Q3 2021 IAC/InterActivecorp and Angi Inc Joint Earnings Call
We put the stake in the ground that it's most important to us to do the right thing for the homeowner and the right thing for the pro and not to focus on short term EBITDA, we guided to revenue growth in or around where we've been in this 15% to 20% range, including including the acquisition.
And we've said we would take it to EBITDA flat EBITDA neutral some quarters might do a little better some quarters might do a little worse.
But overall, that's still the outlook our long term position is we obviously want to take as much market share as possible and get this to over 20% growth rate, knowing we've got a half a trillion dollars Tam out there.
Yes, just to add on a little bit of what I was pushing <unk> remember that we said last quarter.
That you should expect for the foreseeable future sort of our organic growth number to be in that May June range, which was roughly 7% give or take and then layer on the Andrew roofing acquisition. So I think you've seen since then July to October that range between 15% to 21%.
With what <unk> said and Thats, what we expect for the foreseeable future as we navigate this brand the rebranding as we continue to navigate out of this pandemic.
And then on the bottom line, yes, so in and around breakeven in Q3 came in a little bit better but we're.
We're going to continue to push and as I've seen so I'd push back that investment into the experience to make that product is the best as possible.
So our next question will be from Ross Sandler of Barclays.
A question for Neil or Joey on the narrative so guys.
Guys, how should we think about the cadence.
Near term in 2022, given the digital advertising and you guys.
Challenging comps in the first half.
Second is what are the like.
Lowest hanging fruit opportunities around traffic or monetization you talked a lot about this in the last call, but maybe what are we going to go to first and are these more iterations or are they potentially.
Pretty quick needle moving revenue opportunities and then lastly, the print business, what's the overall strategy for Meredith print business. Thank you.
Sure I can take it first go ahead Sir.
So the first the 2022 margin and the lowest hanging fruit. That's all sort of related question I know as Joey said and we said we have a lot of work to do and we think we can do most of it in 2022, so that's going to make.
Just wanted to walk you through the financials, maybe a little bit tricky to read as you know with all the other things we bought we've tended to take a small step back before he takes a big step for us and obviously, we are buying something very big here. So it's going to be some steps back.
We do that to address the low hanging fruit and let me finish up on the margin I think in the long term, we would expect the margin of the whole business to look like our merchants have looked historically.
The low hanging fruit question is I think one of the things that has us. Most excited is the low hanging fruit or the things we know how to do very much aligned with what we have historically been good at like.
We're going to make their sites much faster, we understand a formula for content improvement in the way that we've done things changing.
How they use add to the mix of ads to users of the AD load stuff. That's all very easy for us so theres going to be like an initial phase of changes that we can do very quickly that you've qualified low hanging fruit, but I do think youre going to make a really big impact, but then as you get more into it through 2022, and then on an ongoing.
This model is the same as our model.
Just work its doing the right things thats, making the very best content for all of the things they cover.
And essentially taking their brands, which will be our brands, which we think are some of the best brands in publishing and putting them in their proper place on the Internet and again I've said this before I think IMAX says to you Ross like there is no reason why the spruce is twice the size of better homes and gardens online that doesn't make any sense, so the opportunity to get.
Better homes and gardens to its rightful place online and some combination of this low hanging fruit and the really hard work, we have to do and that's going to start sort of immediately at closing to take us through 2022, but heading into 2023, we're very confident with the numbers we put forth a.
Covenant, where we're going.
Yes.
<unk>.
I think we've been fairly straightforward with what we said, we're going to do with print and print historically they've been focused on a very traditional rate based model, which is print a lot of magazines and sell ads against large audiences.
The data that the best days of that have probably passed.
The guys are going to change the secular advertising decline on print however.
Theyre magazines are beloved and their incredible editorials amazing so what we're going to do is we're going to work on the magazines and make them as good as they can be but we're going to focus the economic model on being much more of a consumer model, which means it's some combination of subscriptions and advertising leaning much more on subscriptions and other things like new stand a little less on advertising, which means circulation is going to go down.
A lot of these titles.
And that's all part of sort of like the evolution of immediate how to make these things healthy in the long term for food and wine and for southern living and for people and for all of these properties is going to be a long term part of this next we just wanted to do it in a way that's right for 2021.
The only thing I'll add to that I agree with everything else that the only thing I'll add to that is from <unk> perspective.
What we've said to Neil and team is that 2022 is a rebuilding year and should be a rebuilding year, which means.
Get everything done in 2022, so as it relates to the financials that you are I am not particularly I mean, obviously, we're going to.
The underlying metrics and progress on all the objectives that we've laid out we've got a very very clear path on what we're doing but as it relates to the financials for 2022, we're very we're much less focused on what that looks like and looking towards 2023, because we don't want to push big decisions out we don't want to push big change.
