates.~~Contracts with Customers, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

For sales incentive programs where the customer relationship period is one year or less, the Company has elected the practical expedient to expense the costs as incurred. The amount of capitalized sales commissions where the customer relationship period is greater than one year is $43.2 million and $40.5 million at September 30, 2019 and December 31, 2018, respectively.

Certain Risks and ~~Concentrations~~Concentrations—Services Agreement with Google

A meaningful portion of the Company's revenue is derived from online advertising, the market for which is highly competitive and rapidly changing. Significant changes in this industry or changes in advertising spending behavior or in customer buying behavior could adversely affect our operating results. Most of the Company's online advertising revenue is attributable to a services agreement with Google ~~Inc. ("Google"~~(the "Services Agreement"). In addition, the Company earns certain other advertising revenue from Google that is not attributable to the Services Agreement. For the three and nine months ended September 30, ~~2017,~~2019, consolidated revenue earned from Google ~~represents 21%~~was $182.5 million and ~~23%~~$574.7 million, respectively, representing 15% and 16%, respectively, of the Company's consolidated revenue. For the three and nine months ended September 30, ~~2016,~~2018, consolidated revenue earned from Google ~~represents 23%~~was $204.4 million and ~~27%~~$620.7 million, representing 19% and 20%, respectively, of the Company's consolidated revenue. Accounts receivable related to revenue earned from Google totaled $61.9 million and $69.1 million at September 30, 2019 and December 31, 2018, respectively.

Revenue attributable to the Services Agreement is earned by the Desktop business within the Applications segment and Ask Media Group within the Emerging & Other segment. For the three and nine months ended September 30, 2019, revenue from the Services Agreement of $68.1 million and $234.1 million, respectively, was earned within the Applications segment and $100.3 million and $298.4 million, respectively, within the Emerging & Other segment. For the three and nine months ended September 30, 2018, revenue from the Services Agreement of $110.8 million and $326.7 million, respectively, was earned within the Applications segment and $79.9 million and $248.2 million, respectively, within the Emerging & Other segment.

The ~~services agreement became effective on April 1, 2016, following the expiration of the previous services agreement, and~~current Services Agreement expires on March 31, ~~2020; however,~~2020. On February 11, 2019, the Company and Google amended the Services Agreement, effective as of April 1, 2020. The amendment extends the expiration date of the agreement to March 31, 2023; provided that during September 2020 and during each September thereafter, either party may, ~~choose to~~after discussion with the other party, terminate the services agreement, effective ~~March 31, 2019.~~on September 30 of the year following the year such notice is given. The ~~services~~Company believes that the amended agreement, taken as a whole, is comparable to the Company’s currently existing agreement with Google. The Services Agreement requires that the Company comply with certain guidelines promulgated by Google. Google may generally unilaterally update its policies and guidelines without advance ~~notice, which~~notice. These updates may be specific to the Services Agreement or could be more general and thereby impact the Company as well as other companies. These policy and guideline updates could in turn require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, which could be costly to address or otherwise have an adverse effect on our business, financial condition and results of operations.

~~For~~On May 31, 2019, Google announced industry-wide policy changes, which became effective on July 1, 2019, related to all extensions distributed through the ~~three and nine months ended~~Chrome Web Store. This industry-wide change, combined with recent changes to polices under the Services Agreement, have had a negative impact on the expected future results of operations of the Desktop business. As of September 30, ~~2017, revenue earned from Google was $176.8~~2019, the goodwill balance of the Desktop reporting unit and the carrying value of the related intangible asset are $265.1 million and ~~$539.2~~$28.9 million, respectively. ~~For~~The fair values of the ~~three~~Desktop reporting unit and ~~nine months ended September 30, 2016, revenue earned from Google was $172.0 million and $638.2 million, respectively. This revenue is earned by~~ the businesses comprising the Applications and Publishing segments. For the three and nine months ended September 30, 2017, revenue earned from Google represents 82% and 83% of Applications revenue and 72% and 71% of Publishing revenue. For the three and nine months ended September 30, 2016, revenue earned from Google represents 85% and 87% of Applications revenue and 66% and 76% of Publishing revenue, respectively. Accounts receivable related ~~to revenue earned from Google totaled $62.0 million and $65.8 million at September 30, 2017 and December 31, 2016, respectively.~~

~~Recent Accounting Pronouncements~~

~~Accounting Pronouncements not yet adopted by the Company~~

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09,~~ ~~Revenue from Contracts with Customers,~~ ~~which clarifies the principles for recognizing revenue and develops~~intangible asset approximate their carrying values, therefore, a common standard for all industries. ASU No. 2014-09 was subsequently amended during 2015, 2016 and 2017; these amendments provide further revenue recognition guidance related to principal versus agent considerations, performance obligations and licensing, narrow-scope improvements and practical expedients.

ASU No. 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The new standard provides a single principles-based, five-step model to be applied to all contracts with customers. This five-step model includes (1) identifying the contract(s) with the customer, (2) identifying the performance obligationsmodest reduction in the ~~contract, (3) determining~~fair values of the ~~transaction price, (4) allocating~~Desktop reporting unit or the ~~transaction price~~related intangible asset would result in an impairment charge, which would be equal to the ~~performance obligations in the contract and (5) recognizing revenue when each performance obligation is satisfied. More~~

~~Table of Contents~~

~~IAC/INTERACTIVECORP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

specifically, revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. ASU No. 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016. Upon adoption, ASU No. 2014-09 may either be applied retrospectively to each prior period presented or using the modified retrospective approach with the cumulative effect recognized asexcess of the ~~date~~carrying value over the fair value of ~~initial application.~~such assets.

~~While the Company’s evaluation of the impact the adoption~~Adoption of ASU No. ~~2014-09 on its consolidated financial statements continues, it has progressed to the point where we have reached certain preliminary determinations.~~2016-02, Leases (Topic 842)

The Company ~~will adopt~~adopted ASU No. ~~2014-09 using the modified retrospective approach~~2016-02, Leases (Topic 842) ("ASC 842") effective January 1, ~~2018. Therefore, the cumulative effect of adoption will be reflected as an adjustment to beginning retained earnings in the Form 10-Q for the period ending March 31, 2018.~~

The Company’s assessment of the accounting for mobile app store fees incurred by Match Group in connection with obtaining members is still preliminary and ongoing. Match Group currently capitalizes these costs and amortizes them over the period of the applicable membership periods, which generally range from one to six months. The Company’s initial conclusions in applying ASU No. 2014-09 to these costs were: (1) these costs represent the incremental direct costs of obtaining a membership contract and (2) would, therefore, continue to be capitalized and amortized as incurred. The Company is reassessing this conclusion in light of its finding that there are divergent and evolving interpretations of the correct application of ASU No. 2014-09 to these costs. The total capitalized mobile app store fees were $19.8 million as of September 30, 2017.

Within ANGI Homeservices, the effect of the adoption of ASU No. 2014-09 on HomeAdvisor will be that sales commissions, which represent the incremental direct costs of obtaining a service professional contract, will be capitalized and amortized over the average life of a service professional. These costs are expensed as incurred today. Prior to the Combination, Angie's List capitalized sales commissions and amortized the cost over the term of the applicable advertising contract. Following the Combination, Angie's List accounting policies will be conformed to the Company's accounting policies and these costs will be expensed as incurred. Following the adoption of ASU No. 2014-09, these costs will be capitalized and amortized over the average life of a service professional.

Within Applications, the primary effect of the adoption of ASU No. 2014-09 will be to accelerate the recognition of the portion of the revenue of certain desktop applications sold by SlimWare that qualify as functional intellectual property under ASU No. 2014-09. This revenue is currently deferred and recognized over the applicable subscription term.

~~The Company does not expect the adoption of ASU No. 2014-09 to have a material effect on its consolidated financial statements.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842), which supersedes~~2019. ASC 842 superseded previously existing guidance on accounting for leases in ~~"Leases (Topic 840)"~~ and generally requires all leases to be recognized in the statement of financial position.

The ~~provisions~~adoption of ~~ASU No. 2016-02 are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions~~ASC 842 resulted in the recognition of ~~ASU No. 2016-02 are to be applied using a modified retrospective approach. The Company will adopt ASU No. 2016-02 effective~~$154.7 million of right-of-use assets ("ROU assets") and related lease liabilities as of January 1, ~~2019.~~2019, with no cumulative effect adjustment. The ~~Company is currently evaluating the impact the~~ adoption of ~~this standard update will have on its consolidated financial statements.~~

~~Accounting Pronouncements adopted by the Company~~

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about the changes to the terms and conditions of a share-based payment award that require an entity to apply modification accounting in~~ ~~"Stock Compensation (Topic 718)."~~ The provisions of ASU No. 2017-09 are effective for reporting periods beginning after December 15, 2017; early adoption is permitted. The provisions of ASU No. 2017-09 are to be applied prospectively to an award modified on or after the adoption date. The Company early adopted the provisions of ASU No. 2017-09 during the third quarter of 2017 and the adoption of this standard update did not have a materialASC 842 had no impact on ~~its~~the Company’s consolidated ~~financial statements.~~results of operations or cash flows.

1011

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~, which clarifies how cash receipts and cash payments in certain transactions are presented and classified on the statement of cash flows. The provisions of ASU No. 2016-15 are effective for reporting periods beginning after December 15, 2017, including interim periods, and will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable; early adoption is permitted. Upon adoption, cash payments made soon after the acquisition date of a business to settle a contingent consideration liability are classified as cash outflows for investing activities. Cash payments which are not made soon after the acquisition date of a business to settle a contingent consideration liability are separated and classified as cash outflows for financing activities up to the amount of the contingent consideration liability recognized at the acquisition date and as cash outflows from operating activities for any excess. The Company early adopted the provisions of ASU No. 2016-15 on January 1, 2017. As a result, $11.1 million of an acquisition-related contingent consideration payment of $15.0 million, which was in excess of the liability initially recognized at the acquisition date, has been classified as a cash outflow within net cash provided by operating activities in the accompanying consolidated statement of cash flows for the nine months ended September 30, 2017.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~. The Company adopted ASC 842 prospectively and, therefore, did not revise comparative period information or disclosure. In addition, the ~~provisions~~Company elected the package of ~~ASU No. 2016-09~~practical expedients permitted under ASC 842.

See "Note 2—Leases" for additional information on January 1, 2017. Excess tax benefits or deficiencies related to equity awards to employees upon the exercise of stock options and the vesting of restricted stock units after January 1, 2017 are (i) reflected in the consolidated statement of operations as a component of the provision for income taxes, rather than recognized in equity, and (ii) reflected as operating, rather than financing, cash flows in our consolidated statement of cash flows. Excess tax benefits for the nine months ended September 30, 2017 were $314.3 million. Excess tax benefits of $43.1 million for the nine months ended September 30, 2016 were reclassified in the consolidated statement of cash flows to conform to the current year presentation. Upon adoption, the calculation of fully diluted shares excludes excess tax benefits from the assumed proceeds in applying the treasury stock method; previously such benefits were included in the calculation. This change increased fully diluted shares by approximately 1.1 million and 2.0 million shares for the three and nine months ended September 30, 2017, respectively. The Company continues to account for forfeitures using an estimated forfeiture rate.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles~~—~~Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~, which is intended to simplify the accounting for goodwill impairment. The guidance eliminates the requirement to calculate the implied fair value of goodwill under today’s two-step impairment test to measure a goodwill impairment charge. The provisions of ASU No. 2017-04 are effective for reporting periods beginning after December 15, 2019; early adoption is permitted. The provisions of ASU No. 2017-04 are to be applied using a prospective approach. The Company early adopted the provisions of ASU No. 2017-04 on January 1, 2017 and the adoption of ~~this standard update did not have a material impact on its consolidated financial statements.~~ASC 842.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2—LEASES

The Company leases land, office space, data center facilities and equipment used in connection with its operations under various operating leases, the majority of which contain escalation clauses.

ROU assets represent the Company’s right to use the underlying assets for the lease term and lease liabilities represent the present value of the Company’s obligation to make payments arising from these leases. ROU assets and related lease liabilities are based on the present value of fixed lease payments over the lease term using the Company's and its publicly-traded subsidiaries' respective incremental borrowing rates on the lease commencement date or January 1, 2019 for leases that commenced prior to that date. The Company combines the lease and non-lease components of lease payments in determining ROU assets and related lease liabilities. If the lease includes one or more options to extend the term of the lease, the renewal option is considered in the lease term if it is reasonably certain the Company will exercise the option(s). Lease expense is recognized on a straight-line basis over the term of the lease. As permitted by ASC 842, leases with an initial term of twelve months or less ("short-term leases") are not recorded on the accompanying consolidated balance sheet.

Variable lease payments consist primarily of common area maintenance, utilities and taxes, which are not included in the recognition of ROU assets and related lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.



Leases	Balance Sheet Classification	September 30, 2019
		(In thousands)
Assets:
Right-of-use assets	Right-of-use assets	$	177,797

Liabilities:
Current lease liabilities	Accrued expenses and other current liabilities	33,029
Long-term lease liabilities	Other long-term liabilities	198,962
Total lease liabilities		$	231,991

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



Lease Cost	Income Statement Classification	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
		(In thousands)
Fixed lease cost	Cost of revenue	$	975	$	3,181
Fixed lease cost	Selling and marketing expense	2,836		7,747
Fixed lease cost	General and administrative expense	7,424		24,014
Fixed lease cost	Product development expense	450		1,050
Total fixed lease cost ^(a)		11,685		35,992
Variable lease cost	Cost of revenue	90		354
Variable lease cost	Selling and marketing expense	337		1,007
Variable lease cost	General and administrative expense	1,799		5,487
Variable lease cost	Product development expense	74		173
Total variable lease cost		2,300		7,021
Net lease cost		$	13,985	$	43,013

_____________________

^(a)Includes approximately $1.1 million and $4.2 million of short-term lease cost and $0.6 million and $1.6 million of sublease income for the three and nine months ended September 30, 2019, respectively.

Maturities of lease liabilities as of September 30, 2019 (in thousands) ^(b):



Remainder of 2019	$	9,565
2020	46,199
2021	40,761
2022	33,659
2023	28,836
After 2023	249,912
Total	408,932
Less: Interest	176,941
Present value of lease liabilities	$	231,991

_____________________


^(b)	Lease payments exclude $6.0 million of legally binding minimum lease payments for leases signed but not yet commenced.

The following are the weighted average assumptions used for lease term and discount rate as of September 30, 2019:



Remaining lease term	15.2 years
Discount rate	6.02	%



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	(In thousands)
Other Information:
Right-of-use assets obtained in exchange for lease liabilities	$	6,699	$	59,857
Cash paid for amounts included in the measurement of lease liabilities	$	10,719	$	34,433

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 3—INCOME TAXES

At the end of each interim period, the Company ~~makes its best estimate of~~estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or ~~the liabilities for uncertain~~unrecognized tax ~~positions~~benefits is recognized in the interim period in which the change occurs.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or

~~Table of Contents~~

~~IAC/INTERACTIVECORP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

our tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs. Included in the income tax benefit for the three months ended September 30, 2019 is a benefit of $3.6 million due to a lower estimated annual effective income tax rate from that applied to ordinary income through the six months ended June 30, 2019. The lower estimated annual effective income tax rate was primarily due to an increase in estimated research credits.

