As filed with the Securities and Exchange Commission on ~~November~~ August 6, ~~2020~~2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the Quarterly Period Ended ~~September~~June 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________

Commission File No. 001-39356

IAC/INTERACTIVECORP

(Exact name of registrant as specified in its charter)


Delaware						84-3727412
(State or other jurisdiction of incorporation or organization)						(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

(Registrant's telephone number, including area code)

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~~$0.0001

IAC

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐☒

Accelerated filer

☐

Non-accelerated filer

☒☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~July 30, ~~2020~~,2021, the following shares of the registrant's common stock were outstanding:


Common Stock			~~79,549,631~~83,445,032
Class B ~~Common Stock~~common stock			5,789,499
Total ~~outstanding Common Stock~~			~~85,339,130~~89,234,531

TABLE OF CONTENTS


		Page Number
PART I
Item 1.	Consolidated and Combined Financial Statements	3
	Consolidated ~~and Combined~~ Balance Sheet	3
	Consolidated and Combined Statement of Operations	4
	Consolidated and Combined Statement of Comprehensive Operations	5
	Consolidated ~~and Combined~~ Statement of Shareholders' Equity	6
	Combined Statement of Parent's Equity and Consolidated Statement of Shareholders' Equity	7
	Consolidated and Combined Statement of Cash Flows	8
	Note 1—The Company and Summary of Significant Accounting Policies	9
	Note 2—Income Taxes	14
	Note 3—~~Business Combination~~Discontinued Operations	1516
	Note 4—~~Goodwill and Intangible Assets~~Business Combination	1718
	Note 5—Financial Instruments and Fair Value Measurements	2018
	Note 6—Long-term Debt	23
	Note 7—Accumulated Other Comprehensive Income (Loss)	24
	Note ~~7—Shareholders' Equity~~8—Earnings (Loss) Per Share	26
	~~Note 8—Accumulated Other Comprehensive Loss~~	2725
	Note 9—~~Earnings (Loss) Per Share~~Segment Information	27
	Note 10—~~Segment Information~~Financial Statement Details	2933
	Note 11—~~Financial Statement Details~~	34
	~~Note 12—~~Contingencies	35
	Note ~~13—~~12—Related Party Transactions	36
	Note ~~14—~~13—Subsequent Event s	3839
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3940
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6364
Item 4.	Controls and Procedures	6465
PART II
Item 1.	Legal Proceedings	6566
Item 1A.	Risk Factors	6668
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6870

Item 6.	Exhibits	6971
	Signatures	7173

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Consolidated and Combined Financial Statements

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ BALANCE SHEET

(Unaudited)


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(In thousands)					(In thousands, except par value amounts)
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	3,471,713	$	839,796	Cash and cash equivalents	$	3,476,071	$	3,366,176

Marketable debt securities		349,953		0
Accounts receivable, net of allowance and reserves of $34,958 and $24,148, respectively		227,316		181,875
Note receivable—related party		0		55,251
Marketable securities						Marketable securities	10,810		224,979
Accounts receivable, net						Accounts receivable, net	256,134		257,668

Other current assets	Other current assets	156,489		152,334		Other current assets	145,752		140,022
Current assets of discontinued operations						Current assets of discontinued operations	0		130,477
Total current assets	Total current assets	4,205,471		1,229,256		Total current assets	3,888,767		4,119,322

Building, capitalized software, leasehold improvements and equipment, net	Building, capitalized software, leasehold improvements and equipment, net	265,818		305,414		Building, capitalized software, leasehold improvements and equipment, net	273,555		274,930
Goodwill	Goodwill	1,767,834		1,616,867		Goodwill	1,636,822		1,660,102
Intangible assets, net of accumulated amortization		394,415		350,150
Intangible assets, net						Intangible assets, net	363,480		394,986
Investment in MGM Resorts International						Investment in MGM Resorts International	2,517,796		1,860,158
Long-term investments	Long-term investments	1,580,478		347,975		Long-term investments	305,589		297,643
Other non-current assets	Other non-current assets	266,198		247,746		Other non-current assets	302,567		288,021
Non-current assets of discontinued operations						Non-current assets of discontinued operations	0		266,547
TOTAL ASSETS	TOTAL ASSETS	$	8,480,214	$	4,097,408	TOTAL ASSETS	$	9,288,576	$	9,161,709

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:	LIABILITIES:					LIABILITIES:
Current portion of long-term debt		$	13,750	$	13,750

Accounts payable, trade	Accounts payable, trade	96,062		72,452		Accounts payable, trade	$	116,230	$	88,849
Deferred revenue	Deferred revenue	268,225		178,647		Deferred revenue	148,048		137,658
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	402,198		320,473		Accrued expenses and other current liabilities	378,398		340,406
Current liabilities of discontinued operations						Current liabilities of discontinued operations	0		183,988
Total current liabilities	Total current liabilities	780,235		585,322		Total current liabilities	642,676		750,901

Long-term debt, net	Long-term debt, net	715,408		231,946		Long-term debt, net	494,195		712,277
Income taxes payable	Income taxes payable	6,207		6,410		Income taxes payable	295		6,444
Deferred income taxes	Deferred income taxes	25,970		44,459		Deferred income taxes	171,800		78,789
Other long-term liabilities	Other long-term liabilities	192,313		180,307		Other long-term liabilities	210,269		227,406
Non-current liabilities of discontinued operations						Non-current liabilities of discontinued operations	0		2,972

Redeemable noncontrolling interests	Redeemable noncontrolling interests	44,164		43,818		Redeemable noncontrolling interests	24,193		231,992

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0

SHAREHOLDERS' EQUITY:	SHAREHOLDERS' EQUITY:					SHAREHOLDERS' EQUITY:
Common stock, $0.001 par value; authorized 1,600,000 shares; 79,549 shares issued and outstanding at September 30, 2020		80		0
Class B common stock, $0.001 par value; authorized 400,000 shares; 5,789 shares issued and outstanding at September 30, 2020		6		0
Common Stock, $0.0001 par value; authorized 1,600,000 shares; 8,344 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively						Common Stock, $0.0001 par value; authorized 1,600,000 shares; 8,344 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	8		0
Class B common stock, $0.0001 par value; authorized 400,000 shares; 579 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020 , respectively						Class B common stock, $0.0001 par value; authorized 400,000 shares; 579 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020 , respectively	1		0
Common Stock, $0.001 par value; authorized 1,600,000 shares; 0 and 82,976 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively						Common Stock, $0.001 par value; authorized 1,600,000 shares; 0 and 82,976 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	0		83
Class B common stock, $0.001 par value; authorized 400,000 shares; 0 and 5,789 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively						Class B common stock, $0.001 par value; authorized 400,000 shares; 0 and 5,789 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	0		6
Additional paid-in-capital	Additional paid-in-capital	6,021,045		0		Additional paid-in-capital	6,341,667		5,909,614
Retained earnings	Retained earnings	184,917		0		Retained earnings	831,489		694,042
Invested capital		0		2,547,251
Accumulated other comprehensive loss		(11,818)		(12,226)
Total IAC shareholders' equity and invested capital, respectively		6,194,230		2,535,025
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	5,686		(6,170)
Total IAC shareholders' equity						Total IAC shareholders' equity	7,178,851		6,597,575
Noncontrolling interests	Noncontrolling interests	521,687		470,121		Noncontrolling interests	566,297		553,353
Total shareholders' equity	Total shareholders' equity	6,715,917		3,005,146		Total shareholders' equity	7,745,148		7,150,928
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	8,480,214	$	4,097,408	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	9,288,576	$	9,161,709

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

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands, except per share data)
Revenue	Revenue	$	788,377	$	705,382	$	2,198,862	$	2,035,287	Revenue	$	829,547	$	659,027	$	1,616,117	$	1,286,243
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	Cost of revenue (exclusive of depreciation shown separately below)	207,643		158,161		565,609		447,734		Cost of revenue (exclusive of depreciation shown separately below)	250,207		155,846		471,024		316,966
Selling and marketing expense	Selling and marketing expense	340,524		310,301		957,557		929,712		Selling and marketing expense	341,035		282,645		653,573		566,162
General and administrative expense	General and administrative expense	168,889		135,463		583,355		448,377		General and administrative expense	174,711		231,753		337,871		393,070
Product development expense	Product development expense	67,870		49,991		192,116		140,351		Product development expense	61,266		46,338		122,526		93,450
Depreciation	Depreciation	18,753		15,009		50,849		39,042		Depreciation	17,112		16,502		36,298		31,936
Amortization of intangibles	Amortization of intangibles	60,151		22,545		132,213		64,112		Amortization of intangibles	13,636		23,388		30,475		66,024
Goodwill impairment	Goodwill impairment	53,173		0		265,146		0		Goodwill impairment	0		0		0		211,973
Total operating costs and expenses	Total operating costs and expenses	917,003		691,470		2,746,845		2,069,328		Total operating costs and expenses	857,967		756,472		1,651,767		1,679,581
Operating (loss) income		(128,626)		13,912		(547,983)		(34,041)
Operating loss										Operating loss	(28,420)		(97,445)		(35,650)		(393,338)
Interest expense	Interest expense	(5,807)		(2,898)		(9,579)		(9,402)		Interest expense	(5,814)		(1,555)		(12,431)		(3,772)
Unrealized gain (loss) on investment in MGM Resorts International										Unrealized gain (loss) on investment in MGM Resorts International	275,098		(24,718)		657,638		(24,718)
Other income (expense), net	Other income (expense), net	290,786		(11,715)		211,769		16,850		Other income (expense), net	50,286		3,311		53,849		(54,077)
Earnings (loss) before income taxes		156,353		(701)		(345,793)		(26,593)
Income tax benefit		29,508		19,079		107,019		53,319
Earnings (loss) from continuing operations before income taxes										Earnings (loss) from continuing operations before income taxes	291,150		(120,407)		663,406		(475,905)
Income tax (provision) benefit										Income tax (provision) benefit	(87,825)		34,403		(141,136)		71,380
Net earnings (loss) from continuing operations										Net earnings (loss) from continuing operations	203,325		(86,004)		522,270		(404,525)
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	(11,787)		(8,060)		(1,831)		(20,110)
Net earnings (loss)	Net earnings (loss)	185,861		18,378		(238,774)		26,726		Net earnings (loss)	191,538		(94,064)		520,439		(424,635)
Net earnings attributable to noncontrolling interests		(944)		(1,912)		(625)		(10,718)
Net loss (earnings) attributable to noncontrolling interests										Net loss (earnings) attributable to noncontrolling interests	3,219		(2,053)		3,446		319
Net earnings (loss) attributable to IAC shareholders	Net earnings (loss) attributable to IAC shareholders	$	184,917	$	16,466	$	(239,399)	$	16,008	Net earnings (loss) attributable to IAC shareholders	$	194,757	$	(96,117)	$	523,885	$	(424,316)

Per share information attributable to IAC shareholders:
Per share information from continuing operations:										Per share information from continuing operations:
Basic earnings (loss) per share										Basic earnings (loss) per share	$	2.31	$	(1.04)	$	5.91	$	(4.75)
Diluted earnings (loss) per share										Diluted earnings (loss) per share	$	2.14	$	(1.04)	$	5.49	$	(4.75)

Per share information attributable to IAC Common Stock and Class B common stock shareholders:										Per share information attributable to IAC Common Stock and Class B common stock shareholders:
Basic earnings (loss) per share	Basic earnings (loss) per share	$	2.17	$	0.19	$	(2.81)	$	0.19	Basic earnings (loss) per share	$	2.18	$	(1.13)	$	5.88	$	(4.98)
Diluted earnings (loss) per share	Diluted earnings (loss) per share	$	2.04	$	0.19	$	(2.81)	$	0.19	Diluted earnings (loss) per share	$	2.02	$	(1.13)	$	5.47	$	(4.98)

Stock-based compensation expense by function:	Stock-based compensation expense by function:									Stock-based compensation expense by function:
Cost of revenue	Cost of revenue	$	34	$	16	$	162	$	59	Cost of revenue	$	22	$	90	$	34	$	103
Selling and marketing expense	Selling and marketing expense	2,677		1,139		5,083		3,890		Selling and marketing expense	1,101		957		2,317		2,076
General and administrative expense	General and administrative expense	25,930		21,365		136,198		83,688		General and administrative expense	21,189		75,685		36,933		108,151
Product development expense	Product development expense	3,078		2,065		7,154		7,230		Product development expense	1,739		1,129		3,082		2,910
Total stock-based compensation expense	Total stock-based compensation expense	$	31,719	$	24,585	$	148,597	$	94,867	Total stock-based compensation expense	$	24,051	$	77,861	$	42,366	$	113,240

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

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE OPERATIONS

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Net earnings (loss)	Net earnings (loss)	$	185,861	$	18,378	$	(238,774)	$	26,726	Net earnings (loss)	$	191,538	$	(94,064)	$	520,439	$	(424,635)
Other comprehensive income (loss), net of income taxes:	Other comprehensive income (loss), net of income taxes:									Other comprehensive income (loss), net of income taxes:
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	3,513		(3,334)		1,049		(3,192)		Change in foreign currency translation adjustment	1,803		4,166		12,820		(2,464)
Change in unrealized gains and losses on available-for-sale marketable debt securities	Change in unrealized gains and losses on available-for-sale marketable debt securities	4		0		3		(3)		Change in unrealized gains and losses on available-for-sale marketable debt securities	0		11		(2)		(1)
Total other comprehensive income (loss), net of income taxes	Total other comprehensive income (loss), net of income taxes	3,517		(3,334)		1,052		(3,195)		Total other comprehensive income (loss), net of income taxes	1,803		4,177		12,818		(2,465)
Comprehensive income (loss), net of income taxes	Comprehensive income (loss), net of income taxes	189,378		15,044		(237,722)		23,531		Comprehensive income (loss), net of income taxes	193,341		(89,887)		533,257		(427,100)
Components of comprehensive (income) loss attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests		(944)		(1,912)		(625)		(10,718)
Components of comprehensive loss (income) attributable to noncontrolling interests:										Components of comprehensive loss (income) attributable to noncontrolling interests:
Net loss (earnings) attributable to noncontrolling interests										Net loss (earnings) attributable to noncontrolling interests	3,219		(2,053)		3,446		319
Change in foreign currency translation adjustment attributable to noncontrolling interests	Change in foreign currency translation adjustment attributable to noncontrolling interests	(1,565)		835		(608)		969		Change in foreign currency translation adjustment attributable to noncontrolling interests	(260)		(22)		(951)		957
Change in unrealized gains and losses of available-for-sale marketable debt securities attributable to noncontrolling interests		0		0		0		1
Comprehensive income attributable to noncontrolling interests		(2,509)		(1,077)		(1,233)		(9,748)

Comprehensive loss (income) attributable to noncontrolling interests										Comprehensive loss (income) attributable to noncontrolling interests	2,959		(2,075)		2,495		1,276
Comprehensive income (loss) attributable to IAC shareholders	Comprehensive income (loss) attributable to IAC shareholders	$	186,869	$	13,967	$	(238,955)	$	13,783	Comprehensive income (loss) attributable to IAC shareholders	$	196,300	$	(91,962)	$	535,752	$	(425,824)

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

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ STATEMENT OF SHAREHOLDERS' EQUITY

Three and ~~Nine Months Ended September~~six months ended June 30, ~~2020~~2021

(Unaudited)

IAC Shareholders' Equity and Invested Capital
Redeemable
Noncontrolling
Interests Common Stock, $0.001 par value Class B Common Stock, $0.001 par value Additional Paid-in-Capital Retained Earnings Invested Capital Accumulated
Other
Comprehensive
(Loss) Income Total IAC
Shareholders' Equity and Invested Capital Noncontrolling
Interests Total Shareholders' Equity
$ Shares $ Shares
(in thousands)
Balance as of June 30, 2020 $ 43,583 $ 79 79,343 $ 6 5,789 $ 4,661,231 $ 0 $ 0 $ (13,781) $ 4,647,535 $ 498,792 $ 5,146,327
Net (loss) earnings (30) — — — — — 184,917 0 — 184,917 974 185,891
Other comprehensive income, net of income taxes 920 — — — — — — — 1,952 1,952 645 2,597
Stock-based compensation expense 0 — — — — 20,865 — 0 — 20,865 13,846 34,711
Adjustment of redeemable noncontrolling interests to fair value (243) — — — — 243 — 0 — 243 — 243
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes — — — — — (46,336) — 0 11 (46,325) 7,855 (38,470)
Proceeds from the sale of Old IAC Class M common stock — — — — — 1,408,298 — — — 1,408,298 — 1,408,298
Issuance of common stock pursuant to stock-based awards, net of withholding taxes — 1 206 — — (22,654) — — — (22,653) — (22,653)
Purchase of noncontrolling interests — — — — — — — — — — (1,115) (1,115)
Other (66) — — — — (602) — — — (602) 690 88
Balance as of September 30, 2020 $ 44,164 $ 80 79,549 $ 6 5,789 $ 6,021,045 $ 184,917 $ 0 $ (11,818) $ 6,194,230 $ 521,687 $ 6,715,917


			IAC Shareholders' Equity
	Redeemable Noncontrolling Interests		Common Stock, $0.0001 par value			Class B common stock, $0.0001 par value			Common Stock, $0.001 par value			Class B common stock, $0.001 par value			Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total IAC Shareholders' Equity		Noncontrolling Interests		Total Shareholders' Equity
			$		Shares	$		Shares	$		Shares	$		Shares
			(In thousands)
Balance as of March 31, 2021	$	702,841	$	0	0	$	0	0	$	83	83,342	$	6	5,789	$	5,660,730	$	1,023,170	$	4,149	$	6,688,138	$	557,882	$	7,246,020
Net earnings (loss)	1,382		—		—	—		—	—		—	—		—	—		194,757		—		194,757		(4,601)		190,156
Other comprehensive income, net of income taxes	9		—		—	—		—	—		—	—		—	—		—		1,505		1,505		251		1,756
Stock-based compensation expense	—		—		—	—		—	—		—	—		—	18,620		—		—		18,620		11,478		30,098
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		8	—		—	—		16	—		—	(7,939)		—		—		(7,939)		—		(7,939)
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—	—		—	(7,971)		—		(6)		(7,977)		1,287		(6,690)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		—	—		—	(721)		—		—		(721)		—		(721)
Distribution to and purchase of noncontrolling interests	(1,147)		—		—	—		—	—		—	—		—	—		—		—		—		—		—
Adjustment of noncontrolling interests to fair value	323,432		—		—	—		—	—		—	—		—	(323,432)		—		—		(323,432)		—		(323,432)
Recapitalization of IAC upon Vimeo spin-off	—		8		8,336	1		579	(83)		(83,358)	(6)		(5,789)	80		—		—		—		—		—
Spin-off of IAC's investment in Vimeo	—		—		—	—		—	—		—	—		—	(38)		(386,438)		38		(386,438)		—		(386,438)
Elimination of Vimeo noncontrolling interest	(1,002,324)		—		—	—		—	—		—	—		—	1,002,324		—		—		1,002,324		—		1,002,324
Other	—		—		—	—		—	—		—	—		—	14		—		—		14		—		14
Balance as of June 30, 2021	$	24,193	$	8	8,344	$	1	579	$	0	0	$	0	0	$	6,341,667	$	831,489	$	5,686	$	7,178,851	$	566,297	$	7,745,148

Balance as of December 31, 2019 $ 43,818 $ 0 0 $ 0 0 $ 0 $ 0 $ 2,547,251 $ (12,226) $ 2,535,025 $ 470,121 $ 3,005,146
Net (loss) earnings (1,235) — — — — — 184,917 (424,316) — (239,399) 1,860 (237,539)
Other comprehensive income, net of income taxes 233 — — — — — — — 444 444 375 819
Stock-based compensation expense 15 — — — — 20,865 — 72,891 — 93,756 54,664 148,420
Purchase of redeemable noncontrolling interests (3,165) — — — — — — — — — — —
Adjustment of redeemable noncontrolling interests to fair value 4,564 — — — — 243 — (4,807) — (4,564) — (4,564)
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes — — — — — (46,336) — 1,248 (36) (45,124) (4,908) (50,032)
Purchase of ANGI Homeservices treasury stock — — — — — — — (54,859) — (54,859) — (54,859)
Net increase in Old IAC's investment in the Company prior to the Separation — — — — — — — 1,685,995 — 1,685,995 — 1,685,995
Cash merger consideration paid by Old IAC in connection with the Separation — — — — — — — 837,913 837,913 — 837,913
Capitalization as a result of the Separation — 79 79,343 6 5,789 4,661,231 — (4,661,316) — — — —
Proceeds from the sale of Old IAC Class M common stock — — — — — 1,408,298 — — — 1,408,298 — 1,408,298
Issuance of common stock pursuant to stock-based awards, net of withholding taxes — 1 206 — — (22,654) — — — (22,653) — (22,653)
Purchase of noncontrolling interests — — — — — — — — — — (1,115) (1,115)
Other (66) — — — — (602) — — — (602) 690 88
Balance as of September 30, 2020 $ 44,164 $ 80 79,549 $ 6 5,789 $ 6,021,045 $ 184,917 $ 0 $ (11,818) $ 6,194,230 $ 521,687 $ 6,715,917

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

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

~~COMBINED STATEMENT OF PARENT'S EQUITY~~

~~Three and Nine Months Ended September 30, 2019~~

~~(Unaudited)~~

Old IAC Equity in
IAC/InterActiveCorp
Accumulated
Other
Comprehensive
Loss Total Old IAC
Equity in IAC/InterActiveCorp
Redeemable
Noncontrolling
Interests Invested Capital Noncontrolling
Interests Total
Shareholders'
Equity

Balance as of June 30, 2019 $ 79,467 $ 2,247,792 $ (12,258) $ 2,235,534 $ 451,491 $ 2,687,025
Net (loss) earnings (1,167) 16,466 — 16,466 3,079 19,545
Other comprehensive loss (365) (2,499) (2,499) (470) (2,969)
Stock-based compensation expense 36 15,667 — 15,667 8,748 24,415
Purchase of redeemable noncontrolling interests (71) — — — —
Adjustment of redeemable noncontrolling interests to fair value (1,531) 1,531 — 1,531 — 1,531
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes — 5,315 (19) 5,296 (8,623) (3,327)
Purchase of ANGI Homeservices treasury stock — (34,157) — (34,157) — (34,157)
Net increase in Old IAC's investment in the Company prior to the Separation — 258,498 — 258,498 — 258,498
Other 1 — — — — —
Balance as of September 30, 2019 $ 76,370 $ 2,511,112 $ (14,776) $ 2,496,336 $ 454,225 $ 2,950,561

Balance as of December 31, 2018 $ 65,687 $ 2,296,583 $ (12,541) $ 2,284,042 $ 400,358 $ 2,684,400
Net earnings 4,735 16,008 — 16,008 5,983 21,991
Other comprehensive loss (514) — (2,225) (2,225) (456) (2,681)
Stock-based compensation expense 113 49,147 — 49,147 45,473 94,620
Purchase of redeemable noncontrolling interests (6,192) — — — — —
Adjustment of redeemable noncontrolling interests to fair value 8,607 (8,607) — (8,607) — (8,607)
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes — (32,422) (10) (32,432) 2,867 (29,565)
Purchase of ANGI Homeservices treasury stock — (34,157) — (34,157) — (34,157)
Noncontrolling interests created in acquisitions 3,967 — — — — —
Net increase in Old IAC's investment in the Company prior to the Separation — 224,560 — 224,560 — 224,560
Other (33) — — — — —
Balance as of September 30, 2019 $ 76,370 $ 2,511,112 $ (14,776) $ 2,496,336 $ 454,225 $ 2,950,561






Balance as of December 31, 2020	$	231,992	$	0	0	$	0	0	$	83	82,976	$	6	5,789	$	5,909,614	$	694,042	$	(6,170)	$	6,597,575	$	553,353	$	7,150,928
Net earnings (loss)	709		—		—	—		—	—		—	—		—	—		523,885		—		523,885		(4,155)		519,730
Other comprehensive income, net of income taxes	589		—		—	—		—	—		—	—		—	—		—		11,829		11,829		362		12,191
Stock-based compensation expense	—		—		—	—		—	—		—	—		—	39,288		—		—		39,288		14,020		53,308
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		—		8	—		—	—		382	—		—	(29,074)		—		—		(29,074)		—		(29,074)
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—	—		—	(57,447)		—		(11)		(57,458)		2,717		(54,741)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		—	—		—	(5,637)		—		—		(5,637)		—		(5,637)
Issuance of Vimeo common stock and creation of noncontrolling interests, net of fees	40,785		—		—	—		—	—		—	—		—	258,965		—		—		258,965		—		258,965
Distribution to and purchase of noncontrolling interests	(24,085)		—		—	—		—	—		—	—		—	—		—		—		—		—		—
Adjustment of noncontrolling interests to fair value	776,531		—		—	—		—	—		—	—		—	(776,531)		—		—		(776,531)		—		(776,531)
Recapitalization of IAC upon Vimeo spin-off	—		8		8,336	1		579	(83)		(83,358)	(6)		(5,789)	80		—		—		—		—		—
Spin-off of IAC's investment in Vimeo	—		—		—	—		—	—		—	—		—	(38)		(386,438)		38		(386,438)		—		(386,438)
Elimination of Vimeo noncontrolling interest	(1,002,324)		—		—	—		—	—		—	—		—	1,002,324		—		—		1,002,324		—		1,002,324
Other	(4)		—		—	—		—	—		—	—		—	123		—		—		123		—		123
Balance as of June 30, 2021	$	24,193	$	8	8,344	$	1	579	$	0	0	$	0	0	$	6,341,667	$	831,489	$	5,686	$	7,178,851	$	566,297	$	7,745,148

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

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

COMBINED STATEMENT OF PARENT'S EQUITY AND CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and six months ended June 30, 2020

(Unaudited)


			IAC Shareholders' Equity
	Redeemable Noncontrolling Interests		Common Stock $0.001 par value			Class B common stock, $0.001 par value			Additional Paid-in-Capital		Invested Capital		Accumulated Other Comprehensive Loss		Total IAC Invested Equity and Shareholders' Equity		Noncontrolling Interests		Total Shareholders' Equity
			$		Shares	$		Shares
			(In thousands)
Balance as of March 31, 2020	$	42,152	$	0	0	$	0	0	$	0	$	3,935,166	$	(17,926)	$	3,917,240	$	479,612	$	4,396,852
Net (loss) earnings	(173)		—		—	—		—	—		(96,117)		—		(96,117)		2,226		(93,891)
Other comprehensive (loss) income, net of income taxes	(786)		—		—	—		—	—		—		4,155		4,155		808		4,963
Stock-based compensation expense	—		—		—	—		—	—		61,502		—		61,502		18,607		80,109

Adjustment of redeemable noncontrolling interests to fair value	2,389		—		—	—		—	—		(2,389)		—		(2,389)		—		(2,389)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes			—		—	—		—	—		(5,748)		(10)		(5,758)		(2,461)		(8,219)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		(15,888)		—		(15,888)		—		(15,888)
Net decrease in Old IAC's investment in IAC Holdings, Inc.	—		—		—	—		—	—		(53,123)		—		(53,123)		—		(53,123)
Cash merger consideration paid by Old IAC in connection with the Separation	—		—		—	—		—	—		837,913		—		837,913		—		837,913
Capitalization as a result of merger	—		79		79,343	6		5,789	4,661,231		(4,661,316)		—		—		—		0
Other	1		—		—	—		—	—		—		—		—		—		—
Balance as of June 30, 2020	$	43,583	$	79	79,343	$	6	5,789	$	4,661,231	$	0	$	(13,781)	$	4,647,535	$	498,792	$	5,146,327






Balance as of December 31, 2019	$	43,818	$	0	0	$	0	0	$	0	$	2,547,251	$	(12,226)	$	2,535,025	$	470,121	$	3,005,146
Net (loss) earnings	(1,205)		—		—	—		—	—		(424,316)		—		(424,316)		886		(423,430)
Other comprehensive loss, net of income taxes	(687)		—		—	—		—	—		—		(1,508)		(1,508)		(270)		(1,778)
Stock-based compensation expense	15		—		—	—		—	—		72,891		—		72,891		40,818		113,709
Purchase of redeemable noncontrolling interests	(3,165)		—		—	—		—	—		—		—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	4,807		—		—	—		—	—		(4,807)		—		(4,807)		—		(4,807)
Issuance of Angi Inc. common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		1,248		(47)		1,201		(12,763)		(11,562)
Purchase of Angi Inc. treasury stock	—		—		—	—		—	—		(54,859)		—		(54,859)		—		(54,859)
Net increase in Old IAC's investment in IAC Holdings, Inc.	—		—		—	—		—	—		1,685,995		—		1,685,995		—		1,685,995
Cash merger consideration paid by Old IAC in connection with the Separation	—		—		—	—		—	—		837,913		—		837,913		—		837,913
Capitalization as a result of merger	—		79		79,343	6		5,789	4,661,231		(4,661,316)		—		—		—		0
Balance as of June 30, 2020	$	43,583	$	79	79,343	$	6	5,789	$	4,661,231	$	0	$	(13,781)	$	4,647,535	$	498,792	$	5,146,327

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

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2020		2019			2021		2020
		(In thousands)					(In thousands)
Cash flows from operating activities:
Net (loss) earnings		$	(238,774)	$	26,726
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Cash flows from operating activities attributable to continuing operations:						Cash flows from operating activities attributable to continuing operations:
Net earnings (loss)						Net earnings (loss)	$	520,439	$	(424,635)
Less: Loss from discontinued operations, net of tax						Less: Loss from discontinued operations, net of tax	(1,831)		(20,110)
Net earnings (loss) from continuing operations						Net earnings (loss) from continuing operations	522,270		(404,525)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities attributable to continuing operations:						Adjustments to reconcile net earnings (loss) to net cash provided by operating activities attributable to continuing operations:
Stock-based compensation expense	Stock-based compensation expense	148,597		94,867		Stock-based compensation expense	42,366		113,240
Amortization of intangibles	Amortization of intangibles	132,213		64,112		Amortization of intangibles	30,475		66,024
Depreciation	Depreciation	50,849		39,042		Depreciation	36,298		31,936
Provision for credit losses	Provision for credit losses	62,594		50,461		Provision for credit losses	42,710		40,278
Goodwill impairment	Goodwill impairment	265,146		0		Goodwill impairment	0		211,973
Deferred income taxes	Deferred income taxes	(82,948)		(56,726)		Deferred income taxes	143,646		(43,557)
Gains on equity securities, net		(215,882)		(26,120)
Unrealized (gain) loss on investment in MGM Resorts International						Unrealized (gain) loss on investment in MGM Resorts International	(657,638)		24,718
(Gains) losses on investments in equity securities, net						(Gains) losses on investments in equity securities, net	(12,167)		51,473
Unrealized (increase) decrease in the estimated fair value of a warrant						Unrealized (increase) decrease in the estimated fair value of a warrant	(55,256)		1,416
Other adjustments, net	Other adjustments, net	18,953		14,166		Other adjustments, net	31,585		7,890
Changes in assets and liabilities, net of effects of acquisitions and dispositions:	Changes in assets and liabilities, net of effects of acquisitions and dispositions:					Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	Accounts receivable	(91,515)		(64,935)		Accounts receivable	(40,671)		(41,024)
Other assets	Other assets	(5,672)		11,365		Other assets	38,844		(10,746)
Accounts payable and other liabilities	Accounts payable and other liabilities	50,019		4,873		Accounts payable and other liabilities	47,797		7,054
Income taxes payable and receivable	Income taxes payable and receivable	(3,490)		3,056		Income taxes payable and receivable	(8,550)		(5,302)
Deferred revenue	Deferred revenue	77,957		30,465		Deferred revenue	15,276		15,450
Net cash provided by operating activities		168,047		191,352
Cash flows from investing activities:
Net cash provided by operating activities attributable to continuing operations						Net cash provided by operating activities attributable to continuing operations	176,985		66,298
Cash flows from investing activities attributable to continuing operations:						Cash flows from investing activities attributable to continuing operations:
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(529,174)		(196,578)		Acquisitions, net of cash acquired	0		(529,272)
Capital expenditures	Capital expenditures	(41,651)		(73,575)		Capital expenditures	(39,425)		(26,994)

Proceeds from maturities of marketable debt securities	Proceeds from maturities of marketable debt securities	125,000		25,000		Proceeds from maturities of marketable debt securities	225,000		50,000
Purchases of marketable debt securities	Purchases of marketable debt securities	(424,875)		0		Purchases of marketable debt securities	0		(74,972)
Cash distribution related to the Spin-off of IAC's investment in Vimeo						Cash distribution related to the Spin-off of IAC's investment in Vimeo	(333,184)		0
Net proceeds from the sale of businesses and investments	Net proceeds from the sale of businesses and investments	17,860		24,461		Net proceeds from the sale of businesses and investments	2,151		14,784
Purchases of investment in MGM Resorts International						Purchases of investment in MGM Resorts International	0		(414,514)
Purchases of investments	Purchases of investments	(1,019,608)		(250,096)		Purchases of investments	(7,179)		0
Decrease (increase) in notes receivable—related party		54,828		(55,827)
Decrease in notes receivable—related party						Decrease in notes receivable—related party	0		54,828
Other, net	Other, net	(10,678)		(2,608)		Other, net	(1,283)		(7,137)
Net cash used in investing activities		(1,828,298)		(529,223)
Cash flows from financing activities:

Proceeds from the issuance of ANGI Group Senior Notes		500,000		0
Net cash used in investing activities attributable to continuing operations						Net cash used in investing activities attributable to continuing operations	(153,920)		(933,277)
Cash flows from financing activities attributable to continuing operations:						Cash flows from financing activities attributable to continuing operations:
Principal payments on ANGI Group Term Loan	Principal payments on ANGI Group Term Loan	(10,313)		(10,313)		Principal payments on ANGI Group Term Loan	(220,000)		(6,875)

Principal payments on related-party debt		0		(2,500)
Debt issuance costs		(5,635)		0
Purchase of ANGI Homeservices treasury stock		(54,400)		(33,979)
Purchase of Angi Inc. treasury stock						Purchase of Angi Inc. treasury stock	(5,637)		(54,400)
Proceeds from the exercise of IAC stock options						Proceeds from the exercise of IAC stock options	1,496		0

Proceeds from the exercise of ANGI Homeservices stock options		0		573
Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	(23,970)		0		Withholding taxes paid on behalf of IAC employees on net settled stock-based awards	(26,276)		0
Withholding taxes paid on behalf of ANGI Homeservices employees on net settled stock-based awards		(49,993)		(30,039)
Withholding taxes paid on behalf of Angi Inc. employees on net settled stock-based awards						Withholding taxes paid on behalf of Angi Inc. employees on net settled stock-based awards	(54,596)		(11,494)
Purchase of noncontrolling interests	Purchase of noncontrolling interests	(4,280)		(6,192)		Purchase of noncontrolling interests	(24,085)		(3,165)

Cash merger consideration paid by Old IAC in connection with the Separation		837,913		0
Transfers from Old IAC for periods prior to the Separation		1,706,479		225,461
Proceeds from the sale of Old IAC Class M common stock		1,408,298		0
Cash merger consideration paid by Old IAC in connection with the MTCH Separation						Cash merger consideration paid by Old IAC in connection with the MTCH Separation	0		837,913
Transfers from Old IAC for periods prior to the MTCH Separation						Transfers from Old IAC for periods prior to the MTCH Separation	0		1,706,479
Other, net	Other, net	784		(3,774)		Other, net	(317)		(466)
Net cash provided by financing activities		4,304,883		139,237
Total cash provided (used)		2,644,632		(198,634)
Net cash (used in) provided by financing activities attributable to continuing operations						Net cash (used in) provided by financing activities attributable to continuing operations	(329,415)		2,467,992
Total cash (used in) provided by continuing operations						Total cash (used in) provided by continuing operations	(306,350)		1,601,013
Net cash provided by operating activities attributable to discontinued operations						Net cash provided by operating activities attributable to discontinued operations	18,053		8,584
Net cash provided by (used in) investing activities attributable to discontinued operations						Net cash provided by (used in) investing activities attributable to discontinued operations	7,602		(335)
Net cash provided by financing activities attributable to discontinued operations						Net cash provided by financing activities attributable to discontinued operations	293,577		0
Total cash provided by discontinued operations						Total cash provided by discontinued operations	319,232		8,249
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(511)		(388)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	648		(1,245)
Net increase (decrease) in cash and cash equivalents and restricted cash		2,644,121		(199,022)
Net increase in cash and cash equivalents and restricted cash						Net increase in cash and cash equivalents and restricted cash	13,530		1,608,017
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	840,732		886,836		Cash and cash equivalents and restricted cash at beginning of period	3,477,110		840,732
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	3,484,853	$	687,814	Cash and cash equivalents and restricted cash at end of period	$	3,490,640	$	2,448,749

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

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED &AND COMBINED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Separation~~Vimeo Spin-off:

On May 25, 2021, IAC completed the spin-off of its full stake in Vimeo to IAC shareholders (which we refer to as the “Spin-off”). Following the Spin-off, Vimeo, Inc. (formerly Vimeo Holdings, Inc. ("Vimeo")) became an independent, separately traded public company. Therefore, Vimeo is presented as a discontinued operation within IAC's consolidated and combined financial statements for all periods prior to May 25, 2021.

MTCH Separation:

On December 19, 2019, IAC/InterActiveCorp ("Old IAC") entered into a Transaction Agreement (as amended, ~~as of April 28, 2020 and June 22, 2020,~~ the "Transaction Agreement") with Match Group, Inc. ("Old MTCH"), IAC Holdings, Inc. ("New IAC" or the "Company"), a direct ~~wholly owned~~wholly-owned subsidiary of Old IAC, and Valentine Merger Sub LLC, an indirect ~~wholly owned~~wholly-owned subsidiary of Old IAC. On June 30, 2020, the businesses of Old MTCH were separated from the remaining businesses of Old IAC through a series of transactions that resulted in the pre-transaction stockholders of Old IAC owning shares in two, separate public companies—(1) Old IAC, which was renamed Match Group, Inc. ("New Match") and which owns the businesses of Old MTCH and certain Old IAC financing subsidiaries, and (2) New IAC, which was renamed IAC/InterActiveCorp, and which owns Old IAC's other businesses—and the pre-transaction stockholders of Old MTCH (other than Old IAC) owning shares in New Match. This transaction is referred to as the ~~"Separation".~~"MTCH Separation."

Nature of Operations

The Company has majority ownership of Angi Inc., which also includes HomeAdvisor Powered by Angi and Handy, and operates ~~Vimeo,~~ Dotdash and Care.com, among many ~~other online businesses, and has majority ownership of ANGI Homeservices, which includes HomeAdvisor, Angie’s List and Handy.~~others.

