Q1 2021 IAC/Interactivecorp and Angi Inc Joint Earnings Call
When they are trying to take the Thursday Friday afternoon, after hanging out with their grandkids all of them are turning to us okay.
To help grow their business and that's a pretty significant shift we're going to make those two things we're going to help our consumers get the job done and we're going to help our pros grow their business and within all of that we're going after the 500 billion.
500 billion channel.
On the back of that vision on the back of that excitement on the back of that opportunity, we're going to invest we talked about in the letter a couple of different examples when we saw growth.
Different things inside of Vimeo different things inside of Dot dash that caused us to get excited.
And enthusiastic about going all in and that's what we're doing here against the vision for Angi services and the vision for making it very simple to do.
To do tasks and jobs on your home in terms of how that translates since numbers, we talked about of $60 million of investment.
This year and Angi services recall, we invest about $40 million last year and angi services. So on a year over year basis, obviously, that's 'twenty, we've talked about in the letter.
The short term this year investments and financial impact on the rebrand is $40 million and then you'll also see some expenses against SP acquisition SP retention SP engagement in all of the SPP initiatives, sorry service professional initiatives that <unk> talked about we're trying to change that dynamic.
And that ROI dynamic for the service service professional so that'll be a significant investment on a year over year basis to help you with the quarterly cadence around that we did about $23 million of of EBITDA in the first quarter. We think that's about the number for the next the next couple of quarters second third and fourth and then.
We'll revisit obviously, how we think about 2022 as.
As we get closer to 2022, but again on the back of the vision on a back of redefining the Tam on the back of redefining our opportunity. We are looking at single digit margins for this year and in all likelihood single digit margins for next year.
Thanks, Our next question will be from Brent Thill at Jefferies.
Thanks, Good morning, Joey Dot dash accelerated again, 67%.
Instead of the Lennar, it's underappreciated I'm curious if you can walk through of the under appreciated component that <unk> seen and as a follow up of love to hear a little more about care.
And what's the next chapter is there.
Sure.
So.
There's really two.
Big things happening at Dash right now that I think R. R.
Leading to what is the current performance and what I think is sustainable.
Future outperformance relative to other publishing businesses and the reason I say underappreciated is maybe it's our our own in securities, but people don't talk about dash is like they talk about other publishing businesses and that's that's okay, but the thing that that.
Is the two things that are working for the business is one it performs for advertisers. So we've talked about this top 25 advertisers concept in dot dash before.
Think of the top 25 of those people are spending.
In 2021 Q1 of 2021.
Net cohort in aggregate of spending of 110%.
In 2021, when it did in 2020 I think that was like 103% in 2020 to 2019, that's right. The fact that those advertisers are coming back I mean, you just don't typically see that in a publishing business advertiser publisher based because advertisers come in and out based on their budgets and what they are doing but but ours are recurring there.
The content performs.
And the reason of the content performance. It gets to the second point is because it has real utility and it has real contracts. So we're not guessing what somebody is interested in and we don't need any personally identifiable information, we know that somebody who's making lasagna is making was asking about making lasagna is making lasagna and <unk>.
Who want to sell products to the people who are making lasagna can reach them at that moment when they are cooking when they are in the kitchen, when they're getting ready to go shopping.
To make a meal and same is true for planning a trip.
We're thinking about their healthcare.
And when you see the rest of the market whats happening is there was a large portion of the market that was using search.
Using other content as an excuse to aggregate personally identifiable information and then use that to triangulate what somebody might be interested in that is a very effective way of of figuring out what people might be interested in and that can lead to performance, but what we're seeing in the market right. Now is the platforms and individuals are making decisions that say that tradeoff isn't a fair.
Laid off anymore. It's just not of tradeoff people are willing to do anymore and what happens is now the advertisers who are spending on that model need another mile of the spend to know where.
To reach users who may be interested in their products and they can do that now through our platform without any personal information of all of our users are anonymous all of our users can be anonymous can remain anonymous and they can still see ads that are relevant to what they wanted to do which works for the user and worked for the advertiser.
The thing that half of the underlying all of that is Fantastic Press conference.
And we're investing an enormous amount of content, we're spending more as a percentage of revenue on content now than we ever have more absolute dollars of of course is revenue is up even more as a percentage of revenue and we want that to continue to outpace everybody else of the market to have the best content. When you put those things together and that's a really compelling business and I think we keep doing that.
And staying true to our values of having the best content not.
<unk> kind of in fact under monetizing relative to the competition I think that we can continue to.
Pull away from the rest of the market and outpacing growth and we have done acquisitions, there and we're going to continue to do acquisitions. There because I think we've got a system that works and we have of really phenomenal team.
<unk> foods, I think underutilized in terms of their ability to scale.
So we want to we want to put more of their.
That dash.
Oh care was the other question.
Care is still very early for us, but we're making good progress.
I think the most exciting thing in.
In the core business.
We're going to do that.
Pretty high confidence, we're going to do that well.
Which is just two.
Making enrollment simpler on the secret side, making enrolment simpler on the provider side.
Collecting better information for both sides to enable better matching and ultimately like assume was talking about in angi figuring out how to really complete the transaction out of the platform.
