IAC Inc.

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 IAC's and Angie Inc.' 's first 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. Please also refer to our press releases, the IAC shareholder letter, and again to the investor relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures.

Good morning. I'm Chris Halpin, CFO of Interactive Corp, and I'd like to welcome you to our first quarter earnings call. I'm joined here today by Joey Levin, CEO of IAC, by O'Sheen Hanrahan, CEO of Angie, and Neil Vogel, CEO of Dot Dash Meredith. With that, I will turn it over to Joey.

Good morning, everybody. Thank you for joining us in what is a very turbulent, broader environment. There's a lot of talk right now around forces outside our control, inflation and war and a very volatile market. I want to focus today on forces that are inside our control. And the two biggest things impacting IAC inside our control are Dash Meredith, which is led by Neil Vogel, who you'll hear from today, and Angie, led by Ashene, who you'll hear from today. I think what you'll hear from both of them is a tremendous amount of confidence in where we are going in our business. And both are at pivotal group points in the business. Dot Dash Meredith is still new, having completed the acquisition only recently and deep in the midst of the integration. So there's a lot to report on that front. And Angie, we're coming off of a 15 month period where we really took on every project we could as an organization in terms of making changes to grow the business. And we have a lot to show for that and we'll talk about that over the course of the call. And the last piece which is relevant in this environment is, what we're going to do at IAC with our cash and with our liquidity position. And we talked about that a little bit in the letter. We view this as a tremendous opportunity for us, and we've been waiting for opportunities like this for many, many years now, and hopefully we'll be wise enough to take advantage of it while it lasts. So let's go to questions.

Our first question is from Ross Sandler at Barclays.

Hey guys, morning everybody. Neil, just wanted to start with your comments on Meredith and dig a little deeper. You mentioned in the letter that health.com is going through its overhaul and there was a statement about revenue getting back to normal after just one week. That's a lot faster than the timeline that you guys have explained on kind of your legacy dot dash vertical sites when you did those overhauls. So can you just elaborate a little bit more on what's going on with that and what's making the, you know, the revenue recovery much quicker at the Meredith properties. And the second question is just for Joey kind of high level on what you just ended with, but it seems like you'll have pick of the litter as far as private consumer internet companies and, to choose from in the coming quarters. I guess just can you bring us under the hood and what are the internal groups I see getting ready for right now? Which marketplace categories look the most attractive or are you most focused on? Or does it just kind of come down to the valuations that you think might present themselves? That's it guys.

Thanks for the question. As per Health.com, typically what we say is when we say we migrate something, it means we take something and we put it on our tech stack and our ad stack. And as you know, and we've talked about this many, many times, boasts significantly faster sites, significantly fewer ads, and significantly better content. And when we make this migration, we pretty much solve the first two problems. We make the sites much faster and make the ads much more performant. I think we said in the letter, the site's about five times faster, and there are about 30% fewer ads and a better type of ad. What has typically happened in the past for us is it takes some time. It takes some time for the markets to realize that the site is better, and that there's fewer ads, and that these ads perform better. And a few stats I'll give you today. The click-through rate, which isn't always the measure of ad performance, but it's an easy baseline here. The click-through rate on the ads on health.com are up 60% since we did the migration. and ad rates in the programmatic market, sort of the programmatic open exchanges, are up about 50%. And that's a 50% on average. Some of the ads are up more, some of the ads are up less, because the slots are a little bit different, so it's not a perfect comp. But what we've seen is the combination of fewer ads, higher prices, faster sites has gotten us to a place where We're willing to sacrifice revenue to make these changes We have caught up in in about a week and that's materially faster than what we've done on Our other brands in the past and I think there's two real reasons why this works The first one is we're still up there this that we used to be we sort of like had to figure this thing out This is our 14 15 16. I'm not even sure vibration So we really know what we're doing and how to set these things up and it's made it really this up so we can do it again and again and again. And I think the second thing which we had hoped, which is not a surprise but more of a confirmation, is help.com is a really strong brand and a really known brand and a really strong domain on the web, stronger than things we've dealt with in the past. So we think that the markets have been much, much more responsive because the domain is much better than sort of like when we did eventually URL or something. out of about.com, which bodes very well for brands like Better Homes and Gardens and Southern Living and people at the brands that are upcoming. Because frankly, help is better than many of the brands that we had at DotDash, but it's not nearly as good as some of the other brands we have in America. So we're pretty excited about this. Again, this is just a starting point. Getting back to neutral is not the goal. I mean, the goal is to, this migration will drive audience growth, it will drive revenue per visit growth on the ad side, it will unlock commerce, it will unlock all the content tools that we have. So it's really just the beginning, but for us, We're celebrating this internally. This is a material proof point that our thesis for buying Meredith, we feel very good about and we're definitely on the right track.