For the three and nine months ended September 30, ~~2017,~~2019, the Company recorded an income tax benefit, despite pre-tax income, of ~~$279.5~~$14.8 million and ~~$322.8~~$62.1 million, ~~respectively. The income tax benefit for the three and nine months ended September 30, 2017 is~~respectively, due primarily to ~~the effect of adopting the provisions of ASU No. 2016-09 on January 1, 2017. Under ASU No. 2016-09,~~ excess tax benefits generated by the exercise ~~purchase or settlement~~and vesting of stock-based awards ~~of $314.3 million for the nine months ended September 30, 2017 are recognized as a reduction to the income tax provision rather than as an increase to additional paid-in capital.~~and research credits. For the three and nine months ended September 30, ~~2016,~~2018, the Company recorded an income tax ~~provision~~benefit, despite pre-tax income, of ~~$17.8~~$18.2 million and ~~an income tax benefit of $77.4~~$15.9 million, respectively, ~~which represents effective income tax rates of 25% and 37%, respectively. The effective tax rate for the three months ended September 30, 2016 is lower than the statutory rate of 35%~~ due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards, a reduction in the Transition Tax described below, and research credits.

The Tax Cuts and Jobs Act subjected to U.S. taxation certain previously deferred earnings of foreign ~~income taxed at lower rates.~~subsidiaries as of December 31, 2017 (“Transition Tax”). The ~~effective~~Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional tax ~~rate for~~expense in the ~~nine months ended September 30, 2016 is higher than~~fourth quarter of 2017. In the ~~statutory rate~~third quarter of ~~35%~~2018, the Company finalized this calculation, which resulted in a $9.2 million reduction in the Transition Tax. The net reduction in the Transition Tax was due primarily to the utilization of additional foreign ~~income taxed at lower rates,~~tax credits and a reduction in state taxes, ~~and the non-taxable gain on the sale of PriceRunner,~~ partially offset by ~~the non-deductible portion~~additional taxable earnings and profits of ~~the goodwill impairment at the Publishing segment.~~our foreign subsidiaries based on Internal Revenue Service ("IRS") guidance.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. ~~At September 30, 2017~~Accruals for interest and December 31, 2016, the Company has accrued $3.3 million and $2.6 million, respectively, for the payment of interest. At both September 30, 2017 and December 31, 2016, the Company has accrued $1.7 million for penalties.penalties are not material.

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The ~~Internal Revenue Service~~IRS is currently auditing the Company’s federal income tax returns for the years ended December 31, 2010 through ~~2012.~~2016. The statute of limitations for the years 2010 through ~~2013~~2012 has been extended to ~~June 30, 2018. Various~~July 31, 2020 and the statute of limitations for the years 2013 through 2015 has been extended to December 31, 2020. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes payable include ~~reserves~~unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. ~~Changes to reserves~~We consider many factors when evaluating and estimating our tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided ~~may be material. Differences between~~will not have a material impact on the ~~reserves for income tax contingencies and the amounts owed by~~liquidity, results of operations, or financial condition of the Company, these matters are ~~recorded~~subject to inherent uncertainties and management’s view of these matters may change in the ~~period they become known.~~future.

At September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, unrecognized tax benefits, including interest and penalties, are ~~$43.0~~$68.3 million and ~~$41.0~~$52.3 million, respectively. Unrecognized tax benefits, including interest, at September 30, 2019 increased by $16.0 million due primarily to research credits. If unrecognized tax benefits at September 30, ~~2017~~2019 are subsequently recognized, ~~$39.4~~$63.5 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

amount as of December 31, ~~2016~~2018 was ~~$37.7~~$49.1 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by ~~$22.5~~$24.5 million by ~~June~~September 30, ~~2018,~~2020, due to expirations of statutes of ~~limitations; $22.0~~limitations or other settlements; of this amount, $24.3 million ~~of which~~ would reduce the income tax provision.

The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, among other things, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, the duration of statutory carryforward periods, available tax planning and historical experience, to the extent these items are applicable. As of September 30, 2017, the Company has a gross deferred tax asset of $221.5 million that the Company expects to fully utilize on a more likely than not basis.

NOTE ~~3—BUSINESS COMBINATION~~4—FINANCIAL INSTRUMENTS

OnMarketable Securities

At September ~~29, 2017, the Company completed its previously announced combination of the businesses in the Company's HomeAdvisor segment~~30, 2019 and Angie's List under a new publicly traded company called ANGI Homeservices. Through the Combination, ANGI Homeservices acquired 100% of the common stock of Angie's List on September 29, 2017 for a total purchase price valued at $781.4 million. Angie’s List is a nationwide marketplace for local services where consumers can research, hire, rate and review the providers of these services. Ratings and reviews assist members in identifying and hiring a provider for their local service needs. Angie’s List's services are provided in markets located across the continental United States.

~~The purchase price of $781.4 million was determined based on the sum of (i)~~December 31, 2018, the fair value of marketable securities are as follows:



	September 30, 2019		December 31, 2018
	(In thousands)
Marketable equity securities	$	157,174	$	419
Available-for-sale marketable debt securities	—		123,246
Total marketable securities	$	157,174	$	123,665

The Company has an investment in Pinterest, which is carried at fair value following its initial public offering in April 2019. Prior to this, the ~~61.3 million shares of Angie's List common stock outstanding immediately prior~~Company accounted for its investment in Pinterest as an equity security without a readily determinable fair value. Unrealized gains or losses related to the ~~Combination based~~Company's investment in Pinterest is included in "Other income, net" in the accompanying consolidated statement of operations. For the three and nine months ended September 30, 2019, the Company recognized an unrealized loss of $4.6 million and an unrealized gain of $25.3 million, respectively.

At December 31, 2018, current available-for-sale marketable debt securities were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Treasury discount notes	$	112,291	$	3	$	(3	)	$	112,291
Commercial paper	10,955		—		—			10,955
Total available-for-sale marketable debt securities	$	123,246	$	3	$	(3	)	$	123,246

The following table presents the proceeds from maturities of available-for-sale marketable debt securities:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(In thousands)
Proceeds from maturities of available-for-sale marketable debt securities	$	—	$	115,000	$	163,500	$	125,000

The specific-identification method is used to determine the cost of available-for-sale marketable debt securities sold and the amount of unrealized gains and losses reclassified out of accumulated other comprehensive income (loss) into earnings. There were 0 gross realized gains or losses from the sales of available-for-sale marketable debt securities for the three and nine months ended September 30, 2019 and 2018.

Equity securities without readily determinable fair values

At September 30, 2019 and December 31, 2018, the carrying values of the Company's investments in equity securities without readily determinable fair values totaled $334.0 million and $235.1 million, respectively, and are included in "Long-term investments" in the accompanying consolidated balance sheet. All gains and losses on ~~the closing stock price of Angie's List~~equity securities without readily

1215

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~common stock on~~determinable fair values, realized and unrealized, are recognized in "Other income, net" in the ~~NASDAQ on September 29, 2017~~accompanying consolidated statement of ~~$12.46~~ ~~per share; (ii)~~operations.

In the ~~cash consideration~~third quarter of~~$1.9~~ 2019, the Company made a $250 million ~~paid to holders~~investment in Turo, a peer-to-peer car sharing marketplace. As part of ~~Angie's List common stock who elected to receive $8.50~~its investment, the Company received a warrant that is net settleable at the Company's option and is recorded at fair value each reporting period with any change included in ~~cash per share;~~"Other income, net" in the accompany consolidated statement of operations. The warrant is measured using significant unobservable inputs and ~~(iii)~~is classified in the fair value hierarchy table below as Level 3. The warrant is included in "Other non-current assets" in the accompanying consolidated balance sheet.

The following table presents a summary of vested equity awards (including the pro rata portion of unvested awards attributable to pre-combination services) outstanding under Angie's List stock plans on September 29, 2017. Each stock option to purchase shares of Angie's List common stock that was outstanding immediately priorrealized and unrealized gains and losses recorded in other income (expense), net, as adjustments to the ~~effective time~~carrying value of ~~the Combination was,~~equity securities without readily determinable fair values held as of ~~the effective time of the Combination, converted into an option to purchase (i) that number of Class A shares of ANGI Homeservices equal~~September 30, 2019 and 2018.



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
	(In thousands)
Upward adjustments (gross unrealized gains)	$	53		$	—	$	53		$	128,786
Downward adjustments including impairment (gross unrealized losses)	(543		)	—		(1,193		)	(2,588		)
Total	$	(490	)	$	—	$	(1,140	)	$	126,198

The cumulative upward and downward adjustments (including impairments) to the ~~total number~~carrying value of ~~shares of Angie's List common stock subject to such Angie's List option immediately prior to the effective time of the Combination, (ii)~~equity securities without readily determinable fair values held at a per-share exercise price equal to the exercise price per share of Angie's List common stock at which such Angie's List option was exercisable immediately prior to the effective time of the Combination. Each award of Angie's List restricted stock units that was outstanding immediately prior to the effective time of the Combination was, as of the effective time of the Combination, converted into an ANGI Homeservices restricted stock unit award with respect to a number of Class A shares of ANGI Homeservices equal to the total number of shares of Angie's List common stock subject to such Angie's List restricted stock unit award immediately prior to the effective time of the Combination.September 30, 2019 were $0.3 million and $3.0 million, respectively.

~~The table below summarizes the purchase price:~~

Angie's List
(In thousands)
Class A common stock $ 763,684
Cash consideration for holders who elected to receive $8.50 in cash per share of Angie's List common stock 1,913
Fair value of vested and pro rata portion of unvested stock options attributable to pre-combination services 11,749
Fair value of the pro rata portion of unvested restricted stock units attributable to pre-combination services 4,038
Total purchase price $ 781,384

~~The financial results of Angie's List are included in~~Realized and unrealized gains and losses for the Company's ~~consolidated financial statements, within the ANGI Homeservices segment, beginning September 29, 2017. For~~marketable equity securities and investments without readily determinable fair values for the three and nine months ended September 30, ~~2017, the Company included $0.7 million of revenue~~2019 and $20.0 million of net losses in its consolidated statement of operations related to Angie's List. The Company is in the process of completing its determination of the fair values of assets acquired and liabilities assumed and the preliminary fair values are subject to revision. These fair values are expected to be finalized in the fourth quarter of 2017.

~~The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of combination:~~

Angie's List
(In thousands)
Cash and cash equivalents $ 44,270
Other current assets 10,641
Property and equipment 16,341
Goodwill 545,396
Intangible assets 317,300
Total assets 933,948
Deferred revenue (32,130 )
Other current liabilities (46,106 )
Long-term debt—related party (61,498 )
Deferred income taxes (11,478 )
Other long-term liabilities (1,352 )
Net assets acquired $ 781,384

~~Table of Contents~~

~~IAC/INTERACTIVECORP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

The purchase price was based on the expected financial performance of Angie's List, not on the value of the net identifiable assets at the time of combination. This resulted in a significant portion of the purchase price being attributed to goodwill because Angie's List is complementary and synergistic to the other North America businesses of ANGI Homeservices.

~~The preliminary estimated fair values of the identifiable intangible assets acquired at the date of combination~~2018 are as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
	(In thousands)
Realized (losses) gains, net, for equity securities sold	$	(8	)	$	702		$	2,136	$	27,874
Unrealized (losses) gains, net, on equity securities held	(5,066		)	(115		)	24,181		126,444
Total (losses) gains recognized, net, in other income, net	$	(5,074	)	$	587		$	26,317	$	154,318

Angie's List
(In thousands)
Weighted-average useful life
(years)
Indefinite-lived trade names and trademarks $ 137,000
Indefinite
Service providers 90,500
3
Developed technology 63,900
6
Memberships 15,900
3
User base 10,000
1
Total identifiable intangible assets acquired $ 317,300

Other current assets, current liabilities and other long-term liabilities of Angie's List were reviewed and adjusted to their fair values at the date of combination, as necessary. The fair value of deferred revenue was determined using an income approach that utilized a cost to fulfill analysis. The fair values of trade names and trademarks were determined using an income approach that utilized the relief from royalty methodology. The fair values of developed technology and user base were determined using a cost approach that utilized the cost to replace methodology. The fair values of the service providers and memberships were determined using an income approach that utilized the excess earnings methodology. The valuations of deferred revenue and intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows, cost and profit margins related to deferred revenue and the determination of royalty and discount rates. The amount attributed to goodwill is not tax deductible.

~~Pro forma financial information~~

The unaudited pro forma financial information in the table below presents the combined results of the Company and Angie's List as if the Combination had occurred on January 1, 2016. The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had the Combination actually occurred on January 1, 2016. For the three and nine months ended September 30, 2017, pro forma adjustments include (i) reductions in stock-based compensation expense of $85.1 million and $52.8 million, respectively, and transaction related costs of $22.1 million and $25.6 million, respectively, because they are one-time in nature and will not have a continuing impact on operations; and (ii) an increase in amortization of intangibles of $11.4 million and $34.4 million, respectively. The stock-based compensation expense is related to the modification of previously issued HomeAdvisor vested equity awards, which were converted into ANGI Homeservices' equity awards, and the acceleration of previously issued Angie's List equity awards held by employees terminated in connection with the Combination. The transaction related costs include severance and retention costs of $12.0 million related to the Combination. For the three and nine months ended September 30, 2016, pro forma adjustments include a reduction in revenue of $5.0 million and $31.4 million, respectively, due to the write-off of deferred revenue at the date of acquisition as well as increases in stock-based compensation expense of $19.7 million and $51.4 million, respectively, and amortization of intangibles of $14.0 million and $42.1 million, respectively.

~~Table of Contents~~

~~IAC/INTERACTIVECORP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands, except per share data)
Revenue $ 898,584
$ 838,834
$ 2,571,613
$ 2,544,019
Net earnings (loss) attributable to IAC shareholders 244,400
12,237
313,054
(221,446 )
Basic earnings (loss) per share attributable to IAC shareholders 3.02
0.15
3.94
(2.76 )
Diluted earnings (loss) per share attributable to IAC shareholders 2.80
0.15
3.70
(2.76 )

~~NOTE 4—GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill and intangible assets, net are as follows:~~

September 30, December 31,
2017 2016
(In thousands)
Goodwill $ 2,501,589
$ 1,924,052
Intangible assets with indefinite lives 460,333
320,645
Intangible assets with definite lives, net 199,770
34,806
Total goodwill and intangible assets, net $ 3,161,692
$ 2,279,503

~~The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill, for the nine months ended September 30, 2017:~~

Balance at
December 31, 2016 Additions (Deductions) Foreign
Exchange
Translation Balance at
September 30, 2017
(In thousands)
Match Group $ 1,206,538
$ 255
$ —
$ 43,575
$ 1,250,368
ANGI Homeservices 170,611
593,880
—
7,865
772,356
Video 25,239
6,384
—
—
31,623
Applications 447,242
—
—
—
447,242
Other 74,422
—
(74,430 ) 8
—
Total $ 1,924,052
$ 600,519
$ (74,430 ) $ 51,448
$ 2,501,589

The additions primarily relate to the acquisitions of Angie's List, MyBuilder and HomeStars (included in the ANGI Homeservices segment). The deductions relate to the sale of The Princeton Review (previously included in the Other segment).

