IAC Inc.

Good morning, everyone. Mark Schneider here, and welcome to the IAC and Angie Inc. second quarter earnings presentation. Joining me today is Joey Levin, CEO of IAC and Chairman of Angie, and O'Sheen Hanrahan, CEO of Angie. Similar to last quarter, supplemental to our quarterly earnings releases, IAC has also published its quarterly shareholder letter. We will not be reading the shareholder letter on this call. 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 for 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 statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in IEC and ANGI's second quarter press releases and our respective filings with the SEC. 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 the call. I'll also refer you to our press releases, the IEC shareholder letter, and again to the investor relations section of our website for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. Now let's jump into it. Joey?

Thank you, Mark. I do want to start by thanking Mark Schneider here, who everyone on the call knows very well because he answers every single one of your emails and phone calls probably instantly. And you all know he has an encyclopedic knowledge of IAC. He's been here, I think, as long as I have, maybe even a little bit longer. But he's always been behind the scenes. Today, he is on the screen. You can see his smiling face. So we're lucky to have Mark here. I know there's going to be a lot of important questions today, so we're going to want to get questions quickly, but I'll just quickly take stock of where we are relative to where we've been. And going into COVID, Matt and Vimeo were both still part of IAC. And they are now off on their own, doing very well, 50-something billion of value off separately. And what's left in IAC is lots of small businesses and anti-home services. And when I look across those businesses, every single one of them, I think almost every single one of them is better off coming out of COVID, I don't know if you can quite say coming out of COVID yet, but is better off today than we were going into the pandemic. And that's probably hardest to see at Angie, but we're going to talk about Angie a lot today and what we're doing and how we're building that business for the long term. That's really, I think, quite an accomplishment and quite a testament to the businesses that we have and the people that we have working here. And I'm very grateful for that group of people and what I think we can do from here. So we're excited about the future. We'd love to talk about what we're doing. And let's start it with the questions.

Great. So our first question will be from Dan Salmon at BMO.

Good morning, everyone. I've got two questions. First, Joey, can you take this another layer deeper on the brand transition impact from both Angie's List, Angie, and then it looks like the more significant impact on the HomeAdvisor brand during the quarter, and specifically, why did that have such a significant impact on EBITDA? And then second, if you could just spell out a little bit more about the contribution from total home roofing in the July growth versus where the organic trends in that business currently, and perhaps just a few high-level comments on your reasons for buying this business. Thanks.

Yeah, I'll let Ashin and Mark both jump in here. But to answer the first part on the brand consolidation, number one, I do think it's important to talk about why we did the brand consolidation. It is – we are spending on multiple brands. That is obviously inefficient. But also, the brand where we were generating the most revenue was – we felt not a brand that was ultimately long-term sticky. We've talked about this before where you talk about the business home advisor. You talk about the success of home advisors. You talk about it's a leader. In the category, it's the best products, most revenue, it's the most service professionals. And you'd finish that conversation with somebody and they'd say, oh, you mean Angie's List. Now, the good news is we own Angie's List, too. But the bad news is for all the hundreds of millions or billion dollars we put into the brand, it was not a sticky brand. It was too generic. It was too literal. And there was a brand that we owned that really owned and defined the category, which was Angie's List. Now, it was a list, which I think as a concept is outdated. And so we had to update that to Angie. But that's something we think we can own, and we think we can own forever, and we think we can define the category as a much more ambitious concept than using a literal brand. But what practically happens in that is two things. Number one, we updated the Angie's List.com domain to Angie. And so that just – we've done this multiple times before. That is a V-shaped curve, and we are seeing that shape. And the traffic goes down. pretty severely and then it comes back up over time. And that we did that at Dot Dash across multiple brands. We did that actually when we went to ServiceMagic, when we went from ServiceMagic to HomeAdvisor. So we have seen this. We have sister companies who've done this that we've talked to, which is Expedia did a big one relatively recently with Vrbo. So this is a relatively well-worn path. It's hard. The thing that, as you point out, we didn't appreciate or we should have appreciated but we didn't was how quickly HomeAdvisor without the brand support would lose audience in search. And that has been more severe. We thought it would hang on. As I said in the letter, it's actually reinforcing the decision because that brand just didn't have the stickiness to it. It needed that constant support. And I think that the... the spending on a new brand is going to be much sicker and last much longer and be more enduring. But because it didn't have the brand support, the audience we were getting from search fell off more quickly. And that gets your margin question too, which is the SEO, The organic search traffic that comes in is very high margin. And so when you lose some of that, then that drops down to the bottom pretty quickly. Ashin, there's a bunch of other stuff in there, including the acquisition, and Ashin should jump in on this.

