Q2 2021 IAC/InterActiveCorp and Angi Inc Joint Earnings Call
Concept is outdated and so we had to update that the Angie.
But that's something we think we can on and we think we can on forever and we think and define the category and it's a much more ambitious concept and then using a literal brands, but what practically happens and that is 2 things.
Number 1 we updated the Andy list Dot com domains of Angi and so that just we've done this multiple times before that is a V shaped curve and we are seeing that shape.
And the traffic was down pretty severely and then it comes back up over time.
And and.
That we did that at the ash across multiple brands, we did that actually when we went to service magic from when we went from service matches. The home advisor. So so we have seen as we have.
Sister companies who've done this and we've talked to with Expedia.
The Expedia did a big 1 relatively recently with verbal.
So this is a relatively well worn path the chart the thing that debt as you point out we didn't appreciate.
Would have appreciated but we didn't was.
And how quickly home advisor without the brand support wood.
Could lose audience and search.
And that has been that has been more severe we thought it would hang on it as I said and the letter it's actually reinforcing the decision because that brand just didn't have the stickiness to it.
And it needed that constant support and I think that the.
On the spending on the new brand is going to be much stickier and last much longer and be more enduring but because it didn't have the brand support the audience. We're getting from search fell off more quickly and that gets to your margin question, 2 which is the SCO the the.
<unk> search traffic that comes in is very high margin and so when you lose some of that then.
That drops down to the bottom of them pretty quickly.
Ashish, there's a bunch of other stuff in there, including the acquisition and Ashish.
And on this thanks Joey.
I think you hit the important part which was we're absolutely committed to where we're going with the AMG brand and the thing that gave us even more confidence was the rate of which home advisor declined when we stopped standard on <unk>.
So the the constant investment and the home advisor brand.
And as proppant of organic search it was proppant up or net.
And it was profit of a bunch of channels and once we took that investment out of the home advisor, particularly on television and we invested and Angie.
We saw a faster degradation than we anticipated.
The upside is the.
And the upside is the shape of the curve were seeing on brand for new LNG is better than anticipated. So what we're seeing is we're transferring the brand equity from <unk> list over the Angie in terms of how we measure unaided awareness in terms of how we measure aided awareness much much faster than we thought and so on a dollar per point of.
But we're in the spaces, where performance somewhere between 7 and 10 times better on new LNG than we are on our than we were when we first transition from service magic over the home advisor. So we're really excited about that.
It had of it had an impact on the it had an impact on EBITDA.
In terms of the question on total home just to zoom out for a second.
We've effectively got 2 things our 2 businesses inside angi right now.
And if you think about the macro environment 1 of them is a business where.
Pros payoffs to access customers and the other is a business, where we pay pros to do work and at a time, where I think it's unprecedented in terms of the change and the macro environment, where we saw this massive contraction and pro supply as a result of Covid and the massive increase in consumer demand.
At the same time that we're asking pros to pay us to access customers that business is challenged at the moment, so irrespective of the brand transition we're going through.
It's challenged obviously, we believe this of temporary we understand that the the macro environment the macro environment is.
Particularly volatile.
Given the given Covid. However, we think it's our responsibility to lean into the other business at the same time, where we actually have huge product market fit so where we're paying pros to do work that business is performing unbelievably well. So you saw the the the growth rate of 120 odd percent.
Q2 versus Q2 last year, you saw the July number of 160 odd percent and.
And.
In terms of the total home or the <unk> roof, and now angi roofing acquisition that contributed that contributed to the to the growth and energy services on an overall basis July would've been flat on growth versus June without the without the angi roofing acquisition of the total home acquisition just to talk about.
And why we did that for a second.
It's it's kind of got to do with why were and why were overall investing and energy services. It's a desire to bring on more supply and build a better customer experience. Our pros want 1 thing and to help grow their business our customers 1 of another which is to get the job done.
What we've done at Angi roofing or what we're doing at total home is we're going deeper into the roofing category and we're building out real expertise to be able to help people get the roofing job done. So today you go to Angie and using total Homer Angie roofing, we can actually quote you the job really quickly.
By the materials dispatch the the roofers, we don't employ the actual individuals doing the work we contract with individual teams, but that's allowing us to bring on more supply because its specializing the work they need to do ever more. So we are really excited really excited to go deeper in this category the great category as I've spoken about before $10000.
The <unk>.
Really really high rate of financing attachments of about 20% of their jobs of finance allows us to get deeper into financing.
And you think about the application of technology, we can apply a lot of technology to allow us to price those roofing roofing jobs and advance using area of lidar or area of photography. So again, it's really bringing it to this at this point, where it's a seamless end to end experience on angi using using total are using Andrew Ruben and I need to get the.
