People Inc. (PPLI) 2026 年第 3 季法說會：數位成長放緩至 2%

People Inc. (PPLI) 發布連續第 12 個季度的數位營收成長，但由於 Google 轉介流量減少拖累網站流量與廣告，成長有所放緩。管理層正將資源轉移至授權、社群影音、訂閱、活動以及其他非瀏覽流量導向的營收來源。

重點摘要

• People Inc. 2026 年第三季數位營收成長 2%，較第二季的 6% 放緩，而數位 EBITDA 則減少約 100 萬美元。
• 在授權、內容分發聯播、活動和社群影音的支撐下，非瀏覽流量導向營收成長 15%。其中授權營收成長 49%。
• 由於網站瀏覽次數下滑 26%（主要受 Google 轉介流量減少影響），傳統瀏覽流量導向營收下降 6%。管理層表示，Google 搜尋流量在過去兩年中下降了近 70%。
• 隨著公司將資源重新分配至 AI 及較新的成長計畫，公司裁減了 195 名員工，約占其員工總數的 6%。
• 管理層預計 People Inc. 全年 EBITDA 為 3.3 億至 3.45 億美元，營收成長為中個位數。PPLI 控股公司總 EBITDA 預計為 2.63 億至 2.83 億美元。
• PPLI 計畫重啟股票回購，管理層表示這將占據中短期資本配置的大部分，同時會在出版領域尋求規模較小的補充型併購。

關鍵財務數據

業務與營運表現

People Inc. 的營收結構繼續擺脫對搜尋流量的依賴。管理層預計到明年同期，非瀏覽流量導向業務將占數位營收的大約一半。

授權是成長最強勁的領域。該業務包括內容分發、AI 授權及傳統產品授權。Apple News 採用基於用戶參與度與內容消費的營收分潤模式，同時公司也透過 Yahoo!、MSN 和 YouTube 等平台分發內容。

社群影音是另一個重點發展項目。People Inc. 目前在旗下品牌擁有 50 多個社群影音系列節目。管理層表示，贊助導向的劇集內容還能支援涵蓋活動、YouTube、Instagram 及其他管道的更廣泛廣告套載方案。

公司已推出 My Recipes+ 和 People VIP 訂閱產品。其 My Recipes 與 People 應用程式產品已吸引約 600 萬次下載或註冊，管理層目前專注於將用戶轉化為付費訂戶。

DCipher 已從開放網路擴展至聯網電視 (CTV) 受眾精準投放。管理層表示，近期該業務有超過一半來自 CTV 定向投放，但並未具體說明衡量期間。

在核心出版業務之外，Vivian 第三季營收成長 18% 至約 1,200 萬美元，而 Daily Beast 營收成長 39% 至 800 萬美元。Turo 繼續保持雙位數營收成長，近期更指出其年營收正邁向約 12 億美元。

管理層業績指引

管理層預計第四季數位營收成長將會改善，並繼續以 20% 高段的數位 EBITDA 利潤率為目標，同時將全年利潤率達到約 30% 列為營運目標。

展望 2027 年，管理層預期過去兩年推出的新計畫將支撐更快速的成長。長期目標是重返雙位數成長，不過正式的 2027 年數位營收計畫目標為中至高個位數擴張。

風險與觀察重點

Google 搜尋仍是主要的營運壓力來源。管理層表示，在其追蹤的搜尋查詢中，有超過 90% 出現 AI 總覽（AI Overviews），而來自 Google 的轉介流量在兩年間下降了近 70%。公司在規劃時並未假設瀏覽次數會有所恢復。

管理層預計由搜尋驅動的流量絕對值將持續下降，但隨著比較基期變小，百分比降幅可能會有所放緩。AI 代理（AI agents）和其他產品引起的消費者行為改變，仍然是額外的不確定性來源。

廣告市場狀況評分為 10 分中的 6 分。健康與製藥廣告以及美容時尚維持強勁，而食品與消費包裝品則被描述為更容易受總體經濟環境影響。

新產品也帶來了短期成本。管理層提到第三季在基礎設施、初步行銷及 AI 費用方面投資了數百萬美元。公司正透過裁員以及將資源從印刷與傳統網路業務中轉移出來，以平衡這些投資。

法人說明會問答亮點

• 流量穩定狀況：管理層認為 People Inc. 已接近 Google 搜尋流量下滑的後期。直接流量與非 Google 轉介流量仍相對健康，但公司在規劃時並未預期搜尋流量會出現復甦。
• 資本配置：預計股票回購將占據中短期資本的大部分。併購將主要針對能強化非瀏覽流量導向營收的較小型出版業補充型併購，而非大型轉型交易。
• MGM 持股：PPLI 保有 26% 的 MGM 股權，並同意不高於 29.9% 的持股上限。Barry Diller 表示，他預期該持股比例可在無需 PPLI 額外資本的情況下，透過 MGM 股票回購而上升。
• Google 廣告科技訴訟：管理層認為其求償金額可能至少達到九位數，同時強調時間點與最終結果仍具不確定性。公司將潛在的解決時間點指為 2027 年。
• AI 部署：People Inc. 正在軟體開發、銷售工作流程、研究及內容主題分析中運用 AI。管理層表示，在其 3,400 至 3,500 名員工中，在典型月份約有 1,500 人使用 AI 工具。
• 成本結構：公司預期將前控股公司的管理費用負擔減少一半，在 2027 年第一季末前達到約 4,500 萬美元的公司費用年化運轉率。

完整法說會逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and welcome to the People Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Tim Quinn, People Inc. Chief Financial Officer. Please go ahead.

