IAC Inc.

Good morning, everyone. Glenn Schiffman here, and welcome to the IAC and Angie Inc. First Quarter Earnings presentation. Joining me today is Joey Levin, CEO of IAC and Chairman of Angie, and Ashin Hanrahan, CEO of Angie Inc. Similar to last quarter, supplemental to our quarterly earnings releases, IAC has published its quarterly shareholder letter. We will not be reading the shareholder letter in this presentation. It is currently available on the investor relations section of IAC's website. I will shortly turn the call over to Joey to make a few brief introductory remarks, and then we'll open it up to Q&A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate, or similar such statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed here today. Some of these risks have been set forth in IAC's, Vimeo's, and Angie's first quarter press releases and our respective filings with the Security and Exchange Commission. We'll also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during this call. I'll refer you to our three press releases, the IAC shareholder letter, and again, to the investor relations section of our websites for all comparable gap measures and full reconciliations of all material non-gap measures. Now let's jump right into it. Joey?

Thank you, Glenn. Thank you all for joining us. I know it's a very busy week for many of you. I'm now almost participating in as many of these calls as some of you are between Matt and Angie and I see in Vimeo. And so I appreciate the work and effort everyone's putting in to be here. Grateful to be here, grateful to be alive and healthy and well, and grateful for a lot of positive momentum in our businesses right now. We had a really strong Q1 and we have a really great outlook for the businesses, for our leaders, for how our... how our customers are interacting with our businesses. It feels like good, solid, positive momentum. And that's always a good place to be to start the year. I want to just especially thank Glenn for his work in getting prepared for this. And again, not just preparing all of us, but also Anjali and Narayan for their first call, who I think did a great job. And also, as you know, he's acting as CFO of Angie. So he's got a few full time jobs right now and doing a wonderful job and prepping a sheen who joins us for the first time. So I want to welcome a sheen who is just doing phenomenally in his first, I don't know, few weeks, feels like months, maybe. on the job, moving at a breakneck pace to get things going in the business, change things, grow things, and start to take some risk with a big, big ambitious vision. I'm sure you'll have plenty of questions for him. And so I don't want to get in the way of that. But we're in a fun place right now. And it's good to be here. Good to be here with all of you. So let's get to those questions.

Great. Our first question will be from Corey Carpenter at JPMorgan.

Great. Thanks for the question. I think Joey's right. We're looking forward to hearing from you. So hoping you could start off with your broader vision for Angie, key priorities, maybe what changes, what stays the same. And then follow up for Glenn, just around the rebranding, why was now the right time? And could you unpack some of the investment areas you talked about in the letter? Thanks.

Thanks so much, Corey. Great to be here. I'm really excited to share the vision for Angie. I'll start at the very top. So this is a $500 billion market. And I think we've talked about it. We've alluded to it before, but we've never really staked our claim to it. We've talked about the take rate model. We've talked about all the different ways that we can play in it. But I think today what we're doing is we're saying we're going to shift away from thinking about this as a percentage of a percentage. And instead, we're going to think about the whole market. And the reason that's important are the two things I'm going to talk most about today, which is what we're doing for the customer and what we're doing for the pro. If you think about what the customer really wants, when they come to Angie and say they want to get a toilet replaced or they want to get a deck installed, what they want is to get the job done. And that's the critical thing. It's not they want to be matched with a pro and have a step away and say, so long, thanks. They actually want to get the job done. And what we're seeing right now, where we offer that service, where we offer the ability for the customer to get the job done, we're seeing really, really strong momentum. You've seen the results on Angie Services, 55 million in Q1, growing 66% a year. The most significant part of that is that we're growing without spending on consumer marketing. So we're growing that off of the demand we've got in our marketplace business, off of the demand we've got in the leads and ads business. And that's a really significant shift. On the pro side, It's about ROI for the pro. It's about how we help them grow the business, whether it's a pro at the beginning of their life cycle where they're starting out and they're trying to make payments on their F-150, whether it's a pro in the middle of their life cycle where they're trying to buy a house and they're trying to get a down payment or a pro towards the more mature part where they're trying to hire more people and they're trying to take the Thursday or Friday afternoon off to hang out with their grandkids. All of them are turning to us to help grow their business. And that's a pretty significant shift we're going to make. Those two things, we're going to help our consumers get the job done, and we're going to help our pros grow their business. And within all of that, we're going after the $500 billion, the $500 billion talent.

On the back of that vision, on the back of that excitement, and on the back of that opportunity, we're going to invest. We talked about in the letter a couple of different examples when we saw different things inside of Vimeo, different things inside of DotDash that caused us to get excited and enthusiastic about going all in. And that's what we're doing here against the vision for Angie Services and the vision for making it very simple to do tasks and jobs on your home. In terms of how that translates into numbers, we talked about a $60 million investment this year in Angie Services. Recall, we invested about $40 million last year in Angie Services. So on a year-over-year basis, obviously, that's 20. We talked about in the letter the short-term this year investment and financial impact on the rebrand is $40 million. And then you'll also see some expenses against SP acquisition. SP retention, SP engagement, and all the SP initiatives, sorry, service professional initiatives that Ashin talked about. We're trying to change that dynamic and that ROI dynamic for the service professional. So that'll be a significant investment on a year over year basis. To help you with the quarterly cadence around that, we did about 23 million of EBITDA in the first quarter. We think that's about the number for the next couple of quarters, second, third, and fourth. And then we'll revisit, obviously, how we think about 2022 as we get closer to 2022. But again, on the back of the vision, on the back of redefining the TAM, on the back of redefining our opportunity. We are looking at single digit margins for this year and in all likelihood, single digit margins for next year.