And I need to get the nomenclature I hopefully after this the only call and Andrew Rubin.
But overall overall, we're really excited about where we're at angi services going.
And just a couple of things to add when we did the <unk>.
ICEE is done through a couple of its businesses things like the French consolidation before and when we do.
Did the service magic the home advisor transition almost 10 years ago.
Roughly 16 months before revenue returned to growth following the commencement of debt.
And similarly adopt dash when we did the virtualization and several years ago on average it took about a year for each of each of those vertical the return to revenue growth. So these things do take time on the July revenue.
And as we said and the shareholder letter we do expect.
And that sort of organic run rate to continue for the next few months of sort of in and around that 7%. We saw amazing July and then you layer on the acquisition and just the help people size that.
Net acquisition.
Compared to total Angie, it's relatively small it's a little outsized in terms of the growth just remember that this has been our anti services the bucket with recognizes revenue and gross and as <unk> said. These are 10000 dollar tickets or more type jobs and then seasonally obviously the summer months for roofing is our strength.
So with that we'll go to our next question from John Blackledge.
Great. Thanks couple of questions Scott that the revenue and EBITDA growth was strong again in the second quarter could you discuss the quarter and then and then we saw the top line do you sell and July if you can.
Julian maybe offers of you on Doctor and ask your second half growth and and.
And any.
Color on the longer term growth vectors for that segment and then just 2 other quick ones on <unk> Dot com.
Any update on the progress there since the acquisition and thoughts about kind of of the longer term opportunity and curious when we might start.
To hear more about that segment more regularly and then just any update on the CFO search will be greater.
Thank you.
Sure Thanks, John on.
Ah.
Maybe I'll do them in reverse order on.
So I don't forget CFO.
<unk>.
Got a great pipeline of candidates.
The good news on the <unk>.
CFO search.
And as Glenn was was I think and.
And the exceptional CFO and has big shoes to fill and so we're.
We've got a high standard for were looking for but we have time and we have flexibility on that.
And then I think.
And I don't want to give a timeline on when we will fill it because of there's maybe some candidates we could go quickly and maybe there is it.
On a chance it could take longer.
But we have a fantastic finance staff here and we built over many years were all I think exceptional and their field that talked about Mr. Schneider already and we've got a head of accounting, whose exceptional we are ahead of the treasury was exceptional.
The same for internal audit for tax and so when we think about when I think about all of those finance functions.
And.
And confidence level, and making sure that things are running smoothly and we're all well protected I have absolute certainty and that and.
So we're going to make sure we find the right person to add value to that equation in terms of capital deployment and and being real.
Value add on the on the executive team and.
Comp and we'll get somebody great on.
Care Dot com.
In terms of breaking it out I don't know debt is sort of the the.
The next step and evolution for the business and we think about businesses and I've seen and we'd like to put them and emerging for awhile and then.
Graduated from emerging to their own segments, and then hopefully long term eventually graduate into being their own business.
Standalone on their own.
But but right now business is doing very well.
I think I've talked about before that the enterprise business was the most.
Positive pleasant surprise for us since we acquired it that's meaningful contributors of the business growing very nicely and.
And is a a I think as a beneficiary of the <unk>.
Important tailwind right now, which is employers increasingly taking on the responsibility here, believing that need to take on the responsibility to help their employees with true.
Out there and it's unequivocal that theres, a direct correlation between taking on that responsibility and diversity and the workforce and so of course unequivocal and the importance of diversity and that work force outs the positive impact on the business. So.
When people now realize that and a lot of that has become even even more clear over the course of COVID-19 in terms of both government realizing that and employers realize that I think thats going to be a tailwind for the and a continued tailwind for the enterprise business.
And the but but that aside the core business of care is growing fast certainly the fastest since we've owned it and probably the fastest and since for a while before that and that's the product of a few things we've got.
As I mentioned and the letter improved conversion and retention those are key to the key building blocks to the business.
And of course, when you get those things going that build the LTV and we can get the LTV going that enables you to do more marketing. So we've got marketing substantially up and that business right right now too and that becomes a virtuous cycle.
So that that's all encouraging and the other piece is it's not just in childcare, we've all of leaf.
I have to default into childcare as the definition of care dotcom, but senior care is and increasingly big and important component and I think also have the demographic tailwind behind it and <unk>.
1 people want and.
The aging population and number 2 people wanting to age and their homes and their family homes as opposed to and and.
And they're seeing homes, and certainly COVID-19 and Didnt help the brand of nursing homes generally so I look at all of that and say we're doing.
We're doing very well and we're excited about it or not and a rush to break it out as its own segment, because we like kind of of the anonymity of the <unk>.
Care being able to work with a lot of the tools.
Behind the scenes and not worry about any particular metric right now in terms of of.