Timothy Quinn

Thank you. Good morning, everyone. This is Tim Quinn, CFO of People Inc., and I want to welcome you all to our third quarter earnings call. Joining me today are Barry Diller, Chairman and Senior Executive of People Inc. and Neil Vogel, Chief Executive Officer. People Inc. has published a presentation on the Investor Relations section of our website entitled Q3 Earnings Presentation. On this call, Barry, Neil and I will provide some introductory remarks referencing that presentation and then open it up to Q&A. Before we get into that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on our current expectations and on information currently available to us. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent annual report on Form 10-K and subsequent reports filed with the SEC.

This information provided on this call should be considered in light of such risks. We also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity's sake during the call. I also refer you to our earnings release, investor presentations and public filings with the SEC and on our Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all non-GAAP measures. And with that, I will hand it over to Barry.

Barry Diller

Thank you, Tim. Good morning, everyone. I'm going to be, as usual, fairly brief about just some opening remarks. I much prefer to get to your questions. On MGM, as you all know, we spent a good many months this summer. First of all, we went into a process where we announced that we were going to attempt to take MGM private for a whole host of reasons, structural. In the end, decided that now was not the timing, if ever was the time, and we ended that process. And then MGM came to us and said, how about if we buy People Inc. And while I was dubious, I said, well, if you would want to make us a proposal, please do so, they did so, and we quickly realized that was not in People's interest, for, again, all sorts of reasons, but I did not think that the time was right, nor do I think probably the time will ever be where someone will "purchase" the People entity.

As far as MGM is concerned, I have not dimmed at all in my belief in their business. I believe that they are the greatest play in a world of disintermediation. I think that there are prospects both their home market of Las Vegas, the regional markets, particularly in both China and the building of this giant resort in Japan. I think the prospects are great. And out of the process when it ended, MGM is interested, as you could understand, I think if you follow MGM or you're an investor in MGM, their security is quite undervalued. And they wanted to buy stock, but they felt that our position at 26% meant that there were issues, so to speak, of creep and control.

And so we entered into an agreement with them that gave certain rights, meeting voting rights in some of our -- in the securities above our 26% if, in fact, it grows by virtue of share, thereby increases our ownership, thereby that they want to be protected in that and they wanted us to not purchase stock in excess of 29.9%.

I was fine with that. I don't intend to do so. I think that it's more than likely over time that our 26% will grow way past 29% without harping up any additional capital in our company. And our first priority, I think, is as we've not been able to purchase our own securities in some time because of the MGM discussions and blackout period. But we are, as I say, open to buy beginning, I think it is tomorrow, and you will see us doing so.

As it relates to the publishing business, which Neil, of course, is going to talk in detail about and will probably be the -- many of your questions are sessions-based revenue, non-session-based revenue, which is what we're after, is growing quite well, and the drag this year was in the sessions legacy business, dragged. I have every expectation that we're going to continue on this path of displacing old legacy, Google essentially search and concomitant revenue with nonsession-based revenue from all of the things that we are doing inside all the books. But the key to our publishing business is we've been on this path, now 2.5 years, almost 3 years of changing before actually it became critical loss of sessions, we began to change and diversify our traffic.

We're continuing to do so. We're confident that we're going to be able to do that, and we're going to be able to get substantial growth, not single-digit growth. That is the goal. That's what I think next year. I would be very disappointed if next year, we do not reach that. But I'm sure you'll hear more about that. We've been simplifying the company, as you all know, I think we've taken our overhead down by $90 million -- $25 million or so. We continue to simplify the business, sell assets that are noncore. There are only 2 assets we have really. One is -- I mean, one is obviously MGM and the other is our publishing business. I think they balance each other extraordinarily well, and I'm very glad that we have them. Think about capital allocation. Capital allocation is going to go towards strengthening that publishing business. We're not going to look outside that. There are many opportunities within that, not big scale, but relatively small scale, but I think could be very additive to the publishing business and returning capital to shareholders.

So with that, I'll turn the call back to Tim or to Neil, and we'll get to your questions as soon as they finish.

Neil Vogel

Great. Thanks, BD. That was a great setup. Hopefully, Tim and I can provide some color to what BD just said. Let's jump right in. If you go to -- if you're looking at the slides, when you go to Slide 3, we continue, as Barry said, to execute on our simplification strategy there. Again, there are 3 main drivers for us, and we've discussed this prior.

First, we're focusing on the core assets. As Barry said, People Inc. and our stake in MGM. For People, Q3 marks 12 straight quarters of digital revenue growth, and we're executing a strategy to accelerate that growth going forward. And as BD said, for MGM, we're focused on using our ownership position to help MGM unlock its many opportunities.

Second, we're continuing to opportunistically monetize our noncore assets, and we're making good progress here. We;ll be smart, seeking the right opportunities. And third, we're being thoughtful stewards of our capital. As Barry said, we're in a strong position to opportunistically buy our own shares and if you'll grow through M&A, specifically at the People Inc. operating business.

Page 4 will be familiar to many of you. People Incorporated continues to trade at a discount to the value of its MGM Holdings plus cash. That means investors are getting our People Media business and all of our other stakes, including Turo, Vivien and Daily Beast as well as our real estate effectively for free. The game plan we outlined is clear. The goal is to unlock the value shown.