In terms of opportunities for IAC and where we're prioritizing our capital, I'll start with, I guess, the private markets. I don't actually think there will be opportunities in the private markets first. We have a list of public companies that we look at that we think are compelling products in big markets with great brands that that we think are interesting, and we'll keep looking at those. And that's generally, I think, where there's more opportunities. Private markets, as you know, unless a business is out of capital, they don't have to embrace what is the current market reality. they can take some time to do that. And I don't think that those are likely to be the nearest opportunities, again, unless companies run out of cash. But one thing that a lot of these companies did over the last couple of years, which was very smart, was make sure they have enough cash so that they don't have to confront the market that we're in right now. Who knows? There could be private opportunities. There could be public opportunities. We just see generally that seems to be more opportunities in the public markets. And then how we're prioritizing that, I'm not going to talk about specific companies or even specific categories, although you're right that we like marketplace businesses and we think we generally know how to evaluate and operate those businesses. when we talk about capital allocation we always think about our existing businesses and uh new businesses so i think for our two biggest existing businesses dash meredith and angie there's a lot going on right now we have a big integration underway at uh at dash meredith right now and so i think that's not uh that's not likely to be a big use of acquisition currency. And Angie, we're also in the midst of big transformations. I think that one's also not likely. Again, anything's possible. If we find an opportunity there, we'll take it. But I think right now, those are less likely. And we'll do small stuff throughout with the smaller businesses, but probably the most likely thing right now for us to be looking at and prioritizing is new opportunities. And again, as we mentioned this in the letter, it's always true, we're gonna evaluate that against share repurchases. And that's a very clear map that we can do and that we do regularly and won't stop doing.

Great. Our next question will be from John Blackledge at Cowen.

Great. Thanks. Two questions. One for Joey. Joey, I thought the tone from the beginning of the shareholder letter for both DotDash Meredith and Angie seemed pretty bullish in terms of profitability going forward. How confident are you in kind of ramping profits at the two segments through the rest of the year? And should we think about $450 million in EBITDA at Dr. X Meredith for 2023 as a bogey that you guys still believe in? And then secondly, this could be for Joey or Chris, and Joey just kind of referenced it, but IAC has 8 million shares remaining in its buyback authorization. Angie has 15 million. Just given where the stocks are trading right now, how should we think about buyback for either IAC and or Angie through the rest of the year. Thank you.

Sure, on profitability, I'll let Chris weigh in on this too. We feel very confident in everything that we said. That doesn't mean that we're rushing back to peak profits at Angie right now, but it does mean that we are improving from here and we're past peak investment. And dot dash Meredith, we've learned enough things in the few months that we've owned it that we feel good about the adjusted EBITDA that we think we can deliver this year. And same is true for the $450 million. The progress that we've made over the course of 2022 so far and we expect to make over the rest of 2022 gives us a lot of confidence in what we've said we think we can do by 2023. I think that there's really sort of like any business, two factors, price and volume. I think at dot dash Meredith, I think on price, we've made the progress. We have the evidence of the progress that we need on price. Macro headwinds could impact us on price, but I think that we have the pieces in place to deliver on price. And I think that the early stuff on traffic is also compelling, but traffic is somewhat outside of our control. I mean, we're going to create great content. We're going to create the best content in the category. We're going to have the freshest content, the fastest sites, the fewest ads, and that ought to lead to traffic. But that's the one that is somewhat outside of our control because a lot of that traffic comes from third parties. And That's the one area that probably is left to prove. But as you say, the early evidence in terms of things we've done with our traffic, things we've done with the sites and how traffic has responded to that has been very, very encouraging. Oh, yeah, buyback. Thank you. You want to add anything on profitability? Go ahead. OK. On share repurchases, Look, as we said, we always consider share repurchases. It is throughout every market. It's something that we evaluate. When we look right now, it's a pretty interesting situation, one that we haven't seen in a long time, which is I think yesterday IAC's market cap was around $6 billion, and we have about $3.5 billion of public securities between Angie and MGM. that leaves $2.5 or $3 billion for Dot Dash Meredith, CARE, Turo, and everything else that generates cash. That is a, well, let's just do it on Dot Dash Meredith alone. If we say two and a half or three billion for everything else and that business generates 300 million of EBITDA this year, that's a multiple that we're very comfortable with. And Care, which is doing great and is a phenomenal brand in a very large category. And Turo, which is doing unbelievably well for free. And let's say everything else offsets, that's a really compelling equation. And that's one that we are looking at. And the good news is we have a lot of securities to... evaluate. So there's IAC, there's Angie, there's MGM. All of these things are in the consideration set. And all of these things are businesses we understand, of course, exceptionally well. And all these things are ones we're going to evaluate as things progress from here.