~~The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill, for the year ended December 31, 2016:~~

~~Table of Contents~~

~~IAC/INTERACTIVECORP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Balance at
December 31, 2015 Additions (Deductions) Impairment Foreign
Exchange
Translation Balance at
December 31, 2016
(In thousands)
Match Group $ 1,218,607
$ 603
$ (2,983 ) $ —
$ (9,689 ) $ 1,206,538
ANGI Homeservices 150,251
21,985
—
—
(1,625 ) 170,611
Video 15,590
9,649
—
—
—
25,239
Applications 447,242
—
—
—
—
447,242
Publishing 277,192
—
(1,968 ) (275,367 ) 143
—
Other 136,482
—
(62,860 ) —
800
74,422
Total $ 2,245,364
$ 32,237
$ (67,811 ) $ (275,367 ) $ (10,371 ) $ 1,924,052

The additions primarily relate to the acquisitions of MyHammer Holding AG (included in the ANGI Homeservices segment) and VHX (included in the Video segment). The deductions primarily relate to the sales of PriceRunner and ShoeBuy (both included in the Other segment). During the second quarter of 2016, the Company recorded impairment charges related to the entire $275.4 million balance of the Publishing reporting unit goodwill. The goodwill impairment charge at Publishing was driven by the impact from the new Google services agreement, traffic trends and monetization challenges and the corresponding impact on the current estimate of fair value.

The September 30, 2017 and December 31, 2016 goodwill balance reflects accumulated impairment losses of $598.0 million, $529.1 million and $11.6 million at Publishing, Applications and Connected Ventures (included in the Video segment), respectively.

Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions. At September 30, 2017 and December 31, 2016, intangible assets with definite lives are as follows:

September 30, 2017
Gross
Carrying
Amount Accumulated
Amortization Net Weighted-Average
Useful Life
(Years)
(In thousands)
Advertiser and supplier relationships and other $ 119,029
$ (4,654 ) $ 114,375
3.0
Technology 104,876
(32,348 ) 72,528
4.9
Customer lists and user base 13,911
(2,973 ) 10,938
1.1
Content 5,000
(3,723 ) 1,277
5.0
Trade names 14,518
(13,866 ) 652
2.7
Total $ 257,334
$ (57,564 ) $ 199,770
3.7

December 31, 2016
Gross
Carrying
Amount Accumulated
Amortization Net Weighted-Average
Useful Life
(Years)
(In thousands)
Advertiser and supplier relationships and other $ 7,230
$ (2,612 ) $ 4,618
4.5
Technology 38,602
(27,667 ) 10,935
3.4
Customer lists 12,485
(9,997 ) 2,488
3.7
Content 14,802
(8,965 ) 5,837
4.3
Trade names 63,855
(52,927 ) 10,928
1.8
Total $ 136,974
$ (102,168 ) $ 34,806
2.8

~~Table of Contents~~

~~IAC/INTERACTIVECORP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~At September 30, 2017, amortization of intangible assets with definite lives for each of the next five years is estimated to be as follows:~~

Years Ending September 30, (In thousands)
2018 $ 68,567
2019 51,422
2020 47,775
2021 10,735
2022 10,650
Thereafter 10,621
Total $ 199,770

~~NOTE 5—FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS~~Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the Company's Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. ~~See below for a discussion of fair value measurements made using Level 3 inputs.~~

The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:


	September 30, 2017										September 30, 2019
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value Measurements			Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value Measurements
	(In thousands)										(In thousands)
Assets:
Cash equivalents:
Money market funds	$	865,630	$	—	$	—		$	865,630		$	818,158	$	—	$	—		$	818,158
Treasury discount notes											—		1,349,257		—			1,349,257
Time deposits	—		105,942		—			105,942			—		145,035		—			145,035
Treasury discount notes	1,199		—		—			1,199
Certificates of deposit	—		6,199		—			6,199
Marketable securities:
Marketable equity security											157,174		—		—			157,174
Other non-current assets:
Warrant											—		—		8,929			8,929
Total	$	866,829	$	112,141	$	—		$	978,970		$	975,332	$	1,494,292	$	8,929		$	2,478,553

Liabilities:
Contingent consideration arrangement	$	—	$	—	$	(1,792	)	$	(1,792	)	$	—	$	—	$	(13,664	)	$	(13,664	)

Table of Contents

~~IAC'S~~

PRINCIPLES OF FINANCIAL REPORTING

IAC reports Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ("GAAP"). This measure is one of the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated. We believe that investors 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~~however, should not be considered a substitute for or superior to GAAP results. IAC 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 ~~IAC's~~ Non-GAAP Measure

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") 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. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that 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, and this measure is one of the primary metrics by which our internal budgets are based and by which management is compensated. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, and we believe that by excluding these items, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business, from which capital investments are made and debt is serviced.nature. Adjusted EBITDA has certain limitations ~~in that~~because it ~~does not take into account~~excludes the impact of these expenses.

The following table reconciles net earnings attributable to ~~IAC's statement of operations of certain expenses.~~IAC shareholders to operating income to consolidated Adjusted EBITDA:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In thousands)
Net earnings attributable to IAC shareholders	$	128,544		$	145,774		$	330,706		$	435,209
Add back:
Net earnings attributable to noncontrolling interests	31,228			25,803			88,842			105,061
Income tax benefit	(14,823		)	(18,242		)	(62,142		)	(15,887		)
Other income, net	(1,229		)	(8,113		)	(47,852		)	(174,635		)
Interest expense	42,132			27,610			110,481			81,471
Operating income	185,852			172,832			420,035			431,219
Stock-based compensation expense	50,053			55,363			179,922			172,006
Depreciation	23,090			18,925			63,152			56,987
Amortization of intangibles	23,186			20,152			65,576			60,293
Acquisition-related contingent consideration fair value adjustments	(16,139		)	55			(12,993		)	265
Adjusted EBITDA	$	266,042		$	267,327		$	715,692		$	720,770

For a reconciliation of operating income (loss) ~~by reportable segment and net earnings attributable to IAC shareholders~~ to Adjusted EBITDA for the ~~three and nine months ended September 30, 2017 and 2016,~~Company's reportable segments, see "Note 9—8—Segment Information" to the consolidated financial statements included in "Item 1. 1—Consolidated Financial Statements."

Non-Cash Expenses That Are Excluded From ~~IAC's Non-GAAP Measure~~Adjusted EBITDA

Stock-based compensationexpense consists principally of expense associated with the grants, ~~of stock options,~~ including unvested grants assumed in acquisitions (including the Combination), of stock options, restricted stock units ("RSUs"), performance-based RSUs and market-based awards. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding using the treasury stock ~~method; however, performance-based~~method. Performance-based RSUs and market-based awards are included only to the extent the applicable performance or market condition(s) have been met (assuming the end of the reporting period is the end of the contingency period). ~~Upon~~To the ~~exercise of stock options and market-based stock options, the awards are gross settled, and the vesting of RSUs, performance-based RSUs and market-based RSUs, the~~extent that stock-based awards are settled on a net basis, ~~with~~ the Company ~~remitting~~remits the required tax-withholding ~~amount~~amounts from its current funds.

Table of Contents

Depreciation is a non-cash expense relating to our property and equipment 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 assets are non-cash expenses related primarily to ~~acquisitions.~~acquisitions (including the Combination). At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as ~~advertiser and supplier~~technology, service professional relationships, ~~technology,~~ customer lists ~~content~~ and user base, memberships, trade names and content, 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 impairment charges 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 arrangementsare accounting adjustments to report contingent consideration liabilities at fair value. 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.

Table of Contents

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position



	September 30, 2019		December 31, 2018
	(In thousands)
MTCH, Cash and cash equivalents:
United States	$	220,175	$	83,851
All other countries	146,272		103,096
Total MTCH cash and cash equivalents	366,447		186,947

ANGI, Cash and cash equivalents and marketable securities:
United States	390,535		328,795
All other countries	12,379		8,189
Total cash and cash equivalents	402,914		336,984
Marketable securities (United States)	—		24,947
Total ANGI cash and cash equivalents and marketable securities	402,914		361,931

IAC, Cash and cash equivalents and marketable securities:
United States	2,077,372		1,558,636
All other countries	99,447		49,065
Total cash and cash equivalents	2,176,819		1,607,701
Marketable securities (United States)	157,174		98,718
Total IAC cash and cash equivalents and marketable securities	2,333,993		1,706,419

Total cash and cash equivalents and marketable securities	$	3,103,354	$	2,255,297



MTCH Debt:
MTCH Term Loan	$	425,000	$	425,000
MTCH Credit Facility	—		260,000
6.375% MTCH Senior Notes	400,000		400,000
5.00% MTCH Senior Notes	450,000		450,000
5.625% MTCH Senior Notes	350,000		—
Total MTCH long-term debt	1,625,000		1,535,000
Less: unamortized original issue discount	6,586		7,352
Less: unamortized debt issuance costs	15,786		11,737
Total MTCH debt, net	1,602,628		1,515,911

ANGI Debt:
ANGI Term Loan	250,938		261,250
Less: current portion of ANGI Term Loan	13,750		13,750
Less: unamortized debt issuance costs	1,942		2,529
Total ANGI debt, net	235,246		244,971

IAC Debt:
2022 Exchangeable Notes	517,500		517,500
2026 Exchangeable Notes	575,000		—
2030 Exchangeable Notes	575,000		—
4.75% Senior Notes	—		34,489
Total IAC long-term debt	1,667,500		551,989
Less: unamortized original issue discount	362,390		54,025
Less: unamortized debt issuance costs	31,102		13,298
Total IAC debt, net	1,274,008		484,666

Total long-term debt, net	$	3,111,882	$	2,245,548

September 30, 2017 December 31, 2016
(In thousands)
Cash and cash equivalents:
United States^(a)
$ 738,646
$ 815,588
All other countries^(b)
516,671
513,599
Total cash and cash equivalents 1,255,317
1,329,187
Marketable securities (United States)^(c)
—
89,342
Total cash and cash equivalents and marketable securities^{(d) (e)}
$ 1,255,317
$ 1,418,529

Table of Contents

Match Group Debt:
Match Group 6.75% Senior Notes $ 445,172
$ 445,172
Match Group 6.375% Senior Notes 400,000
400,000
Match Group Term Loan due November 16, 2022^(f)
425,000
350,000
Total Match Group long-term debt 1,270,172
1,195,172
Less: Unamortized original issue discount and original issue premium, net 4,470
5,245
Less: Unamortized debt issuance costs 11,704
13,434
Total Match Group debt 1,253,998
1,176,493

IAC Debt:
4.875% Senior Notes 361,874
390,214
4.75% Senior Notes 34,859
38,109
Total IAC long-term debt 396,733
428,323
Less: Current portion of IAC long-term debt —
20,000
Less: Unamortized debt issuance costs 1,464
2,332
Total IAC debt, net of current portion 395,269
405,991

Total long-term debt, net of current portion $ 1,649,267
$ 1,582,484


^(a)	Domestically, cash equivalents primarily consist of AAA rated government money market funds and commercial paper rated A1/P1 or better with maturities less than 91 days from the date of purchase, and treasury discount notes.

^(b)

Internationally, cash equivalents primarily consist of AAA rated treasury money market funds and time deposits with maturities of less than 91 days. If needed for our U.S. operations, most of the cash and cash equivalents held by the Company's foreign subsidiaries could be repatriated; however, under current law, would be subject to U.S. federal and state income taxes. We have not provided for any such tax because the Company currently does not anticipate a need to repatriate these funds to finance our U.S. operations and it is the Company's intent to indefinitely reinvest these funds outside of the U.S.

^(c)

The Company did not own any marketable securities at September 2017. At December 31, 2016, marketable securities consisted of commercial paper rated at least A1/P1, treasury discount notes and short-to-medium-term debt securities issued by investment grade corporate issuers. The Company invests in marketable debt securities with active secondary or resale markets to ensure portfolio liquidity to fund current operations or satisfy other cash requirements as needed. The Company also may invest in equity securities as part of its investment strategy.

^(d)

At September 30, 2017 and December 31, 2016, cash and cash equivalents includes Match Group's domestic and international cash and cash equivalents of $37.2 million and $120.3 million; and $114.0 million and $139.6 million, respectively. Match Group is a separate and distinct legal entity with its own public shareholders and board of directors and has no obligation to provide the Company with funds. As a result, we cannot freely access the cash of Match Group and its subsidiaries. Match Group generated $229.6 million and $195.5 million of operating cash flows for the nine months ended September 30, 2017 and 2016, respectively. In addition, agreements governing Match Group’s indebtedness limit the payment of dividends or distributions, loans or advances to stockholders, including the Company, in the event a default has occurred or Match Group's leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0.

^(e)

At September 30, 2017, cash and cash equivalents includes ANGI Homeservices' domestic and international cash and cash equivalents of $55.5 million and $4.0 million, respectively. At December 31, 2016, all of ANGI Homeservices' cash and cash equivalents of $36.4 million was held internationally. ANGI Homeservices is a separate and distinct legal entity with its own public shareholders and board of directors and has no obligation to provide the Company with funds. As a result, we cannot freely access the cash of ANGI Homeservices and its subsidiaries.

~~ANGI Homeservices generated $52.0 million and $40.6 million of operating cash flows for the nine months ended September 30, 2017 and 2016, respectively.~~


^(f)	The Match Group Term Loan matures on November 16, 2022; provided that, if any of the Match Group 6.75% Senior Notes remain outstanding on the date that is 91 days prior to the maturity date of the Match Group 6.75% Senior Notes, the Match Group Term Loan maturity date shall be September 15, 2022, the date that is 91 days prior to the maturity date of the Match Group 6.75% Senior Notes.

IAC, MTCH and ~~Match Group~~ANGI Long-term Debt

For a detailed description of IAC, MTCH and ~~Match Group~~ANGI long-term debt, see "Note 6—5—Long-term Debt" to the consolidated financial statements included in "Item 1. Consolidated Financial Statements."