Now on to People's media results for the quarter. Q3 represents our 12th straight quarter of digital revenue growth, although not with the strength we would have hoped. Digital revenue grew 2%, down from 6% last quarter. The trend for the quarter was clear. Our newer nonsessions-based revenues continue to grow at pace, while legacy sessions-based revenues were more of a drag than we expected. Our future is the strength of our brands and the durability and diversity of our nonsession-based businesses, as Barry introduced.

Non-sessions based revenues grew at a solid 15%, in line with Q2, with continued strength in licensing, content syndication, events and social video. In the last quarter alone, we launched my [ Recipes+ ] and People VIP paid online subscription models, along with multiple new and expanded events across our food and home brands, and we're up to 50-plus social video series across brands from Instyle to travel and leisure.

Legacy sessions based revenues declined by 6% in Q3 versus 1% in Q2. That was driven by web session declines of 26%, up from 22% last quarter primarily due to declines in Google referrals. However, we continue to drive premium ad rates rooted in the quality of our brands, audiences and execution, offsetting much of those declines on the web. We expect our digital revenue growth rate to increase in Q4 and to deliver on our EBITDA targets for the year. We plan for digital growth to return to mid- to high single digits in 2027, and our aspirations are in line with what BD outlined.

We are aligning our resources to our biggest opportunities with disciplined cost efficiency. Last week, we executed staffing reductions impacting 195 employees, about 6% of our workforce. We are optimizing headcount around our most important projects. We continue to integrate AI across all work streams. We are reorienting essentially everything we do to embrace AI. And most importantly, we're now playing offense, not defense. We are aggressively looking for acquisitions to accelerate our noncessions-based businesses.

The next slide illustrates the macro changes in media and how we've evolved. Going to Slide 6. Our opportunity to reach audiences and serve marketers has never been larger, more diversified or offered greater potential. Since the Meredith acquisition 5 years ago, we have grown from website-based media with print roots, limited in scale and narrowing revenue streams to brand-focused media reaching scaled audiences across digital and in real life. The growth of our non-sessions-based revenue is a direct result of the growth in these businesses. World-class brands are our anchor. We have the gravitas of 50 or even 100 years of history and our generation relationships with consumers transcend media tactics.

Our key objectives are twofold: to build direct relationships with consumers and to capitalize on our significantly larger addressable market. Whether it's social video hits like People's Next Red Carpet reporter, rapidly expanding events like BHG's Red Platt Cafe or our content partnership with Apple News, we're successfully delivering new ways to connect with and delight consumers.

The next slide shows how we develop and grow properties specifically in today's brand-based era, focusing on people's 2026 Sexiest Man Alive, one of our most important franchises. Going on to the next slide. Last week, People announced its picked for SMA, Noah Wiley from the hit show The Pitt. I'm sure Noah is thrilled to be part of our earnings call. SMA is a 41-year-old franchise that has been reenergized by our new media mix, and we've increased its reach, cultural residence and economic potential. What started as a magazine cover then a web feature has become a robust franchise that lives across Instagram, TikTok, YouTube, Apple News, our People app and VIP subscription, podcasts and our distribution partners.

The outcome is clear. We grew revenue associated with SMA this year, 50% with significantly expanded audience reach and drove the cultural conversation. We have opportunities like this across all of our key brands. So whether it's launching our own products like Sweet Tea, at Southern Living, which is coming very soon, expanding our event franchises, launching subscription services. We're creating new video-based IP, we have a blueprint for future growth.

Now I'll turn it over to Tim to go over the financials.

Timothy Quinn

Great. Turning to Page 8, I want to frame in financial terms where we sit on our journey from a primarily web-centric business to a diversified branded media company. Our formula is to grow our non-sessions revenue about 15% to 20% over time. We have some room to go from the 15% we delivered this quarter. But as Neil said, we have plans to get there. This part of our business will represent about half of our digital revenue by this time next year and is where we are putting all of our time, energy and resources. This is the future.

The other half of the business resides on the web and is the place where our consumers interact directly with our brands and often choose to transact. Because of this, we can combat the declines in web audiences better than most by focusing on the performance we deliver for advertisers and our commerce partners. You saw this play out in the numbers very clearly this quarter. Digital revenue growth at People slowed to 2%, and that was primarily felt in our sessions-based ads business. Total digital ads declined 8% in the quarter, and this was directly attributable to core session declines of 26%, the steepest we've seen yet. AI overviews penetration on Google search queries are now found on over 90% of the searches we track, an increase even since Q3.

At the same time, the use of AI agents and other products continue to change consumer behavior in real time. Despite all of this, we delivered digital revenue growth for the 12th straight quarter. Today, we make more content of all kinds than anyone in publishing and that is accruing to our benefit with our licensing revenue growing 49% in the quarter. This growth represents revenue from people consuming our content across all distributed platforms, including Apple News and AI. Outside of publishing, the Emerging and Other segment also performed extremely well with both Vivien and the Daily Beast posting strong revenue growth and improving margins and profitability. Overall, PPLI EBITDA of the holding company was flat year-over-year and digital EBITDA at People was down about $1 million.

Turning to Slide 9. This slide highlights the very strong cash position the business has built over the last year as we execute our corporate simplification strategy. This is an important part of the story, so I want to take a moment to connect the dots.

