Q1 2021 IAC/Interactivecorp and Angi Inc Joint Earnings Call
Without spending on consumer marketing, so we're growing that off of the demand we've got in our marketplace business off of the demand we've got and the leads and adds business and that's a really significant shift on the pro side.
It's about ROI for the pro it's about how we help them grow the business, whether it's the pro at the beginning of their lifecycle, where they're starting out and they're trying to make payments on their F 150, and whether it's the pro in the middle of the lifecycle, where they're trying to buy a house and they are trying to get a down payment or approach towards the the more mature part where they're trying to hire more people and.
And Theyre trying to take the Thursday, or Friday afternoon off the hanging out with the grandkids and all of them are turning to us to help grow their business and Thats, 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.
$200 billion channel.
On the back of that vision on the back of that excitement and on the back of that opportunity, we're going to invest we talked about and the letter a couple of different examples when we saw growth.
Different things inside of Vimeo and different things inside of the 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 energy services. So on a year over year basis, obviously, that's 'twenty, we've talked about and the letter the.
The short term this year.
<unk> and financial impact on the rebrand is $40 million and then you'll also see some expenses against SP acquisition SP retention SP engagement and all of the SPP initiatives service professional initiatives that <unk> talked about we're trying to change that dynamic and that ROI dynamic for the service.
The service professional so that'll be a significant investment on a year over year basis to help you with the quarterly cadence around that we did about $23 million of of EBITDA and 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 of.
Obviously, how we think about 2022.
As we get closer to 2022, but again on the back of the vision on the back of redefining the Tam on the back of redefining our opportunity. We are looking at single digit margins for this year and in all likelihood single digit margins for next year.
Our next question will be from Brent Thill at Jefferies.
Thanks, Good morning Joey.
Cash and accelerated again and 67% and.
And said in the letter it's underappreciated I'm curious if you can walk through of the under appreciated component that you see and as the falloff of love to hear a little more about care and.
And what's the next chapter is there.
Sure.
So.
There's really two.
Big things happening at Dash right now that I think are are leading.
Leading to what is the current performance and what I think is sustainable.
The outperformance relative to other publishing businesses and the reason I say underappreciated is maybe it's our our own and securities, but people don't talk about bad debt as much as 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 and dot dash before I.
Thank.
The top 25 of those people are spending.
In 2021, and Q1 of 2021 day.
That cohort and aggregate of spending of 110% and and.
In 2021, when it did in 2020, I think that was like a 103% and in 2020 to 2019, that's right. The fact that those advertisers are coming back and you just don't typically see that in a publishing business and advertiser and publisher based advertising has come in and out based on their budgets and what theyre doing but but ours are recurring there.
Because the the call.
The content performs.
And the reason the content performance and it gets to the second point is because it has real utility and it has real context. 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 that I was asking about making lasagna's, making lasagna and the <unk>.
People, who want to sell products to the people who are making lasagna can reach them at that moment when they are cooking win there and the kitchen, when they're getting ready to go shopping.
To make a meal and the same is true for planning a trip or for thinking about their healthcare.
And when you see the rest of the market whats happening is there is a large portion of the market that was using.
Using other content as an excuse the aggregate personally identifiable information and then use debt to triangulate what somebody might be interested and that is a very effective way of of figuring out what people might be interested in and that and lead the performance, but what we're seeing and the market right now as of the platforms and individuals are making decisions that say that tradeoff isn't a fair.
The tradeoff 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 miles the spend to know where.
And to reach users, who may be interested and their products and they can do that now through our platform without any personal information and all of our users are anonymous all of our users can be anonymous can remain anonymous and they can still see adds that are relevant to what they wanted to do which works for the user and worked for the advertiser.
The other.
And the thing that half of the underlying all of that is fantastic Prescott.
And we're investing and enormous amount and 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 and even more as a percentage of revenue and we want that to continue to outpace everybody else and 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.
Net and staying true to our values of having the best content not.
<unk> kind of impact under monetizing relative to the competition I think that we can continue to.
Pull away from the rest of the market and outpace and 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.
So we want to we want to put more of their.
And 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 and in.
And the core business.
We're going to do that.
The high confidence, we're going to do that well.
Which is just two.
Making enrollment simpler on the secret side, and the enrollment simpler and the provider side.
Collecting better information for both sides to enable better matching and ultimately like Athene was talking about and Angie figuring out how to really complete the transaction on the platform.