Thanks. Our next question will be from Brent Phil at Jefferies.

Thanks. Good morning. Joey dot dash accelerated again, 67%. You said in the letter it's underappreciated. I'm curious if you can walk through the underappreciated component that you see. And as a follow-up, I'd love to hear a little more about care and what the next chapter is there. Sure.

So there's really two things. big things happening at Dot Dash right now that I think are leading to what is the current performance and what I think is a sustainable future outperformance relative to other publishing businesses. And the reason I say underappreciated is maybe it's our own insecurities, but people don't talk about Dot Dash as much as they talk about other publishing businesses, and that's okay. But the thing that... is is the two things that are working for the business is one it performs for advertisers so we've talked about this top 25 advertisers concept in dot dash before i think uh of the top 25 those people are spending uh in 2021 q1 of 2021 those that cohort and aggregate is spending 110 percent in in 2021 what it did in 2020. I think that was like 103% in 2020 to 2019. That's right. The fact that those advertisers are coming back, I mean, you just don't typically see that in a publishing business, an advertiser publishing business, because advertisers come in and out based on their budgets and what they're doing. But ours are recurring there because the content performs. And the reason the content performs, this gets to the second point, is because it has real utility and it has real context. So we're not guessing what somebody's interested in, and we don't need any personally identifiable information. We know that somebody who's making lasagna is asking about making lasagna is making lasagna. And the people who want to sell products to the people who are making lasagna can reach them at that moment when they're cooking, when they're in the kitchen, when they're getting ready to go shopping. to make a meal, and same is true for planning a trip or for thinking about their health care. And when you see the rest of the market, what's happening is there was a large portion of the market that was using other content as an excuse to aggregate personally identifiable information and then use that to triangulate what somebody might be interested in. That is a very effective way of figuring out what people might be interested in, and that can lead to performance. But what we're seeing in the market right now is the platforms and individuals are making decisions that say that tradeoff isn't a fair tradeoff anymore. It's just not a tradeoff people are willing to do anymore. And what happens is now the advertisers who are spending on that model need another model to spend to know where – to reach users who may be interested in their products. And they can do that now through our platform without any personal information. All of our users are anonymous. All of our users can be anonymous, can remain anonymous, and they can still see ads that are relevant to what they want to do, which works for the user and works for the advertiser. The thing that has to underlie all of that is fantastic, fresh content. And we're investing an enormous amount in content. We're spending more as a percentage of revenue on content now than we ever have. More absolute dollars, of course, as revenue is up, but even more as a percentage of revenue. And we want that to continue to outpace everybody else in the market to have the best content. When you put those things together, that's a really compelling business. And I think we keep doing that and staying true to our values of having the best content, not over-monetizing, in fact, under-monetizing relative to the competition. I think that we can continue to pull away from the rest of the market and outpace in growth. And we have done acquisitions there and we're going to continue to do acquisitions there because I think we've got a system that works and we have a really phenomenal team who's who's, I think, underutilized in terms of their ability to scale. So we want to we want to put more there. That's that dash. Oh, Kara was the other question. Care is still very early for us, but we're making good progress. I think the most exciting thing, I think in the core business, we're going to do that. I have pretty high confidence we're going to do that well, which is just... making enrollment simpler on the seeker side, making enrollment simpler on the provider side, collecting better information for both sides to enable better matching. And ultimately, like Ashim was talking about and Angie, figuring out how to really complete the transaction on the platform to get to something closer to on-demand. We're going to do all those things. But the thing that we're really starting to get excited about is defining the market much larger and the the other things we can participate in. So the care of work business for enterprises is a good example of something that was a small portion of the business and is now a very large portion of the business and is growing very fast, the fastest growing piece of the business. That part is growing over 100% year on year. That's been the case for the last four quarters in a row. And I think it can continue at a pretty high growth rate there. And the reason for that is, is certainly a macro trend and what covet has done for for the the workforce is is in diversity in the workforce is not good women have lost way more jobs uh than men over this period and the the apart part of that is child care and i think that enterprises are realizing that if they want to have the workforce that the the diversity in the workforce in particular around gender uh that they desire, that this is something they're going to have to help out with. And CARE is there to provide that solution. And we're seeing that increasingly with all the biggest corporations, a lot of the biggest corporations, a lot of the biggest names you've heard of looking at our platform. But even beyond all that, I think we can define the business bigger when you start to think about how can care be helpful. You can go from childcare to senior care, to remote care, mental health, health care in general. I think all these things are adjacencies that we can start to look into. That's on the very long term, not the short term. The short term is just nailing the product, making it seamless, making it seamless for seekers and providers, and also bringing the enterprise into the system to help fund some of this, bringing government into the system, perhaps, to help fund some of this. But all those things, I think, are big opportunities for us. And we see a very large market, but And at $77 million of revenue in the quarter is a teeny tiny drop in the bucket of what can happen in this area.

Thanks. So our next question will be from Justin Patterson at KeyBank.

Great. Thank you. For Oisin, welcome to the IAC and Angie calls. Could you talk about the opportunities you see from unifying Angie under one brand? Likewise, SP capacity has long been a challenge for Angie. Does it make sense for you to take a more aggressive approach around controlling the supplier relationship like Zillow and others have done? And then for Glenn, given the past experience with transitions from about.com and service magic, what's your expectation for when we could see the Angie brand and domain changes switch from a headwind to a tailwind?