Basis of Presentation

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

The Company prepares its consolidated and combined financial statements (collectively referred to herein as "financial statements") in accordance with U.S. generally accepted accounting principles ~~(‘‘GAAP’’~~("GAAP").

The Company's financial statements were prepared on a consolidated basis beginning June 30, 2020 and on a combined basis for periods prior thereto. The difference in presentation is due to the fact that the final steps of the legal reorganization, including the contribution to New IAC of all the entities that comprise the Company following the MTCH Separation, were not completed until June 30, 2020. The preparation of the financial statements on a combined basis for periods prior to June 30, 2020 allows for the financial statements to be presented on a consistent basis for all periods presented.

The historical combined financial statements of the Company have been derived from the ~~consolidated financial statements and~~historical accounting records of Old IAC. The combined financial statements reflect the historical financial position, results of operations and cash flows of the entities comprising the Company since their respective dates of acquisition by Old IAC and the allocation to the Company of certain Old IAC corporate expenses based on the historical ~~financial statements and~~ accounting records of Old IAC through June 30, 2020. 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. For the purpose of the combined financial statements, income taxes have been computed as if the entities comprising the Company filed tax returns on a standalone, separate basis for periods prior to the MTCH Separation.

All intercompany transactions and balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between (i) the Company and (ii) Old IAC and its subsidiaries for periods prior to the MTCH Separation are considered to be effectively settled for cash at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the statement of cash flows as a financing activity and in the ~~balance sheet~~statement of parent's equity as ~~‘‘Invested capital.’’~~"Invested capital".

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In management’s opinion, the assumptions underlying the historical financial statements of the Company, including the basis on which the expenses have been allocated from Old IAC, are reasonable. However, the allocations may not reflect the expenses that ~~we may~~the Company would have incurred as an independent, stand-alone company for the periods presented.

The accompanying unaudited financial statements have been prepared in accordance with GAAP for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not

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~~(Unaudited)~~

include all of the information and notes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements ~~of the Company~~ and notes thereto for the year ended December 31, ~~2019 filed on the Current Report~~2020 included on Form 8-K filed with the SEC on ~~October 5, 2020.~~June 1, 2021.

COVID-19 Update ~~and Impairments~~

The impact on the Company from the COVID-19 ~~outbreak, which has been declared a "pandemic" by~~pandemic and the ~~World Health Organization, has been varied. The extent to which developments related to the COVID-19 outbreak and~~ measures designed to ~~curb~~contain its spread ~~continue to~~has been varied and volatile.

As previously disclosed, the initial impact ~~the Company’s business, financial condition and results~~ of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments. For example, these developments and measures have resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to the COVID-19 outbreak. The longer the global outbreak and measures designed to curb the spread of the virus continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for the Company’s various products and services), the greater the adverse impact is likely to be on the ~~Company’s business, financial condition and results of operations and the more limited will be the Company’s ability to try and make up for delayed or lost revenues.~~

~~In March 2020, the Company's ANGI Homeservices business experienced~~businesses in IAC's Angi Inc. segment resulted in a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). ~~In the second quarter of 2020, ANGI Homeservices~~While these businesses have experienced a rebound in service requests ~~exceeding pre-COVID-19 growth levels,~~ ~~driven by increased demand from homeowners who spent more time at home due to measures taken to reduce the spread of COVID-19. ANGI Homeservices continued to experience strong demand for home services~~ in the ~~third quarter~~second half of ~~2020. However,~~2020 and the first half of 2021, many service professionals' businesses ~~have~~had been adversely impacted by labor and material constraints and many service professionals ~~have~~had limited capacity to take on new business, which ~~has~~ negatively impacted ~~ANGI Homeservices'~~the ability of these businesses to monetize this increased level of service ~~requests. Vimeo has seen strong revenue growth as~~requests through the ~~demand for communication via video has increased due~~first quarter of 2021. Although Angi Inc.'s ability to monetize service requests rebounded modestly in the ~~pandemic.~~second quarter of 2021, it is still not back to levels it experienced pre-COVID-19. No assurances can be provided that Angi Inc. will continue to be able to improve monetization, or that service professionals' businesses will not be adversely impacted in the future. The Search segment has experienced ~~a decline~~an increase in revenue in the first and second quarter of 2021 compared to the prior year due, in part, to ~~the decrease~~lower advertising rates in ~~advertising rates~~2020 due to the impact of COVID-19. The volatile nature of our operating results in 2020 due to COVID-19 ~~which decrease in rates was more significant earlier in~~will impact the ~~year.~~comparability of our year-over-year results of operations.

In the quarter ended March 31, 2020, the Company determined that the effects of COVID-19 were an indicator of possible impairment for certain of its assets and identified the following impairments:

•a $212.0 million impairment related to the goodwill of the Desktop reporting ~~unit;~~unit (included in the Search segment);

•a $21.4 million impairment related to certain indefinite-lived intangible assets of the Desktop reporting unit;

•a $51.5 million impairment of certain equity securities without readily determinable fair values; and

•a $7.5 million impairment of a note receivable and a warrant related to certain investees.

~~There were no impairments identified during the second quarter of 2020.~~

~~In the quarter ended September 30, 2020, the Company recorded impairments of~~ ~~$53.2 million and $10.8 million relate~~dThe extent to which developments related to the ~~goodwill~~COVID-19 pandemic and ~~intangible assets, respectively, of the Desktop reporting unit.Refer to "Certain Risks and Concentrations—Services Agreement with Google" for additional information.~~

In addition, the United States, which represents 81% and 80% of the Company's revenue for the three and nine months ended September 30, 2020, respectively, has experienced a significant resurgence of the COVID-19 virus with record levels of infection being reported in the weeks following September 30, 2020. Europe, which is the second largest market for the

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~~(Unaudited)~~

~~Company's products and services, has also seen a dramatic resurgence in COVID-19. This resurgence and the~~ measures designed to curb its spread ~~could materially and adversely affect our~~continue to impact the Company’s business, financial condition and results of ~~operations.~~operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.

Accounting Estimates

Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its 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.

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On an ongoing basis, the Company evaluates its estimates, judgments and ~~judgments,~~assumptions, including those related to: the fair values of cash equivalents and marketable debt and equity securities; the carrying value of accounts receivable, including the determination of the allowance for credit ~~losses;~~losses and the determination of revenue reserves; the determination of the customer relationship period for certain costs to obtain a contract with a customer; the carrying value of right-of-use assets ("ROU assets"); the useful lives and recoverability of ~~definite-lived intangible assets and~~ building, capitalized software, leasehold improvements and ~~equipment;~~equipment and definite-lived intangible assets; 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; unrecognized tax 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, judgments and ~~judgments~~assumptions on historical experience, its forecasts and budgets and other factors that the Company considers relevant.

Accounting for Investments in Equity Securities

Investments in equity securities, other than those of the Company's consolidated ~~and combined~~ subsidiaries and those accounted for under the equity method, if applicable, are accounted for at fair value or under the measurement alternative, ~~of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~, 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 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; fair 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 the Company considers 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 its investments in equity securities, which require judgment and the use of estimates. When the Company's 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. See "Note ~~5 -~~ 5—Financial Instruments and Fair Value Measurements" for additional information on the impairments of certain equity securities without readily determinable fair values recorded during the ~~nine~~three months ended ~~September 30,~~March 31, 2020.

~~In the event the~~The Company ~~has~~accounts for 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~~using the equity method. At June 30, 2021 and December 31, 2020, the Company has 1 investment accounted for using the equity method ~~and are~~which is included in "Long-term investments" in the accompanying balance sheet. ~~At September 30, 2020 and December 31, 2019, the Company did not have any investments accounted for using the equity method.~~

General Revenue Recognition

Revenue is recognized when control of the promised services or goods is transferred to the Company's 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 ~~10—~~9—Segment Information."

~~Prior to January 1, 2020, ANGI's Handy business recorded~~Deferred Revenue

Deferred revenue consists of payments that are received or are contractually due in advance of the Company's performance obligation. The Company’s deferred revenue is reported on a ~~net basis. Effective January 1,~~contract-by-contract basis at the end of each reporting period. The Company classifies deferred revenue as current when the remaining term of the applicable subscription period or expected completion of its performance obligation is one year or less. The current and non-current deferred revenue balances are $137.7 million and $0.7 million, respectively, at December 31, 2020, and $94.7 million and $0.6 million, respectively, at December 31, 2019. During the six months ended June 30, 2021, the Company recognized $105.3 million of revenue that was included in the deferred revenue balance as of December 31, 2020. During the six months ended June 30, 2020, the Company ~~modified~~recognized $72.1 million of revenue that was included in the ~~Handy terms~~deferred revenue balance as of December 31, 2019. The current and ~~conditions so that Handy, rather than~~non-current deferred revenue balances are $148.0 million and $0.6 million, at June 30, 2021, respectively. Non-current deferred revenue is included in "Other long-term liabilities" in the ~~service professional, has the contractual~~accompanying balance sheet.

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relationship with the consumer to deliver the service and Handy, rather than the consumer, has the contractual relationship with the service professional. Consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. This change in contractual terms requires gross revenue accounting treatment effective January 1, 2020. Also, in the case of certain tasks, HomeAdvisor provides a pre-priced product offering, pursuant to which consumers can request services through a HomeAdvisor platform and pay HomeAdvisor for the services directly. HomeAdvisor then fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. Revenue from HomeAdvisor’s pre-priced product offering is also recorded on a gross basis effective January 1, 2020. In addition to changing the presentation of revenue to gross from net, the timing of revenue recognition changed for HomeAdvisor pre-priced jobs and will be later than consumer connection revenue because the Company will not be able to record revenue, generally, until the service professional completes the job on the Company's behalf. The change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020, resulted in an increase in revenue of $20.8 million and $51.3 million during the three and nine months ended September 30, 2020, respectively.

~~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 the Company's performance obligation is one year or less. The current and non-current deferred revenue balances at December 31, 2019 are $178.6 million and $1.3 million, respectively. During the nine months ended September 30, 2020, the Company recognized $163.3 million of revenue that was included in the deferred revenue balance as of December 31, 2019. During the nine months ended September 30, 2019, the Company recognized $139.0 million of revenue that was included in the deferred revenue balance as of December 31, 2018. The current and non-current deferred revenue balances at September 30, 2020 are $268.2 million and $1.5 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying balance sheet.

Practical Expedients and Exemptions

As permitted under the practical expedient available under ASU No. 2014-09, Revenue from 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 ~~the Company~~it has the right to invoice for services performed.

Assets Recognized from the Costs to Obtain a Contract with a Customer

The Company uses a portfolio approach to assess the accounting treatment of the incremental costs to obtain a contract with a customer. The Company recognizes an asset for these costs if we expect to recover those costs. To the extent that these costs are capitalized, the resultant asset is amortized on a systematic basis consistent with the pattern of the transfer of the services to which the asset relates. The current and non-current capitalized costs to obtain a contract with a customer are included in "Other current assets" and "Other non-current assets" in the accompanying balance sheet and are $55.2 million and $5.4 million, and $58.8 million and $4.4 million, at June 30, 2021 and December 31, 2020, respectively.

Commissions Paid to Employees Pursuant to Sales Incentive Programs

The Company has determined that commissions paid to employees pursuant to certain sales incentive programs meet the requirements to be capitalized as the incremental costs to obtain a contract with a customer. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods. Capitalized commissions paid to employees pursuant to these sales incentive programs are amortized over the estimated customer relationship period. The Company calculates the anticipated customer relationship period as the average customer life, which is based on historical data.

For sales incentive programs where the anticipated 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 initial customer relationship period is greater than one year is $61.4 million and $42.4 million at September 30, 2020 and December 31, 2019, respectively. The current and non-current capitalized sales commissions balances are included in "Other current assets" and "Other non-current assets" in the accompanying balance sheet and are $52.5 million and $8.9 million, and $36.1 million and $6.2 million, at September 30, 2020 and December 31, 2019, respectively.

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~~(Unaudited)~~

~~Credit Losses and Revenue Reserve~~App Store Fees

The ~~following table presents~~Company pays fees to the ~~changes in~~Apple App Store and the ~~allowance for credit losses~~Google Play Store for the ~~nine months ended September 30, 2020:~~


	~~September 30, 2020~~
	~~(In thousands)~~
~~Balance at January 1~~	$	~~20,257~~
~~Current period provision for credit losses~~	~~62,594~~
~~Write-offs charged against the allowance~~	~~(54,381)~~
~~Recoveries collected~~	~~1,897~~
~~Balance at September 30~~	$	~~30,367~~

distribution of our paid mobile apps. The ~~revenue reserve was $4.6 million~~Company capitalizes and ~~$3.9 million at September 30, 2020 and December 31, 2019, respectively. The total allowance for credit losses and revenue reserve was $35.0 million and $24.1 million as~~amortizes mobile app store fees related to subscriptions over the term of ~~September 30, 2020 and December 31, 2019, respectively.~~the applicable subscription.

Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement")

A meaningful portion of the Company's revenue (and a substantial portion of IAC's net cash from operating activities attributable to continuing operations that it can freely access) is attributable to 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~~six months ended ~~September~~June 30, ~~2020,~~2021, total revenue earned from Google was ~~$132.4~~$169.6 million and ~~$385.9~~$341.4 million, respectively, representing ~~17%~~20% and ~~18%~~21%, respectively, of the Company's revenue. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, total revenue earned from Google was $~~182.4~~114.4 million and $253.2 million, respectively, representing 17% and ~~$574.7 million, representing 26%~~ ~~and 28%~~20%, respectively,, of the Company's ~~combined~~ revenue. ~~Accounts~~The related accounts receivable ~~related to~~totaled $58.7 million and $61.9 million at June 30, 2021 and December 31, 2020, respectively.

The total revenue earned from ~~Google totaled $46.3~~the Services Agreement for the three and six months ended June 30, 2021 was $150.8 million and ~~$53.0~~$303.3 million, ~~at September~~respectively, representing 18% and 19%, respectively, of the Company's total revenue. The total revenue earned from the Services Agreement for the three and six months ended June 30, 2020 was $104.2 million and ~~December 31, 2019, respectively.~~$230.7 million, respectively, representing 16% and 18%, respectively, of the Company's total revenue.

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~~Revenue~~The revenue attributable to the Services Agreement is earned by Ask Media Group and the Desktop business, ~~and Ask Media Group,~~ both within the Search segment. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, revenue earned from the Services Agreement ~~of $35.6~~was $123.2 million and ~~$118.9 million, respectively, was earned within the Desktop business and $83.7 million and $231.2~~$244.6 million, respectively, within Ask Media ~~Group.~~Group and $27.6 million and $58.7 million, respectively, within the Desktop business. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, revenue earned from the Services Agreement of ~~$68.0~~was $67.0 million and ~~$234.1~~$147.5 million,~~, respectively, was earned within the Desktop business and~~ ~~$100.3 million~~ ~~and~~ ~~$299.1 million~~, respectively, within Ask Media ~~Group.~~Group and $37.2 million and $83.3 million, respectively, within the Desktop business.

The Services Agreement expires on March 31, 2023; provided that during each September, either party may, after discussion with the other party, terminate the Services Agreement, effective on September 30 of the year following the year such notice is given. Neither party gave notice to the other party to terminate the Services Agreement pursuant to this provision in September 2020. TheThe 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. 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 have in the past and could in ~~turn~~the future require modifications to, or prohibit and/or render obsolete certain of ~~the Company's~~our products, services and/or business practices, which have been and could be costly to address ~~or otherwise~~and have had and in the future could have an adverse effect on ~~the Company's~~our financial condition and results of ~~operations, particularly the businesses in our Search segment. From time to time,~~operations. As described below, Google has made changes to the policies under the Services Agreement and has also made industry-wide changes that have negatively impacted the Desktop business-to-consumer ("B2C") business and ~~Google~~it may do so in the future.

~~Google implemented~~Certain industry-wide policy changes ~~that~~ became effective on ~~July 1, 2019 and~~ August 27, 2020. These industry-wide changes, combined with ~~other changes to~~increased enforcement of policies under the Services Agreement, ~~during the second half of 2019,~~ have had a negative impact on the ~~historical and expected future~~ results of operations of the B2C business. In addition, during the fourth quarter of 2020, Google suspended services with respect to some B2C's products and may do so with respect to other products in the future. As a result, the B2C business elected to modify certain marketing strategies in early January 2021. Subsequently, Google informed us of another policy change in the first quarter of 2021 that became effective on May 10, 2021. We anticipated that this Google policy change would eliminate our ability to successfully introduce and market new B2C products that would be profitable. Therefore, we undertook cost reduction measures and we effectively eliminated all marketing of B2C products beginning in March 2021. This elimination of marketing has and will positively impact profitability in 2021 because revenue from B2C products is earned over multiple periods beyond just the period in which the initial marketing is incurred and following the cessation of the introduction of new products in March 2021, the B2C revenue stream relates solely to the then existing installed base of products. For the three months ended June 30, 2021, B2C revenue declined by $11.3 million to $20.9 million while Desktop ~~business.~~

operating income increased by $10.7 million to $14.4 million versus the comparable prior year period. In the second half of 2021, we expect this trend to continue and B2C revenue to decline substantially while Desktop operating income, excluding the third quarter ~~ended September 30,~~ 2020 goodwill and intangible asset impairment charges, will increase modestly versus the ~~Company reassessed~~comparable prior year period. Beyond 2021, we expect the ~~fair values~~revenue and profits of the B2C business and Desktop, ~~reporting unit~~respectively, to decline significantly.

Recent Accounting Pronouncements

There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect on the results of operations, financial condition or cash flows of the Company.

Discontinued Operations

Discontinued operations in the accompanying financial statements include Vimeo for all periods prior to May 25, 2021. The notes accompanying these consolidated and ~~the~~combined financial statements reflect our continuing operations and, unless otherwise noted, exclude information related ~~indefinite-lived intangible assets and recorded impairments equal~~to Vimeo. See “Note 3—Discontinued Operations” for additional details.

Reclassifications

Certain prior year amounts have been reclassified to conform to the ~~remaining carrying value of the goodwill of~~ ~~$53.2 million and $10.8 million related to the intangible assets.~~The reduction in the Company’s fair value estimates is due to lower consumer queries, increasing challenges in monetization and the reduced ability to market profitably due to policy changes implemented by Google and other browsers. The effects of COVID-19 on monetization were an additional factor.current year presentation.

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~~Adoption of New Accounting Pronouncements~~

~~Adoption of ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~

~~The Company adopted ASU No. 2016-13effective January 1, 2020.~~ ASU No. 2016-13 replaces the “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. The Company adopted ASU No. 2016-13 using the modified retrospective approach and there was no cumulative effect arising from the adoption. The adoption of ASU No. 2016-13 did not have a material impact on the Company's financial statements.

~~Adoption of ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~

~~The Company adopted~~ ~~ASU No. 2019-12~~ ~~effective January 1, 2020,~~ ~~which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740,~~ ~~Income Taxes~~,and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within ASU No. 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted ASU No. 2019-12 on January 1, 2020 using the modified retrospective basis for those amendments that are not applied on a prospective basis. The adoption of ASU No. 2019-12 did not have a material impact on the Company's financial statements.

~~Reclassifications~~

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

NOTE 2—INCOME TAXES

The Company was included within Old IAC’s tax group for purposes of federal and consolidated state income tax return filings through June 30, 2020, the date of the MTCH Separation. For periods prior thereto, the income tax benefit/provision were computed for the Company on an as if standalone, separate return basis and payments to and refunds from Old IAC for the Company’s share of Old IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying statement of cash flows.

At the end of each interim period, the Company 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 unrecognized tax 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 the Company's 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 or benefit in the quarter in which the change occurs.

We have calculated the provision for income taxes during the three and nine months ended September 30, 2020 using the estimated annual effective tax rate method described above. We have used the discrete effective tax rate method to calculate domestic taxes for the three and nine months ended September 30, 2019 because small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate.

For the three and ~~nine~~six months ended ~~September~~June 30, 2021, the Company recorded an income tax provision of $87.8 million and $141.1 million, which represents an effective income tax rate of 30% and 21%, respectively. For the three months ended June 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to an increase in the valuation allowance on beginning-of-the-year deferred tax assets related to the Spin-off and state taxes, partially offset by excess tax benefits generated by the exercise and vesting of stock-based awards. For the six months ended June 30, 2021, the effective income tax rate was the same as the statutory rate of 21% due to excess tax benefits generated by the exercise and vesting of stock-based awards, offset by an increase in the valuation allowance on beginning-of-the-year deferred tax assets related to the Spin-off and state taxes. For the three and six months ended June 30, 2020, the Company recorded an income tax benefit of ~~$29.5~~$34.4 million and ~~$107.0~~$71.4 million, ~~respectively,~~which represents an effective income tax rate of 29% and 15%, respectively. For the three months ended June 30, 2020, the effective income tax rate is higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and the recognition of amortizable tax basis for certain assets related to an intercompany transaction, partially offset by an unbenefited unrealized loss related to our investment in MGM Resorts International ("MGM"). For the six months ended June 30, 2020, the effective income tax rate is lower than the statutory rate of 21% due primarily to the non-deductible portion of the Desktop goodwill ~~impairment. For~~impairment charge and unbenefited losses related to other investment impairments, partially offset by a revaluation of net operating loss deferred taxes due to the ~~three~~Coronavirus Aid, Relief, and ~~nine months~~

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~~(Unaudited)~~

~~ended September 30, 2019, the Company recorded an income tax benefit of $19.1 million~~Economic Security Act and ~~$53.3 million respectively, due primarily to~~ excess tax benefits generated by the exercise and vesting of stock-based awards.

As a result of the MTCH Separation, the Company's net deferred tax liability was adjusted via invested capital for tax attributes allocated to it from Old IAC's consolidated federal and state tax filings. The allocation of tax attributes that was recorded as of June 30, 2020 was preliminary. Any subsequent adjustment to allocated tax attributes will be recorded as an adjustment to deferred taxes and additional paid-in capital. This adjustment is expected to be made in the fourth quarter of 2021 following the filing of income tax returns for the year ~~ending~~ended December 31, 2020.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest and penalties are not material.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company and consolidated tax returns with Old ~~IAC.~~IAC and will be under audit for its tax returns filed on a standalone basis following the MTCH Separation. 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") has substantially completed its audit of Old IAC’s federal income tax returns for the years ended December 31, ~~2010~~2013 through ~~2016,~~2017, which includes the operations of the Company. The ~~IRS began its audit of the year ended December 31, 2017 in the second quarter of 2020. The~~ statute of limitations for the years ~~2010 through 2012 and for the years~~ 2013 through 2017 ~~have~~has been extended to ~~May 31, 2021 and December 31, 2021, respectively.~~June 30, 2022. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from the examination of prior year tax returns. The Company considers many factors when evaluating and estimating its 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 will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, unrecognized tax benefits, including interest and penalties, are ~~$19.5~~$14.5 million and ~~$20.3~~$20.1 million, respectively. Unrecognized tax benefits, including interest and penalties, at ~~September~~June 30, ~~2020~~2021 decreased by ~~$0.8~~$5.6 million due primarily to ~~research credits.~~statute expirations. If unrecognized tax benefits at ~~September~~June 30, ~~2020~~2021 are subsequently recognized, ~~$18.0~~$13.4 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable amount as of December 31, ~~2019~~2020 was ~~$18.9~~$18.5 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by ~~$6.1~~$0.1 million by ~~March 31, 2021,~~June 30, 2022, due ~~primarily~~ to ~~expirations of statutes of limitations and other settlements,~~settlements; all of which would reduce the income tax ~~provision.~~provision from continuing operations.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 3—DISCONTINUED OPERATIONS

On May 25, 2021, IAC completed the Spin-off. Following the Spin-off, Vimeo became an independent, separately traded public company. Therefore, Vimeo is presented as discontinued operations within IAC's consolidated and combined financial statements for all periods prior to May 25, 2021.

The components of assets and liabilities of discontinued operations in the consolidated balance sheet at December 31, 2020 consisted of the following:


	December 31, 2020
	(In thousands)
Current assets
Cash and cash equivalents	$	110,011
Accounts receivable, net	12,785
Other current assets	7,681
Total current assets of discontinued operations	$	130,477

Non-current assets
Leasehold improvements and equipment, net	$	3,321
Goodwill	219,336
Intangible assets, net	10,854
Deferred income taxes	26,216
Other non-current assets	6,820
Total non-current assets of discontinued operations	$	266,547

Current liabilities
Accounts payable, trade	$	3,324
Deferred revenue	137,436
Accrued expenses and other current liabilities	43,228
Total current liabilities of discontinued operations	$	183,988

Non-current liabilities
Lease liability	$	1,027
Other non-current liabilities	1,945
Total non-current liabilities of discontinued operations	$	2,972

Redeemable noncontrolling interests attributable to discontinued operations at December 31, 2020 was $188.0 million.

The components of the loss from discontinued operations for the three and six months ended June 30, 2021 and 2020 in the consolidated and combined statement of operations consisted of the following:

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	In thousands
Revenue	$	56,096	$	67,333	$	145,514	$	124,241
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	15,039		22,900		39,995		41,257
Selling and marketing expense	22,721		26,483		54,774		51,564
General and administrative expense	9,815		8,245		23,343		19,686
Product development expense	14,176		16,262		35,651		31,555
Depreciation	68		102		182		160
Amortization of intangibles	1,096		2,915		2,983		6,038
Total operating costs and expenses	62,915		76,907		156,928		150,260
Operating loss from discontinued operations	(6,819)		(9,574)		(11,414)		(26,019)
Interest expense	(76)		0		(140)		0
Other income (expense), net	87		(162)		10,172		(222)
Loss from discontinued operations before tax	(6,808)		(9,736)		(1,382)		(26,241)
Income tax (expense) benefit	(4,979)		1,676		(449)		6,131
Loss from discontinued operations, net of tax	$	(11,787)	$	(8,060)	$	(1,831)	$	(20,110)

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4—BUSINESS COMBINATION

On February 11, 2020, the Company acquired 100% of Care.com, athe leading ~~global platform~~online destination for ~~finding and managing family care,~~families to easily connect with caregivers, for a total purchase price of $626.9 million, which includes cash consideration of $587.0 million paid by the Company and the settlement of all outstanding vested employee equity awards for $40.0 million paid by Care.com prior to the completion of the acquisition. The ~~Company's~~Company completed the purchase accounting ~~is not yet complete and is not expected to be finalized until~~for the Care.com acquisition during the first quarter of 2021; the allocation of purchase price to the fair value of assets acquired and liabilities assumed, primarily intangible assets, goodwill, income tax related assets and liabilities and contingent liabilities, is preliminary and subject to revision.

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

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

~~(Unaudited)~~


	~~Care.com~~
	~~(In thousands)~~
~~Cash and cash equivalents~~	$	~~57,702~~
~~Short-term investments~~	~~20,000~~
~~Accounts receivable~~	~~20,213~~
~~Other current assets~~	~~7,479~~
~~Property and equipment~~	~~2,894~~
~~Goodwill~~	~~415,164~~
~~Intangible assets~~	~~145,300~~
~~Other non-current assets~~	~~30,444~~
~~Total assets~~	~~699,196~~
~~Deferred revenue~~	~~(13,422)~~
~~Other current liabilities~~	~~(38,801)~~
~~Deferred income taxes~~	~~(33,960)~~
~~Other non-current liabilities~~	~~(26,039)~~
~~Net assets acquired~~	$	~~586,974~~

The Company acquired Care.com because it is complementary to other marketplace businesses of IAC. The purchase price was based on the expected financial performance of Care.com, not on the value of the net identifiable assets at the time of acquisition. This resulted in a significant portion of the purchase price being attributed to goodwill.

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

Care.com
(In thousands) Useful Life
(Years)
Indefinite-lived trade name and trademarks $ 59,300 Indefinite
Developed technology 49,500 2
Customer relationships 35,700 2 - 5
Provider relationships 800 4
Total identifiable intangible assets acquired $ 145,300

Accounts receivable, other current assets, other non-current assets, other current liabilities and other non-current liabilities of Care.com were reviewed and adjusted to their fair values at the date of acquisition, 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 the trade name and developed technology were determined using an income approach that utilized the relief from royalty methodology. The fair values of customer relationships and provider relationships were determined using an income approach that utilized the excess earnings methodology. The valuations of the intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates. The amount attributed to goodwill is not tax deductible.

The financial results of Care.com are included in the Company's financial statements, within the Emerging & Other segment, beginning February 11, 2020. For the three and nine months ended September 30, 2020, the Company included $56.7 million and $123.2 million of revenue, respectively, and $15.7 million and $31.6 million of net loss, respectively, in its statement of operations related to Care.com. For the three and nine months ended September 30, 2020, the net loss of Care.com reflects a reduction in revenue of $2.4 million and $15.7 million, respectively, due to the write-off of deferred revenue due to purchase accounting fair value adjustments and $2.6 million and $9.6 million, respectively, in transaction-related costs, including severance.

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

~~(Unaudited)~~

2021.

Unaudited pro forma financial information

The unaudited pro forma financial information in the table below presents the results of the Company and Care.com as if this acquisition had occurred on January 1, 2019. 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 acquisition occurred on January 1, 2019. For the three and ~~nine~~six months ended ~~September~~June 30, 2020, pro forma adjustments include a reduction in transaction related costs (including stock-based compensation expense related to the acceleration of vesting of outstanding employee equity awards) of ~~$2.6~~$2.2 million and ~~$65.7~~$63.1 million, respectively, because they are one-time in nature and will not have a continuing impact on operations and an increase in revenue of ~~$2.4~~$4.5 million and ~~$15.6~~$13.2 million ~~respectively,~~ related to deferred revenue written off as a part of the acquisition. For the three and nine months ended September 30, 2019, pro forma adjustments include an increase in amortization of intangibles of $20.9 million and $30.0 million, respectively, and a decrease in revenue of $1.1 million and $10.6 million, respectively, related to the deferred revenue written off as a part of the acquisition.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Revenue $ 790,783 $ 757,574 $ 2,240,452 $ 2,182,252
Net earnings (loss) attributable to IAC shareholders $ 190,766 $ (646) $ (221,290) $ (31,083)
Basic earnings (loss) per share attributable to IAC shareholders $ 2.24 $ (0.01) $ (2.59) $ (0.37)
Diluted earnings (loss) per share attributable to IAC shareholders $ 2.11 $ (0.01) $ (2.59) $ (0.37)


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	(In thousands except per share data)
Revenue	$	663,572	$	1,325,427
Net loss from continuing operations	$	(80,987)	$	(392,264)
Basic and diluted loss per share from continuing operations	$	(0.98)	$	(4.61)
Net loss attributable to IAC shareholders	$	(91,101)	$	(412,056)
Basic and diluted loss per share attributable to IAC shareholders	$	(1.07)	$	(4.84)

NOTE ~~4—GOODWILL~~5—FINANCIAL INSTRUMENTS AND ~~INTANGIBLE ASSETS~~FAIR VALUE MEASUREMENTS

~~Goodwill~~Marketable Securities

At June 30, 2021 and ~~intangible assets, net are as follows:~~

September 30, December 31,
2020 2019
(In thousands)
Goodwill $ 1,767,834 $ 1,616,867
Intangible assets with indefinite lives 245,932 225,296
Intangible assets with definite lives, net of accumulated amortization 148,483 124,854
Total goodwill and intangible assets, net $ 2,162,249 $ 1,967,017

~~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, 2020:~~

Balance at
December 31, 2019 Additions (Deductions) Impairment Foreign
Exchange
Translation Balance at September 30, 2020
(In thousands)
ANGI Homeservices $ 884,296 $ 0 $ 0 $ 0 $ 736 $ 885,032
Vimeo 219,374 0 (38) 0 0 219,336
Search 265,146 0 0 (265,146) 0 0
Emerging & Other 248,051 415,164 0 0 251 663,466
Total $ 1,616,867 $ 415,164 $ (38) $ (265,146) $ 987 $ 1,767,834

~~Additions are related to the acquisition of Care.com (included in the Emerging & Other segment).~~

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

~~(Unaudited)~~

~~In the quarter ended March~~December 31, 2020, the Company determined that the effects of COVID-19 were an indicator of possible impairment for certain of its reporting units and indefinite-lived intangible assets and identified the following impairments:

•~~a $212.0 million impairment related to the goodwill of the Desktop reporting unit (included in the Search segment) and~~

•~~a $21.4 million impairment related to certain indefinite-lived intangible assets of the Desktop reporting unit (included in the Search segment).~~

In the quarter ended September 30, 2020, the Company reassessed the fair values of the Desktop reporting unit and the related indefinite-lived intangible assets and recorded impairments equal to the remaining carrying value of the goodwill of $53.2 million and $10.8 million related to the intangible assets. The reduction in the Company’s fair value estimates is due to lower consumer queries, increasing challenges in monetization and the reduced ability to market profitably due to policy changes implemented by Google and other browsers. The effects of COVID-19 on monetization were an additional factor.

~~The Company also reassessed~~ the fair value of marketable securities are as follows:


	June 30, 2021		December 31, 2020
	(In thousands)
Marketable equity security	$	10,810	$	0
Available for sale marketable debt securities	0		224,979
Total marketable securities	$	10,810	$	224,979

The marketable equity security relates to one of the ~~Mosaic Group reporting unit (included~~Company’s investments that was previously accounted for as an equity security without a readily determinable fair value. Following the investee’s initial public offering, it is now carried at fair value. Unrealized gains or losses related to this investment is included in "Other income (expense), net" in the ~~Emerging & Other segment) and determined that as~~accompanying statement of September 30, 2020, its fair value approximates its carrying value of $239.9 million. To the extent there is a decline in the fair value of the Mosaic reporting unit below its carrying value, a goodwill impairment would be recorded to the extent the carrying value exceeds the fair value.

The fair values of the Desktop and Mosaic Group reporting units were determined using both an income approach based on discounted cash flows ("DCF") and a market approach. Determining fair value using a DCF analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the DCF analyses were based on the most recent forecasts for Desktop and Mosaic Group for 2020 and each of the years in the forecast period, which were updated in light of the factors described above.operations. For years beyond the forecast period, Desktop and Mosaic Group estimates were based, in part, on forecasted growth rates. The discount rates used in the DCF analyses were intended to reflect the risks inherent in the expected future cash flows of the Desktop and Mosaic Group reporting units. The discount rate used for determining the fair value of both the ~~Desktop~~three and Mosaic Group reporting units was 15.0%. Determining fair value using a market approach considers multiples of financial metrics based on both acquisitions and trading multiples of a selected peer group of companies. From the comparable companies, a representative market multiple is determined, which is applied to financial metrics to estimate the fair value of the Desktop and Mosaic Group reporting units. To determine a peer group of companies for Desktop and Mosaic Group,six months ended June 30, 2021, the Company ~~considered companies relevant in terms~~recognized an unrealized gain of consumer use, monetization model, margin and growth characteristics, and brand strength operating in their respective sectors. The aggregate carrying value of goodwill for which the most recent estimate of the excess of fair value over carrying value is less than 20% is approximately $655.0 million.

~~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, 2019:~~

Balance at
December 31, 2018 Additions (Deductions) Impairment Foreign
Exchange
Translation Balance at
December 31, 2019
(In thousands)
ANGI Homeservices $ 895,071 $ 18,326 $ (29,293) $ 0 $ 192 $ 884,296
Vimeo 77,152 142,222 0 0 0 219,374
Search 265,146 0 0 0 0 265,146
Emerging & Other 246,748 4,765 0 (3,318) (144) 248,051
Total $ 1,484,117 $ 165,313 $ (29,293) $ (3,318) $ 48 $ 1,616,867

Additions primarily relate to the acquisitions of Magisto (included in the Vimeo segment) and Fixd Repair (included in the ANGI Homeservices segment). Deductions primarily relate to tax benefits of acquired attributes related to the acquisition of Handy (included in the ANGI Homeservices segment). During the fourth quarter of 2019, the Company recorded an impairment of $3.3$10.7 million related to ~~the goodwill of the College Humor Media business (included in the Emerging & Other Segment), which was sold on March 16, 2020.~~this investment.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~The September 30, 2020 goodwill balances reflect accumulated impairment losses of $981.3 million and $198.3 million at Search and Dotdash, respectively. The~~At December 31, 2019 goodwill balances reflect accumulated impairment losses of $716.2 million and $198.3 million at Search and Dotdash, respectively, and $14.9 million related to College Humor Media (included in the Emerging & Other segment).

As described above, the Company updated its calculations of the fair value for certain of its indefinite-lived intangible assets as of March 31, 2020 and September 30, 2020 and recorded impairments of $32.2 million in aggregate at Desktop, related to indefinite-lived trade names. The impairment of indefinite-lived intangible assets is included in “Amortization of intangibles” in the accompanying statement of operations. The Company determines the fair value of indefinite-lived intangible assets using an avoided royalty DCF valuation analysis. Significant judgments inherent in this analysis include the selection of appropriate royalty and discount rates and estimating the amount and timing of expected future cash flows. The discount rates used in the DCF analyses were intended to reflect the risks inherent in the expected future cash flows generated by the respective intangible assets. The royalty rates used in the DCF analyses were based upon an estimate of the royalty rates that a market participant would pay to license the Company's trade names and trademarks. The discount rate used to value the trade names that were impaired in the first quarter of 2020 was 15.0% and the royalty rate was 1.0%. The aggregate carrying value of indefinite-lived intangible assets for which the most recent estimate of the excess of fair value over carrying value is less than 20% is approximately $59.3 million.