To get to something closer to on demand, we're going to do all 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 and so the care of work business for enterprises is a good example of something that was a small portion of the business and is now of very large portion of the business and 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 and 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 and what COVID-19 has done for for the.
Of the Workforces is and.
Diversity and the work force is not good women of lots of way more jobs.
And then over this period and.
And the the.
And apart.
Part of that is child, and I think that enterprises are realizing that if they want to have the work force that the diversity and the workforce and particular around gander.
And that they.
The desire debt. This is something they're going to have to help out with and.
Are there to provide that solution and we're seeing that increasingly with all of the biggest corporations a 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 senior care to remote care.
Mental health.
The health care in General I think all of these things are adjacencies that we can start to look into that's all and the very long term not the short term. The short term is just nailing the product, making it seamless making it seamless for secrets and providers and also bringing.
Bringing the enterprise into the system to help fund some of this bringing government and to 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.
A very large market, but early and at $77 million of revenue in the quarter is a teeny tiny drop and the bucket of what what's going to happen in this area.
Thanks.
Our next question will be from Justin Patterson at Keybanc.
Great. Thank you for Oceana and welcome to the IAC and Angi calls could you talk about the opportunities you see from unifying Angie 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 the growth the supplier relationship like Zillow and <unk>.
Others have done and then for Glenn and given the past experience with the transitions from about Dot Com and service Magic, What's your expectation for when we could see of the AMG brand and domain changes switch from a headwind to a tailwind.
Thanks, Joe and 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 brand of huge opportunity to focus on the problem of the customer actually basis, which is to get the job done and the problems of the pro faces, which is to grow their business and you know this from slides and 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.
And with the customer cares about is getting the job done and that means segmenting by verticals. The customer of that comes into you and that wants to get the toilet repaired the customer that comes into you that wants to get of decorate replace the customer that comes in view of the once a day.
The bathroom remodels at that moment in time, they don't care about the other services and take care of that you've 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.
The 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.
<unk> as my.
And 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 AUM and I'll give or its not enough data that the teeny tiny and I would look at each of these categories and I would say they are all individually subscale. They are all teeny tiny and we've got this opportunity to go out and take every single category.
Ari.
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 invest and category by category building best in class experiences. We've got the right pricing. We've got the right froze, we've got the right product and Thats going to take a huge amount of investment to get it right category by category I'll touch on Europe.
Sure.
Your question on capacity I think we've got a huge opportunity to go after more capacity and our marketplace business. The way I think about our marketplace business is it gives us unbelievable breath. So.
So of 32 million service requests from 20 odd million households served by a quarter of a $1 billion growth, that's given us more breadth and anyone else and what.
And what has failed to do is give us debt 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 and the services business is around $300000 of work done and a single day in April this year, we hit over $1 million of work done and.
The 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 and the marketplace business too and 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 and the contact.
<unk> of ancillary benefits for our approach. So one of the biggest things we've rolled out recently is the rollout of payments product now clip and about $2 million of weak and payment volume for our pros call of $100 million run rate I think of the last few weeks of seeing multiple days of over $400000 of payments processed and a day.
Does 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 per consumers vertical by vertical under a single brand and per pros, how do we deliver the more ROI through better pricing using energy services and ancillary benefits like payments and <unk>.
To answer your question on <unk>.
The 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 may.
The slight headwind, but the massive tailwind we have.
Is the energy 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.
In terms of third quarter again, mid double mid double digits and 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 branch range will pierce through 20%.
Thank and accelerate.
Into into next year now the path will not be linear.
And with the monthly metrics Youll see.
The continued volatility for example may of last year, you recall and April we were down 2% year over year last year and May we were up 15%. So I think youll see of Mei print and 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.
And then accelerate from there, we're also seeing potentially <unk> and <unk>.
And our underlying metrics, where I think you could see Srs decline and May Srs the client in June and <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 on Srs and Thats what were doing on our investments and SP acquisition retention.
And the engagement and that's what we're doing with Angi services, we're kind of changing that dynamic under ashis leadership.
Our next question is from Ross Sandler at Barclays.
Joey just going back to dash, so the <unk> and the April run rate is obviously robust and.
Both the one year and the two year stack accelerating and.
Digitally.
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 lastly, there's been a lot of M&A recently.