Our efforts out we want to get everything done relatively quickly and reflect all those transitional costs in 2022.
Our next question will be from John Blackledge at Cowen.
Great. Thanks, maybe a couple of questions for Joey.
Julian what does it.
It look like kind of post the Meredith deal how should we think about capital allocation and maybe an update on the CFO search.
Sure.
So.
I think.
Probably best way to think about pro forma cash of somewhere in the neighborhood.
<unk> five.
We have we have about $3 billion of cash right now and we'll leave that raised $1 billion of debt for the Meredith transaction and then there's probably another realistically a couple hundred million dollars of costs that all in once you get through everything all the costs related to clean up on.
Meredith that will come through over the course of the year.
We also have a we've talked about this a little bit we have a warrant with respect to throw that that is another potential use of cash that we would expect to exercise at some point.
And so with that all in we think about right in the neighborhood of $1 billion of half of totally free cash.
To spend.
And remember there is no debt at the parent level so that we.
We also have greater spending capacities and then just separately you have and Theres a lot of currencies that we can invest in or that we can.
Issue or or or.
Go any direction with.
We've got.
<unk>.
Currency of course, the angi currency.
MGM, there's maybe at some point tomorrow and so all of these things are areas, where we can think about cash going in one direction or the other and that provides us a significant amount I think of flexibility and the priorities are going to be the same they've always been meaning number one is invest.
Into our existing businesses that can look like what we're doing with angi right. Now we are reinvesting most of the P&L.
That could look like reinvesting in our existing businesses through share repurchases.
And that could also and I think probably the significant portion of our time right. Now is spent on looking at new things.
And we see a lot of new areas that are funding small scale we've got.
We are building businesses with Newco, we built a few businesses already and we've got a great list of businesses that we're trying to build with newco.
And again, we're always looking for new things and so that's going to be.
Yes.
A factor for our cash flow.
Second question was CFO search.
Theres too.
Kind of what I view, both actually it's great news on CFO search one is we're seeing phenomenal candidates I've met with another half dozen this week and a lot of interest in the role.
And.
The other good news is we have the luxury of being able to take our time to make sure we get the right fit.
All of that Mr. Schneider, who is a phenomenal doing a phenomenal job in <unk> Investor Relations. We have mature men, who is doing an exceptional job and has been with us for a very long time as controller next office our treasurer.
And the list goes on we have a phenomenal finance that and so I'm not.
Worried about where we are as ive to say, we don't need a CFO and wants to CFO I want to get one quickly, but we have an exceptional.
Finance App that keeps the trains running very well with high confidence are all of us internally.
We're going to make sure we find the right person for the role and take our time doing it.
Thanks Joey.
Our next question will be from Brent Thill at Jefferies.
Good morning.
Dash has been decelerating on a tough comp in the October growth rate was also a deceleration on an easy comp just curious as to your confidence still on the organic 20% sustainable growth.
And any commentary you can provide on the tailwind they're experiencing from the 90 day front.
Sure I'll take the first thing is that <unk> I mean, one of the one of the.
Things, we talk about a lot in our businesses, we don't need personally identifiable information to do what we do again, if someone is coming for diabetes information no pretty much what we need to know about them. If they're trying to figure out I think as Joey wrote in a letter what color to paint their children's room, we know everything we need to know about them without knowing any of that so none of the Apple changes that provided a headwind I think if there is.
Headwind. It is as you said, it's a hard comp I mean at this time and it's primarily in the in the transactional Commerce business. This time last year people were not shopping in stores at all it was all ecommerce I think at this time last year. There was no there werent any supply chain issues both of those things are fairly big headwinds.
Feel good about the 20% long term target I think we had an exceptionally good time period last year I think things are just.
I guess, even out a little bit, but I think in the long term I think 20% is something that we're pretty comfortable.
To us.
Yes, just to add on a little to what to what Neil said remember the comp last year. We grew 33% in Q4, which was the high point of the year. So it is a tougher comp, but it's something that we've been discussing throughout the year that the comps will get tougher.
On a two year stack that that growth in October would have been closer to 40% relative to where we came in so still a really healthy number.
And then I would just also highlight that sort of the macro environment you saw some of our some other.
Businesses report Amazon their U S ecommerce business only up 3%. So that just illustrates what Neal was saying about some of the headwinds.
Up against our performance marketing business, but still up over and around 10% in the last couple of months.
And just a quick follow up for Joey on search, it's doing really well can you walk through what youre seeing on that side.
Yes, we the search business now is is primarily performance marketing in the sense of we go out and acquire users and we monetize that when they get to our site.
There is two components of that is there is our.