~~At September 30, 2020 and December 31, 2019, intangible assets with definite lives are as follows:~~

September 30, 2020
Gross
Carrying
Amount Accumulated
Amortization Net Weighted-Average
Useful Life
(Years)
(In thousands)
Technology $ 188,893 $ (102,542) $ 86,351 3.9
Service professional relationships 97,618 (96,799) 819 3.0
Customer lists and user base 58,396 (27,050) 31,346 3.6
Trade names 45,691 (16,845) 28,846 2.1
Memberships 15,900 (15,900) — 3.0
Other 10,439 (9,318) 1,121 3.4
Total $ 416,937 $ (268,454) $ 148,483 3.4

December 31, 2019
Gross
Carrying
Amount Accumulated
Amortization Net Weighted-Average
Useful Life
(Years)
(In thousands)
Technology $ 143,255 $ (73,483) $ 69,772 4.5
Service professional relationships 99,651 (76,445) 23,206 2.9
Customer lists and user base 44,286 (24,226) 20,060 3.3
Trade names 12,777 (8,082) 4,695 3.5
Memberships 15,900 (11,940) 3,960 3.0
Other 10,439 (7,278) 3,161 3.4
Total $ 326,308 $ (201,454) $ 124,854 3.7

~~At September 30, 2020, amortization of intangible assets with definite lives is estimated to be as follows:~~

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

~~(Unaudited)~~

(In thousands)
Remainder of 2020 $ 22,408
2021 73,412
2022 36,712
2023 13,509
2024 1,742
Thereafter 700
Total $ 148,483

~~NOTE 5—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS~~

~~Marketable Debt Securities~~

~~At September 30,~~ 2020, current available-for-sale marketable debt securities are as follows:

Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
(In thousands)
Treasury discount notes $ 349,949 $ 5 $ (1) $ 349,953
Total available-for-sale marketable debt securities $ 349,949 $ 5 $ (1) $ 349,953

~~The Company did 0t hold any marketable debt securities at December 31, 2019.~~


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Treasury discount notes	$	224,976	$	3	$	0	$	224,979
Total available-for-sale marketable debt securities	$	224,976	$	3	$	0	$	224,979

The contractual maturities of debt securities classified as current available-for-sale at ~~September 30,~~December 31, 2020 ~~are~~were within one year. There ~~are~~were 0 investments in available-for-sale marketable debt securities that ~~have~~had been in a continuous unrealized loss position for longer than twelve months as of ~~September 30,~~December 31, 2020.

~~Long-term Investments~~

~~Long-term investments consists of:~~

September 30, 2020 December 31, 2019
(In thousands)
Investment in MGM Resorts International ("MGM") $ 1,283,987 $ 0
Equity securities without readily determinable fair values 296,491 347,975
Total long-term investments $ 1,580,478 $ 347,975

Investment in MGM Resorts International


	June 30, 2021		December 31, 2020
	(In thousands)
Investment in MGM Resorts International	$	2,517,796	$	1,860,158

During the ~~three~~second and ~~nine months ended September 30,~~third quarters of 2020, the Company purchased ~~35.6 million and~~a total of 59.0 million shares of ~~MGM, respectively.~~MGM. The fair value of the investment in MGM is remeasured each reporting period based upon MGM's closing stock price on the New York Stock Exchange on the last trading day in the reporting period and any unrealized gains or losses are included ~~in "Other income (expense), net"~~ in the accompanying statement of operations. For the three and ~~nine~~six months ended ~~September~~June 30, 2021, the Company recognized unrealized gains on its investment in MGM of $275.1 million and $657.6 million, respectively. For both the three and six months ended June 30, 2020, the Company recognized an unrealized ~~gain~~loss of ~~$289.1~~$24.7 million ~~and $264.4 million, respectively,~~ on its investment in MGM.

Long-term Investments

Long-term investments consist of:


	June 30, 2021		December 31, 2020
	(In thousands)

Equity securities without readily determinable fair values	$	302,984	$	296,491
Equity method investment	2,605		1,152
Total long-term investments	$	305,589	$	297,643

Equity Securities without Readily Determinable Fair Values

During the first quarter of 2020, the Company recorded unrealized impairments of $51.5 million related to certain equity securities without readily determinable fair values due to the impact of COVID-19. All gains and losses on equity securities

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

~~without readily determinable fair values, realized and unrealized, are recognized in "Other income (expense), net" in the accompanying statement of operations.~~

The following table presents a summary of unrealized gains and losses recorded in "Other income (expense), net," as adjustments to the carrying value of equity securities without readily determinable fair values held as of ~~September~~June 30, 2021 and 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Upward adjustments (gross unrealized gains)	$	0	$	0	$	1,376	$	0
Downward adjustments including impairments (gross unrealized losses)	0		0		0		(51,484)
Total	$	0	$	0	$	1,376	$	(51,484)

During the first quarter of 2020, ~~and 2019.~~the Company recorded unrealized impairments of $51.5 million related to certain equity securities without readily determinable fair values due to the impact of COVID-19.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Upward adjustments (gross unrealized gains) $ 0 $ 53 $ 0 $ 53
Downward adjustments including impairment (gross unrealized losses) 0 (543) (51,484) (1,193)
Total $ 0 $ (490) $ (51,484) $ (1,140)

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The cumulative upward and downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held at ~~September~~June 30, ~~2020~~2021 were ~~$19.7~~$21.1 million and ~~$49.5~~$43.5 million, respectively.

Realized and unrealized gains and losses for the Company's ~~marketable equity securities and~~ investments without readily determinable fair values for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Realized gains (losses), net, for equity securities sold $ 2,976 $ (8) $ 488 $ 2,006
Unrealized gains (losses), net, on equity securities held 289,097 (5,066) 215,394 24,114
Total gains (losses), net recognized in other income (expense), net $ 292,073 $ (5,074) $ 215,882 $ 26,120


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Realized (losses) gains net, for equity securities sold	$	0	$	(1)	$	81	$	11
Unrealized gains (losses), net, on equity securities held	0		0		1,376		(51,484)
Total (losses) gains, net recognized	$	0	$	(1)	$	1,457	$	(51,473)

All gains and losses on equity securities without readily determinable fair values, realized and unrealized, are recognized in "Other income (expense), net" in the accompanying statement of operations.

Equity Method Investment

During the fourth quarter of 2020 and first quarter of 2021, the Company acquired common shares of Turo Inc. ("Turo"), a peer-to-peer car sharing marketplace. This investment is accounted for under the equity method of accounting given the Company's preexisting ownership interest of approximately 27.1% on a fully diluted basis in the form of preferred shares, which are not common stock equivalents. The Company accounts for this investment on a one quarter lag.

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.

•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.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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


	June 30, 2021
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	3,069,531	$	0	$	0	$	3,069,531

Time deposits	0		407		0		407
Marketable equity security	10,810		0		0		10,810
Investment in MGM	2,517,796		0		0		2,517,796
Other non-current assets:
Warrant	0		0		60,532		60,532
Total	$	5,598,137	$	407	$	60,532	$	5,659,076

Liabilities:
Contingent consideration arrangement					$	0	$	0


	December 31, 2020
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	1,769,239	$	0	$	0	$	1,769,239
Treasury discount notes	0		1,224,966		0		1,224,966
Time deposits	0		2,721		0		2,721
Marketable debt securities:
Treasury discount notes	0		224,979		0		224,979
Investment in MGM	1,860,158		0		0		1,860,158
Other non-current assets:
Warrant	0		0		5,276		5,276
Total	$	3,629,397	$	1,452,666	$	5,276	$	5,087,339

Liabilities:
Contingent consideration arrangement					$	0	$	0

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

September 30, 2020
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)
Assets:
Cash equivalents:
Money market funds $ 1,717,738 $ 0 $ 0 $ 1,717,738
Treasury discount notes 0 1,349,926 0 1,349,926
Time deposits 0 42,988 0 42,988
Marketable debt securities:
Treasury discount notes 0 349,953 0 349,953
Long-term investments:
Investment in MGM 1,283,987 0 0 1,283,987
Other non-current assets:
Warrant 0 0 4,748 4,748
Total $ 3,001,725 $ 1,742,867 $ 4,748 $ 4,749,340

December 31, 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
(In thousands)
Assets:
Cash equivalents:
Money market funds $ 699,589 $ 0 $ 0 $ 699,589
Time deposits 0 23,075 0 23,075
Other non-current assets:
Warrant 0 0 8,495 8,495
Total $ 699,589 $ 23,075 $ 8,495 $ 731,159
Liabilities:
Contingent consideration arrangement $ 0 $ 0 $ (6,918) $ (6,918)

The following tables present the changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

~~Table of Contents~~


	Three Months Ended June 30,
	2021		2020
	Warrant			Warrant		Contingent Consideration Arrangements
	(In thousands)
Balance at April 1	$	18,051		$	6,489	$	(636)

Total net gains:
Fair value adjustments included in earnings	42,481			590		636

Balance at June 30	$	60,532		$	7,079	$	0

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

Three Months Ended September 30,
2020 2019
Warrant Warrant Contingent
Consideration
Arrangement
(In thousands)
Balance at July 1 $ 7,079 $ 0 $ (29,803)
Fair value at date of acquisition 0 17,518 0
Total net (losses) gains:
Included in earnings:
Fair value adjustments (2,331) (8,689) 16,139
Balance at September 30 $ 4,748 $ 8,829 $ (13,664)

Nine Months Ended September 30,
2020 2019
Warrant Contingent
Consideration
Arrangements Warrant Contingent
Consideration
Arrangement
(In thousands)
Balance at January 1 $ 8,495 $ (6,918) $ 0 $ (26,657)
Fair value at date of acquisition 0 (1,000) 17,518 0
Total net (losses) gains:
Included in earnings:
Fair value adjustments (3,747) 6,918 (8,689) 12,993
Settlements 0 1,000 0 0
Balance at September 30 $ 4,748 $ 0 $ 8,829 $ (13,664)


	Six Months Ended June 30,
	2021		2020
	Warrant			Warrant		Contingent Consideration Arrangements
	(In thousands)
Balance at January 1	$	5,276		$	8,495	$	(6,918)
Fair value at date of acquisition	0			0		(1,000)
Total net gains (losses):
Fair value adjustments included in earnings	55,256			(1,416)		6,918
Settlements	0			0		1,000
Balance at June 30	$	60,532		$	7,079	$	0

Warrant

As part of the Company's investment in Turo ~~a peer-to-peer car sharing marketplace,~~preferred shares, 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 "Other income (expense), net" in the accompanying statement of operations. The warrant is measured using significant unobservable inputs and is classified in the fair value hierarchy table as Level 3. The warrant is included in "Other non-current assets" in the accompanying balance sheet.

Contingent Consideration ~~Arrangements~~Arrangement

At ~~September~~June 30, ~~2020,~~2021, the Company has one outstanding contingent consideration arrangement related to a business ~~acquisition.~~combination. The maximum contingent payments related to this arrangement for periods subsequent to December 31, ~~2019 total $30.0~~2020, which is the end of the most recent measurement period, is $15.0 million. ~~The potential earnout payment for the year ended December 31, 2019 was $15.0 million; however, the financial performance threshold that would have triggered that payment was not achieved.~~ At ~~September~~June 30, ~~2020,~~2021, the Company does not expect to make any payments related to this contingent consideration arrangement. In connection with the Care.com acquisition on February 11, 2020, the Company assumed a contingent consideration arrangement liability of $1.0 million, which was subsequently paid and settled during the first quarter of 2020.

~~Generally, our contingent consideration arrangements are based upon financial performance and/or operating metric targets~~ At both June 30, 2021 and the Company generally determines the fair value of the contingent consideration arrangements by using probability-weighted analyses to determine the amounts of the gross liability, and, if the arrangements are initially long-term in nature, applying a discount rate that appropriately captures the risks associated with the obligations to determine the net amount reflected in the financial statements.

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

The fair value of contingent consideration arrangements is sensitive to changes in the expected achievement of the applicable targets and changes in discount rates. The Company remeasures the fair value of the contingent consideration arrangements each reporting period, including the accretion of the discount, if applicable, and changes are recognized in "General and administrative expense" in the accompanying statement of operations. ThereDecember 31, 2020, there is 0 contingent consideration liability outstanding at September 30, 2020. The contingent consideration arrangement liability at December 31, 2019 includes a non-current portion of $6.9 million and, is included in “Other long-term liabilities” in the accompanying balance sheet.outstanding.

Assets measured at fair value on a nonrecurring basis

The Company's non-financial assets, such as goodwill, intangible assets, ROU assets and building, capitalized software, leasehold improvements and equipment, are adjusted to fair value only when an impairment is recognized. The Company's financial assets, comprising equity securities without readily determinable fair values, are adjusted to fair value when observable price changes are identified or an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs. ~~See "~~

~~Note 4—Goodwill and Intangible Assets~~Table of Contents~~" for a detailed description of the Desktop goodwill and indefinite-lived intangible asset impairments recorded during the first and third quarter of 2020.~~

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:

September 30, 2020 December 31, 2019
Carrying
Value Fair
Value Carrying
Value Fair
Value
(In thousands)
Notes receivable—related party, current $ 0 $ 0 $ 55,251 $ 55,251
Current portion of long-term debt $ (13,750) $ (13,750) $ (13,750) $ (13,681)
Long-term debt, net(a)
$ (715,408) $ (715,288) $ (231,946) $ (232,581)


	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Long-term debt, net(a)	$	(494,195)	$	(495,600)	$	(712,277)	$	(725,700)

_____________________

(a) At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying value of long-term debt, net includes unamortized debt issuance costs of ~~$8.0~~$5.8 million and ~~$1.8~~$7.7 million, respectively.

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of long-term debt ~~including the current portion,~~ is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

NOTE 6—LONG-TERM DEBT

Long-term debt consists of:

September 30, 2020 December 31, 2019
(In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 ("ANGI Group Senior Notes"); interest payable each February 15 and August 15, commencing February 15, 2021 $ 500,000 $ 0
ANGI Group Term Loan due November 5, 2023 ("ANGI Group Term Loan") 237,188 247,500
Total long-term debt 737,188 247,500
Less: current portion of ANGI Group Term Loan 13,750 13,750
Less: unamortized debt issuance costs 8,030 1,804
Total long-term debt, net $ 715,408 $ 231,946

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~


	June 30, 2021		December 31, 2020
	(In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 ("ANGI Group Senior Notes"); interest payable each February 15 and August 15, commencing February 15, 2021	$	500,000	$	500,000
ANGI Group Term Loan due November 5, 2023 ("ANGI Group Term Loan")	0		220,000
Total long-term debt	500,000		720,000

Less: unamortized debt issuance costs	5,805		7,723
Total long-term debt, net	$	494,195	$	712,277

ANGI Group Senior Notes

~~On August 20, 2020, ANGI Group, LLC ("ANGI Group"), a direct wholly-owned subsidiary of ANGI, issued $500 million in aggregate principal amount of the~~The ANGI Group Senior Notes were issued on August 20, 2020, the proceeds of which are intended for general corporate purposes, including potential future acquisitions and return of capital. At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium. Thereafter, these notes may be redeemed at the redemption prices set forth ~~below,~~in the indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the applicable redemption ~~date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:~~

Year Percentage
2023 101.938 %
2024 100.969 %
2025 and thereafter 100.000 %
date.

The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money in the event a default has occurred or ~~the~~ ANGI Group’s secured leverage ratio (as defined in the indenture) exceeds 3.75 to 1.0. At ~~September~~June 30, ~~2020,~~2021 there were no limitations pursuant thereto.

ANGI Group ~~Term Loan and~~Revolving Facility

The $250 million ANGI Group Revolving Facility,

~~ANGI was a party to a credit agreement that terminates~~ which otherwise would have expired on November 5, 2023, was terminated effective August 3, 2021. ~~On August 12, 2020,~~No amounts were ever drawn under the ANGI Group ~~entered into a joinder agreement with ANGI, the other subsidiaries~~Revolving Facility prior to its termination.

Table of ~~ANGI that are party to the credit agreement, and each of the other loan parties to the credit agreement, pursuant to which,~~ Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

ANGI Group ~~became~~Term Loan

As of May 6, 2021, the ~~successor borrower under the credit agreement and ANGI Homeservices Inc.'s obligations thereunder were terminated. The credit agreement governs~~outstanding balance of the ANGI Group Term Loan ~~and revolving credit facility (the "ANGI Group Revolving Facility"). In addition, on August 12, 2020, the definition of "Permitted Unsecured Ratio Debt"~~was repaid in ~~the credit agreement was amended to remove the requirement that guarantees of certain indebtedness of the borrower be subordinated to the guarantees under the credit agreement.~~

its entirety. The outstanding balance of the ANGI Group Term Loan at December 31, 2020 was ~~$237.2~~$220.0 million and $247.5 million at September 30, 2020 and December 31, 2019, respectively. There are quarterly principal payments of $3.4 million through December 31, 2021, $6.9 million for the one-year period ending December 31, 2022 and $10.3 million through maturity of the loan when the final amount of $161.6 million is due. Additionally, interest payments are due at least quarterly through the term of the loan. At both September 30, 2020 and December 31, 2019, the ANGI Group Term Loan bore interest at ~~LIBOR plus 1.50%, or 1.66% and 3.25%, respectively. The spread over LIBOR is subject to change in future periods based on ANGI Group's consolidated net leverage ratio.~~2.16%.

NOTE 7—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The ~~ANGI Group Term Loan requires ANGI Group~~following tables present the components of accumulated other comprehensive income (loss):


	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income		Foreign Currency Translation Adjustment		Unrealized (Losses) Gains On Available-For-Sale Marketable Debt Securities		Accumulated Other Comprehensive Loss
	(In thousands)
Balance at of April 1	$	4,149	$	4,149	$	(17,914)	$	(12)	$	(17,926)
Other comprehensive income before reclassifications	1,543		1,543		4,288		11		4,299
Amounts reclassified to earnings	0		0		(144)		0		(144)
Net current period other comprehensive income	1,543		1,543		4,144		11		4,155
Accumulated other comprehensive income allocated to noncontrolling interests during the period	(6)		(6)		(10)		0		(10)
Balance at of June 30	$	5,686	$	5,686	$	(13,780)	$	(1)	$	(13,781)


	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	Foreign Currency Translation Adjustment		Unrealized Gains (Losses) On Available-For-Sale Marketable Debt Securities		Accumulated Other Comprehensive (Loss) Income		Foreign Currency Translation Adjustment		Unrealized Losses On Available-For-Sale Marketable Debt Securities		Accumulated Other Comprehensive Loss
	(In thousands)
Balance at of January 1	$	(6,172)	$	2	$	(6,170)	$	(12,226)	$	0	$	(12,226)
Other comprehensive income (loss) before reclassifications	1,837		(2)		1,835		(1,363)		(1)		(1,364)
Amounts reclassified to earnings	10,032		0		10,032		(144)		0		(144)
Net current period other comprehensive income (loss)	11,869		(2)		11,867		(1,507)		(1)		(1,508)
Accumulated other comprehensive income allocated to noncontrolling interests during the period	(11)		0		(11)		(47)		0		(47)
Balance at of June 30	$	5,686	$	0	$	5,686	$	(13,780)	$	(1)	$	(13,781)

The amounts reclassified out of foreign currency translation adjustment into earnings for the six months ended June 30, 2021 and the three and six months ended June 30, 2020 relate to ~~maintain~~the substantial liquidation of certain international subsidiaries.

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

At both June 30, 2021 and 2020, there was 0 income tax benefit or provision on the accumulated other comprehensive income (loss).

NOTE 8—EARNINGS (LOSS) PER SHARE

The Company treats its common stock and Class B common stock as one class of stock for earnings per share ("EPS") purposes as both classes of stock participate in earnings, dividends and other distributions on the same basis. The restricted stock award granted to our Chief Executive Officer ("CEO") on November 5, 2020 is a ~~consolidated net leverage ratio of not more than 4.5 to 1.0~~participating security and the Company calculates EPS using the two-class method since those restricted shares are unvested and have a minimum interest coverage ratio of not less than 2.0 to 1.0 (in each case as defined in the ANGI Group credit agreement). The ANGI Group credit agreement also contains covenants that would limit ANGI Group's ability to pay dividends or make distributionsnon-forfeitable dividend right in the event the Company declares a ~~default has occurred or ANGI Group's consolidated~~cash dividend on common shares and participate in all other distributions of the Company in the same manner as all other IAC common shares.

Undistributed earnings allocated to the participating security is subtracted from net ~~leverage ratio exceeds 4.25~~income in determining net income attributable to ~~1.0. At September 30, 2020, there were no limitations pursuant thereto.~~holders of IAC common stock and Class B common stock for basic EPS. Basic EPS is computed by dividing net income attributable to holders of IAC common stock and Class B common stock by the weighted-average number of shares of common stock and Class B common stock outstanding during the period.

For the calculation of diluted EPS, net income attributable to holders of IAC common stock and Class B common stock is adjusted for the impact from our public subsidiary's dilutive securities, if applicable, and the reallocation of undistributed earnings allocated to the participating security by the weighted-average number of common stock and Class B common stock outstanding plus dilutive securities during the period.

The ~~$250 million ANGI Group Revolving Facility expires on November 5, 2023. At September 30, 2020~~numerator and December 31, 2019, there were 0 outstanding borrowings under the ANGI Group Revolving Facility. The annual commitment fee on undrawn funds is based on ANGI Group's consolidated net leverage ratio most recently reporteddenominator of basic and was 25 basis points at both September 30, 2020 and December 31, 2019. Any future borrowings under the ANGI Group Revolving Facility would bear interest, at ANGI Group's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is based on ANGI Group's consolidated net leverage ratio. The financial and other covenants are the same as thosediluted EPS computations for the ~~ANGI Group Term Loan.~~Company’s common stock and Class B common stock are calculated as follows:

The ANGI Group Senior Notes, ANGI Group Term Loan and ANGI Group Revolving Facility are guaranteed by certain of ANGI Group's wholly-owned material domestic subsidiaries and ANGI Group’s obligations under the ANGI Group Term Loan and the ANGI Group Revolving Facility are secured by substantially all assets of ANGI Group and the guarantors, subject


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except per share data)
Basic EPS:
Numerator:
Net earnings (loss) from continuing operations	$	203,325	$	(86,004)	$	522,270	$	(404,525)
Net loss (earnings) attributable to noncontrolling interests of continuing operations	2,596		(2,118)		3,632		90
Net earnings attributed to unvested participating security	(6,929)		0		(17,721)		0
Net earnings (loss) from continuing operations attributable to IAC Common Stock and Class B common stock shareholders	$	198,992	$	(88,122)	$	508,181	$	(404,435)

Net loss from discontinued operations, net of tax	$	(11,787)	$	(8,060)	$	(1,831)	$	(20,110)
Net loss (earnings) attributable to noncontrolling interests of discontinued operations	623		65		(186)		229
Net loss attributed to unvested participating security	376		0		68		0
Net loss from discontinued operations attributable to IAC Common Stock and Class B common stock shareholders	$	(10,788)	$	(7,995)	$	(1,949)	$	(19,881)

Net earnings (loss) attributable to IAC Common Stock and Class B common stock shareholders	$	188,204	$	(96,117)	$	506,232	$	(424,316)

Denominator:
Weighted average basic IAC Common Stock and Class B common stock shares outstanding(a)	86,157		85,132		86,029		85,132

Table of Contents

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

to certain exceptions. The ANGI Group Term Loan and outstanding borrowings, if any, under the ANGI Group Revolving Facility rank equally with each other, and have priority over the ANGI Group Senior Notes to the extent of the value of the assets securing the borrowings under the credit agreement.


Earnings (loss) per share:
Earnings (loss) per share from continuing operations attributable to IAC Common Stock and Class B common stock shareholders	$	2.31	$	(1.04)	$	5.91	$	(4.75)
Loss per share from discontinued operations, net of tax, attributable to IAC Common Stock and Class B common stock shareholders	$	(0.13)	$	(0.09)	$	(0.02)	$	(0.23)
Earnings (loss) per share attributable to IAC Common Stock shareholders and Class B common stock shareholders	$	2.18	$	(1.13)	$	5.88	$	(4.98)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2021
	(In thousands, except per share data)
Diluted EPS:
Numerator:
Net earnings (loss) from continuing operations	$	203,325	$	(86,004)	$	522,270	$	(404,525)
Net loss (earnings) attributable to noncontrolling interests of continuing operations	2,596		(2,118)		3,632		90
Net earnings attributed to unvested participating security	(6,416)		0		(16,482)		0
Impact from public subsidiaries' dilutive securities(c)	172		0		155		0
Net earnings (loss) from continuing operations attributable to IAC Common Stock and Class B common stock shareholders	$	199,677	$	(88,122)	$	509,575	$	(404,435)

Net loss from discontinued operations, net of tax	$	(11,787)	$	(8,060)	$	(1,831)	$	(20,110)
Net loss (earnings) attributable to noncontrolling interests of discontinued operations	623		65		(186)		229
Net loss attributed to unvested participating security	348		0		63		0
Net loss from discontinued operations attributable to shareholders	$	(10,816)	$	(7,995)	$	(1,954)	$	(19,881)

Net earnings (loss) attributable to IAC Common Stock and Class B common stock shareholders	$	188,861	$	(96,117)	$	507,621	$	(424,316)

Denominator:
Weighted average basic IAC Common Stock and Class B common stock shares outstanding(a)	86,157		85,132		86,029		85,132
Dilutive securities(b)(c)(d)(e)	7,210		0		6,724		0
Denominator for earnings per share—weighted average shares(b)(c)(d)(e)	93,367		85,132		92,753		85,132

Earnings (loss) per share:
Earnings (loss) per share from continuing operations attributable to IAC Common Stock and Class B common stock shareholders	$	2.14	$	(1.04)	$	5.49	$	(4.75)
Loss per share from discontinued operations, net of tax, attributable to IAC Common Stock and Class B common stock shareholders	$	(0.12)	$	(0.09)	$	(0.02)	$	(0.23)
Earnings (loss) per share attributable to IAC Common Stock and Class B common stock shareholders	$	2.02	$	(1.13)	$	5.47	$	(4.98)

~~IAC Group Credit Facility~~

The IAC Group, LLC ("IAC Group") $250 million revolving credit facility (the "IAC Group Credit Facility"), which was scheduled to expire on November 5, 2023, was terminated effective October 2, 2020. At September 30, 2020 and December 31, 2019, there were 0 outstanding borrowings under the IAC Group Credit Facility.

~~Long-term Debt Maturities~~

~~Long-term debt maturities as of September 30, 2020 are summarized in the table below:~~

(In thousands)
Remainder of 2020 $ 3,438
2021 13,750
2022 27,500
2023 192,500
2028 500,000
Total 737,188
Less: current portion of ANGI Group Term Loan 13,750
Less: unamortized debt issuance costs 8,030
Total long-term debt, net $ 715,408

~~NOTE 7—SHAREHOLDERS' EQUITY~~

~~Description of Common Stock and Class B Convertible Common Stock~~

~~Except as described herein, shares of IAC common stock and IAC Class B common stock are identical.~~

Each holder of shares of IAC common stock and IAC Class B common stock vote together as a single class with respect to matters that may be submitted to a vote or for the consent of IAC's shareholders generally, including the election of directors. In connection with any such vote, each holder of IAC common stock is entitled to 1 vote for each share of IAC commonstock held and each holder of IAC Class B common stock is entitled to 10 votes for each share of IAC Class B common stock held. Notwithstanding the foregoing, the holders of shares of IAC common stock, acting as a single class, are entitled to elect 25% of the total number of IAC's directors, and, in the event that 25% of the total number of directors shall result in a fraction of a director, then the holders of shares of IAC common stock, acting as a single class, are entitled to elect the next higher whole number of IAC's directors. In addition, Delaware law requires that certain matters be approved by the holders of shares of IAC common stock or holders of IAC Class B common stock voting as a separate class.

Shares of IAC Class B common stock are convertible into shares of IAC common stock at the option of the holder thereof, at any time, on a share-for-share basis. Such conversion ratio will in all events be equitably preserved in the event of any recapitalization of IAC by means of a stock dividend on, or a stock split or combination of, outstanding shares of IAC common stock or IAC Class B common stock, or in the event of any merger, consolidation or other reorganization of IAC with another corporation. Upon the conversion of shares of IAC Class B common stock into shares of IAC common stock, those shares of IAC Class B common stock will be retired and will not be subject to reissue. Shares of IAC common stock are not convertible into shares of IAC Class B common stock.

The holders of shares of IAC common stock and the holders of shares of IAC Class B common stock are entitled to receive, share for share, such dividends as may be declared by IAC's Board of Directors out of funds legally available therefor. In the event of a liquidation, dissolution, distribution of assets or winding-up of IAC, the holders of shares of IAC common_____________________

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IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(a) On November 5, 2020, IAC's CEO was granted a stock-based award in the form of 3.0 million shares of restricted common stock. The number of shares that ultimately vests is subject to the satisfaction of growth targets in IAC's stock price over the 10-year service condition of the award. These restricted shares have a non-forfeitable dividend right in the event the Company declares a cash dividend on its common shares and participate in all other distributions of the Company in the same manner as all other IAC common shares. Accordingly, the two-class method of calculating earnings per share is used. While the restricted shares are presented as outstanding shares in the consolidated balance sheet, these shares are excluded from the weighted average shares outstanding in calculating basic earnings per share and the ~~holders~~allocable portion of net earnings are also excluded. Fully diluted earnings per share reflects the impact on earnings and fully diluted shares ~~of IAC Class B common stock are entitled to receive, share for share, all~~in the ~~assets of IAC available for distribution to its stockholders, after the rights of the holders of any IAC preferred stock have been satisfied.~~

~~NOTE 8—ACCUMULATED OTHER COMPREHENSIVE LOSS~~

~~The following tables present the components of accumulated other comprehensive loss:~~

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019
Foreign Currency Translation Adjustment Unrealized (Losses) Gains On Available-For-Sale Debt Securities Accumulated Other Comprehensive Loss Foreign Currency Translation Adjustment Accumulated Other Comprehensive Loss
(In thousands)
Balance as of July 1 $ (13,780) $ (1) $ (13,781) $ (12,258) $ (12,258)
Other comprehensive income (loss) 1,948 4 1,952 (2,499) (2,499)
Allocation of accumulated other comprehensive income (loss) related to noncontrolling interests 11 0 11 (19) (19)
Balance as of September 30 $ (11,821) $ 3 $ (11,818) $ (14,776) $ (14,776)
manner that is most dilutive.

(b)

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Foreign Currency Translation Adjustment Unrealized Gains On Available-For-Sale Debt Securities Accumulated Other Comprehensive Loss Foreign Currency Translation Adjustment Unrealized Gains (Losses) On Available-For-Sale Debt Securities Accumulated Other Comprehensive Loss
(In thousands)
Balance as of January 1 $ (12,226) $ 0 $ (12,226) $ (12,543) $ 2 $ (12,541)
Other comprehensive income (loss) before reclassifications 585 3 588 (2,223) (2) (2,225)
Amounts reclassified to earnings (144) 0 (144) 0 0 0
Net current period other comprehensive income (loss) 441 3 444 (2,223) (2) (2,225)
Allocation of accumulated other comprehensive loss related to noncontrolling interests (36) 0 (36) (10) 0 (10)
Balance as of September 30 $ (11,821) $ 3 $ (11,818) $ (14,776) $ 0 $ (14,776)

The ~~amount reclassified out of foreign currency translation adjustment into earnings for the nine months ended September 30, 2020 relate to the liquidation of an international subsidiary.~~

~~At both September 30, 2020 and 2019, there was 0 tax benefit or provision on the accumulated other comprehensive loss.~~

~~NOTE 9—EARNINGS (LOSS) PER SHARE~~

~~The following table sets forth the computation of~~Company computed basic and diluted earnings ~~(loss)~~ per share ~~attributable~~for periods prior to ~~IAC shareholders:~~

~~Table of Contents~~the MTCH Separation using the shares issued on June 30, 2020 in connection with the MTCH Separation.

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

Three Months Ended September 30,
2020 2019
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator:
Net earnings $ 185,861 $ 185,861 $ 18,378 $ 18,378
Net earnings attributable to noncontrolling interests (944) (944) (1,912) (1,912)
Impact from public subsidiary dilutive securities (b)
— (79) — 0
Net earnings attributable to IAC shareholders $ 184,917 $ 184,838 $ 16,466 $ 16,466
Denominator:
Weighted average basic shares outstanding 85,297 85,297 85,132 85,132
Dilutive securities(a) (b) (c)
— 5,180 — 0
Denominator for earnings per share—weighted average shares (a) (b) (c)
85,297 90,477 85,132 85,132
Earnings per share attributable to IAC shareholders:
Earnings per share $ 2.17 $ 2.04 $ 0.19 $ 0.19
(c) IAC has the option to settle certain Angi Inc. stock-based awards in its shares. For the three and six months ended June 30, 2021, it is more dilutive for IAC to settle these Angi Inc. equity awards. The impact on earnings relates to the settlement of Angi Inc.'s dilutive securities in IAC common shares.

(d)

Nine Months Ended September 30,
2020 2019
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator:
Net (loss) earnings $ (238,774) $ (238,774) $ 26,726 $ 26,726
Net earnings attributable to noncontrolling interests (625) (625) (10,718) (10,718)
Impact from public subsidiary dilutive securities (b)
— (150) — 0
Net (loss) earnings attributable to IAC shareholders $ (239,399) $ (239,549) $ 16,008 $ 16,008
Denominator:
Weighted average basic shares outstanding 85,295 85,295 85,132 85,132
Dilutive securities(a) (b) (c)
— 0 — 0
Denominator for earnings per share—weighted average shares (a) (b) (c)
85,295 85,295 85,132 85,132
Loss (earnings) per share attributable to IAC shareholders:
Loss (earnings) per share $ (2.81) $ (2.81) $ 0.19 $ 0.19

~~_____________________~~

~~(a)~~ If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and subsidiary denominated equity and vesting of restricted common stock, restricted stock units ("RSUs") and market-based awards ("MSUs"). For both the three and six months ended ~~September~~June 30, ~~2020, less than 0.1~~2021, 3.0 million of potentially dilutive securities were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

(e) For the ~~nine~~three and six months ended ~~September~~June 30, 2020, the Company had a loss from operations and, as a result, approximately ~~6.0~~5.7 million potentially dilutive securities were excluded from ~~the calculation of diluted~~computing dilutive earnings per share because ~~their inclusion~~the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute ~~the~~all earnings per share ~~amounts for the nine months ended September 30, 2020.~~

~~(b)~~IAC has the option to settle certain ANGI stock-based awards in its shares. For the three months ended September 30, 2020, it is more dilutive for IAC to settle these ANGI equity awards. For the nine months ended September 30, 2020, the Company had a loss from operations, therefore it is

~~Table of Contents~~

~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

~~more dilutive for ANGI to settle these ANGI equity awards. The impact on earnings relates to the settlement of ANGI's dilutive securities under the if-converted method~~.

~~(c)~~ ~~The Company computed basic and diluted earnings per share for periods prior to the Separation using the shares issued on June 30, 2020 in connection with the Separation.~~amounts.

NOTE ~~10—~~9—SEGMENT INFORMATION

The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent ~~with:~~with how the chief operating decision maker views the ~~businesses;~~businesses. In addition, we consider how the businesses are organized as to segment ~~management;~~management and the focus of the businesses with regards to the types of services or products offered or the target market. Operating segments are combined for reporting purposes if they meet certain aggregation criteria, which principally relate to the similarity of their economic characteristics, which is the case for the Desktop and Ask Media Group operating segments in the Search reportable segment, or, in the case of the Emerging & Other reportable segment, do not meet the quantitative thresholds that require presentation as separate reportable segments.

The following table presents revenue by reportable segment:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Revenue:
ANGI Homeservices		$	389,913	$	357,358	$	1,108,624	$	1,004,697
Vimeo		75,130		52,145		199,432		141,439
Revenue										Revenue
Angi Inc.										Angi Inc.	$	420,988	$	375,061	$	808,017	$	718,711
Dotdash	Dotdash	50,774		40,285		139,515		111,974		Dotdash	73,333		44,621		138,754		88,741
Search	Search	145,208		185,664		430,890		575,608		Search	183,607		131,263		364,641		285,682
Emerging & Other	Emerging & Other	127,425		69,988		320,594		201,820		Emerging & Other	151,656		108,127		304,812		193,169
Inter-segment eliminations	Inter-segment eliminations	(73)		(58)		(193)		(251)		Inter-segment eliminations	(37)		(45)		(107)		(60)
Total	Total	$	788,377	$	705,382	$	2,198,862	$	2,035,287	Total	$	829,547	$	659,027	$	1,616,117	$	1,286,243

The following table presents the revenue of the Company's segments disaggregated by type of service:

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(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)

ANGI Homeservices
Marketplace:
Angi Inc.										Angi Inc.
North America										North America
Angi Marketplace:										Angi Marketplace:
Consumer connection revenue(a)	Consumer connection revenue(a)	$	287,568	$	252,552	$	800,047	$	695,370	Consumer connection revenue(a)	$	240,016	$	242,015	$	461,447	$	450,619
Angi Services revenue(b)										Angi Services revenue(b)	72,819		32,095		127,505		64,956
Service professional membership subscription revenue	Service professional membership subscription revenue	12,195		15,995		38,989		48,697		Service professional membership subscription revenue	12,390		13,017		24,342		26,794
Other revenue	Other revenue	6,944		4,915		19,620		11,186		Other revenue	2,372		6,046		5,353		9,580
Total Marketplace revenue		306,707		273,462		858,656		755,253
Advertising and other revenue(b)		65,519		65,682		195,119		190,285
Total Angi Marketplace revenue										Total Angi Marketplace revenue	327,597		293,173		618,647		551,949
Advertising and other revenue(c)										Advertising and other revenue(c)	72,348		64,244		142,339		129,600
Total North America revenue	Total North America revenue	372,226		339,144		1,053,775		945,538		Total North America revenue	399,945		357,417		760,986		681,549
Consumer connection revenue(c)		14,006		14,125		43,640		46,480
Europe										Europe
Consumer connection revenue(d)										Consumer connection revenue(d)	17,345		13,945		39,696		29,634
Service professional membership subscription revenue	Service professional membership subscription revenue	3,278		3,465		9,792		10,820		Service professional membership subscription revenue	3,331		3,215		6,659		6,514
Advertising and other revenue	Advertising and other revenue	403		624		1,417		1,859		Advertising and other revenue	367		484		676		1,014
Total Europe revenue	Total Europe revenue	17,687		18,214		54,849		59,159		Total Europe revenue	21,043		17,644		47,031		37,162
Total ANGI Homeservices revenue		$	389,913	$	357,358	$	1,108,624	$	1,004,697
Total Angi Inc. revenue										Total Angi Inc. revenue	$	420,988	$	375,061	$	808,017	$	718,711

(a) Includes fees paid by service professionals for consumer matches and revenue from pre-priced jobs sourced through the HomeAdvisor and Handy platforms.
(b) Includes Angie's List revenue from service professionals under contract for advertising and Angie's List membership subscription fees from consumers, as well as revenue from mHelpDesk and HomeStars.
(c) Includes fees paid by service professionals for consumer matches.