Public performance, but it ought to get there I can't see a reason why it won't and.
The product development is probably going to be the biggest driver of that meaning getting some new products launch getting some momentum behind that and once we do we'll probably want to break it off on its own.
Scott the Ash was your other question.
Dot Dash is also as you point out doing very well exceptional quarter.
It did decelerate, but we always expected it to decelerate in the back half of this year and you can see that in July and giving you. Some context like the display advertising business and Q2 of 'twenty was down 8% year over year of everyone cut back their spend.
That went back to growing 9% year over year, and Q3 of 2000, and so that's the big difference and the comp.
And from for this year from Q2 to Q3, and that's something to pay attention to and we expected that deceleration is the the business is exiting again I don't know if we can say exiting COVID-19 anymore, but it is exiting COVID-19 at a faster growth rate than than when it entered and.
On a higher base, which is fantastic and.
And so that's important we're going to keep investing in content and that business I think that's our competitive advantage I think we are.
And our content investments up 50% year over year, this year and I hope to continue to grow that faster than revenue for a while.
And underlying that the.
There is there is a few trends that do help that are completely independent of the pandemic..1 is what's happening to privacy and data privacy and some of the tools for tracking users and how those things of become weaker on the internet over time are on <unk>.
Particularly on mobile over time.
And I think that trend continues for a while Scott.
Cash is a beneficiary of that because that doesn't need that data dot dash is selling to advertisers a product, which is we know somebody is doing X because they are reading about doing X. They are looking for information on doing X do you want to reach of reader, who is doing that you don't need to know their name you don't need to know their age you don't need to know.
Where they came from on the Internet or some other things. They were doing you need to know exactly what they're looking for which is is obviously, we don't need any data for that and I think there are a lot of advertisers who appreciate that now number 1 day appreciate it because they can't spend the dollars of elsewhere, where they were the where they were tracking on a different basis, but number 2 they like to be able to to target.
Audience with effect of $1 without having to.
The violate personal space or worry about privacy concerns and I think that's really important and we can see it in the advertisers. So the love quoting the stat I think I quoted every quarter top 25 advertisers and I was just looking at that again this morning from.
From 2019 to 2021 and the top 25 advertisers. The same 25 names are spending of 139% and 2021 of what they were spending in.
2019, and I think of 123% or something like that of what they were spending in 2020 and.
People like the concepts of net revenue retention, we've learned from Vimeo and if you think about that as in that context, it's pretty amazing and again. The reason is what I said, it's what they offer but it's also performs and they they can see that advertisers can see that it performed and so they stick with it so that's all very encouraging.
In terms of long term growth rate.
I like to think of it as 20% north of 20% and I don't know exactly how that plays out and the second half of the year, but I think that that's a bogey for us and the things that drive that are more content.
And getting.
And not more ads.
That is something that we're not pushing.
But getting more content and getting more efficient on the AD getting better performance on the ads and then in each vertical we can get deeper in terms of how we deliver of customer 2 and advertisers so and categories like financing and met the PDR brokerage or credit cards or things like that there's a lot of revenue to be found there and getting.
Delivering a more qualified customer 2 and advertiser and because we are at sit at that top of the funnel I think we have the opportunity to do that Mark you want to add.
Yeah, I'll add a little bit just on the second half expectation. So why we look at that north of 20% of sort of our target and what we think of.
Online publisher of really healthy number just look at some of the update from the data points that Glen called out on the last call of the so now what 10 of the last 12 quarters. We felt that that has grown over 20% 6 of the last 9 quarters over 30% and.
13th straight months of over 20%, So we do think that 20%.
And north of 20% is a good way to think about the business and as Joey said the comps do get tougher last year of Q2 grew 18% and that accelerated the 26% and the 33% and Q4.
On margins for this business remember that 2020 was a bit of a pull forward in terms of the margins for not that like a lot of other businesses at the onset of Covid kind of pumped the brakes on investment.
And for the year margins were 31% last year that was up from 24% and 2019.
And this year, we're leaning back in the content Joey mentioned that where we expect the growth content, our content and expense investment and 50% year over year.
And so I think you should expect to see some contraction and that sort of cycle through over the back half of the year as the lean more into it.
And so some contraction over the second half of the year for the full year, we should be relatively flattish in lines of that 31%, we did last year, but.
To get there you have to have some contraction over the back half of the year.
And so far on our next question, we'll go to Cory Carpenter of Jpmorgan.
Hey, Thanks for the thanks for the question.
And can see on here Mark so on the AG services, how do you think about the sustainability of the recent growth and.
And we'll continue to drive further penetration and the machine maybe if you could talk a bit about some of the progress you've made on your product initiatives and on EZ key home advisor and consumer financing.
Thanks Corey.