Thanks, Joey. I think you hit the important part, which was we're absolutely committed to where we're going with the Angie brand. And the thing that gave us even more confidence was the rate at which HomeAdvisor declined when we stopped standing on it. So the constant investment in the HomeAdvisor brand was propping up organic search. It was propping up SEM. It was propping up a bunch of channels. And once we took that investment out of the HomeAdvisor, particularly on TV, and we invested in Angie, we saw a faster degradation than we anticipated. The upside is the shape of the curve we're seeing on brand for new Angie is better than anticipated. So what we're seeing is we're transferring the brand equity from Angie's List over to Angie in terms of how we measure unaided awareness, in terms of how we measure aided awareness much, much faster than we thought. So on a dollar per point of awareness basis, we're performing somewhere between seven and ten times better on new Angie awareness. than we were when we first transitioned from ServiceMagic over to HomeAdvisor. So we're really excited about that. Obviously, it had an impact on EBITDA. In terms of the question on total home, just to zoom out for a second, we've effectively got two things or two businesses inside Angie right now. And if you think about the macro environment, One of them is a business where pros pay us to access customers, and the other is a business where we pay pros to do work. And at a time where I think it's unprecedented in terms of the change in the macro environment where we saw this massive contraction in pro supply as a result of COVID and this massive increase in consumer demand happening at the same time that we're asking pros to pay us to access customers, That business is challenged at the moment. So irrespective of the brand transition we're going through, it's challenged. Obviously, we believe this is temporary. We understand that the macro environment is particularly volatile given COVID. However, we think it's our responsibility to lean into the other business at the same time where we actually have huge product market share. So where we're paying pros to do work, that business is performing unbelievably well. So, you know, you saw the growth rate is 120-odd percent Q2 versus Q2 last year. You saw the July number of 160-odd percent. And, you know, in terms of the total home or the Angie roof, now Angie roofing, acquisition that contributed to the growth in energy services on an overall basis, July would have been flat on growth versus June without the energy roofing acquisition or the total home acquisition. Just to talk about why we did that for a second. It's kind of got to do with why we're overall investing in energy services. It's a desire to bring on more supply and build a better customer experience. Our pros want one thing. It's to help grow their business. Our customers want another, which is to get the job done. What we've done at Angie Roofing or what we're doing at Total Home is we're going deeper into the roofing category and we're building out real expertise to be able to help people get their roofing job done. So today you go to Angie and using Total Home or Angie Roofing, we can actually quote you the job really quickly and buy the materials, dispatch the roofers. We don't employ the actual individuals doing the work. We contract with individual teams. But that's allowing us to bring on more supply because it's specializing the work they need to do ever more. So we're really excited to go deeper in this category. It's a great category, as I've spoken about before. $10,000 AOV, really, really high rate of financing attachments. So about 20% of their jobs are financed. So it allows us to get deeper into financing areas. And, you know, you think about the application of technology, we can apply a lot of technology to allow us to price those roofing jobs in advance using aerial LIDAR or aerial photography. So, again, it's really bringing it to this point where it's a seamless end-to-end experience on Angie using Total Home or using Angie Roofing. I need to get the nomenclature right. Hopefully after this we'll only call it Angie Roofing. But overall, we're really excited about where Angie's service is going.

And just a couple of things to add. You know, when we did the, you know, IEC has done through a couple of its businesses things like this brand consolidation before. And when we did the service magic to home advisor transition, you know, almost 10 years ago, you know, that took roughly 16 months before, you know, revenue returned to growth following the commencement of that. And similarly at DotDash, when we did the verticalization several years ago, you know, on average it took about a year for each of those verticals to return to revenue growth. So these things do take time. On the July revenue, you know, as we said in the shareholder letter, we do expect that sort of organic run rate to continue for the next few months. So it's sort of in and around that 7% we saw in May, June, July. And then you layer on the acquisition. And just to help people size, You know, that acquisition, you know, compared to Total Energy, it's relatively small. It's a little outsized in terms of growth. Just remember that this is in our energy services bucket, which recognizes revenue at gross. As Oisin said, these are, you know, $10,000 tickets or more type jobs. And then seasonally, obviously, the summer months for roofing is very strong. So with that, we'll go to our next question from John Blackridge.

Great. Thanks. A couple of questions. DotDash, the revenue in EBITDA growth was strong again in the second quarter. Could you discuss the quarter? And then we saw the top-line decel in July. If you can, Joey, maybe offer us a view on DotDash's second-half growth and any color on the longer-term growth vectors for that segment. And then just two other quick ones. CARE.com – Any update on the progress there since the acquisition? Thoughts about kind of the longer-term opportunity? And curious when we might start to hear more about that segment more regularly? And then just any update on the CFO search would be great. Thank you.