Cash Flow Information

In summary, the Company's cash flows are as follows:

Nine Months Ended September 30,
2017 2016
(In thousands)
Net cash provided by operating activities $ 297,597
$ 194,259
Net cash provided by (used in) investing activities 81,243
(106,412 )
Net cash used in financing activities (462,055 ) (380,731 )



	Nine Months Ended September 30,
	2019			2018
	(In thousands)
Net cash provided by (used in)
Operating activities	$	688,766		$	671,700
Investing activities	(407,294		)	(273,558		)
Financing activities	535,530			(359,856		)

~~2017~~

Net cash provided by operating activities consists of earnings adjusted for stock-based compensation expense, depreciation, amortization of intangibles, goodwill impairment, deferred income taxes, acquisition-related contingent consideration fair value adjustments, adjustments related to gains on the sale of businesses and investments, impairments of long-term investments, an acquisition-related contingent consideration payment, andnon-cash items, the effect of changes in working ~~capital.~~ capital and acquisition-related contingent consideration payments (to the extent greater than the liability initially recognized at the time of acquisition). Non-cash adjustments include stock-based compensation expense, deferred income taxes, amortization of intangibles, depreciation, bad debt expense, unrealized gains and losses on equity securities, and losses and gains from the sale of investments and businesses.

2019

Adjustments to earnings consist primarily ~~consist~~ of ~~$344.1~~$179.9 million of stock-based compensation expense, $65.6 million of amortization of intangibles, $63.2 million of depreciation, and $50.5 million of bad debt expense, partially offset by $85.0 million of deferred income taxes ~~$207.4 million of stock-based compensation expense, $55.5 million of depreciation, $24.0~~and $24.2 million of net unrealized gains on sale of businesses and investments, $22.2 million of amortization of intangibles, $11.1 million of an acquisition-related contingent consideration payment, $20.9 million of bad debt expense, and $23.0 million of other adjustments, which primarily consists of net foreign currency exchange losses.certain equity securities. The deferred income tax benefit primarily relates to the the net operating loss created by the ~~excess tax benefit of $314.3 million related to the settlement of stock-based awards~~exercise and ~~the deferred tax benefit on the modification charge for the conversion and acceleration~~vesting of stock-based awards. The ~~increase~~decrease from changes in working capital ~~consist~~ primarily consists of ~~an increase in accounts payable and other current liabilities of $47.5 million and an increase in deferred revenue of $44.8 million, partially offset by~~ an increase in accounts receivable of ~~$78.6~~$133.5 million, ~~and an increase~~partially offset by increases in ~~other assets~~deferred revenue of ~~$17.5 million. The increase in~~$55.0 million and accounts payable and other ~~current~~ liabilities ~~is due to: (i) an increase in accrued interest relating to the Company's Senior Notes and Match Group Senior Notes due to timing~~ of interest payments, (ii) an increase in payables at Match Group due to timing of payments and at ANGI Homeservices due to increased advertising expenses, and (iii) an increase in accrued severance and retention and accrued professional fees at ANGI Homeservices related to the Combination. The increase in deferred revenue is due mainly to growth in membership revenue at Match Group, ANGI Homeservices and Vimeo, partially offset by decreases at Electus and Notional mainly due to the delivery of programming related to various production deals.$54.0 million. The increase in accounts receivable is primarily due to ~~(i) the timing of receipts and revenue increasingly sourced through mobile app stores at Match Group, and (ii)~~ revenue growth at ANGI ~~Homeservices.~~and MTCH as well as the timing of cash receipts at MTCH and Applications, including cash received in the fourth quarter of 2018 rather than in the first quarter of 2019. The increase in deferred revenue is due primarily to growth in subscription sales at MTCH, Vimeo, and Mosaic Group. The increase in accounts payable and other ~~assets~~liabilities is primarily ~~related~~due to an increase in ~~prepaid marketing~~(i) accrued advertising and related payables at ANGI ~~Homeservices.~~

~~Net cash provided by investing activities includes net proceeds from sale of businesses~~ and ~~investments of $125.2 million, which is~~MTCH, (ii) accrued interest primarily related to the ~~sale~~MTCH Senior Notes due to the timing of ~~The Princeton Review,~~interest payments and the Exchangeable Notes, which were issued in the second quarter of 2019, and (iii) accrued legal fees at MTCH.

Net cash used in investing activities includes cash used for investments and acquisitions of $450.4 million, principally related to the investment in Turo and acquisitions of Magisto and Fixd Repair, and capital expenditures of $103.6 million, primarily related to investments in the development of capitalized software at ANGI and MTCH to support their products and services, leasehold improvements at ANGI, and the payment of a deposit for an ownership interest in an aircraft at Corporate, partially offset by proceeds from maturities (net of purchases) of marketable debt securities of ~~$89.4~~$123.8 million, and net proceeds from the sale of businesses and investments of $24.8 million, principally related to the December 31, 2018 sale of Felix.

Net cash provided by financing activities includes $1.2 billion in proceeds from the issuance of the 2026 and 2030 Exchangeable Notes, $350.0 million in proceeds from the 5.625% MTCH Senior Notes, $40.0 million in borrowings under the MTCH Credit Facility, and $10.2 million in proceeds from the exercise of IAC stock options, partially offset by ~~$69.1~~$300.0 million ~~of cash used for~~to repay the ~~MyBuilder, Angie's List,~~outstanding borrowings under the MTCH Credit Facility, $167.2 million and HomeStars acquisitions, and capital expenditures of $56.5 million, primarily related to the Company's purchase of a 50% ownership interest in an aircraft and investments in internal development of software at Match Group and ANGI Homeservices to support their products and services and computer hardware.

~~Net cash used in financing activities includes $501.4~~$30.0 million for ~~the payment of (i)~~ withholding taxes paid on behalf of ~~Match Group~~MTCH and ANGI employees, respectively, for stock-based awards that were net settled, ~~and (ii) the purchase of certain fully vested awards (refer to "Liquidity and Capital Resources" below for further information), $57.2~~$175.7 million for the ~~payment~~repurchase of 2.5 million shares of MTCH common stock, on a settlement date basis, at an average price of $69.51 per share, $136.9 million used to pay the net premium on the exchangeable note hedge and warrant transactions, $88.3 million for withholding taxes paid on behalf of IAC employees for stock-based awards that were net settled, ~~$56.4~~$35.0 million for repurchases of IAC debt, $34.0 million for the repurchase of ~~0.8~~4.1 million shares of

ANGI common stock, on a settlement date basis, at an average price of ~~$69.24~~$8.23 per share, ~~$31.6~~$27.8 million ~~for the redemption and repurchase~~ of ~~a portion of the 4.75% and 4.875% Senior Notes, $27.3~~debt issuance costs, $10.3 million in ~~acquisition-related contingent consideration~~principal payments on ANGI debt, and ~~$13.0~~$6.2 million for the purchase of noncontrolling ~~interests, partially offset by $75.0 million in proceeds from additional borrowings under the Match Group Term Loan, $69.1 million in proceeds related to the issuance~~interest.

Table of IAC common stock pursuant to stock-based awards, $57.7 million in proceeds related to the issuance of Match Group common stock pursuant to stock-based awards, a $20.1 million decrease in restricted cash that relates to settled IAC bond redemptions, and $10.6 million of funds returned from escrow for the MyHammer tender offer.Contents

~~2016~~

2018

Adjustments to earnings primarily consist of ~~$275.4~~$172.0 million of ~~goodwill impairment at the Publishing segment, $100.0~~stock-based compensation expense, $60.3 million of amortization of intangibles, $57.0 million of depreciation and $35.5 million of bad debt expense, partially offset by $126.4 million of net unrealized gains on certain equity securities, $36.9 million of deferred income taxes ~~$82.6~~and $27.2 million of ~~stock-based compensation expense, $65.1 million of amortization of intangibles, $51.3 million of depreciation, $13.4 million of net~~ gains onfrom the sale of ~~businesses~~investments. The deferred income tax benefit primarily relates to the net operating loss created by the exercise and ~~investments, $12.5 million~~vesting of ~~bad debt expense, $8.0 million of acquisition-related contingent consideration fair value adjustments, and $5.6 million in other adjustments that consist primarily of a non-cash charge~~stock-based awards, partially offset by the deferred income tax provision on the ~~repayment of $400 million of the Match Group Term Loan.~~net unrealized gains on certain equity securities. The decrease from changes in working capital ~~consist~~ primarily consists of ~~a decrease~~an increase in accounts ~~payable and other current liabilities of $63.7 million, a decrease in income taxes payable and~~ receivable of ~~$37.1~~$78.7 million, ~~and~~ an increase in other assets of ~~$19.8~~$48.9 million, partially offset by ~~a decrease in accounts receivable of $33.0 million and an increase in deferred revenue of $31.4 million.~~ ~~The decrease~~increases in accounts payable and other ~~current~~ liabilities ~~is due to~~ ~~(i) a decrease~~of $57.9 million and deferred revenue of $52.2 million. The increase in accrued advertising and revenue share expense at Publishing and Applications mainly due to the effect of the new Google contract, which became effective April 1, 2016, (ii) decreases in payables at Match Group and Applications due to the timing of payments and a seasonal decrease in payables to suppliers at ShoeBuy, (iii) a decrease in VAT payables related mainly to decreases in international revenue at Publishing, and (iv) a decrease in accrued employee compensation and benefits mainly related to the ~~payment of 2015 cash bonuses in 2016. The decrease in income taxes payable and~~accounts receivable is primarily due to ~~the payment of 2015 tax liabilities in 2016.~~ ~~The excess tax benefit from stock-based awards was $43.1 million.~~ revenue growth at ANGI, MTCH and Ask Media Group. The increase in other assets is primarily related to anincreases in prepaid hosting services and capitalized mobile app store fees at MTCH and increases in capitalized sales commissions and prepaid marketing at ANGI. The increase in ~~productions costs at IAC Films~~accounts payable and ~~an increase in prepaid maintenance contracts at Match Group. The decrease in accounts receivable~~other liabilities is ~~mainly~~primarily due to ~~a decrease~~increases in (i) accrued compensation costs, (ii) payables and accruals at ~~Publishing~~Ask Media Group due to ~~lower revenue~~growth in paid traffic primarily in international markets, (iii) accrued interest primarily related to the ~~new services agreement with Google, partially offset by an increase at~~ ~~ANGI Homeservices~~ MTCH Senior Notes due to ~~revenue growth.~~the timing of interest payments and (iv) accrued advertising driven by MTCH and ANGI. The increase in deferred revenue is ~~mainly~~ due primarily to growth in ~~prepaid revenue~~subscription sales at ~~Match Group, ANGI Homeservices, SlimWare~~MTCH and Vimeo.

Net cash used in investing activities includes purchases (net of ~~sales and~~ maturities) of marketable debt securities of ~~$150.0~~$201.9 million, capital expenditures of ~~$62.7~~$60.1 million, primarily related to ~~Match Group and ANGI Homeservices~~ investments in ~~internal~~the development of capitalized software at ANGI and MTCH to support their products and services ~~as well as leasehold improvements~~ and computer hardware, and cash used infor investments and acquisitions of ~~$9.7~~$49.8 million, partially offset by net proceeds from the sale of ~~businesses and~~ investments of ~~$110.5~~$28.6 million ~~which mainly consists of~~and $10.4 million in net proceeds from the sale of ~~PriceRunner.~~Angie's List's campus located in Indianapolis.

Net cash used in financing activities includes ~~$247.3~~$181.8 million and $27.2 million for the repurchase of 5.3 million shares of common stock at an average price of $46.79 per share, $126.3 million for the redemption and repurchase of a portion of the 4.75% and 4.875% Senior Notes, $29.8 million for the payment of withholding taxes paid on behalf of ~~Match Group~~MTCH and ANGI employees, respectively, for stock-based awards that were net settled, ~~$26.7~~$86.2 million for the ~~payment~~repurchase of ~~withholding taxes~~2.0 million shares of MTCH common stock, on ~~behalf~~a settlement date basis, at an average price of ~~IAC employees for stock-based awards that were net settled, $5.0 million in debt issuance costs related to the Match Group 6.375% Senior Notes, $2.5~~$42.85 per share, $82.9 million for the ~~purchase~~repurchase of ~~noncontrolling interests and $2.2~~0.5 million in acquisition-related contingent consideration payments, partially offset by $30.2 million in proceeds related to the issuance of Match Group common stock pursuant to stock-based awards, a decrease of $20.0 million in restricted cash that related to unsettled IAC bond redemptions and $19.5 million in proceeds related to the issuanceshares of IAC common stock, ~~pursuant to stock-based awards. Additionally,~~on a settlement date basis, at an average price of $152.23 per share, and $10.3 million in principal payments on ANGI debt, partially offset by $38.9 million in proceeds from the exercise of ~~$410.0 million were made toward the Match Group Term Loan, of which $400.0 million was financed by the issuance of the Match Group 6.375% Senior Notes.~~IAC stock options.

Liquidity and Capital Resources

The Company's principal sources of liquidity are its cash and cash equivalents ~~as well as~~and marketable securities, cash flows generated from operations. IAC has a $300 million revolving credit facility that expires on October 7, 2020. Match Group has a $500 million revolving credit facility that expires on October 7, 2020. At September 30, 2017, there were no outstandingoperations and available borrowings under the IAC Credit ~~Facility or the Match Group Credit~~ Facility.

On October 2, 2017, IAC FinanceCo, Inc. completed a private offering of $517.5 million aggregate principal amount of its 0.875% Exchangeable Senior Notes due 2022, which notes are guaranteed by the Company. Interest is payable each April 1 and October 1 and commences on April 1, 2018. In connection with the Notes offering, IAC FinanceCo, Inc. purchased a bond hedge and IAC sold warrants, in each case covering the same aggregate number of shares that would be issuable upon exchange of the Notes. The net proceeds from the sale of the 0.875% Exchangeable Senior Notes were approximately $500.5 million,

after deducting fees and expenses. The net proceeds from the offering were (i) used to pay the premium on the exchangeable note hedge transactions (calculated after taking into account the proceeds from the sale of the warrants) of approximately $50.7 million, and (ii) loaned to IAC, which repaid all of the Company's outstanding 4.875% Senior Notes of $361.9 million, plus accrued interest of $8.8 million. The 4.875% Senior Notes will be redeemed and canceled on November 30, 2017.

On September 29, 2017, the Company issued two intercompany notes (collectively referred to as "Intercompany Notes") to ANGI Homeservices as follows: (i) a Payoff Intercompany Note, which provided the funds necessary to repay the outstanding balance under Angie's List's existing credit agreement, totaling approximately $61.5 million; and (ii) a Working Capital Intercompany Note, which provided ANGI Homeservices with $15 million for working capital purposes. These amounts eliminate in the Company's consolidated balance sheet. On November 1, 2017, ANGI Homeservices entered into a credit agreement which provides for a five-year term loan A facility of $275 million (the "ANGI Homeservices Term Loan"). The ANGI Homeservices Term Loan is guaranteed by ANGI Homeservices' wholly-owned material domestic subsidiaries and is secured by substantially all assets of ANGI Homeservices and the guarantors, subject to certain exceptions. A portion of the proceeds of the loan were used to repay the aforementioned Intercompany Notes and the remaining proceeds will be used for general corporate purposes.