To get to something closer to on demand, we're going to do all of those things, but the thing that we're really starting to get excited about is defining the market much larger and.
The other things we can participate in so the care of at work business for Enterprise is a good example of something that was a small portion of the business and is now of very large portion of the business is growing very fast with the fastest growing piece of the business.
Of that part is growing over 100% year on year. That's been the case for the last four quarters of ROE and I think it can continue at a pretty high high growth rate there and the reason for that.
Is certainly of macro trend what COVID-19 has done for four of.
Of the Workforces is.
Firstly in the work force is not good women of lots of way more jobs.
And then over this period.
And the the.
Apart.
Part of that is childcare and I think that enterprises are realizing that if they want to have the work force that the diversity of the workforce in particular around vendor.
That.
Desire that this is something they are going to have to help out with and share.
We're there to provide that solution and we're seeing that increasingly with all of the biggest corporations of lot of the biggest corporations of lot of the biggest names you've heard of.
Looking at our platform, but even beyond all of that I think we can define the business bigger when you start to think about how compare be helpful. There you can go from childcare to senior care to remote care.
Mental health.
Health Health care in General I think all of these things are adjacencies that we can start to look into that on the very long term amount of short term of short term is just nailing the product, making it seamless making it seamless for seekers and providers and also.
Bringing the enterprise into the system to help fund some of this bringing government into the system, perhaps to help fund some of this but all of those things I think are big opportunities for us and.
We see a very large market, but we're early in at 77 million of revenue in the quarter is a teeny tiny drop in the bucket of what what's going to happen in this area.
Thanks.
So our next question will be from Justin Patterson at Keybanc.
Great. Thank you for Ocean of welcome to the IAC and Angi calls could you talk about the opportunities you see from unifying angi under one brand. Likewise SP capacity has long been a challenge for Angi does it make sense for you to think of more aggressive approach around controlling growth the supplier relationship like Zillow and.
Others have done and then for Glenn given the past experience with transitions from about Dot Com and service magic, What's your expectation from when we could see of the AMG brand and domain changes switch from a headwind to a tailwind.
Thanks, Justin great to be here I'll start with your I'll start with your brand question. So if an alien came down from space Tomorrow.
And decided to hang out with us and talk about home services and home improvements and they looked at our brand chart and then they looked at our Org chart and saw three customer service teams three product teams three operations teams three pro acquisition teams. They would either things that we are incredibly smart for our brand as a work in progress.
And I think we've got a huge opportunity to pull it all together under a single brands of huge opportunity to focus on the problem of the customer actually basis, which is to get the job done and the problem of pro faces, which is to grow their business and you know this from slice in financials and we're looking at other companies. There is only so many.
Ways, you can segment the business and today, we're segmenting by brand, but thats not what the customer cares about.
But the customer cares about is getting the job done and that means segmenting by verticals. The customer of that comes into you that wants to get their toilet repaired the customer that comes into you that wants to get a deck replace the customer that comes into your of the once a.
A bathroom remodels at that moment in time, they don't care about the other services and they care that you have got a great amazing experience in that particular category. So by focusing on a particular brand instead of segmenting all of those teams that I just talked about we can segment.
By category, we can segment by vertical and we can point teams at saying how do we take our TV mounting business from a $30 million to $40 million business to a couple of hundred million dollars business, how do we take each individual vertical each individual category, where today. We are in the tens of millions of dollars of revenue and turn them into large significant business.
As my.
I have a two year old daughter, and whenever I give her oatmeal per her response to every single every single time it doesn't matter how much Ob Oliver it's not enough data, that's teeny tiny and I would look at each of these categories and I would say they are all individually sub scale. They are all <unk> and we've got this opportunity to go out and take every single category.
Laurie.
201, and become best in class by category and Thats going to take time.
Glenn will talk about the investment, but that's what we're talking about we're talking about investing category by category building best in class experiences, where we've got the right pricing. We've got the right pros, we've got the right products and Thats going to take a huge amount of investment to get it right category by category I'll touch on your your.
Your question on capacity I think we've got a huge opportunity to go after a more capacity in our marketplace business. The way I think about our marketplace business is it gives us unbelievable breath.
So 32 million service requests from 20 odd million households served by a quarter of a $1 million gross that's given us more breadth than anyone else.
What has failed to do is give us depth and thats. The services business. So the service business is giving us much deeper supply and we're seeing that as we bring on more capacity. So you rewind to last April I think our biggest day in our services business was around $300000 of work done in a single day in April this year, we hit over $1 million of work done in.
Single day, that's a huge amount of capacity or adding to our marketplace in terms of services just the services business of course.
We got to do better on raw capacity in the marketplace business too in our leads and AD business and I think about that as how do we get better itself enroll how do we get better in terms of pricing and how do we think about retention in the context of ancillary benefits for our approach. So one of the biggest things we've rolled out recently as we rollout of payments products now flippant about too.
$2 million of week in payment volume for our pros call of 100 million run rates I think of the last few weeks of seeing multiple days of over $400000 of payments processed in a day.