We have 2 pieces to the strategy. First is growing operating cash flow. At a time when many businesses making headlines are now cash flow negative, People, the publisher generated $186 million of free cash flow after tax and debt service last year. At the same time, we've taken the necessary steps to reduce corporate expenses at the former IAC Holdco level and expect to be at about $45 million corporate expense run rate by the end of Q1 next year, cutting our former overhead burden by half.

Going forward, this will allow us to be even more efficient turning operating profit into cash.

The second part of the equation is the simplification strategy. This year, the sale of Care, the limited partner stake that was previously announced and closed in Q3 and smaller asset sales have together generated nearly $0.5 billion of after-tax cash. Going forward, our remaining collection of assets also have real value and include Toro, Vivian, the Daily Beast, each of which are growing nicely, and our IC headquarters building.

For context, conservatively, the value of this collection of assets is at least similar to the cash proceeds generated this past year, so it is material. Notably, this framing excludes any potential proceeds from the ongoing Google ad tech litigation, which we believe offers further meaningful upside. Most importantly, our plan is to put that cash to good use. We've proven we are more than capable of defending our business against all these well-documented threats. Now is the time to go back on the offensive with our strengthening balance sheet and cash reserves. We have ample resources to continue to get back to buying our own stock and we'll be actively looking to accelerate people growth through opportunistic M&A.

Finally, on Slide 10, we are refining our guidance for the year given the current outlook for Q4. For People Inc., we expect EBITDA to be in the $330 million to $345 million range and mid-single-digit revenue growth for the year. For total PPLI EBITDA at the holdco, we are expecting EBITDA in the $263 million to $283 million range.

Just to wrap it up, we remain focused on delivering our financial results for the year, while importantly positioning the business to execute on our ambitious growth plans for 2027.

And with that, operator, we are ready for questions.

Operator

[Operator Instructions] And our first question for today will come from Justin Patterson with KeyBanc.

分析師問答

Justin Patterson

Two if I can. First, could you talk about how AI impacted people traffic over the course of the quarter and the efforts you have to mitigate some of those headwinds? And then secondly, as you look towards 2027 and in the ad market where there's a lot of change going on, where do you see opportunities around product innovation to help advertisers navigate this environment?

Neil Vogel

Thanks, Justin, it's Neil. I'll take you to let Tim chime in with some color. The first question was, how did AI affect traffic. I have 2 facts for you. It's not the last quarter. It's really the last few years, as Barry said. We've lost nearly 70% of our Google search traffic over the last 2 years. And as Tim said, AIO is now over 90% of the queries that used -- on 90% of the queries that used to send us traffic from search. This has been ongoing.

Despite all of this, we've still grown for 12 straight quarters. So mitigating this is not new to us, nor is this decline surprising. I think in this quarter, decline may have been a bit -- a little steeper than we anticipated, but none of it is surprising. I mean we were using the term, and I don't want to take credit for this, we kind of made up the term Google Zero internally. What we've been doing is we focused on our brands, their gravitas, our audiences to develop more durable and diversified ways to reach audiences and reach advertisers.

And we -- this is -- we're not new to this and it is why we've been able to grow through this to date, and it's why we're super optimistic. The things we're doing all show up essentially in our nonsession-based revenue. And you can see that we had a strong quarter there that's growing healthily. And the Google stuff showed up and obviously, in the session-based revenue.

The nonsession-based things that we're doing to grow the business, include events, social series, which has been a big success for us, programs across TikTok, Instagram, big audiences on YouTube, our Decipher product, which is not only open web, but has pivoted a lot into CTV. Our success on Apple News, our AI licensing our launch of apps and subscriptions doing things like our consumer products like Sweet Tea. Each of our brands has a plan for the future, and we've been executing against it. And I think it's why Barry's so optimistic about our next year. It's why we feel so good about our return to good growth upcoming. And why we feel really good about this business.

Our success is anchored in our iconic brands and reaching audiences in new ways. And I think we've proven we're pretty good.

Second question, which is a good question, is the -- as the Internet changes, right, and it's not just like selling ads on a web, what ad innovation do we need to sell going forward. And I think the one interesting thing is we have been building these audiences we talk about for longer than they have businesses to support these audiences. So what we've had to do for the last 3 years has worked very hard to create models that actually work. We have no interest in audience that we can't effectively deliver value to both users and to advertisers.

So a very good example is what we've done in episodic series. So The Intern is a big hit series we have at InStyle, it took off and we had to find a model for it. The model for it now is essentially season-long branded content. The season is 7, 3-minute episodes. And what we do is we get a sponsor and we leave that sponsor into the plot line with a link in a way that users enjoy, and somebody buys an entire season.

Now not only are they buying entire season of The Intern, but they then have the opportunity to layer on that events it InStyle, events it people, media across YouTube and across Instagram and across all these other places. So we're selling these really interesting packages. On their own, the social series are very lucrative and very high margin. And these things allow us to make packages that are very modern and very exciting for advertisers.

And I think that is a lot why we've seen, despite 26% sessions-based decline this quarter, even on the web, the web -- session-based revenue didn't go down -- went down 6%. People really like what we're selling. Our audiences really like what we're doing, and we're integrating things really, really well. So between adapting DCipher to make it work for CTV. The things we're doing with our episodic shows, the clever things we're doing to advertise on social the expansion of our events, we have a whole host of things we can sell people that we frankly didn't even have 12 or 18 months ago that's resonating in the market.