At September 30, 2017, IAC had 8.6 million shares remaining in its share repurchase authorization. IAC may purchase shares over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors IAC management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

In May 2017, the Board of Directors of Match Group authorized Match Group to repurchase up to 6 million shares of its common stock. Match Group has not repurchased any shares related to this repurchase authorization.

IAC's consolidated cash and cash equivalents and marketable securities at September 30, ~~2017~~2019 were ~~$1.3~~$3.1 billion, of which ~~$157.6 million was held by Match Group and $59.5~~$402.9 million was held by ANGI ~~Homeservices.~~and $366.4 million was held by MTCH. The Company generated ~~$297.6~~$688.8 million of operating cash flows for the nine months ended September 30, ~~2017,~~2019, of which ~~$229.6~~$472.9 million was generated by ~~Match Group~~MTCH and ~~$52.0~~$182.1 million was generated by ~~ANGI Homeservices.~~ANGI. Each of ~~Match Group~~MTCH and ANGI ~~Homeservices are~~is a separate and distinct legal ~~entities~~entity with ~~their~~its own public shareholders and board of directors and has no obligation to provide the Company with funds. As a result, wethe Company cannot freely access the cash of ~~Match Group~~MTCH and ANGI ~~Homeservices~~ and their respective subsidiaries. In addition, certain agreements governing ~~Match Group's~~MTCH and ANGI indebtedness limit the payment of dividends or distributions and loans or advances to stockholders, including the Company, in the event a default has occurred or ~~Match Group's~~in the case of MTCH, its secured net leverage ratio (as defined in the ~~Match Group Indentures)~~MTCH Term Loan) exceeds ~~5.0~~2.0 to ~~1.0. In addition, the agreement governing ANGI Homeservices’ Term Loan limit the payment of dividends~~1.0 or ~~distributions in the event a default has occurred or ANGI Homeservices’~~its consolidated leverage ratio (as defined ~~therein)~~in certain MTCH indentures) exceeds ~~4.0~~5.0 to 1.0, and in the case of ANGI, its consolidated net leverage ratio (as defined in the ANGI Term Loan) exceeds 4.5 to 1.0. There were no such limitations at September 30, 2019.

There were no outstanding borrowings under the IAC, MTCH and ANGI credit facilities at September 30, 2019.

The Company anticipates that it will need to make capital and other expenditures in connection with the development and expansion of its operations. The Company's ~~2017~~2019 capital expenditures are expected to be higher than ~~2016~~2018 capital expenditures of $85.6 million by approximately 5%65% to ~~10%~~70%, driven ~~in part,~~ by higher capital expenditures at ANGI ~~Homeservices' sales center~~ and ~~corporate headquarters~~MTCH related to the development of capitalized software to support their products and services and leasehold improvements, including the expansion of office space at Tinder, and higher capital expenditures at Corporate. During 2019, the ~~Company's~~Company will make payments totaling approximately $23.0 million to purchase of a 50% ownership interest in an aircraft, of which $13.5 million was made in ~~the second quarter~~April of ~~2017 for~~2019. A balance of approximately ~~$16 million. This aircraft will replace the older~~$13.5 million is due upon delivery of the ~~Company's two existing jointly-owned aircrafts,~~new aircraft, which is ~~currently being marketed for sale.~~expected to occur in late 2020 or early 2021.

At September 30, 2019, IAC has 8.0 million shares remaining in its share repurchase authorization.

Table of Contents

On August 30, 2019, the Board of Directors of MTCH authorized MTCH to repurchase an additional 10 million shares of its common stock; this authorization was in addition to the 1.3 million remaining under a previous authorization. During the nine months ended September 30, 2019, MTCH repurchased 2.7 million shares, on a trade date basis, of its common stock at an average price of $69.63 per share, or $186.5 million in aggregate. From October 1, 2019 through November 1, 2019, MTCH repurchased an additional 0.3 million shares at an average price of $73.64 per share, or $24.4 million in aggregate. MTCH has 9.9 million shares remaining in its share repurchase authorization.

On February 6, 2019, the Board of Directors of ANGI authorized ANGI to repurchase up to 15 million shares of its common stock. During the nine months ended September 30, 2019, ANGI repurchased 4.2 million shares, on a trade date basis, of its common stock at an average price of $8.22 per share, or $34.2 million in aggregate. From October 1, 2019 through November 1, 2019, ANGI repurchased an additional 1.1 million shares at an average price of $6.85 per share, or $7.4 million in aggregate. ANGI has 9.8 million shares remaining in its share repurchase authorization.

IAC, MTCH and ANGI may purchase shares over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

The Company has granted ~~stock options and~~ stock settled stock appreciation rights denominated in the equity of ~~its~~certain non-publicly traded subsidiaries to employees and management of ~~certain~~those subsidiaries. These equity awards vest over a period of years or upon the occurrence of certain prescribed events. The value of the stock options and stock settled stock appreciation rights is tied to the value of the common stock of these subsidiaries. Accordingly, these interests only have value to the extent the relevant business appreciates in value above the initial value utilized to determine the exercise price. These interests can have significant value in the event of significant appreciation. The interests are ultimately settled in IAC common stock with fair market value generally determined by negotiation or arbitration. These equity awards are settled on a net basis, with the award holder entitled to receive a payment in IAC shares equal to the intrinsic value of the award at exercise less an amount equal to the required cash tax withholding ~~payment.~~payment which, for purposes of this paragraph is assumed at a 50% withholding rate. The number of IAC common shares that would be required to net settle these vested and unvested interests at current estimated fair values, other than for MTCH, ANGI and their subsidiaries, at November 1, 2019, is 0.1 million shares. In addition, withholding taxes, which will be paid by the Company on behalf of the employees upon exercise, would have been $15.7 million at November 1, 2019. The number of IAC common shares ultimately needed to settle these awards may vary significantly as a result of both movements in ~~our~~the Company's stock price and athe determination of fair value of the relevant subsidiary that is different than ~~our~~the Company's estimate.

~~In July 2017, Tinder, Inc. (“Tinder”) was merged into Match Group and as~~ The Company's RSUs are awards in the form of phantom shares or units denominated in a ~~result, all Tinder denominated~~hypothetical equivalent number of shares of IAC common stock. These equity awards were converted into Match Group tandem stock options ("tandem awards"), which can be exercised on a gross or net basis at the election of the award holder. If exercised on a gross basis, the award holder receives Match Group shares. If exercisedare settled on a net ~~basis, the award holder receives IAC or Match Group shares, at IAC's election. In the event that~~basis. The number of IAC common shares ~~are~~that would be required to net settle these awards at November 1, 2019 is 0.1 million shares. In addition, withholding taxes, which will be paid by the Company on behalf of the employees upon vest, would have been $12.8 million at November 1, 2019.

The Company currently settles all stock options on a net basis. Assuming all stock options outstanding on November 1, 2019, were net settled on that date, the Company would have issued 1.8 million common shares (of which 1.4 million is related to vested options and 0.4 million is related to unvested options) and would have remitted $404.2 million (of which $321.6 million is related to vested options and $82.5 million is related to unvested options) in cash for withholding taxes (in each case assuming a 50% withholding rate).

Certain equity awards issued prior to the MTCH initial public offering and the Combination to employees of MTCH and ANGI and denominated in the shares of those subsidiaries may be settled using IAC shares at the Company's election.

MTCH currently settles substantially all equity awards on a net basis. Assuming all MTCH equity awards outstanding on November 1, 2019 were net settled on that date, MTCH would have issued 7.9 million common shares (of which 1.9 million is related to vested shares and 5.9 million is related to unvested shares) and would have remitted $575.3 million (of which $141.9 million is related to vested shares and $433.5 million is related to unvested shares) in cash for withholding taxes (in each case assuming a 50% withholding rate). Certain MTCH stock options ("Tandem Awards") can be settled in MTCH or IAC common stock at the Company's election. Assuming all vested and unvested Tandem Awards outstanding on November 1, 2019 were exercised on that date and settled using IAC stock, 0.3 million IAC common shares would have been issued in settlement ~~Match Group will issue its common~~and MTCH would have issued 1.0 million shares, ~~or pay cash~~which is included in the amount above, to IAC as ~~reimbursement for the IAC common~~reimbursement.

~~shares issued to the award holders pursuant to the Employee Matters Agreement. All of the Match Group tandem~~ANGI currently settles all equity awards ~~that were exercised during the third quarter of 2017 were exercised~~ on a net basis and were settled in IAC common shares. The Company issued 1.9 million shares of its common stock to settle these awards and Match Group issued 10.6 million shares of its common stock to IAC as reimbursement. During the third quarter of 2017, Match Group also purchased certain fully vested tandem awards. During the third quarter of 2017, Match Group made cash payments of approximately $500 million to cover both the withholding taxes paid on behalf of employees who exercised these awards and the purchase of certain fully vested awards. Match Group will recognize a corporate income tax deduction based on the tax benefit of the intrinsic value of the awards exercised during the third quarter of 2017, however, there will be some delay in the timing of the realization of the cash benefit of the income tax deduction because it will be dependent upon the amount and timing of future taxable income and the timing of estimated income tax payments. At September 30, 2017, approximately 80% of the tandem awards was exercised.

basis. In connection with the Combination, previously issued stock appreciation rights ~~that~~ related to the common stock of HomeAdvisor (US) were converted into ANGI stock appreciation rights that are ~~exercisable for~~settleable, at ANGI's option, on a net basis with ANGI remitting withholding taxes on behalf of the employee or on a gross basis with ANGI issuing a sufficient number of Class A shares to cover the withholding taxes. In addition, at IAC's option, these awards can be settled in either Class A shares of ANGI ~~Homeservices. IAC has the right to settle these awards using~~or shares of IAC common stock. ~~To the extent shares of~~If settled in IAC common stock, ~~are~~ANGI reimburses IAC in either cash or through the issuance of Class A shares to IAC. Assuming all of the stock appreciation rights outstanding on November 1, 2019 were net settled on that date using IAC stock, 0.2 million IAC common shares would have been issued in settlement, ~~of these awards, ANGI Homeservices will reimburse~~ IAC ~~by issuing to IAC additional Class B~~would have been issued 6.2 million shares of ANGI ~~Homeservices~~Class A stock and ANGI would have remitted $43.7 million in cash for withholding taxes (assuming a 50% withholding rate). ANGI's cash withholding obligation

Table of Contents

on all other ANGI net settled awards, including stock options, RSUs and subsidiary denominated equity, outstanding on November 1, 2019 is $21.7 million (assuming a 50% withholding rate), which is the equivalent of 3.1 million shares.

As of September 30, 2019, IAC's economic and voting interest in MTCH is 80.8% and 97.5%, respectively, and in ANGI is 83.7% and 98.1%, respectively. As described above, certain MTCH and ANGI equity awards can be settled either in IAC common ~~stock pursuant to~~shares or the ~~Employee Matters Agreement.~~

common shares of these subsidiaries at IAC's election. The Company currently expects to settle a sufficient number of ~~exercises~~awards in IAC shares to maintain an economic interest in both ~~Match Group~~MTCH and ANGI ~~Homeservices~~ of at least 80% and to otherwise take such other steps as necessary to maintain an economic interest in each of MTCH and ANGI of at least 80%.

The Company does not expect to be a full U.S. federal cash income taxpayer until 2022. The ultimate timing is dependent upon a number of factors, including the performance of the Company, other components of pre-tax income (including realized gains and losses), the amount and timing of tax deductions related to stock-based awards and the impacts of the Separation.

At September 30, 2019, all of the Company’s international cash can be repatriated without significant tax consequences.

The Company believes its existing cash, cash equivalents, marketable securities, available borrowings under the IAC Credit Facility and expected positive cash flows generated from operations will be sufficient to fund ~~our~~its normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards, and investing and other commitments for the foreseeable future. The Company's liquidity could be negatively affected by a decrease in demand for ~~our~~its products and services. The Company’s indebtedness could limit ~~our~~its ability to: (i) obtain additional financing to fund working capital needs, acquisitions, capital ~~expenditure or~~expenditures, debt service or other requirements; and (ii) use operating cash flow to make acquisitions or capital expenditures, or invest in other areas, such as developing ~~properties and exploiting~~ business ~~opportunities, in the event a default has occurred or in certain circumstances our leverage ratio (as defined in the credit agreement) exceeds 3.25 to 1.0.~~opportunities. The ~~Company may make additional acquisitions and investments and, as a result, the~~ Company may need to raise additional capital through future debt or equity financing to make additional acquisitions and investments or to provide for greater financial flexibility. Additional financing may not be available ~~at all or~~ on terms favorable to ~~us.~~the Company or at all.

Table of Contents

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS



	Payments Due by Period
Contractual Obligations^(a)	Less Than 1 Year		1–3 Years		3–5 Years		More Than 5 Years		Total
	(In thousands)
Long-term debt^(b)	$	129,874	$	271,099	$	1,727,153	$	2,190,656	$	4,318,782
Operating leases^(c)	44,765		79,896		57,243		232,989		414,893
Purchase obligations^(d)	24,656		—		—		—		24,656
Total contractual obligations	$	199,295	$	350,995	$	1,784,396	$	2,423,645	$	4,758,331


^(a)	The Company has excluded $63.5 million in unrecognized tax benefits and related interest from the table above as we are unable to make a reasonably reliable estimate of the period in which these liabilities might be paid. For additional information on income taxes, see "Note 3—Income Taxes" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."

^(b)

Represents contractual amounts due including interest on both fixed and variable rate instruments. Long-term debt at September 30, 2019 consists of $2.9 billion bearing interest at fixed rates and $675.9 million bearing interest at variable rates. The variable rate instruments consist of a $425.0 million MTCH Term Loan and a $250.9 million ANGI Term Loan. The MTCH Term Loan bears interest at LIBOR plus 2.50%, or 4.66%, at September 30, 2019. The ANGI Term Loan bears interest at LIBOR plus 1.50%, or 3.53% at September 30, 2019. The amount of interest ultimately paid on the MTCH and ANGI term loans may differ based on changes in interest rates. For additional information on long-term debt arrangements, see "Note 5—Long-term Debt" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."

^(c)

The Company leases land, office space, data center facilities and equipment used in connection with operations under various operating leases, the majority of which contain escalation clauses. Operating leases obligations include legally binding minimum lease payments for leases signed but not yet commenced. The Company is also committed to pay a portion of the related operating expenses under certain lease agreements. These operating expenses are not included in the table above. For additional information on operating leases, see "Note 2—Leases" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."


^(d)	The purchase obligations principally include web hosting commitments.

Other Commercial Commitments

At September 30, ~~2017,~~2019, there have been no material changes to the Company's ~~contractual obligations,~~ commercial commitments ~~and off-balance sheet arrangements~~ since the disclosure ~~included~~ in ~~the Company's Current~~our Annual Report on Form ~~8-K dated July 18, 2017~~10-K for the year ended December 31, ~~2016.~~2018.

~~On October 2, 2017, a direct, wholly-owned subsidiary of~~Off-Balance Sheet Arrangements

Other than the items described above, the Company ~~completed a private offering~~does not have any off-balance sheet arrangements as of ~~$517.5 million aggregate principal amount~~September 30, 2019.