The auto and NOL of trading of the private equity.
Now the Dod the I was just kind of firing on all cylinders of the change your thinking around the appetite for larger versus kind of the more.
<unk> of our 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 25, yes, absolutely we have to build that out of course, we are but I think there is.
Two areas to think about that when we think about $1 25.
That's like direct sold through relationships premium advertising and premium pricing. There is also the.
Private marketplace and there is also just kind of everything else and some of that stuff is and.
And then separate from that there's the performance marketing, which we now break out separately.
A number the.
The.
The AD below premium.
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 and more guaranteed inventory and that is definitely the work for us to grow that top 25 years and are talking about the top 50 and.
And I don't actually know the stat off the top of my head and that but that's something that we should start 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.
A fantastic business you are right that advertising on fire, it's been on fire for a little while performance has been a big beneficiary of that I think those growth rates probably are not sustainable forever.
And that's going to decelerate.
The amount of volume I think the amount of people are going to go outside again people are going to start doing things and real life again, and I think debt.
And those growth rates will come down somewhat.
But we still of a lot of different categories to go into and performance marketing and what we're doing there.
Pretty methodically is looking at categories, where users are looking to make decisions and the content out there isn't.
Unbiased clean good.
Work to help the consumer makes a decision most of the products out there are way over monetize and not leaning and consumers to make the best decisions and so we're out there now finding these categories and building the content and content and the purely editorial way.
And bias on not driven by the monetization and finding that if we just.
And make the links on those.
And that content work it ends up being very monetize able and.
And we sell of a lot of categories to go there so theres, probably a macro deceleration and I expect but there is some micro things and we're doing too.
Growth into more categories there.
And then on the on the acquisition side, Yes, we're looking at 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 and the biggest we have down there is 50 or $75 million and 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.
And remember Ross, we're still an attacker.
And we're still not number one and any of these categories and they are very large categories. Each of the categories and which we compete are tens of billions of dollars and size. So there is a fair amount of running room in terms of the in terms of the revenue cadence.
And 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.
The growth will decelerate towards as we go through go through the year, obviously were enjoying.
Strong economic times strong AD rates right now and the.
And a.
A favorable comp last year as you recall and the second quarter and the first quarter and into the second quarter every company tap the brakes on variables of expenses and slammed the brakes on advertising expenses, So where we will see a deceleration throughout the throughout the year and then all of the performance based marketing business.
And we obviously blocked what nearly 100% growth.
And this quarter that that will naturally decelerate, where again, we're comping the COVID-19.
Behavioral shift when more people were online and more people were transacting transacting online and 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 <unk> at Deutsche Bank.
Thanks, Mark Thanks for taking the question.
Up.
Couple of.
One I was intrigued by the by the chart that you had and the letter of where you were talking about like frequency and how that kind of changes.
The fixed price experience and the.
And then.
At the top of the chart remember with the ops, which was like almost seven times.
Was wondering that would almost suggest that's been a flow for every.
Service request that the customer could have had and debt household the upcoming to Angie.
So.
From that of close in terms of the your building liquidity is how much of those service requests are you able to fulfill and now and as you invest another $60 million and liquidity throughout the year, how much more will you be able to do by the let's say by the end of this year. Thank you.
Predominantly.
She and answer this one but I do on it and say.
And say one the switches.
You're right we've talked about that we think the homeowner does maybe six day jobs a year and so when you look at that.
The member with the App doing six nine jobs with us that that could be all of them, but one thing that debt is that we believe is possible and that we may be seeing and as 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 and the number that they are doing and a year and the reason that the cases, because the process is unpleasant and.
And our process the category in general is unpleasant assigned to a reported yesterday, who used our product and was surprised the after doing a fixed price.
Two fixes gutters.
Nobody came into his house or knock on the door and said, Okay and now you've got to pay me more money or now it turns out and you've got it changes the other thing of fix this other thing the day.
Default experience in the category is one where there's a lot of haggling and Theres a lot of hassle Theres a lot of inconvenience and so when you look at the job to get done.
Frequently just don't do it.
Because you don't want to go through that.
We think that if we deliver the experience that we have been delivering and that we think is possible and 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 depot and strange category, where the default experience is to be unpleasant to debt.
And as Theyre get inconvenienced and in some way where the.
And for a default experience that is exactly what you would hope it would be exactly what you what.
Can 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.