Thanks, Justin, great to be here. I'll start with your brand question. So if an alien came down from space tomorrow and decided to hang out with us and talk about home services and home improvement, and they looked at our brand chart, And then they looked at our org chart and saw three customer service teams, three product teams, three operations teams, three pro acquisition teams. They would either think that we are incredibly smart or our brand is a work in progress. And I think we've got a huge opportunity to pull it all together under a single brand, a huge opportunity to focus on the problem that the customer actually faces, which is to get the job done, and the problem the pro faces, which is to grow their business. and you know this from Slice and Financials and looking at other companies, there's only so many ways you can segment the business. And today we're segmenting by brand, but that's not what the customer cares about. What the customer cares about is getting the job done, and that means segmenting by verticals. The customer that comes into you that wants to get their toilet repaired, the customer that comes into you that wants to get a deck replaced, the customer that comes into you that wants a bathroom remodeled, at that moment in time, they don't care about the other services, and they care that you've got a great, amazing experience in that particular category. So by focusing on a particular brand, instead of segmenting all those teams that I just talked about, we can segment by category, we can segment by vertical, and we can point teams at saying, how do we take our TV mounting business from a $30, $40 million business to a couple of $100 million business? How do we take each individual vertical, each individual category where today we're in the tens of millions of dollars of revenue and turn them into large, significant businesses? I have a two-year-old daughter and whenever I give her oatmeal, her response to every single time, it doesn't matter how much oatmeal I give her, it's not enough data, that's teeny tiny. And I would look at each of these categories and I would say they are all individually subscale. They are all teeny tiny. And we've got this opportunity to go out and take every single category to a one and become best in class by category. And that's going to take time. Glenn will talk about the investment, but that's what we're talking about. We're talking about investing category by category, building best in class experiences. We've got the right pricing. We've got the right pros. We've got the right product. And that's going to take a huge amount of investment to get it right category by category. I'll touch on your question on capacity. I think we've got a huge opportunity to go after more capacity in our marketplace business. The way I think about our marketplace business is it gives us unbelievable breadth. So 32 million service requests from 20 odd million households served by a quarter of a million pros. That's given us more breadth than anyone else. What it's failed to do is give us depth and that's the services business. So the service business is giving us much deeper supply and we're seeing that as we bring on more capacity. So you rewind to last April, I think our biggest day in the services business was around $300,000 of work done in a single day. In April this year, we hit over a million dollars of work done in a single day. That's a huge amount of capacity we're adding to our marketplace in terms of services, just the services business. Of course, we got to do better on raw capacity in the marketplace business too, in our leads and ads business. And I think about that as how do we get better at self-enroll? How do we get better in terms of pricing? And how do we think about retention in the context of ancillary benefits for our pros? So one of the biggest things we rolled out recently is we rolled out a payments product. It's now clipping about $2 million a week in payment volume for our pros called 100 Million Run Rate. I think of the last few weeks, I've seen multiple days over $400,000 in payments processed in a day. Pros that use payments retain at a far higher rate. So we're looking at this very holistically to say, how do we get the job done for consumers, vertical by vertical, under a single brand? And for pros, how do we deliver them more ROI through better pricing, using Angie services and ancillary benefits like payments?

And to answer your question on headwinds with the brand, headwinds and tailwinds are a good way to think about the year, frankly. We think the brand change, the brand unification will probably create a headwind for the entire year, maybe into the first quarter of 2022. We'll see. The supply constraint, obviously, is also a slight headwind. And then some of our comps may be a slight headwind. But the massive tailwind we have is the Angie Services business. And notwithstanding the tailwinds, sorry, the headwinds of which I spoke, we think we still hit the revenue numbers that we talked about for this year, maybe even a scooch higher. So as we look into the second quarter, I think we're looking at probably mid double digits, maybe a little bit lower in terms of second quarter revenue growth, in terms of Third quarter, again, mid double digits. And the fourth quarter, again, on the back of energy services, on the back of hopefully some of the supply constraints lifting, and the more muted effect of this brand change will pierce through 20%, we think, and accelerate into next year. Now, the path will not be linear. And with the monthly metrics, you'll see continued volatility. For example, May last year, you recall, in April, we were down, what, 2% year over year last year. In May, we were up 15%. So I think you'll see a May print in terms of our monthly metrics around 10%, probably June 10%. But we'll average again for the quarter, that mid-double digit, and then accelerate from there. We're also seeing potentially wonkiness in our in our underlying metrics where I think you could see SR's decline in May, SR's decline in June, and SR's decline in the third quarter. But again, given we're servicing our customers a lot better, you're going to see monetized transactions go up. And remember, we get paid on monetized transactions. We don't necessarily get paid on SRs. And that's what we're doing on our investments in SP acquisition, retention, and engagement. And that's what we're doing with Angie Services. We're kind of changing that dynamic under Ashin's leadership.

Our next question is from Ross Sandler at Barclays.

Hey, Joey, just going back to DotDash. So the 1Q and the April run rate is obviously robust and both the one year and the two year stack accelerating and digital advertising is on fire right now. So I guess, can you put some numbers around how we should think about growth for the balance of the year 2Q and beyond as you get to the tougher comps later this year? And do you need to build out revenue beyond that top 25 you mentioned And then lastly, there's been a lot of M&A recently with Yahoo and AOL trading to private equity. Now that DotDash is kind of firing on all cylinders, has it changed your thinking around the appetite for larger versus kind of the more smaller kind of vertical tuck-ins that you've done for that segment? Thanks a lot.