Vimeo
Platform revenue		$	75,130	$	52,145	$	199,432	$	139,160
Hardware revenue		0		0		0		2,279
Total Vimeo revenue		$	75,130	$	52,145	$	199,432	$	141,439
(a) Includes fees paid by service professionals for consumer matches sourced through the marketplace platforms.										(a) Includes fees paid by service professionals for consumer matches sourced through the marketplace platforms.
(b) Includes revenue from pre-priced offerings sourced through the marketplace platforms.										(b) Includes revenue from pre-priced offerings sourced through the marketplace platforms.
(c) Includes Angi revenue from service professionals under contract for advertising and Angi membership subscription fees from consumers, as well as revenue from HomeStars.										(c) Includes Angi revenue from service professionals under contract for advertising and Angi membership subscription fees from consumers, as well as revenue from HomeStars.
(d) Includes fees paid by service professionals for consumer matches.										(d) Includes fees paid by service professionals for consumer matches.

Dotdash	Dotdash									Dotdash
Display advertising revenue	Display advertising revenue	$	31,836	$	29,158	$	88,326	$	84,171	Display advertising revenue	$	44,932	$	26,601	$	82,103	$	56,490
Performance marketing revenue	Performance marketing revenue	18,938		11,127		51,189		27,803		Performance marketing revenue	28,401		18,020		56,651		32,251
Total Dotdash revenue	Total Dotdash revenue	$	50,774	$	40,285	$	139,515	$	111,974	Total Dotdash revenue	$	73,333	$	44,621	$	138,754	$	88,741

Search	Search									Search
Advertising revenue	Advertising revenue									Advertising revenue
Google advertising revenue:	Google advertising revenue:	$	120,838	$	168,574	$	352,918	$	534,389	Google advertising revenue:	$	153,517	$	105,283	$	308,935	$	232,080
Non-Google advertising revenue	Non-Google advertising revenue	20,171		13,357		64,878		28,893		Non-Google advertising revenue	26,200		21,331		47,734		44,707
Total advertising revenue	Total advertising revenue	141,009		181,931		417,796		563,282		Total advertising revenue	179,717		126,614		356,669		276,787
Other revenue	Other revenue	4,199		3,733		13,094		12,326		Other revenue	3,890		4,649		7,972		8,895
Total Search revenue	Total Search revenue	$	145,208	$	185,664	$	430,890	$	575,608	Total Search revenue	$	183,607	$	131,263	$	364,641	$	285,682

Emerging & Other	Emerging & Other									Emerging & Other
Subscription revenue	Subscription revenue	$	84,369	$	50,081	$	217,974	$	141,759	Subscription revenue	$	88,664	$	72,934	$	172,230	$	133,605
Marketplace revenue	Marketplace revenue	35,476		10,399		83,711		30,288		Marketplace revenue	53,888		30,539		110,159		48,235
Media production and distribution revenue										Media production and distribution revenue	2,624		543		10,412		1,929
Advertising revenue:	Advertising revenue:									Advertising revenue:
Non-Google advertising revenue	Non-Google advertising revenue	4,255		5,704		10,470		16,455		Non-Google advertising revenue	3,919		2,502		7,312		6,215
Google advertising revenue	Google advertising revenue	859		1,002		2,204		3,030		Google advertising revenue	550		511		1,121		1,345
Total advertising revenue	Total advertising revenue	5,114		6,706		12,674		19,485		Total advertising revenue	4,469		3,013		8,433		7,560
Other revenue		2,466		2,802		6,235		10,288
Service and other revenue										Service and other revenue	2,011		1,098		3,578		1,840
Total Emerging & Other revenue	Total Emerging & Other revenue	$	127,425	$	69,988	$	320,594	$	201,820	Total Emerging & Other revenue	$	151,656	$	108,127	$	304,812	$	193,169

3028

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived assets is presented below:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Revenue:	Revenue:									Revenue:
United States	United States	$	638,474	$	552,106	$	1,763,585	$	1,572,540	United States	$	704,218	$	553,910	$	1,359,253	$	1,061,702
All other countries	All other countries	149,903		153,276		435,277		462,747		All other countries	125,329		105,117		256,864		224,541
Total	Total	$	788,377	$	705,382	$	2,198,862	$	2,035,287	Total	$	829,547	$	659,027	$	1,616,117	$	1,286,243

September 30,
2020 December 31,
2019
(In thousands)
Long-lived assets (excluding goodwill, intangible assets and ROU assets):
United States $ 254,869 $ 297,433
All other countries 10,949 7,981
Total $ 265,818 $ 305,414


	June 30, 2021		December 31, 2020
	(In thousands)
Long-lived assets (excluding goodwill, intangible assets and ROU assets):
United States	$	264,006	$	263,620
All other countries	9,549		11,310
Total	$	273,555	$	274,930

The following tables present operating (loss) income and Adjusted EBITDA by reportable segment:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Operating (loss) income:	Operating (loss) income:									Operating (loss) income:
ANGI Homeservices		$	(3,019)	$	24,726	$	(1,671)	$	32,488
Vimeo		(3,298)		(11,155)		(25,623)		(40,555)
Angi Inc.										Angi Inc.	$	(32,731)	$	17,644	$	(32,622)	$	1,348
Dotdash	Dotdash	11,773		3,695		21,860		13,752		Dotdash	19,174		7,676		37,301		10,087
Search	Search	(52,979)		28,758		(264,761)		100,551		Search	25,662		8,781		44,048		(211,782)
Emerging & Other	Emerging & Other	(35,123)		8,520		(61,979)		(21,259)		Emerging & Other	(2,701)		(8,986)		(1,707)		(26,856)
Corporate	Corporate	(45,980)		(40,632)		(215,809)		(119,018)		Corporate	(37,824)		(122,560)		(82,670)		(166,135)
Total	Total	$	(128,626)	$	13,912	$	(547,983)	$	(34,041)	Total	$	(28,420)	$	(97,445)	$	(35,650)	$	(393,338)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Adjusted EBITDA (d):

ANGI Homeservices $ 38,487 $ 58,923 $ 130,820 $ 147,534
Vimeo $ 3,421 $ (7,997) $ (12,706) $ (33,661)
Dotdash $ 16,181 $ 7,026 $ 35,304 $ 22,551
Search $ 11,875 $ 29,177 $ 34,449 $ 101,982
Emerging & Other $ (8,061) $ (5,274) $ (30,648) $ (26,684)
Corporate $ (26,733) $ (21,943) $ (115,315) $ (60,735)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Adjusted EBITDA(e):
Angi Inc.	$	(4,442)	$	57,936	$	18,744	$	92,333
Dotdash	$	20,549	$	12,112	$	40,471	$	19,123
Search	$	25,670	$	9,444	$	44,056	$	22,574
Emerging & Other	$	6,891	$	(2,628)	$	18,855	$	(22,587)
Corporate	$	(22,289)	$	(57,194)	$	(48,637)	$	(88,526)

_____________________

~~(d)~~ (e) The Company's primary financial measure is Adjusted EBITDA, which 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. The Company believes this measure is useful for analysts and investors as this measure allows a more meaningful comparison between the Company's performance and that of its competitors. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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


	Three Months Ended June 30, 2021
	Operating (Loss) Income		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
Angi Inc.	$	(32,731)	$	9,543	$	15,058	$	3,688	$	(4,442)
Dotdash	19,174		$	0	$	630	$	745	$	20,549
Search	25,662		$	0	$	8	$	0	$	25,670
Emerging & Other	(2,701)		$	25	$	364	$	9,203	$	6,891
Corporate	(37,824)		$	14,483	$	1,052	$	0	$	(22,289)
Total	(28,420)
Interest expense	(5,814)
Unrealized gain on investment in MGM Resorts International	275,098
Other income, net	50,286
Earnings before income taxes	291,150
Income tax provision	(87,825)
Net earnings from continuing operations	203,325
Loss from discontinued operations, net of tax	(11,787)
Net earnings	191,538
Net loss attributable to noncontrolling interests	3,219
Net earnings attributable to IAC shareholders	$	194,757

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	Three Months Ended June 30, 2020
	Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Acquisition-related Contingent Consideration Fair Value Arrangements		Adjusted EBITDA
	(In thousands)
Angi Inc.	$	17,644	$	14,759	$	12,555	$	12,978	$	0	$	57,936
Dotdash	7,676		$	0	$	617	$	3,819	$	0	$	12,112
Search	8,781		$	0	$	663	$	0	$	0	$	9,444
Emerging & Other	(8,986)		$	25	$	378	$	6,591	$	(636)	$	(2,628)
Corporate	(122,560)		$	63,077	$	2,289	$	0	$	0	$	(57,194)
Total	(97,445)
Interest expense	(1,555)
Unrealized loss on investment in MGM Resorts International	(24,718)
Other income, net	3,311
Loss before income taxes	(120,407)
Income tax benefit	34,403
Net loss from continuing operations	(86,004)
Loss from discontinued operations, net of tax	(8,060)
Net loss	(94,064)
Net earnings attributable to noncontrolling interests	(2,053)
Net loss attributable to IAC shareholders	$	(96,117)

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

performance and that of its competitors. The above items are excluded from the Company's Adjusted EBITDA measure because these items are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.


	Six Months Ended June 30, 2021
	Operating (Loss) Income		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
Angi Inc.	$	(32,622)	$	11,577	$	31,027	$	8,762	$	18,744
Dotdash	37,301		$	0	$	1,179	$	1,991	$	40,471
Search	44,048		$	0	$	8	$	0	$	44,056
Emerging & Other	(1,707)		$	50	$	790	$	19,722	$	18,855
Corporate	(82,670)		$	30,739	$	3,294	$	0	$	(48,637)
Total	(35,650)
Interest expense	(12,431)
Unrealized gain on investment in MGM Resorts International	657,638
Other income, net	53,849
Earnings before income taxes	663,406
Income tax provision	(141,136)
Net earnings from continuing operations	522,270
Loss from discontinued operations, net of tax	(1,831)
Net earnings	520,439
Net loss attributable to noncontrolling interests	3,446
Net earnings attributable to IAC shareholders	$	523,885

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

Three Months Ended September 30, 2020
Operating
(Loss) Income Stock-based
Compensation
Expense Depreciation Amortization
of Intangibles Acquisition-related Contingent Consideration Fair Value Arrangements Goodwill Impairment Adjusted
EBITDA
(In thousands)
ANGI Homeservices $ (3,019) $ 14,697 $ 13,921 $ 12,888 $ 0 $ 0 $ 38,487
Vimeo (3,298) $ 0 $ 106 $ 6,613 $ 0 $ 0 $ 3,421
Dotdash 11,773 $ 0 $ 742 $ 3,666 $ 0 $ 0 $ 16,181
Search (52,979) $ 0 $ 881 $ 10,800 $ 0 $ 53,173 $ 11,875
Emerging & Other (35,123) $ 25 $ 853 $ 26,184 $ 0 $ 0 $ (8,061)
Corporate (45,980) $ 16,997 $ 2,250 $ 0 $ 0 $ 0 $ (26,733)
Total (128,626)
Interest expense (5,807)
Other income, net 290,786
Earnings before income taxes 156,353
Income tax benefit 29,508
Net earnings 185,861
Net earnings attributable to noncontrolling interests (944)
Net earnings attributable to IAC shareholders $ 184,917

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(Unaudited)

Three Months Ended September 30, 2019
Operating
Income (Loss) Stock-based
Compensation
Expense Depreciation Amortization
of Intangibles Acquisition-related Contingent Consideration Fair Value Arrangements Adjusted
EBITDA
(In thousands)
ANGI Homeservices $ 24,726 $ 8,784 $ 11,244 $ 14,169 $ 0 $ 58,923
Vimeo (11,155) $ 0 $ 39 $ 3,119 $ 0 $ (7,997)
Dotdash 3,695 $ 0 $ 216 $ 3,115 $ 0 $ 7,026
Search 28,758 $ 0 $ 419 $ 0 $ 0 $ 29,177
Emerging & Other 8,520 $ 0 $ 203 $ 2,142 $ (16,139) $ (5,274)
Corporate (40,632) $ 15,801 $ 2,888 $ 0 $ 0 $ (21,943)
Total 13,912
Interest expense (2,898)
Other expense, net (11,715)
Loss before income taxes (701)
Income tax benefit 19,079
Net earnings 18,378
Net earnings attributable to noncontrolling interests (1,912)
Net earnings attributable to IAC shareholders $ 16,466

Nine Months Ended September 30, 2020
Operating
(Loss) Income Stock-based
Compensation
Expense Depreciation Amortization
of Intangibles Acquisition-related Contingent Consideration Fair Value Arrangements Goodwill Impairment Adjusted
EBITDA
(In thousands)
ANGI Homeservices $ (1,671) $ 55,031 $ 38,614 $ 38,846 $ 0 $ 0 $ 130,820
Vimeo (25,623) $ 0 $ 266 $ 12,651 $ 0 $ 0 $ (12,706)
Dotdash 21,860 $ 0 $ 1,569 $ 11,875 $ 0 $ 0 $ 35,304
Search (264,761) $ 0 $ 1,864 $ 32,200 $ 0 $ 265,146 $ 34,449
Emerging & Other (61,979) $ 75 $ 1,533 $ 36,641 $ (6,918) $ 0 $ (30,648)
Corporate (215,809) $ 93,491 $ 7,003 $ 0 $ 0 $ 0 $ (115,315)
Total (547,983)
Interest expense (9,579)
Other income, net 211,769
Loss before income taxes (345,793)
Income tax benefit 107,019
Net loss (238,774)
Net earnings attributable to noncontrolling interests (625)
Net loss attributable to IAC shareholders $ (239,399)

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

Nine Months Ended September 30, 2019
Operating
Income
(Loss) Stock-based
Compensation
Expense Depreciation Amortization
of Intangibles Acquisition-related Contingent Consideration Fair Value Arrangements Adjusted
EBITDA
(In thousands)
ANGI Homeservices $ 32,488 $ 45,586 $ 27,039 $ 42,421 $ 0 $ 147,534
Vimeo (40,555) $ 0 $ 364 $ 6,530 $ 0 $ (33,661)
Dotdash 13,752 $ 0 $ 660 $ 8,139 $ 0 $ 22,551
Search 100,551 $ 0 $ 1,431 $ 0 $ 0 $ 101,982
Emerging & Other (21,259) $ 0 $ 546 $ 7,022 $ (12,993) $ (26,684)
Corporate (119,018) $ 49,281 $ 9,002 $ 0 $ 0 $ (60,735)
Total (34,041)
Interest expense (9,402)
Other income, net 16,850
Loss before income taxes (26,593)
Income tax benefit 53,319
Net earnings 26,726
Net earnings attributable to noncontrolling interests (10,718)
Net earnings attributable to IAC shareholders $ 16,008


	Six Months Ended June 30, 2020
	Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Acquisition-related Contingent Consideration Fair Value Arrangements		Goodwill Impairment		Adjusted EBITDA
	(In thousands)
Angi Inc.	$	1,348	$	40,334	$	24,693	$	25,958	$	0	$	0	$	92,333
Dotdash	10,087		$	0	$	827	$	8,209	$	0	$	0	$	19,123
Search	(211,782)		$	0	$	983	$	21,400	$	0	$	211,973	$	22,574
Emerging & Other	(26,856)		$	50	$	680	$	10,457	$	(6,918)	$	0	$	(22,587)
Corporate	(166,135)		$	72,856	$	4,753	$	0	$	0	$	0	$	(88,526)
Total	(393,338)
Interest expense	(3,772)
Unrealized loss on investment in MGM Resorts International	(24,718)
Other expense, net	(54,077)
Loss before income taxes	(475,905)
Income tax benefit	71,380
Net loss from continuing operations	(404,525)
Loss from discontinued operations, net of tax	(20,110)
Net loss	(424,635)
Net loss attributable to noncontrolling interests	319
Net loss attributable to IAC shareholders	$	(424,316)

NOTE ~~11—~~10—FINANCIAL STATEMENT DETAILS

Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying balance sheet to the total amounts shown in the accompanying statement of cash flows:


		September 30, 2020		December 31, 2019		September 30, 2019		December 31, 2018			June 30, 2021		December 31, 2020		June 30, 2020		December 31, 2019
		(In thousands)									(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	3,471,713	$	839,796	$	685,965	$	884,975	Cash and cash equivalents	$	3,476,071	$	3,366,176	$	2,445,030	$	837,916
Restricted cash included in other current assets	Restricted cash included in other current assets	12,711		527		1,445		1,441		Restricted cash included in other current assets	13,839		448		465		503
Restricted cash included in other non-current assets	Restricted cash included in other non-current assets	429		409		404		420		Restricted cash included in other non-current assets	730		449		413		409
Cash, cash equivalents, and restricted cash included in current assets of discontinued operations										Cash, cash equivalents, and restricted cash included in current assets of discontinued operations	0		110,037		2,841		1,904
Total cash and cash equivalents and restricted cash as shown on the statement of cash flows	Total cash and cash equivalents and restricted cash as shown on the statement of cash flows	$	3,484,853	$	840,732	$	687,814	$	886,836	Total cash and cash equivalents and restricted cash as shown on the statement of cash flows	$	3,490,640	$	3,477,110	$	2,448,749	$	840,732

Restricted cash included in other current assets at ~~September~~June 30, ~~2020~~2021 primarily consists of cash received from customers at Care.com’s payment solutions business, representing funds collected for payroll and related taxes, which were not remitted as of the period end.

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(Unaudited)

Restricted cash included in other current assets at December 31, 2020 primarily consists of cash received from customers at Angi Inc. through their Handy platform, representing funds collected for payments to service providers, which were not settled as of the period end and cash reserved to fund insurance claims at Angi Inc.

Restricted cash included in other current assets at June 30, 2020 primarily consists of a deposit related to corporate credit cards and cash reserved to fund insurance claims at Angi Inc.

Restricted cash included in other current assets at December 31, 2019 primarily consists of a deposit related to corporate credit ~~cards. Restricted cash included in other current assets~~cards at ~~September 30, 2019 and December 31, 2018 primarily consists of a cash collateralized letter of credit and a deposit related to corporate credit cards.~~Angi Inc.

Restricted cash included in other non-current assets for all periods presented consists of deposits related to leases.

Credit Losses

The following table presents the changes in the allowance for credit losses for the six months ended June 30, 2021 and 2020, respectively:



	2021		2020
	(In thousands)
Balance at January 1	$	27,178	$	19,984
Current period provision for credit losses	42,710		40,278
Write-offs charged against the allowance	(37,181)		(34,183)
Recoveries collected	1,351		1,283
Balance at June 30	$	34,058	$	27,362

Accumulated Amortization and Depreciation

The following table provides the accumulated amortization and depreciation within the consolidated balance sheet:


Asset Category	June 30, 2021		December 31, 2020
	(In thousands)
Right-of-use assets included in other non-current assets	$	98,365	$	73,498
Building, capitalized software, leasehold improvements and equipment	$	192,858	$	207,401
Intangible assets	$	250,078	$	148,073

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~Accumulated Amortization and Depreciation~~

~~The following table provides the accumulated amortization and depreciation within the consolidated balance sheet:~~

Asset Category September 30, 2020 December 31, 2019
(In thousands)
Right-of-use assets included in other non-current assets $ 65,409 $ 35,775
Building, capitalized software, leasehold improvements and equipment, net $ 217,069 $ 201,798
Intangible assets $ 268,454 $ 201,454

Other income (expense), net

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Unrealized gains (losses) related to investments (a)
$ 289,097 $ (4,576) $ 264,379 $ 25,322
Interest income 971 3,697 6,557 11,930
Realized gain related to the sale of an investment 2,671 0 2,671 0
Impairments related to impact of COVID-19 (b)
0 0 (59,001) 0
Unrealized reduction in the estimated fair value of a warrant (2,331) (8,689) (1,741) (8,689)
Realized loss related to the sale of Vimeo's hardware business 0 0 0 (8,234)
Mark-to-market loss on an indemnification claim related to the Handy acquisition 0 (945) (181) (1,999)
Other 378 (1,202) (915) (1,480)
Other income (expense), net $ 290,786 $ (11,715) $ 211,769 $ 16,850


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Unrealized increase in the estimated fair value of a warrant	$	42,481	$	590	$	55,256	$	590
Unrealized gain related to an investment following its initial public offering	10,710		0		10,710		0
Loss on the extinguishment of debt(a)	(1,110)		0		(1,110)		0
Impairments related to impact of COVID-19 (b)	0		0		0		(59,001)
Interest income	279		1,116		716		5,583
Foreign exchange gains (losses), net (c)	514		1,551		(11,118)		(112)
Other	(2,588)		54		(605)		(1,137)
Other income (expense), net	$	50,286	$	3,311	$	53,849	$	(54,077)

_____________________

(a) ~~Includes unrealized gains~~Represents the write-off of ~~$289.1 million~~ ~~and~~ ~~$264.4 million~~deferred debt issuance costs related to the ~~Company's investment~~ANGI Group Term Loan, which was repaid in ~~MGM for~~its entirety during the ~~three and nine months ended September 30, 2020~~, ~~respectively, and an unrealized loss~~second quarter of ~~$4.6 million~~ ~~and unrealized gain of~~ ~~$25.3 million~~ ~~related to the Company's investment in Pinterest, for the three and nine months ended September 30, 2019, respectively.~~2021.

(b) Includes ~~$51.5~~$51.5 million in impairments related to investments in equity securities without readily determinable fair values and ~~$7.5~~$7.5 million in impairments of a note receivable and a warrant related to certain ~~investees.~~investees in the six months ended June 30, 2020.

(c) Includes $10.0 million in foreign exchange losses primarily related to the substantial liquidation of certain foreign subsidiaries in the three months ended March 31, 2021.

NOTE ~~12—~~11—CONTINGENCIES

In the ordinary course of business, the Company is a party to various lawsuits. The Company establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Management has also identified certain other legal matters where the Company believes an unfavorable outcome is not probable and, therefore, 0no reserve is established. Although management currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management's view of these matters may change in the future. The Company also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of 1one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the Company. See "Note 2—Income Taxes" for additional information related to income tax contingencies.

Tinder Optionholder Litigation against IAC and ~~MTCH~~Match Group

In August 2018, 10 then-current and former employees of Match Group’s Tinder business filed a lawsuit in New York

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~~IAC/INTERACTIVECORP AND SUBSIDIARIES~~

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

~~(Unaudited)~~

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 a contractually established process for the independent valuation of Tinder by ~~certain~~2 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 the plaintiffs of their contractual right to later valuations of Tinder on a stand‑alone basis. The complaint asserts inter alia claims for breach of contract and interference with contractual relations and prospective economic advantage and seeks compensatory damages in the amount of at least $2 billion, as well as punitive damages. Shortly after filing suit, 4 plaintiffs who were still employed by Match Group filed a notice of discontinuance of their claims without prejudice, leaving the 6 former employees as the remaining plaintiffs.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

In October 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 time-barred under applicable law. In June 2019, the court issued a decision and order granting the motion in part but leaving the plaintiffs’ principal claims intact. The defendants appealed from the partial denial of their motion to dismiss, and in October 2019, the Appellate Division, First Department, affirmed the lower court’s decision. After additional appellate motion practice, in May 2020, the Appellate Division reaffirmed the lower court’s decision on different grounds. In June 2020, the defendants filed a motion for leave to appeal that decision to the Court of Appeals; the Appellate Division denied the motion in July 2020.

In June 2019, the defendants filed a second motion to dismiss or for other relief based upon certain substantial advance and/or preferential payment provisions of the plaintiffs’ agreement with a litigation funding firm; in July 2021, the court ruled that ~~motion remains pending.~~while it would not dismiss the case or preclude the payment recipients from testifying at trial, if they do testify, the defendants will have wide latitude on cross-examination to explore the circumstances of the payments. From July to November 2019, the defendants filed counterclaims against former Tinder CEO Sean Rad for breach of contract and unjust enrichment based upon his alleged misappropriation and unauthorized destruction of confidential company information, unauthorized recording of conversations with company employees, and breach of his non-solicitation obligations. In January 2020 and May 2021, the parties participated in a mediation sessions that did not result in the resolution of the matter.

~~Document discovery~~ Discovery in the case is ~~substantially complete; deposition discovery~~complete.

In June 2021, the defendants filed a motion to strike the plaintiffs' jury demand; in July 2021, the court issued an order denying the motion, whereupon the defendants filed a notice of appeal from that order and a motion to stay the trial, which is currently scheduled to commence in ~~progress.~~ November 2021, pending resolution of the appeal. In July 2021, the defendants also filed a motion for summary judgment.

In July 2020, the 4 individuals who earlier had discontinued their claims in the lawsuit commenced arbitration proceedings against IAC and Match Group before the American Arbitration Association in California, asserting the same claims and seeking the same relief as the 6 remaining plaintiffs in the New York lawsuit. In September 2020, the defendants filed a motion to stay the trial in the New York ~~action~~lawsuit in favor of the California arbitration; in November 2020, the court denied the motion. In December 2020, the claimants in the California arbitration ~~proceedings; that~~filed a motion to stay those proceedings in favor of the New York action; in January 2021, the arbitrator denied the motion and scheduled a hearing on the merits for February 2022. In April 2021, the respondents in the California arbitration filed a motion for summary judgment dismissing the claimants' merger-related claims; the motion was argued in July 2021 and remains pending.

IAC believes that the allegations against it in ~~this~~the New York lawsuit and the ~~arbitrations~~California arbitration are without merit and will continue to defend vigorously against them. ~~For a fuller description of this matter, please see~~ ~~Item 1.~~ ~~Legal Proceedings~~.

Pursuant to the Transaction Agreement (as defined in ~~Item 2-Management's Discussion~~Note 1—The Company and ~~Analysis~~Summary of ~~Financial Condition and Results of Operations-General-Separation),~~Significant Accounting Policies-MTCH Separation ), Match Group has agreed to indemnify the Company for matters relating to any business of Match Group, including indemnifying the Company for costs related to the matter described above.

NOTE ~~13—~~12—RELATED PARTY TRANSACTIONS

Relationship with Old IAC prior to the MTCH Separation

The Company’s statement of operations includes allocations of costs, including stock-based compensation expense, related to Old IAC’s accounting, treasury, legal, tax, corporate support and internal audit functions prior to the ~~Separation.~~MTCH Separation for the three and six months ended June 30, 2020. Old IAC historically allocated costs related to its accounting, treasury, legal, tax, corporate support and internal audit functions that were incurred at the Old IAC legal entity level to its publicly traded subsidiaries, Old MTCH and ANGI Homeservices, based upon time spent or other cost drivers, such as revenue, number of legal entities or transaction volume, in their standalone financial statements. For periods subsequent to the Old MTCH initial public offering in November 2015 and the combination of the HomeAdvisor business and Angie's List, Inc into ANGI Homeservices on September 29, 2017 (the "Combination"), Old IAC billed Old MTCH and ANGI HomeservicesAngi Inc. for any services provided under the applicable services agreements. The remaining unallocated expenses of Old IAC related to its accounting, treasury, legal, tax, corporate support and internal audit functions were allocated to the Company. ~~Allocated~~Old IAC allocated costs ~~inclusive of stock-based compensation expense, in 2020 prior~~ to the ~~Separation, were $85.5 million. Allocated costs,~~Company, inclusive of stock-based compensation expense, ~~were~~totaled $~~46.6~~61.5 million and ~~$119.0~~$85.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~2020, the date of the MTCH Separation. It is not practicable to determine the actual expenses that would have been incurred for these services had the Company operated as a standalone entity during the periods presented. Management considers the allocation method to be reasonable.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The portion of interest income reflected in the statement of operations that is related party in nature was less than $0.1 million and $0.1 million infor the three and six months ended June 30, 2020, prior to the MTCH Separation ~~and~~ ~~$0.2 million~~ ~~for both the three and nine months ended September 30, 2019, respectively,~~ and is included in ~~‘‘Interest~~"Interest income, ~~net’’~~net" in the table below.

The following table summarizes the components of the net ~~increase~~decrease (increase) in Old IAC’s investment in the Company for the ~~periods prior to~~three and six months ended June 30, 2020, the date of the MTCH Separation:


		Six Months Ended June 30, the date of the Separation		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
		2020		2019					(In thousands)
		(In thousands)
Cash transfers from Old IAC related to its centrally managed U.S. treasury management function, acquisitions and cash expenses paid by Old IAC on behalf of the Company, net		$	(1,742,854)	$	(246,652)	$	(154,754)
Cash transfers to (from) Old IAC related to its centrally managed U.S. treasury management function, acquisitions and cash expenses paid by Old IAC on behalf of the Company, net								Cash transfers to (from) Old IAC related to its centrally managed U.S. treasury management function, acquisitions and cash expenses paid by Old IAC on behalf of the Company, net	$	43,705	$	(1,742,854)
Contribution of buildings to Match Group	Contribution of buildings to Match Group	34,973		0		0		Contribution of buildings to Match Group	0		34,973
Taxes	Taxes	34,436		18,876		(125)		Taxes	9,388		34,436
Allocation of costs from Old IAC	Allocation of costs from Old IAC	(12,652)		(30,911)		(69,870)		Allocation of costs from Old IAC	0		(12,652)
Interest income, net	Interest income, net	102		189		189		Interest income, net	30		102
Net increase in Old IAC's investment in the Company prior to the Separation		$	(1,685,995)	$	(258,498)	$	(224,560)
Net decrease (increase) in Old IAC's investment in the Company prior to the MTCH Separation								Net decrease (increase) in Old IAC's investment in the Company prior to the MTCH Separation	$	53,123	$	(1,685,995)

Notes Receivable—Related Party

During 2019, the Company, through two subsidiaries, entered into loan agreements with Old IAC for cash transfers to Old IAC under its centrally managed U.S. treasury function. During the first quarter of 2020, the outstanding balance, which was $55.3 million at December 31, 2019, was repaid.

On February 11, 2020, the Company, through a subsidiary, entered into a loan agreement with Old IAC for cash transfers to Old IAC under its centrally managed U.S. treasury function. During the second quarter of 2020, the outstanding balance, which was $27.2 million at March 31, 2020, was repaid.

~~Long-term Debt—Related Party~~

On December 14, 2018, the Company, through a subsidiary, entered into a loan agreement with Old IAC for an amount not to exceed $15.0 million for general working capital purposes in the ordinary course of business. During the first quarter of 2019, the outstanding balance, which was $2.5 million at December 31, 2018, was repaid.

~~IAC and ANGI~~

Old IAC and ANGI, in connection with the Combination, entered into a contribution agreement; an investor rights agreement; a services agreement; a tax sharing agreement; and an employee matters agreement. Upon the Separation, Old IAC assigned these agreements to the Company.

For the three and nine months ended September 30, 2020, 0.1 million and 0.3 million shares, respectively of ANGI Class B common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement as reimbursement for shares of IAC common stock, issued for periods after the Separation, and Old IAC common stock, issued for periods prior to the Separation, in connection with the exercise and vesting of IAC and Old IAC equity awards held by ANGI employees. For the three and nine months ended September 30, 2019, 0.1 million and 0.5 million shares, respectively, of ANGI Class B common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement.

For the three and nine months ended September 30, 2020 and 2019, ANGI was charged $1.3 million and $3.6 million; and $1.0 million and $3.7 million, respectively, by IAC, for periods after the Separation, and Old IAC, for periods prior to the Separation, for services rendered pursuant to the services agreement. There were 0 outstanding receivables or payables pursuant to the services agreement as of September 30, 2020 or December 31, 2019.

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

~~(Unaudited)~~

At September 30, 2020 and December 31, 2019, ANGI had outstanding payables of $0.6 million and $0.2 million, respectively, due to the Company pursuant to the tax sharing agreement. There were $3.1 million of refunds made to ANGI pursuant to this agreement during the nine months ended September 30, 2020. There were 0 payments to or refunds from ANGI pursuant to this agreement during the three months ended September 30, 2020. During the first quarter of 2019, $11.4 million was paid to the Company pursuant to this agreement.

Additionally, the Company subleases office space from ANGI and was charged $0.5 million and $1.4 million; and $0.5 million and $1.0 million of rent for the three and nine months ended September 30, 2020 and 2019, respectively. At both September 30, 2020 and 2019, there were outstanding payables of less than $0.1 million due to ANGI pursuant to sublease agreements, which were subsequently paid in full in each respective fourth quarter.

IAC and Old MTCH

Prior to the MTCH Separation, for the three and six months ended June 30, 2020, ~~the date of the Separation, and for the three and nine months ended September 30, 2019,~~ Old MTCH incurred rent expense of ~~$1.4 million; and $1.5~~$0.5 million and ~~$4.4~~$1.4 million, respectively, for leasing office space for certain of its businesses at properties owned by the Company. The ~~amounts were~~amount was paid in full by Old MTCH at June 30, 2020. After June 30, 2020, the date of ~~Separation and at September 30, 2019, respectively. After~~ the MTCH Separation, Match Group is no longer a related party.

On January 31, 2020, Old IAC contributed 2 office buildings in Los Angeles to Old MTCH, which are primarily occupied and were previously leased from the Company by Tinder. In connection with ~~the~~this contribution, the Company entered into a lease with Old MTCH for office space, which the Company currently occupies, in one of the buildings and for both the three and six months ended June 30, 2020, ~~the date of the Separation,~~ the Company paid Old MTCH less than $0.1 million under the lease. Old MTCH issued 1.4 million shares of Old MTCH common stock to Old IAC for the buildings.

IAC and Angi Inc.

Old IAC and Angi Inc., in connection with the transaction resulting in formation of Angi Inc., entered into a contribution agreement; an investor rights agreement; a services agreement; a tax sharing agreement; and an employee matters agreement. Upon the MTCH Separation, Old IAC assigned these agreements to the Company.

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IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

For the three and six months ended June 30, 2021, less than 0.1 million and 0.1 million shares, respectively, of Angi Inc. Class B common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by Angi Inc. employees. For the six months ended June 30, 2020, 0.2 million shares of Angi Inc. Class B common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement as reimbursement for shares of Old IAC common stock issued in connection with the exercise and vesting of Old IAC equity awards held by Angi Inc. employees. There were 0 shares issued pursuant to the employee matters agreement for the three months ended June 30, 2020. For the three and six months ended June 30, 2021, less than 0.1 million and 2.6 million shares, respectively, of Angi Inc. Class A common stock were issued to a subsidiary of the Company pursuant to the employee matters agreement as reimbursement for IAC common stock issued in connection with the exercise and settlement of certain Angi Inc. stock appreciation rights. There were 0 shares of Angi Inc. Class A common stock issued to IAC during the three and six months ended June 30, 2020.

For the three and six months ended June 30, 2021 and 2020, Angi Inc. was charged $1.2 million and $2.3 million; and $1.2 million and $2.4 million, respectively, by IAC and Old IAC, respectively, for services rendered pursuant to the services agreement. At June 30, 2021 and December 31, 2020, there were 0 outstanding receivables or payables pursuant to the services agreement.

At June 30, 2021 and December 31, 2020, Angi Inc. had outstanding payables of $1.5 million and $0.9 million, respectively, due to the Company pursuant to the tax sharing agreement. There were 0 payments to or refunds from Angi Inc. pursuant to this agreement during the three and six months ended June 30, 2021. There were $3.1 million of refunds made to Angi Inc. pursuant to this agreement during the three and six months ended June 30, 2020.

Additionally, the Company subleases office space from Angi Inc. and was charged $0.4 million and $0.8 million; and $0.4 million and $0.9 million of rent for the three and six months ended June 30, 2021 and 2020, respectively. At June 30, 2021 there were 0 outstanding payables due to Angi Inc. pursuant to the sublease agreements. At December 31, 2020, there was an outstanding payable of less than $0.1 million due to Angi Inc. pursuant to sublease agreements, which was subsequently paid in full in the first quarter of 2021.

IAC and Vimeo

Following the Spin-off, the relationship between IAC and Vimeo is governed by a number of agreements. These agreements include a separation agreement; a tax matters agreement; a transition services agreement; an employee matters agreement; and an office lease agreement. The Company and Vimeo are related parties because Mr. Diller is the beneficial owner of more than 10% of the voting interests in both IAC and Vimeo.

At June 30, 2021, Vimeo had 0 outstanding payables or receivables due to or due from the Company pursuant to the tax sharing agreement. There were 0 payments to or refunds from Vimeo pursuant to this agreement for the period of May 25, 2021 through June 30, 2021.

For the period of May 25, 2021 through June 30, 2021, Vimeo was charged $0.2 million by IAC for services rendered pursuant to the transition services agreement. At June 30, 2021, there were 0 outstanding receivables or payables pursuant to the transition services agreement.

Vimeo has an outstanding payable due to the Company of $3.0 million at June 30, 2021 related primarily to reimbursements due to the Company for Vimeo’s participation in the Company’s employee benefit plans. This amount is included in “Other current assets" on the Company’s consolidated balance sheet at June 30, 2021. This amount was paid in full in July 2021.

For the period of May 25, 2021 through June 30, 2021, Vimeo was charged $0.4 million of rent pursuant to the lease agreement. At June 30, 2021 there were 0 outstanding receivables due from Vimeo pursuant to the lease agreement.

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IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

IAC and Expedia

The Company and Expedia each have a 50% ownership interest in 2 aircraft that may be used by both companies. In 2019, the Company and Expedia entered into an agreement to jointly acquire a new corporate aircraft for a total expected cost of ~~$72.3~~$72.7 million (including purchase price and related costs), with each company to bear 50% of such expected cost. The Company paid approximately $23 million in 2019 in connection with ~~our joint entry into~~ the purchase agreement, and the respective share of the balance is due upon delivery of the new aircraft, which is expected to occur in the third quarter of 2021. Members of the aircraft flight crews are employed by an entity in which the Company and Expedia each have a 50% ownership interest. The Company and Expedia have agreed to share costs relating to flight crew compensation and benefits pro-rata according to each company’s respective usage of the aircraft, for which they are separately billed by the entity described above. The Company and Expedia are related parties ~~since they were under common control, given that~~because Mr. Diller serves as Chairman and Senior Executive of both IAC and Expedia. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, total payments made to this entity by the Company were not material.

NOTE ~~14—~~13—SUBSEQUENT ~~EVENTS~~EVENT

OnThe $250 million ANGI Group Revolving Facility, which otherwise would have expired on November 5, ~~2020,~~2023, was terminated effective August 3, 2021. No amounts were ever drawn under the ~~Company announced it is considering a spin-off of its ownership stake in Vimeo~~ANGI Group Revolving Facility prior to its ~~shareholders; the Company also entered into an agreement to raise $150 million at Vimeo at an enterprise value of approximately $2.75 billion.~~

On November 5, 2020, the Company entered into a new, ten-year employment agreement (the "Employment Agreement") and a Restricted Stock Agreement ("RSA Agreement") with Joseph Levin, IAC's Chief Executive Officer. The Employment Agreement provides for an annual base salary of $1,000,000 and a discretionary annual bonus, as determined by the Compensation Committee of the Board. The RSA Agreement provides for a grant of 3,000,000 shares of IAC restricted common stock, that cliff vest on the ten-year anniversary of the grant date based on satisfaction of IAC's stock price targets and Mr. Levin's continued employment through the vesting date.