We can pull that off we think that is transformational but go ahead of it.
It sounds hard when you say it to get the job done at a price Thats fair for the customer and.
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 this graph and here I'll just walk through it. So we're all talking and the same thing.
On the left hand side of this what you can see is what the repeat rate is for a consumer if they come into our traditional service request business, So thats, where they come in the submit a lead they repeat one eight times and the first 365 days, so and 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 pool and <unk>.
Service job so they come in and 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 full builds up booking since the pro to their home pro does a great job we pay the probe 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 and become a member of $30 a year.
You can get up to 20% off a number of home services. The number of our services and when you see that happen and you get to a repeat rate of around five eight and the first year. We have about 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 and so Angie services jobs and also service requests so youre seeing the people to come back to make their first booking is and Angie service booking. They also submit more service requests and so it's really positive loop, where you do more jobs, but also you submit more service requests and then the last of the.
Last bar here is the $6 nine which is the one we're all we're all really excited about so that you come in you have and Angie service bookings. Your first booking you joined as a member and also joint and 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.
And run rate 55 million and the last quarter growing as Glenn said earlier, 66% year on year the.
The key point again is we're doing that with our <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 all of the own monetize demand on the traditional leads and adds 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.
And we're working really hard on it Glenn spoke to the investment were making and bring on that supply, but it's if we unlock this debt.
That's what unlocks the that's what unlocks the growth as we as we think about making energy services spin and the future and Kunal, let's have some fun with numbers of engie.
And I enjoy doing 32 million service requests last year.
And from 18 million homeowners Thats, how we get to the the one eight if we can take on that 18 million homeowner base. If we could take one eight to two point out and 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 have to pay a dime of marketing for we monetize service request of $70 million. So if we can achieve that and our ambitions are far greater and this will take years, but that's $250 million of high.
The margin revenue that will just fall, obviously straight to the bottom line and that's why we're so excited about that that's what we see and 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 and wanted to ask a bit more about.
M&A and uses of capital. So when you guys have done the.
And the spin and the past.
You've had businesses that are regenerating meaningfully more cash flow. So I guess first.
Is an important and kind of.
Now post Vimeo that you have of business that generates cash flow and then if not.
Sure.
To the extent you guys tend to be.
More value, which buyers I think and some of the verticals you've been excited about valuation of <unk>.
Kind of been high and whether that's in <unk>.
<unk> Dot dash.
And gaming I think everything and particularly expensive right now so maybe kind of help us understand how we should think about us.
Use of the balance sheet and do you need to buy a business that.
Cash flow generating given the.
Kind of investment mode of Angi and the short term.
Sure so.
Number one.
That is the 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 and previous ones.
Verify that but I think we are.
We actually have more we're in the same neighborhood.
The but look having a source of cash flow is certainly provides a.
The important safety net earned important.
LOE to continue to reinvest.
And that is something we will look at there theres always opportunities and every market I agree with you completely the things seem very rich things, certainly seemed rich and and gaming and similar areas.
But in.
We thought that maybe because we are cheaper or something or value add as you said I think I kind of like debt. We we felt for a long time the market has been expensive and multiples of continues to go up and we find opportunities and all of those markets.
And care Dot com and the market.
Was I think largely considered expensive by historical standards.
And we found other things too so I'm optimistic that we'll find things that make sense on the Galilee basin by the way, we don't have the rising the 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 probably harder and this market and it was and other markets, but it can exist.
And 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 and we can find new things and care, we can find new things and AMG debt.
And that'll have a priority on our cash but also.
In aggregate the Po.
The <unk>.
And in a position where it makes sense the buyback stock or buy back stock and we've gone through periods. After spin where we've bought back half of the company and 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 opportunities opportunities and any market.
To.
And <unk> acquisitions.
In terms of new categories at the hard one to answer.
We're looking at several and here's a few that are very very interesting in terms of the their current valuation relative to long term prospects.
I do think we're probably going to buy of smaller on things and of our sweet spot has been the several hundred million dollars acquisitions.
And that's probably where we'll focus but there is opportunity.
Great. Our next question is from Dan Salmon of BMO.
Hey, good morning, everyone.
Can we get into the details of the $60 million investment and <unk> and in particular, how much of that is learning to the price job.
Is it fair to compare that to sort of promotional spend that we see and other marketplaces like 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.
And then Glenn Thanks for the near term revenue guidance.