Sure, Ross. I'm going to let Glenn do the growth rates, but I'll cover the other two. So beyond the top 25, yes, absolutely, we have to build that out. Of course, we are, but I think there's two areas to think about that. When we think about the top 25... that's like direct sold through relationships, premium advertising and premium pricing. There's also the private marketplace and there's also just kind of everything else. And some of that stuff is, and sorry, and then separate from that, there's the performance marketing, which we now break out separately. uh a number the the the the ads below premium are a lot of that is automated so people come in and out of the market uh relatively uh frequently and the the work for us is to move those people into a direct relationship and to at a higher price a more guaranteed inventory And that is definitely the work for us to grow that top 25 to start talking about the top 50. And I don't actually know there's that off the top of my head in that, but that's something that we should start to talk about or the top 100 or the top 500, whatever we get to there. um uh and then the performance side that i think is uh a fantastic business you're right that advertising is on fire it's been on fire for a little while performance has been a big beneficiary of that i think those growth rates probably are not sustainable forever uh i think that's going to decelerate uh just with the amount of volume i think the amount of people are going to go outside again people are going to start doing things in real life again and i think that those growth rates will come down somewhat. But we still have a lot of different categories to go into in performance marketing. And what we're doing there pretty methodically is looking at categories where users are looking to make decisions and the content out there isn't unbiased, clean, good work to help a consumer make a decision. Most of the products out there are way over-monetized and not leading consumers to make the best decisions. And so we're out there now finding these categories and building the content, building the content in a purely editorial way, unbiased, not driven by the monetization, and finding that if we just make the links on that content work, it ends up being very monetizable, and we still have a lot of categories to go there. So there's probably a macro deceleration, I'd expect, but there's some micro things that we're doing to... grow into more categories there. And then on the, on the acquisition side, yes, we're looking bigger for sure. I, I think there's not a lot bigger available, but we are definitely looking bigger. Everything we've done so far has been relatively small. I think the biggest we've done there is 50 or $75 million or somewhere in that area. But yeah, We don't really have an appetite for bigger and would like to, but whether we'll be able to find something, I don't know.

Yeah, and remember, Ross, we're still an attacker. We're still not number one in any of these categories, and they are very large categories. Each of the categories in which we compete are tens of billions of dollars in size. So there's a fair amount of running room. In terms of the revenue cadence, I'll point to two statistics. Nine out of the last 11 quarters, greater than 20% revenue growth. Five out of the last eight quarters, greater than 30% revenue growth. I think the advertising growth will decelerate as we go through the year. Obviously, we're enjoying strong economic times, strong ad rates right now, and a favorable comp. Last year, as you recall, in the first quarter and into the second quarter, every company tapped the brakes on variable expenses and slammed the brakes on advertising expenses. So we'll see a deceleration throughout. throughout the year. And then on the performance-based marketing business, we obviously clocked, what, nearly 100% growth in this quarter. That will naturally decelerate where, again, we're comping the COVID behavioral shift when more people were online and more people were transacting transacting online. So I think you'll see a steady deceleration, but we feel confident that this business is a north of 20% grower for as far as the eye can see at these attractive margins.

Our next question will be from Kunal Madakar at Deutsche Bank.

Thanks, Mark. Thanks for taking the question. Couple, if I may. One, I was intrigued by the chart that you had in the letter where you were talking about frequency and how that kind of changes with the fixed price experience. And then at the top of that chart was member with apps, which was like almost seven times. I was wondering, that would almost suggest that for every service request that the customer could have had in their household, they are coming to Angie. So, you know, from that it flows, you know, in terms of the you building liquidity is how much of those service requests are you able to fulfill now? And as you invest another 60 million in liquidity throughout the year, how much more will you be able to do by the, let's say, by the end of this year? Thank you.

I'm going to let Ashin answer this one, but I do want to say one piece, which is, you're right, we've talked about that we think the homeowner does maybe six to eight jobs a year, and so when you look at that, the member with the app doing 6.9 jobs with us, that could be all of them. But one thing that we believe is possible, and that we may be seeing these numbers, but it's very hard to know for sure, is that Homeowners can do a lot more than jobs or would or should do a lot more jobs than the number that they are doing in a year. And the reason that's the case is because the process is unpleasant. And not just our process, the category in general is unpleasant. I was talking to a reporter yesterday who used our product and was surprised that After doing a fixed price to fix his gutters, nobody came into his house or knocked on his door and said, okay, now you got to pay me more money. Or now it turns out you got to change this other thing or fix this other thing. The default experience in the category is one where there's a lot of haggling. There's a lot of hassle. There's a lot of inconvenience. And so when you look at a job to get done, you frequently just don't do it because you don't want to go through that. We think that if we deliver the experience that we have been delivering and that we think is possible in a lot of categories, that the number of jobs that homeowners will do will increase in aggregate. And then what portion of that we get, I don't know, but we do think that's possible when you change the default. It's a strange category where the default experience is to be unpleasant, to get hosed or get inconvenienced in some way. We're going for a default experience that is exactly what you'd hope it would be, exactly what you believe it should be would be pleasant. And if we can pull that off, which we're doing at a relatively small scale, if we can pull that off, we think that is transformational. But go ahead, Ashim.