So just on Angi services to start as you pointed out the growth accelerated to 127% of up to 73 million for Q2.
And just to understand for a second of the different components of Angi services, you've got 3 different businesses inside there and got a retail business, where we partner with the largest retailers of the world.
Some of the largest retailers and the world of sell in store online on their site, so you're going to buy furniture, and we we sell we sell our furniture assembly alongside of the furniture. The second part is the the book now business, where you come to Angi and you make and instant booking for service and fully pay and we show up and do the work and then the third part is.
Managed managed services and managed projects, where we give you an initial quote online you put down the small deposit and then we organized the complete the job.
By phone and you pay for the job completely so the average ticket on that and that 1 of its closer to 7 to $10000. All 3 of those experienced pretty significant growth.
As you can imagine the levers the levers are different and each 1 we're really only scratching the surface on the book now and on managed projects in particular, so the the early read on those as the NPS is really strong both for customers for homeowners and for our pros.
And we're seeing significant pro engagement significant customer engagement.
You think about it on a category level is probably 10 categories. We have identified already where we think we could build the half of $1 billion business and each category, where we look at it and say okay. In roofing alone, it's a $45 billion category and the U S. There is no reason why we shouldnt be able to build of very large business in that category. So the the levers for future growth.
There the levers for future growth of really vertical <unk> going deep into each category in the books now business, we started to build out those category teams already.
Got about a half of dozen of those teams that are now now nearly fully staffed in terms of in terms of the category managers for that for those individuals sub verticals spin and our product work.
And that experience better and the levers are really around added the completed better job pricing more accurate more accurate request by the customer allows us to do and even better job spin through into replace of the customer repeat rate for the pro and overall just makes our business better on the manage project side again, we.
Our deep and 1 category with roofing to start we've got a number were across quite a few categories already but.
But we're really going deep on roofing, we're also going deeper and dispensing of the category.
And really looking and saying how do we make sure that in that category. We build a great experience you pointed out Angie key and and.
Payments.
And the payments product up to $26 million, I think and Q2.70 odd percent growth.
Q1 to Q2, so we're really excited about that I think it hit $3 million and a week.
And in July.
And the way I look at that as I look at it and I think where are we really getting deep with the customer where we really completing the loop and actually looking at it and say how do we know that we've completed the whole transaction for the customer and of the pros getting paid or they are using anti service and we know that broke back so I look at Q2.
And actually when I think about jobs that we know that we've completed and we know we process. The payment on I look at the 26 million and I think about the $73 million I think those are jobs that were either fulfilled by LNG or we actually completed the payment and made sure. The pro got paid so I think that's a really significant really.
<unk> deepening of our relationship with the customer and deepening of our relationship with the pro and it flips it back around from the propane us to us making sure the pro gets guests.
It gets paid.
We've got we've got more pros that we're rolling out payments too so it's not across the entire pro base yet. So we're we recently.
Rebranded.
Home advisor to AMG leads and and these list of Angi ads. There are a number of AD growth that don't yet have the access to payments. So we're continuing to roll that out. So we will expect to see continued growth in the.
And payments as we go deeper into it financing is also an important part of payments again very early on the data, but I think it I think it has tripled in terms of financing volume again on the tiny numbers Q1 to Q2 and again the roofing business gets us deeper into financing as well. So it is all of this virtuous loop of getting closer to the customer.
Managing the payments getting into financing and really really really getting to a place where we know that the job is getting done for the customer and <unk> was the I think the last part of your question again, great growth month over month or sorry quarter over quarter of 2.140000 members now the price point on that is up to $29 of <unk>.
30 Bucks.
A year.
We're still of pay to save paid.
Pay the safe program I think there is a lot more we can do there in terms of value add is I think you're asking your question of where we've taken it.
And does it look like I think some of that has to do with helping the customer helping the homeowner has access to more information. Some of it has to do with educating the customer perhaps elevated levels of service I think financing also plays an important role into that so could we could we think about the financing for engie key members of preferential rates and then I think.
There's a lot of <unk>.
More of tangential things to do with the home that we could do with edge of key as well, but we're early on we're exploring but we think it's we think it's a really powerful.
And it really fits the long term vision of the long term vision branches.
How do we have of single brand that most of our people are members. They use our mobile app and they turned to Angie to get everything done inside their home and you think about services you think about angi key things about payments and you think about our broader marketplace business that really broadens and gives you access to all of the services. They all fit together and I think youre hitting.
On the Youre hitting on all of the important building blocks.
And that go into that.
I'll just add 1 small thing to that last sentence from Athene, which is.
You would go to in that World that day describes with all of those features and he describes what's important and there is also and you go to Angie first because it's faster and easier it's reliable it's going to deliver the service.