Those that use payments retained at a far higher rate. So we're looking at this very holistically to say, how do we get the job done for consumers vertical by vertical under a single brand and for pros, how do we deliver the more ROI through better pricing using energy services and ancillary benefits of payments.
To answer your question.
Headwinds with the brand headwinds and <unk> are a good way to think about of the year frankly, we think the brand change the brand unification will probably create a headwind for the entire year, maybe into 2000 and the first quarter of 2022, we will see the supply constraint. Obviously is also a slight slight headwind and then some of our comps.
To be a slight headwind, but the massive tailwind we have.
Is the angi services business and notwithstanding the tailwind sorry of the headwinds of which I spoke we think we still hit the revenue numbers that we talked about for for this year, maybe even of SKU tire. So as we look into the second second quarter I think we're looking at probably mid double digits, maybe a little bit lower in terms of second quarter revenue growth.
In terms of third quarter again mid double mid double digits in the fourth quarter again on the back of Angi services on the back of hopefully some of the supply constraints lifting and the more muted effect of this of this brand change will pierce through 20%.
And accelerate.
Into into next year now the path will not be linear.
And with the monthly metrics Youll see.
Continued volatility for example may of last year, you recall in April we were down 2% year over year last year in May we were up 15%. So I think youll see of Mei print in terms of our monthly metrics around 10% probably June 10%, but we'll average again for the quarter that mid mid double digit and then.
And then accelerate from there we're also seeing potentially walking us in our in.
And our underlying metrics, where I think you could see Srs decline in May <unk> of the client in June of <unk> declined in the third quarter, but again, given where we are.
Servicing our customers a lot better youre going to see monetize transactions go up.
And remember we get paid on monetized transactions, we don't necessarily get paid on an ISR <unk> and Thats what were doing on our investments in SP acquisition retention and engagement and Thats what were doing with Angi services, we're kind of changing that dynamic under <unk> leadership.
Our next question is from Ross Sandler at Barclays.
Hey, Joey just going back to dot dash, so the <unk> and the April run rate is obviously robust in both of the one year end of two year stack accelerating.
Digital.
Digital advertising is on fire right now so I guess can you put some numbers around how we should think about growth for the balance of the year of <unk> and beyond as you get to the tougher comps later this year and do you need to build out revenue beyond the top 25, you mentioned and then last week, there's been a lot of M&A recently with Yahoo.
<unk> trading of private equity.
Now the Dod dash is kind of firing on all cylinders of the changed your thinking around the appetite for larger versus kind of the more.
Smaller kind of vertical tuck ins that you've done for that segment. Thanks a lot.
Sure Ross I'm going to let Glenn do the growth rates, but I'll cover the other two so on beyond the top of 25, yes, absolutely we have to build that out of course, we are but.
Thanks.
Two areas to think about that when we think of about $1 25.
That's like direct sold through relationships premium advertising of premium pricing. There is also the <unk>.
But marketplace and there is also just kind of everything else and some of that stuff is and sorry, and then separate from that there's the performance marketing, which we now break out separately.
A number of the.
<unk>.
The AD below premium.
There are a lot of that is automated so people come in and out of the market relatively frequently and the work for US is to move those people into a direct relationship and at a higher price of more guaranteed inventory and that is definitely the work for us to grow that top 25 to start talking about the top 50 in.
I don't actually know the stat off the top my head in that but that's something that we should.
To talk about are the top 100 or the top 500, whenever we get to there.
And then the performance side that I think is a fantastic business you are right that advertisers of Empire has been on fire for a little low performance has been a big beneficiary of that I think those growth rates, probably are not sustainable forever I think thats going to decelerate just with the amount of volume I think.
The amount of people are going to go outside again people are going to start doing things in real life again, and I think that.
Those growth rates will come down somewhat.
But we still of a lot of different categories to go into performance marketing and what we're doing there.
Methodically is looking at categories, where users are looking to make decisions and the content out there is an unbiased clean good.
Work to help of consumer make a decision most of the products out there are way over monetize of not leading consumers to make the best decisions and so we're out there now finding these categories and building the content building of content in a purely editorial way.
Unbiased not driven by the monetization and finding that if we just.
Make the links on those.
Of that content, where it ends up being very monetize able.
And we sell of a lot of categories to go there. So theres, probably a macro deceleration I expect but there is some micro things that we're doing to.
Grow into more categories there.
And then on the on the.
The acquisition side.
Yes, we're looking there for sure.
I think.
Theres not a lot bigger available, but we are definitely looking bigger.
Everything we've done so far has been relatively small in the Vegas. We've done there is 50 or $75 million of somewhere in that area, but we we don't really have an appetite for bigger and we'd like to but whether we will be able to find something I don't know.
Yes.
And remember Ross, we're still an attacker.
We're still not number one in any of these categories and they are very large categories. Each of the categories in which we compete are tens of billions of dollars in size. So there is a fair amount of running room in terms of the in terms of the revenue cadence.
I'll point to two statistics nine out of the last 11 quarters greater than 20% revenue growth five out of last eight quarters greater than 30% revenue growth I think the advertising.
Of growth will decelerate towards as we go through go through the year, obviously were enjoying.
Strong economic times strong AD rates right now.