It sounds hard when you say it. To get the job done at a price that's fair for the customer and at a price that delivers ROI for the pro, it should be easier, but it's hard. And I think that's why we're so proud of this chart, this graph in here. I'll just walk through it so we're all talking the same thing. On the left-hand side of this, what you can see is what the repeat rate is for a consumer if they come into our traditional service request business. So that's where they come in, they submit a lead, they repeat 1.8 times in the first 365 days, so in the first year. To the right of that, you've got three different segments. where the consumer comes in and instead of having a service request as their first booking or their first experience, they have a full Angie service job. So they come in, they go through the service request path, but at the end of that path, they actually take out their credit card and they make a booking and the Angie services business takes over, fulfills that booking, sends the pro to their home. Pro does a great job. We pay the pro. you see three different segments there. When that happens, repeat goes from 1.8 to 3.3. We've also layered on what happens when someone becomes a member. So in that checkout flow, we also offer the ability for the consumer to become a member. For $30 a year, you can get up to 20% off a number of home services, a number of our services. And when you see that happen, you get to a repeat rate of around 5.8 in the first year. We have about 100,000 members today that fall in that category. And that 5.8, to the point that was made earlier, is a combination of both bookings, so Angie services jobs, and also service requests. So you're seeing the people that come back who make their first booking as an Angie service booking, they also submit more service requests. So it's this really positive loop where you do more jobs, but also you submit more service requests. And then the last, the last bar here is the 6.9, which is the one we're all, we're all really excited about. So that's, you come in, you have an Angie service booking as your first booking, you join as a member and you also join, you also download the mobile app. So those are our most engaged users. And when we think about where we're trying to go here, we've got this business doing 250 million run rate, 55 million in the last quarter, growing, as Glenn said earlier, 66% year on year. The key point, again, is we're doing that without spending incremental marketing. And that comes from this repeat use. So this repeat use here is the key driver along with the fact that we've got the all the unmonetized demand on the traditional leads and ads business. So that's what we're really excited about. Yes, we've got to bring on more supply to make sure that we fulfill in these jobs. We know that we're working really hard on it. Glenn spoke to the investment we're making and bringing on that supply. But it's if we unlock this, then that's what unlocks the that's what unlocks the growth as we as we think about making Angie services spin in the future.

And Kunal, let's have some fun with numbers as I enjoy doing. 32 million service requests last year from 18 million homeowners. That's how we get to the 1.8. If we can take on that 18 million homeowner base, if we could take 1.8 to 2.0, and our ambition is significantly higher than that, That will apply that 0.2 against the 18 million. That's 3.6 million additional service requests that we don't have to pay a dime of marketing for. We monetize service requests at $70 million. So if we can achieve that, and our ambitions are far greater, and this will take years, but that's $250 million of high margin revenue that will just fall obviously straight to the bottom line. That's why we're so excited about that. That's what we see in the numbers. And that's why we're green lighting a significant investment in this.

Thank you. Great. Our next question, can we go to Jason Helfstein at Oppenheimer?

Thanks. Joey, I want to ask a bit more about M&A and uses of capital. So, you know, when you guys have done the spin in the past, you know, you've had businesses that were generating meaningfully more cash flow. So I guess first, you know, Is it important kind of, you know, now post Vimeo that you have a business that generates cash flow? And then if not, you know, to the extent you guys tend to be more value with buyers, I think in some of the verticals you've been excited about, valuations have kind of been high, whether that's in .dash. Obviously in gaming, I think everything is particularly expensive right now. So maybe kind of help us understand how we should think about, you know, use of the balance sheet and, you know, do you need to buy a business that's, you know, cashflow generating given the kind of investment mode of Angie in the short term?

Sure. So number one, that is a debate, a discussion actually that we have quite a bit internally. I'm not sure you're right that we have less cashflow now than we have in Previous ones, Glenn will verify that. But I think we actually have more. We're in the same neighborhood. But look, having a source of cash flow certainly provides an important safety net or an important resource. flow to continue to reinvest. And that is something we'll look at. There's always opportunities at every market. I agree with you completely that things seem very rich. Things certainly seem rich in gaming and similar areas. But we've thought that maybe because we're cheap or something or we're value-ish, as you said. I think I kind of like that. We felt for a long time the market has been expensive and multiples have continued to go up. And we find opportunities in all of those markets. We found care.com in a market that – was, I think, largely considered expensive by historical standards. And we found other things, too. So I'm optimistic that we'll find things that make sense on an economic basis. By the way, we don't have to buy things at low multiples. We have low current multiples. We have to buy things where we have a very clear vision for a very large future. And that can exist in any market. I think it's probably harder in this market than it was in other markets, but it can exist in any market. And where we're looking is, yes, certainly in, as always, our priority is our existing businesses. And that means two things. That means, number one, we can find new things in publishing and we can find new things in care. We can find new things in Angie that that'll have a priority on our cash, but also if in aggregate, the post Vimeo IC is in a position where it makes sense to buy back stock, we'll buy back stock. And we've gone through periods after spins where we've bought back half the company. We've gone through periods after spins where we've bought new companies. I think both of those are possibilities. And I'm always optimistic that we're gonna find opportunities in any market to find acquisitions. In terms of new categories, that's a hard one to answer. We're looking at several. I think there's a few that are very, very interesting in terms of their current valuation relative to long-term prospects. I do think we're probably going to buy a smaller on things. Our sweet spot has been the several hundred million dollar acquisitions. And that's probably where we'll focus. But there's opportunities.

Great. Our next question is from Dan Salmon at BMO.

Good morning, everyone. Can we get into the details of the 60 million investment at Angie? And in particular, how much of that is learning to price jobs? Is it fair to compare that to sort of promotional spend that we see in other marketplaces like mobility and delivery? Or do you really have critical mass here on both sides? And it's really simply a matter of learning how to price at scale better. And then, Glenn, thanks for the near-term revenue guidance and comments a little bit earlier. The 2025% target for the business that we talked about over the long term, you spoke about getting to that rate to exit the year. We understand the change in margins as you have more of a gross approach to your TAM versus net. Is that sort of growth rate still the right number for the top line over the mid to long term?