It's going to delivery of the service at a fair price, but the point is you go there first and we'll make more sense to go there first and it will to go anywhere else first and get a list or after the sort through things or have to read reviews or have to pick from 10 or whatever it is.
You will be going first setting up the infrastructure that it makes.
More sense of the go to Andy first of its more efficient to go on Angi first is a significant portion of the groundwork were laying right now.
I think thats, a really good point and I.
And might even push further I might even push further to say you go there first for the discretionary things for the urgent things, but actually because you have a relationship with us because.
We know your home because we know probably better than any other professional any other company, we can actually anticipate and take care of the background maintenance for you. So you go there first for discretionary things because we built a great brand and you've got the mobile app to remember and you.
Of engage with Us and trust us and.
And hopefully we anticipate the maintenance for you and we can actually take care of of behind the scenes are weak and proactively prompt you to say Hey would you like us to do go to as gutter cleaning at this time of year would you like us to do sprinkler blowouts at this time of the year can we do these things for you.
And in an automated or of magical way so I.
We're definitely going to prioritize our existing businesses for M&A and <unk>.
I've talked for a little while now and continue to believe that debt.
Dot dash and publishing would be a priority of there because I think we have a great team that is building a great business that has proven their ability to do acquisitions integrate acquisitions and add value and those acquisitions and.
And it's scalable so I want to add there if we can find the opportunities, which I do believe exists.
That's 1 for sure.
And all of our existing businesses.
We're going to prioritize over new businesses for acquisitions, but we continue to be and the on for new categories to to get into I don't think will will as we've always said I don't think we will look for of debt. The company type of acquisition, but I think that.
Finding businesses that generate real cash flow and where we have a unique angle is something that debt. We're going to debt. We are looking for and continue to look for and.
And is a priority of the last 1 you mentioned is share repurchases and Thats always in the consideration set we will continue to be in the consideration set.
And it's basically a variation on putting more capital into our existing businesses because.
And with just effectively buying more of them and so that's an easy 1.
And it's definitely something that we always have looked at and we will continue to look at.
And we.
And off the same story on the on the A&D side as it relates to cash.
Share repurchases and acquisitions I don't think and he is going to get into a brand new business with capital.
But looking to do small acquisitions like the roofing, 1 where we can talk something in and and really make a difference and also.
Consider share repurchases if it makes sense.
Great. Thank you.
So our next question will be from Jason <unk> at Oppenheimer.
Thanks, I, just wanted to dig a bit deeper into the Angie.
How much you're willing to draw a line and the fans the kind of whole of the revenue growth led the 7% to 10% for the foreseeable future given that the headwinds youre facing at home advisor from of traffic standpoint.
On.
We'll take time.
And obviously, it's the it's a balance there so just help us understand kind of.
How bad it and get over the next several quarters.
I'll start and then Ashish.
And jump in but we're not holding any lines and it'd be crazy the old any lines of if it's not we can't there is nothing so sacred.
Sacred and we'd say, we'd do anything for.
4.
The 7% to 10% revenue growth of what we're saying right now is that's what we're seeing.
On the organic side and Thats now bigger as of <unk>.
The acquisition, that's what we're seeing and we don't see a reason why it should be worse and that but we're in a very volatile environment for 2 reasons and probably more than that but for sure. There's still a lot of ups and downs as it relates to the pandemic and People's willingness to do work availability to do work and things like that and we created our own volatility.
With this brand thing and so some components of that are out of our control. We know what we're seeing today, we know what direction. It's generally headed in the various pieces some up some down and so we've made assumptions on on how those hold.
Things can change for the positive or the negative there and.
And and that's always going to be the case.
Yes.
So that we know where we're going we know we're trying to build and we like the destination as Joey said and the letter.
And just put the slightly more contexts on it we've essentially got 2 businesses that are performing very differently because of the macro environment and because of the brand. So the.
Services business and the current environment has fantastic product market fit and is growing like crazy and obviously, a smaller part of the business, but growing like Crazy and you got the lead business that is challenged from 2 perspectives 1 is the.
1 of the brand and 2 of the pandemic and we believe the brand is temporary and we will be and a stronger place on the other side of it and the pandemic hopefully is also and we all hope it's very temporary.
And.
You look at the math of when those 2 lines are going to cross of when a smaller faster growing business is going to help with the the overall.
We're focused on the long term, we're focused on what we want to accomplish overall, we're not focused on how do we hold the line and a particular place this quarter of said anything it's a what we're all about is making sure we're making the right long term decisions, we want to make sure that we're set up for success, we have absolute confidence that if we build the right product for the homeowner.
And that helps them get the job done we build the right product for the pro that actually helps them grow their business will be and a stronger spot. We are in addition to the brand change on the the home advisor business I'm, sorry on the lead business.