~~Mr. Levin may elect to accelerate vesting of the IAC restricted shares, effective on the 6~~th~~, 7~~th~~, 8~~th~~, or 9~~th anniversary of the grant date, in which case performance will be measured through such date, and Mr. Levin will receive a pro-rated portion of the award (based on the years elapsed from the grant date) and any remaining shares will be forfeited. The applicable stock price goals are proportionately lower on the earlier vesting dates.termination.

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

GENERAL

~~Separation~~Vimeo Spin-off:

MTCH Separation:

Management Overview

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

For a more detailed description of the Company's operating businesses, see "Description of IAC Businesses" included in "Item 1—Business" to the ~~annual audited combined financial statements of the Company and notes thereto~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2019 filed on~~2020.

Defined Terms and Operating Metrics:

Unless otherwise indicated or as the ~~Current Report on Form 8-K with the Securities Exchange Commission on October 5, 2020.~~

~~Key Terms:~~

~~When the following~~context otherwise requires, certain terms ~~appear~~used in this quarterly report, ~~they have~~which include the ~~meanings indicated~~principal operating metrics we use in managing our business, are defined below:

Reportable Segments (for additional information see "Note ~~10—~~9—Segment Information" to the financial statements included in "Item 1—Consolidated and Combined Financial Statements"):

•~~ANGI Homeservices~~Angi Inc. ~~("ANGI Homeservices" or "ANGI")~~ - a publicly traded company that connects quality home service professionals with consumers across 500 different categories, from repairing and remodeling homes to cleaning and ~~landscaping, with consumers through category-transforming products under brands such as HomeAdvisor, Angie’s List, Handy and Fixd Repair.~~landscaping. At ~~September~~June 30, ~~2020,~~2021, the Company’s economic interest and voting interest in ~~ANGI~~Angi Inc. were ~~84.5%~~84.1% and ~~98.2%~~98.1%, respectively.

•~~Vimeo~~ ~~- operates a global video platform for creative professionals, small and medium businesses ("SMBs"), organizations and enterprises to connect with their audiences, customers and employees.~~

•Dotdash - is a portfolio of digital publishing brands ~~providing~~that collectively provide expert information and inspiration in select vertical content categories. Dotdash operates in six verticals: Health (Verywell), Finance(Investopedia, the Balance), Home (the Spruce, MyDomaine), Food & Drink (the Spruce Eats, Simply Recipes, Serious Eats, Liquor.com), Beauty & Style (Byrdie, Brides), and Lifestyle (Lifewire, TripSavvy, TreeHugger.com). Through these brands, Dotdash provides original and engaging digital content in a variety of formats, including articles, illustrations, videos and images.

•Search - consists of Ask Media Group, a collection of websites providing general search services and information, and Desktop, which includes our direct-to-consumer downloadable desktop applications and our business-to-business partnership operations.

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•Emerging & Other - consists of

◦Care.com, the leading online destination for families to easily connect with caregivers for their children, aging parents, pets and homes and for a wide variety of caregivers to easily connect with families. Care.com's brands include Care@Work, Care.com offerings to enterprises, and HomePay. Care.com acquired Lifecare, a leading ~~global platform for finding and managing~~provider of family care ~~which was acquired~~benefits, on ~~February 11, 2020,~~ October 27, 2020;

◦Mosaic Group, a leading developer and provider of global subscription mobile applications. Mosaic Group has a portfolio of some of the largest and most popular applications ~~(through Apalon,~~ in the following verticals including Communications (RoboKiller, TapeACall), Language (iTranslate, Grammatica), Weather (Clime: NOAA Weather Radar Live, Weather Live), Business (PDF Hero, Scan Hero), Health (Daily Burn, Window - Intermittent Fasting) and ~~TelTech)~~Lifestyle (Blossom, Pixomatic); and

◦Bluecrew ~~NurseFly, a healthcare staffing platform acquired on June 26, 2019,~~ , Vivian Health (formerly NurseFly), The Daily Beast, Newco (an IAC incubator), IAC Films and, for periods prior to its sale on March 16, 2020, College Humor ~~Media.~~Media.

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~~Defined Terms and Operating Metrics:~~

Unless otherwise indicated or as the context otherwise requires certain terms used in this quarterly report, which include the principal operating metrics we use in managing our business, are defined below:

~~ANGI Homeservices~~Angi Inc.

•Angi Marketplace Revenue - ~~includes revenue from the HomeAdvisor, Handy and Fixd Repair~~primarily reflects domestic ~~marketplaces,~~marketplace revenues, including consumer connection revenue for consumer matches, revenue from ~~pre-priced jobs~~Angi Services offerings sourced through ~~the HomeAdvisor, Handy and Fixd Repair~~marketplace platforms, and ~~service professional~~ membership subscription ~~revenue. It excludes~~ revenue from Angie's List, mHelpDesk and HomeStars. Effective January 1, 2020, Fixd Repair has been moved to Marketplace from Advertising & Other and prior year amounts have been reclassified to conform to the current year presentation.service professionals.

•Advertising &and OtherRevenue - primarily includes ~~Angie’s List~~ revenue ~~(revenue~~ from service professionals under contract for advertising and membership subscription fees from ~~consumers) as well as revenue~~consumers.

•Angi Services - are Angi Inc.'s pre-priced offerings by which the consumer purchases services directly from ~~mHelpDesk~~Angi Inc. and ~~HomeStars.~~Angi Inc. engages a service professional to perform the service.

•Marketplace Service Requests - are fully completed and submitted domestic customer service requests ~~to HomeAdvisor~~ and includes ~~pre-priced jobs~~Angi Services requests sourced through the ~~HomeAdvisor, Handy and Fixd Repair platforms.~~marketplace platforms in the period.

•Marketplace Monetized Transactions - are fully completed and submitted domestic customer service requests ~~to HomeAdvisor~~ that were matched to and paid for by a service professional and includes ~~pre-priced~~completed and in-process Angi Services jobs sourced through the ~~HomeAdvisor, Handy and Fixd Repair~~marketplace platforms ~~during~~in the period.

•Marketplace Transacting Service Professionals ("Marketplace Transacting SPs")- are the number of ~~HomeAdvisor, Handy and Fixd Repair domestic~~marketplace service professionals that paid for consumer matches or performed aan Angi Services job sourced through the ~~HomeAdvisor, Handy and Fixd Repair~~marketplace platforms ~~during~~in the quarter.

•Advertising Service Professionals ("Advertising SPs") - are the ~~total~~ number of ~~Angie’s List~~ service professionals under contract for advertising ~~at the end of the period.~~

~~Vimeo~~

•~~Platform Revenue~~ ~~- primarily includes revenue from Software-as-a-Service ("SaaS") subscription fees and other related revenue from Vimeo subscribers.~~

•~~Hardware Revenue~~ ~~- includes sales of our live streaming accessories. Vimeo sold its hardware business on March 29, 2019.~~

•~~Vimeo Ending Subscribers~~ ~~- is the number of subscribers to Vimeo's SaaS video tools~~ at the end of the period.

Dotdash

•Display Advertising Revenue - primarily includes revenue generated from display advertisements sold both directly through our sales team and via programmatic exchanges.

•Performance Marketing Revenue - primarily includes affiliate commerce and performance marketing commissions generated when consumers are directed from our properties to third-party service providers. Affiliate commerce commissions are generated when a consumer completes a transaction. Performance marketing commissions are generated on a cost-per-click or cost-per-new account basis.

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Operating Costs and Expenses:

•Cost of revenue - consists primarily of traffic acquisition costs, which includes (i) payments made to partners who direct traffic to our Ask Media Group websites, who distribute our business-to-business customized browser-based applications and who integrate our paid listings into their websites and (ii) the amortization of fees paid to Apple and

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Google related to the distribution of apps and the facilitation of in-app ~~purchases.~~purchases of product features. Traffic acquisition costs include payment of amounts based on revenue share and other arrangements. Cost of revenue also includes payments made to independent third party service professionals who perform work contracted under ~~pre-priced~~Angi Services arrangements through the ~~HomeAdvisor, Handy and Fixd Repair~~Angi Inc. marketplace platforms, compensation expense (including stock-based compensation expense) and other employee-related costs for ~~Vimeo and~~ Care.com customer care and support functions, ~~employees at Fixd Repair for service work performed,~~ payments made to workers staffed by Bluecrew, payments made to care providers for Care@Work, hosting fees, credit card processing fees, content costs, and production costs related to IAC Films and College Humor, for periods prior to its sale on March 16, ~~2020, College Humor Media.~~2020.

•Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including ~~fees paid to~~through search engines and social media sites, ~~and~~fees paid to third parties that distribute our direct-to-consumer downloadable desktop applications, offline marketing, which is primarily television advertising, ~~and~~ partner-related payments to those who direct traffic to the brands within our ~~ANGI~~Angi Inc. segment, and compensation expense (including stock-based compensation expense) and other employee-related costs for ~~ANGI's~~Angi Inc.'s sales force and marketing personnel.

•General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions (except for ~~Vimeo and~~ Care.com, which include customer service costs within cost of revenue), fees for professional services (including transaction-related costs related to the MTCH Separation, the Spin-off and acquisitions), rent expense, facilities costs, ~~bad debt expense,~~provision for credit losses, software license and maintenance costs and acquisition-related contingent consideration fair value adjustments (described below). The customer service function at ~~ANGI~~Angi Inc. includes personnel who provide support to its service professionals and consumers.

•Product development expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs and third-party contractors that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology and software license and maintenance costs.

•Acquisition-related contingent consideration fair value adjustments - relate to the portion of the purchase price of certain acquisitions that is contingent upon the financial performance and/or operating metric targets of the acquired company. The fair value of the liability is estimated at the date of acquisition and adjusted each reporting period until the liability is settled. Significant changes in financial performance and/or operating metrics will result in a significantly higher or lower fair value measurement. The changes in the estimated fair value of the contingent consideration arrangements during each reporting period, including the accretion of the discount if the arrangement is longer than one year, are recognized in "General and administrative expense" in the accompanying statement of operations.

Long-term debt (for additional information see "Note 6—Long-term Debt" to the financial statements included in "Item 1—Consolidated and Combined Financial Statements"):

•ANGI Group Senior Notes - Onon August 20, 2020, ANGI Group, LLC ("ANGI Group"), a direct wholly-owned subsidiary of ~~ANGI,~~Angi Inc., issued $500 million of its 3.875% Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year, commencing February 15, 2021. ~~The proceeds from the offering will be used for general corporate purposes, including potential future acquisitions and return of capital.~~

•~~ANGI Group Term Loan -~~ ~~due November 5, 2023. The outstanding balance of the ANGI Term Loan as of September 30, 2020~~ ~~is $237.2 million and quarterl~~y principal payments are required. Pursuant to the joinder agreement entered into on August 12, 2020, ANGI Group became the successor borrower under the ANGI Group Term Loan and ANGI Homeservices Inc.’s obligations thereunder were terminated. At both September 30, 2020 and December 31, 2019, the ANGI Term Loan bore interest at LIBOR plus 1.50%. The interest rate wa~~s 1.66% and~~ ~~3.25% at September 30, 2020 and December 31, 2019, respectively.~~

•ANGI Group Revolving Facility - ~~The~~the $250 million ANGI Group ~~$250 million~~ revolving credit facility, ~~expires~~which otherwise would have expired on November 5, ~~2023. Pursuant to the joinder agreement entered into on~~2023, was terminated effective August ~~12, 2020, ANGI Group became the successor borrower~~3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility ~~and ANGI Homeservices Inc.’s obligations thereunder were~~prior to its termination.

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~~terminated. At September 30, 2020 and December 31, 2019, there were no outstanding borrowings under the ANGI Group Revolving Facility.~~

•~~IAC Group Credit Facility~~ - The IAC Group $250 million revolving credit facility, which was scheduled to expire on November 5, 2023, was terminated effective October 2, 2020. At September 30, 2020 and December 31, 2019, there were no outstanding borrowings under the IAC Group Credit Facility.

Non-GAAP financial measure:

•Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") - is a non-GAAP financial measure. See "Principles of Financial Reporting" for the definition of Adjusted EBITDA and a reconciliation of net earnings (loss) attributable to IAC shareholders to operating ~~(loss) income~~loss to ~~consolidated and combined~~ Adjusted EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

Angi Inc.'s Brand Integration Initiative

On March 17, 2021, Angi Inc. updated one of its leading websites and brands, Angie’s List, to Angi, and concentrated its marketing investment in the Angi brand in order to focus its marketing, sales and branding efforts on a single brand.

Angi Inc. relies heavily on free, or organic, search results from search engine optimization and paid search engine marketing to drive traffic to its platforms. This brand initiative has adversely affected the placement and ranking of Angi Inc. websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List. In addition, Angi Inc. shifted marketing to support Angi, away from HomeAdvisor, which has negatively affected the efficiency of its search engine marketing efforts.

During the second quarter of 2021, these efforts had a pronounced negative impact on Marketplace Service Requests from organic search results, and from Angi Inc.'s mobile applications, which in turn has resulted in increased paid search engine marketing to generate Marketplace Service Requests. The combined effect of this during the three months ended June 30, 2021, has reduced revenue and increased marketing spend, materially more than expected at the launch of the brand initiative in the first quarter of 2021 and more significantly than our forecasts at the beginning of May 2021. Angi Inc. expects the pronounced negative impact to organic search results, the increased paid search engine marketing costs and the reduced monetization from our mobile applications to continue until such time as the new brand establishes search engine optimization ranking and consumer awareness is established.

Angi Services Investment

Angi Services was launched in August 2019 and for the three and six months ended June 30, 2021 revenue grew 127% and 96%, respectively, versus the comparable prior year periods. Angi Inc. has invested significantly in Angi Services and expects to continue to do so going forward. In the second half of 2021, Angi Inc. expects significant revenue growth at Angi Services as it expands the business, refines the overall experience, and increase penetration in certain geographies. This increased investment in Angi Services has contributed to lower profitability for Angi Inc. for the three and six months ended June 30, 2021 and is expected to continue to negatively impact profits through the remainder of 2021.

Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement")

A meaningful portion of the Company's revenue (and a substantial portion of IAC's net cash from operating activities attributable to continuing operations that it can freely access) is attributable to 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~~six months ended ~~September~~June 30, ~~2020,~~2021, total revenue earned from Google was ~~$132.4~~$169.6 million and ~~$385.9~~$341.4 million, respectively, representing ~~17%~~20% and ~~18%~~21%, respectively, of the Company's revenue. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, total revenue earned from Google was ~~$182.4~~$114.4 million and ~~$574.7~~$253.2 million, respectively, representing ~~26%~~17% and ~~28%~~20%, respectively, of the Company's ~~combined~~ revenue. ~~Accounts~~The related accounts receivable ~~related to~~totaled $58.7 million and $61.9 million at June 30, 2021 and December 31, 2020, respectively.

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~~Revenue~~

The revenue attributable to the Services Agreement is earned by Ask Media Group and the Desktop business, ~~and Ask Media Group,~~ both within the Search segment. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, revenue earned from the Services Agreement ~~of $35.6~~was $123.2 million and ~~$118.9 million, respectively, was earned within the Desktop business and $83.7 million and $231.2~~$244.6 million, respectively, within Ask Media ~~Group.~~Group and $27.6 million and $58.7 million, respectively, within the Desktop business. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, revenue earned from the Services Agreement ~~of $68.0~~was $67.0 million and ~~$234.1 million, respectively, was earned within the Desktop business and $100.3 million and $299.1~~$147.5 million, respectively, within Ask Media ~~Group.~~Group and $37.2 million and $83.3 million, respectively, within the Desktop business.

The Services Agreement expires on March 31, 2023; provided that during each September, either party may, after discussion with the other party, terminate the Services Agreement, effective on September 30 of the year following the year such notice is given. Neither party gave notice to the other party to terminate the Services Agreement pursuant to this provision in September 2020. 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. 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 have in the past and could in ~~turn~~the future require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, which have been and could be costly to address ~~or otherwise~~and have had and in the future could have an adverse effect on our financial condition and results of ~~operations, particularly the businesses in our Search segment.~~operations. As described below, Google has made changes to the policies under the Services Agreement and has also made industry-wide changes that have negatively impacted the Desktop business-to-consumer ("B2C") business and ~~Google~~it may do so in the future.

In addition, during the fourth quarter ~~ended September 30,~~of 2020, Google suspended services with respect to some B2C's products and may do so with respect to other products in the ~~Company reassessed~~future. As a result, the ~~fair values~~B2C business elected to modify certain marketing strategies in early January 2021. Subsequently, Google informed us of another policy change in the first quarter of 2021 that became effective on May 10, 2021. We anticipated that this Google policy change would eliminate our ability to successfully introduce and market new B2C products that would be profitable. Therefore, we undertook cost reduction measures and we effectively eliminated all marketing of B2C products beginning in March 2021. This elimination of marketing has and will positively impact profitability in 2021 because revenue from B2C products is earned over multiple periods beyond just the period in which the initial marketing is incurred and following the cessation of the ~~Desktop reporting unit and~~introduction of new products in March 2021, the ~~related indefinite-lived intangible assets and recorded impairments equal~~B2C revenue stream relates solely to the ~~remaining carrying value~~then existing installed base of ~~the goodwill of~~ ~~$53.2 million and $10.8 million related to the intangible assets.~~The reduction in the Company’s fair value estimates is due to lower consumer queries, increasing challenges in monetization and the reduced ability to market profitably due to policy changes implemented by Google and other browsers. The effects of COVID-19 on monetization were an additional factor.

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~~Overview—Consolidated and Combined Results~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Revenue:
ANGI Homeservices $ 389,913 $ 32,555 9 % $ 357,358 $ 1,108,624 $ 103,927 10 % $ 1,004,697
Vimeo 75,130 22,985 44 % 52,145 199,432 57,993 41 % 141,439
Dotdash 50,774 10,489 26 % 40,285 139,515 27,541 25 % 111,974
Search 145,208 (40,456) (22) % 185,664 430,890 (144,718) (25) % 575,608
Emerging & Other 127,425 57,437 82 % 69,988 320,594 118,774 59 % 201,820
Inter-segment eliminations (73) (15) (24) % (58) (193) 58 23 % (251)
Total $ 788,377 $ 82,995 12 % $ 705,382 $ 2,198,862 $ 163,575 8 % $ 2,035,287
Operating (Loss) Income:
ANGI Homeservices $ (3,019) $ (27,745) NM $ 24,726 $ (1,671) $ (34,159) NM $ 32,488
Vimeo (3,298) 7,857 70 % (11,155) (25,623) 14,932 37 % (40,555)
Dotdash 11,773 8,078 219 % 3,695 21,860 8,108 59 % 13,752
Search (52,979) (81,737) NM 28,758 (264,761) (365,312) NM 100,551
Emerging & Other (35,123) (43,643) NM 8,520 (61,979) (40,720) (192) % (21,259)
Corporate (45,980) (5,348) (13) % (40,632) (215,809) (96,791) (81) % (119,018)
Total $ (128,626) $ (142,538) NM $ 13,912 $ (547,983) $ (513,942) (1,510) % $ (34,041)
Adjusted EBITDA:
ANGI Homeservices $ 38,487 $ (20,436) (35) % $ 58,923 $ 130,820 $ (16,714) (11) % $ 147,534
Vimeo 3,421 11,418 NM (7,997) (12,706) 20,955 62 % (33,661)
Dotdash 16,181 9,155 130 % 7,026 35,304 12,753 57 % 22,551
Search 11,875 (17,302) (59) % 29,177 34,449 (67,533) (66) % 101,982
Emerging & Other (8,061) (2,787) (53) % (5,274) (30,648) (3,964) (15) % (26,684)
Corporate (26,733) (4,790) (22) % (21,943) (115,315) (54,580) (90) % (60,735)
Total $ 35,170 $ (24,742) (41) % $ 59,912 $ 41,904 $ (109,083) (72) % $ 150,987

~~_____________________~~

~~NM = Not meaningful.~~

products. For the three months ended ~~September~~June 30, ~~2020:~~

•Revenue increased $83.0 million, or 12%, to $788.4 million, due to increases of $57.4 million from Emerging & Other, resulting primarily from the contribution from Care.com, acquired February 11, 2020, $32.6 million from ANGI, $23.0 million from Vimeo and $10.5 million from Dotdash, partially offset2021, B2C revenue declined by ~~a decrease of $40.5 million from Search.~~

•~~Operating income decreased $142.5~~$11.3 million to ~~a loss~~$20.9 million while Desktop operating income increased by $10.7 million to $14.4 million versus the comparable prior year period. In the second half of ~~$128.6 million due primarily~~2021, we expect this trend to ~~a goodwill impairment of $53.2 million~~continue and ~~$10.8 million in indefinite-lived intangible asset impairments at Search related~~B2C revenue to ~~the~~decline substantially while Desktop ~~business, a decrease in Adjusted EBITDA of $24.7 million, described below, and an increase of $26.8 million in amortization of intangibles,~~operating income, excluding the $10.8 million Desktop impairment noted above, the inclusion in 2019 of income of $16.1 million in acquisition-related contingent consideration fair value adjustments, and increases of $7.1 million in stock-based compensation expense and $3.7 million in depreciation. The overall increase in amortization of intangibles of $37.6 million was due principally to an increase in amortization related to recent acquisitions, the inclusion in 2020 of indefinite-lived intangible asset impairments of $10.8 million related to the Desktop business, and

~~Table of Contents~~

~~a reduction in the estimated useful lives of certain intangible assets. The goodwill and the indefinite-lived intangible asset impairments are described above in "Certain Risks and Concentrations~~—Services Agreement with Google (the "Services Agreement").” The income from acquisition-related contingent consideration fair value adjustments in 2019 was due to the decrease in the expected amount of contingent consideration to be paid in connection with a previous acquisition. ~~The increase in stock-based compensation expense was due primarily to the issuance of new equity awards since the prior~~ ~~year period and the reversal in~~ the third quarter ~~of 2019 of $7.6 million of expense related to certain performance-based awards that did not vest, partially offset by~~2020 goodwill and intangible asset impairment charges, will increase modestly versus the ~~vesting of awards. The increase in depreciation was due primarily to~~comparable prior year period. Beyond 2021, we expect the ~~investments in capitalized software to support ANGI's products~~revenue and ~~services and leasehold improvements related to additional office space at ANGI.~~

•~~Adjusted EBITDA decreased $24.7 million to $35.2 million due to reduced~~ profits of ~~$20.4 million~~the B2C business and ~~$17.3 million from ANGI and Search,~~Desktop, respectively, and increased losses of $4.8 million and $2.8 million from Corporate and Emerging & Other, respectively, partially offset by reduced losses of $11.4 million from Vimeo and growth of $9.2 million from Dotdash.to decline significantly.

~~For~~COVID-19 Update

The impact on the ~~nine months ended September 30, 2020:~~

•~~Revenue increased $163.6 million, or 8%, to $2.2 billion, due to increases of $118.8 million from Emerging & Other resulting primarily~~Company from the ~~contribution from Care.com, acquired February 11, 2020, $103.9 million from ANGI, $58.0 million from Vimeo and $27.5 million from Dotdash, partially offset by a decrease of $144.7 million from Search.~~

•Operating loss increased $513.9 million to a loss of $548.0 million due primarily to a goodwill impairment of $265.2 million and $32.2 million in indefinite-lived intangible asset impairments at Search related to the Desktop business, a decrease in Adjusted EBITDA of $109.1 million, described below, and increases of $53.7 million in stock-based compensation expense, $35.9 million in amortization of intangibles, excluding the $32.2 million Desktop impairment noted above, $11.8 million in depreciation and a change of $6.1 million in acquisition-related contingent consideration fair value adjustments (income of ~~$6.9 million~~ in ~~2020 compared to income~~ of $13.0 million in 2019). The overall increase in amortization of intangibles of $68.1 million was due principally to the inclusion in 2020 of indefinite-lived intangible asset impairments of $32.2 million related to the Desktop business, an increase in amortization related to recent acquisitions and a reduction in the estimated useful lives of certain intangible assets. ~~The goodwill~~COVID-19 pandemic and the ~~indefinite-lived intangible asset impairments are described~~ ~~below in~~ ~~"COVID-19 Update~~measures designed to contain its spread has been varied and ~~Impairments".~~ ~~The increase in stock-based compensation expense was due primarily to a modification charge of $55.6 million related to the Separation and the issuance of new equity awards since the prior year period, partially offset by~~ the vesting of awards. The increase in depreciation was due primarily to the investments in capitalized software to support ANGI's products and services and leasehold improvements related to additional office space at ANGI.

•Adjusted EBITDA decreased $109.1 million to $41.9 million due primarily to reduced profits of $67.5 million and $16.7 million from Search and ANGI, respectively, and increased losses of $54.6 million and $4.0 million from Corporate and Emerging & Other, respectively, partially offset by reduced losses of $21.0 million from Vimeo and growth of $12.8 million from Dotdash. The increased losses at Corporate are due primaril~~y to $25.0 million related to the IAC Fellows Foundation endowment and~~ ~~an increase of $18.2 million in costs related to the Separation.~~

~~Acquisitions and dispositions affecting year-over-year comparability include:~~

~~Acquisitions:~~

~~Reportable Segment:~~

~~Acquisition Date:~~

~~Fixd~~

~~ANGI~~

~~January 25, 2019~~

~~Magisto~~

~~Vimeo~~

~~May 28, 2019~~

~~NurseFly - controlling interest~~

~~Emerging & Other~~

~~June 26, 2019~~

~~Care.com~~

~~Emerging & Other~~

~~February 11, 2020~~

~~Dispositions:~~

~~Reportable Segment:~~

~~Sale Date:~~

~~Vimeo's hardware business~~

~~Vimeo~~

~~March 29, 2019~~

~~College Humor Media~~

~~Emerging & Other~~

~~March 16, 2020~~

volatile.

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As previously disclosed, the initial impact of COVID-19 ~~Update and Impairments~~

~~The impact~~ on the Company from the COVID-19 outbreak, which has been declared a "pandemic" by the World Health Organization, has been varied. The extent to which developments related to the COVID-19 outbreak and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments. For example, these developments and measures havebusinesses in IAC's Angi Inc. segment resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to the COVID-19 outbreak. The longer the global outbreak and measures designed to curb the spread of the virus continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for the Company’s various products and services), the greater the adverse impact is likely to be on the Company’s business, financial condition and results of operations and the more limited will be the Company’s ability to try and make up for delayed or lost revenues.

~~In March 2020, the Company's ANGI Homeservices business experienced~~ a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). ~~In the second quarter of 2020, ANGI Homeservices~~While these businesses have experienced a rebound in service requests ~~exceeding pre-COVID-19 growth levels,~~ ~~driven by increased demand from homeowners who spent more time at home due to measures taken to reduce the spread of COVID-19. ANGI Homeservices continued to experience strong demand for home services~~ in the ~~third quarter~~second half of ~~2020. However,~~2020 and the first half of 2021, many service professionals' businesses ~~have~~had been adversely impacted by labor and material constraints and many service professionals ~~have~~had limited capacity to take on new business, which ~~has~~ negatively impacted ~~ANGI Homeservices'~~the ability of these businesses to monetize this increased level of service ~~requests. Vimeo has seen strong revenue growth as~~requests through the ~~demand for communication via video has increased due~~first quarter of 2021. Although Angi Inc.'s ability to monetize service requests rebounded modestly in the ~~pandemic.~~second quarter of 2021, it is still not back to levels it experienced pre-COVID-19. No assurances can be provided that such Angi Inc. will continue to be able to improve monetization, or that service professionals' businesses will not be adversely impacted in the future. The Search segment has experienced ~~a decline~~an increase in revenue in the first and second quarter of 2021 compared to the prior year due, in part, to ~~the decrease~~lower advertising rates in ~~advertising rates~~2020 due to the impact of COVID-19. The volatile nature of our operating results in 2020 due to COVID-19 ~~which decrease in rates was more significant earlier in~~will impact the ~~year.~~comparability of our year-over-year results of operations.

In the quarter ended March 31, 2020, the Company determined that the effects of COVID-19 were an indicator of possible impairment for certain of its assets and identified the following impairments:

•a $212.0 million impairment related to the goodwill of the Desktop reporting ~~unit;~~unit (included in the Search segment);

•a $21.4 million impairment related to certain indefinite-lived intangible assets of the Desktop reporting unit;

•a $51.5 million impairment of certain equity securities without readily determinable fair values; and

•a $7.5 million impairment of a note receivable and a warrant related to certain investees.

~~There were no impairments identified during the second quarter of 2020.~~

~~In the quarter ended September 30, 2020, the Company recorded impairments of~~ ~~$53.2 million and $10.8 million relate~~dThe extent to which developments related to the ~~goodwill~~COVID-19 pandemic and ~~intangible assets, respectively, of the Desktop reporting unit. Refer to "Certain Risks and Concentrations—Services Agreement with Google" for additional information.~~

~~In addition, the United States, which represents 81% and 80% of t~~he Company's revenue for the three and nine months ended September 30, 2020, respectively, has experienced a significant resurgence of the COVID-19 virus with record levels of infection being reported in the weeks following September 30, 2020. Europe, which is the second largest market for the Company's products and services, has also seen a dramatic resurgence in COVID-19. This resurgence and the measures designed to curb its spread ~~could materially and adversely affect our~~continue to impact the Company’s business, financial condition and results of ~~operations.~~operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.

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Results of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020

Revenue


		Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended June 30,							Six Months Ended June 30,
		2020		$ Change		% Change	2019		2020		$ Change		% Change	2019			2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)															(Dollars in thousands)
ANGI Homeservices		$	389,913	$	32,555	9%	$	357,358	$	1,108,624	$	103,927	10%	$	1,004,697
Vimeo		75,130		22,985		44%	52,145		199,432		57,993		41%	141,439
Angi Inc.																Angi Inc.	$	420,988	$	45,927	12%	$	375,061	$	808,017	$	89,306	12%	$	718,711
Dotdash	Dotdash	50,774		10,489		26%	40,285		139,515		27,541		25%	111,974		Dotdash	73,333		28,712		64%	44,621		138,754		50,013		56%	88,741
Search	Search	145,208		(40,456)		(22)%	185,664		430,890		(144,718)		(25)%	575,608		Search	183,607		52,344		40%	131,263		364,641		78,959		28%	285,682
Emerging & Other	Emerging & Other	127,425		57,437		82%	69,988		320,594		118,774		59%	201,820		Emerging & Other	151,656		43,529		40%	108,127		304,812		111,643		58%	193,169
Inter-segment eliminations	Inter-segment eliminations	(73)		(15)		(24)%	(58)		(193)		58		23%	(251)		Inter-segment eliminations	(37)		8		15%	(45)		(107)		(47)		(82)%	(60)
Total	Total	$	788,377	$	82,995	12%	$	705,382	$	2,198,862	$	163,575	8%	$	2,035,287	Total	$	829,547	$	170,520	26%	$	659,027	$	1,616,117	$	329,874	26%	$	1,286,243

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

•~~ANGI~~Angi Inc. revenue increased 9%12% to ~~$389.9~~$421.0 million driven ~~principally~~ by Marketplace Revenue growth of ~~$33.2~~ $34.4 million, or 12%, ~~partially offset by a decline~~ growth of ~~$0.5~~$8.1 million, or 3%13%, in Advertising and Other Revenue and an increase of $3.4 million, or 19%, at the European businesses. The increase in Marketplace Revenue ~~was~~is due to an increase in Angi Services revenue of $40.7 million, or 127%, due primarily to an 11% increase in Marketplace Monetized Transactions to 5.0 million, despite Marketplace Service Requests being flat. Advertising and Other Revenue increased due primarily to an increase of 8% in ~~Marketplace Monetized Transactions to~~ ~~4.7 million,~~ Angi revenue driven by an ~~increase of~~ ~~29% in~~ ~~Marketplace Service Requests to~~ ~~9.8 million, and an~~6% increase in ~~revenue of $20.8 million due~~Advertising SPs to ~~the change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 202~~0.forty thousand. The revenue ~~decline~~increase at the European businesses was due ~~primarily~~ to ~~lower monetization from transitioning the business~~strong growth in ~~France~~its largest markets due to ~~a common European technology platform with the businesses in the Netherlands~~increased consumer demand and ~~Italy, which began in early February 2020, partially offset by~~ the favorable impact of the weakening of the U.S. dollar relative to the Euro and British Pound.

•~~Vimeo revenue grew 44% to $75.1 million due to Platform Revenue growth~~ ~~of $23.0 million, or 44%. Platform Revenue growth was driven by~~ ~~a 22% increase in~~ ~~average revenue per subscriber and a~~ ~~21% increase in Vimeo Ending Subscribers to nearly~~ ~~1.5 million~~ ~~as enterprises and organizations move to deliver their products and communicate via video with their customers due to the effects of COVID-19.~~

•Dotdash revenue increased ~~26%~~64% to ~~$50.8~~$73.3 million due to growth o~~f 70% in~~ ~~Performance Marketing Revenue and 9%~~of $18.3 million, or 69%, in Display Advertising R~~evenue.~~Revenue and $10.4 million, or 58%, higher Performance Marketing Revenue. The growth in Display Advertising Revenue was driven by an increase in advertising sold at favorable rates through our direct sales and programmatic channels as the prior year rates were negatively impacted by COVID-19. The increase in Performance Marketing Revenue was due primarily to growth in both affiliate commerce commission revenue and performance marketing commission revenue due to increased online sales ~~as a result of COVID-19. The increase in Display Advertising Revenue was driven by an increase in advertising sold through our sales team.~~and new performance marketing products.

•Search revenue ~~decreased 22%~~increased 40% to ~~$145.2~~$183.6 million due to ~~decreases~~ growth of ~~$32.6~~$62.8 million, or ~~44%~~72%, from D~~esktop~~ ~~and $7.9~~Ask Media Group, partially offset by a decrease of $10.5 million, or 7%24%, ~~fro~~mfrom Desktop. The increase in Ask Media ~~Group.~~Group revenue was due to growth in paid traffic and an increase in advertising rates in 2021 as the prior year rates were negatively impacted by COVID-19. The decrease in Desktop revenue was ~~driven by lower queries and monetization challenges following browser~~due primarily to the Google policy changes in the fourth quarter of 2020 and ~~a decrease in advertising rates due to~~ the ~~impact~~first quarter of ~~COVID-19. The decrease in Ask Media Group is primarily due to a decrease in advertising rates due to the impact of COVID-19.~~2021 described above under "Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement")."

•Emerging & Other revenue increased ~~82%~~40% to ~~$127.4~~$151.7 million ~~due principally to the contribution of Care.com, acquired February 11, 2020.~~

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

•~~ANGI revenue increased 10% to $1.1 billion~~ ~~driven by Marketplace Revenue growth~~ ~~of $103.4 million, or 14%, and~~ ~~an increase~~ ~~of $4.8 million, or 3%, in Advertising & Other Revenue, partially offset by a decline~~ ~~of $4.3 million, or 7%, at the European businesses. The increase in Marketplace Revenue was~~ due primarily to an increase in revenue from Care.com driven, in part, by the addition of Lifecare, acquired in October 2020, and increases in revenue from Bluecrew, Mosaic Group, The Daily Beast and Vivian Health. ~~4% in~~ ~~Marketplace Monetized Transactions~~

For the six months ended June 30, 2021 compared to 1~~2.8 million,~~ ~~driven by an increase of 18% in Marketplace Service Requests to~~the six months ended June 30, 2020

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~~25.~~•2Angi Inc. revenue increased 12% to $808.0 million driven by Marketplace Revenue growth of $66.7 million, or 12%, growth of $12.7 million, or 10%, in Advertising and Other Revenue and an increase of $9.9 million, or 27%, at the European businesses. The increase in Marketplace Revenue is due to an increase in Angi Services revenue of ~~$51.3~~$62.5 million, d~~ue to the change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020. Advertising & Other Revenue increased~~or 96%, due primarily to an increase of 12% in ~~Angie's List revenue driven by an~~Marketplace Service Requests to 17.1 million, resulting in a 14% increase in Marketplace Monetized Transactions to 9.2 million, slightly outpacing the increase in Marketplace Service Requests. The increase in Advertising ~~SPs.~~and Other Revenue was due to the factor described above in the three-month discussion. The revenue ~~decline~~increase at the European businesses was due ~~primarily~~to strong growth across all of its markets due to increased consumer demand and the favorable impact of the weakening of the U.S. dollar relative to the ~~impact of COVID-19~~Euro and ~~lower monetization from transitioning the business in France to a common European technology platform~~ ~~with the businesses in the Netherlands and Italy, which began in early February 2020.~~

•~~Vimeo revenue grew~~ ~~41% to $199.4 million due~~ ~~to Platform Revenue growth of $60.3 million, or 43%. Pl~~atform Revenue growth was driven by the factors described above in the three-month discussion and from the contribution of Magisto (acquired May 28, 2019). Revenue in 2019 included $2.3 million from the hardware business, which was sold in the first quarter of 2019.British Pound.

•Dotdash revenue ~~increased 25%~~increased 56% to ~~$139.5~~$138.8 million duedue to ~~growt~~hgrowth of ~~84%~~$25.6 million, or 45%, in ~~Performance Marketing Revenue and 5%~~ ~~higher~~ Display Advertising Revenue and $24.4 million, or 76%, higher Performance Marketing Revenue. The ~~growth~~increase in both Display Advertising Revenue and Performance Marketing Revenue ~~was~~were due ~~primarily~~ to the factors described above in the three-month discussion. ~~The higher~~ ~~Display Advertising Revenue was due to~~ ~~an increase in advertising sold through our sales team, partially offset by the impact of COVID-19.~~

•Search revenue ~~decreased 25%~~increased 28% to ~~$430.9~~$364.6 million d~~ue primarily~~due to ~~decreases~~ growth of ~~$116.1~~$105.8 million, or ~~45%~~56%, from De~~sktop and $28.6~~Ask Media Group, partially offset by a decrease of $26.8 million, or 9%28%, from ~~Ask Media Group.~~ Desktop. The ~~decreases~~increase in ~~Desktop and~~ Ask Media Group revenue and the decrease in Desktop revenue were ~~driven by~~due to the factors described above in the three-month discussion.

•Emerging & Other revenue ~~increased 59%~~increased 58% to ~~$320.6~~$304.8 million due p~~rimarily~~primarily to the ~~contributions~~contribution of Care.com, acquired February 11, 2020, the addition of Lifecare, acquired by Care.com in October 2020, and ~~Nursefly, acquired June 26, 2019, and an increase~~increases in revenue ~~at Mosaic, partially offset by lower revenue at Bluecrew and~~from IAC Films, Bluecrew, Mosaic Group and ~~the sale of College Humor Media during the first quarter of 2020.~~Daily Beast.