Sure. Thanks, John. Maybe I'll do them in reverse order so I don't forget. CFO, we are – got great pipeline of candidates. The good news on the CFO search is, you know, Glenn was, I think, an exceptional CFO and his big shoes to fill. And so, we've got a high standard for what we're looking for. But we have time and we have flexibility on that. Again, I think I don't want to give a timeline on when we'll fill it because there's maybe some candidates we could go with quickly and maybe there's a chance it could take longer. But we have a fantastic finance staff here we've built over many years. We're all, I think, exceptional in their field. I've talked about Mr. Schneider already. We've got a head of accounting who's exceptional. We have a head of treasury who's exceptional. Same for internal audit for tax. And so when I think about all those finance functions, and confidence level in making sure that things are running smoothly and we're all well protected. I have absolute certainty in that. And so we're going to make sure we find the right person to add value to that equation in terms of capital deployment and being a real value add on the executive team. And I'm confident we'll get somebody great. Care.com, in terms of breaking it out, I don't know. That is sort of the next step in evolution for the business. When we think about businesses in the IT, we like to put them in emerging for a while and then graduate from emerging to their own segments and then hopefully long-term eventually graduate into being their own business off standalone on their own. But right now, business is doing very well. I think I've talked about before that the enterprise business was the most positive, pleasant surprise for us since we acquired it. That's a meaningful contributor to the business, growing very nicely, and I think is a beneficiary of an important tailwind right now. which is employers increasingly taking on the responsibility or believing they need to take on the responsibility to help their employees with child care. And it's unequivocal that there's a direct correlation between taking on that responsibility and diversity in the workforce. And it's, of course, unequivocal, the importance of diversity in that workforce, how it's a positive impact on a business. So when people now realize that, and a lot of that has become even more clear over the course of COVID in terms of both government realizing that and employers realize that, I think that's going to be a tailwind for the – a continued tailwind for the enterprise business. But that aside, the core business at CARE is growing fast, certainly the fastest since we've owned it and probably the fastest since for a while before that. And that's a product of a few things. We've got improved, as I mentioned in the letter, improved conversion and retention. Those are key to the key building blocks to the business. And, of course, when you get those things going, that builds LTV, and when you get the LTV going, that enables you to do more marketing. So we've got marketing substantially up in that business right now too, and that becomes a virtuous cycle. So that's all encouraging. The other piece is it's not just in child care. We've all, at least I have, defaulted to child care as the definition of care.com. But senior care is an increasingly big and important component and I think also has a demographic tailwind behind it. Number one, people want it. an aging population. Number two, people wanting to age in their homes or in their family homes as opposed to in nursing homes. And certainly COVID didn't help the brand of nursing homes generally. So I look at all that and say we're doing very well there. We're excited about it. We're not in a rush to break it out as its own segment because we like kind of the anonymity of care being able to work with a lot of the tools behind the scenes and not worry about any particular metric right now in terms of public performance. But it ought to get there. I can't see a reason why it won't. And the product development is probably going to be the biggest driver of that, meaning getting some new products launched, getting some momentum behind that. And once we do, we'll probably want to break it off on its own. DotDash is your other question. DotDash is also, as you point out, doing very well, exceptional quarter. It did decelerate, but we always expected it to decelerate in the back half of this year. You can see that in July. Just to give you some context, like the display advertising business in Q2 of 20 was down 8% year over year. Everyone cut back their spend. That went back to growing 9% year over year in Q3 of 20, and so that's a big difference in the comp. for this year from Q2 to Q3, and that's something to pay attention to. We expected that deceleration. The business is exiting again. I don't know if we can say exiting COVID anymore, but it is exiting COVID at a faster growth rate than when it entered on a higher base, which is fantastic. And so that's important. We're going to keep investing in content in that business. I think that's our competitive advantage. I think our content investment is up 50% year over year this year, and I hope to continue to grow that faster than revenue for a while. And underlying that, there's a few trends that do help that are completely independent of the pandemic. One is what's happening to privacy and data privacy and some of the tools for tracking users and how those things have become weaker on the Internet over time, or in particular on mobile over time. And I think that trend continues for a while. Dot dash is a beneficiary of that because dot dash doesn't need that data. Dot dash is selling to advertisers a product, which is we know somebody is doing X because they're reading about doing X. They're looking for information on doing X. Do you want to reach a reader who's doing that? You don't need to know their name. You don't need to know their age. You don't need to know where they came from on the Internet or some other things they were doing. You need to know exactly what they're looking for, which is obvious. You don't need any data for that. And I think there are a lot of advertisers who appreciate that now. Number one, they appreciate it because they can't spend the dollars elsewhere where they were tracking on a different basis. But number two, they like to be able to target audience with effective dollars without having to violate personal space or worry about privacy concerns. And I think that's really important. We can see it in the advertisers. So I love quoting this stat. I think I quote it every quarter. Top 25 advertisers. I was just looking at that again this morning. From 2019 to 2021, the top 25 advertisers, those same 25 names are spending 139% in 2021 of what they were spending in 2019. And I think 123% or something like that of what they were spending in 2020. And, you know, people like these concepts of net revenue retention. We've learned from Vimeo. And if you think about dot dash in that context, it's pretty amazing. And, again, the reason is what I said. It's what they offer, but it also performs. And they can see that it – advertisers can see that it performs, and so they stick with it. So that's all very encouraging. In terms of long-term growth rate, I like to think of it as – 20%, north of 20%. And I don't know exactly how that plays out in the second half of the year, but I think that that's a bogey for us. And the things that drive that are more content. and getting not more ads. That is something that we're not pushing. But getting more content, getting more efficient on the ads, getting better performance on the ads. And then in each vertical, we can get deeper in terms of how we deliver a customer to an advertiser. So in categories like finance and Investopedia or brokerage or credit cards or things like that, there's a lot of revenue to be found there in getting – delivering a more qualified customer to an advertiser. And because we sit at that top of the funnel, I think we have the opportunity to do that. Mark, do you want to add to that?