Table of its 0.875% Exchangeable Senior Notes due October 1, 2022. In addition, on November 1, 2017, ANGI Homeservices entered into a credit agreement which provides for a five-year term loan A facility of $275 million. See "~~Note 14—Subsequent Events~~Contents~~" to the consolidated financial statements included in "Item 1. Consolidated Financial Statements" for additional information on these new long-term debt arrangements.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

AtDuring the three and nine months ended September 30, ~~2017, there have been no material changes to~~2019, the Company's ~~instruments or positions that are sensitive~~exposure to market risk for changes in interest rates relating to long-term debt, including current maturities, has changed since the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018, for:

~~On October 2, 2017, a direct, wholly-owned subsidiary~~the redemption, on August 23, 2019, of all of the ~~Company completed a private offering~~Company's outstanding 4.75% Senior Notes of ~~$517.5~~$34.5 million, which was prior to their maturity date of December 15, 2022;

IAC FinanceCo 2, Inc.’s issuance during the second quarter of 2019, of $575.0 million aggregate principal amount of its 0.875% Exchangeable Senior Notes due ~~October 1, 2022. In addition,~~June 15, 2026 and IAC FinanceCo 3, Inc.’s issuance during the second quarter of 2019, of $575.0 million aggregate principal amount of its 2.00% Exchangeable Senior Notes due January 15, 2030 (together with the 2022 Exchangeable Notes the "Exchangeable Notes"); and

MTCH's issuance, on ~~November 1, 2017, ANGI Homeservices entered into~~February 15, 2019, of $350 million aggregate principal amount of its 5.625% Senior Notes due February 15, 2029; a ~~credit agreement which provides for a five-year term loan A facility~~portion of ~~$275 million.~~ the proceeds were used to repay outstanding borrowings under the MTCH Credit Facility.

The ~~Term Loan currently bears interest at LIBOR plus 200 basis points. The Term Loan~~Company's outstanding debt is ~~sensitive to changes~~described in ~~interest rates. See~~ "Note ~~14—Subsequent Events~~5—Long-term Debt" to the consolidated financial statements included in "Item 1. 1—Consolidated Financial Statements."

Market Risk

The Company carries the Exchangeable Notes at face value less unamortized original issue discount on the consolidated balance sheet included in "Item 1—Consolidated Financial Statements." Since the Exchangeable Notes bear interest at fixed rates, the Company has no financial statement risk associated with changes in interest rates. However, the fair value of the Exchangeable Notes change when the market price of our common stock fluctuates or interest rates change.

Interest Rate Risk

At September 30, 2019, the Company's outstanding debt was $3.5 billion, of which $2.9 billion bears interest at fixed rates. If market rates decline, the Company runs the risk that the related required payments on the fixed rate debt will exceed those based on market rates. A 100-basis point increase or decrease in the level of interest rates would, respectively, decrease or increase the fair value of the fixed-rate debt by $130.4 million. Such potential increase or decrease in fair value is based on certain simplifying assumptions, including a constant level and rate of fixed-rate debt for ~~additional information~~all maturities and an immediate across-the-board increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period. The $425.0 million MTCH Term Loan and the $250.9 million outstanding balance on ~~these new long-term debt arrangements.~~the ANGI Term Loan bear interest at variable rates. The MTCH Term Loan bears interest at LIBOR plus 2.50%. As of September 30, 2019, the rate in effect was 4.66%. If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense on the MTCH Term Loan would increase or decrease by $4.3 million. The ANGI Term Loan bears interest at LIBOR plus 1.50%. As of September 30, 2019, the rate in effect was approximately 3.53%. If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense on the ANGI Term Loan would increase or decrease by $2.5 million.

Table of Contents

Item 4. Controls and Procedures

The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over financial reporting in order to improve ~~its~~their overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), IAC management, including our principal executive and principal financial officers, or persons performing similar functions, evaluated the effectiveness of the Company's disclosure controls and procedures as defined by Rule 13a-15(e) under the Exchange Act. Based on this evaluation, management has concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report in providing reasonable assurance that information we are required to disclose in our filings with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and ~~Forms,~~forms, and include controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There were no changes to the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Overview

In the ordinary course of business, the Company and its subsidiaries are (or may become) parties to litigation involving property, personal injury, contract, intellectual property and other claims, as well as stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings and claims cannot be predicted with certainty, neither the Company nor any of our subsidiaries is currently a party to any legal proceedings the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.

Rules of the Securities and Exchange Commission require the description of material pending legal proceedings (other than ordinary, routine litigation incident to the registrant’s business) and advise that proceedings ordinarily need not be described if they primarily involve damages claims for amounts (exclusive of interest and costs) not exceeding 10% of the current assets of the registrant and its subsidiaries on a consolidated basis. In the judgment of IAC management, none of the pending litigation matters which we are defending, including those described below, involves or is likely to involve amounts of that magnitude. The litigation matters described below involve issues or claims that may be of particular interest to our stockholders, regardless of whether any of these matters may be material to our financial position or operations based upon the standard set forth in the rules of the Securities and Exchange Commission.

~~Securities~~Consumer Class Action ~~Litigation~~Challenging Tinder’s Age‑Tiered Pricing

This putative state-wide class action filed against ~~Match Group~~

~~As previously disclosed~~Tinder and pending in state court in California is described in detail on pages 28-29 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2018, page 57 of our Quarterly Report on ~~February 26, 2016, a putative nationwide class action was filed in federal court in Texas against Match Group, five~~Form 10-Q for the fiscal quarter ended March 31, 2019and page 74 of ~~its officers and directors, and twelve underwriters of Match Group's initial public offering in November 2015.~~ our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019. See ~~David M. Stein~~Allan Candelore v. ~~Match Group,~~Tinder, Inc. ~~et al.~~, No. ~~3:16-cv-549 (U.S. District~~BC583162 (Superior Court ~~Northern District~~ of ~~Texas)~~California, County of Los Angeles). The ~~complaint alleged~~lawsuit principally alleges that ~~Match Group's registration statement~~Tinder violated California’s Unruh Civil Rights Act (the “Unruh Act”) by offering and ~~prospectus issued in connection with~~charging users age 30 and over a higher price than younger users for subscriptions to its ~~initial public offering were materially false~~premium Tinder Plus service and misleading given their failure to state that: (i) Match Group's Non-dating business would miss its revenue projection for the quarter ended December 31, 2015, and (ii) ARPPU (as defined in "Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations-General-Key Terms") would decline substantially in the quarter ended December 31, 2015. The complaint asserted that these alleged failures to timely disclose material information caused Match Group's stock price to drop after the announcement of its earnings for the quarter ended December 31, 2015. The complaint pleaded claims under the Securities Act of 1933 for untrue statements of material fact in, or omissions of material facts from, the registration statement, the prospectus, and related communications in violation of Sections 11 and 12 and, as to the officer/director defendants only, control-person liability under Section 15 for Match Group’s alleged violations. The complaint sought among other relief class certification andseeks damages in an unspecified amount.

~~On March 9, 2016, a virtually identical class action complaint was filed~~ There have been no material or otherwise noteworthy developments in this case since the ~~same court against the same defendants by a different named plaintiff.~~ ~~See Stephany Kam-Wan Chan v. Match Group, Inc. et al., No. 3:16-cv-668 (U.S. District Court, Northern District~~filing of ~~Texas). On April 25, 2016, Judge Boyle in the~~ ~~Chan~~ ~~case issued an order granting the parties’ joint motion to transfer that case to Judge Lindsay, who is presiding over the earlier-filed~~ ~~Stein~~ ~~case. On April 27, 2016, various current or former Match Group shareholders and their respective law firms filed motions seeking appointment as lead plaintiff(s) and lead or liaison counsel~~our Quarterly Report on Form 10-Q for the ~~putative class. On April 28, 2016, the Court issued orders: (i) consolidating the~~ ~~Chan~~ ~~case into the~~ ~~Stein~~ case, (ii) approving the parties’ stipulation to extend the defendants’ time to respond to the complaint until after the Court has appointed a lead plaintiff and lead counsel for the putative class and has set a schedule for the plaintiff’s filing of a consolidated complaint and the defendants’ response to that pleading, and (iii) referring the various motions for appointment of lead plaintiff(s) and lead or liaison counsel for the putative class to a United States Magistrate Judge for determination. In accordance with this order, the consolidated case is now captioned ~~Mary McCloskey et ano. v. Match Group, Inc. et al., No. 3:16-CV-549-L. On~~fiscal quarter ended June ~~9, 2016, the Magistrate Judge issued an order appointing two lead plaintiffs, two law firms as co-lead plaintiffs’ counsel, and a third law firm as plaintiffs’ liaison counsel.~~

On July 27, 2016, the parties submitted to the Court a joint status report proposing a schedule for the plaintiffs’ filing of a consolidated amended complaint and the parties’ briefing of the defendants’ contemplated motion to dismiss the consolidated complaint. On August 17, 2016, the Court issued an order approving the parties’ proposed schedule. On September 9, 2016, in accordance with the schedule, the plaintiffs filed an amended consolidated complaint. The amended pleading focused solely on allegedly misleading statements or omissions concerning the Match Group’s Non-dating business. The defendants filed motions to dismiss the amended consolidated complaint on November 8, 2016. The plaintiffs filed oppositions to the motions on December 23, 2016, and the defendants filed replies to the oppositions on February 6, 2017. On September 27, 2017, the court issued an opinion and order: (i) denying, without prejudice to renewal, the defendants’ motions and (ii) directing the plaintiffs to file a further amended pleading addressing the deficiencies in the amended consolidated complaint that were identified in the defendants’ motions. On October 30, 2017, the plaintiffs filed a second amended consolidated complaint, which among other things, dropped their claim under Section 12 of the Securities Act of 1933. Pursuant to an agreed-upon briefing schedule approved by the court, the defendants intend to file motions to dismiss the second amended consolidated complaint by December 14, 2017. We2019. IAC and Match Group believe that the allegations in this lawsuit ~~and the material allegations and claims therein,~~ are without merit and ~~intend to~~will continue to defend vigorously against ~~them vigorously.~~them.

Tinder Optionholder Litigation against IAC and Match Group

~~Securities Class Action Litigation Challenging HomeAdvisor’s Combination~~On August 14, 2018, ten then-current and former employees of Match Group, LLC or Tinder, Inc. ("Tinder"), an operating business of Match Group, filed a lawsuit in New York state court against IAC and Match Group. See Sean Rad et al. v. IAC/InterActiveCorp and Match Group, Inc., No. 654038/2018 (Supreme Court, New York County). The complaint alleges that in 2017, the defendants: (i) wrongfully interfered with ~~Angie’s List~~a contractually established process for the independent valuation of Tinder by certain investment banks, resulting in a substantial undervaluation of Tinder and a consequent underpayment to the plaintiffs upon exercise of their Tinder stock options, and (ii) then wrongfully merged Tinder into Match Group, thereby depriving certain of the plaintiffs of their contractual right to later valuations of Tinder on a stand‑alone basis. The complaint asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, interference with contractual relations (as against Match Group only), and interference with prospective economic advantage, and seeks compensatory damages in the amount of at least $2 billion, as well as punitive damages. On August 31, 2018, four plaintiffs who were still employed by Match Group filed a notice of discontinuance of their claims without prejudice, leaving the six former employees as the remaining plaintiffs.

On October 9, 2018, the defendants filed a motion to dismiss the complaint on various grounds, including that the 2017 valuation of Tinder by the investment banks was an expert determination any challenge to which is both time‑barred under applicable law and available only on narrow substantive grounds that the plaintiffs have not pleaded in their complaint; the plaintiffs opposed the motion. On June 13, 2019, the court issued a decision and order: (i) granting the motion to dismiss the claims for breach of the implied covenant of good faith and fair dealing and for unjust enrichment, (ii) granting the motion to dismiss the merger-related claim for breach of contract as to two of the remaining six plaintiffs, and (iii) otherwise denying the motion to dismiss. On June 21, 2019, the defendants filed a notice of appeal from the court’s partial denial of their motion to dismiss, and the parties thereafter briefed the appeal. On October 29, 2019, the Appellate Division, First Department, issued an order affirming the lower court’s decision.

On June 3, 2019, the defendants filed a second motion to dismiss or for other relief based upon certain provisions of the plaintiffs’ agreement with a litigation funding firm; the plaintiffs have opposed the motion, which remains pending. On July ~~18,~~15, 2019, the defendants filed an answer denying the material allegations of the complaint, as well as counterclaims against Sean Rad for breach of contract and unjust enrichment based upon his alleged misappropriation of confidential company information. On September 13, 2019, the defendants filed an amended answer and counterclaims, adding claims based on Rad's alleged unauthorized recording of conversations with company employees. Document discovery in the case is nearing completion; deposition discovery is in abeyance pursuant to the court’s suggestion that the parties pursue mediation of their dispute. IAC

Table of Contents

and Match Group believe that the allegations against IAC and Match Group in this lawsuit are without merit and will continue to defend vigorously against it.

FTC Investigation of Certain Match.com Business Practices

In March 2017, the Federal Trade Commission (“FTC”) requested information and documents in connection with a ~~purported shareholder class action was~~civil investigation regarding certain business practices of Match.com. The FTC raised potential claims relating to Match.com’s marketing, chargeback, and online cancellation practices. In November 2018, the FTC proposed to resolve its potential claims via a consent judgment requiring certain changes in those practices, as well as a $60 million payment. Ensuing discussions between Match Group and the FTC ended without resolution.

On August 7, 2019, the FTC voted to assert claims against Match Group and referred the matter to the U.S. Department of Justice (“DOJ”). The DOJ subsequently declined to pursue a civil case against Match Group and referred the matter back to the FTC.

On September 25, 2019, the FTC filed a lawsuit in ~~federal court in Indianapolis~~the Northern District of Texas against ~~Angie’s List,~~Match Group. See FTC v. Match Group, Inc., No. 3:19:cv-02281-K (N.D. Tex.). The complaint alleges that, prior to mid-2018, for marketing purposes Match.com told non-paying users that other users were trying to communicate with them, even though Match.com had identified those subscriber accounts as potentially fraudulent, thereby inducing non-paying users to subscribe and exposing them to the ~~members~~risk of fraud should they subscribe. The complaint also challenges the adequacy of Match.com’s disclosure of its ~~board~~six-month guarantee, the efficacy of ~~directors,~~its cancellation process, and its handling of chargeback disputes. The complaint seeks among other things permanent injunctive relief, civil penalties, restitution, disgorgement, and costs of suit. On October 17, 2019, Match Group filed a motion to dismiss the ~~Company and two related corporate entities, asserting violations~~complaint. The FTC filed its opposition to the motion to dismiss on November 5, 2019. Match Group's reply is due November 19, 2019.