I'll take the whole thing. Yeah, we do think the north of 20% is absolutely the right growth rate for the long term. And that obviously opens up, obviously, a fair amount of revenue. We're now, as Ashin mentioned, we're going after the $500 billion TAM, not a take rate against that TAM. And on the back of that $500 million of TAM, you add on payments. you add on financing, you add on subscription. So I think we're also creating TAM as we're approaching the market. So not only will you see a higher revenue base over time, but as you think about our margin against that, we're less focused clearly on the percentage of margin as we are on the aggregate EBITDA pull through from there. In terms of the 60 million investment in energy services, one, It is to price the jobs, but I wouldn't say promotional. It's the diligence around pricing the jobs. Remember, we're doing this at national scale in 40% of our categories, so call it 200 categories. So there's an investment to price the jobs. Two, there's an investment to fulfill the jobs, not the pro pay, but to make sure the pro shows up and shows up on time. Three, it's to make sure the job was done well and, you know, to follow up and to intervene throughout that process to ensure an excellent experience. And there is human intervention in all of those three. And then fourth, probably the biggest investment that we're doing is to automate the top three. and making sure over time a human is not involved. And we could productize home services the way Ashin and his team did so well in building the Handy business. And that's our blueprint that we're looking at. We see how that got done. We see the fulfillment rates there. And we're following that through our 200 different categories.

For our next question, can we go to Nick Jones at Citi?

Great. Thanks for taking the questions. I guess just an update on consumer behavior at Angie. Are homeowners more willing to let service providers in their home today? And then the second question on creating liquidity at Angie. I mean, how much is maybe becoming more focused and making sure you can drive volume to the best service providers versus continuing to add breadth Um, cause I think a lot of service providers have lumpy work. So by being able to provide consistent work, maybe the prices come down or you get more consistent metrics, any color would be great.

Sure. So there's a few things going on in terms of macro trends. You've obviously got the snap back where people are clearly leaving their homes, returning to some element of normality and transitioning away from some of the work they were getting done in outdoor tasks. So we're seeing a softness in terms of outdoor tasks as everyone moves away from getting their backyard and deck and new fire pit put in to more indoor tasks. The other thing we are seeing is we're seeing this pent up demand for new homeowners. I think we've all seen the 1.8 trillion sitting on the sidelines. We've seen the shift towards millennials from, hey, maybe they'll never buy homes to they're going to be the largest buyers of homes. And the homes they're buying need more and more work because there's less and less inventory out there. And then the last thing we're seeing is this shift from offline to online. So there's those three or four trends put together that we think, as Glenn alluded to earlier, we're seeing softness in the next couple of months in terms of service requests. But expect that you see the shift towards homeownership increase and probably will play out in the future. in a positive way for us. In terms of the spread of consumer demand across the pro base, what we're seeing is for energy service pros, where we get to density in a market, and density is fewer jobs than you would think, but where we get to density in a market, we see those pros really engage much more in the platform. So we see the more jobs we drive to a market, the more bookings that individual pro does, the longer they stay on the platform. We also see in the We also see in the marketplace business an opportunity to think about better pricing for our pros. Glenn alluded earlier on to the huge impact on, or potentially positive impact if we drive more consumer demand. In addition to the possibility to let that drop to the bottom line, the other thing we can do with that is we can invest it directly in better pricing for our pros to help them grow their businesses. And I think that's the key here. It's about how do we get the job done for consumers How do we help pros grow their business? Right now, we've got work to do in terms of helping pros self-enroll on the platform, helping them actually fine-tune what their geotask combo should be, and helping them get the best possible pricing. for the leads that they need so that they can successfully grow their business. Our pros want to grow their business. There's no doubt about that. On average, the pros want to grow their business. It's just a matter of how they can do it within the energy ecosystem. And we think if we focus maniacally on the pros that we've got, we've got more pros than anyone else. We've got a quarter million pros working on the platform. If we focus maniacally on helping them grow, we can actually grow capacity in a really positive way. And that probably involves the combo of our different products. So you think today we've got leads, we've got ads, and we've got energy services, our fixed price product, all under different brands, historically, and available to individual sets of pros. As we pull those together, we've got this opportunity to help pros really think about how they decide to grow from each segment of our marketplace.

For our next question, can we go to John Blackledge at Cowen?

Great. Thanks. A couple of questions on MGM. Could you just, Joey, provide some thoughts on the investment, which was, you know, different use of capital than you typically see with IAC. Kind of what's the end game there and would you look to get a bigger stake over time? And then on online employment marketplaces, you have stakes in Blue Crew, Vivian, which I guess formerly called NurseFly. What's the opportunity in this emerging segment? And just curious with Blue Crew, for that segment of the labor pool, are you seeing a tight market given the stimulus? Thanks.