Cost of revenue (exclusive of depreciation shown separately below)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,					Six Months Ended June 30,
		2020	$ Change	% Change	2019	2020	$ Change	% Change	2019		2021	$ Change		% Change	2020	2021	$ Change		% Change	2020
		(Dollars in thousands)									(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)	Cost of revenue (exclusive of depreciation shown separately below)	$207,643	$49,482	31%	$158,161	$565,609	$117,875	26%	$447,734	Cost of revenue (exclusive of depreciation shown separately below)	250,207	$	94,361	61%	155,846	$471,024	$	154,058	49%	$316,966
As a percentage of revenue	As a percentage of revenue	26%			22%	26%			22%	As a percentage of revenue	30%				24%	29%				25%

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

Cost of revenue in ~~2020~~2021 increased from ~~2019~~2020 due to increases of ~~$34.9~~$51.3 million from ~~ANGI, $18.0~~Search, $28.7 million from Angi Inc. and $7.8 million from Emerging & ~~Other and $4.5 million from Vimeo, partially offset by a decrease of $7.7 million from Search.~~Other.

•The ~~ANGI~~Search increase was primarily due to an increase of $50.0 million in traffic acquisition costs at Ask Media Group resulting from the increase in revenue.

•The Angi Inc. increase was due primarily to the ~~change~~growth of Angi Services, resulting in higher payments made to independent third-party service professionals who perform work contracted under Angi Services arrangements to complete service requests from ~~net to gross revenue reporting for Handy and HomeAdvisor's pre-priced product offering, effective January 1, 2020.~~consumers.

•The Emerging & Other in~~crease~~increase was due primarily to ~~$21.0~~$5.9 million of expense from the inclusion of ~~Care.com,~~Lifecare, $3.6 million in payments made to workers staffed by Bluecrew resulting from an increase in revenue and $2.3 million in production costs at IAC Films due to recent theatrical releases, partially offset by a decrease of ~~$3.8~~$5.9 million at Care.com related to a change from gross to net revenue recognition for certain Care@Work contracts.~~t College Humor Media~~

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Cost of revenue in 2021 increased from 2020 due to ~~its sale during the first quarter~~increases of ~~2020.~~

•~~The Vimeo increase was due primarily to an increase of $2.6~~$76.1 million ~~in credit card processing fees driven by higher revenue~~from Search, $49.3 million from Angi Inc. and ~~an increase in compensation expense related to its customer support function.~~$19.4 million from Emerging & Other.

•The Search ~~decrease~~increase was primarily due ~~primarily~~ to ~~a decrease~~an increase of ~~$7.4~~ $76.5 million in tr~~affic~~traffic acquisition costs ~~driven by a decline at Desktop related to its business-to-business partnership revenue and lower revenue sourced through partners~~ at Ask Media ~~Group.~~

~~For~~Group resulting from the ~~nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~Cost of revenue~~increase in ~~2020 increased from 2019 due to increases of $88.5 million from ANGI, $35.1 million from Emerging & Other and $12.4 million from Vimeo, partially offset by a decrease of $21.2 million from Search.~~revenue.

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•The ~~ANGI~~Angi Inc. increase was due primarily to growth of Angi Services and payments made to independent third party service professionals described above in the ~~change from net to gross revenue reporting for Handy and HomeAdvisor's pre-priced product offering, effective January 1, 2020.~~three-month discussion.

•The Emerging & ~~Oth~~erOther increase was due primarily to ~~$49.2~~$12.7 million of expense from the inclusion of ~~Care.com,~~Lifecare, $4.3 million in payments made to workers staffed by Bluecrew resulting from an increase in revenue and $4.2 million in production costs at IAC Films due to recent theatrical releases, partially offset by a decrease of ~~$10.1~~$1.1 million at College Humor Media due to its sale during the first quarter of 2020~~and $3.1 million in payments made to workers staffed by Bluecrew.~~.

•~~The Vimeo increase was~~Selling and marketing expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
	(Dollars in thousands)
Selling and marketing expense	341,035	$58,390	21%	282,645	$653,573	$87,411	15%	$566,162
As a percentage of revenue	41%			43%	40%			44%

For the three months ended June 30, 2021 compared to the three months ended June 30, 2020

Selling and marketing expense in 2021 increased from 2020 due ~~primarily~~ to ~~an increase~~increases of ~~$9.2~~$49.0 million i~~n credit card processing fees~~from Angi Inc., $17.3 million from Emerging & Other and ~~in-app purchase fees driven by higher revenue and~~ ~~an increase in compensation expense related to its customer support function,~~$6.2 million from Dotdash, partially offset by a decrease of ~~$4.2~~$14.0 million ~~in hosting fees resulting~~ from ~~more favorable storage rates and $1.7 million in product costs related to the hardware business, which was sold in the first quarter of 2019~~.Search.

•The ~~Search decrease~~Angi Inc. increase was due primarily to ~~a decrease~~increases in advertising expense of ~~$20.3~~$30.8 million, i~~n traffic acquisition~~compensation expense of $13.7 million, and consulting costs ~~driven by lower revenue at~~of $4.3 million. The increase in advertising expense was due principally to increases of $24.1 million in online marketing and $6.4 million in television spend. The increase in online marketing spend was attributable to the ~~Desktop business and Ask Media Group.~~

~~Selling and marketing expense~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Selling and marketing expense $340,524 $30,223 10% $310,301 $957,557 $27,845 3% $929,712
As a percentage of revenue 43% 44% 44% 46%

~~For~~brand integration initiative described above under "Angi Inc.'s Brand Integration Initiative." The increase in television spend in 2021 reflects the ~~three months ended September 30, 2020~~return to historical spending amounts as compared to the ~~three months ended September 30, 2019~~

~~Selling and marketing expense in~~cost cutting initiatives experienced during the second quarter of 2020 ~~increased from 2019~~ due to ~~increases~~the impact of ~~$25.3 million from Emerging & Other, $14.6 million from ANGI~~COVID-19. The increase in compensation expense was due primarily to increased commission expense and ~~$5.2 million from Vimeo, partially offset by a decrease of $15.3 million from Search.~~an increase in sales force headcount. The increase in consulting costs was due primarily to various sales initiatives at Angi Services.

•The Emerging & Other increase was due primarily to ~~$18.6~~increases of $9.4 million of in online marketing and television spend at Care.com, $2.4 million in online marketing at Mosaic Group and $1.9 million in expense from the inclusion of ~~Care.com and an increase of $8.1 million in advertising expense at Mosaic, partially offset by a decrease of $1.1 million in compensation at College Humor Media due to its sale during the first quarter of 2020.~~Lifecare.

•The ~~ANGI increase was due primarily to increases~~ ~~of $7.2 million~~ ~~in advertising expense~~ ~~and $6.1 million in~~ compensation expense. While service requests from both Google paid traffic and free traffic increased, advertising expense increased due primarily to an increase in online marketing costs as the proportion of service requests from Google paid traffic increased. ANGI continues to benefit from the search engine marketing strategy that was implemented in the second half of 2019, which focuses on the lifetime profitability of rather than cost per service request. This increase in online marketing was partially offset by a decrease in television spend resulting from cost cutting initiatives due to the impact of COVID-19. T~~he increase in compensation expense was due primarily to increased commission expense to the sales force resulting~~ ~~from higher revenue.~~

•~~The Vimeo~~Dotdash increase was due primarily to increases in online advertising expense of $3.7 million and compensation expense of ~~$2.6 million, due,~~$2.1 million. The increase in ~~part, to growth in the sales force and increased commission~~compensation expense ~~resulting from growth in bookings~~was primarily due to ~~COVID-19, and marketing of $1.9 million.~~higher headcount.

•The Search decrease was due primarily to a decrease in marketing of ~~$14.9~~$19.4 million ~~principally~~ at Desktop as ~~we mitigate~~it eliminated all marketing of its B2C products beginning in early March 2021 due primarily to the ~~negative impact on revenue from the browser~~Google policy changes in the fourth quarter of 2020 and ~~COVID-19.~~the first quarter of 2021 described above under "Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement"), partially offset by an increase of $5.0 million in online marketing at Ask Media Group.

For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020

Selling and marketing expense in ~~2020~~2021 increased from ~~2019~~2020 due to increases of ~~$42.5~~$64.9 million from Angi Inc., $29.3 million from Emerging & Other ~~$23.1 million from ANGI, $14.2 million from Vimeo~~ and ~~$4.6~~$9.8 million from Dotdash, partially offset by a decrease of ~~$55.9~~$16.6 million from Search.

•~~The Emerging & Other increase was due primarily to $39.8 million of expense from the inclusion of Care.com and an increase of $5.9 million in advertising expense at Mosaic due to an increase in online marketing, partailly offset by a decrease of $3.2 million in~~ ~~compensation at College Humor Media due to its sale during the first quarter of 2020.~~

Table of Contents

•The ~~ANGI~~Angi Inc. increase was due primarily to increases in advertising expense of $36.7 million, compensation expense of ~~$16.5~~$22.1 million and outsourced personnel and consulting costs of ~~$4.4 million,~~$7.2 million. The increase in advertising expense was due primarily to an increase of ~~$2.9~~$48.2 million ~~and facility costs of $1.4 million,~~in online marketing, partially offset by a decrease of ~~$2.5~~$10.2 million in ~~travel related expenses resulting from~~television spend. The increase in online marketing spend was due primarily to the ~~impact~~"Angi Inc. Brand Integration Initiative" described above. The decrease in television spend was due primarily to reduced spend in the first quarter of ~~COVID-19.~~2021 compared to the prior year period in anticipation of the aforementioned "Angi Inc. Brand Integration Initiative" described above. The increase in compensation expense was due primarily to ~~growth~~increased commission expense and an increase in sales force headcount, partially offset by lower compensation expense in France due to headcount reductions in the ~~sales force and increased commission expense.~~third quarter of 2020. The increase in outsourced personnel and consulting costs was due primarily to various sales initiatives at ~~Handy. The increase in advertising expense was due primarily to the factors described above in the three-month discussion.~~Angi Services.

•The ~~Vimeo~~Emerging & Other increase was due primarily to increases of $15.6 million in ~~compensation~~online marketing and television spend at Care.com, $2.7 million in online marketing at Mosaic Group and $3.7 million in expense from the inclusion of $9.8 million, due, in part, to growth in the sales force and increased commission expense resulting from growth in bookings due to COVID-19, marketing of $1.5 million and software license and maintenance costs of $1.3 million.Lifecare.

•The Dotdash increase was due primarily to anincreases in online advertising expense of $5.2 million and compensation expense of $4.2 million. The increase in compensation ~~expense of $5.7 million,~~expense was primarily due ~~in part,~~ to ~~growth in the sales force, partially offset by a decrease of $1.0 million in travel related expenses resulting from the impact of COVID-19.~~

higher headcount.

•The Search decrease was due primarily to a decrease in marketing of ~~$53.4~~$34.6 million ~~due primarily to~~at Desktop ~~due to~~as it substantially reduced marketing of its B2C products in January 2021 and the ~~factors described above~~subsequent elimination all marketing of B2C products beginning in ~~the three-month discussion, as well~~early March 2021 as a ~~decrease~~result of Google policy changes, partially offset by an increase of $16.1 million in online marketing at Ask Media ~~Group driven by browser policy changes impacting our ability to acquire traffic.~~Group.

General and administrative expense


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020	$ Change	% Change	2019	2020	$ Change	% Change	2019		2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
		(Dollars in thousands)									(Dollars in thousands)
General and administrative expense	General and administrative expense	$168,889	$33,426	25%	$135,463	$583,355	$134,978	30%	$448,377	General and administrative expense	174,711	$(57,042)	(25)%	231,753	$337,871	$(55,199)	(14)%	$393,070
As a percentage of revenue	As a percentage of revenue	21%			19%	27%			22%	As a percentage of revenue	21%			35%	21%			31%

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

General and administrative expense in ~~2020 increased~~2021 decreased from ~~2019~~2020 due to a decrease of $83.6 million from Corporate, partially offset by increases of ~~$22.2~~$22.0 million from Angi Inc and $4.6 million from Emerging & ~~Other, $7.8~~Other.

•The Corporate decrease was due primarily to the inclusion in 2020 of $51.2 million in stock-based compensation expense related to modification charges from ~~ANGI~~the MTCH Separation, a $25 million contribution to the IAC Fellows endowment and ~~$5.6~~$11.2 million ~~from Corporate.~~in transaction-related costs related to the MTCH Separation.

•The Angi Inc. increase was due primarily to $9.6 million in one-time costs as a result of Angi Inc. reducing its real estate footprint, $8.5 million increase in professional fees and $2.1 million increase in the provision for credit losses. The real estate related costs are the result of impairments of right-of-use lease assets, leasehold improvements and furniture and equipment associated with office space it is vacating. The increase in professional fees is due primarily to an increase in outsourced personnel costs, legal fees, and recruiting fees. The increase in outsourced personnel costs is due primarily to an increase in call volume related to Angi Inc.'s customer service function. The increase in the provision for credit losses is driven by higher Marketplace Revenue.

•The Emerging & Other increase was due primarily to ~~the inclusion in 2019~~$3.2 million of ~~income o~~expense ~~f $16.1 million in acquisition-related contingent consideration fair value adjustments and $8.3 million~~ ~~of expen~~se from the inclusion of ~~Care.com, partially offset by a decrease~~Lifecare and an increase of ~~$1.6~~$1.8 million~~at College Humor Media due to its sale during the first quarter of 2020.~~ The income from acquisition-related contingent consideration fair value adjustments in 2019 is due to the decrease in the expected amount of contingent consideration to be paid in connection with a previous acquisition.

•~~The ANGI increase was due primarily to increases~~ in compensation expense of $6.0 million, bad debt expense of $3.6 million due to higher Marketplace Revenue, and $1.2 million in outsourced personnel costs, partially offset by a decrease of $1.2 million in travel related expenses resulting from the impact of COVID-19. The increase in compensation expense wasat Care.com due primarily to an increase in ~~stock-based compensation expense and~~ headcount~~severance costs recorded in the European business in the third quarter of 2020 associated with headcount reductions in France. The increase in stock-based compensation expense is~~ due primarily to the issuance of new equity awards since 2019 and the reversal in the third quarter of 2019 of $7.3 million of expense related to certain performance-based awards that did not vest, partially offset by a decrease ~~of $2.9 million in the modification charge related to the Combination. The increase in outsourced personnel costs is due primarily to an~~ ~~increase in call volume related to our customer service function.~~.

•The Corporate increase was due primarily to an increase of $5.7 million in compensation expense driven primarily by increased employer taxes related to Match Group stock option exercises by IAC employees during the third quarter of 2020.

For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020

General and administrative expense in ~~2020 increased~~2021 decreased from ~~2019~~2020 due to ~~increases~~a decrease of ~~$99.1~~$82.5 million from Corporate, ~~$24.9~~partially offset by increases of $15.6 million from Angi Inc. and $14.1 million from Emerging & ~~Other and $15.3 million from ANGI.~~Other.

Table of Contents

•The Corporate decrease was due primarily to a decrease of $42.6 million in stock-based compensation expense, a $25 million contribution to the IAC Fellows endowment included in the prior year period and a decrease in transaction-related costs ($18.7 million related to the MTCH Separation in 2020 compared to $5.1 million in connection with the Spin-off in 2021). The decrease in stock-based compensation is due primarily to the inclusion in 2020 of $51.2 million in modification charges related to the MTCH Separation, partially offset by the issuance of new equity awards since 2020.

•The Angi Inc. increase was due primarily to an increase of ~~$42.6~~$12.0 million inin professional fees, $9.6 million in one-time costs related to Angi Inc. reducing its real estate footprint described above in the three-month discussion, $3.4 million increase in the provision for credit losses, and $2.3 million increase in software and maintenance costs, partially offset by a decrease of $15.5 million in compensation expense. The increase in professional fees and provision for credit losses were due primarily to the factors described above in the three-month discussion. The increase in software license and maintenance expense was due primarily to increased investment in software to support Angi Inc.'s customer service function. The decrease in compensation expense was due primarily to a decrease in stock-based compensation expense ~~$25.0~~of $28.6 million, ~~related~~ ~~to the IAC Fellows Foundation endowment and higher professional fees, including an increase of $18.2~~partially offset by $6.1 million in ~~costs related to the Separation. The increase in stock-based compensation is due primarily to~~wage related expenses resulting primarily from annual wage increases and a ~~$54.7~~$6.0 million ~~modification~~ charge related to the ~~Separation~~acquisition of an additional 21% interest in MyBuilder at a premium to fair value. The decrease in stock-based compensation expense was due primarily to $17.3 million in stock appreciation rights expense recognized in the first half of 2020 which was not incurred in 2021 as the awards became fully vested in 2020 and a net decrease of $7.7 million due to the reversal of previously recognized expense related to unvested awards that were forfeited due to management departures in the first quarter of 2021, partially offset by the issuance of new equity awards since ~~2019, partially offset by the vesting of awards.~~2020.

•The Emerging & Other increase was due primarily to ~~$24.9 milli~~$7.3 million of expense on ~~of expen~~se from the inclusion of ~~Care~~Lifecare, the inclusion in 2020 of income of $6.9 million in ~~.com.~~

•~~The ANGI~~acquisition-related contingent consideration fair value adjustments due to the decrease in the expected amount of contingent consideration to be paid out in connection with a previous Mosaic Group acquisition, and an increase ~~was~~of $5.4 million in compensation expense at Care.com due primarily to an increase ~~of $10.8 million~~ in ~~bad debt expense, $7.9 million in compensation expense and $3.4 in professional fees,~~headcount, partially offset by a decrease of ~~$2.4~~$2.6 million ~~in travel related expenses resulting from the impact of COVID-19, $1.9 million in~~ ~~software license and maintenance costs and $1.2 million in non-payroll taxes~~. The increase in bad debt is due to higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses from Angie’s List service professionals under contract for advertising. The increase in compensation expense ~~is due primarily to an increase in stock-based compensation expense due primarily to the factors described above in the three-month discussion and~~ ~~severance costs recorded in the European business in the third quarter of 2020 associated with headcount reductions in France. The increase in professional fees is due primarily to an increase in legal fees. The decrease in non-payroll taxes is due, in part, to a decrease in property taxes in North America and the digital services tax in Europe.~~at Mosaic Group.

Product development expense


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020	$ Change	% Change	2019	2020	$ Change	% Change	2019		2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
		(Dollars in thousands)									(Dollars in thousands)
Product development expense	Product development expense	$67,870	$17,879	36%	$49,991	$192,116	$51,765	37%	$140,351	Product development expense	61,266	$14,928	32%	46,338	$122,526	$29,076	31%	$93,450
As a percentage of revenue	As a percentage of revenue	9%			7%	9%			7%	As a percentage of revenue	7%			7%	8%			7%

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

Product development expense in ~~2020~~2021 increased from ~~2019~~2020 due to increases of ~~$10.9~~$6.0 million from Dotdash, $4.9 million from Emerging & Other ~~$3.9~~and $3.3 million from ~~Vimeo and $1.6 million from ANGI.~~

•~~The Emerging & Other increase was due primarily to $10.1 million of expense from the inclusion of Care.com.~~

•~~The Vimeo increase was due primarily to an increase of $2.7 million in compensation expense due primarily to increased headcount.~~

•~~The ANGI increase was due primarily to an increase of $1.6 million in compensation expense.~~

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~Product development expense in 2020 increased from 2019 due to increases of $26.4 million from Emerging & Other, $15.3 million from Vimeo and $6.7 million from Dotdash.~~

•The Emerging & Other increase was due primarily to $23.0 million of expense from the inclusion of Care.com and an increase of $3.4 million in compensation expense at Mosaic due primarily to increased headcount.

•~~The Vimeo increase was due primarily to an increase of $11.5 million in compensation expense due primarily to the inclusion of Magisto (acquired May 28, 2019) and increased headcount.~~Angi Inc.

•The Dotdash increase was due primarily to an increase of ~~$7.3~~$4.7 million in compensation expense due to higher headcount.

•The Emerging & Other increase was due primarily to ~~increased headcount and~~ an increase of $3.0 million in outsourced personnel costs at Care.com and $0.7 million in expense ~~for third-party contractors.~~from the inclusion of Lifecare. The increase in outsourced personnel costs at Care.com is primarily due to enhancing existing product offerings and developing new products.

•The Angi Inc. increase was due primarily to an increase of $2.4 million in compensation expense driven by fewer projects being capitalized at the European businesses and higher salary expense, due, in part, to increased headcount.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Product development expense in 2021 increased from 2020 due to increases of $14.3 million from Emerging & Other, $9.6 million from Dotdash and $4.3 million from Angi Inc.

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~~Depreciation~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Depreciation $18,753 $3,744 25% $15,009 $50,849 $11,807 30% $39,042
As a percentage of revenue 2% 2% 2% 2%

~~For~~•The Emerging & Other increase was due primarily to increases of $5.6 million and $4.4 million in outsourced personnel costs and compensation expense at Care.com and $2.8 million in expense from the ~~three months ended September 30, 2020 compared~~inclusion of Lifecare. The increase in compensation expense at Care.com is primarily due to ~~the three months ended September 30, 2019~~

~~Depreciation~~an increase in ~~2020 increased from 2019~~headcount. The increase in outsourced personnel costs is due primarily to the ~~investments~~factors described above in ~~capitalized software~~the three-months discussion.

•The Dotdash increase was due primarily to ~~support ANGI's products~~increases of $8.2 million in compensation expense and ~~services and leasehold improvements related~~$1.6 million in expense for third-party contractors. The increase in compensation expense is due to ~~additional office space at ANGI.~~higher headcount.

~~For the nine months ended September 30, 2020 compared~~•The Angi Inc. increase was due primarily to ~~the nine months ended September 30, 2019~~

~~Depreciation~~an increase of $3.1 million in ~~2020 increased from 2019~~compensation expense due primarily to the factors described above in the three-month ~~discussion, partially offset by certain fixed assets becoming fully depreciated.~~discussion.

Depreciation


	Three Months Ended June 30,						Six Months Ended June 30,
	2021		$ Change	% Change	2020		2021	$ Change	% Change	2020
	(Dollars in thousands)
Depreciation	$	17,112	$610	4%	$	16,502	$36,298	$4,362	14%	$31,936
As a percentage of revenue	2%				3%		2%			2%

For the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020

Depreciation in 2021 increased from 2020 due primarily to the investments in Angi Inc. capitalized software.

Operating (loss) income


		Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended June 30,							Six Months Ended June 30,
		2020		$ Change		% Change	2019		2020		$ Change		% Change	2019			2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)															(Dollars in thousands)
ANGI Homeservices		$	(3,019)	$	(27,745)	NM	$	24,726	$	(1,671)	$	(34,159)	NM	$	32,488
Vimeo		(3,298)		7,857		70%	(11,155)		(25,623)		14,932		37%	(40,555)
Angi Inc.																Angi Inc.	$	(32,731)	$	(50,375)	NM	$	17,644	$	(32,622)	$	(33,970)	NM	$	1,348
Dotdash	Dotdash	11,773		8,078		219%	3,695		21,860		8,108		59%	13,752		Dotdash	19,174		11,498		150%	7,676		37,301		27,214		270%	10,087
Search	Search	(52,979)		(81,737)		NM	28,758		(264,761)		(365,312)		NM	100,551		Search	25,662		16,881		192%	8,781		44,048		255,830		NM	(211,782)
Emerging & Other	Emerging & Other	(35,123)		(43,643)		NM	8,520		(61,979)		(40,720)		(192)%	(21,259)		Emerging & Other	(2,701)		6,285		70%	(8,986)		(1,707)		25,149		94%	(26,856)
Corporate	Corporate	(45,980)		(5,348)		(13)%	(40,632)		(215,809)		(96,791)		(81)%	(119,018)		Corporate	(37,824)		84,736		69%	(122,560)		(82,670)		83,465		50%	(166,135)
Total	Total	$	(128,626)	$	(142,538)	NM	$	13,912	$	(547,983)	$	(513,942)	(1,510)%	$	(34,041)	Total	$	(28,420)	$	69,025	71%	$	(97,445)	$	(35,650)	$	357,688	91%	$	(393,338)

As a percentage of revenue	As a percentage of revenue	(16)%					2%		(25)%					(2)%		As a percentage of revenue	(3)%					(15)%		(2)%					(31)%

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

Operating ~~income~~loss decreased ~~$142.5~~$69.0 million to a loss of ~~$128.6~~$28.4 million due primarily to decreases of $53.8 million in stock-based compensation expense and $9.8 million in amortization of intangibles and an increase in Adjusted EBITDA of $6.7 million, described below. The decrease in stock-based compensation expense was due to the inclusion in 2020 of $52.1 million in modification charges related to the MTCH Separation. The decrease in amortization of intangibles was due primarily to certain intangible assets becoming fully amortized in 2020, partially offset by an increase in amortization related to the recent acquisition of Lifecare.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Table of Contents

Operating loss decreased $357.7 million to a loss of $35.7 million due primarily to the inclusion in 2020 of a goodwill impairment of ~~$53.2~~$212.0 million and ~~$10.8~~$21.4 million in indefinite-lived intangible asset impairments at Search related to the Desktop business, a decrease of $70.9 million in stock-based compensation expense, an increase in Adjusted EBITDA of ~~$24.7~~$50.6 million, described below, and ~~an increase~~a decrease of ~~$26.8~~$14.1 million in amortization of intangibles, excluding the ~~$10.8 million~~ Desktop impairment noted above, partially offset by the inclusion in ~~2019~~2020 of ~~income~~$6.9 million of ~~$16.1 million~~income in acquisition-related contingent consideration fair value adjustments and ~~increases~~an increase of ~~$7.1~~$4.4 million in depreciation. The goodwill and the indefinite-lived intangible asset impairments in 2020 at the Desktop business were primarily due to lower consumer queries, increasing challenges in monetization and the reduced ability to market profitably due to browser policy changes implemented by Google and other browsers. The effects of COVID-19 on monetization were an additional factor. The decrease in stock-based compensation expense was due primarily to factors described above in the general and ~~$3.7 million in depreciation.~~administrative expense discussion. The overall ~~increase~~decrease in amortization of intangibles of ~~$37.6~~$35.5 million was due principally to ~~an increase in amortization related to recent acquisitions,~~ the inclusion in 2020 of indefinite-lived intangible asset impairments ~~of $10.8 million~~ related to the Desktop business noted above and ~~a reduction in the estimated useful lives of~~ certain intangible ~~asset~~s. ~~The goodwill and the indefinite-lived intangible asset impairments~~ ~~are described above in "Certain Risks and Concentrations~~—Services Agreement with Google (the "Services Agreement").” The income from acquisition-related contingent consideration fair value adjustments in 2019 is due to the decrease in the expected amount of contingent consideration to be paid in connection with a previous acquisition. The increase in stock-based ~~compensation expense was due primarily to the issuance of new equity awards since the prior~~ ~~year period and the reversal in the third quarter of 2019 of $7.6 million of expense related to certain performance-based awards that did not vest,~~assets becoming fully amortized during 2020, partially offset by ~~the vesting of awards.~~an increase in amortization related to recent acquisitions (Care.com and Lifecare). The increase in depreciation was due primarily to the investments in Angi Inc. capitalized ~~software to support ANGI's products and leasehold improvements related to additional office space at ANGI.~~software.

At ~~September~~June 30, ~~2020,~~2021, there was ~~$197.8~~$323.4 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately ~~3.1~~5.7 years.

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~Table of Contents~~

Operating loss increased $513.9 million to a loss of $548.0 million due primarily to a goodwill impairment of $265.2 million and $32.2 million in indefinite-lived intangible asset impairments at Search related to the Desktop business, a decrease in Adjusted EBITDA of $109.1 million, described below, and increases of $53.7 million in stock-based compensation expense, $35.9 million in amortization of intangibles, excluding the $32.2 million Desktop impairment noted above, $11.8 million in depreciation and a change of $6.1 million in acquisition-related contingent consideration fair value adjustments (income of ~~$6.9 million~~ in ~~2020 compared to income~~ of $13.0 million in 2019). The overall increase in amortization of intangibles of $68.1 million was due principally to the inclusion in 2020 of indefinite-lived intangible asset impairments of $32.2 million related to the Desktop business, an increase in amortization related to recent acquisitions and a reduction in the estimated useful lives of certain intangible assets. The goodwill and the indefinite-lived intangible asset impairments ~~are described~~ ~~above in~~ ~~"COVID-19 Update and Impairments".~~ ~~The increase in stock-based compensation expense was due primarily to a modification charge~~ ~~of $55.6 million rela~~ted to the Separation and the issuance of new equity awards since the prior year period, partially offset by the vesting of awards. The increase in depreciation was due primarily to investments in capitalized software to support ANGI's products and services and leasehold improvements related to additional office space at ANGI.

~~See "Note 4—Goodwill and Intangible Assets" to the financial statements included in "Item 1. Consolidated and Combined Financial Statements" for a detailed description of the Desktop goodwill and indefinite-lived intangible asset impairments.~~

~~The aggregate carrying value of goodwill for which the most recent estimate of the excess of fair value over carrying value is less than 20% is approximately $655.0 million. The aggregate carrying value of indefinite-lived intangible assets for which the most recent estimate of the excess of fair value over carrying value is less than 20% is approximately $59.3 million.~~

Adjusted EBITDA


		Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended June 30,							Six Months Ended June 30,
		2020		$ Change		% Change	2019		2020		$ Change		% Change	2019			2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)															(Dollars in thousands)							(Dollars in thousands)
ANGI Homeservices		$	38,487	$	(20,436)	(35)%	$	58,923	$	130,820	$	(16,714)	(11)%	$	147,534
Vimeo		3,421		11,418		NM	(7,997)		(12,706)		20,955		62%	(33,661)
Angi Inc.																Angi Inc.	$	(4,442)	$	(62,378)	NM	$	57,936	$	18,744	$	(73,589)	(80)%	$	92,333
Dotdash	Dotdash	16,181		9,155		130%	7,026		35,304		12,753		57%	22,551		Dotdash	20,549		8,437		70%	12,112		40,471		21,348		112%	19,123
Search	Search	11,875		(17,302)		(59)%	29,177		34,449		(67,533)		(66)%	101,982		Search	25,670		16,226		172%	9,444		44,056		21,482		95%	22,574
Emerging & Other	Emerging & Other	(8,061)		(2,787)		(53)%	(5,274)		(30,648)		(3,964)		(15)%	(26,684)		Emerging & Other	6,891		9,519		NM	(2,628)		18,855		41,442		NM	(22,587)
Corporate	Corporate	(26,733)		(4,790)		(22)%	(21,943)		(115,315)		(54,580)		(90)%	(60,735)		Corporate	(22,289)		34,905		61%	(57,194)		(48,637)		39,889		45%	(88,526)
Total	Total	$	35,170	$	(24,742)	(41)%	$	59,912	$	41,904	$	(109,083)	(72)%	$	150,987	Total	$	26,379	$	6,709	34%	$	19,670	$	73,489	$	50,572	221%	$	22,917

As a percentage of revenue	As a percentage of revenue	4%					8%		2%					7%		As a percentage of revenue	3%					3%		5%					2%

For a reconciliation of net earnings (loss) attributable to IAC shareholders to operating ~~(loss) income~~loss to ~~consolidated and combined~~ Adjusted EBITDA, see "Principles of Financial Reporting." For a reconciliation of operating (loss) income to Adjusted EBITDA for the Company's reportable segments, see "Note ~~10—~~9—Segment Information" to the financial statements included in "Item 1—Consolidated and Combined Financial Statements."

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

•~~ANGI~~Angi Inc. Adjusted EBITDA decreased ~~35%~~$62.4 million to ~~$38.5~~a loss of $4.4 million, despite higher revenue, due primarily to ~~an increase~~increases of $30.8 million in advertising expense due to its brand integration initiative and $28.7 million in cost of revenue ~~increased investment~~resulting from continued growth in ~~fixed price,~~ ~~an increase in compensation expense due, in part, to severance costs~~ ~~recorded in the European business in the third quarter of 2020 associated with headcount reductions in France~~Angi Services, and ~~an increase of $3.6~~$9.6 million in ~~bad debt expense due to higher Marketplace Revenue.~~one-time costs as a result of Angi Inc. reducing its real estate footprint.

•~~Vimeo~~Dotdash Adjusted EBITDA increased ~~$11.4 million~~70% to ~~$3.4 million from a loss of $8.0~~$20.5 million due primarily to higher revenue, partially offset by ~~higher~~increases in compensation expense and advertising expense.

•Search Adjusted EBITDA increased 172% to $25.7 million due ~~primarily~~ to an increase in ~~headcount~~ Ask Media Group revenue and ~~increases~~the decrease of ~~$2.6~~$19.4 million in ~~credit card processing fees~~marketing at Desktop as it eliminated all marketing of its B2C products beginning in early March 2021 as a result of Google policy changes in the fourth quarter of 2020 and ~~$1.9 million in marketing.~~the first quarter of 2021 described above under "Certain Risks and Concentrations—Services Agreement with Google (the "Services Agreement")."

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•Emerging & Other Adjusted EBITDA increased $9.5 million to $6.9 million from a loss of $2.6 million due primarily to increased revenue at Care.com, $6.8 million in transaction-related items in 2020 from the Care.com acquisition (including $4.6 million in deferred revenue write-off's and $2.2 million in transaction-related costs) and profits in the current year compared to losses in the prior year at IAC Films.

•Corporate Adjusted EBITDA loss decreased 61% to $22.3 million due primarily to the inclusion in 2020 of the $25 million contribution to the IAC Fellows endowment and $11.2 million in costs related to the MTCH Separation.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

•Angi Inc. Adjusted EBITDA decreased 80% to $18.7 million, despite higher revenue, due primarily to the factors described above in the three month discussion and an increase in compensation expense due to increased commission expense and headcount, a $6.0 million charge related to the acquisition of an additional 21% interest in MyBuilder at a premium to fair value, $4.0 million in expense related to impairments at the Fixd Services business and from management changes in the first quarter of 2021, and an increase of $3.4 million in provision for credit losses due to higher Marketplace Revenue.

•Dotdash Adjusted EBITDA increased ~~130%~~112% to ~~$16.2~~$40.5 million due primarily to higher revenue and a decrease in the provision for credit losses, which had been established in the first quarter of 2020 in response to COVID-19, partially offset by ~~higher~~increases in compensation ~~expense.~~expense, expense for third-party contractors and advertising expense.

•Search Adjusted EBITDA ~~decreased 59%~~increased 95% to ~~$11.9~~$44.1 million due to aan increase in Ask Media Group revenue and the decrease ~~in revenue, partially offset by a decrease~~of $34.6 million in marketing o~~f $14.9 million~~at Desktop as ~~we mitigate~~ it substantially reduced marketing of its B2C products in January 2021 and the ~~negative impact on revenue from the browser~~subsequent elimination all marketing of B2C products beginning in early March 2021 as a result of Google policy ~~changes and COVID-19, and lower traffic acquisition costs of $7.4 million.~~changes.

•Emerging & Other Adjusted EBITDA ~~loss~~ increased ~~$2.8~~$41.4 million to ~~$8.1~~$18.9 million from a loss of $22.6 million due primarily to increased revenue at Care.com, $20.3 million~~to $5.0 million~~ in transaction-related items in 2020 from the Care.com acquisition (including ~~$2.6~~$13.3 million in deferred revenue write-offs and $7.0 million in transaction-related ~~costs~~costs) and ~~$2.4 million~~profits in ~~deferred revenue write-offs~~),the current year compared to losses in the prior year at ~~Nursefly and reduced profits from Mosaic, partially offset by lower losses at College Humor Media due to its sale during the first quarter of 2020.~~IAC Films.

•Corporate Adjusted EBITDA loss ~~increased 22%~~decreased 45% to ~~$26.7~~$48.6 million due primarily to ~~an increase of in compensation expense driven primarily by increased employer taxes related to Match Group stock option exercises by IAC employees during the third quarter of 2020.~~

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

•~~ANGI Adjusted EBITDA decreased 11% to $130.8 million, despite higher revenue due primarily to an increase~~ in cost of revenue, an increase of $10.5 million in bad debt expense due to higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses on Angie’s List service professionals under contract for advertising and increased European losses.

•Vimeo Adjusted EBITDA loss decreased 62% to $12.7 million due primarily to higher revenue, partially offset by higher compensation expense due to the factors described above in the three-month discussion and including expense from the inclusion in 2020 of ~~Magisto (acquired May 28, 2019).~~

•the ~~Dotdash Adjusted EBITDA increased 57% to $35.3~~$25 million due primarily to higher revenue, partially offset by higher compensation expense, an increase in expense for third-party contractors and an increase in bad debt expense due, in part, to the impact of COVID-19 on expected credit losses.

•~~Search Adjusted EBITDA decreased 66% to $34.4 million due to a decrease in revenue, partially offset by a decrease in marketing of $53.4 million as we mitigate the negative impact on revenue from the browser policy changes and COVID-19 at both Desktop and Ask Media Group and lower traffic acquisition costs of $20.3 million.~~

•~~Emerging & Other Adjusted EBITDA loss increased $4.0 million to $30.6 million due primarily to $25.3 million in transaction-related items from the Care.com acquisition (including $15.7 million in deferred revenue write-offs and $9.6 million~~ in transaction-related costs), losses in the current year compared to profits in the prior year at IAC Films, losses at Nursefly and increased losses at Bluecrew, partially offset by lower losses at College Humor Media due to its sale during the first quarter of 2020 and increased profits from Mosaic.

•~~Corporate Adjusted EBITDA loss increased 90% to $115.3 million due primarily~~ ~~to $25.0 million related~~contribution to the IAC Fellows ~~Foundation~~ endowment ~~higher professional fees, including an increase of $18.2~~and $18.7 million in costs related to the MTCH Separation, ~~and an increase of~~partially offset by $5.1 million in ~~compensation expense due~~ costs related to the ~~factor described above in the three-month discussion.~~Spin-off.

Interest expense

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Interest expense $5,807 $2,909 100% $2,898 $9,579 $177 2% $9,402


	Three Months Ended June 30,				Six Months Ended June 30,
	2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
	(Dollars in thousands)
Interest expense	$5,814	$4,259	274%	$1,555	$12,431	$8,659	230%	$3,772

For the three months ended ~~September~~June 30, ~~2020~~2021 compared to the three months ended ~~September~~June 30, ~~2019~~2020

Interest expense in ~~2020~~2021 increased from ~~2019~~2020 due primarily to ~~the write-off of deferred financing costs as a result of the termination of the IAC Group Credit Facility and~~ the issuance of the ANGI Group Senior Notes in August 2020, partially offset by a decrease in interest expense on the ANGI Group Term Loan due to the repayment during the second quarter of 2021.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Interest expense in 2021 increased from 2020 due primarily to the issuance of the ANGI Group Senior Notes in August 2020, partially offset by a decrease in interest expense on the ANGI Group Term Loan due to lower interest rates and the decrease in the average outstanding balance compared to the prior year period.