We're also making significant investment there and actually making the product and the experience better for pros. So we've got of pricing tests out and a small number of markets right now that significantly changes the ROI calculation for our pros.
Very early very early results.
But the broadly seen they broadly seen positive at this point.
Obviously investing and payments.
To close the loop again, the read on pros that use payments significantly higher retention and significantly more engagement.
And overall, we're looking at we're looking at vertical <unk> of that business suite. So we've talked before I think loosely about verticalizing. The sales force that's something we're actively going after again with the view that with the view that as we Verticalizing. The sales force, we built a better experience for pros that will engage with the product more.
The thing that's given us confidence on that is and Onboarding and Onboarding program, we've run for our AD Sps, where we put them through a pretty heavy touch pretty heavy touch on boarding tests. That's yielded really good results on really good results on win rate really good results on 90 day retention and again, we're really saying how do we not.
Say all of the pandemic is there let's.
And it'll it'll pass, but how do we say, let's make the AD business and the lead business higher ROI for pros and how do we make sure that we come out the other side of this and a really strong place and all the while we continue to have the other the other option, which is how do we create our own supply, which I think with energy services and some other.
Our other you have like a lot of kind of a greenfield how to videos and definitions and stuff like that but is there and other things that you've thought about that could tap into the growing retail trading group and invest the P. A material part of the dash at this point like where does it stand relative to the 300 odd million that youre going to do.
And that segment this year.
Sure so on.
On the emerging the next tier aftercare and mosaic is.
And what we've called the future of work and we have 2 businesses in that area of both tiny but both growing very nicely.
And both still improvement once called Blue crew and the others call Vivian used to be called <unk>, we changed the name of Dominion.
Yeah.
And they are the concept and both of those businesses is that matching employers with employees.
And is a thing that can be done meaningfully better with software over time and.
And that in a number of categories qualifications for a job or binary and so the historic tools for that resumes and.
List and interviews and things like that are much basically.
Not that valuable.
And what would be more valuable is software and data so somebody's ability to show up ability to show up on time ability to.
With the box or lift of certain wage or operate of certain machine or.
Things like that.
We're qualifications are binary or the qualifications can be taught within 20 minutes or something like that.
And in those things, we think the software is better and we're certain of software vendors every customer we go to now in those businesses.
And when they start using our solution they love using our solution and they immediately and recognize the difference between our solution and what existed previously and the market and at the leading to very high growth rates and those businesses.
Yes, I'd say its not proven as the business yet because it's still expensive for us to deliver that product and we're still net net negative investing in those both of those businesses and that's both in terms of fixed cost and and.
In the.
The sort of contribution margin and you could argue and either of them is probably positive, but there are scenarios, where where it could be negative and.
And.
So.
We're now and we now need to continue to scale of those business and deliver those businesses and.
They are each and.
Multi hundred billion dollar categories.
And with incumbents that I think leave plenty of room for 4.
The new competition and we're seeing also that some other players are now getting funding and there. We've heard we know 1 just raised a lot of money at a big valuation and we know of another 1 is trying to raise money a lot of money out of big valuation sorry, 3 of them I can think of now.
Which I think is fantastic for the category because that's more people out there.
The educating the customer on what's possible that more people out there pushing the the limits of innovation and challenging each other on innovation and I think that's very good and and.
And we're pretty excited about that but again these are very small businesses today with with lots of prove and and.
That's an important place for us to be for us to be playing.
And the other thing and they're in emerging and other that I'll mention.
And so what we call Newco, which is our new incubator.
And we're.
We're building new businesses there we've got 2 businesses that are <unk>.
Real ish, meaning we've now got a product thats out and the market that's being tested.
And we've got we're going to continue to build more and.
And this before where I think we're going to focus that from here on business is debt.
Use the blockchain to 2 <unk>.
And the customer experience.
The work we've done around blockchain is very clear that it's going to transform many categories.
And more efficient to operate or or or interact with.
With different sides of the marketplace.
And and were therefore, I'm really excited about investing and those things and we think about the last incubator. We had was focused on mobile and mobile apps became a thing that we launched an incubator very early and that called hatch, which was entirely focused on building mobile apps and Thats, where tinder came out of and I think we're going to focus on.
So on the blockchain and we'll see what comes out of there are first of all businesses have nothing to do with the blockchain, but they are pretty interesting and.
Well.
We will continue to innovate.
And your other question was invest the PDR.
I think in terms of.
And as for big segments of that debt finance.
Health lifestyle, and beauty finance health and lifestyle are all roughly equivalent and beauties of little bit smaller.
And then the other 3.
They are the all important categories I think it's true what you set of invent the Peter I think this is true of others too is we do have the ability to go deeper and we do have the ability to be built build real business is benefiting from some of the trends and people trying to find information and so. The example, you have an MSP of retail investors and some.