Timothy Quinn

Yes. That's well said, Neil. The only point I would underscore is -- we're very capable direct sales team that have relationships across basically all key advertising sectors, and we wouldn't be able to make this transition without that asset, and it's core to what we're doing, and it's -- as I said, it's really an asset for us to leverage.

Operator

Next question will come from John Blackledge with TD Cowen.

John Blackledge

Two questions. First, now that the MGM situation is clarified, how should we think about the go-forward strategy to unlock shareholder value? And then second, can you further kind of unpack the 3Q digital revenue drivers? And how should they trend in 4Q?

Timothy Quinn

Barry, do you want to tackle the MGM question?

Barry Diller

Yes, I don't know about tackling. How do we unlock value? MGM, I believe, in the next years is going to increase its value substantially. There's there are going to -- there are several catalysts for this, closer we get to Japan, the further in of all the exciting things we're doing in Las Vegas, et cetera, Las Vegas had tough summer, but it seems to be coming out of that now. I don't think there's no I have no worries about Las Vegas as a destination as more attractions, sports to everything else imaginable in entertainment come into the city, convention bookings are very strong, I think, for the fourth quarter. And the prospects for MGM, I think, are just excellent. So that's how value will be unlocked over time.

Timothy Quinn

Great. Thank you. I'll tackle the Q3 question. Yes, I mean the deceleration in revenue, as we said, John, was directly attributable to the decline in sessions. We are very clear. We are in the midst of a very real and fundamental transition in the business. We have been on this path for several years now. And as we said repeatedly, we continue to grow through it. Advertising, as I said, declined 8%, the traffic pressure intensified, yet our direct sold revenue and our programmatic rates are both growing really nicely. So that strength reflects really the unique value we bring in the market, which is branded environments, real people, premium performance.

We are not counting on sessions to improve, and -- but yet, we do expect advertising to improve in Q4. Again, that's off the backs of our premium sales capabilities and performance. Performance marketing growth slowed from 13% to 2% in Q3. This was largely expected, something we previewed and was part of the timing -- in part due to the timing of Prime Day, which was a drag of about 4 percentage points of growth that was shifted into Q2 from Q3. We actually expect Q4 to improve back to sort of the mid- to high single-digit levels that we would have seen in each of Q2 and Q3 when you adjust for the Prime Day impacts.

Finally, the licensing revenue, as you said -- as I said and as we saw was really impressive. We continue to have real success across Apple News, AI and other content partnerships. In Q4, those growth rates will slow some as we lap the Meta AI deal that we announced last Q4. We still expect full year growth to be about what we delivered in licensing in the first half, which translates to something roughly about 20% Q4 growth.

Again, our focus is to get back to the growth we want and expect, as Neil said, mid- to high single digits, and that gets us on a path to the double digits that Barry and we all aspire to.

Operator

The next question will come from Jason Helfstein with Oppenheimer.

Jason Helfstein

Just can you just elaborate, I guess, more of a focus on next year or so in the face of worsening search traffic, how are you thinking about growing non-revenue next year, more specifically, maybe talk about what's a reasonable expectation for licensing for next year? And then secondly, can we get an update on the Google lawsuit? When do you expect it to be resolved? Are there legal costs still contemplated in the corporate run rate? And do you have a way to tie this into a long-term licensing deal with Google versus just like a onetime settlement or payment from that bank?

Neil Vogel

I'll let Tim do the Google question. I'll take the non-sessions revenue question for next year. I think the non-sessions revenue answer is an extension of what I said prior I think as we get into next year, not only will we continue to launch new things potentially girded a bit by some smaller acquisitions that give us in capabilities. But we should see the maturation of a lot of the things that we've launched this year and at the end of last year. And I think we're pretty excited to see where these things go, and I think they give us confidence in our numbers.

In terms of Google, the math would say that we're probably on the other side of a lot of these declines, right? We've already lost 70% of our referrals and AI is on 90% of searches. So hopefully, at least in real numbers, that thing is going to stabilize even if it doesn't in percentage decline terms. But we feel very good about next year. We have -- again, we talk about planting seeds. We've planted a lot of seeds that are starting to grow. We have a lot more seats to plant. And we feel very good about it.

Timothy Quinn

Yes, I think that's right. 2027, Jason, is a little bit of the payoff for the last 2 years' worth of work. I think we feel confident that we will continue to see success on DCipher excited about the subscription products that we've launched. We have about 6 million downloads or registrations on our -- my Recipes and People app product. Now we're going to turn to monetizing those subscribers. And so that's the path to get back to the growth.

Talking about Google -- switching gears to the Google Ad Tech litigation for a second. Again, to remind people who haven't heard the story, we are relying on the government's findings that Google engaged an anticompetitive practices as it relates to the ad market. The government has already found that, that to be the case. We believe that we have substantial claims amongst the largest claims out there given our lineage with Dotdash, Meredith and Time Inc.

The new information in this last few months is that a court date has been set for the USA TODAY litigation, which is the court set the date of April. This is not our case, but as a precedent for us. We're kind of next in the queue after it and gives us a lot more confidence that a resolution to our case could occur in 2026.

Neil Vogel

And the litigation -- it's related only to damages, not to whether or not something was wrong.

Timothy Quinn

Yes. And so we're hopeful that it's a 2027 event, and we remain confident our claims could be at least 9 figures when it's all said and done. But a lot of uncertainty and a lot remains to be seen there.