On September 26, 2019, Match Group received a grand-jury subpoena from the DOJ for documents relating to certain of the federal securities laws based upon alleged material omissions from the registration statement related to the proposed combination of the HomeAdvisor and Angie’s List businesses into a single, publicly traded company. ~~See Parshall v. Angie’s List, Inc. et al., No. 1:17-cv-2418 (U.S. District Court, Southern District of Indiana). On July 20, 2017, a second, substantially similar purported shareholder class action was filed~~marketing-related claims in the ~~same court.~~ ~~See Pill v. Angie’s List, Inc. et al., No. 1:17-cv-2461 (U.S. District Court, Southern District of Indiana). On September 11, 2017, a third, substantially similar purported shareholder class action was filed in the same court.~~ ~~See Chojar v. Angie’s List, Inc. et al., No. 1:17-cv-3208 (U.S. District Court, Southern District of Indiana). The gravamen of the complaints in these lawsuits is~~FTC’s complaint.

IAC and Match Group believe that the ~~registration statement was materially misleading~~FTC’s claims regarding Match.com’s practices, policies and procedures are without merit and will defend vigorously against them. Match Group intends to shareholders of Angie’s List because it omitted: (i) certain financial projections, assumptions and other information relied upon by Angie’s List’s financial advisors in rendering their fairness opinions with respect to the proposed combination, (ii) certain information about Angie’s List’s board members’ potential conflicts of interest and (iii) certain information about the background of the transaction. The complaints asserted violations of Sections 14-a and 20-a of the Securities Exchange Act of 1934 and sought to enjoin the transaction, require the issuance of a revised registration statement and rescind the transaction and obtain damages should it go forward. On September 19, 2017: (i) the parties in these three lawsuits entered into a memorandum of understanding in which the plaintiffs agreed to dismiss their claims in exchange for the filing by Angie’s List of agreed-upon supplemental disclosures to the registration statement,cooperate with the ~~court~~DOJ in ~~Parshall~~ ~~case~~responding to retain jurisdiction for purposes of adjudicating the anticipated application by plaintiffs’ counsel for a mootness fee award, and (ii) Angie’s List filed the agreed-upon supplemental disclosures on a Form 8-K. In accordance with the parties’ memorandum of understanding, the plaintiffs filed notices of dismissal with prejudice in the ~~Parshall~~, ~~Pill, and~~ ~~Chojar~~ ~~cases on September 29, October 2, and September 29, 2017, respectively.~~

its subpoena.

Item 1A. Risk Factors

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipates," "estimates," "expects," "plans" and "believes," among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: IAC's future financial performance, IAC's business prospects and strategy, including the possibility of separating Match Group from IAC, IAC’s intentions with respect to its investment in ANGI Homeservices, anticipated trends and prospects in the industries in which IAC's businesses operate and other similar matters. These forward-looking statements are based on IAC management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others: ~~changes~~the risks inherent in ~~senior management at~~separating Match Group from IAC ~~and/or its~~(including uncertainties related to, among other things, whether any agreement will be reached to proceed with a transaction, whether IAC will determine to proceed with any such transaction if an agreement can be reached, the final terms and conditions of any such transaction if such an agreement is reached, the costs and expected benefits of the proposed transaction, the expected timing of the transaction, whether any conditions to the transaction can be satisfied, the expected tax treatment of the transaction, and the impact of the transaction on the businesses ~~changes~~of IAC and Match Group), any change in our ~~relationship~~intention with ~~or policies implemented by, Google, adverse changes~~respect to our investment in ~~economic conditions, either generally or in any of the markets in which IAC's businesses operate, adverse trends in any of the industries in which IAC's businesses operate,~~ANGI Homeservices, our ~~dependence on third parties in connection with the distribution~~continued ability to successfully market, distribute and ~~use of~~monetize our products and services through search engines, social media platforms and digital app stores, the failure or delay of the markets and industries in which our ~~ability~~businesses operate to ~~offer new or alternative products~~

~~and services in a cost-effective manner and consumer acceptance of these products and services, our ability to attract and convert visitors to our various websites into users and customers,~~migrate online, our ability to build, maintain and/or enhance our various brands, ~~foreign exchange currency rate fluctuations,~~ our ability to develop and monetize ~~mobile~~ versions of our ~~various~~ products and services for mobile and other digital devices, adverse economic events or trends, either generally and/or in any of the markets in which our businesses operate, our continued ability to communicate with users and consumers via e-mail (or sufficient means), our ability to successfully offset increasing digital app store fees, our ability to establish and maintain

Table of Contents

relationships with quality service professionals, changes in ~~industry standards and technology, the integrity and scalability of~~ our ~~systems and infrastructure (and those of third parties),~~relationship with (or policies implemented by) Google, foreign exchange currency rate fluctuations, our ability to protect our systems from cyberattacks and to protect personal and confidential user information, the occurrence of data security breaches, fraud and/or additional regulation involving or impacting credit card payments, the integrity, quality, scalability and redundancy of our systems, technology and infrastructure (and those of third parties with whom we do business), changes in key personnel, our ability to service our outstanding indebtedness and ~~access to cash without adversely affecting our operations,~~interest rate risk, dilution with respect to our investments in Match Group ~~Inc.~~ and ANGI Homeservices, ~~Inc.,~~ operational and financial risks relating to acquisitions and our continued ability to ~~successfully integrate Angie's List,~~identify suitable acquisition candidates, our ability to expand successfully into international markets, regulatory changes, our ability to adequately protect our intellectual property rights and ~~regulatory changes.~~not infringe the intellectual property rights of third parties and the determination of whether to proceed with the distribution transactions referenced above and risks related thereto. Certain of these and other risks and uncertainties are discussed in IAC's filings with the SEC, including in Part ~~I "Item 1A. Risk Factors"~~I-Item 1A-Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2018. Other unknown or unpredictable factors that could also adversely affect IAC's business, financial condition and operating results may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of IAC management as of the date of this quarterly report. IAC does not undertake to update these forward-looking statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

~~Except as described immediately below, during the quarter ended September 30, 2017, the~~The Company did not issue or sell any shares of its common stock or any other equity securities pursuant to unregistered ~~transactions.~~transactions during the quarter ended September 30, 2019.

Issuer Purchases of Equity Securities

The Company did not purchase any shares of its common stock during the quarter ended September 30, ~~2017.~~2019. As of that date, ~~8,580,742~~8,036,226 shares of IAC common stock remained available for repurchase under the Company's previously announced May 2016 repurchase authorization. IAC may ~~purchase~~repurchase shares pursuant to this repurchase authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors IAC management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

Item 5. Other Information

On August 7, 2019, IAC announced its intention to explore the possibility of a distribution of its interests in either or both of Match Group and ANGI Homeservices to its shareholders. On October 11, 2019, IAC disclosed that it had made a proposal to a special committee of the Board of Directors of Match Group with respect to a potential transaction involving its interest in Match Group (the “Match Group Proposal”). A description of the Match Group Proposal is set forth under the caption “Item 4. Purpose of the Transaction” of Amendments No. 13 and 14 (filed on October 11, 2019 and November 7, 2019, respectively) to the Schedule 13D relating to IAC’s interest in Match Group and is incorporated herein by reference. There can be no assurance that any transaction will occur or that if a transaction does occur, as to the timing and terms of any such transaction.

On October 11, 2019, IAC also disclosed that it does not currently intend to pursue a separation transaction with respect to its interest in ANGI Homeservices during the negotiation or execution of the potential Match Group transaction. However, IAC is evaluating its equity stake in ANGI Homeservices on an ongoing basis and may or may not pursue a transaction involving ANGI Homeservices in the future.

Table of Contents

Item 6. Exhibits

The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith, incorporated by reference to the location indicated or furnished herewith.



Exhibit Number	Description	Location
~~2.1~~	Agreement and Plan of Merger, dated as of May 1, 2017, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of August 26, 2017, by and among Angie's List, Inc., IAC/InterActiveCorp, ANGI Homeservices Inc. and Casa Merger Sub, Inc.	~~Annex B to the Proxy Statement/Prospectus of Angie's List, Inc. and ANGI Homeservices Inc., filed on August 30, 2017 pursuant to Rule 424(b)(3)~~.
3.1	Restated Certificate of Incorporation of IAC/InterActiveCorp.	Exhibit 3.1 to the Registrant's Registration Statement on Form 8-A/A, filed on August 12, 2005.
3.2	Certificate of Amendment of the Restated Certificate of Incorporation of IAC/InterActiveCorp (dated as of August 20, 2008).	Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 22, 2008.
3.3	Amended and Restated By-Laws of IAC/InterActiveCorp (amended and restated as of December 1, 2010).	Exhibit 3.1(II) to the Registrant's Current Report on Form 8-K, filed on December 6, 2010.
3.4	Certificate of Designations of Series C Cumulative Preferred Stock.	Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017.
3.5	Certificate of Designations of Series D Cumulative Preferred Stock.	Exhibit 3.5 to the Registrant's Quarterly Report on Form 10-Q, filed on November 9, 2018.
~~4.1~~	~~Supplemental Indenture for 4.75% Senior Notes due 2022, dated as of September 21, 2017, among IAC/InterActiveCorp, the Guarantors named therein and Computershare Trust Company, N.A., as Trustee. (1)~~
~~4.2~~	~~Supplemental Indenture for 4.875% Senior Notes due 2018, dated as of September 21, 2017, among IAC/InterActiveCorp, the Guarantors named therein and Computershare Trust Company, N.A., as Trustee. (1)~~
~~10.1~~	~~Contribution Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)~~	~~Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.2~~	~~Investor Rights Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.~~	~~Exhibit 2.2 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.3~~	~~Services Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)~~	~~Exhibit 2.3 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.4~~	~~Tax Sharing Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.~~	~~Exhibit 2.4 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.5~~	~~Employee Matters Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)~~	~~Exhibit 2.5 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.6~~	~~Intercompany Note, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC Group, LLC. (2)~~	~~Exhibit 2.6 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.7~~	~~Intercompany Note, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC Group, LLC. (2)~~	~~Exhibit 2.7 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.8~~	Amendment No. 2 dated as of September 25, 2017, to the Credit Agreement dated as of December 21, 2012 and amended and restated as of October 7, 2015, among IAC/InterActiveCorp, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the various other parties thereto.	~~Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on September 25, 2017~~.



~~10.9~~	Amendment No. 4 dated as of August 14, 2017 to the Credit Agreement dated as of October 7, 2015, as amended and restated as of November 16, 2015, as further amended as of December 16, 2015, as further amended as of December 8, 2016, among Match Group, Inc., as borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other parties thereto.	~~Exhibit 10.1 to Match Group, Inc. Current Report on Form 8-K, filed on August 17, 2017~~.
31.1	Certification of the Chairman and Senior Executive pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. (1)
31.2	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. (1)
31.3	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. (1)
32.1	Certification of the Chairman and Senior Executive pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. ~~(3)~~(2)
32.2	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. ~~(3)~~(2)
32.3	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. ~~(3)~~(2)
101.INS	Inline XBRL Instance (1)	The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema (1)
101.CAL	Inline XBRL Taxonomy Extension Calculation (1)
101.DEF	Inline XBRL Taxonomy Extension Definition (1)
101.LAB	Inline XBRL Taxonomy Extension Labels (1)
101.PRE	Inline XBRL Taxonomy Extension Presentation (1)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


(1)	Filed herewith.

Table of Contents


(2)	Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.


~~(3)~~	Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Dated:	November ~~9, 2017~~7, 2019
		IAC/INTERACTIVECORP

		By:	/s/ GLENN H. SCHIFFMAN
			Glenn H. Schiffman
			Executive Vice President and Chief Financial Officer




Signature	Title	Date

/s/ GLENN H. SCHIFFMAN	Executive Vice President and Chief Financial Officer	November ~~9, 2017~~7, 2019
Glenn H. Schiffman

~~QuickLinks~~

~~PART I FINANCIAL INFORMATION~~

~~Item 1. Consolidated Financial Statements~~

~~IAC/INTERACTIVECORP CONSOLIDATED BALANCE SHEET (Unaudited)~~

~~IAC/INTERACTIVECORP CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)~~

~~IAC/INTERACTIVECORP CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS (Unaudited)~~

~~IAC/INTERACTIVECORP CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)~~

~~IAC/INTERACTIVECORP CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)~~

~~IAC/INTERACTIVECORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations~~

~~GENERAL~~

~~IAC'S PRINCIPLES OF FINANCIAL REPORTING~~

~~FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES~~

~~CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS~~

~~Item 3. Quantitative and Qualitative Disclosures about Market Risk~~

~~Item 4. Controls and Procedures~~

~~PART II OTHER INFORMATION~~

~~Item 1. Legal Proceedings~~

~~Item 1A. Risk Factors~~

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

~~Item 6. Exhibits~~

~~SIGNATURES~~


~~For the Quarterly Period Ended September 30, 2017~~
Or
¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________



Delaware		59-2712887
(State or other jurisdiction of incorporation or organization)		~~59-2712887~~ (I.R.S. Employer Identification No.)
~~555 West 18th Street, New York, New York 10011~~ ~~(Address of registrant's principal executive offices)~~
~~(212) 314-7300~~



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, par value $0.001	IAC	The Nasdaq Stock Market LLC



Large accelerated filerý	☒	Accelerated filero	☐	Non-accelerated filero~~(Do not check if a smaller~~ ~~reporting company)~~	☐	Smaller reporting companyo	☐	Emerging growth companyo	☐



Common Stock	~~76,195,855~~78,800,508
Class B Common Stock	5,789,499
Total outstanding Common Stock	~~81,985,354~~84,590,007



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



		Page Number
PART I
Item 1.	Consolidated Financial Statements	3
	~~Item 2.~~Consolidated Balance Sheet	3
	Consolidated Statement of Operations	4
	Consolidated Statement of Comprehensive Operations	5
	Consolidated Statement of Shareholders' Equity	6
	Consolidated Statement of Cash Flows	8
	Note 1—The Company and Summary of Significant Accounting Policies	9
	Note 2—Leases	12
	Note 3—Income Taxes	14
	Note 4—Financial Instruments	15
	Note 5—Long-term Debt	19
	Note 6—Accumulated Other Comprehensive Loss	26
	Note 7—Earnings Per Share	27
	Note 8—Segment Information	29
	Note 9—Consolidated Financial Statement Details	35
	Note 10—Contingencies	37
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4238
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 4.	Controls and Procedures	64
PART II
Item 1.	Legal Proceedings	65
Item 1A.	Risk Factors	66
Item 4.2.	~~Controls and Procedures~~	67
~~PART II~~
~~Item 1.~~	~~Legal Proceedings~~	68
~~Item 1A.~~	~~Risk Factors~~	69
~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 5.	Other Information	67
Item 6.	Exhibits	68
	Signatures	70
~~Item 6.~~	~~Exhibits~~	71
	~~Signatures~~	73