And the momentum behind retail investors I think is really important and has been fantastic for invest the BDO for sure and I think that they are of similar trends that we can point to around beauty for example, and people taking control of their beauty and the the.
Slicing beauty into more <unk>.
<unk> and narrower.
And products to serve different customers, I think and something that we benefit from and in terms of being able to leverage Influencers and I think there's something there that we benefit from and each 1 of these categories. We absolutely can go deeper we absolutely can deliver we can deliver product to the customer that that gives them exactly the information that they're looking for and <unk>.
Liver advertising surrounding that debt is very very qualified for the free.
The advertising delivered to the customers very very qualified for the advertising.
Our next question will be from Justin Patterson at Keybanc.
Great. Thank you 1 for Joey on 1 floor Oceana Joey on care Com and its been a unique period with some tailwind and enterprise and some headwinds elsewhere. How should we think about just what normal growth should look like going forward as well as the investment level of support that Linda Oceana and I wanted to tackle that.
<unk> rebrand from a different angle of the approach perspective, how are they reacting to the new brand and with traffic adversely affected our U of ensuring that we don't have a new capacity problem form. Thank you.
Thanks, Jonathan.
Youre right.
It was the tailwind in terms of care was the tailwind for enterprise and the headwind for 4.
Consumer and I think that the consumer is now coming back we can see that very clearly again latest till the date of may change all of that but we can see very clearly.
Records on the Daily records on subscribers.
The new subscribers and care.
The in terms of investments the business is profitable today.
And think it will be profitable 4 of.
While forever.
Hard to say forever, because maybe there is an opportunity but it is.
Right now I think that the level of investment necessary in that business to do the things that we want to do allows us to maintain profitability there in terms of the growth rate.
I I don't know Mark do you want to.
Take that 1 sure.
Look I think we are again were early with our owners of this business the only to her about a year, we think that the Tam here is.
Is 300 billion the.
The penetration is less and 1%. So we think there's a long runway here and you look at other marketplace businesses north of North of 20.
And like that that is a potentially of long term number here and now we're nowhere near where we want to be in terms of our penetration and product and and investment. So we've got a long way to go but we think and we've said that this is a tam that is growing and the opportunity here could longer term be as big as what we think we have with Angie, but we've got a lot of work to do.
To get there so it's a little hard to to give long term revenue and long term margin given our earlier stage, but and you look at other marketplace businesses, you can get the sense.
And I'm going to hit the free rent. So just to talk about the rebrand and pros we started of the rebrand by moving <unk> list of Angie.
For both AD pros and <unk> list customers more recently and the last month and a half we flipped over home advisor to readers and G leads for pros. So the the pros now are either Angie AD customers on angi lead customers.
And a few things going on there 1 is the pro sentiments towards Angie is better than the pro sentiment towards home advisor. So that's a net win right out of the gate, where pros BLA.
They feel better about the LNG brands on the home advisor brands in terms of the their association with the brand. The second is we've got overlap of customers who are.
And <unk> AD pros and Angie lead pros for the first time, we've invested in and having a dedicated point of contact for those growth. So they know each have a single point of contact to help them manage their accounts on on <unk>.
<unk> adds and leads which is it sounds obvious but.
And as a step forward for them. So they go to 1 place and they got questions concerns and.
And then the third is.
The third opportunity I'd say is we've obviously got different sales force of selling those different products and how we think about being more integrated on that is is a pretty significant opportunity. There's a lot of product work to go on to make it happen.
Where today you still you still do have 2 distinct accounts 2 different sets of customers that come to you or leads that come to you through those accounts.
But I think now that we've got them under the same name effectively there is a pretty big opportunity to integrate those more tightly before we take on the next phase, which would be getting those same pros access to energy services jobs.
And the future as well so.
I think we're on a path here.
It's clear, we're making incremental steps and to me I feel very impatient on any given day of week or month, but we're not moving fast enough to to get to a place where we're we've got it all in and of <unk>.
The place where all of our pros can access all of our products and single location, but I know that I know.
The team is doing phenomenal work to pull that together and the fact that we've rebranded and at a pretty fast clip on the on the pro side on ads and leads just speaks to our commitment to do this we know it's the right thing to do we know what's going on ultimately lead to.
Better ROI for our pros and a better experience overall so.
I think we're.
Getting through the pro rebrand and I think as the.
Bunch of upside and as you know SP retention is a.
On a significant lever for the business and if we move that through a combination of better better pricing better brand connection and ultimately a better product as well. So there are things we're doing below the surface to actually make the product and the experience better for the pros as we move them to this new brand, we could see we could see upside growth.
Great. Our next question will be from Brian Fitzgerald and Wells Fargo.