Thank you, Joey. And with respect to dot dash Meredith profit scale, there are a number of factors that throughout the year come together to explain the step up north of 300 million of EBITDA. The first is, and we messaged this in the last call, the first quarter was going to be an extremely tough comp. That was driven by COVID factors a year ago when everyone was locked down pre-vaccines. as well as a variety of movements within the Dot Dash Meredith portfolio and demand shifts. You can see in the April numbers on the digital revenue side that we have already come out of the year of the March, and that builds confidence for the rest of the year. The other point in your reference to the health.com migration, you know, we'll talk about a few different green shoots from the combination and the status of the business. That was a major one was what happens the first time that we move a Meredith property over to the dot dash platform so that we can do the dot dash playbook on it. The positivity we've seen there gives us considerable confidence for where we go from here, both in terms of advertising performance, site speeds, um traffic e-commerce all of those uh growth engines are available once we get the property onto the dot dash platform and that will drive performance through the rest of the year the other factor that is important is the marginal profit uh on a digital dollar is quite high And that's the nature of gross margin and profitability scaling on the fixed costs on the digital side. And then finally, you'll hear some discussion from Neil on Salesforce performance and growth there. So when you look across, it is a back-end weighted plan. We've always said that, but the margin scale on digital will happen throughout the year. We expect print and corporate costs to be in the same neighborhood, and that's how we have confidence to get above $300 million for the year on the EBITDA side of DDM.

Thank you.

Our next question will be from Corey Carpenter at JP Morgan.

Thanks for the question. Um, or she will be great to start off just with the recap of how the quarter went versus your expectations. And then looking forward, is there any change to how you're thinking about the growth opportunity for the rest of the year? And then, uh, Chris, maybe two questions for you. Just Angie moving pack past peak investment. Is this happening naturally? Or is this more of a decision that you guys are proactively making to pull back on spin and anything to call out on the April comps? Thanks.

Thanks, Corey. So in terms of the performance in Q1, we started Q1, obviously, with a tough situation with Omicron. And then the comps were particularly challenging with last year, which we knew was going to be the case. Where, if you recall, last year we had incredible consumer demand across pretty much every category with stimulus checks and everything else going on. As we look back on Q1, we're very happy to be coming out of it with a really strong position in April. The overall ads and leads business becomes much better from here. As we think about the services business, we've got, as we pointed out in the letter, we've got the good fortune of being past peak investment. That was by design when we created the plan. the q4 of last year march was always the uh the high point of investment in angie services As we go forward from here, we see significant increases in gross profit dollars coming from services, which helps to reduce the drag that services has on the overall business. And ultimately, services gets to profitability. The growth that we see in gross profit dollars coming from services comes from a combo of an increase in take rate, better optimization on variable costs, particularly around supporting the bookings. And then in addition to that, what we see is an increase in engagement from pros in the ad business. So the growth that we see in the ad business for the back half of the year, we expect that to accelerate. And that's driven by some of the macro factors that we've got. So the overall ads and leads business benefits from reduced consumer demand. into that business, where as pros have less and less work, as their order book runs down, we know that they've had the most work they frankly ever had over the last year. As the order book runs down slightly, those pros are more engaged in the platform. We see that in terms of new pros signing up, in terms of Salesforce productivity, We see it in terms of pro spend. We see it in terms of the monetization of the transactions that we have on the platform. So we feel very good about organic growth and services accelerating. We feel very good about our highest margin business ads and leads growing through the back half of the year. And we feel very good about growing profitability overall.

And then, Corey, just building on O'Sheen's point, I think this was always the plan that peak investment would be in March. Fixed costs scale up. From an EBITDA perspective, fixed costs scale up. Seasonally, the first quarter is lower on a revenue basis. And as the services revenue grow organically and seasonally throughout the year, gross profit drops down on a relatively static fixed cost base and that reverses the EBITDA losses. I'd say one other point, we have made a point in the and we'll do so going forward to talk more about gross profit at the services business and provide more insight to investors on relative profitability and over time how ads and leads profits will flow through and also how services profits will roll through as Joey said in the letter, lower margin product, but growing rapidly and bigger projects. So larger whole dollar gross profits.

implement.

And then in the April metrics, a few points we would point out. Well, first off, there's nothing we'd flag right now to think about in the May and June timeframe. Pretty smooth comparables, like to like year over year, different than March and April. Two things we'd point out, though, which tie to the narrative and to our message of of greater confidence. Our two largest profit generators across the portfolio at IAC, ads and leads at ANG and digital revenue at Dot Dash, both showed stability in April off of really March bottoms. And that confirms what we messaged in the prior call that it's a tough March comp for both businesses, fairly COVID related in both circumstances, and that we are on the other side of that. So you saw basic flatness in ads and leads revenue year over year and in digital revenue. And we expect Q2 Dot Dash will still be flattish. That's our guidance as we work through the replatforming and these other specific factors to to what we're doing in the integration. But sets us up for back end growth and returning to that 15 to 20 percent digital target at Dot Dash. And then Angie, as we have stability in ads and leads, that is the profit engine, as she said, and then organic services growth in the back end and driving gross profit dollars there. So those would be the main things we flag in the April metrics.