Patiency in acquiring users, where we had a technology upgrade that got us better at.
At the acquisition and then.
And then on the monetization side, that's been good pretty steady, but we found as a result of some of the work we've been doing on some new channels for marketing, where we go out and find users with a new AD unit significantly.
Historically we've.
Generally acquired users from search into a search experience now we've opened up the ability to acquire users from display advertising and so that get opened up inventory on a lot of publishers, where we now can can market there and drive back to the App site for monetization and that.
Effort really started at zero at the beginning of this year is going very very well and it's something that we'll continue to lean into and grow.
It doesn't change my overall view on the segment, which is it's a segment that debt.
Has some ups and downs and but for US has been a reliable cash flow generator and we think can continue to be a reliable cash flow generator.
Thank you Brian.
Just talking about the numbers a little bit of help you understand kind of the trajectory. There so growth for total starts with 57% in Q3 accelerating throughout the quarter with 78% in October we do expect that expect that to moderate.
Going going forward.
The comps last year again, Q3, 2020 asked media, which grew 88% in Q3 and over 100%. The last few months was down 7%. So.
An easier comp versus the 40% growth that we saw in Q4 2020. So we do expect that to moderate somewhat but still still healthy based on all the things, we're doing and what Joey went into the other piece of start as desktop and as you know there. The biggest piece of that is our BDC desktop applications business, which we have effectively stopped marketing.
Earlier this year. So you have the dynamic of the tail of that revenue continuing but that will continue to erode over time.
And but no marketing really against that so that is why youre seeing sort of the profits that starts jumped the last.
Last couple of quarters.
We do expect continued healthy profits from search given what's going on in App, but certainly not at not at the levels. We've seen in Q3 long term.
So our next question, we will go to Brian Fitzgerald at Wells Fargo.
Thanks, guys I'm Meredith you've talked about the <unk> the brand search some of the complementary complementarity around monetization wanted to ask about audience composition.
Do you think the audiences are little older more female and wanted to ask of it if it helps.
You tap into wallet share in categories like CPG.
I think the answer to all of that is yes, I think one of the things we're really excited about and you can do this in.
Any of any of the sort of the verticals in which Meredith compete we compete also in just take food for instance, right and you can take the food brands that are in North America food brands food and wine is a high end brand and a piece of the market that we don't occupy all recipes as user generated content and a piece of the market we don't occupy.
Okay.
You can go down the line and you compare it to like where the spruce sits which is sort of like like your local supermarket or we're serious sits which is like Brooklyn hipster food.
Almost.
Every brand they have sits in a place in the market, where we don't see it. So it is very very complementary you can take that and you can start to look at.
Some of the sales clients and a lot of this we knew beforehand, but the people we sell to there is surprisingly little overlap like there is a lot less overlap.
Then one would expect we do very well in.
Sort of endemic pharma and academic financing, we do okay in lifestyle victory tremendously well in lifestyle and don't really play as much in some of the areas in which we play so it's all very complementary complementary audience is complementary.
<unk>.
Advertising partners, even the way we do commerce is different.
Focused on commerce, such deals and we're very focused on commerce product review based which we're going to make the whole company focused on so one of the things the more we learned and the reasons. We got more excited is exactly.
It's almost like.
This is like a plant question for me I like it so much like everything is complementary and that's what we're really really excited on even taking a step further we're very good at making my transaction and they are very good at making money selling ads and thats something that Joe highlighted in the letter as being very complementary.
It's a really really nice fit at almost fits together like a perfect policies.
Got it appreciate it thank you.
Our next question will be from Jason <unk> Oppenheimer.
Hey, guys. Thanks.
<unk> asked a bit more about angi total roofing first can you.
What is that grow kind of maybe just pro forma so how much did your top of funnel benefit that asset and to the extent that that was successful and is this a playbook should you own should you buy three or more of these and other verticals and then just another question on <unk>.
You said transaction transacting service professionals is up 7%.
Get the business.
Kind of growing pretty minimally I mean, just is there.
Certain service professionals, you are moving in while others may be moving out. So those are two questions. Thank you.
Thanks.
So just in terms of how we're feeling about roofing overall, we're incredibly happy with our roofing is going.
The early read is that it's doing exactly what we wanted it to do so.
You change ownership.
You want to make sure that everything is doing what it's doing what you thought it was going to do so that's happening.
The two dimensions on which we are expanding that business. One is geographically. So we're in three new markets Q3 will be going into two more new markets Q4.
Driving the majority of the top of funnel in those new markets from Angie. So energy is the primary source of leads and those three new markets Q3, two new markets Q4.
And overall, we're seeing comparable conversion rates to what they were seeing in the existing markets. The early read is that it is going in the right direction. So we're very very happy with the team very happy with.