Thanks, guys, maybe 2 quick ones with respect to the rebranding effort, maybe from and SCM SCO perspective.
As we reopen and theres been heightened demand for kind of bottom of funnel performance AD formats to get ahead of that resurgent consumer spend and it sounds like you may be seeing this kind of and dot cash too.
Was that impacting the speed or the efficacy with which you guys roll out youre kind of exercise rebrand playbook.
And then second 1 was just on key.
And 50% of new customers opting in and getting a discount on the first job Thats a great.
Deal.
The impact that's having on repeat rates.
And how are repeat rates performing versus what you thought they would going into the the key rollout.
Yeah, I'll I'll take I'll take the key and we are.
Work backwards from there and perhaps Joe you can chime in on the the STM part as well so just to hit the key part we released the data and a number of different segments. So we compared it to service requests and someone who just dose services someone who does services as a key member and then key member with the.
And with the App and starts and services, we're continuing to roll that out obviously at the 140000 members now we released the data the first time in the last letter that that showed the significant outperformance.
It's degraded slightly but it is still incredibly strong in terms of the GAAP between service requests of service requests Srs service request customer and someone who is at the opposite end of the spectrum. So it is of <unk> Delta So and when you think about the person who downloads of the mobile app engages with.
Engages with <unk> and has a booking.
The 3 X Delta, which is really really strong and we're excited to continue to roll that out and.
Get to get to scale on that and again I think it's super early on key it's super early in terms of.
In terms of like the value profit still pay to say I think I alluded to some of the things early on that we could take on with key but it really should be the beginning of our relationship with the.
The homeowner around how we help them manage their home and the fact that they've invested and us by buying the key membership should give us confidence to go and invest in them and get to know their home and think about what other things we can do and.
Terms of.
In terms of SCM and.
And so I think we're seeing more volatility in terms of algorithm updates on SCO, which is definitely having an impact in terms of how people are thinking about SCM and and how there are other how they're buying and SCM and the biggest thing. We're seeing is as we've taking dollars out of out of home and <unk>.
Laser television brand, what we've seen on the what we've seen in terms of the click through rates.
And as change what we've done as we've.
As we decided to push further into the energy brand.
I'm not sure I totally.
I understand the question on SCM, but.
Part of it was did did any of this impact the timing of when we chose to roll things out and the answer is no although.
We did view it is convenient.
Net.
The time, when we were at risk of of.
Reducing our demand funnel.
Meaning and the brand change and the domain change producing a brand funnel.
And that that was the convenient time to do it on account of there being less supply of available given the supply crunch and the market. So it would be less impactful on the business overall and it was 1 factor and the other thing, which and again maybe your question may not be but I think in general when we look at SCM and we look at the way that the Mark.
It is and the the market share of.
Search I think it is.
It is safe to assume generally that the cost of SCM and all categories for all businesses continues to go up over time.
And because thats the way it works when you have that kind of market share concentrated I think.
And that's not.
Not ideal for the world, but I do think that debt and that happens what you see happening is the price.
It goes up that gets pass through the constituents that play and the search.
In the search marketplaces, and then that ultimately gets passed through to the customer and that's the reality of.
Of that world.
Thanks, guys. The jewelry, that's exactly right. So looking forward I appreciate it okay. Thanks, Brian.
So I think we have time for 1 more quick 1 so let's go to Nick Jones from Citi.
Great. Thanks for taking the question.
I guess just 1.
And that's quite of bit of confusion around what the the impact of the Delta is going to be and how are you thinking about the risks kind of going into the rest of the year.
And kind of pullback from letting people and other home.
And then maybe the second on <unk> I.
I guess more pointed is driving more proactive requests and.
And it's early days.
Yes.
Yeah. So as you pointed out I think it's really hard to the hard to predict what's going to happen with the delta variance.
What we have.
Observed thus far is when people are in their homes.
And they lean into spending more on their homes and it is.
And then a huge boon for for the services side of that business I think as you.
As we've all observed its leftist challenged on the supply side.
But I think there is no hope.
And that the hope that we will see continued.
Yes.
Hope that we will see us come out of this.
Huge imbalance of supply and demand.
Over the next over the next few quarters.
Terms of <unk>, Yes, we are seeing we are seeing increased both bookings and service requests on and incremental basis from the users who become and GT members. So they both.
They are both create more bookings so for angi services and they submit more service requests overall and again that's amplified further when we when we when we get those users to download and get those homeowners and download the mobile App, which is a really important driver for us are really important push for us as we think about the rest of the year and as we think about 'twenty 2 we're really.
Thinking about how to how to make sure we get more and more of our homeowners into that segment of key members, who have our mobile app.
Alright, we've run over time here of really appreciate everyones spending your morning, with us and look forward to talking to you next quarter. So on.
Okay.