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Interactive Corp. (IAC), the digital media empire owned by media mogul Barry Diller, has been quietly building a profitable mobile apps division that's on track to bring in about $200 million in annual revenue.

  • The company has been building and acquiring roughly 8 consumer-facing mobile apps per year for the past 5 years, sources tell Axios. Sources say the company plans to add another round of around 8 apps this year, either by acquiring them or building them itself.

The company is looking to acquire apps in emerging categories, like mental health. Meditation apps similar to Calm or Headspace could be an area of investment, or even mood tracking or journaling apps.

  • How it works: IAC will give the mobile group, now called Mosaic, the money for the acquisitions, so long as Mosaic pays IAC back.
  • The company builds most of its apps, or acquires talent to rebuild them. It has done 5 full-scale app and/or app development shop acquisitions over the past 5 years, about one acquisition per year.

Why it matters: It's one of IAC's fastest-growing line of business. Even though IAC only recently began reporting revenue for its mobile apps group, sources say the group has had 7 consecutive quarters growth and revenue.

  • In its most recently-filed earnings report, IAC says Mosaic apps brought in $51.2 million for the third quarter.
  • The mobile apps group is set to overtake IAC's desktop applications business, which is mostly browser plugins, within the next year or so.
  • Currently more than 40% of IAC's total app revenue comes from mobile, up from 23% a year ago.

All of the apps currently are non-gaming. Most serve as utilities for users, a similar strategy that IAC has used when acquiring media companies for its utility content platform, Dotdash.

  • Its most successful mobile app to-date is "Robokiller," the top spam-blocking app in the Apple and Google Play stores.
  • It also owns iTranslate, the second-most popular translating app in both stores.

By the numbers: In total, all of Mosaic group's apps total around 4 million paying subscribers. For comparison, the dating app Tinder — which is also majority owned by IAC through its subdivision "Match Group," has around 5.7 million paid subscribers.

  • About 330 people work within IAC's mobile division, 56% as engineers.
  • Currently, Mosaic houses more than 40 mobile apps.

The big picture: IAC is looking to spin out Match Group, its popular dating app portfolio, of which it has a majority stake. The company has said on earnings calls that its strategy is to build up businesses so that they can eventually spin them out for a profit. The mobile apps group would be treated no differently.

What's next: Sources say that Mosaic apps have gotten around 200 million installs. In total, there are roughly 200 billion app installs annually around the world, which means there's a lot of room to grow.

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