Operator

The next question will come from Dan Lurnos with StoneX.

Daniel Kurnos

Neil, I guess -- I know you've talked an awful lot about it already. But I think the concept -- we all saw Google reported this quarter, and now they're starting to aggressively monetize advertising within overviews, and we're seeing that, that advertising is yielding less, so they're kind of being forced to kill their own golden goose, which they clearly teated to grow back in the day.

But when you look at all of the initiatives that you have forthcoming, and you kind of mentioned briefly DCipher, CTV, et cetera, just help us understand sort of where the best shots on goal are to help you kind of reaccelerate the core business or the non-sessions business, I should say, into '27? And I guess, adjacent to that, you guys have made it pretty clear that M&A is firmly bet on the table. You've got a great balance sheet, you generate a ton of free cash. Can you like size that for us? Would you do larger deals? And what kind of stuff are you guys looking at?

Neil Vogel

Sure. I'll take a shot at this. Tim can add color. Let's go to the shots-on-goal question, which is actually a very good framing. So I think we have real traction in a number of things we're doing that we think are going to be fairly high probability shots on goal.

One is social series. And the episodic work we're doing. We have more than 50 social series across our brands that is -- it is almost like the new TV for a new generation, and it has been a material part of our growth. We're very excited about that. We are very excited about DCipher. Now the open web has slowed a bit, which you would think would water down our excitement about DCipher, but what deciphers data has been has proven very good for CTV. Tim give the time period, but recently, more than half of the DCipher business has been CTV targeting, which is a really interesting thing -- we are -- events are a little bit more linear growth, but we've had a lot of success in advance, expanding our events and launching our events.

And as Tim said, we're making our first foray into web-based subscriptions. Now we have 9 million or 10 million subscribers to our print magazine, so we know how to do this. We have launched 2 really interesting app products, one around My Recipes, which is a recipe aggregator, and there's going to be a whole bunch of other things. And what we call our People VIP app, Between the 2 of them, we've got over 6 million people that have already signed up for these things. We just need to convert them to paying, which is a very, very good opportunity.

And we continue to do really well syndicating our content to places like Apple News, and some other places, we really have a really nice healthy portfolio of things going forward that we're excited about. I think some of them are going to work really well. Not all of them are going to work really well, but they don't all need to work really well to get back to double-digit growth. So we feel very good about that.

The next question was M&A. And I think that is true and something Barry is very much encouraging us to do. I think to frame it, I think the expectation would be in the last 5, 6 months, we've made 2 small acquisitions we bought, Feefeed, which was an influencer network around food, and we [ Hotlock ], which was an event series of food event series for Gen Z audiences, they're both very add-on. They are both things we think we can really grow and expand given our sales team and our infrastructure and expertise.

I would expect more things of that profile add-on things, if you're a private equity person, think of them as add-on acquisitions for things you're already doing to really bolster our nonsession-based revenue business. That would be the primary focus.

Timothy Quinn

Yes. Yes, more direct connections to our users, places where we can leverage our advertiser relationships, but these are not that the company type of bets. So we don't allay any fears there. Go ahead, Barry.

Barry Diller

I'd only add one thing, which is -- which I don't think would surprise anyone, but the acquisitions that we are looking at are bolt-ons to our current publishing business. We're not looking outside of that, I can't say that something won't come along opportunistically, but it's really unlikely. And also the size of these acquisitions will not. I also believe in large.

Operator

Next question will come from Stephen Ju with UBS.

Stephen Ju

So just kind of looking back over the last year, I think the licensing and other revenue has now risen to be about 20% of the digital revenue mix. So I was wondering if you could talk about the different components that live in that line? And in particular, I guess, the Apple news distribution and how that functions. And it seems like there's probably other well traffic outlets like Apple News that you guys could probably lean into.

Timothy Quinn

Yes, I'll take that one, and Neil can color in. So yes, our licensing revenue has 3 components to it. So think about it as content licensing, AI licensing and kind of traditional product licensing.

The majority of the growth that we have seen is coming from the content licensing line. And again, to reiterate what I said earlier, we are making more high-quality content than anybody out there publishing or otherwise, tech -- written word, video, everything. We made a shift 2, 3 years ago to publish that content to as many places as we could. One of the places where we've had great success is in Apple News. It is a traditional sort of browsing like experience. It relies heavily on our historical magazine presence and capability. We can consume the magazine and the Apple News experience as well as our digital content. And so that's been a great partnership. You asked how does it work? It is Think about it as a revenue share based on time spent based on how much content the user consumes -- and so we like that model. We are able to sell advertising on that as well kind of to the extent that we can extend and our own capabilities.

So Apple News has been a great success. They're not the only one, as you said. We continue to publish to places like Yahoo! and MSN and looking for YouTube and all sorts of other -- Netflix, places where we can get our content in front of our consumers. So I think one advantage that we have, Stephen, that -- in this realm is we are not a single brand company. There are about 15 brands where we have success in these distributed environments, and that gives us multiple bites at the apple and I want us to really scale.

The second part of the licensing line, of course, is AI, AI licenses. We remain optimistic in that market that they will continue to evolve and that there's a big place for our content. There's increasingly a place for recency, meaning new content in that marketplace. And the third leg of the stool, so to speak, is a traditional product licensing where we continue to have one of, if not the biggest licensing deal at Walmart with our BHG line.