Yeah, I'll add a little bit just on the second half expectation. So, you know, why we look at that north of 20% as sort of our target and what we think is, you know, for an online publisher, a really healthy number. You know, just look at some of the – I'll update some of the data points that Glenn called out in the last call. So now we've – 10 of the last 12 quarters, DotDash has gone over 20%. Six of the last nine quarters, over 30%, and 13 straight months of over 20%. So we do think that 20%, north of 20%, is a good way to think about the business. And as Joey said, the comps do get tougher. Last year, Q2 grew 18%, and that accelerated to 26%, and then 33% in Q4. On margins for this business, remember that 2020 was a bit of a pull forward in terms of margins for DotDash. Like a lot of other businesses at the onset of COVID, they kind of pumped the brakes on investment. For the year, margins were 31% last year. That was up from 24% in 2019. And this year, we're leaning back into content. Joey mentioned that we expect to grow content, our content industry. expense investment 50% year over year. So I think you should expect to see some contraction as that sort of cycles through over the back half of the year as we lean more into it. So some contraction over the second half of the year. For the full year, you know, we should be relatively flattish in line to that 31% we did last year. But, you know, to get there, you have to have some contraction over the back half of the year. Thanks. So for our next question, we'll go to Corey Carpenter of J.P. Morgan. Okay.

Hey, thanks for the question. Good to see you on here, Mark. So on energy services, how do you think about the sustainability of recent growth and what continues to drive further penetration in the machine? Maybe if you could talk a bit about some of the progress you've made on your product initiatives like energy key, home advisor pay, and consumer financing. Thanks.

Thanks, Corey. So just on Angie Services to start, as you pointed out, the growth accelerated to 127, up to 73 million for Q2. Just to understand for a second the different components of Angie Services, you've got three different businesses inside there. You've got our retail business, where we partner with the largest retailers in the world. some of the largest retailers in the world, to sell in-store or online on their site. So you go and you buy furniture, and we sell a furniture assembly alongside the furniture. The second part is the book now business, where you come to Angie and you make an instant booking for a service. You fully pay, and we show up and do the work. And then the third part is managed services or managed projects, where we give you an initial quote online, you put down a small deposit, and then we organize to complete the job by phone, and you pay for the job completely. So the average ticket on that one is closer to $7,000 to $10,000. All three of those experience pretty significant growth. As you can imagine, the levers are different on each one. We're really only scratching the surface on both now and on managed projects in particular. So, the early read on those is the NPS is really strong, both for customers, for homeowners, and for our pros. And we're seeing significant pro engagement, significant customer engagement. If you think about it on a category level, there's probably 10 categories we've identified already where we think we could build a half a billion dollar business in each category, where we look at it and say, okay, in roofing alone, it's a $45 billion category in the U.S. There's no reason why we shouldn't be able to build a very large business in that category. So the levers for future growth there, the levers for future growth are really verticalization and going deep into each category. In the book now business, we've started to build out those category teams already. We've got about a half a dozen of those teams that are now nearly fully staffed in terms of category managers for those individual sub-verticals. It's been enough product work to make that experience better. And the levers are really around added to completed, better job pricing, more accurate requests by the customer allows us to do an even better job, spins through into rate for the customer, repeat rate for the pro, and overall just makes that business better. On the managed project side, again, we're deep in one category with roofing to start. We've got a number, we're across quite a few categories already, but we're really going deep on roofing. We're also going deep into fencing as a category. and really looking at saying, how do we make sure that in that category we build a great experience? You pointed out Angie Key and payments. The payments product up to $26 million, I think, in Q2, 70-odd percent growth Q1 to Q2. So we're really excited about that. I think it hit $3 million in a week. in July. And the way I look at that is I look at it and I think, where are we really getting deep with the customer? Where are we really completing the loop and actually, you know, looking at it and saying, how do we whole transaction for the customer. And if the pro is getting paid or they're using Angie service, we know that for a fact. So I look at Q2 and actually, you know, when I think about jobs that we know that we've completed and we know we've processed the payment on, I look at the 26 million and I think about the 73 million. And I think those are jobs that were, you know, either fulfilled by Angie or or we actually completed the payment and made sure the pro got paid. So I think that's a really significant deepening of our relationship with the customer and deepening of our relationship with the pro. And it flips it back around from the pro paying us to us making sure the pro gets paid. We've got more pros that we're rolling out payments to, so it's not across the entire pro base yet. So we recently, as you know, rebranded HomeAdvisor to Angie Leads and Angie's List to Angie Ads. There are a number of ad pros that don't yet have access to payments, so we're continuing to roll that out. So we'll expect to see continued growth in payments as we go deeper into it. financing is also an important part of payments again very early on the data but i think it i think it tripled in terms of financing volume again on tiny numbers q1 to q2 and again the roofing business gets us deeper into financing as well so it's all this virtuous loop of getting closer to the customer managing the payment getting into financing and really uh really really getting to a place where we know that the job is getting done for the customer Angie Key was, I think, the last part of your question. Again, great growth month over month, or sorry, quarter over quarter, up to 140,000 members now. The price point on that is up to $29, so $30 a year. We're still a pay-to-save program. I think there's a lot more we can do there in terms of value add, as I think you were asking your question of where are we taking it. What does it look like? I think some of that has to do with helping the customer, helping the homeowner have access to more information. Some of it has to do with educating the customer, perhaps elevated levels of service. I think financing also plays an important role into that. So could we think about financing for Angie Key members at preferential rates? And then I think there's a lot of more tangential things to do with the home that we could do with Angie Key as well that we're early on, we're exploring. But we think it's a really powerful idea. It really fits the long-term vision. The long-term vision for Angie is, you know, it's how do we have a single brand that most of our people are members, they use our mobile app, and they turn to Angie to get everything done inside their home. And you think about services, you think about Angie Key, you think about payments, and you think about our broader marketplace business that really broadens and gives you access to all the services. They all fit together, and I think you're hitting on all the important building blocks that go into that.