Sure. On MGM, we are, first of all, very happy with where we are right now. I think we had... few ideas of what we hoped would happen, could happen. And I think that's largely playing out probably faster than we thought. One is, uh, that MGM could make it to the other side. Well, that's clear. MGM is, is, is overcapitalized now has way more than enough capital. Uh, two is whether, you know, people will come back to Vegas. I think that's crystal clear already. The convention business is the only thing that's still, uh, uh not officially proven but we're pretty optimistic based on what the consumer is doing so far and the third critical thing for us was this digital business and they just shared some numbers publicly recently of that business growing 400 year on year and that is uh I think a very, very compelling business. The thing that hasn't happened yet, I mean, it does happen, it's already happened, but hasn't sort of happened in the magical flywheel way yet is the full integration of physical to digital and digital to physical in a sort of clear consumer experience. And we still believe that has a lot of potential. And so we're excited about it. As far as owning more, Sure, we could. We'd love to. It's a great business. It'd have to be something that makes sense for us, but we're open-minded to anything there, and we're still looking at the category more broadly if it makes sense to do something outside of there. I think our first choice in everything would be to be through MGM because I think that their team is doing a great job. The MGM team is doing a great job, and that would be but if it makes sense to do something outside of that, that's possible too. Uh, on, um, Blue Crew and Vivian, I'm impressed, by the way. That's only like a day old, that new name for NurseFly. So congratulations on that. So, yeah, Blue Crew saw this. It's abated a bit, but for probably a couple weeks ago, for a little while, it was we couldn't get people to work. They were saying even at a higher premium, I'm making X dollars an hour on the couch to make – $2 more an hour to work is probably not worth it. I'd rather make $2 less on the couch. And that was hard. That's starting to thaw a bit, and we're getting people working again. And I think that is a short-term problem. That definitely was real for a little while. On that category more broadly, not a lot of people know Blue Crew. or Vivian, formerly NurseFly, but our thesis there is that there's a better way to match employers with workers in certain categories, where one of the criteria, I think this is a short-term criteria, but it's easier to understand than the long-term criteria, is kind of whether you're qualified for the job is somewhat binary. You have the certification, you can lift a certain amount of weight, you can operate a certain kind of machine or just as simple as you can show up guaranteed on time. And in those things like interviews, I don't think are particularly valuable. I don't think that most of the historical hiring methods add value. I think software has the most value here. So we can say whether somebody is capable of, in fact, showing up on time. We can verify whether somebody has historically shown up on time. And we can verify whether they have certifications and things like that. And when you have those sort of binary questions to answer about the ability to hire, a platform like ours can allow... employers to scale up or scale down much more quickly and to most frequently the issue is scaling up quickly and the way our platform works is we enable that through software and and bringing people into work i think that's just fundamentally a better way and i if you this is one of the things we say all the time where the future is obvious i do believe in this category the future is obvious are you going to use phones and and uh uh or pulling up to a, uh, a home Depot to find workers, or are you going to use software? You're going to press a button and workers and employers can, can, uh, uh, match and get work done. And by the way, software can shorten commutes. Software can reduce the cost of commutes. Software can do a lot of things that, that, uh, physical just with less information can't do. And so we're very optimistic about that category. We're, tiny, both Blue Crew and Vivian are tiny businesses, but both growing nicely, making real progress in the category, both a fraction of a fraction of a point of the market. But we view that as opportunity in terms of addressable market. And we're going to keep putting capital in that area and feel pretty good about it. But we've still got a lot to prove in both of those businesses before we know we have something real.

Would you, sorry, just one, would you build and or buy other verticals within that?

Absolutely. Yeah, absolutely. And we're looking at that. We've been looking at that for a while and we continue to, but that's the place we'd love to put more capital.

Thank you.

Our next question will be from Yusuf Squally at Truist.

Great. Thank you guys for taking the question. So I have two, one more clarification from Glenn. So, Glenn, tell me if I'm thinking about this correctly, but on the energy services side, on the fixed price, as you recognize revenues, they're obviously recognized on a growth basis, right? Not on the net basis. So as you look about the growth trajectory, shouldn't it accelerate even more than what you've historically talked about? again, just because of that pure accounting practice. And then as you, And I think by simple math, fixed price is already like 15% of your revenues. And then on the long-term margin, you've talked historically about how Angie could support maybe 35% plus margin profile. As the accounting changes a little bit, can you help us maybe think about the potential for a long-term margin there? And then just one question for O'Sheen. been tracking your progress with Handy years ago and did a great job there. But as you try to kind of take the Handy playbook and move it to a much larger platform, can you maybe just speak to the one or two toughest friction points that we have to worry about as investors looking from the outside in?

Yeah, let me start, Ashin, and then you could pick up. On the gross revenue, you know, recall we changed our revenue recognition in 2020, right? So we had an artificial lift there in 2020 against 2019 as we shift from net to gross. Now all the numbers you see are gross to gross. And yeah, there's a slight uptick as we get into larger tasks, the medium consideration tasks. I think it was rounded to about a 1% accretion in growth rate, that mixed shift. But sure, there'll be a slight lift, but it's not material. On the long-term margin, obviously, we've long talked about the 35% target for this business. As we've been talking about over the last several quarters, that's in respect of our traditional marketplace business, the former Home Advisor, the former Angie's List. And we still believe that holds. But now that we're making a much more aggressive push into Angie Services, and now we think Angie Services can be a significant component of the overall mix. We've talked about maybe even 50%. I don't know if that's a five-year time frame, seven-year time frame, or even longer than that. Angie Services is not a 35 percent margin business and may not be a positive margin business for two to three years from now as we grow and as we take over more tasks and go deeper and wider in each of these tasks. So I think you have to think about what the balance is between Angie Services. and our traditional business in terms of percentage of the whole. Apply your 35% against our traditional business and apply, I think, a substantially lower number, again, negative for a bunch of years, to get to a blended margin. Said another way, we'll make progress on scale and sales and marketing. We've talked about those numbers before, 10% to 15% probably over the next decade. intervening the next few years. We'll make progress on product development in G&A. I've talked about 5% or 10% progress there. Again, maybe five to seven years. And we'll give back a lot of that on the increase in cost of goods sold. So that's how to kind of frame up the long-term margin. But importantly, I alluded to this earlier, but maybe didn't do it as crisply as I should have, we're reframing the opportunity here. We are absolutely less focused on the percent margin as we are the aggregate EBITDA dollars. And our ability to... add on not only the full totality of our total addressable market that 500 billion but even more services uh more services beyond that so as you compare to the way we thought about the business years ago margins will definitely be percentage margins will definitely be down and we think aggregate opportunity opportunity will be up but it'll take uh as we've talked about some time this is a a long-term build for sure as we uh hopefully continue to transform the category