Our next question will be from Justin Patterson at KeyBank.

Great. Thank you very much. Two if I can. Neil, as you've executed on the integration and engaged with advertisers, how has the tone of your conversations changed and how should we think about that just building up in Salesforce productivity into the back half of the year? And then for Oisin, how do you think about rising interest rates impacting your business? Could this actually be a tailwind as consumers deal with affordability issues and start doing more projects at home? Thank you.

Thanks, Justin. So on the sales side, we talked a little bit in the letter and I talked a little bit more about the integration of the two teams, which is essentially complete. And we have the teams structured vertically, brand focused, feel really great. But I think the word I would describe it with is there's a lot of excitement. There's excitement internally, and there's a lot of excitement from advertisers. Because we, for the first time, can now bring something that hasn't been brought to them before, which is intent-based targeting, contextual targeting at a scale that's never been able to be done before. And people really like Dot Dash. They like our historical hustle. They really like all the merit of brands and the combination is proving really powerful. I've been in a lot of these meetings myself with some of the biggest agencies, some of our biggest clients, and I can say almost without exception, the going forward commitments, some of them are hard commitments, some of them are softer commitments, one plus one is more than two. And that is probably the most exciting thing. And I think we're going to see some real growth from the biggest agencies and the biggest partners when we bring our energy, our performance, showing what performance looks like as we migrate. And you combine that with some of the Meredith brands that are, frankly, at a level we haven't had before. When you can do it at Better Homes and Gardens, and you can do it at People, and you can do it at Allrecipes, and you can do it at Food & Wine, people get very, very, very excited. And we are exclusively focused on brands and selling brands and selling performance. And the thing that we keep hearing, again, I'll say it again, People are rooting for us. And what I think we can become, we're not there yet, but we can be. We have the scale and performance to be a viable alternative to some of the platforms people have been putting money that they may or may not want to do that anymore. All of our content is safe. We create it all. We're not news. We're not feeds. We're not UGC with the exception of bedded recipes at a few of our sites. So it's a whole new thing. And educating the market and bringing and seizing on this excitement is our job now. So we feel really good, kind of like exceptionally good with where we are now. This is hard. Bringing it together is hard. It's going to take a little bit of time. But in the medium to long term, I think we feel really good about where we are.

in terms of interest rates and the macro environment, the biggest advantage or the biggest positive from what's going on is a less dislocated relationship between supply and demand. So the last two years where COVID drove Exceptional demand for home services created an incredibly challenging environment to sell advertising products, performance marketing products to SPs. Our average plumber, painter, carpenter, remodeler had more work than they could handle. And throughout that period, we kept the Angie performance marketing business, the ads and leads business relatively stable. The biggest macro impact is as consumer demand normalizes, as the labor market perhaps normalizes even just a little bit, we expect to see that relationship between supply and demand give us significant tailwinds. business. We're already starting to see that in terms of softening consumer demand. We're already starting to see that in terms of higher Salesforce productivity, and we're already starting to see it in terms of pro engagement. You put that together with the challenging comps from last year, and we expect to see the ads and leads business become more relevant in the current macroeconomic environment. add on top of that, as pros need us more, we do have pricing optimization as that relationship between demand and supply becomes a little more normal. So overall, we think the macroeconomic environment is more favorable to the ads and leads business than the incredible dislocation we've had over the last 24 months.

Our next question is from Jason Helfstein at Oppenheimer.

Thanks. Joey, I'll ask you about gaming. Obviously, you highlighted a very pressing investment in MGM. I think some of that investment had to do with your views on interactivity and sports betting and some of the other emerging areas in gaming. Just maybe talk. We've seen kind of values really depressed now within online sports betting. So maybe talk about would any investments in that area be done through MGM or other ways you're thinking about perhaps investments outside of MGM or just raw thoughts on gaming right now. Thanks.