And so licensing is a very high margin, as you can see, fast-growing area of the business, and I think it is a function of sort of the quality of our brands and the level of investments that we're making in our content.

Operator

The next question will come from Eric Sheridan with Goldman Sachs.

Eric Sheridan

With the revenue results you saw in some of the noncore operations, wanted to know if we go a little bit deeper in some of the drivers of those results and how you increasingly think about the long-term future for those assets within the broader portfolio approach you guys have talked about so far.

Timothy Quinn

Thanks,. I can grab that. The sort of Toro is the biggest and continues to perform extremely well. They had record first half results. They continue to deliver double-digit revenue growth quarter in, quarter out, and recently announced they are pacing towards about $1.2 billion of revenue for the year. So Toro is in really good shape.

Again, we are a minority holder. We're anxious for an opportunity to monetize the good work that they're doing there, and we look to partner with them to find that path. You can't really put a timing on it, but that's something that we're excited about and the performance underwrites a really big opportunity there.

Vivian and Bill Kong and his team are doing a great job. Vivian grew Q3 revenue 18% to about $12 million. They really leaned in on subscription and usage-based revenue streams. They launched an AI assistant subscription product in Q4 2025 that they're having real measurable, tangible success on. And so we continue to be really thrilled with the performance over at Vivien, and they're really gaining some momentum there. And the Daily Beast revenue in Q3 grew 39%, so an amazing quarter for the folks there as well to $8 million.

Kind of most importantly, each one of these businesses performing well, each one is worth more today than they were 6 months ago or a year ago. What we're looking to do is find the right home for these assets. Obviously, and complement that with sort of maximizing value for us and our shareholders. So we're enthused about it, about the performance there, and it's really giving us confidence in the simplification strategy that we embarked on.

Operator

Your next question will come from Bryan Smilek with JPMorgan.

Unknown Analyst

This is Vignesh on for Bryan. I guess just on the ad market, I believe you called it maybe 6 out of 10 last quarter. Just curious where it is now, especially for food and beverage? And I guess, secondly, how you kind of -- or what do you see for holiday spending and budget kind of going into the next quarter of 2027?

Neil Vogel

Sure. I think this is going to be the third or fourth quarter in a row that we're going to tell you probably 6 out of 10. Again, I think good enough to do our job. The economies are still a little bit weird, right? There's inflation and high gas prices. But so far, the American consumer is undefeated. I think strong categories for us, health and pharma has been really strong, beauty and style has been really strong. We also have very good assets and very good sellers in those areas, so there's probably some correlation there.

Food for us has been challenged for a number of quarters, although it did return to modest growth in Q3. We have some good programs that might be part of it. CPG and food is still -- I wouldn't call them growth, I would call them macro exposed, so they're a little bit more exposed to things. But overall, I think 6 out of 10, holiday spend, we haven't seen any signs that things are unusual yet. I think we're booking business around how we'd expect. So as we get closer, we'll know, but I guess thematically, things are breaking later, but that's been a trend going on for years. So that's not really new. But yes, so I would say it's a boring answer, but 6 out of 10.

Operator

The next question will come from Youssef Squali with Truist.

Youssef Squali

I have 2. So maybe the first is, we didn't session-based ad revenues, is there kind of a natural lower limit to how low that can go given the search issues? Neil, I think you talked about how you've already lost about [ 7 approval ] traffic. Should we look at 2027 as a year of normalization or at least the start of normalization for that?

And then maybe, Tim, the adjusted EBITDA guide for '26 implies a big step up in margins in Q3 and Q4. And assuming that flat die. So other than normal seasonality, can you just flesh out some of the drivers of that jump?

Timothy Quinn

Yes. I mean on the -- I'll start with the margins and then we'll tag team on the session because it's a little bit of a crystal ball question.

Yes. We have real seasonality in this business in the back half of the year. So you're going to see a real step up. I would look back to Q4 of '2% for what the margin profile looks like. we would expect margins to be similar in '26 as they were EBITDA margin -- digital EBITDA margins as they were in '25, kind of overall, just some commentary on margins, our non-session-based revenue margins are strong. That's a place where people kind of keep looking to find softness or weakness.

Really, the margin pressures that we saw here in Q3 were volume-related, very candidly. Licensing revenue margins are strong. Our non-session ad margins are strong and comparable. Our DCipher margins have been kind of a pleasant surprise and strong. So we're continuing to try to manage to those healthy sort of high 20s target, say, 30% full year EBITDA margins.

At the same time, we are investing in the future. So we are investing in each of these products that Neil described today. We've demonstrated a few years that we're disciplined about those investments that we really try to invest into success, not ahead of it. But there's a couple -- several million dollars sort of drag in Q3 as we stand up the infrastructure, preliminary marketing, even some AI costs associated with those new projects.

But again, it's being done thoughtfully. It's not going to ever get away from us. And as we referenced in the release and you reference remarks, we did a staff reduction in -- that we announced last week. It's never easy. They're always hard to do. These are important colleagues that have helped us to get here. But we really felt like we needed to redeploy resources away from some of the legacy businesses like print and even the web towards these new growth initiatives, and so that's another way that we're kind of mindful of our margins. On session-based, do you want to...

Neil Vogel

Yes. Do you want to -- will you read the session-based question again?

Youssef Squali

Yes. So just trying to get a sense of when do we trough with session-based ad revenues now that you've lost most of the traffic that, in theory, you should be losing to Google, right? I think you mentioned...