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~~by a decrease~~Unrealized gain (loss) on investment in ~~interest expense on the ANGI Group Term Loan due primarily to lower interest rates and the decrease in the average outstanding balance of the ANGI Group Term Loan compared to the prior year period.~~MGM Resorts International

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~Interest expense in 2020 increased from 2019 due primarily to the factors described above in the three-month discussion.~~

~~Other income (expense), net~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Other income (expense), net $290,786 $302,501 NM $(11,715) $211,769 $194,919 1,157% $16,850


	Three Months Ended June 30,				Six Months Ended June 30,
	2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
	(Dollars in thousands)
Unrealized gain (loss) on investment in MGM Resorts International	$275,098	$299,816	NM	$(24,718)	$657,638	$682,356	NM	$(24,718)

For the three months ended ~~September~~June 30, 2021 compared to the three months ended June 30, 2020 ~~and 2019~~

~~Other income, net in 2020 includes:~~The Company recognized an unrealized gain of ~~$289.1~~$275.1 million ~~related to our~~and an unrealized loss of $24.7 million on its investment in MGM Resorts International ("MGM"). during the second quarter of 2021 and 2020, respectively. During the second and third quarters of 2020, the Company purchased a total of 59.0 million shares of MGM.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

The Company recognized an unrealized gain of $657.6 million and an unrealized loss of $24.7 million on its investment in MGM during the first six months of 2021 and 2020, respectively.

Other ~~expense,~~income (expense), net


	Three Months Ended June 30,				Six Months Ended June 30,
	2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
	(Dollars in thousands)
Other income (expense), net	$50,286	$46,975	1,418%	$3,311	$53,849	$107,926	NM	$(54,077)

For the three months ended June 30, 2021 and 2020

Other income, net in ~~2019~~2021 includes: an unrealized ~~reduction~~increase of ~~$8.7~~$42.5 million in the estimated fair value of a warrant; ~~a $4.6~~an unrealized gain of $10.7 million ~~loss~~ related to ~~our investment in Pinterest, which was carried at fair value~~one of the Company’s investments following its initial public offering, partially offset by the write-off of $1.1 million of deferred debt issuance costs related to the ANGI Group Term Loan, which was repaid in ~~April 2019;~~its entirety during the second quarter of 2021.

Other income, net in 2020 includes: $1.6 million of net foreign currency exchange gains and ~~$3.7~~$1.1 million of interest income.

For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Other income, net in ~~2020~~2021 includes: an unrealized increase of $55.3 million in the estimated fair value of a warrant; an unrealized gain of ~~$264.4~~$10.7 million related to ~~our investment~~one of the Company’s investments described above in ~~MGM; $6.6~~the three-month discussion; partially offset by $11.1 million of ~~interest income;~~foreign exchange losses primarily relating to the substantial liquidation of certain foreign subsidiaries and the write-off of $1.1 million of deferred debt issuance costs related to the ANGI Group Term Loan.

Other expense, net in 2020 includes: $51.5 million in impairments related to investments in equity securities without readily determinable fair values and $7.5 million in impairments of a note receivable and a warrant related to certain investees due to the impact of ~~COVID-19.~~

~~Other income, net in 2019 includes: a $25.3 million gain related to our investment in Pinterest; $11.9~~COVID-19; and $5.6 million of interest income; an unrealized reduction of $8.7 million in the estimated fair value of a warrant; a realized loss of $8.2 million related to the sale of Vimeo's hardware business; and a $2.0 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares during the first quarter of 2020.income.

Income tax (provision) benefit


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020	$ Change	% Change	2019	2020	$ Change	% Change	2019		2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
		(Dollars in thousands)									(Dollars in thousands)
Income tax benefit		$29,508	$10,429	55%	$19,079	$107,019	$53,700	101%	$53,319
Income tax (provision) benefit										Income tax (provision) benefit	$(87,825)	$(122,228)	NM	$34,403	$(141,136)	$(212,516)	NM	$71,380
Effective income tax rate	Effective income tax rate	NM			NM	31%			NM	Effective income tax rate	30%			29%	21%			15%

For further details of income tax matters, see "Note 2—Income Taxes" to the financial statements included in "Item 1. Consolidated and Combined Financial Statements."

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For the three months ended ~~September~~June 30, 2021 compared to the three months ended June 30, 2020

In 2021, the effective income tax rate was higher than the statutory rate of 21% due primarily to an increase in the valuation allowance on beginning-of-the-year deferred tax assets related to the Spin-off and ~~2019~~state taxes, partially offset by excess tax benefits generated by the exercise and vesting of stock-based awards.

In 2020, the ~~Company recorded an~~ income tax benefit represented an effective tax rate of ~~$29.5 million, despite pre-tax income.~~29%. The effective income tax ~~benefit~~rate was higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and the recognition of amortizable tax basis for certain assets related to an intercompany transaction, partially offset by ~~the non-deductible portion of the Desktop goodwill impairment.~~

~~In 2019, the income tax benefit was due primarily~~an unbenefited unrealized loss related to ~~excess tax benefits generated by the exercise and vesting of stock-based awards.~~our investment in MGM.

For the ~~nine~~six months ended ~~September~~June 30, 2021 compared to the six months ended June 30, 2020 ~~and 2019~~

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In ~~2020,~~2021, the effective income tax ~~benefit~~rate was the same as the statutory rate of 21% due ~~primarily~~ to excess tax benefits generated by the exercise and vesting of stock-based awards, ~~partially~~ offset by an increase in the valuation allowance on beginning-of-the-year deferred tax assets related to the Spin-off and state taxes.

In 2020, the income tax benefit represented an effective tax rate of 15%. The effective income tax rate was lower than the statutory rate of 21% due primarily to the non-deductible portion of the Desktop goodwill ~~impairment.~~

~~In 2019,~~impairment charge and unbenefited losses related to other investment impairments, partially offset by a revaluation of net operating loss deferred taxes due to the ~~Company recorded an income tax benefit of $53.3 million due primarily to~~Coronavirus Aid, Relief, and Economic Security Act and excess tax benefits generated by the exercise and vesting of stock-based awards.

Net ~~earnings~~loss (earnings) attributable to noncontrolling interests

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Net earnings attributable to noncontrolling interests $944 $(968) (51)% $1,912 $625 $(10,093) (94)% $10,718

~~For the three months ended September 30, 2020 and 2019~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2021	$ Change	% Change	2020	2021	$ Change	% Change	2020
	(Dollars in thousands)
Net loss (earnings) attributable to noncontrolling interests	$3,219	$5,272	NM	$(2,053)	$3,446	$3,127	979%	$319

Net ~~earnings~~loss (earnings) attributable to noncontrolling interests ~~for~~in 2021 and 2020 ~~and 2019~~ primarily represents the publicly-held interest in ~~ANGI's~~Angi Inc.'s earnings. Net ~~earnings~~loss (earnings) attributable to noncontrolling interests ~~for 2019~~in 2021 includes a ~~third-party~~third party interest in a subsidiary that ~~held~~holds the Company's investment that recorded a $10.7 million unrealized gain ~~on our investment~~ in ~~Pinterest.~~

~~For~~ the ~~nine~~three months ended ~~September~~June 30, ~~2020 and 2019~~

~~Net earnings attributable to noncontrolling interests for 2020 and 2019 primarily represents the factors described above in the three-month discussion.~~2021 following its initial public offering.

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PRINCIPLES OF FINANCIAL REPORTING

The Company 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 should not be considered a substitute for or superior to GAAP results. The Company endeavors to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure, which we discuss below.

Definition of Non-GAAP Measure

Adjusted 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. ~~The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature.~~ Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

The following table reconciles net earnings (loss) attributable to IAC shareholders to operating ~~(loss) income~~loss to ~~consolidated and combined~~ Adjusted EBITDA:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Net earnings (loss) attributable to IAC shareholders	Net earnings (loss) attributable to IAC shareholders	$	184,917	$	16,466	$	(239,399)	$	16,008	Net earnings (loss) attributable to IAC shareholders	$	194,757	$	(96,117)	$	523,885	$	(424,316)
Add back:	Add back:									Add back:
Net earnings attributable to noncontrolling interests		944		1,912		625		10,718
Income tax benefit		(29,508)		(19,079)		(107,019)		(53,319)
Net (loss) earnings attributable to noncontrolling interests										Net (loss) earnings attributable to noncontrolling interests	(3,219)		2,053		(3,446)		(319)
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	11,787		8,060		1,831		20,110
Income tax provision (benefit)										Income tax provision (benefit)	87,825		(34,403)		141,136		(71,380)
Other (income) expense, net	Other (income) expense, net	(290,786)		11,715		(211,769)		(16,850)		Other (income) expense, net	(50,286)		(3,311)		(53,849)		54,077
Unrealized (gain) loss on investment in MGM Resorts International										Unrealized (gain) loss on investment in MGM Resorts International	(275,098)		24,718		(657,638)		24,718
Interest expense	Interest expense	5,807		2,898		9,579		9,402		Interest expense	5,814		1,555		12,431		3,772
Operating (loss) income		(128,626)		13,912		(547,983)		(34,041)
Operating loss										Operating loss	(28,420)		(97,445)		(35,650)		(393,338)
Add back:										Add back:
Stock-based compensation expense	Stock-based compensation expense	31,719		24,585		148,597		94,867		Stock-based compensation expense	24,051		77,861		42,366		113,240
Depreciation	Depreciation	18,753		15,009		50,849		39,042		Depreciation	17,112		16,502		36,298		31,936
Amortization of intangibles	Amortization of intangibles	60,151		22,545		132,213		64,112		Amortization of intangibles	13,636		23,388		30,475		66,024
Acquisition-related contingent consideration fair value adjustments	Acquisition-related contingent consideration fair value adjustments	—		(16,139)		(6,918)		(12,993)		Acquisition-related contingent consideration fair value adjustments	—		(636)		—		(6,918)
Goodwill impairment	Goodwill impairment	53,173		—		265,146		—		Goodwill impairment	—		—		—		211,973
Adjusted EBITDA	Adjusted EBITDA	$	35,170	$	59,912	$	41,904	$	150,987	Adjusted EBITDA	$	26,379	$	19,670	$	73,489	$	22,917

For a reconciliation of operating (loss) income to Adjusted EBITDA for the Company's reportable segments, see "Note ~~10—~~9—Segment Information" to the financial statements included in "Item 1—Consolidated and Combined Financial Statements."

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Non-Cash Expenses That Are Excluded ~~From~~from Our Non-GAAP Measure

Stock-based compensation expense consists ~~principally~~ of expense associated with ~~awards issued by certain subsidiaries of the Company and expense related to~~ awards that were granted under various IAC stock and annual incentive ~~plans.~~plans and expense related to awards issued by certain subsidiaries of the Company. These expenses are not paid in cash and we view the economic ~~cost~~costs of stock-based awards to be the dilution to our share base; we also include the related shares in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method.

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The Company is currently settling all stock-based awards on a net ~~basis and~~basis; IAC remits the required tax-withholding amounts for net-settled awards from its current funds.

Depreciation is a non-cash expense relating to our building, capitalized software, leasehold improvements 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. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as technology, service professional relationships, customer lists 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 impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.

Gains and losses recognized on changes in the fair value of contingent consideration arrangements are accounting adjustments to report 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.

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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(In thousands)					(In thousands)
ANGI cash and cash equivalents and marketable debt securities:
Angi Inc. cash and cash equivalents and marketable debt securities:						Angi Inc. cash and cash equivalents and marketable debt securities:
United States	United States	$	837,611	$	377,648	United States	$	563,024	$	793,679
All other countries	All other countries	17,433		12,917		All other countries	21,236		19,026
Total cash and cash equivalents	Total cash and cash equivalents	855,044		390,565		Total cash and cash equivalents	584,260		812,705
Marketable debt securities (United States)	Marketable debt securities (United States)	49,992		—		Marketable debt securities (United States)	—		49,995
Total ANGI cash and cash equivalents and marketable debt securities		905,036		390,565
Total Angi Inc. cash and cash equivalents and marketable debt securities						Total Angi Inc. cash and cash equivalents and marketable debt securities	584,260		862,700

IAC (excluding ANGI) cash and cash equivalents and marketable debt securities:
IAC (excluding Angi Inc.) cash and cash equivalents and marketable securities:						IAC (excluding Angi Inc.) cash and cash equivalents and marketable securities:
United States	United States	2,538,201		392,521		United States	2,819,709		2,466,404
All other countries	All other countries	78,468		56,710		All other countries	72,102		87,067
Total cash and cash equivalents	Total cash and cash equivalents	2,616,669		449,231		Total cash and cash equivalents	2,891,811		2,553,471

Marketable debt securities (United States)		299,961		—
Total IAC (excluding ANGI) cash and cash equivalents and marketable debt securities		2,916,630		449,231
Marketable securities (United States)						Marketable securities (United States)	10,810		174,984
Total IAC (excluding Angi Inc.) cash and cash equivalents and marketable securities						Total IAC (excluding Angi Inc.) cash and cash equivalents and marketable securities	2,902,621		2,728,455

Total cash and cash equivalents and marketable debt securities		$	3,821,666	$	839,796
Total cash and cash equivalents and marketable securities						Total cash and cash equivalents and marketable securities	$	3,486,881	$	3,591,155


Long-term debt:	Long-term debt:					Long-term debt:
ANGI Group Senior Notes	ANGI Group Senior Notes	$	500,000	$	—	ANGI Group Senior Notes	$	500,000	$	500,000
ANGI Group Term Loan	ANGI Group Term Loan	237,188		247,500		ANGI Group Term Loan	—		220,000
Total long-term debt	Total long-term debt	737,188		247,500		Total long-term debt	500,000		720,000
Less: current portion of ANGI Group Term Loan		13,750		13,750
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	8,030		1,804		Less: unamortized debt issuance costs	5,805		7,723
Total long-term debt, net	Total long-term debt, net	$	715,408	$	231,946	Total long-term debt, net	$	494,195	$	712,277

The Company's international cash can be repatriated without significant tax consequences.

For a detailed description of long-term debt, see "Note 6—Long-term Debt" to the financial statements included in "Item 1. Consolidated and Combined Financial Statements."

Cash Flow Information

In summary, IAC's cash flows are as follows:

Nine Months Ended September 30,
2020 2019
(In thousands)
Net cash provided by (used in)
     Operating activities $ 168,047 $ 191,352
     Investing activities $ (1,828,298) $ (529,223)
     Financing activities $ 4,304,883 $ 139,237


	Three Months Ended June 30,
	2021		2020
	(In thousands)
Net cash provided by (used in):
Operating activities attributable to continuing operations	$	176,985	$	66,298
Investing activities attributable to continuing operations	$	(153,920)	$	(933,277)
Financing activities attributable to continuing operations	$	(329,415)	$	2,467,992

Net cash provided by operating activities attributable to continuing operations consists of earnings adjusted for non-cash items, the effect of changes in working 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 the unrealized (gain) loss on the investment in MGM, goodwill ~~impairments,~~impairment, deferred income taxes, stock-based compensation expense, ~~net gains on equity securities,~~ amortization of intangibles, ~~deferred income taxes,~~unrealized (increase) decrease in the estimated fair value of a warrant, net (gains) losses on investments in equity securities, provision for credit losses, and depreciation.

~~2020~~

Adjustments to earnings consist primarily of a $265.1 million goodwill impairment, $148.6 million of stock-based compensation expense, $132.2 million of amortization of intangibles, including impairments of $32.2 million, $62.6 million of provision for credit losses, and $50.8 million of depreciation, partially offset by $215.9 million of gains on equity securities, net

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2021

Adjustments to earnings attributable to continuing operations consist primarily of ~~$51.5~~$657.6 million of ~~impairments~~an unrealized gain on the investment in MGM, an unrealized increase on the estimated fair value of ~~certain~~a warrant of $55.3 million, and net gains on investments in equity securities ~~without readily determinable fair values, and $82.9~~of $12.2 million, partially offset by $143.6 million of deferred income ~~taxes.~~taxes, $42.7 million of provision for credit losses, $42.4 million of stock-based compensation expense, $36.3 million of depreciation, and $30.5 million of amortization of intangibles. The increase from changes in working capital primarily consists of an increase in ~~deferred revenue of $78.0 million and an increase in~~ accounts payable and other liabilities of ~~$50.0~~$47.8 million, a decrease in other assets of $38.8 million, and an increase in deferred revenue of $15.3 million, partially offset by an increase in accounts receivable of ~~$91.5~~$40.7 million and a decrease in income taxes payable and receivable of $8.5 million. The increase in accounts payable and other liabilities is due primarily to an increase in accrued advertising and related payables at Angi Inc. The decrease in other assets ~~of $5.7 million.~~is due, in part, to decreases in prepaid hosting services at Corporate and Angi Inc. and capitalized downloadable search toolbar costs at Search. The increase in deferred revenue is due primarily to growth in subscription sales at ~~Vimeo~~Care.com and ~~Care.com. The~~an increase in ~~accounts payable and other liabilities is due primarily to accrued advertising and related payables~~memberships at ~~ANGI, and accrued compensation costs due, in part, to the deferral of payroll tax payments under the Coronavirus Aid, Relief, and Economic Security Act.~~Angi Inc. The increase in accounts receivable is due primarily to revenue growth at ~~ANGI, Vimeo,~~Angi Inc. and ~~Care.com, and~~the timing of cash receipts at Mosaic, ~~Group.~~partially offset by timing of cash receipts at Care.com. The decrease in income taxes payable and receivable is due primarily to the release of income tax reserves due to statue expirations and income tax payments in excess of income tax accruals.

Net cash used in investing activities attributable to continuing operations includes the cash distribution related to the spin-off of Vimeo of $333.2 million, capital expenditures of $39.4 million, primarily related to investments in capitalized software at Angi Inc. to support its products and services, and purchases of investments of $7.2 million, primarily related to Turo, partially offset by maturities of marketable debt securities of $225.0 million,

Net cash used in financing activities attributable to continuing operations includes $220.0 million for the prepayment of the ANGI Group Term Loan, which otherwise would have matured on November 5, 2023, $54.6 million for withholding taxes paid on behalf of Angi Inc. employees for stock-based awards that were net settled, $26.3 million for withholding taxes paid on behalf of IAC employees for stock-based awards that were net settled, $24.1 million for the purchase of redeemable noncontrolling interests, and $5.6 million for the repurchase of 0.5 million shares of Angi Inc. Class A common stock, on a settlement date basis, at an average price of $11.87 per share.

2020

Adjustments to earnings attributable to continuing operations consist primarily of a $212.0 million goodwill impairment, $113.2 million of stock-based compensation expense, $66.0 million of amortization of intangibles, including impairments of $21.4 million, $51.5 million of impairments of certain equity securities without readily determinable fair values, $40.3 million of provision for credit losses, $31.9 million of depreciation, and $24.7 million of an unrealized loss on investment in MGM, partially offset by $43.6 million of deferred income taxes. The deferred income tax benefit primarily relates to the net operating loss created in the six months ended June 30, 2020, the tax benefit on the stock-based compensation modification charge as well as the deductible portion of the intangible and goodwill impairments, and an adjustment to deferred taxes resulting from a true-up of the state tax rate, partially offset by adjustments related to the Coronavirus Aid, Relief, and Economic Security Act. The decrease from changes in working capital primarily consists of an increase in accounts receivable of $41.0 million and an increase in other assets of $10.7 million, partially offset by an increase in deferred revenue of $15.5 million. The increase in accounts receivable is due primarily to revenue growth at Angi Inc. The increase in other assets is due ~~in part,~~primarily to ~~capitalized production costs of various production deals at IAC Films,~~a receivable due from Match Group under the tax sharing agreement, partially offset by ~~a decrease~~decreases in prepaid hosting services at Corporate and Angi Inc. and capitalized downloadable search toolbar costs at Search. The increase in deferred revenue is due primarily to growth in subscription sales at Care.com.

Net cash used in investing activities attributable to continuing operations includes cash used for ~~investments and~~ acquisitions of ~~$1.5 billion, principally related to the investment in MGM of $1.0 billion for the purchase of 59.0~~$529.3 million, ~~shares and acquisitions~~ principally related to the Care.com acquisition, purchase of 23.2 million shares, on a settlement date basis, of MGM of $414.5 million, capital expenditures of $27.0 million, primarily related to investments in capitalized software at Angi Inc. to support its products and services, and leasehold improvements, purchases (net of maturities) of marketable debt securities of ~~$299.9~~$25.0 million, ~~and capital expenditures of $41.7 million, primarily related to investments in capitalized software at ANGI to support their products and services, and leasehold improvements,~~ partially offset by a decrease in notes receivable—related party of $54.8 million and proceeds from the sale of businesses and investments of ~~$17.9~~$14.8 million, principally related to the 2018 sales of Dictionary and ~~Electus in 2018.~~Electus.

Net cash provided by financing activities attributable to continuing operations includes cash transfers of $1.7 billion from Old IAC to the Company pursuant to the terms of the MTCH Separation and cash merger consideration of $837.9 million paid by Old IAC in connection with the MTCH Separation, ~~$1.4 billion of proceeds related to the sale of Old IAC Class M common stock, and $500.0 million of proceeds from the issuance of the ANGI Group Senior Notes,~~ partially offset by $54.4 million for the repurchase of 7.7 million shares of ~~ANGI Class A~~Angi Inc. common stock, on a settlement date basis, at an average price of $7.02 per share, ~~$50.0~~$11.5 million for withholding taxes paid on behalf of ~~ANGI~~Angi Inc. employees for stock-based awards that were net settled, ~~$24.0 million for withholding taxes paid on behalf of IAC employees for stock-based awards that were net settled, $10.3~~$6.9 million in principal payments on the ANGI Group Term Loan, ~~$5.6 million for debt issuance costs,~~ and ~~$4.3~~$3.2 million for the purchase of redeemable noncontrolling interests.

~~2019~~

Adjustments to earnings consist primarily of $94.9 million of stock-based compensation expense, $64.1 million of amortization of intangibles, $50.5 million of provision of credit losses, and $39.0 million of depreciation, partially offset by $56.7 million of deferred income taxes, and $26.1 million of gains on equity securities. The deferred income tax benefit primarily relates to the net operating loss created by the exercise and vesting of stock-based awards. The decrease from changes in working capital primarily consists of an increase in accounts receivable of $64.9 million, partially offset by an increase in deferred revenue of $30.5 million and a decrease in other assets of $11.4 million. The increase in accounts receivable is due primarily to revenue growth at ANGI and timing of cash receipts at Mosaic Group, 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 Vimeo and Mosaic Group. The decrease in other assets is primarily due to a receipt of tenant improvement allowances at ANGI.

Net cash used by investing activities includes cash used for investments and acquisitions of $446.7 million, principally related to the investment in Turo and acquisitions of Magisto and Fixd Repair, and capital expenditures of $73.6 million, primarily related to investments in capitalized software at ANGI 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, and an increase in notes receivable—related party of $55.8 million, partially offset by proceeds from maturities of marketable debt securities of $25.0 million, and net proceeds from the sale of businesses and investments of $24.5 million, principally related to the sale of Felix on December 31, 2018.

Net cash used by financing activities includes cash transfers of $225.5 million from Old IAC pursuant to Old IAC's centrally managed U.S. treasury function, in which the Company participated for periods prior to the Separation, partially offset by $34.0 million for the repurchase of 4.1 million shares of ANGI Class A common stock, on a settlement date basis, at an average price of $8.23 per share; $30.0 million for withholding taxes paid on behalf of ANGI employees for stock-based awards that were net settled, and $10.3 million in principal payments on ANGI debt.

~~Liquidity and Capital Resources~~

Prior to the Separation, the Company's principal sources of liquidity were our cash and cash equivalents, including the funding we received from Old IAC pursuant to its centrally managed U.S. treasury function, in which the Company participated.

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Discontinued Operations

Net cash provided by discontinued operations of $319.2 million and $8.2 million for the six months ended June 30, 2021 and June 30, 2020, respectively, relates to the operations of Vimeo. The Company ~~generated $168.0 million of operating~~does not expect cash flows ~~for~~from discontinued operations following the ~~nine months ended September 30, 2020, of which $173.2 million was generated by ANGI. ANGI is a separate~~Spin-off.

Liquidity 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, the Company cannot freely access the cash of ANGI and its subsidiaries. In addition, the ANGI Group credit agreement contains covenants that would limit ANGI Group's ability to pay dividends or make distributions in the event a default has occurred or if ANGI Group's consolidated net leverage ratio (as defined in the ANGI Group credit agreement) exceeds 4.25 to 1.0. There were no such limitations at September 30, 2020.Capital Resources

~~On August 20, 2020, ANGI Group issued $500 million of its~~Financing Arrangements

The ANGI Group Senior Notes ~~due~~were issued on August ~~15, 2028, with interest payable February 15 and August 15~~20, 2020, the proceeds of ~~each year, commencing February 15, 2021. The proceeds from the offering will be used~~which are intended for general corporate purposes, including potential future acquisitions and return of capital.

~~On August 12, 2020, ANGI Group entered into a joinder agreement with ANGI,~~As of May 6, 2021, the ~~other subsidiaries~~outstanding balance of ANGI that are party to the credit agreement, and each of the other loan parties to the credit agreement, pursuant to which ANGI Group became the successor borrower under the credit agreement and ANGI Homeservices Inc.'s obligations thereunder were terminated. The credit agreement governs the ANGI Group Term Loan ~~and~~was repaid in its entirety. The outstanding balance of the ANGI Group ~~Revolving Facility. In addition, on August 12,~~Term Loan at December 31, 2020 ~~the definition of "Permitted Unsecured Ratio Debt" in the credit agreement~~ was ~~amended to remove the requirement that guarantees of certain indebtedness of the borrower be subordinated to the guarantees under the credit agreement.~~$220.0 million and bore interest at 2.16%.

The $250 million ANGI Group Revolving Facility, expires on November 5, 2023. At September 30, 2020 and December 31, 2019, there were no outstanding borrowings under the ANGI Group Revolving Facility. The annual commitment fee on undrawn funds is currently 25 basis points and is based on ANGI Group's consolidated net leverage ratio most recently reported. Borrowings under the ANGI Group Revolving Facility bear interest, at ANGI Group's option, at either a base rate or LIBOR, in each case plus an applicable margin, which ~~is determined based on ANGI Group's consolidated net leverage ratio.~~

~~The $250 million IAC Group Credit Facility, which was scheduled to expire~~otherwise would have expired on November 5, 2023, was terminated effective ~~October 2, 2020. At September 30, 2020~~August 3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

Share Repurchase Authorizations and ~~December 31, 2019, there were no outstanding borrowings under this credit facility.~~Activity

OnAt June 30, ~~2020, the Board of Directors of the Company authorized repurchases up to~~2021, IAC has 8.0 million shares ~~of common stock, which is equal to the number of shares available under the~~remaining in its share repurchase ~~authorization at Old IAC immediately prior to the Separation.~~authorization.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020, ANGI~~2021, Angi Inc. repurchased ~~7.6~~0.5 million shares of its Class A common stock, on a trade date basis, at an average price of ~~$7.00~~$11.87 per share, or ~~$53.4~~$5.6 million in aggregate. ~~At September 30, 2020, ANGI~~From July 1, 2021 through August 3, 2021, Angi Inc. repurchased an additional 0.7 million shares at an average price of $11.68 per share, or $7.7 million in aggregate. Angi Inc. has ~~20.1~~18.1 million shares remaining in its share repurchase ~~authorization.~~authorization as of August 3, 2021.

IAC and ~~ANGI~~Angi Inc. may purchase their 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~~Outstanding Stock-based Awards

IAC and Angi Inc. may settle stock options, stock settled stock appreciation rights, ~~to employees~~restricted stock units ("RSUs") and ~~management of certain of its non-publicly traded subsidiaries~~restricted stock on a gross or a net basis based upon factors deemed relevant at the time.To the extent that ~~are denominated in the equity of those subsidiaries. These~~ equity awards are settled on a net basis, the holders of the awards receive shares of IAC or Angi Inc., as applicable, with a value equal to the fair value of the award ~~holder entitled to receive IAC shares~~on the vest date for RSUs and restricted stock and with a value equal to the intrinsic value of the award upon ~~settlement~~exercise for stock options or stock settled appreciation rights less, in each case, an amount equal to the required cash tax withholding payment, which will be paid by IAC or Angi Inc., as applicable, on the ~~Company.~~ employee's behalf.All awards are being settled currently on a net basis.

Certain previously issued Angi Inc. stock appreciation rights are settleable in either shares of Angi Inc. common stock or shares of IAC common stock at IAC's option.If settled in IAC common stock, Angi Inc. reimburses IAC in shares of Angi Inc.'s common stock.

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The following table summarizes (i) the aggregate intrinsic value of ~~these awards~~IAC options, Angi Inc. options, Angi Inc. stock settled stock appreciation rights, IAC and Angi Inc. non-publicly traded subsidiary denominated stock settled stock appreciation rights and (ii) the aggregate fair value (based on stock prices as of July 30, 2021) of IAC and Angi Inc. RSUs and IAC restricted stock outstanding ~~at October 30, 2020 is $43.3 million;~~as of that date; assuming these awards were net settled on that date, the withholding taxes that would be paid by the Company on behalf of employees upon exercise or vesting that would be payable (assuming these equity awards are ~~$21.6 million, assuming~~net settled with a 50% ~~withholding rate,~~tax rate), and the ~~Company~~shares that would have been issued ~~0.2 million common shares.~~are as follows:


	Aggregate intrinsic value / fair value of awards outstanding		Estimated withholding taxes payable on vested shares and shares that will vest by June 30, 2022		Estimated withholding taxes payable on shares that will vest after June 30, 2022		Estimated IAC shares to be issued
	(In thousands)
IAC
Stock settled stock appreciation rights denominated in shares of certain non-publicly traded IAC subsidiaries other than Angi Inc. subsidiaries(a)	$	72,376	$	21,372	$	14,823	263
IAC denominated stock options(b)	467,677		235,270		—		1,714
IAC RSUs(c)	248,523		16,785		102,935		948
IAC restricted stock(d)	253,124		—		126,562		922
Total IAC outstanding employee stock-based awards	1,041,700		273,427		244,320		3,847

Angi Inc.
Angi Inc. stock appreciation rights	8,455		4,228		—		See footnote (f) below
Other Angi Inc. equity awards(a)(e)	164,636		19,147		50,069		See footnote (f) below
Total Angi Inc. outstanding employee stock-based awards	173,091		23,375		50,069
Total outstanding employee stock-based awards	$	1,214,791	$	296,802	$	294,389

_______________

(a) The number of ~~IAC~~ shares ultimately needed to settle these awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant ~~subsidiary.~~subsidiary at the time of exercise. In addition, the number of ~~IAC~~ shares required to settle these awards will be impacted by movement in the ~~Company's~~ stock ~~price.~~price of IAC.

~~ANGI currently settles all equity~~(b) The Company has the discretion to settle these awards net of withholding tax and exercise price (which is represented in the table above) or settle on a ~~net basis. Certain previously issued stock appreciation rights are settleable in either shares~~gross basis and require the award holder to pay its share of ~~ANGI Class A common stock~~the withholding tax, which he or ~~shares of~~she may do so by selling IAC common stock at IAC's option, these awards are currently being settled in shares of ANGI. The aggregate intrinsic value of these awards outstanding at October 30, 2020 is $77.2 million, assuming these awards were net settled on that dateshares. ~~, the withholding taxes that would be payable are~~ ~~$38.6 million, assuming a 50% withholding rate, and ANGI would have issued~~ ~~3.6 million shares of~~ ~~its Class A common stock. The aggregate intrinsic value of all other ANGI equity awards, including stock options, RSUs and subsidiary denominated equity at October 30, 2020 is~~ ~~$135.4 million; assuming these awards were net settled on that date, the withholding taxes that would be~~

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~~payable are~~ ~~$67.7 million, assuming a 50% withholding rate, and ANGI would have issued~~ ~~6.4 million~~ ~~shares of its Class A common stock.~~

In connection with the Separation, Old IAC denominated stock options were converted into stock options to purchase IAC common stock and stock options to purchase New Match common stock in a manner that preserved the spread value of the stock options immediately before and immediately after the adjustment, with the allocation between the two stock options based on the value of a share of IAC common stock relative to the value of a share of New Match common stock multiplied by the transaction exchange ratio of 2.1584. Assuming all IAC stock options outstanding on ~~October~~July 30, ~~2020~~2021 were ~~net settled on that date, withholding taxes, which would be paid by the Company on behalf of the employees upon exercise, would have been~~ ~~$222.6 million~~ ~~in aggregate assuming a 50% withholding rate.~~

~~In connection with the Separation,~~ Old IAC's RSUs were converted into IAC RSUs in a manner that preserved their fair value. RSUs are awards in the form of phantom shares or units denominated in a hypothetical equivalent number of shares of IAC common stock. These equity awards are settled on a ~~net~~gross basis, ~~with~~i.e., through the ~~award holder entitled to receive IAC shares equal to the fair value~~issuance of ~~the award upon settlement less an amount equal to the required cash tax withholding payment, which will be paid by the Company. The~~a number of IAC common shares ~~that~~equal to the number of stock options exercised, the Company would ~~be required~~have issued 3.8 million common shares and would have received $53.7 million in cash proceeds. These amounts reflects adjustments made to ~~net settle RSUs outstanding at October 30, 2020 is 0.6 million shares. In addition,~~IAC awards upon the completion of the Spin-off.

(c) Approximately 85% of the estimated withholding taxes ~~which~~payable on shares that will ~~be paid by~~vest after June 30, 2022 is related to awards that are scheduled to cliff vest on the five-year anniversary of the grant date in 2025.

(d) On November 5, 2020, the Company granted 3.0 million shares of IAC restricted common stock to its CEO, that cliff vest on ~~behalf~~the ten-year anniversary of the ~~employees upon vest, would have been $70.4 million at October 30, 2020, assuming a 50% withholding rate.~~grant date based on satisfaction of IAC's stock price targets and continued employment through the vesting date.

As(e) Includes stock options, RSUs and subsidiary denominated equity.

(f) Pursuant to the employee matters agreement between IAC and Angi Inc., certain stock appreciation rights of ~~September 30, 2020,~~Angi, Inc. and equity awards denominated in shares of Angi Inc.'s subsidiaries may be settled in either shares of Angi Inc. common stock or IAC common stock. To the ~~Company's economic interest and voting interest~~extent shares of IAC common stock are issued in ~~ANGI~~settlement of these awards, Angi Inc. is ~~84.5% and 98.2%, respectively. The Company intends~~obligated to ~~take steps if necessary to maintain an economic interest in ANGI~~reimburse IAC for the cost of ~~at least 80%.~~those shares by issuing shares of Angi Inc. common stock.

~~The Company's international cash can be repatriated without significant tax consequences.~~Capital Expenditures

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 ~~2020~~2021 capital expenditures are expected to be ~~lower~~higher than ~~2019~~2020 capital expenditures of ~~$97.9~~$60.7 million by approximately ~~30%~~50% to ~~35%~~55%, due primarily to ~~timing~~increased investments in capitalized software to support the development of products and services at Angi Inc. and payments related to the purchase of a 50% interest in an aircraft at Corporate, ~~and lower leasehold improvements at ANGI. The remaining~~the final payment ~~of $13.3 million related to the purchase of the 50% interest in an aircraft~~for which is expected to be made in the third quarter of 2021.

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Liquidity Assessment

As of June 30, 2021, the Company's consolidated cash, cash equivalents, and marketable equity securities was $3.5 billion, of which $584.3 million was held by Angi Inc. The Company's consolidated outstanding debt of $500.0 million is a liability of ANGI Group, a subsidiary of Angi Inc. The Company generated $177.0 million of consolidated operating cash flows attributable to continuing operations for the six months ended June 30, 2021, of which $59.3 million was generated by Angi Inc. Angi Inc. 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, the Company cannot freely access the cash of Angi Inc. and its subsidiaries.

The Company's liquidity could be negatively affected by a decrease in demand for its products and services due to COVID-19 or other factors. As described in the "COVID-19 Update" section above, to date, the COVID-19 outbreak and measures designed to curb its spread have adversely impacted the Company's businesses.

The Company's only indebtedness is the $500 million of ANGI Group Senior Notes. This existing indebtedness could limit Angi Inc.'s ability to obtain additional financing, however, we do not believe that this indebtedness would limit IAC's ability to obtain additional financing. The Company may need to raise additional capital through future debt or equity financing to make additional acquisitions and investments. Additional financing may not be available on terms favorable to the Company or at all, which may also be impacted by any disruptions in the financial markets caused by COVID-19 or otherwise.

The Company believes its existing cash, cash equivalents, and marketable ~~debt~~equity securities and expected positive cash flows generated from operations will be sufficient to fund 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 products and services due to COVID-19 or other factors. As described in the "COVID-19 Update" section above, to date, the COVID-19 outbreak and measures designed to curb its spread have had an impact on certain of the Company's businesses. The longer the global outbreak and measures designed to curb the spread of the COVID-19 outbreak have adverse impacts on economic conditions generally, the greater the adverse impact is likely to be on the Company's business, financial condition and results of operations. The Company's capital structure could limit its ability to: (i) obtain additional financing to fund working capital needs, acquisitions, capital 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 business opportunities. The Company's ability to obtain additional financing could also be impacted by any disruptions in the financial markets caused by COVID-19 or otherwise. The Company may need to raise additional capital through future debt or equity financing to make additional acquisitions and investments. Additional financing may not be available on terms favorable to the Company or at all.

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CONTRACTUAL OBLIGATIONS

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)
$ 37,407 $ 109,735 $ 201,125 $ 558,125 $ 906,392
Operating leases(c)
38,992 73,139 61,215 227,925 401,271
Purchase obligations(d)
62,941 23,819 — — 86,760
Total contractual obligations $ 139,340 $ 206,693 $ 262,340 $ 786,050 $ 1,394,423
AS OF JUNE 30, 2021


	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)	$	19,375	$	38,750	$	38,750	$	548,438	$	645,313
Operating leases(c)	39,045		73,686		57,450		214,152		384,333
Purchase obligations(d)	41,134		7,966		—		—		49,100
Total contractual obligations	$	99,554	$	120,402	$	96,200	$	762,590	$	1,078,746

(a)The Company has excluded ~~$18.0~~$13.4 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 2—Income Taxes" to the financial statements included in "Item 1. 1—Consolidated and Combined Financial Statements."