So both inside of MGM and outside of MGM is interesting for us. We've learned a lot since we've been there. I'd say that the gaming business, the online gaming business overall, which is both sports betting and iGaming, has outperformed our expectations relative to when we came in. It's grown really tremendously, and that growth is going to continue for a long time. The hard part, I'm sure, as you know, has been the margins. And it's a wildly competitive space. There's a lot of people who feel like they there's a lot of companies who feel like they need to win there and own that. And so it's a category where you have multiple players losing half a billion dollars a year or somewhere in that neighborhood, which is a very hard thing to do. One thing that that's a clear learning in that is that gaming is certainly right now, at least, is a much better business than sports betting. even though sports betting is in a much bigger market. And we take those learnings, and hopefully we can do more within – hopefully there's more to do within MGM. And you saw MGM just is in an announcement about buying a – global gaming company in Europe. And we're also going to look and see what we can find. But everything we do, we'll first consider through MGM. And we have a very open dialogue with them on everything that MGM is looking at and everything that we're looking at. And we're highly coordinated there. And the ideal move generally would be to do things through MGM. But But there very well may be opportunities for us outside there to leverage some of the learnings we've had there where it makes sense for us to do something on our own. And again, if we did that, it would only be with MGM's blessing.

Thanks. Our next question is from Brian Fitzgerald at Wells Fargo.

Thanks, guys. Two quick follow-ups. On doc-meredith and the recovery speed there and the trajectory at health.com, What are the drivers by which advertisers kind of pick up on the benefits of reduced clutter? Does that come through in the click-through conversions, brand lift studies, or is it partly a matter of Salesforce communications? Second one was a follow-up on Angie. The zero match SR rate has been ticking down over the past few quarters as you continue to scale sales. and perhaps as pros have more available capacity like you talked about. Any thoughts on where you think that zero match rate can go? And as you continue to make improvements and effectively fulfill demand, do you expect SEM, SEO benefits from that closure?

If you want to go first, my answer is fairly quick. Thanks, Brian. So it's sort of the clients see this in a phased way. The minute you make the change, you're sending very different signals into programmatic marketplaces. And as you can see by what happened to help.com, those respond nearly immediately. And again, in a week, we've seen great improvement. And we would expect, just as we refine this, for that to continually improve. Now, those signals get back to clients. And that starts to reflect in the premium deals that are running on those things. And those take a little bit longer, there's a little lag, there's less instant. And then ultimately, they are reflected in things like brand lift studies. When a page has three highly performing ads for a client that does creativity and creative things that we know that work on our sites, that results in pretty much any metric you want to measure your advertising on is going to be better. And we've seen this at Dot Dash repeatedly. If your metric is a brand look metric because you're launching a new car line and you want to drive the new brand or you want to drive test drives, that's one thing. If your metric is CTI, that's another thing. We are going to hit on all of them. They don't all happen immediately. Sort of the math marketplace stuff happens immediately and then the rest of it trickles out over time. And a lot of it is educating clients. Our sales team going out and educating clients how much better we perform than others and how our performance is. And a little bit is for clients to understand that these units and our ad offerings are actually more valuable and something that they should pay more for. And that takes a little bit longer, but we feel very strongly that we are on the path. The number one proof point is once you start to perform and the programmatic markets move, we know exactly what happens next because we've seen it 14 or 15 times.

On the zero match rate at Angie or the accept rate at Angie and how it impacts SEM and SEO, you're absolutely right. So we now have the richest product portfolio out there between ads, leads, and services. there's nobody with a product portfolio that looks anything like this so we are more attractive than ever on angie seo in particular and we see that coming through in terms of the performance of seo on angie which feel really, really good about the direction that's taking. So you're absolutely right that having the combo of those things gives us an advantage on SEO. On SEM, it also gives us an advantage because by having ads lead services to monetize particular service requests, particular services, and particular geos, it makes it more predictable for our SEM bidders to know when and where and for which categories to bid. So what you would ultimately see is us buying fewer us. So the more predictable our supply is, the more predictable our offerings are because we have more offerings, the easier it is for our algorithms to decide, yes, it's worth bidding on this particular click. So that would reduce our long-term tendency to buy service requests that we're unable to monetize. And you should be able to see our transactions that we are monetizing start to increase. One call out on that is that our monetized transactions don't take account of the ad monetization yet, but it is something that we need to look at. Thanks, guys.

Our next question will be from Eric Sheridan at Goldman Sachs.

Thanks so much for taking the question. Guys, if I could just take a step back and think about the capital allocation inside the firm. You've got these opportunities at Dot Dash Meredith and Angie and then emerging opportunities. Is there any different sense of where you could accelerate some of your efforts over the medium to longer term and where you're trying to go for the business? uh against allocating capital behind it or is it purely down to execution and then can we expand that conversation into areas like care uh how you see operations versus the application of capital capital to speed up the opportunity set thanks sure there's a lot in that one uh try and take