<unk>.
A favorable comp last year as you recall in the second quarter and the first quarter and into the second quarter every company tapped the brakes on variables of expenses and slammed the brakes on advertising expenses, So where we will see a deceleration throughout throughout the year and then all of the performance based marketing business.
Obviously, <unk> got nearly 100% growth.
In this quarter that that will naturally decelerate, where again we're comping.
COVID-19.
Behavioral shift when more people were online and more people were transacting transacting online. So I think you'll see a steady deceleration, but we feel confident that this business is of north of 20% grower.
For as far as the I can see at these attractive margins.
Our next question will be from Kunal, Matt occur at Deutsche Bank.
Thanks, Mark Thanks for taking the question.
Up.
Couple of if I may.
Day, one I was intrigued by the by the chart that you had in the letter of where you were talking about like frequency and how that kind of changes.
The fixed price experience.
Then.
At the top of the chart was remember with apps, which was like almost seven times.
Was wondering that would almost suggest that's been a force for every.
Service request that the customer could have had in that household the upcoming to angi <unk>.
So.
And from that it flows in terms of the new building liquidity is how much of those service requests are you able to fulfill now and as you invest another 60 million of liquidity throughout the year, how much more will you be able to do.
Let's say by the end of this year. Thank you.
Predominant will go up.
Of Shane answer this one but I do on it.
Day, one piece, which is.
You're right we've talked about that we think the homeowner does maybe six to eight jobs a year and so when you look at that.
Remember with the App doing $6 nine jobs with us that that could be all of them, but one thing that that is that we believe is possible and that we may be thinking of the numbers, but it's very hard to know for sure is that.
Homeowners can do a lot more than jobs or would or should do a lot more jobs than the number that they are doing in a year and the reason that the cases because the process is unpleasant.
Our process of the category in general is unpleasant assigned to a reported yesterday, who used our product and was surprised that after doing a fixed price.
Two fixes gutters.
Nobody came into his house or knock on of door and said, Okay. Now you got to pay me more money or now it turns out he got it changes the other thing of fixed this other thing the default experience in the category is one where there's a lot of haggling theres a lot of hassle theres a lot of inconvenience and so when you look at of job to get done you frequently just.
<unk>.
Because you don't want to go through that we think that if we deliver the experience that we have been delivering and that we think is possible in a lot of categories that the number of jobs that homeowners will do will increase in aggregate.
And then what portion of that we get I don't know, but we do think that's possible. When you change the default, it's strange category, where the default experience is to be unpleasant to get hosed, there get inconvenienced in some way.
We're going for a default experience that is exactly what you would hope it would be exactly what you. What you believe it should be will be pleasant and if we can pull that off with which we're doing at a relatively small scale and.
If we can pull that off we think that is transformational but go ahead of him.
It sounds hard when you say it to get the job done at a price Thats fair for the customer and at a price of delivers ROI for the pro it should be easier, but its hard and I think that's why we're so proud of this chart. This is graphing here I'll just walk through it. So so we're all we're all talking the same thing.
On the left hand side of this what you can see is what day repeat rate is for a consumer if they come into our traditional service request business, So thats, where they come in they submit of lead they repeat one eight times in the first 365 days so in the first year to.
To the right of that you've got three different segments, where the consumer comes in and instead of having a service request as their first booking or their first experience they have a full angi.
Service job so they come in they go through the service request path, but at the end of that path. They actually take out the credit card and they make of booking and angi services business takes over fulfills that booking sense of pro to their home pro does a great job, we pay the growth you see three different segments, there when that happens.
It goes from one 8% to three three.
We've also layered on what happens when someone becomes a member so in that checkout flow. We also offer the ability for the consumer to come become a member of $30 a year.
You can get up to 20% of a number of home services of number of our services and when you see that happen you get to a repeat rate of around five eight in the first year. We've got 100000 members today that fall in that category and that five eight to the point that was made earlier is a comb.
The nation of both bookings so angi services jobs and also service requests so youre seeing the people that come back to make their first booking is an angi service bookings. They also submit more service requests. So it's really positive loop, where you do more jobs, but also you submit more service requests and then the last day.
Last bar here is the $6 nine which is the one we're all we're all really excited about so thats you come in you have an angi service bookings. Your first booking you joined as a member and you also joy of you also download the mobile app. So those of our most engaged users and when we think about like where we're trying to go here. We've got this business doing call. It 250.
Run rate $55 million of last quarter growing as Glenn said earlier, 66% year on year.
The key point again is we're doing that with <unk>.
Spending incremental marketing and that comes from this repeat use. So this this repeat use here is the key driver along with the fact that we've got the of <unk>.
One monetize demand on the traditional <unk> business. So that's what we're really excited about yes, we've got to bring on more supply to make sure that we fulfill and these jobs. We know that we're working really hard on it Glenn spoke to the investment we're making in bringing on that supply, but it's if we unlock this that's what unlocks the that's what unlocks the growth as we as we think about making it easy.
Service of spin in the future and Kunal, let's have some fun with numbers.
Enjoy it as I enjoy doing 32 million service requests last year.