	September 30, 2017			December 31, 2016			September 30, 2019			December 31, 2018
	(In thousands, except par value amounts)						(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	1,255,317		$	1,329,187		$	2,946,180		$	2,131,632
Marketable securities	—			89,342			157,174			123,665
Accounts receivable, net of allowance of $12,847 and $16,405, respectively	271,209			220,138
Accounts receivable, net of allowance and reserves of $25,003 and $18,860, respectively							355,924			279,189
Other current assets	200,377			204,068			225,016			228,253
Total current assets	1,726,903			1,842,735			3,684,294			2,762,739

Property and equipment, net of accumulated depreciation and amortization of $314,703 at September 30, 2017 and $311,834 at December 31, 2016	320,277			306,248
Right-of-use assets							177,797			—
Property and equipment, net of accumulated depreciation and amortization of $308,987 and $286,798, respectively							361,664			318,800
Goodwill	2,501,589			1,924,052			2,852,986			2,726,859
Intangible assets, net	660,103			355,451
Intangible assets, net of accumulated amortization of $196,563 and $136,405, respectively							603,702			631,422
Long-term investments	120,806			122,810			333,980			235,055
Deferred income taxes	129,879			2,511			170,299			64,786
Other non-current assets	81,398			92,066			120,069			134,924
TOTAL ASSETS	$	5,540,955		$	4,645,873		$	8,304,791		$	6,874,585

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Current portion of long-term debt	$	—		$	20,000		$	13,750		$	13,750
Accounts payable	104,806			62,863
Accounts payable, trade							100,858			74,907
Deferred revenue	343,413			285,615			414,325			360,015
Accrued expenses and other current liabilities	387,307			344,910			507,348			434,886
Total current liabilities	835,526			713,388			1,036,281			883,558

Long-term debt, net of current portion	1,649,267			1,582,484
Long-term debt, net							3,111,882			2,245,548
Income taxes payable	33,290			33,528			36,297			37,584
Deferred income taxes	36,023			228,798			21,657			23,600
Other long-term liabilities	37,165			44,178			215,611			66,807

Redeemable noncontrolling interests	40,981			32,827			77,302			65,687

Commitments and contingencies

SHAREHOLDERS' EQUITY:
Common stock $.001 par value; authorized 1,600,000 shares; issued 259,875 and 255,672 shares, respectively and outstanding 76,080 and 72,595 shares, respectively	260			256
Common stock $.001 par value; authorized 1,600,000 shares; issued 263,110 and 262,303 shares, respectively, and outstanding 78,770 and 77,963 shares, respectively							263			262
Class B convertible common stock $.001 par value; authorized 400,000 shares; issued 16,157 shares and outstanding 5,789 shares	16			16			16			16
Additional paid-in capital	12,192,645			11,921,559			11,761,711			12,022,387
Retained earnings	562,234			290,114			1,589,500			1,258,794
Accumulated other comprehensive loss	(99,513		)	(166,123		)	(144,604		)	(128,722		)
Treasury stock 194,163 and 193,445 shares, respectively	(10,226,721		)	(10,176,600		)
Treasury stock 194,708 shares							(10,309,612		)	(10,309,612		)
Total IAC shareholders' equity	2,428,921			1,869,222			2,897,274			2,843,125
Noncontrolling interests	479,782			141,448			908,487			708,676
Total shareholders' equity	2,908,703			2,010,670			3,805,761			3,551,801
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	5,540,955		$	4,645,873		$	8,304,791		$	6,874,585



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(In thousands)
Net earnings (loss)	$	225,639		$	52,340		$	334,659		$	(130,268	)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustment ^(a)	44,126			(4,808		)	84,824			7,596
Change in unrealized gains and losses of available-for-sale securities (net of tax benefit of $3,846 for the nine months ended September 30, 2017, and net of tax benefits of $85 and $868 for the three and nine months ended September 30, 2016, respectively) ^(b)	—			(145		)	(4,026		)	1,510
Total other comprehensive income (loss), net of tax	44,126			(4,953		)	80,798			9,106
Comprehensive income (loss)	269,765			47,387			415,457			(121,162		)
Comprehensive income attributable to noncontrolling interests	(52,897		)	(9,502		)	(76,727		)	(13,881		)
Comprehensive income (loss) attributable to IAC shareholders	$	216,868		$	37,885		$	338,730		$	(135,043	)



	Angie's List
	(In thousands)
Class A common stock	$	763,684
Cash consideration for holders who elected to receive $8.50 in cash per share of Angie's List common stock	1,913
Fair value of vested and pro rata portion of unvested stock options attributable to pre-combination services	11,749
Fair value of the pro rata portion of unvested restricted stock units attributable to pre-combination services	4,038
Total purchase price	$	781,384



	Angie's List
	(In thousands)		Weighted-average useful life (years)
Indefinite-lived trade names and trademarks	$	137,000	Indefinite
Service providers	90,500		3
Developed technology	63,900		6
Memberships	15,900		3
User base	10,000		1
Total identifiable intangible assets acquired	$	317,300



	September 30,		December 31,
	2017		2016
	(In thousands)
Goodwill	$	2,501,589	$	1,924,052
Intangible assets with indefinite lives	460,333		320,645
Intangible assets with definite lives, net	199,770		34,806
Total goodwill and intangible assets, net	$	3,161,692	$	2,279,503



	Balance at December 31, 2016		Additions		(Deductions)			Foreign Exchange Translation		Balance at September 30, 2017
	(In thousands)
Match Group	$	1,206,538	$	255	$	—		$	43,575	$	1,250,368
ANGI Homeservices	170,611		593,880		—			7,865		772,356
Video	25,239		6,384		—			—		31,623
Applications	447,242		—		—			—		447,242
Other	74,422		—		(74,430		)	8		—
Total	$	1,924,052	$	600,519	$	(74,430	)	$	51,448	$	2,501,589



	Balance at December 31, 2015		Additions		(Deductions)			Impairment			Foreign Exchange Translation			Balance at December 31, 2016
	(In thousands)
Match Group	$	1,218,607	$	603	$	(2,983	)	$	—		$	(9,689	)	$	1,206,538
ANGI Homeservices	150,251		21,985		—			—			(1,625		)	170,611
Video	15,590		9,649		—			—			—			25,239
Applications	447,242		—		—			—			—			447,242
Publishing	277,192		—		(1,968		)	(275,367		)	143			—
Other	136,482		—		(62,860		)	—			800			74,422
Total	$	2,245,364	$	32,237	$	(67,811	)	$	(275,367	)	$	(10,371	)	$	1,924,052



	September 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted-Average Useful Life (Years)
	(In thousands)
Advertiser and supplier relationships and other	$	119,029	$	(4,654	)	$	114,375	3.0
Technology	104,876		(32,348		)	72,528		4.9
Customer lists and user base	13,911		(2,973		)	10,938		1.1
Content	5,000		(3,723		)	1,277		5.0
Trade names	14,518		(13,866		)	652		2.7
Total	$	257,334	$	(57,564	)	$	199,770	3.7



Years Ending September 30,	(In thousands)
2018	$	68,567
2019	51,422
2020	47,775
2021	10,735
2022	10,650
Thereafter	10,621
Total	$	199,770



	Contingent Consideration Arrangements
	Three Months Ended September 30,
	2017			2016
	(In thousands)
Balance at July 1	$	(24,829	)	$	(45,526	)
Total net (losses) gains:
Included in earnings:
Fair value adjustments	(60		)	2,477
Included in other comprehensive loss	(332		)	(333		)
Settlements	23,429			30
Balance at September 30	$	(1,792	)	$	(43,352	)



	September 30, 2019						December 31, 2018
	Carrying Value			Fair Value			Carrying Value			Fair Value
	(In thousands)
Current portion of long-term debt	$	(13,750	)	$	(13,681	)	$	(13,750	)	$	(12,753	)
Long-term debt, net^(a)	(3,111,882		)	(3,934,574		)	(2,245,548		)	(2,460,204		)



	Number of shares of the Company's Common Stock into which each $1,000 of Principal of the Exchangeable Notes is Exchangeable*	Approximate Equivalent Exchange Price per Share*		Exchangeable Date
2022 Exchangeable Notes	6.5713	$	152.18	July 1, 2022
2026 Exchangeable Notes	3.3028	$	302.77	March 15, 2026
2030 Exchangeable Notes	3.4323	$	291.35	October 15, 2029



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
	2022 Exchangeable Notes
Contractual interest expense	$	1,138	$	3,396
Amortization of original issue discount	3,299		9,802
Amortization of debt issuance costs	865		2,619
Total interest expense recognized	$	5,302	$	15,817



	Number of Shares*	Approximate Equivalent Exchange Price per Share*
2022 Exchangeable Notes Hedge	3.4	$	152.18
2026 Exchangeable Notes Hedge	1.9	$	302.77
2030 Exchangeable Notes Hedge	2.0	$	291.35



	Number of Shares*	Strike Price per Share*
2022 Exchangeable Notes Warrants	3.4	$	229.70
2026 Exchangeable Notes Warrants	1.9	$	457.02
2030 Exchangeable Notes Warrants	2.0	$	457.02



Remainder of 2019	$	3,438
2020	13,750
2021	13,750
2022	970,000
2023	192,500
After 2023	2,350,000
Total	3,543,438
Less: current portion of long-term debt	13,750
Less: unamortized original issue discount	368,976
Less: unamortized debt issuance costs	48,830
Total long-term debt, net	$	3,111,882



	Three Months Ended September 30, 2019
	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Loss
	(In thousands)
Balance as of July 1	$	(125,705	)	$	(125,705	)
Other comprehensive loss	(18,389		)	(18,389		)
Net current period other comprehensive loss	(18,389		)	(18,389		)
Allocation of accumulated other comprehensive loss related to the noncontrolling interests	(510		)	(510		)
Balance as of September 30	$	(144,604	)	$	(144,604	)



	Three Months Ended September 30, 2017
	Foreign Currency Translation Adjustment			Unrealized Gains On Available-For-Sale Securities		Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance at July 1	$	(136,738	)	$	—	$	(136,738	)
Other comprehensive income before reclassifications	37,225			—		37,225
Amounts reclassified to earnings	—			—		—
Net current period other comprehensive income	37,225			—		37,225
Balance at September 30	$	(99,513	)	$	—	$	(99,513	)



	Three Months Ended September 30, 2018
	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) On Available-For-Sale Debt Securities			Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance as of July 1	$	(112,730	)	$	13		$	(112,717	)
Other comprehensive loss	(502		)	(27		)	(529		)
Net current period other comprehensive loss	(502		)	(27		)	(529		)
Allocation of accumulated other comprehensive income related to the noncontrolling interests	391			—			391
Balance as of September 30	$	(112,841	)	$	(14	)	$	(112,855	)



	Three Months Ended September 30, 2016
	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) On Available-For-Sale Securities				Accumulated Other Comprehensive Loss
	(In thousands)
Balance at July 1	$	(121,612	)	$	4,205			$	(117,407	)
Other comprehensive (loss) income before reclassifications, net of tax provision of $0.1 million related to unrealized losses on available-for-sale securities	(5,132		)	114				(5,018		)
Amounts reclassified to earnings	—			(259		)	^(a)	(259		)
Net current period other comprehensive loss	(5,132		)	(145		)		(5,277		)
Balance at September 30	$	(126,744	)	$	4,060			$	(122,684	)



	Nine Months Ended September 30, 2017
	Foreign Currency Translation Adjustment			Unrealized Gains On Available-For-Sale Securities				Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance at January 1	$	(170,149	)	$	4,026			$	(166,123	)
Other comprehensive income before reclassifications	69,951			7				69,958
Amounts reclassified to earnings	685			(4,033		)	^(b)	(3,348		)
Net current period other comprehensive income (loss)	70,636			(4,026		)		66,610
Balance as of September 30	$	(99,513	)	$	—			$	(99,513	)



	Nine Months Ended September 30, 2018
	Foreign Currency Translation Adjustment			Unrealized Losses On Available-For-Sale Debt Securities			Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance as of January 1	$	(103,568	)	$	—		$	(103,568	)
Other comprehensive loss before reclassifications	(9,550		)	(14		)	(9,564		)
Amounts reclassified to earnings	(52		)	—			(52		)
Net current period other comprehensive loss	(9,602		)	(14		)	(9,616		)
Allocation of accumulated other comprehensive income related to the noncontrolling interests	329			—			329
Balance as of September 30	$	(112,841	)	$	(14	)	$	(112,855	)



	Nine Months Ended September 30, 2016
	Foreign Currency Translation Adjustment			Unrealized Gains On Available-For-Sale Securities				Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance as of January 1	$	(154,645	)	$	2,542			$	(152,103	)
Other comprehensive (loss) income before reclassifications, net of tax benefit of $0.7 million related to unrealized losses on available-for-sale securities	(3,538		)	4,868				1,330
Amounts reclassified to earnings	9,850			(2,892		)	^(c)	6,958
Net current period other comprehensive income	6,312			1,976				8,288
Reallocation of accumulated other comprehensive loss (income) related to the noncontrolling interests created in the Match Group initial public offering	21,589			(458		)		21,131
Balance as of September 30	$	(126,744	)	$	4,060			$	(122,684	)


^(d)(c)	For the nine months ended September 30, 2016, the Company had a loss from operations and, as a result, approximately 9.8 million potentially dilutive securities were excluded from computing diluted earnings per share because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute the diluted earnings per share amount.


^(a)	The Other segment consists of the results of PriceRunner, ShoeBuy and The Princeton Review for periods prior to the sale of these businesses, which occurred on March 18, 2016, December 30, 2016 and March 31, 2017, respectively. Beginning in the second quarter of 2017, as a result of the sale of these businesses, the Other segment does not include any financial results.



	September 30, 2019		December 31, 2018
	(In thousands)
Long-lived assets (excluding goodwill and intangible assets):
United States	$	336,055	$	289,756
All other countries	25,609		29,044
Total	$	361,664	$	318,800



	Three Months Ended September 30, 2019
	Operating Income (Loss)			Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Acquisition-related Contingent Consideration Fair Value Adjustments			Adjusted EBITDA
	(In thousands)
Match Group	$	176,604		$	20,805	$	8,081	$	641	$	—		$	206,131
ANGI Homeservices	24,726			$	8,784	$	11,244	$	14,169	$	—		$	58,923
Vimeo	(11,155		)	$	—	$	39	$	3,119	$	—		$	(7,997	)
Dotdash	3,695			$	—	$	216	$	3,115	$	—		$	7,026
Applications	39,099			$	—	$	331	$	2,142	$	(16,139	)	$	25,433
Emerging & Other	(1,821		)	$	—	$	292	$	—	$	—		$	(1,529	)
Corporate	(45,296		)	$	20,464	$	2,887	$	—	$	—		$	(21,945	)
Operating income	185,852
Interest expense	(42,132		)
Other income, net	1,229
Earnings before income taxes	144,949
Income tax benefit	14,823
Net earnings	159,772
Net earnings attributable to noncontrolling interests	(31,228		)
Net earnings attributable to IAC shareholders	$	128,544


^(c)	~~Fees paid by service professionals for consumer matches.~~