Comments, a little bit earlier the <unk>.
25% 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 and margins as you have more of a gross approached your Tam versus net is that sort of growth rate still the right number for the top line over the mid to long term.
I'll take the whole thing, yes, we do think the.
We do think the north of 20% is absolutely the right growth rate for the for the long term.
And.
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 the higher a higher revenue base over and 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 60 60 million investment and anti services of one.
It's too it is the price of the jobs, but I wouldn't say promote the promotional.
And if the diligence around pricing the jobs remember, we're dealing with the national scale.
And 40% of our categories. So call. It 200 category, so theres and investments of price of the jobs to theirs and investment to fulfill the jobs not the propane but to make sure of the pro shows up and shows up on time.
Three of its to make sure of the job was done well and the follow up and to intervene.
The throughout that process to ensure and excellent experience and there is human intervention and all of those three and enforced probably the biggest investment that we're doing is to automate the top three and making sure overtime of human is not enough.
And we could product ties home services, the way of Shane and his team is so well and building the handy business and Thats, our blueprint that were looking at and we see how that got done we see the fulfillment rates.
Of the air and we're.
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.
Consumer behavior and.
Angie and our homeowners more willing to let service private and they are in their home today and then the second question.
Creating liquidity.
And <unk>.
Much of it is maybe becoming more focused and making sure you can drive volume to the.
Debt service providers versus continuing continuing to add breadth.
Because I think a lot of the 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 there would be great.
Sure. So there's a few things going on in terms of macro trends, you've obviously got the snap back where people are clearly, leaving their homes returning to some element of north of abnormality and transitioning away from some of the work they were getting done and outdoor tasks. So we're seeing a softness in terms of outdoor tasks as everyone moves away from getting their backyard.
And Dirk and new fire pit, but into the more indoor test. The other thing. We're seeing is we're seeing as pent up demand for new homeowners and I think we've all seen the one eight trillion and sitting on the sidelines, we've seen the shift towards millennials from Hey, maybe they'll never buy homes to they're going to be the largest buyers of homes and the <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 are those three or four trends put together that we think as Glen alluded to earlier, we're seeing softness and the next couple of months in terms of service requests, but expect that you see the <unk>.
<unk> towards homeownership increase and probably will play out and 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 the market and densities fewer jobs and you would think but where we can get the density and a market we see.
And 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 dose the longer they stay on the platform. We also see in the.
We also see in the marketplace business and 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 the possibility of let that drop to the bottom line. The other thing we can do with that is we can invest.
The directly and better pricing for our pros to help them grow their businesses and I think thats. The key here, it's about how do we get the job done for consumers and how do we help froze grow their business right now we've got work to do in terms of helping pros self enroll and the platform, helping them actually fine tune what their what.
Their task combo should be and helping them get the best possible pricing for the leads that they need so that they can successfully grow their business, our pros want to grow their business. There's no doubt about that on average the pros want to grow their business. It's just a matter of how they can do it within the <unk> 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 and a really positive way and probably involves the combo of our different products. So you think today, we've got leads and we've got adds and we got and energy services or fixed price product all under different brands historically.
And available to individuals sets approach as we pull those together.
We've got this opportunity to help crows like really think about how they decide to how they decide to grow from each segment of our marketplace.
Our next question can we go to John Blackledge at Cowen.
Great. Thanks, a couple of questions on MGM.
Could you just Joey provide some thoughts on the investment.
It was different.
Different use of capital than you typically see with IAC kind of what's the endgame there and would you look to get a bigger stake over time and then.
Online and employment marketplaces, you of Stakes and Blue crew, Vivien, which formerly called nurse why what's the opportunity and this emerging segment and just curious with Blue crew for that segment of the labor pool are you seeing a great market given the stimulus.
Sure.
MGM.
First of all very happy with where we are right now I think we we had.
A 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 debt.
The 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 and of the 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 and.
Just shared some numbers publicly recently and that business growing 400% year on year and that is.
I think it's a very very compelling business.
The thing that Hasnt happened, yet and it does have and it has already happened, but haven't sort of happened and the the magical flywheel way yet is the full integration of physical and digital and digital to physical and.
A sort of.
Clear consumer experience and we still believe that has a lot of potential and so we're excited about it as far as owning more.
And sure we could we'd love to.
A great business.