I just have one small thing to that last sentence from Ashim, which is you would go to, in that world that he describes with all those features that he describes, what's important in there is also you go to Angie first. Because it's faster, it's easier, it's reliable, it's going to deliver the service, it's going to deliver the service at a fair price. But the point is, you go there first. It will make more sense to go there first than it will to go anywhere else first and get a list or have to sort through things or have to read reviews or have to pick from 10 or whatever it is. You will be going first, setting up the infrastructure that makes more sense to go to Angie first. It's more efficient to go to Angie first is a significant portion of the groundwork we're laying right now.

I think that's a really good point. And I might even push further. I might even push further to say you go there first for the discretionary things, for the urgent things. But actually, because you have a relationship with us, because, you know, we know your home, because we know it probably better than, you know, any other professional, any other company, we can actually anticipate and take care of the background maintenance for you. So you go there first for discretionary things because we build a great brand. You've got the mobile app to remember and, you know, you engage with us and trust us. And hopefully we anticipate. anticipate the maintenance for you, and we can actually take care of it behind the scenes, or we can proactively prompt you to say, hey, would you like us to do gutter cleaning at this time of year? Would you like us to do sprinkler blowouts at this time of year? Can we do these things for you in an automated or a magical way? So I think it's, you know, obviously the economics get a lot better. You know, we've talked before about the key drivers for Angie long-term economics around zero step rate, customer repeat, SPU retention. And the more we can bypass some of the demand channels that we've got to pay for today and take customers directly into the energy ecosystem for the long term, firstly, the better business we build. Firstly, I would say the better customer experience we build, and secondly, the better a business we build.

So our next question will be from Brent Still at Jefferies.

Thanks. Joey, a lot of questions around capital allocation, $3.5 billion, no buyback on IEC for a while. Can you just give us your perspective on where the stock is at relative to the activities you want to do on the core side of the business?

Sure. We have at the IEC, it's a little under $3 billion, and I think, of course, the catcher thing about it is Angie. And priorities are basically the same they've always been. We're definitely going to prioritize our existing businesses for M&A. I think I've talked for a little while now and continue to believe that that. dot dash and publishing would be a priority there because I think we have a great team that is building a great business that's proven their ability to do acquisitions, integrate acquisitions, and add value in those acquisitions. And it's scalable. So I want to add there, if we could find the opportunities, which I do believe exist, that's one for sure. And all of our existing businesses are going to prioritize over new businesses for acquisitions. But we continue to be in the hunt for new categories to get into. I don't think we'll, as we've always said, I don't think we'll look for a that's the company type of acquisition. But I think that finding businesses that generate real cash flow and where we have a unique angle is something that we're going to, that we are looking for and continue to look for and And it's a priority. The last one you mentioned is charity purchases. That's always in the consideration set, will continue to be in the consideration set. And it's basically a variation on putting more capital into our existing businesses because it's just effectively buying more of them. And so that's an easy one. And it's definitely something that we always have looked at and will continue to look at. We same story on the Angie side as it relates to share repurchases and acquisitions. I don't think Angie is going to get into a brand-new business with Capital, but looking to do small acquisitions like the roofing one where we can tuck something in and really make a difference and also consider share repurchases if it makes sense. Great. Thank you.

So our next question will be from Jason Hellstein at Oppenheimer.

Thanks. I just want to dig a bit deeper into Angie. How much are you willing to draw a line in the sand to kind of hold revenue growth, let's say, at 7% to 10% for the foreseeable future, given that the headwinds you're facing at HomeAdvisor from a traffic standpoint, you know, will take time? And obviously, it's a balance there. So just help us understand that. You know, how bad it could get over the next several quarters. Thanks.

I'll start and then Shane jump in. But we're not holding any lines. It'd be crazy to hold any lines because it's not – we can't. There's nothing so sacred we'd say we'd do anything for. for 7% to 10% revenue growth. What we're saying right now is that's what we're seeing on the organic side, and that's now bigger as a result of the acquisition. That's what we're seeing, and we don't see a reason why it should be worse than that, but we're in a very volatile environment for two reasons, probably more than that. But for sure, there's still a lot of ups and downs as it relates to the pandemic and people's willingness to do work and availability to do work, things like that. And we created our own volatility with this brand thing. And so some components of that are out of our control. We know what we're seeing today. We know what direction it's generally headed in various pieces, some up, some down. And so we've made assumptions on how those hold. But things can change for the positive or the negative there. And that's always going to be the case.