maybe piece by piece. The businesses where we are, we like to be investing in every business. I'd say that's probably true everywhere except search where for a while now we've been in more profit maximization mode than we have been in growth mode. And I think that continues there. Everywhere else, it's our responsibility to balance the short-term and the long-term, which means we're reinvesting some portion for growth and some portion to profit. As one of our colleagues used to say, eat while you dream. And it's easy to just do one or the other, you know, focus on long term or short term. And our job is to balance both. I think at Angie you've seen over the last little while, we probably went to the most extreme we've gone historically in terms of long-term and investing. And you'll see that now that we're past the peak period, that sort of balances out, comes to a more natural balance. But in every one of our businesses, we want to be doing both. We are not at profit maximization mode in anything, really, besides search. Of course, in emerging and others, some of those businesses are losing money. So we're obviously investing, trying to build a business there. But care, profitable. But we are definitely reinvesting a portion of the profits in that business to drive growth and expect to continue that for a while. And again, I think that you'll find that's true. across most of our businesses.

You want to add to that? Yeah, no, just to agree and to build on it, in our capital allocation, to Joey's point, every dollar, whether invested in a transaction in the form of M&A or follow-on investment or invested in incremental operating expense or capital for a growth initiative or incremental marketing investment, That is a capital allocation decision. At the end of the day, IAC has a pool of capital that flows across it and into new opportunities to maximize value for shareholders. So in this environment where there are higher discount rates, it's good because the valuations come down, capital is dearer. Our strong balance sheet is that much more of a competitive advantage. And at the same time, You continue to optimize your portfolio of investments within the operating side of companies for the right return in this environment. We've talked about growing opportunities at care in the letter. We believe those new initiatives will be highly accretive. DotDash and Angie have large operational elements, one coming out of a large transaction that was done last fall in Meredith. But there are major operational activities that are generating value for shareholders, and that's the predominance of the focus. And then we look at, as Joey led off, we look at our own share price and Angie's and others and think about capital allocation opportunities there. So it is a full analysis really across the potential home of any dollar.

Our next question will be from Tom Champion at Piper Sandler.

Great. Good morning. Oshina, I was wondering if you could talk a little bit about the monthly metrics and the service requests down double digits the last three months. What's driving this dynamic here? And maybe you could tie this to the comments on ads and leads revenue that suggests stabilization. And then maybe a question for for Chris, just to follow up on on care.com. The letter refers to some longer term or some some newer opportunities outside of the the longer term legacy opportunities in nanny care and in long term care that have emerged post pandemic. I was curious if you could flush those out a little bit. What are you what are you seeing more recently?

Sure, thanks for the question. So in terms of the service request being down, there's two primary drivers of that. The first is just, as we talked about, the incredibly tough comps from this time last year. when service requests and the overall activity on the home was at all-time highs and perhaps irrational highs as people were stuck at home. So that created an incredibly tough comp. And then the second is the Angie rebrand and the shift away from Angie's List to Angie, which we've largely recovered from on Angie and are back to very strong growth in the Angie domain. However, we do also have the fact that we shifted from our legacy home advisor domain and something we were putting consumer marketing dollars behind and by reducing our marketing in that, it has led to a drag in service requests. Overall, we are seeing greater monetization benefit from the service requests that we do have. This means that we're more likely to match the service requests that do come in than we've ever been. So our likelihood to match you with a pro and make money from that transaction is the highest it's ever been. And on the one hand, you could say, well, don't you want every service request? On the other hand, we want service requests that we're actually going to be able to fulfill. Of Of course, in an ideal world, yes, we would want every service request forever. However, if we're going to have service requests where we're not going to deliver a great experience for the homeowner and we're going to pay for that, then we're going to be in a double whammy situation where we pay for a service request and we disappoint a homeowner. So we are being more diligent and more responsible than ever before in terms of thinking about how we buy service requests, how we market and making sure that when we are marketing and you see that in the zero accept rate, you see it in the rate of monetization, we are more likely to monetize these transactions. So that's how we're thinking about it. Obviously, over the long term, we do need to make sure that we get back to get back to service request growth. And ultimately, we do expect that

to happen as we lap all these things and uh and we get to a place where we're monetizing a greater percentage than ever before and we uh we will ultimately get back to service request growth uh thanks roshin and then tom thanks for the question on care um i would i i'd highlight two main elements that were reflected in joey's letter one um are areas that are um that we've had inbound demand to our platform, but we currently aren't able to satisfy those services, things like out of home daycare, senior care, pet services, those types of activities where, you know, I think we said 40% of the inbounds were not able to meet the request. So that's a matter of, we've got the demand, now let's build up the supply and have a healthy two-sided marketplace. And so the expansion there is adding, that provider supply, the matching element, and going from there. The other which we are very excited about, and Joey actually referenced in the last earnings call, is the instant book process. And any of us as a parent, you can quickly see the value in this service, which is a much faster matching of the need for a babysitter or any sort of home care provider in a, as they say, instant book measured in hours to get the provider to your home or apartment. That is an element of developing the product and then developing the liquidity on both sides of the marketplace to meet much faster turnaround times. We are beta in that product and Tim and team are actively ramping it up. We are excited, but that's going to be a rollout. We want to make sure, as you would in any new marketplace innovation, that the product is there, but also you have liquidity on both sides. So we view this as really phase two of care after remediating the historical issues and really building up the core care and enterprise foundation. These are the extensions to grow from here.