Neil Vogel

So again, let's definition out -- what session-based ad revenues actually means is revenues we get from web sessions, people who actually come to our websites. Even without Google, there is a substantial number of people that come to our websites, right? And we've lost 70% of our Google referrals, so there's still a fairly large audience, 70% of our referrals from search. There's still a fairly large audience on the web that we can market to. And that will always be there.

So the piece that we're dealing with is the remaining number of sessions that will be sent to us from Google, they are going to continue to decline over time, but we're on the other side of a lot of it at this point. So the percentage -- again, I'm just -- this is a math problem, right? So the percentage of declines might go down, but the aggregate numbers of sessions are going to go down less because you're dealing with a smaller number up top. The rest of the business, direct traffic, referral, that's fairly healthy. It's doing okay.

So I do think you will see a leveling off. I do you think you'll start to see it next year in session traffic and session-based revenue. And remember, sessions were down 26% this quarter, but revenue was only down 6%. So if we can mitigate some of this, there is some opportunities in this side of the business to hold the line and have it as a nice underpinning of what we're doing.

Timothy Quinn

Yes. I would just underscore, I think the the absolute declines will continue. I think the percentage declines will definitely moderate. And that's just sort of the math of it. I do think we're closer to the other side of search.

I think what makes the question challenging for us, you and everyone is what's next? Is it agentic? Where does the world go in terms of new consumer products? But again, most of our traffic today comes directly to our sites or is not coming from Google, and so we'll manage whatever the future is. So I guess the way to think of it is we're not counting on an improvement, that's for sure. We're preparing for the future as it is and sort of optimistic that there'll be some moderation.

Operator

The next question will come from Ron Josey with Citi.

Unknown Analyst

This is James Michael with Sherman Lewis on for Ron. Two here, please. First, on the subject of reallocating investments towards People's biggest opportunities, can you elaborate more here on where you think about leaning in on spend to drive growth, not just the growth brands, but also how you plan on using AI here? And then secondarily, on the capital allocation strategy, any update on the balance overall, maybe leaning in on share repurchases in the interim ahead of any potential M&A? Any color there would be helpful.

Neil Vogel

So in looking at our investments, as Tim said, we will be responsible with our investing. And I think, again, what we're doing here -- there's not some new pivot this quarter. We have been doing and operating under the assumption that Google traffic will be very challenged for a number of years. And we have managed to deliver growth and margins in that context, while we've launched all these new things. And we don't think anything in the macro of that look is going to change. As Tim said, we made more decisions, we eliminated some jobs last week as part of a reallocation of resources.

We will continue to do that. And I think most of our projects are much more people-intensive than capital-intensive. We don't need -- we're not doing data centers. We don't have the challenges that our significantly larger competitors have. And we're able to generate cash, generate margin and invest in new things all at the same time. That's what I would say.

Timothy Quinn

Yes. In terms of AI, I think the -- the last 6 months, we've seen an incredible improvement in kind of AI coding capabilities. I think our team has done a great job of embracing that -- our software development process is as rapid as it's ever been. That allows us to very efficiently try and launch to rather to launch these new products that we talked about today.

Neil Vogel

I mean, we've got 3,400, 3,500 employees and 1,500 of them are burning tokens at some point during the month working on things.

Timothy Quinn

So yes, we're embracing AI in that sense. I think the other way to think about our business is we really had great success in I think that's where the best -- one of the highest and best uses for non-coding AI is today. That's everything from ingesting and interpreting RFPs on the sales side to research, to kind of content topic research. So there's a lot of workflow work that we're doing. And again, that's all efficiencies that we're generating in the business that we can redeploy.

In terms of your second question -- yes, sorry, go ahead, Barry.

Barry Diller

No, I was just going to say, let's take one last question.

Operator

The last question for today will come from Matt Condon with Citizens Bank.

Matthew Condon

Great. I'll keep it short here. Just wanted to ask on the $26 billion of off-platform views this quarter. How should we think about the monetization on a per view basis going forward? Is there a lot of opportunity to grow that? And how do you do that? Or is really the opportunity is about actually growing those off-platform views going forward?

Neil Vogel

Two things. One, I'll let Tim answer the second half of the prior question in a second. I'll take that first. I think when you look at the off-platform audience that is such a diverse basket of things. There are pieces of that audience that you get paid on a per view basis. There are other pieces that are sponsorship-driven. There's a whole host of ways that we make money in all the business models and different things we've been talking about here feed into that number.

I think it's much more directional. I think the way we've changed the business in the last 3 years, we have more than enough audience right now to do what we need to do for sponsors. We just have to keep it fresh and engaged and fun and interesting, which we're very, very good at. That number is going to go up, and I think there's going to be a correlation with revenue going up. But it's not like a direct line like a selling ad on a web session. And I'll let Tim go back to the prior buyoff question.

Timothy Quinn

Yes. We just wanted to -- just to end on the capital allocation question. I think the predominance of the money in the short to midterm will be done -- spent on share repurchase. And I think Barry was very clear and forthright in his opening comments. We'll be opportunistic on the M&A side, but we intend to get back into the share repurchase market, kind of right here in short order.

I think with that, we will wrap it up. Unless Barry, do you have any final comments?

Barry Diller

No. Thank you all.

Timothy Quinn

Yes. Thank you all. Okay. Bye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.