Yeah, I'd echo that. We know where we're going. We know what we're trying to build. We like the destination, as Joey said in the letter. I'd just put slightly more context on it. We've essentially got two businesses that are performing very differently because of the macro environment and because of the brand. So the services business in the current environment has – fantastic product market fit and is growing like crazy. Obviously a smaller part of the business, but growing like crazy. And you've got the lead business that is challenged from two perspectives. One is the brand and two is the pandemic. And we believe the brand is temporary and we will be in a stronger place on the other side of it. And the pandemic hopefully is also – I think we all hope it's very temporary. And, you know, you look at the math of when those two lines are going to cross, of when a smaller, faster-growing business is going to help with the overalls. but we're we're focused on the long term we're focused on what we want to accomplish overall we're not focused on how do we you know hold a line in a particular place you know if this quarter has said anything it's hey what we're all about is making sure we're making the right long-term decisions we want to make sure that we're set up for success we have absolute confidence that if we build the right product for the homeowner that helps them get the job done we build the right product for the pro that actually helps them grow their business we'll be in a stronger spot We are, in addition to the brand change on the home advisor business, I'm sorry, on the lead business, we're also making significant investment there in actually making the product and the experience better for pros. So we've got a pricing test that's out in a small number of markets right now that significantly changes the ROI calculation for our pros. Very early, very early results, but they broadly seem positive at this point. We're obviously investing in payments to close the loop. Again, the read on pros that use payments, significantly higher retention, significantly more engagement. And overall, we're looking at verticalization of that business, too. So we've talked before, I think, loosely about verticalizing that sales force. That's something we're actively going after, again, with a view that as we verticalize the sales force, we build a better experience for pros that will engage with the product more. The thing that's given us confidence on that is an onboarding program we've run for our ad SPs, where we put them through a pretty heavy touch onboarding test that's yielded really good results on really good results on win rate, really good results on 90-day retention. And again, we're really saying, how do we not just say, oh, the pandemic is there, it'll pass, but how do we say, let's make the ad business and the lead business hire ROI for pros and And how do we make sure that we come out the other side of this in a really strong place? And all the while, we continue to have the other option, which is how do we create our own supply? Which I think, you know, with energy services and some other things we're doing, we feel like there's opportunity. And we've proven we can do it in certain categories. And we're excited to do it in more skilled categories. So I, you know, I don't want to. I don't want to lean into lines in the sand other than to say we're focused on the long-term and we're focused on what's right for the customer, what's right for the pro. We know that TAM is huge, and we're more confident than ever before that we're getting towards the right product.

Thanks. Our next question will be from Ross Sandler at Barclays.

Thanks, Mark, and welcome to the call. Joey, just If we look past Care.com and Mosaic in emerging and other, what are the next, like, set of brands that you're most excited about that are in that group? And then what's the bull case on those up-and-coming brands? And then going back to Investopedia, so given the huge uptick that we've seen in just – interest around retail trading and crypto and all these new areas, Robinhood, et cetera. Is there more that you guys can do in that business to tap into that? You have like a lot of kind of greenfield how-to videos and definitions and stuff like that, but is there other things that you've thought about that could tap into that growing retail trading group? And is Investopedia a material part of DotDash at this point? Like where does it stand relative to the 300-odd million that you're going to do in that segment this year?