Our next question will be from Igal Arunian at Wedbush.

Hey, good morning, guys. I'll start with just the comments on past peak investment and services and your plans to expand into new categories there. Where are you with those plans on the new categories and how does that align with discussions about being past peak investment? And then for Joey, just you hit on Blue Crew and Vivian in the investor letter. We didn't talk about it today. It's clearly one of the strongest areas of the business right now. You just expand on where things are there, kind of where your vision is for where those businesses go in the coming months and years. Thanks.

Again, in services first. So from my perspective, we have had four straight quarters of 100% year over year plus growth in services and below. That includes obviously the anti-roofing THR acquisition. Below that, we have incredibly strong organic growth in services, and we expect that organic growth in services to accelerate through the rest of this year. We've got an incredibly strong backlog in particularly larger projects where we are selling those at a far faster rate. as you expect in a growth environment than we are delivering them. So our backlog is the biggest it's ever been in large projects and roofing and in other remodel categories. So we feel really good about the ongoing growth that we expect to see in services for the back half of the year, just based on that alone. In addition to that, we also have still more places within the product that we can continue to expose services. And we do have optimization in terms of the product flow, in terms of the Q&A flow, in terms of conversion, in terms of job allocation, and how we make that more efficient. In terms of the margin for services, as we said, we've hit peak investment in services in March. That is largely driven by increases in gross profit dollars coming from services. And we saw a significant increase in gross profit dollars even March to April, which again helps us with our drive towards profitability and services. We know that we have significant levers across take rate. We've been doing some of these categories for six, seven, eight years within uh within handy so we have very high confidence levels and i have very high confidence levels in the take rate that we uh that we know that we can get to in some of these categories we know the path to optimize uh some of the variable costs and customer service and operations refunds uh credits uh and and you know redos and refunds etc so we're very aware of the the path that we go on to optimize each of these categories uh and we will balance as has been pointed out, we'll balance this with observation and being incredibly vigilant of what's going on overall in the marketplace. So we're clearly in a more volatile time than we have been historically. Things are less predictable. So we will be incredibly responsive and incredibly diligent in terms of selecting categories and investing more behind categories where we do have gross profit contribution margin contribution dollars coming off those categories and off those verticals. And we will be more judicious about reducing investment in categories where we're not having that success. So overall, we feel incredibly positive, incredibly confident in the growth rate and the organic growth rate of services accelerating for the rest of the year and confident in the path to profitability on it.

Thank you. The only thing I'd add is relative to just the question, category expansion is not a key element of services going forward and relative to being past peak investment. If anything, to Oisin's point, we've identified the job types and categories where margins and momentum are strongest. So it'll be more around perhaps placing greater prioritization on those, but it's We are in a broad set of categories as it is.

Thank you. On Blueco and Vivian, thanks for that question. It is there. So they're actually very different business models, but there's a fundamental thing that they share and take advantage of. The Vivian is in the matching business and which means matching business. employees with employers in particular in nursing but eventually we hope in all health care and blue crew is in the agency model which means we're actually employing the workers in that in that business model but what they both share is a significant evolution which is where we see the future going from sort of job listings static job listings and a very inefficient matching process to a much more dynamic engagement between employer and candidate. And it's probably easiest to understand, although I think it goes well beyond this, it's probably easiest to understand when the job qualifications are binary. So either you are certified as a nurse for the necessary certifications for that particular job or you're not. Or in the case of Blue Crew, either you can lift this amount of weight or you can show up to this place and you can respond to the 20 minutes of training or whatever it might be in that example. When those qualifications are binary, the reality is that all the other stuff that surrounds the hiring process, we've found to be largely inefficient or sometimes bordering on useless, meaning people aren't as good at interviews as they think. And the process that people put around there just slows it down and doesn't actually yield better results. What you find with a platform, and we now are building this data at both Vivian and Blue Crew, is you can know, in fact, with data who can perform jobs well, what their on-time rate is, what their employment history is, what their certifications are, things like that. And you can make that process much more efficient for both the candidate and the employer. And what you can also do is... TAB, allow much more flexibility for for both sides of that marketplace, so it need not fit necessarily in the typical nine to five or 40 hour work week or whatever it was historically. TAB, You can customize that using our tools and people can can indicate what they're interested in and match with employers in that way, and so, when we look at. TAB, Vivian. started in about a $10 billion TAM, which the travel nurse market has now expanded beyond that. And when you get to total healthcare, it becomes multiples of that in terms of healthcare staffing. And on the Blue Crew side started in about, I think, a $30 billion TAM. But again, that can become multiples bigger if we can expand into other categories as we hope. And the key for us is just using that technology, absorbing the data, getting the information the customers on both sides of that to input the data in ways that yield real benefits to them because it can be extended across multiple employers or multiple jobs. As we ingest that data, we can do a better job with matching and we can grow those businesses and both of those businesses continue to grow very nicely and we're pretty optimistic on where we think they can go.