From 18 million homeowners. So that's how we get to the one eight if we can take on that $18 million homeowner base. If we could take one eight to two point out.
Our ambition is significantly higher than that.
That will imply that point to against the $18 million of $3 6 million additional service requests and we don't want us to pay a dime of marketing for we monetize service request of $70 million.
If we can achieve that and our ambitions are far greater and this will take years, but that's $250 million of high margin revenue that will just fall obviously straight to the bottom line. That's why we're so excited about that that's what we see in the numbers and that's why we're green lighting of significant investment.
Thank you.
Our next question can we go to Jason <unk> at Oppenheimer.
Thanks, Joe I wanted to ask a bit more about.
M&A and uses of capital. So when you guys have done.
The spin in the past.
You've had businesses that were generating meaningfully more cash flow. So I guess first.
Is an important kind of.
Now post Vimeo that you have of business that generates cash flow and then if not.
Sure.
<unk>.
To the extent you guys tend to be.
More value, which buyers I think in some of the verticals you've been excited about valuations of have kind of been high and whether that's in <unk>.
<unk> Dot dash, obviously in gaming I think everything is particularly expensive right now so maybe kind of help us understand how we should think about use.
Use of the balance sheet and do you need to buy a business that's.
Cash flow generating given the.
Kind of investment mode of Angi in the short term.
Sure so.
Number one.
That is of debate and discussion and actually that we have quite of bit internally.
I'm not sure you're right that we have less cash flow now than we have in previous ones.
<unk>.
Verify that but I think we are.
We actually have more we're in the same neighborhood.
But look having a source of cash flow is certainly provides a important safety net earned important.
Flow to continue to reinvest.
And that is something we look at there there's always.
<unk> in every market I agree with you completely that things seem very rich things certainly seemed rich and in gaming in similar areas.
But in.
We thought that maybe because we are cheaper or something or where value is as you said I think I kind of like that.
We felt for a long time the market has been expensive and multiples of continues to go up and we find opportunities in all of those markets.
On <unk> dot com in the market.
Was I think largely considered expensive by historical standards.
And we found other thing to say I'm optimistic that we'll find things that make sense on ecommerce basis by the way, we don't have to of I think low multiples.
Low current multiples, we have devising where we we have a very clear vision for our very large future and.
That can that can exist in any market I think it's.
Harder in this market than it was in other markets, but it can exist.
In any market and where we're looking is yes, certainly in as always our priority is our existing businesses and that means two things I mean number one we can find new things and publishing of redefining things and care, we can finding things in AMG that that'll have a priority on our cash but also.
In aggregate.
Most of <unk>.
In a position where it makes sense to buy back stock or buy back stock and we've gone through periods. After spin where we've bought back half of the company. We've gone through periods of the spins, where we've bought new companies I think both of those are possibilities and I'm always optimistic that we're going to find operating opportunities in any market.
To find acquisitions.
In terms of new categories, that's a hard one to answer.
We're looking at several of <unk>, Here's a few that are very very interesting in terms of they are there.
Current valuation relative to long term prospects.
I do think we're probably going to buy of smaller on things in our sweet spot has been the several hundred million dollars of acquisitions.
And that's probably where we'll focus but there is opportunity.
Okay. Our next question is from Dan Salmon of BMO.
Good morning, everyone.
Can we get into the details of the $60 million investment at Angi in particular, how much of that is learning to price jobs.
Is it fair to compare that to sort of promotional spend that we see in other marketplaces like mobility and delivery or do you really have critical mass here on both sides and it's really simply a matter of of learning how to price it scale better.
And then Glenn Thanks for the near term revenue guidance.
Comments, a little bit earlier.
2025% target for the business that we've talked about over the long term you spoke about getting to that rate to exit the year.
We understand the change in margins as you have more of a gross approached your Tam versus net is that sort of growth rate still the right number from the top line over the mid to long term.
I'll take the whole thing.
Yes, we do think that we.
We do think that north of 20% is absolutely the right growth rate for free for the long term.
And is.
That obviously opens up obviously.
A fair amount of revenue, we're now as Ashish mentioned, we're going after the 500 billion Tam not of take rate against that Tam and on the back of that $500 million of Pam you add on payments you add on financing you add on subscription. So I think we're also creating Pam as we're approaching the market.
So not only will you see a higher a higher revenue base over over time, but as you think about our margin against that we're less focused clearly on the percentage of margin as we are on the aggregate EBITDA pull through from there in terms of the investment of 66 million investment in Angi services of one.
It's too it is the price of of jobs, but I wouldn't say promote promotional if the diligence around pricing the jobs remember we're doing this at a national scale.
In 40% of our categories. So call. It 200 category. So there is an investment to price of the jobs too there is an investment to fulfill the jobs not the propane but to make sure of the pro shows up and shows up on time.
Three is to make sure of that job was done well and the follow up and to intervene.
Throughout that process to ensure an excellent experience and there is human intervention and all of those three and then fourth probably the biggest investment that we're doing is to automate the top three and making sure overtime of human is not at all.
And we could product ties home services, the way of Shane and his team is so well and building the handy business and that's our blueprint that were looking at we see how that got done we see the fulfillment rates.