To be something that debt makes sense for us, but we're open minded.
Two anything there and we're still looking at the category of more broadly if it makes sense to do something outside of there I think our first choice and everything will be the to be through MDM, 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 and do something outside of any of that that's possible too.
On.
Blue crew and Vivian and <unk>.
<unk> by the way you've got the that's the only like a day old net new names.
So.
Related to that range.
Yes.
It's so yes brokerage saw this.
Abated, 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.
Nick.
$2 more of an hour to work is probably not worth it and 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 that's the that is the short term problem and that Devin.
<unk> was real for a little while.
And that category and more broadly and not a lot of people know.
Blue crew.
<unk> and formally nurse side, but 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 the long term criteria. It's kind of whether you are qualified for the job is somewhat binary.
You have the certification.
And you can lift the certain amount of weight you can operate of certain.
And the machine.
Or just as simple as you can show up.
Guaranteed on time and.
And in those things like interviews I don't think are particularly valuable I don't think that most of the historical hiring methods.
Add value I think software adds the most value here. So we can say whether somebody is capable of and 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 debt those sort of binary questions to answer about the ability of higher.
The platform like ours.
Allow.
Employers the scale up of our scale down much more quickly and to.
The most frequently the issue of scaling up quickly and the way our platform works as we enable that through software and bringing people into it.
Thats, just fundamentally a better way and I view this as one of the thing and we say all the time, where the future is obvious I do believe in this category of the future is obvious are you going to use phones and and.
And.
Pulling up to.
Home depot to find workers or are you going to use operating in the press the button and workers and employers can can.
Match and get work done and by the way software can shorten commutes software can reduce the cost of commute software can do a lot of things that.
Physical just with less information can't do and so we're very optimistic about that category, where tiny both blue grew and and Vivian our China businesses, but both growing nicely, making real progress and the category. Both a fraction of a fraction of of point of the market, but we view that as opportunity in terms of.
The rest of world market.
And we're going to keep putting capital in and that area and 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 some point would you sorry, just one would you build the <unk> by other verticals within the.
Absolutely yeah, absolutely and we're looking at that we've been looking at debt for a while and we continue to but that's the place we would love to put more capital.
Thank you.
Okay.
Our next question will be from Youssef Squali at tourists.
Great. Thank you guys for taking the question. So I have share one more clarification from Glen So glad to tell me if I'm thinking about this correctly.
The energy services side on the fixed price as you recognize revenues are obviously recognize on the gross basis right not on the net basis. So as you look about the growth the growth trajectory shouldnt you be should need to accelerate even more than what you've historically talked about.
And again, just because of that pure accounting.
Practices and then.
And as.
And I think by simple math fixed price is already like 15% of the revenues and then on the.
Long term margin you've talked historically about how angi could support and maybe 35% plus margin profile as the accounting changes a little of it.
Can you help us maybe think about the potential for the long term margin there and then just one question per o'shea.
Been tracking your progress with handy years ago, and did a great job there, but as you try to kind of take the.
The the handy playbook and.
And moving to a much larger platform can you maybe just speak to lake debt, the one or two toughest friction points that debt we have to worry about.
And as investors looking from the outside in.
Yes, let me, let me start pushing and then you could.
Hi, Scott.
The on the gross revenue recall, we changed our revenue recognition and.
And 2020, right. So we had and artificial lift there and 2020 against 2019 as we shift from net to growth now all of the numbers you see our growth our growth to growth.
And yes, there was a slight.
Slight uptick as we get into.
Larger task the mediums consideration path I think it was rounded to about a 1% accretion in and.
And growth rate that that mix shift but.
Sure there'll be a slight lift, but it's not it's not material.
There.
On the long term margin.
And we've long talked about the 35% target for this business as we've been talking about over the last several quarters. That's in respect of our traditional marketplace business.
The former home advisor 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 Andrew services can be a significant component of the overall mix, we've talked about maybe even 50% I don't know if its a five year time frame 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 of tasks and go deeper and wider and each of these tasks. So I think you 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.
And against our traditional business and apply I think of substantially lower number again negative for for a bunch of years.
Debt to a blended blended margin said another way, we will make progress on scale and sales and marketing we've talked about those numbers before 10% to 15% probably over the next intervening the net.