Our next question will be from Brent Thill at Jefferies.

Joey, many investors are asking if the macro headwinds get even stiffer, how do you think the rest of the portfolio fares and what gives a defensive element in a tougher macro tape over the next year?

Sure. Again, we probably have to do it business by business, but we'll start with Dr. Ashmered. We look at what's the last dollars to get cut in a tough environment. And generally, for us as advertisers across all of our businesses and all of our history, the last step to go is the performance. where you can very clearly tie a dollar of spend to a dollar of results. And what we know from our dot dash history is that performs and that performance can be measured very clearly. And we're now in the process of migrating all of Meredith onto the dot dash platform where we can measure and prove or show that performance. And so we think that that is ought to be reasonably well protected. Of course, the harder the environment gets, things start to change, but where we are in that food chain, I think is a very, very strong place simply because our ads perform, which we see in the data and we see in the advertiser retention. We talked a little bit, Ashin already talked a little bit about Angie in that regard, which is the natural hedge on the ads and leads business, which is as demand softens on the consumer side, then interest among service professionals increase almost in sort of direct opposite. And you can see that in our numbers sort of throughout our history, which is the revenue per service requests or accepts per service requests go up as the consumer demand goes down. uh and so we like that adjunct and remember we've talked about this in a few different environments in our history with angie the substantial portion i want to say 60 but somebody here will correct me are non-discretionary jobs and so those happen in any environment that's uh fixing a broken toilet or a broken hvac or a locksmith or whatever it doesn't matter what the economy is doing you got to get those things fixed And so we're somewhat protected in those. In the other, I think care, we haven't really been through a cycle like that with care. It held up fine during the pandemic, but there was all kinds of dynamics unique to that that would have impacted care. And so we'll see in that environment. But again, I think it's sort of a fundamental need, which is people go out, people need childcare, people go to work, people need childcare. And so I think that ought to be reasonably well protected. And those are really the big ones that we think about.

Okay, our next question will be from Brad Erickson at RBC.

Hi, thanks. Just a couple of follow-ups on ads and leads within Angie. Oishin, you mentioned, you know, traffic's still coming back. There are post-brand trends.

Sorry, Brad, you're coming in and out.

You can't hear me. How about now? All good? Yep. All right. So on ads and leads, Oishin, you talked about SEO and SEM and obviously traffic's still coming back. As we look at results for today, would you say that you're over-earning right now there or under-earning? And just I guess how aggressively would you look to spend on marketing on Angie.com once traffic more fully recovers? And then second, uh historically you've said that you know roofing could be sort of like a blueprint for other category expansion you know you acquire you get a company supplier network labor network etc are you saying just curious relative to you mentioned maybe some acquisitions not being on the table there as much are you saying that you're not really exploring those anymore you just don't need to because you have the capacity you need maybe you could just reconcile that a little bit more

Sure. So in terms of where we are with ads and leads and the relative demand and supply, we are still obviously this category by category and vertical by vertical. But in aggregate, we still have more consumer demand than pro supply. So yes, there are certain categories where we would monetize more if we had more consumer demand. However, in aggregate across everything, we still have more consumer demand than pro-supply, which is why an increase in pro-supply or a reduction in consumer demand would be net positive. So we are not yet back to, if you take our peak media spend or broad reach media spend on our legacy brands, HomeAdvisor at its peak, we are not back to that level of broad media spend yet. As the environment evolves, changes, as we continue to see progress on the Angie brand and it continues to make sense for us, we will obviously lean in where it makes sense. In terms of roofing, We're very happy with the roofing investment that we've made. It has allowed us to accelerate into that category. It's growing quite rapidly and we expect the growth in that to continue for the rest of the year. You know, all M&A is, you know, within IAC, and everyone here has spoken to it, is opportunistic. And as we think about the rest of the year, as we think about where the macro environment shakes out, we're going to be more judicious. and more vigilant on how we make those decisions, but it certainly doesn't rule out us identifying a category where we're making great progress and where we identify an asset that makes sense to add to the business.

Last question.

Last question?

No, we're done.

Okay. So with that, we thank you for joining us this morning and look forward to discussing more. Have a good day.

Thank you.

Thanks.