Yeah, we're tiny. We're less than $2 billion of a 500 billion TAM and a true 500 billion TAM, not a take rate part of it. And I think the opportunity is one that we are very, very excited about going after in a in a very forceful way. And as we continue to invest in Angie services, I think we're going to transition from the tasks that you mentioned before that Handy was great at into the much bigger tasks. So the stuff that Handy was good at, true automated enroll, automated job fulfillment, that works. So we've got that, that flywheel is spinning. We're continuing to see that grow. Where we're pushing is into the bigger tasks. So the three, four, five, seven, $10,000 tasks. I think right now we've got two or three tasks going where one of them is $150,000. One of them is a $200,000 essential remodel of someone's home where we're taking full responsibility for the job and we're actually project managing and getting it done. And I think that's where we've got work to do. And we've deliberately... One of the first things I did was we split the ownership in terms of the business. We said, hey, we're going to have a dedicated person in Brian Ellis running the marketplace business, which is leads and ads. We're going to have Amang, my co-founder from Handy, running the Angie Services business. And it's to give it that... dedicated focus because it's going to be, it's going to be bumpy. So we're, we're aware that it's going to be challenging. I think Glenn is obviously given the numbers. If I was guessing right now, it's probably going to cost more than we think, but it's probably going to grow faster than you think. If I was like to over under it. And I think we're really excited about the, uh, We're really excited about the potential to see this grow at a much faster rate, largely because of the data we're seeing in the customer retention, the data we're seeing in the repeat use and the engagement we're seeing on the pro side when we help them grow their business using the energy services model together with the marketplace model. No one else is doing it. Like you think about the competitive set. Yeah, there's people out there doing leads and doing ads. There's people out there doing a GC model or a services model. There's nobody that's put them together and said, this is the category winner. This is how this is going to work.

Mr. Schneider, let's put one more question in. We're over time, but we'll go through it very quickly.

Okay. We'll take our last question from Agal Arunian at Webush.

Thanks for speaking, man. I have a couple, but I promise they're the shorter ones. Just on the rebrand and the impact, is there any way to quantify what that's been so far? And you talked about being at 40% of the categories for Angie Services. Historically, you've talked about 50-50, the goal to getting there 50-50 on revenue. Can you talk about the goal in getting there in terms of categories? And on the payment side, that really seems pretty interesting. You know, what are the benefits for pros to using that? And do you expect to kind of bring on all the pros that are using Angie services into your own payments railways? Thanks.

One, nine, two, three, and then you get one. So let's start with the payments and work backwards. So today we've got the payments actually available to the marketplace pros. So that $2 million a week, those are our lead and ad pros that are helping collect or collecting money from their customers and getting paid through the Angie mobile app. The really interesting part of that is a third of those payment requests are going to non-Angie customers. So those are actually our pros going out doing customer acquisition for us by requesting payment from their non-Angie customers who then have to download the Angie mobile app to make payment. So that's like a really interesting ship that we're seeing there. I have completely blanked and forgotten your second question. I'm sorry. What was it?

The second question was on the 40-40 or the 40 split. Yes.

Yeah. So what we're seeing today, as Glenn said, is we're seeing about 40% of our service requests being shown some version of Angie services. That doesn't mean they see it on the top of the page. And there's a way in which we can show it top of the page, middle, bottom, and as a slide over. And we've really got an opportunity to think about how to throttle that. Probably it's really only being shown in an aggressive way to less than half those people today. Long term, I have a view that we should be able to offer Angie services for nearly every single task. So if we're able to do $150,000 or $200,000 remodel, we should be able to offer Angie services for every task as an option to the consumer to sit alongside that marketplace model of leads and ads.

Egalin, respectfully, I'd rather not mark us to market on not exactly where we are on the impact of the rebound. It's been six weeks. Our observable inputs are what obviously gave rise to our $40 million EBITDA impact for the year. And we think we've hit bottom, and we think we're building from here. But as I said earlier, it'll be a slow build, and the headwinds could continue into the first quarter of next year. We may also decide to spend a little more to try and fuel the recapture and fuel more domain authority around the new brand. We'll see. Obviously, as always, we'll keep you posted. And I'll turn it over to Joey to make a few or a concluding remark.

Just I'll add a little bit, though, to what Glenn said. We have we're past the most harrowing part. We've been through a few of these rebranding things. It serves magic. many at dot dash. And what happened, the biggest impact is in search. And what happens is your traffic goes down and then it goes back up. We're past the going down part. We're in the going back up part. So that's comforting. That's the most harrowing part. Now the question is just pace of going back up, and we really don't know. It's hard to predict. We do our best to predict that. Hopefully we get it right, but it's really hard to know. What we do know is we're confident it's the right decision for the business. We're confident that we are now doing what we probably should have done a very long time ago, and we're in the right place to sort of build and win the long, real, enduring brand product in the category. And maybe that's a good summary for where we are overall. We're excited about where we're headed. We've got big bets. We've got scary bets. We've got fun bets. And we're excited about where we're going. So thank you all for joining us. And we will speak to you in a quarter.