<unk> of air and were.
Following that through our 200 or 200 different categories.
Thank you.
For our next question can we go to Nick Jones at Citi.
Great. Thanks for taking the questions.
I guess, just an update on <unk>.
Consumer behavior.
Angi in our homeowners more willing to let service provider than they are in their home today and then second question of.
Creating liquidity.
At Angi <unk>.
Much is maybe becoming more focused and making sure you can drive volume too.
Best service providers versus continuing continuing to add breadth.
Because I think of lot of service providers have lumpy work, so by being able to provide consistent or maybe the prices come down or do you get more consistent metric any color that'd be great.
Sure. So there's a few things going on in terms of macro trends, you've obviously got the snapback, where people are clearly, leaving their homes returning to some element of north of abnormality and transitioning away from some of the work they were getting done in outdoor tasks. So we're seeing a softness in terms of of outdoor tasks as everyone moves away from getting their backyard.
And Dirk and new Firepit put into some more indoor tests. The other thing. We're seeing is we're seeing as pent up demand for new homeowners I think we've all seen the one eight trillion sitting on the sidelines, we've seen the shift towards millennials from Hey, maybe they'll never buy homes to they're going to be the largest buyers of homes and of <unk>.
They are buying need more and more work because theres less and less inventory out there and then the last thing. We're seeing is this shift from offline to online. So there is those three or four trends put together that we think as Glen alluded to earlier, we're seeing softness in the next couple of months in terms of service request, but expect that you see the <unk>.
<unk> towards homeownership increase and probably will play out in the and of positive way for us in terms of the spread of consumer demand across the pro base. What we're seeing is or energy service pros, where we get to density in a market and densities fewer job than you would think but where we can get the density in a market we see.
Those pros really engaged much more of the platform. So we see the more jobs, we drive to a market the more bookings that individual pro does the longer they stay on the platform. We also see in the.
We also see in the <unk>.
Place business, an opportunity to think about better pricing for our pros Glen alluded earlier on to the huge impact on the potential EBITDA positive impact if we drive more consumer demand. In addition to the possibility of let that drop to the bottom line. The other thing we can do with that is we can invested directly in better pricing for our approach.
To help them grow their businesses and I think thats. The key here, it's about how do we get the job done per consumers, how do we help froze grow their business right now we've got work to do in terms of helping pros self enroll in the platform, helping them actually fine tune what their what their geo task combo, it should be and <unk>.
Bring them get the best possible pricing for the leads that they need so that they can successfully grow their business, our pros want to grow their business. There's no doubt about that on average the pros want to grow their business. It's just a matter of how they can do it within the angi ecosystem and we think if we focus maniacally on the pros that we've got we've got more pros and anyone else, who got quarter million flow is working.
On the platform, if we focus maniacally on helping them grow we can actually grow capacity in a really positive way probably involves the combo of our different products. So you think today. We've got leads we've got ads and we got angi services or fixed price product all under different brands historically and available to individuals sets approach is.
We pull those together.
We've got this opportunity to help pros like really think about how they decide to how they decided to grow from each segment of our marketplace.
Our next question can we go to John Blackledge with Cowen.
Great. Thanks, a couple of questions on MGM.
Could you just Joey provide some thoughts on the investment.
This was no.
A different use of capital than you typically see with IAC kind of what's the end game, there and would you look to get a bigger stake over time and then.
Online employment marketplaces, you have stakes in Blue crew Vivian.
I guess, formerly called nurse why what's the opportunity in this emerging segment and just curious of Blue crew for that segment of the labor pool are you seeing a freight market given the stimulus.
Sure.
MGM.
First of all very happy with where we are right now I think we.
We had.
Few ideas of what we hoped would happen could happen and I think that's largely playing out probably faster than we thought one is.
Okay.
MGM could make it to the other side will that MGM is overcapitalized now is way more than enough capital to.
Two is whether people will come back to Vegas, I think that's crystal clear already end of convention business is the only thing Thats still.
Not officially proven but we're pretty optimistic based on what the consumer's doing so far and the third critical thing for US was the digital business.
Just shared some numbers publicly recently of that business growing 400% year on year and that is.
I think a very very compelling business.
The thing that Hasnt happened yet it does happen, it's already happened, but hasnt sort of havent been that the magical flywheel way yet is the full integration of physical to digital and digital to physical.
A sort of clear consumer experience.
And we still believe that has a lot of potential and so we're excited by it as far as owning more.
Sure, we could we'd love to.
It's a great business.
They have to be something that makes sense for us, but we're open minded to.
Two anything there and we're still looking at the category more broadly if it makes sense to do something outside of there I think our first choice and everything will be set to be through MGM, because I think that they're just their team is doing a great job of that MGM team is doing a great job and that would be optimal but if it makes sense of do something outside of that that's possible too.
On.
Blue crew and Vivian.
<unk> by the way you've got that's only like a day old net new names.
Hi, so congratulations on range yeah.
Yeah.
So, yes, Bruce who saw this.
<unk>.
Made it a bit but for probably a couple of weeks ago for a little while it was we couldn't get people to work.
They were saying it even at a higher premium on making X dollars an hour on the couch.
