Earnings call transcript: People Incorporated misses Q3 2026 profit view

People Incorporated reported a steep quarterly loss and weaker-than-expected revenue in Q3 2026, even as it said digital revenue grew for a 12th straight quarter and its push into subscriptions, licensing and off-platform distribution continued to gain traction. The company posted adjusted EPS of -$9.15, far below the -$0.19 analysts expected, while revenue came in at $430.8 million, missing the $442.43 million forecast. The stock was last at $36.50, down 1.03% from the previous close of $36.88 and well within its 52-week range of $29.56 to $48.32. Despite the near-term volatility, InvestingPro analysis suggests the company is significantly undervalued, with shares trading at a P/E ratio of just 6.34 and appearing on the platform’s Most Undervalued list based on its Fair Value calculation.

People Incorporated’s results showed a business still in transition. The company is moving away from a model that depended heavily on search-driven web traffic and toward a broader mix that includes subscriptions, licensing, events, branded content and off-platform distribution.

That shift is producing growth, but not evenly. Digital revenue rose only 2% in the quarter, down from 6% in Q2. Non-sessions-based revenue grew 15%, in line with the prior quarter, while sessions-based revenue declined 6%. The company said web sessions fell 26%, the steepest drop so far, as Google AI Overviews and other changes continued to reduce referral traffic.

Even so, management pointed to signs of resilience. Direct traffic and referral deals remained relatively healthy, and the company said its premium brands still attract advertisers. It also said it is making more content than any other publisher and using that content across many platforms.

People Incorporated missed Wall Street’s expectations by a wide margin on earnings. Adjusted EPS came in at -$9.15, compared with the -$0.19 forecast, a difference of -$8.96 per share. That represents a surprise of about -4,716%.

Revenue also fell short, though by a much smaller amount. The company generated $430.8 million, below the $442.43 million consensus estimate by $11.63 million, or 2.63%.

The size of the EPS miss was far larger than the revenue miss, suggesting that costs, mix effects or other below-the-line items weighed heavily on the quarter. Even so, the company’s underlying business trend was not uniformly weak. It still posted its 12th straight quarter of digital revenue growth and continued to expand higher-margin businesses such as licensing.

The stock’s latest price of $36.50 was down 1.03% from the prior close of $36.88, a decline of about $0.38. The move was modest, especially given the size of the earnings miss.

At the current level, the shares trade about 23.5% above the 52-week low of $29.56 and about 24.4% below the 52-week high of $48.32. That places the stock in the middle of its recent range, suggesting investors are still weighing the company’s long-term transformation against near-term pressure from traffic declines and uneven earnings.

No unusual trading volume was provided, but the limited price move suggests the market may be focusing more on the company’s strategic shift, cash generation and asset value than on the quarterly EPS figure alone.

Management kept its full-year 2026 outlook in place. People Incorporated expects:

The company also said it expects digital revenue growth to improve in Q4 and that performance marketing should return to mid- to high-single-digit growth once timing effects from Prime Day roll off.

Looking further ahead, management said it expects:

The company also said it is open to share repurchases and small bolt-on acquisitions, but not large deals.

Barry Diller, chairman, said the company has cut corporate overhead sharply and remains focused on unlocking value. “We’ve taken our overhead down by $90 million to $25 million or so,” he said.

Neil Vogel, chief executive, said the company is still executing through a difficult traffic environment. “We lost nearly 70% of our Google search traffic over the last few years... Despite all this, we’ve still grown for 12 straight quarters,” he said.

Tim Quinn, chief financial officer, pointed to the company’s content engine and licensing strength. “We are making 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,” he said.

Analysts focused heavily on three topics: the impact of AI on search traffic, the path to stronger non-sessions revenue, and the company’s capital allocation plan.

Questions centered on how much Google’s AI Overviews are hurting traffic, and management said the company has already lost nearly 70% of its Google search referrals over time. Executives said they are responding by building direct relationships with consumers through apps, subscriptions and events.

Analysts also asked about growth in 2027. Management said the next phase will come from maturing products already launched, including MyRecipes+, PEOPLE VIP, social video series and D/Cipher, which now gets more than half its business from CTV targeting.

Another major topic was capital allocation. Management said share repurchases are the near-term priority, while M&A will likely remain limited to small bolt-on deals that strengthen existing businesses rather than large acquisitions.

The company also addressed its Google litigation. Management said it expects a possible resolution in 2027 and believes damages could be at least in the nine-figure range, though it stressed that timing remains uncertain.

Conference Operator: Good day, and welcome to the People Incorporated Third Quarter 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by 0. After introductory remarks, there will be a question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Tim Quinn, People Incorporated’s Chief Financial Officer. Please go ahead.

Tim Quinn, Chief Financial Officer, People Incorporated: Thank you. Good morning, everyone. This is Tim Quinn, CFO of People Incorporated, 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 Incorporated, and Neil Vogel, Chief Executive Officer. People Incorporated 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 our investor relations section of our website for all comparable GAAP measures and full reconciliations for all non-GAAP measures. With that, I will hand it over to Barry.

Barry Diller, Chairman and Senior Executive, People Incorporated: 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. We, in the end, decided that now was not the time, if ever was the time, and we ended that process. Then MGM came to us and said, "How about if we, excuse me, buy People Inc.?" While I was dubious, I said, "Well, if you 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.

I did not think that the time was right, nor do I think probably the time will ever be where someone will, quote, "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 their prospects, both in 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.

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. So, we entered into an agreement with them that gave certain rights, meaning voting rights, and some of our in the securities above our 26%, if in fact it grows by virtue every share they buy, increases our ownership thereby, that they wanted 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.

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