Just a few years, we'll make progress on product development and G&A I talked about five or 10% projects progress. There again, maybe five to seven years, and we will get back a lot of that on the increase and cost of goods sold so that's how the kind of frame up the long term margin, but importantly, I allude. This alluded to this earlier, but maybe you didn't do it.
And that's principally as I should of where reframing. The opportunity here, we are absolutely less focused on the percentage margin as we are the aggregate EBITDA EBITDA dollars and our ability to.
Add on not only the full totality of our total addressable market that $500 billion, but even more services.
The more services beyond that so as you compare to the way we thought about the business years ago margins will definitely be percentage margins will definitely be down and we think aggregate opportunity 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.
Yeah.
We're tiny we're less than $2 billion of.
Of the 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 and 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 the stuff that handy was good at true automated enroll automated job of 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 seven and $10000 cash. So I think right now we've got two or three tasks going where one of them is the $150000 of one of them of the $200000.
Essentially remodel of someone's home, where we're taking full responsibility for the job and we're actually project managing it 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 the 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 has lead the.
Adds we're going to have a long my co founder and handy running the energy 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 is going to be challenging and 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 of it.
And I would 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 and the customer retention and the data, we're seeing and the repeat use and the engagement we're seeing on the pro side, when we help them grow their business using the energy services model together with the marketplace model no. One else is doing it like do you think about the <unk>.
Competitive set the others people out there doing leads and do and adds those people out there doing a GC model or of services model. There is nobody let's put them together and said this the category winner of this is how this is kind of work.
Mr. Schneider of it's been one more question and where over time, and we will but we'll go through it very quickly okay.
Okay, we'll take our last question from a gala Rooney and at Wedbush.
Okay.
Thanks for squeezing me in and.
I have a couple of but I promise, there and the shorter ones.
Just.
And 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 goals of getting there strategically and revenue.
Can you talk about the the the goal and getting there in terms of categories.
And.
On the on the payment side that really seems pretty interesting.
And what are the benefits for pros using that and do you expect the kind of bring on all of the pros that are using energy services and to your own payments Railways.
One of the two three and then you get one.
So let's start with the the payments and work backwards. So today, we've got the payments actually available to the marketplace price so that $2 million of week those of our lead and add pros that are helping collector of collecting money from their customers and getting paid through the through the energy services of our site through the angi and mobile.
The really interesting part of that is a third of those payment requests are going to non LNG customers. So those are actually our pros going out doing customer acquisition for us by requesting payment from their non energy customers, who then have to download the angi mobile app to make payments. So thats like a really interesting shift that.
We're seeing there I have completely blank of forgotten. Your second question, sorry, what was it the <unk>.
The question was on the $4 40, or the 40 split and where that goes.
So what we're seeing today as Glenn said as we've seen about 40% of our service requests 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 of which we can show of top of the page middle of bottom end of our slide over and we've really got and opportunity to think about her.
Out of brought all of that probably it's really only being shown in and aggressive way to less than half of those people are less than half of those people today long term I of review that we should be able to offer Angie services for nearly every single task. So if we're able to do 150 of $200000 remodel we should be able to offer Angie services for every tab.
As an option to the consumer to sit alongside of that marketplace model of leads and adds you got.
Ill and respectfully I'd, rather not markets the market.
Not exactly where we are.
On the impact of the <unk> and it's been six weeks are observable inputs are what obviously gave rise for a $40 million EBITDA impact for the year.
And we think we've hit bottom and we think we're building from here, but as I said earlier, it's it'll be a slow build and the headwinds could continue into the first quarter of.
And of next year, we may also decide to spend a little more to try and fuel the.
And the recapture and fuel more domain authority around the around the new brand, we'll see obviously as always we'll keep you posted.
And I'll turn it over to Joey to make a few of our.
The concluding remark.
Just add a little bit though to what Glen said, we have.
Pass the most harrowing part of we've been through a few of these rebranding things.
The service Magic many of that Dash and.
And what happens is the biggest impact is and search and what happens is your your traffic goes down and then it goes back up we're past the going down hardware and the going backup part. So that's that's comforting that has the most airlines are now. The question is just pace of going back up and we really don't know its hard to predict we do our best to predict that hope.
And when we get it right, but but it's really hard to know what we do know is we're confident it's the right and 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 and when the long real enduring brand product and 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 the scary best we've got upon the bets and.
And we're excited about where we're going so thank you all for joining us and we will speak to you and the quarter.
Okay.