It may.
$2 more of an hour to work probably not worth it I'd, rather make make $2 less on the cash and that was that was hard.
Starting to thaw, a bit and we're getting people working again and I think thats of that as a short term problem of that definitely was real for a little while.
On that category and more broadly than not.
A lot of people know.
Blue crew.
Vivian formerly neuro side book our thesis there is that there is a better way to match employers with workers in these in certain categories, where we're one of the criteria. I think this is a short term criteria, but it's easier to understand and long term criteria. It's kind of whether you are qualified for the job of somewhat buying.
You have the certification.
Hugh you can lift of certain amount of weight you can operate of certain kind of machine.
Or just as simple as you can show up.
Guaranteed on time and in those things like interviews I don't think are particularly valuable I don't think that most of the historical hiring methods.
<unk> value I think software adds the most value here. So we can say whether somebody is capable of in fact showing up on time, we can verify whether somebody has historically shown up on time.
And we can verify whether they have certifications and things like that and when you have that that those sort of binary questions to answer about the ability of higher.
A platform like ours.
Allow.
Employers to scale up or scale down much more quickly and to.
Most frequently of the issue of scaling up quickly and the way our platform works as we enable that through software and bringing people into it I think thats just fundamentally a better way.
This is one of the things we say all the time of the future is obvious I do believe in this category of future is obvious are you going to use phones in and.
Pulling up to.
Home depot defined workers or are you going to use operating in our press, a button and workers and employers can Ken.
Match and get work done and by way of software can shorten commutes software can reduce the cost of commute software can do a lot of things that that.
Physical just with less information can't do and so we're very optimistic about that category, where tiny both net <unk> and Vivian our China businesses, but both growing nicely, making real progress in the category. Both a fraction of a fraction of a point of the market, but we view that as opportunity in terms of.
Dressed a bull market.
And we're going to keep putting capital in that area and feel pretty good about it but we've still got a lot to prove and both of those businesses before we before we know we have something where it would you sorry, I just would you build <unk> by other verticals within that.
Absolutely yeah, absolutely and we're looking at that we've been looking at that for a while and we continue to but that's that's in place we'd love to put more capital.
Thank you.
Our next question will be from Youssef Squali at Trust.
Great. Thank you guys for taking my question. So I have one more clarification from Glen So Glenn tell me if I'm thinking about this correctly.
The angi services side on the fixed price as you recognize revenues are obviously recognized on a gross basis right not on a net basis. So as you look about the growth the growth trajectory shouldnt it be should need to accelerate even more than what you've historically talked about.
Again, just because of that pure accounting.
Practice and then.
As.
And I think by simple math fixed price is already like 15% of the revenues.
Then on the.
Long term margin you've talked historically about how angi could support maybe 35% plus margin profile as the accounting changes a little bit.
Can you help us maybe think about the potential for long term margin. There and then just one question for Oceania.
Been tracking your progress with handy years ago, and did a great job there, but as you try to kind of take the handy playbook.
And moving to a much larger platform can you, maybe just speak to that but one or two toughest friction points that we have to worry about.
As investors looking from the outside of it.
Yeah, Let me, let me start pushing and then you could.
Pick up on that.
On the gross revenue recall, we changed our revenue recognition.
In 2020, right. So we had an artificial lift there in 2020 against 2019 as we shift from net to gross now all of the numbers you see our gross our gross to gross.
Yes, there was a slight a slight uptick as we get into more larger task of mediums consideration cash I think it was rounded to about a 1% accretion and.
And growth rate that that mix shift but.
Sure there'll be a slight lift, but it's not it's not material.
Sure.
On the long term margin, obviously, we've long talked about the 35% target for this business as we've been talking about over the last several quarters. That's in respect of our traditional marketplace business.
A former home advisor of the former Andrews list and we still believe that holds but now that we're making a much more aggressive push into angi services and now we think angi services can can be a significant component of the overall mix, we talked about maybe even 50% I don't know if its a five year timeframe seven year time.
Or even longer than that angi services is not a 35% margin business and may not be of positive margin business for two to three years from now as we grow and as we take over.
More tasks and go deeper and wider in each of these past. So I think you'll have to think about what the balances between angi services.
And our traditional business in terms of percentage of the whole apply your 35% against.
Against our traditional business and apply I think of substantially lower number again negative for for a bunch of years.
To get to a blended blended margin said another way, we'll make progress on scale in sales and marketing we've talked about those numbers before 10% to 15% probably over the next intervening.
Next a few years, we will make progress on product development of G&A I talked about five or 10% progress progress. There again, maybe five to seven years, and we will get back a lot of that on the increase in cost of goods sold.
Out of kind of frame up the long term margins, but importantly, I allude. This alluded to this earlier, but maybe you didn't do it as briskly as of as I should of Reframing. The opportunity here, we are absolutely less focus on the percentage margin as we are the aggregate EBITDA EBITDA dollars and our ability to.
<unk>.
Add on not only the full totality of our total addressable market by $500 billion, but even more services.
More services beyond that so as you compare to the way we thought about the business years ago margins will definitely be percentage margins will definitely be down and we think aggregate EBITDA opportunity will be up but it will take as we've talked about some time. This is a long term build for sure as we hopefully continue to transform the category.