(b)Long-term debt at ~~September~~June 30, ~~2020~~2021 consists of $500.0 million of ANGI Group Senior Notes, which bear interest at a fixed rate of 3.875% and $237.2 million of the ANGI Term Loan, which bears interest at a variable rate. The ANGI Term loan bore interest at LIBOR plus 1.50%, or 1.66% at September 30, 2020. The amount of interest ultimately paid on the variable rate debt may differ based on changes in interest rates.. For additional information on long-term debt, see "Note 6—Long-term Debt" to the financial statements included in "Item 1. 1—Consolidated and Combined 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 lease 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.

(d)The purchase obligations primarily consist of ~~payments for cloud computing arrangements, a background check service provider arrangement, and~~ a remaining payment of ~~$13.3~~$13.1 million r~~elated~~related to a 50% interest in a corporate ~~aircraft.~~aircraft, payments for cloud computing arrangements, advertising commitments, communications commitments, and background check service provider arrangements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

At ~~September~~June 30, ~~2020,~~2021, there have been no material changes to the Company's instruments or positions that are sensitive to market risk since the disclosure for the year ended December 31, ~~2019~~2020 included in the Company's Current Report on Form 8-K filed with the Securities Exchange Commission on ~~October 5, 2020,~~June 1, 2021, other than the ~~issuance~~Company's long-term investment in MGM described below.

Equity Price Risk

During the second and third quarters of 2020, the Company purchased a total of 59.0 million shares of MGM for a total consideration of $1.0 billion. The Company's results of operations and financial condition have been and may be materially impacted by increases or decreases in the price of MGM common shares, which are traded on the New York Stock Exchange. The Company recorded an unrealized pre-tax gain of $275.1 million and $657.6 million for the three and six months ended June 30, 2021, respectively. The cumulative unrealized pre-tax gain through June 30, 2021 is $1.5 billion. The carrying value of the ~~ANGI Group Senior Notes on August 20,~~Company's investment in MGM was $2.5 billion and $1.9 billion at June 30, 2021 and December 31, 2020, respectively, which ~~increased the Company's exposure to interest rate risk.~~

~~If market interest rates decline, the Company runs the risk that the related required payments~~represents approximately 27% and 20% of ~~the ANGI Group Senior Notes will~~ ~~exceed those based on market rates.~~IAC's consolidated total assets, respectively. A ~~100-basis point~~$2.00 increase or decrease in the ~~level~~share price of ~~interest rates~~MGM would, respectively, ~~decrease~~result in an unrealized gain or ~~increase the fair value~~loss of ~~the fixed-rate debt by $33.4~~$118.1 million. Such potential increase or decrease in fair value is based on certain simplifying assumptions, including an immediate increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period. The outstanding balance of $237.2 million on the ANGI Group Term Loan bears interest at LIBOR plus 1.50%. As of September 30, 2020, the rate in effect was 1.66%. If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense on the ANGI Group Term Loan would increase or decrease by $2.4 million. The decline in interest rates in 2020 relative to 2019 has reduced the Company's interest expense by approximately ~~$1.3 million and $3.1 million for three and nine months ended September 30, 2020~~.

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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 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"), the Company’s 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.

There were no changes to our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Overview

In the ordinary course of business, IAC and its subsidiaries 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. The litigation matters described below involve issues or claims that may be of particular interest to IAC's stockholders, regardless of whether any of these matters may be material to IAC's financial position or operations based upon the standard set forth in the rules of the Securities and Exchange Commission.

Tinder Optionholder Litigation against IAC and ~~MTCH~~Match Group

The New York Lawsuit. 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 ~~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 a contractually established process for the independent valuation of Tinder by ~~certain~~two 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 the plaintiffs of their contractual right to later valuations of Tinder on a ~~stand‑alone~~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 trial ~~court’s~~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~~court's decision. On November 22, 2019, the defendants filed a motion for reargument or, in the alternative, leave to appeal the Appellate ~~Division’s~~Division's order to the New York Court of Appeals; the plaintiffs opposed the motion. On May 21, 2020, the Appellate Division issued an order: (i) granting the ~~defendants’~~defendants' motion for reargument, vacating its prior decision, and replacing it with a new decision that affirmed the lower ~~court’s~~court's decision on different grounds, and (ii) denying the ~~defendants’~~defendants' motion for leave to appeal the initial (and now vacated) decision to the Court of Appeals, without prejudice to the ~~defendants’~~defendants' filing a motion for leave to appeal the new decision to the Court of Appeals. On June 5, 2020, the defendants filed a motion for leave to appeal the Appellate Division's May 21 decision to the Court of Appeals; the plaintiffs opposed the motion. On July 24, 2020, the Appellate Division issued an order denying the motion.

On June 3, 2019, the defendants filed a second motion to dismiss or for other relief based upon certain substantial advance and/or preferential payment provisions of the plaintiffs’ agreement with a litigation funding firm; the plaintiffs opposed the motion. On July 14, 2021, after supplemental briefing and argument on the motion, ~~which remains pending.~~ the court ruled that while it would not dismiss the case or preclude the payment recipients from testifying at trial, if they do testify, the defendants will have wide latitude on cross-examination to explore the circumstances of the payments.

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On July 15, 2019, the defendants filed an answer denying the material allegations of the complaint, as well as counterclaims against former Tinder CEO 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. On November 21, 2019, the defendants filed a second amended answer and counterclaims, adding claims based on ~~Rad’s~~Rad's alleged unauthorized destruction of company information and breach of his non-solicitation ~~obligations. On~~obligations.On January 30, 2020 and May 21, 2021, the parties participated in a mediation sessions that did not result in the resolution of the matter.

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~~Document discovery~~ Discovery in the case is ~~substantially complete; deposition discovery,~~complete.

On June 14, 2021, the defendants filed a motion to strike the plaintiffs’ demand for a jury trial; the plaintiffs opposed the motion, and on July 14, 2021, the court denied the motion.On July 29, 2021, the defendants filed a notice of appeal to the Appellate Division, First Department, from the trial court’s order denying the motion.On July 30, 2021, the defendants filed a motion to stay the trial, which ~~had been~~is currently scheduled to commence on ~~hiatus in light~~November 8, 2021, pending resolution of the ~~COVID-19 pandemic, is in progress.~~ appeal.

On July 9, 2021, the defendants filed a motion for summary judgment.

The California Arbitration.On July 12, 2020, the four individuals who earlier had discontinued their claims in the New York lawsuit commenced separate arbitration proceedings against IAC and Match Group before the American Arbitration Association in California, asserting the same claims and seeking the same relief as the six remaining plaintiffs in the New York lawsuit.See Rosette Pambakian et al. v. IAC/InterActiveCorp et al., No. 01-20-0009-9733. On September 14, 2020, the defendants in the New York lawsuit filed a motion to stay the trial in ~~the New York~~that action in favor of the California arbitration; the plaintiffs opposed the motion. On November 16, 2020, the court denied the motion.

On December 8, 2020, the claimants in the California arbitration ~~proceedings;~~filed a motion to stay the proceedings in favor of the New York lawsuit; the respondents opposed the motion. On December 22, 2020, the respondents requested permission to file a motion for summary judgment on the claims arising out of the merger of Tinder into Match Group; the claimants opposed the request. On January 28, 2021, the arbitrator issued a decision and order: (i) denying the claimants' motion to stay the proceedings, (ii) granting the respondents' request to file a motion for summary judgment on the merger claims, provided that the motion await the close of fact discovery in the New York lawsuit, and (iii) setting a provisional hearing date of February 7, 2022. On April 30, 2021, the respondents filed a motion for summary judgment dismissing the claimants' merger claims; the plaintiffs opposed the motion, which was argued on July 22, 2021 and remains pending.

IAC believes that the allegations against it in ~~this~~the New York lawsuit and the ~~arbitrations~~California arbitration are without merit and will continue to defend vigorously against them.

Pursuant to the Transaction Agreement (as defined in Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations-General-Separation), Match Group has agreed to indemnify the Company for matters relating to any business of Match Group, including indemnifying the Company for costs related to the matter described above.

Shareholder Litigation Arising Out of the MTCH Separation ~~of Match Group from IAC~~

On June 24, 2020, a shareholder class action and derivative lawsuit was filed in Delaware state court against then IAC/InterActiveCorp (now Match Group, Inc.), then IAC Holdings, Inc. (now IAC/InterActiveCorp), ~~IAC’s~~IAC's Chairman and Senior Executive, Barry Diller, former Match Group (as a nominal defendant only), and the ten members of former Match ~~Group’s Board~~Group's board of ~~Directors~~directors at the time of the MTCH Separation, ~~(as defined in Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations-General-Separation),~~ challenging, on behalf of a putative class of then Match Group public shareholders, the agreed-upon terms of the MTCH Separation. See ~~See~~ David Newman v. IAC/InterActiveCorp et al.,No. 2020-0505 (Delaware Chancery Court). The gravamen of the complaint is that the terms of the MTCH Separation are unfair to former Match Group and unduly beneficial to IAC as a result of undue influence by IAC and Mr. Diller over the then Match Group directors who unanimously approved the transaction. The complaint ~~asserts~~asserted direct and derivative ~~claims:~~claims for: (i) ~~for~~ breach of fiduciary duty against IAC and Mr. Diller as former ~~Match Group’s~~ controlling shareholders of Match Group, (ii) ~~for~~ breach of fiduciary duty against the Match Group directors who unanimously approved the MTCH Separation, (iii) ~~for~~ breach of contract (~~i.e.~~(i.e., a provision of former Match ~~Group’s~~Group's charter), (iv) ~~for~~ breach of the implied covenant of good faith and fair dealing, and (v) ~~for~~ tortious interference with contract against IAC. The complaint ~~seeks~~sought various declarations and damages in an unspecified amount. On September 24, 2020, the defendants filed motions to dismiss the complaint.

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On January 8, 2021, instead of responding to the motions to dismiss, the plaintiff, joined by another plaintiff, Boilermakers National Annuity Trust, filed an amended complaint. In addition, on January 7, 2021, another complaint challenging the MTCH Separation was filed against substantially the same defendants in the same court. See Construction Industry & Laborers Joint Pension Trust for Southern Nevada Plan A v. IAC/InterActiveCorp et al. (Delaware Chancery Court). The two cases have been consolidated under the caption In re Match Group, Inc. Derivative Litigation,No. 2020-0505. On March 15, 2021, the court issued an order appointing Construction Industry and Laborers Joint Pension Trust for Southern Nevada Plan A as lead plaintiff in the litigation and directing it to file a consolidated complaint by April 14, 2021, and on that date the lead plaintiff filed the consolidated complaint. On June 22, 2021, the defendants filed motions to dismiss the consolidated complaint.

IAC believes that the allegations in this ~~lawsuit~~litigation are without merit and will continue to defend vigorously against them.

Shareholder Litigation Regarding the Spin-off

On January 22, 2021, a putative shareholder class action was filed in New York state court against IAC and the members of IAC's board of directors. See Dean Drulias v. Joseph Levin et al., No. 650504/2021 (Supreme Court, New York County). The gravamen of the complaint was that IAC’s proposed Spin-off was being driven by IAC's controlling shareholder, Chairman and Senior Executive, Barry Diller, allegedly in order to: (i) generate additional cash for IAC to invest in the gaming industry, (ii) decrease IAC's stock price to facilitate additional share purchases by Mr. Diller and (iii) generate additional cash for Mr. Diller without diluting his controlling interest in IAC. The complaint asserted claims under Delaware law against IAC's board of directors for breach of fiduciary duty on account of its approval of the Spin-off and against IAC and its board of directors for their respective failures to include certain allegedly material information in the Company's proxy materials related to the proposed transaction. The complaint sought damages in an unspecified amount, as well as an order requiring the Company to include additional disclosures in the proxy materials related to the proposed transaction. On March 22, 2021, the defendants filed a motion to dismiss the complaint and to stay discovery pending resolution of the motion.

On April 13, 2021, the plaintiff filed an amended complaint. On April 15, 2021, the plaintiff filed a motion for a preliminary injunction to stop the IAC stockholder vote on the Spin-off from taking place as scheduled; the defendants opposed the motion. On April 23, 2021, the court issued a decision and order denying the motion.

On May 24, 2021, the court entered an agreed stipulation and order discontinuing the action without prejudice as to the plaintiff and the putative IAC shareholder class.

Item 1A. Risk Factors

Cautionary Statement Regarding Forward-Looking Information

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

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Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others: (i) our ability to market our products and services in a successful and cost-effective manner, (ii) the ~~impact~~display of ~~the COVID-19 outbreak on~~links to websites offering our ~~businesses, (ii)~~products and services in a prominent manner in search results, (iii) changes in our relationship with (or policies implemented by) Google, (iv) our continued ability to ~~successfully~~ market, distribute and monetize our products and services through search engines, digital app stores and social media platforms, (iii) our ability to market our products and services in a successful and cost-effective manner, (iv) the continued display of links to websites offering our products and services in a prominent manner in search results, (v) ~~changes in our relationship with (or policies implemented by) Google, (vi) our ability to compete, (vii)~~ the failure or delay of the markets and industries in which our businesses operate to migrate online and the continued growth and acceptance of online products and services as effective alternatives to traditional products and services, (vi) our continued ability to develop and monetize versions of our products and services for mobile and other digital devices, (vii) our ability to establish and maintain relationships with quality and trustworthy service professionals and caregivers, (viii) the ability of Angi Inc. to successfully implement its brand integration initiative (which could involve substantial costs, including as a result of a continued negative impact on its organic search placement) and expand Angi Services (its pre-priced offerings), (ix) our ability to engage directly with users, subscribers, consumers, service professionals and caregivers directly on a timely basis, (x) our ability to access, collect and use personal data about our users and subscribers, (xi) the ability of our Chairman and Senior Executive, certain members of his family and our Chief Executive Officer to exercise significant influence over the composition of our board of directors, matters subject to stockholder approval and our operations, (xii) our inability to freely access the cash of Angi Inc. and its subsidiaries, (xiii) dilution with respect to our investment in Angi Inc., (xiv) our ability to compete, (xv) adverse economic events or trends (particularly those that adversely impact advertising spending levels and consumer confidence and spending behavior), either generally and/or in any of the markets in which our businesses operate, ~~(ix)~~(xvi) our ability to build, maintain and/or enhance our various brands, ~~(x)~~(xvii) the impact of the COVID-19 outbreak on our ability to develop and monetize versions of our products and services for mobile and other digital devices, (xi) our ability to establish and maintain relationships with quality service professionals and caregivers, (xii) our continued ability to communicate with users and consumers via e-mail (or other sufficient means), (xiii) our ability to access, collect and use personal data about our users and subscribers, (xiv) our ability to successfully offset increasing digital app store fees, (xv)businesses, (xviii) our ability to protect our systems, technology and infrastructure from cyberattacks and to protect personal and confidential user information, ~~(xvi)~~as well as cyberattacks experienced by third parties, (xix) the occurrence of data security breaches ~~fraud~~ and/or ~~additional regulation~~

~~Table~~fraud, (xx) increased liabilities and costs related to the processing, storage, use and disclosure of ~~Contents~~

~~involving or impacting credit card payments, (xvii)~~personal and confidential user information, (xxi) the integrity, quality, ~~scalability~~efficiency and ~~redundancy~~scalability of our systems, technology and infrastructure (and those of third parties with whom we do business), ~~(xviii)~~(xxii) changes in key personnel ~~(xix)~~and (xxiii) the risks inherent in the completed separation of Vimeo, Inc. from our ~~ability~~other businesses, including (among others) uncertainties related to service our outstanding indebtedness and interest rate risk, (xx) dilution with respect to our investment in ANGI Homeservices, (xxi) foreign exchange currency rate fluctuations, (xxii) operational and financial riskswhether the expected benefits of the transaction will be realized (on the anticipated timeline or at all), any litigation arising out of or relating to ~~acquisitions~~the transaction, the expected tax treatment of the transaction and the impact of the transaction on our continued ability to identify suitable acquisition candidates, (xxiii) our ability to operate in (and expand into) international markets successfully, (xxiv) regulatory changes, (xxv) our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties and (xxvi) the possibility that our historical consolidated and combined results may not be indicative of our future results.remaining businesses.

Certain of these and other risks and uncertainties are discussed in our filings with the SEC, including under the ~~caption~~captions "Risks Relating to ~~New~~IAC Securities and SpinCo Securities Following the Spin-off," "Risks Relating to IAC's Business Following the ~~Separation"~~Spin-off," "General Risk Factors" and "Risks Related to SpinCo and the Vimeo Business Following the Spin-off" in the Registration Statement on Form S-4 (Registration No. ~~333-236420)~~333-251656), as amended, Part I-Item 1A-Risk Factors of our annual report on 10-K for the fiscal year ended December 31, 2020 and Part II-Item 1A-Risk Factors of our ~~Quarterly Report~~quarterly report on 10-Q for the fiscal quarter ended ~~June 30, 2020.~~March 31, 2021. 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 quarterly 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.

Risk Factors

In addition to the risk factor ~~relating to~~below and the ~~impact of the COVID-19 outbreak on our businesses and~~ other information ~~set forth~~ in this quarterly report, ~~on Form 10-Q,~~ you should carefully consider the risk factors discussed under the ~~caption~~captions "Risks Relating to ~~New~~IAC Securities and SpinCo Securities Following the Spin-off," "Risks Relating to IAC's Business Following the ~~Separation"~~Spin-off," "General Risk Factors" and "Risks Related to SpinCo and the Vimeo Business Following the Spin-off" in the Registration Statement on Form S-4 (Registration No. ~~333-236420)~~333-251656), as amended, Part I-Item 1A-Risk Factors of our annual report on 10-K for the fiscal year ended December 31, 2020 and Part II-Item 1A-Risk Factors of our ~~Quarterly Report~~quarterly report on 10-Q for the fiscal quarter ended ~~June 30, 2020,~~March 31, 2021, which could materially and adversely affect IAC's business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect IAC's business, financial condition and/or operating results.

~~The global outbreak of COVID-19 and other similar outbreaks could adversely affect IAC's business, financial condition and results of operations.~~

IAC's business could be materially and adversely affected by the outbreak of a widespread health epidemic or pandemic, including the outbreak of the coronavirus (COVID-19), which has been declared a "pandemic" by the World Health Organization. To date, the outbreak of COVID-19 has caused a widespread global health crisis, and governments in affected regions have implemented measures designed to curb the spread of the virus, such as social distancing, government-imposed quarantines and lockdowns, travel bans and other public health safety measures. These measures have resulted in significant social disruption and have had (and are likely to continue to have) an adverse effect on economic conditions generally, on advertising expenditures across traditional and digital advertising channels, and on consumer confidence and spending, all of which could have an adverse effect on IAC's businesses, financial condition and results of operations.

To date, the impact on IAC's businesses has varied from business to business and from quarter to quarter. For example, in March 2020, IAC's ANGI Homeservices business experienced a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). In the second quarter of 2020, ANGI Homeservices experienced a rebound in service requests, exceeding pre-COVID-19 growth levels, driven by increased demand from homeowners who spent more time at home due to measures taken to reduce the spread of COVID-19. ANGI Homeservices continued to experience strong demand for home services in the third quarter of 2020. However, many ANGI Homeservices service professionals' businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which has negatively impacted the ability of ANGI Homeservices to monetize this increased level of service requests. While IAC's Vimeo business has seen strong revenue growth as the demand for communication via video has increased due to the pandemic, the Search segment has experienced a decline in revenue due, in part, to decreased advertising rates due to the impact of COVID-19, which decrease in rates was more significant earlier in the year, and in the third quarter of 2020, IAC recorded impairments of $53.2 million and $10.8 million related to the goodwill and intangible assets, respectively, of its Desktop reporting unit, with the effects of COVID-19 on monetization being a contributing factor. See Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations-General-COVID 19 Updates and Impairments. Also, the United States, which represents 81% and 80% of the Company's revenue for the three and nine months ended September 30, 2020, respectively, has experienced a significant

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~~resurgence~~The Angi brand integration initiative may involve substantial costs, including as a result of ~~COVID-19 with record levels~~a continued negative impact on organic search placement, and may not be favorably received by customers and service professionals.

On March 17, 2021, Angi Inc. ("Angi") updated one of ~~infection being reported~~its leading websites and brands, Angie’s List, to Angi, and concentrated its marketing investment in the ~~weeks following the end of the third quarter of 2020. Lastly, Europe, which is the second largest market for IAC products~~Angi brand in order to focus its marketing, sales and ~~services,~~branding efforts on a single brand.

Angi (and in turn, IAC) has ~~also seen a dramatic resurgence of COVID-19. These resurgences~~incurred and ~~the measures designed to curb their spread could materially and adversely affect our business, financial condition and results of operations.~~

~~In addition, in response to the outbreak of COVID-19 and government-imposed measures to control its spread, the ability of IAC to conduct ordinary course business activities has been (and~~ may continue to be) impaired for an indefinite period of time. For example, IAC has taken several precautions that could adversely impact employee productivity, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing office locations. IAC may also experience increased operatingincur substantial costs as ~~it gradually resumes normal operations~~a result of this brand integration initiative and ~~enhances preventative measures, including with respect~~may not be able to ~~real estate, compliance~~achieve or maintain brand name recognition or status that is comparable to the recognition and ~~insurance-related expenses. Moreover, IAC~~status previously enjoyed by Angie’s List, and customers and service professionals may ~~also experience business disruption if~~be confused as Angi transitions and focuses on the ~~ordinary course operations~~Angi brand. Angi relies heavily on free and paid search engine marketing efforts to drive traffic to its platforms. The brand initiative has adversely affected the placement and ranking of ~~its contractors, vendors or business partners are adversely affected. Any~~Angi websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List. In addition, Angi shifted marketing to support the Angi brand away from the HomeAdvisor brand, which has negatively affected the efficiency of Angi's search engine marketing efforts.

During the second quarter of 2021, these ~~measures or impairments could adversely affect IAC's business, financial condition~~efforts had a pronounced negative impact on Marketplace Service Requests from organic search results and ~~results of operations.~~

~~The extent to~~via mobile applications, which developments related to COVID-19 and measures designed to curb its spread continue to impact IAC's business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond IAC's control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments. For example, these developments and measures havein turn has resulted in ~~rapid and adverse changes~~increased paid search engine marketing to the operating environment in which IAC does business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to COVID-19.generate Marketplace Service Requests. The longer the global outbreak and measures designed to curb the spread of COVID-19 continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for IAC's various products and services), the greater the adverse impact is likely to be on IAC's business, financial condition and results of operations and the more limited IAC's ability will be to try and make up for delayed or lost revenues.

~~The COVID-19 outbreak may also have the~~combined effect of ~~heightening many of~~this during the other risks described under the caption "Risks Relating to New IAC's Business Following the Separation" in the Registration Statement on Form S-4 (Registration No. 333-236420), as amended, and Part II-Item 1A-Risk Factors of our Quarterly Report on 10-Q for the fiscal quarterthree months ended June 30, ~~2020. IAC will continue to evaluate~~2021 has reduced revenue and increased marketing spend, materially more than expected at the ~~nature and extent~~launch of the ~~impact of the COVID-19 outbreak on its business, financial condition and results of operations.~~

~~Furthermore, because COVID-19 did not begin to impact our results until late~~brand initiative in the first quarter of ~~2020, any current~~2021 and more significantly than forecasts at the beginning of May 2021. It is expected that the pronounced negative impact to organic search results, increased paid search engine marketing and reduced monetization from mobile applications will continue until such time as the new brand establishes search engine optimization ranking and consumer awareness is established. Any or ~~future~~all of these impacts ~~may~~could continue to increase marketing costs (particularly if free traffic is replaced with paid traffic) and adversely affect the effectiveness of marketing efforts overall. Finally, as Angi aligns and focuses its organization around a single brand, it could experience financial and operational challenges and reduced service professional participation across its various product lines. Depending on market acceptance, the brand integration initiative could adversely affect the ability of Angi to attract and retain customers and service professionals, which could cause Angi not ~~be directly comparable~~ to ~~any historical periods and are not necessarily indicative of any future impacts that COVID-19may have on our results for the remainder of 2020~~realize some or ~~any subsequent periods. The impact of COVID-19 on our revenues and expenses may also fluctuate differently over the duration~~all of the ~~pandemic.~~anticipated benefits contemplated by the brand integration initiative.

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

Unregistered Sales of Equity Securities

The Company did not issue or sell any shares of its common stock or any other equity securities pursuant to unregistered transactions during the quarter ended ~~September~~June 30, ~~2020.~~2021.

Issuer Purchases of Equity Securities

The Company did not purchase any shares of its common stock during the quarter ended ~~September~~June 30, ~~2020.~~2021. As of that date, 8,036,226 shares of IAC common stock remained available for repurchase under the Company's previously announced June 2020 repurchase authorization. The Company may 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.

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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	Separation Agreement by and between the Registrant and Vimeo, Inc., dated as of May 24, 2021.(1)	Exhibit 2.1 to the Registrant's Form 8-K , filed on May 28, 2021.
3.1	Restated Certificate of Incorporation of the ~~Registrant, dated as of June 30, 2020.~~Registrant.	Exhibit 3.1(c) to the Registrant's Form 8-K, filed on July 2, 2020.
3.2	Amendment to Restated Certificate of Incorporation of the Registrant.	Exhibit 4.2 to the Registrant's Post-Effective Amendment No. 1 on Form S-8 to Registration Statement on Form S-4 (File No. 333-251656), filed on May 26, 2021.
3.3	Certificate of Designations of Series A Cumulative Preferred Stock of the ~~Registrant, dated as of June 30, 2020~~Registrant.	Exhibit 3.2 to the Registrant's Form 8-K, filed on July 2, 2020.
~~3.3~~3.4	Amended and Restated By-Laws of the ~~Registrant, dated as of June 30, 2020.~~Registrant.	Exhibit ~~3.3~~3.1 to the Registrant's Form 8-K, filed on ~~July 2, 2020~~April 9, 2021.
~~4.1~~10.1	~~Indenture,~~Transition Services Agreement by and between the Registrant and Vimeo, Inc., dated as of ~~August 20, 2020, among ANGI Group, LLC,~~May 24, 2021.(1)	Exhibit 10.1 t o the ~~guarantors party thereto~~Registrant's Form 8-K, filed on May 28, 202 1.
10.2	Employee Matters Agreement by and ~~Computershare Trust Company, N.A.~~between the Registrant and Vimeo, Inc., dated as ~~trustee.~~of May 24, 2021.(1)	Exhibit 10.2 to the Registrant's Form 8-K, filed on May 28, 2021.
10.3	Tax Matters Agreement by and between the Registrant and Vimeo, Inc., dated as of May 24, 2021.	Exhibit ~~4.1~~10.3 to the Registrant's Form 8-K, filed on May 28, 2021.
10.4	Amendment No. 1, as of March 31, 2021, to Transition Services Agreement by ~~ANGI Homeservices~~and between the Registrant and Match Group, Inc., dated as of June 30, 2020.(1)(2)
10.5	Amended and Restated Restricted Stock Agreement, dated as of June 7, 2021, by and between the Registrant and Joseph M. Levin.	Exhibit 10.1 to the Registrant's Form 8-K, filed on ~~August 20, 2020~~June 8, 2021.
10.6	Separation Agreement between the Registrant and Glenn H. Schiffman, dated as of June 8, 2021.	Exhibit 10.1 to the Registrant's Form 8-K , filed on June 8, 2021.
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)~~(2)
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)~~(2)

Table of Contents


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)~~(2)
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. ~~(2)~~(3)
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. ~~(2)~~(3)
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. ~~(2)~~(3)
101.INS	Inline XBRL ~~Instance (1)~~Instance.(2)	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)~~Schema.(2)
101.CAL	Inline XBRL Taxonomy Extension ~~Calculation (1)~~Calculation.(2)
101.DEF	Inline XBRL Taxonomy Extension ~~Definition (1)~~Definition.(2)
101.LAB	Inline XBRL Taxonomy Extension ~~Labels (1)~~Labels.(2)
101.PRE	Inline XBRL Taxonomy Extension ~~Presentation (1)~~Presentation.(2)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~Table~~(1)Pursuant to Item 601(a)(5) of ~~Contents~~Regulation S-K, certain schedules and similar attachments have been omitted. The Registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

~~(1)~~(2)Filed herewith.

~~(2)~~(3)Furnished herewith.

7072

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~~August 6, ~~2020~~2021

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~~August 6, ~~2020~~2021
Glenn H. Schiffman

7173


			IAC Shareholders' Equity and Invested Capital
	Redeemable Noncontrolling Interests		Common Stock, $0.001 par value			Class B Common Stock, $0.001 par value			Additional Paid-in-Capital		Retained Earnings		Invested Capital		Accumulated Other Comprehensive (Loss) Income		Total IAC Shareholders' Equity and Invested Capital		Noncontrolling Interests		Total Shareholders' Equity
			$		Shares	$		Shares
			(in thousands)
Balance as of June 30, 2020	$	43,583	$	79	79,343	$	6	5,789	$	4,661,231	$	0	$	0	$	(13,781)	$	4,647,535	$	498,792	$	5,146,327
Net (loss) earnings	(30)		—		—	—		—	—		184,917		0		—		184,917		974		185,891
Other comprehensive income, net of income taxes	920		—		—	—		—	—		—		—		1,952		1,952		645		2,597
Stock-based compensation expense	0		—		—	—		—	20,865		—		0		—		20,865		13,846		34,711
Adjustment of redeemable noncontrolling interests to fair value	(243)		—		—	—		—	243		—		0		—		243		—		243
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	(46,336)		—		0		11		(46,325)		7,855		(38,470)
Proceeds from the sale of Old IAC Class M common stock	—		—		—	—		—	1,408,298		—		—		—		1,408,298		—		1,408,298
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		1		206	—		—	(22,654)		—		—		—		(22,653)		—		(22,653)
Purchase of noncontrolling interests	—		—		—	—		—	—		—		—		—		—		(1,115)		(1,115)

Other	(66)		—		—	—		—	(602)		—		—		—		(602)		690		88
Balance as of September 30, 2020	$	44,164	$	80	79,549	$	6	5,789	$	6,021,045	$	184,917	$	0	$	(11,818)	$	6,194,230	$	521,687	$	6,715,917



			Old IAC Equity in
			IAC/InterActiveCorp
					Accumulated Other Comprehensive Loss		Total Old IAC Equity in IAC/InterActiveCorp
	Redeemable Noncontrolling Interests		Invested Capital						Noncontrolling Interests		Total Shareholders' Equity


Balance as of June 30, 2019	$	79,467	$	2,247,792	$	(12,258)	$	2,235,534	$	451,491	$	2,687,025
Net (loss) earnings	(1,167)		16,466		—		16,466		3,079		19,545
Other comprehensive loss	(365)				(2,499)		(2,499)		(470)		(2,969)
Stock-based compensation expense	36		15,667		—		15,667		8,748		24,415
Purchase of redeemable noncontrolling interests	(71)				—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	(1,531)		1,531		—		1,531		—		1,531
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—		5,315		(19)		5,296		(8,623)		(3,327)
Purchase of ANGI Homeservices treasury stock	—		(34,157)		—		(34,157)		—		(34,157)

Net increase in Old IAC's investment in the Company prior to the Separation	—		258,498		—		258,498		—		258,498
Other	1		—		—		—		—		—
Balance as of September 30, 2019	$	76,370	$	2,511,112	$	(14,776)	$	2,496,336	$	454,225	$	2,950,561


Balance as of December 31, 2018	$	65,687	$	2,296,583	$	(12,541)	$	2,284,042	$	400,358	$	2,684,400
Net earnings	4,735		16,008		—		16,008		5,983		21,991
Other comprehensive loss	(514)		—		(2,225)		(2,225)		(456)		(2,681)
Stock-based compensation expense	113		49,147		—		49,147		45,473		94,620
Purchase of redeemable noncontrolling interests	(6,192)		—		—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	8,607		(8,607)		—		(8,607)		—		(8,607)
Issuance of ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—		(32,422)		(10)		(32,432)		2,867		(29,565)
Purchase of ANGI Homeservices treasury stock	—		(34,157)		—		(34,157)		—		(34,157)
Noncontrolling interests created in acquisitions	3,967		—		—		—		—		—
Net increase in Old IAC's investment in the Company prior to the Separation	—		224,560		—		224,560		—		224,560
Other	(33)		—		—		—		—		—
Balance as of September 30, 2019	$	76,370	$	2,511,112	$	(14,776)	$	2,496,336	$	454,225	$	2,950,561


	Care.com
	(In thousands)		Useful Life (Years)
Indefinite-lived trade name and trademarks	$	59,300	Indefinite
Developed technology	49,500		2
Customer relationships	35,700		2 - 5
Provider relationships	800		4
Total identifiable intangible assets acquired	$	145,300


	September 30,		December 31,
	2020		2019
	(In thousands)
Goodwill	$	1,767,834	$	1,616,867
Intangible assets with indefinite lives	245,932		225,296
Intangible assets with definite lives, net of accumulated amortization	148,483		124,854
Total goodwill and intangible assets, net	$	2,162,249	$	1,967,017


	Balance at December 31, 2019		Additions		(Deductions)		Impairment		Foreign Exchange Translation		Balance at September 30, 2020
	(In thousands)
ANGI Homeservices	$	884,296	$	0	$	0	$	0	$	736	$	885,032
Vimeo	219,374		0		(38)		0		0		219,336
Search	265,146		0		0		(265,146)		0		0
Emerging & Other	248,051		415,164		0		0		251		663,466
Total	$	1,616,867	$	415,164	$	(38)	$	(265,146)	$	987	$	1,767,834


	Balance at December 31, 2018		Additions		(Deductions)		Impairment		Foreign Exchange Translation		Balance at December 31, 2019
	(In thousands)
ANGI Homeservices	$	895,071	$	18,326	$	(29,293)	$	0	$	192	$	884,296
Vimeo	77,152		142,222		0		0		0		219,374
Search	265,146		0		0		0		0		265,146
Emerging & Other	246,748		4,765		0		(3,318)		(144)		248,051
Total	$	1,484,117	$	165,313	$	(29,293)	$	(3,318)	$	48	$	1,616,867


	September 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Useful Life (Years)
	(In thousands)
Technology	$	188,893	$	(102,542)	$	86,351	3.9
Service professional relationships	97,618		(96,799)		819		3.0
Customer lists and user base	58,396		(27,050)		31,346		3.6
Trade names	45,691		(16,845)		28,846		2.1
Memberships	15,900		(15,900)		—		3.0
Other	10,439		(9,318)		1,121		3.4
Total	$	416,937	$	(268,454)	$	148,483	3.4


	(In thousands)
Remainder of 2020	$	22,408
2021	73,412
2022	36,712
2023	13,509
2024	1,742
Thereafter	700
Total	$	148,483


	September 30, 2020
	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)
Assets:
Cash equivalents:
Money market funds	$	1,717,738	$	0	$	0	$	1,717,738
Treasury discount notes	0		1,349,926		0		1,349,926
Time deposits	0		42,988		0		42,988

Marketable debt securities:
Treasury discount notes	0		349,953		0		349,953
Long-term investments:
Investment in MGM	1,283,987		0		0		1,283,987
Other non-current assets:
Warrant	0		0		4,748		4,748
Total	$	3,001,725	$	1,742,867	$	4,748	$	4,749,340


Year	Percentage
2023	101.938	%
2024	100.969	%
2025 and thereafter	100.000	%


	(In thousands)
Remainder of 2020	$	3,438
2021	13,750
2022	27,500
2023	192,500
2028	500,000
Total	737,188
Less: current portion of ANGI Group Term Loan	13,750
Less: unamortized debt issuance costs	8,030
Total long-term debt, net	$	715,408


	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
	Foreign Currency Translation Adjustment		Unrealized (Losses) Gains On Available-For-Sale Debt Securities		Accumulated Other Comprehensive Loss		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
	(In thousands)
Balance as of July 1	$	(13,780)	$	(1)	$	(13,781)	$	(12,258)	$	(12,258)
Other comprehensive income (loss)	1,948		4		1,952		(2,499)		(2,499)
Allocation of accumulated other comprehensive income (loss) related to noncontrolling interests	11		0		11		(19)		(19)
Balance as of September 30	$	(11,821)	$	3	$	(11,818)	$	(14,776)	$	(14,776)


	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
	Foreign Currency Translation Adjustment		Unrealized Gains On Available-For-Sale Debt Securities		Accumulated Other Comprehensive Loss		Foreign Currency Translation Adjustment		Unrealized Gains (Losses) On Available-For-Sale Debt Securities		Accumulated Other Comprehensive Loss
	(In thousands)
Balance as of January 1	$	(12,226)	$	0	$	(12,226)	$	(12,543)	$	2	$	(12,541)
Other comprehensive income (loss) before reclassifications	585		3		588		(2,223)		(2)		(2,225)
Amounts reclassified to earnings	(144)		0		(144)		0		0		0
Net current period other comprehensive income (loss)	441		3		444		(2,223)		(2)		(2,225)
Allocation of accumulated other comprehensive loss related to noncontrolling interests	(36)		0		(36)		(10)		0		(10)
Balance as of September 30	$	(11,821)	$	3	$	(11,818)	$	(14,776)	$	0	$	(14,776)


	September 30, 2020		December 31, 2019
	(In thousands)
Long-lived assets (excluding goodwill, intangible assets and ROU assets):
United States	$	254,869	$	297,433
All other countries	10,949		7,981
Total	$	265,818	$	305,414


	Nine Months Ended September 30, 2019
	Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Acquisition-related Contingent Consideration Fair Value Arrangements		Adjusted EBITDA
	(In thousands)
ANGI Homeservices	$	32,488	$	45,586	$	27,039	$	42,421	$	0	$	147,534
Vimeo	(40,555)		$	0	$	364	$	6,530	$	0	$	(33,661)
Dotdash	13,752		$	0	$	660	$	8,139	$	0	$	22,551
Search	100,551		$	0	$	1,431	$	0	$	0	$	101,982
Emerging & Other	(21,259)		$	0	$	546	$	7,022	$	(12,993)	$	(26,684)
Corporate	(119,018)		$	49,281	$	9,002	$	0	$	0	$	(60,735)
Total	(34,041)
Interest expense	(9,402)
Other income, net	16,850
Loss before income taxes	(26,593)
Income tax benefit	53,319
Net earnings	26,726
Net earnings attributable to noncontrolling interests	(10,718)
Net earnings attributable to IAC shareholders	$	16,008