Sure. So on emerging, the next tier after Care and Mosaic is – what we've called the future of work. And we have two businesses in that area, both tiny, but both growing very nicely. And both still unproven. One's called Blue Crew. The other is called Vivian. It used to be called Nurse Fly. We changed the name to Vivian. The concept of both of those businesses is that matching employers with employees is a thing that can be done meaningfully better with software over time, and that in a number of categories, qualifications for a job are binaries. And so the historic tools for that, resumes and lists and interviews and things like that, are basically not that valuable. And what would be more valuable is software and data. So somebody's ability to show up, ability to show up on time, ability to lift a box or lift a certain weight or operate a certain machine or things like that, where qualifications are binary or the qualifications can be taught within, you know, 20 minutes or something like that. And in those things, we think that software is better. And we're certain that software is better. So every customer we go to now in those businesses, when they start using our solution, they love using our solution. And they immediately can recognize the difference between our solution and what existed previously in the market. And that's leading to very high growth rates in those businesses. Now, I say it's not proven as a business yet because it's still expensive for us to deliver that product, and we're still net negative investing in both of those businesses, both in terms of fixed costs and in the sort of contribution margin, you could argue, in either of them is probably positive, but there's scenarios where it could be negative. And so... We now need to continue to scale those businesses and deliver those businesses. And they're each in multi-hundred billion dollar categories with incumbents that I think leave plenty of room for new competition. And we're seeing also that some other players are now getting funding in there. We know one just raised a lot of money at a big valuation, and we know another one is trying to raise a lot of money at a big valuation. Sorry, three of them I can think of now, which I think is fantastic for the category because that's more people out there educating the customer on what's possible. That's more people out there pushing the limits of innovation and challenging each other on innovation. I think that's very good. And we're pretty excited about that. But, again, these are very small businesses today with lots to prove. And that's an important place for us to be playing. The other thing in there in emerging and other that I'll mention is what we call NUCO, which is our new incubator. And we're building new businesses there. We've got two businesses that are real-ish, meaning we've now got a product that's out in the market that's being tested and And we're going to continue to build more. And I've said this before, but I think we're going to focus that from here on businesses that use the blockchain to build the customer experience. The work we've done around blockchain is very clear that it's going to transform many categories, just make it more efficient to operate or interact with customers. with different sides of a marketplace. And we're therefore really excited about investing in those things. And we think about the last incubator we had was focused on mobile when mobile apps became a thing that we've launched an incubator very early in that called Hatch, which was entirely focused on building mobile apps. And that's where Tinder came out of. And I think we're going to focus on a blockchain and we'll see what comes out of there. Our first two businesses have nothing to do with the blockchain, but they're pretty interesting and we'll continue to innovate. Your other question was Investopedia. I think in terms of there's four big segments of .dash, finance, health, lifestyle and beauty. Finance, health and lifestyle are all roughly equivalent and beauty is a little bit smaller than the other three. They're all important categories. I think it's true what you said of Investopedia, I think this is true of others too, is we do have the ability to go deeper and we do have the ability to build real businesses benefiting from some of the trends of people trying to find information. The example you have in Investopedia of retail investors and some of the momentum beyond retail investors I think is really important and has been fantastic for Investopedia for sure. And I think that there are similar trends that we can point to around beauty, for example, and people taking control of their beauty and the – slicing beauty into more narrower and narrower products to serve different customers, I think is something that we benefit from in terms of being able to leverage influencers. I think it's something there that we benefit from. In each one of these categories, we absolutely can go deeper. We absolutely can deliver a product to a customer that gives them exactly the information that they're looking for and deliver advertising surrounding that that is very, very qualified for the advertiser, that delivers a customer that's very, very qualified for the advertiser.

Our next question will be from Justin Patterson at KeyBank.

Great. Thank you. One for Joey and one for Oisin. Joey, on Care.com, it's been a unique period with some tailwinds in enterprise and some headwinds elsewhere. How should we think about just what normal growth should look like going forward, as well as the investment level to support that? Then Oisin, I wanted to tackle the Angie rebrand from a different angle, the pros perspective. How were they reacting to the new brand? Was traffic adversely affected? How are you ensuring that we don't have a new capacity problem for them? Thank you.

Thanks, Justin. You're right. It was a tailwind in terms of care. It was a tailwind for Enterprise and a headwind for Oisin. consumer, and I think that the consumer is now coming back. We can see that very clearly. Again, latest COVID data may change all of that, but we can see very clearly daily records on subscribers, new subscribers at Care. In terms of investment, the business is profitable today. I think it will be profitable for a while, forever. It's Hard to say forever because maybe there's an opportunity, but it is. Right now, I think that the level of investment necessary in that business to do the things that we want to do allows us to maintain profitability there. In terms of the growth rate, I don't know, Mark, you want to take that one?

Sure. Sure. Yeah, look, I think we are – again, we're early with our ownership of this business. We've owned it for about a year. We think that the TAM here is $300 billion. The penetration is less than 1%. So we think there's a long runway here. You know, you look at other marketplace businesses, you know, north of 20%. That is potentially a long-term number here. We're nowhere near where we want to be in terms of our penetration and product and investment. So we've got a long way to go. But we think and we've said that this is a TAM that is growing, and the opportunity here could longer term be as big as what we think we have with Angie. But we've got a lot of work to do to get there. So it's a little hard to give long-term revenue and long-term margins given our earlier stage. But you look at other marketplace businesses, you can get a sense.

So just to talk about the rebrand and pros, we started the rebrand by moving Angie's List to Angie for both ad pros and Angie's List customers. More recently, in the last month and a half, we flipped over home advisor to read as Angie leads for pros. So the pros now are either Angie ad customers or Angie lead customers. There's a few things going on there. One is the pro sentiment towards Angie is better than the pro sentiment towards home advisor. So that's a net win right out of the gate where pros feel a they feel better about the Angie brand than the HomeAdvisor brand in terms of their association with the brand. The second is we've got overlap of customers who are Angie Ad Pros and Angie Lead Pros. For the first time, we've invested in having a dedicated point of contact for those pros. So they now each have a single point of contact to help them manage their accounts on both ads and leads, which sounds obvious but is a step forward for them. So they go to one place when they've got questions, concerns. And then the third is the third opportunity, I'd say, is we've obviously got different sales forces selling those different products. And how we think about being more integrated on that is a pretty significant opportunity. There's a lot of product work to go on to make it happen. where today you still do have two distinct accounts, two different sets of customers that come to you or leads that come to you through those accounts. But I think now that we've got them under the same name effectively, there is a pretty big opportunity to integrate those more tightly before we take on the next phase, which would be getting those same pros access to energy services jobs more. in the future as well. So I think we're on a path here. It's clear we're making incremental steps. To me, I feel very impatient on any given day or week or month that we're not moving fast enough to get to a place where where we've got it all in a single place where all our pros can access all our products in a single location. But I know that the team is doing phenomenal work to pull that together. And, you know, the fact that we rebranded at a pretty fast clip on the pro side on ads and leads just speaks to our commitment to do this. We know it's the right thing to do. We know it's going to ultimately lead to better ROI for our pros and a better experience overall. I think we're getting through the pro rebrand, and I think there's a bunch of upside. And as you know, SP retention is a significant lever for the business. And if we move that through a combination of better pricing, better brand connection, and ultimately a better product as well. So there are things we're doing below the surface to actually make the product and the experience better for the pros as we move them to this new brand. We could see upside for them.