Yes.
For tiny we're less than $2 billion of of 500 billion Tam and of true 500 billion Tam not of take rate part of it and I think the opportunity is one that we are very very excited about going after and are in a very forceful way and as we continue to invest.
First in energy services.
I think we're going to transition from the tasks that you mentioned before that Andy was great at into the much bigger task. So the stuff that Andy was good at true automated enroll automated job fulfillment that works. So we've got that that flywheel is spinning we're continuing to see that grow.
Where we're pushing into the bigger tasks of the three or four of $5 $7 $10000 cash. So I think right now we've got two or three tasks going where one of them as of $150000. One of them is of $200000.
Essentially remodel of someone's home, where we're taking full responsibility for the job of we're actually project managing and getting it done and I think that's where that's where we've got work to do and we've deliberately one of them. One of the first things I did was we split the ownership in terms of the business. We said hey, we're going to of a dedicated person and Brian Ellis running the marketplace business, which is leaving.
We're going to of a long my co founder of from Handy running the Angi services business and it is to give it that dedicated focus because it's going to be it's going to be bumpy. So we're aware that it's going to be challenging I think Glenn has obviously given the numbers. If I was guessing right now, it's probably going to cost more than we think but it's probably going to grow faster than you think.
It was like to over under it and I think we're really excited about the.
We're really excited about the potential to see this grow at a much faster rate largely because of the data we're seeing in the customer retention of the data we're seeing in the repeat use and the engagement we're seeing on the pro side, when we help them grow their business using the angi services model together with the marketplace model no. One else is doing it like do you think about the <unk>.
<unk>, yes, there is people out there doing leads and do an ads there's people out there doing a GC modeler of services model Theres, nobody, let's put them together and said this category winner of this is how this is kind of work.
Mr Schneider of looks but one more question in where overtime and will but we'll go through it very quickly.
Okay, we'll take our last question from a gala Rooney and at Wedbush.
Thanks for squeezing me in.
I have a couple of but I promise there of the shorter ones.
On the rebrand and the impact of is there any way to quantify what that's been so far.
And you talked about being at 40% of the categories for Angi services historically, you've talked about $50 50, the goal of getting there strategically on revenue.
Can you talk about the the the goal of getting there in terms of categories.
And.
On the on the payment side that really seems pretty interesting.
What are the benefits for proceeds of that and do you expect to kind of bring on all of the pros that are using energy services into your own payments railways.
Why don't I hit Q3, and then you get one.
So let's start with the payments and work backwards. So today, we've got the payments actually available to the marketplace for us so that $2 million of week those of our lead in AD pros that are helping collector collecting money from their customers and getting paid through the through the angi services our site through the angi mobile.
The really interesting part of that is a third of those payment requests are going to non angi customers. So those are actually our pros going out doing customer acquisition for us by requesting payment from their non angi customers, who then have to download the angi mobile app to make payments. So that's like a really interesting shifts that.
We're seeing there I have completely blank of forgotten. Your second question, sorry, what was it the search.
Question was on the $40 40, or the 40 split for that growth.
So what we're seeing today as Glenn said is we're seeing about 40% of our service request being shown some version of Angi services that doesn't mean, they see it on the top of the page and there is a way in which we can show of top of the page middle of bottom and is a slight over and we've really got an opportunity to think about.
Out of bottle that probably it's really only being shown in an aggressive way to less than half of those people are less than half of those people today long term I have a view that we should be able to offer angi services for nearly every single task. So if we're able to do 150 of $200000 remodel we should be able to offer angi services for every <unk>.
As an option to the consumer to sit alongside of that marketplace model of leasing assets.
<unk> respectfully I'd, rather not mark to market on.
Exactly where we are.
On the impact of the <unk>. It's been six weeks are observable inputs are what obviously gave rise four of $40 million EBITDA impact for the year.
And we think where we've hit bottom and.
And we think we're building from here, but as I said earlier, it's it'll be a slow build and the headwinds could continue into the first quarter of <unk>.
Of next year, we may also decide to spend a little more to try and fuel.
The recapture and fuel more domain authority around the around the new brands, we will see obviously as always we'll keep you posted.
And I'll turn it over to Joey to make a few of our.
Of concluding remark.
Just add a little bit though to what Glen said, we have.
Past the most harrowing part of we've been through a few of these rebranding things.
Service Magic many of that dash and what happens if the biggest impact is in search and what happens is your your traffic goes down and then it goes back up we're past going down hardware and then going back up part. So that's that's comforting that most airlines are now the question is just pace of going back.
And we really don't know its hard to predict we do our best to predict that hopefully we get it right, but but it's really hard to know what we do know is we're confident it's the right decision for the business. We're confident that we are now doing what we probably should have done a very long time ago and we are we're in the right place to sort of build in wind along real.
Enduring brand product in the category and.
Maybe that's a good summary for for where we are overall, we are excited about where we're headed we've got big bets. We've got scary bets, we got from that.
And we're excited about where we're going so thank you all for joining us and we will speak to you and of course.
Okay.
Okay.