Great. Our next question will be from Brian Fitzgerald at Wells Fargo.

Thanks, guys. Maybe two quick ones. With respect to the rebranding effort, maybe from an SEM SEO perspective, as we reopen, there's been heightened demand for kind of bottom-of-funnel performant ad formats to get ahead of that resurgent consumer spend. Sounds like you may be seeing this kind of in .dash, too. Was that impacting the speed or the efficacy with which you guys roll out your kind of exercise rebrand playbook? And then the second one was just on key. Fifty percent of new customers opting in, getting a discount on the first job, that's a great deal. What's the impact that's having on repeat rates and how are repeat rates performing versus what you thought they would going into the key rollout?

Yeah, I'll take the key and work backwards from there. And perhaps, Joe, you can chime in on the SDM part as well. So just to hit the key part, we released the data in a number of different segments. So we compared it to service requests, someone who just does services, someone who does services as a key member, and then key member with the app who starts with services. We're continuing to roll that out. Obviously, at 140,000 members now, we released the data the first time in the last letter that showed a significant outperformance. It's degraded slightly, but it is still incredibly strong in terms of the gap between service requests a service request customer and someone who is at the opposite end of the spectrum. So it is a 3x delta. So if you think about the person who downloads the mobile app, engages with Angie Key and has a booking, that's a 3x delta, which is really, really strong. And we're excited to continue to roll that out and get to scale on that. And, again, I think it's super early on Key. It's super early in terms of – in terms of like the value profits still pay to save. I think I alluded to some of the things early on that we could take on with key, but it really should be the beginning of a relationship with, uh, with the homeowner around how we help them manage their home. And the fact that they've invested in us, uh, by buying a key membership should give us confidence to go and invest in them and get to know their home and think about what other things you can do, uh, in, in terms of, um, In terms of SEM and SEO, I think we're seeing more volatility in terms of algorithm updates on SEO, which is definitely having an impact in terms of how people are thinking about SEM and how they're Buying an SEM, the biggest thing, as you know, that we're seeing is as we've taken dollars out of HomeAdvisor's TV brand, what we've seen in terms of click-through rates has changed what we've done as we've decided to push further into the Angie brand.

Yeah, I'm not sure I totally understand the question on SEM, but part of it was did – Did any of this impact the timing when we chose to roll things out? The answer is no, although we did view it as convenient that a time when we were at risk of reducing our demand funnel, meaning in the brand change and the domain change, reducing our brand funnel, that that was a convenient time to do it on account of there being less supply available given the supply crunch in the market. So it would be less impactful on the business overall. That was one factor. The other thing, which again, maybe your question may not be, but I think in general, when we look at SEM and we look at the way that the market is and the market share of I think it is safe to assume generally that the cost of SEM in all categories for all businesses continues to go up over time because that's the way it works when you have that kind of market share concentrated. I think that's not – it's not ideal for the world, but I do think that – As that happens, what you see happening is the price goes up, that gets passed through the constituents that play in the search marketplaces, and then that ultimately gets passed through to the customer, and that's the reality of that world. Yep.

Thanks, guys. Joey, that's exactly what I was looking for. Appreciate it. Okay. Thanks, Brian.

So I think we have time for one more quick one. So let's go to Nick Jones from Citi.

Great. Thanks for taking the questions. I guess just one is, you know, there's quite a bit of confusion around what the impact of the Delta variant is going to be. I mean, how are you thinking about the risk kind of going into the rest of the year if people kind of pull back from letting people into their homes? And then maybe second on Angie Key, I guess more point, is this driving more proactive requests in its early days? Thanks.

Yeah, so as you pointed out, I think it's really hard to predict what's going to happen with the Delta variant. What we've observed thus far is when people are in their homes, they lean into spending more on their homes. And it has been a huge boon for the services side of that business. I think, as we've all observed, it's left us challenged on the supply side. But I think there's... Hope that we'll see continued – hope that we will see us come out of this huge imbalance of supply and demand over the next few quarters. In terms of Angie Key, yeah, we are seeing increased both bookings and service requests on an incremental basis from the users who become Angie Key members. So they both – They both create more bookings for Angie services, and they submit more service requests overall. And, again, that's amplified further when we get those users to download or get those homeowners to download the mobile app, which is a really important driver for us or a really important push for us as we think about the rest of the year. And as we think about 22, we're really thinking about how to make sure we get more of our homeowners into that segment of key members who have our mobile app.

All right, we've run over time here. Really appreciate everyone spending their morning with us and look forward to talking to you next quarter. So long.