The existing perform our performance in the existing markets happy with the early read.
I think there is no reason at this point to believe we won't be able to expand that out into many more markets next year I think there's a lot. We can do with that so by getting deeper into that funnel. It exposes us to more players in the supply chain the manufacturer of the distributor.
Financing partner gives us a lot more exposure to the different parts of the value chain that go into the winter roofing. So we haven't even started to really to really play there yet, but I think you can expect as.
As we scale that business out we're going to wait or we are going to wait for those the first three markets, we've expanded into mature a little bit at some critical mass and then we will we will expand that number of markets again next year, assuming everything continues to.
To go on track with roofing.
The follow up on that was are we going to do the same thing in other categories.
I mean as Joe pointed out this is a material change for the business with a relatively small financial transaction for us to buy that.
To buy that business, we are actively exploring the same thing in other categories I think I've referenced before some of those categories that we think could be $1 billion standalone categories things like fencing things like driveways things like exterior painting.
Interior painting to a degree and we are actively looking at actively looking at how we might repeat that again, while we're developing the confidence that developing the confidence that this playbook.
Is the right one for US I think our early read tells us that yes, we're going the right direction with it.
Zoom all the way out in this this was effectively the playbook that we've had with that.
With handy wear panty was small and a small number of categories and we've expanded handy out now to be energy services in the book now business in.
100, plus categories across the nation. So I think the early read.
Is very positive and we are likely to continue down that path.
In terms of transacting Sps.
Look we made a commitment to nine months ago to say, let's put the customer in the center of everything in terms of what that means for the pro that means when we bring on a pro we want them to be incredibly successful on the platform.
So we've done a lot of work to change how the sales team is structured in terms of compensation plan in terms of Verticalizing that salesforce and that's starting to play out.
Starting to play out and the types of Sps that we're bringing on in terms of how we throttle their spend in the first.
$690 $12 60 to 90 days up through the first six months, how we expose them to features on the platform. How we gradually increase their exposure and I think all of that has proven to be super positive. So.
That's some of what's going on in terms of us bringing on <unk>.
Fewer higher quality and by quality I mean likely to be successful on the platform Sps.
And we're.
The early read again on that data is that by doing that we're seeing higher levels of retention higher levels of ongoing engagement with those are from those Sps.
And I think the ROI for <unk> is going to be much higher like we said the things we're trying to get done or for the homeowner who want to help them get the job in their home done for the SP. What we want to do is want to help them grow their business and we're not successful long term unless we truly helped that SP by delivering them great ROI. So that's some of what's going on in the Lee business in terms of transacting Sps.
In addition to that obviously, we are facing supply constraints and thats putting a.
A dampener in terms of engagement, there's also stuff going on in the services business in terms of transacting Sps, where we are seeing a concentration in some cases in larger Sps, which is resulting in fewer.
Fewer SP counts for the volume of service work that we're doing so the mix shift of all that is changing what it means to have a transacting Sps. So you can look at the transacting Sps and saying, yes, we are driving towards higher quality larger transacting Sps, who we know we're going to be more successful in leads and more successful in services and ultimately what we want to get to is.
Asps that are buying across or transacting across leads ads and services, where it is right for them.
Thanks for the color.
So far our next question will go to a gala Rooney in at Wedbush.
Hey, guys.
A couple of questions two so firstly, there's been a lot of talk especially this quarter.
Around.
Why.
<unk> constraints, especially in Andrew's line of business without having an impact on you guys at all especially on the energy services side.
Labor costs.
Taking longer to finish jobs waiting waiting for a construction materials and then you talked.
Also a bit about expanded contribution margins any color you could add around that.
Is it coming from certain categories.
Where are you along that path how much more improvement is there a lot of things.
Great.
In terms of the supply constraints.
We're seeing it in pockets in energy services.
However, the product market fit that we have there is so strong that it's growing through it so.
Actively at 80 plus percent or around half the 160% so call it 80% organic growth rate in that business.
The product market fit is so strong it's basically growing through the supply constraint. Yes. There is stuff on the margin that's impacting US is some of that business is sold through our retail partners. Some of our retail partners, obviously have supply chain constraints. We've all read about the the backup on the ports, particularly in California, that's affecting that some of our pros are having issues getting materials that's the.
<unk> that but the product market fit is just so strong on AG services that it's almost not being noticed quite so much yes, it's happening.
While parts, where we're experiencing more of the supply constraint issue or the supply chain constraints is actually on the lead business, where the lead pros are in the AD pros are scaling back.
In certain cases their willingness to continue to invest in Leeds and adds when they know they are struggling to get more pros onboard when they are struggling to get tools machinery equipment et cetera in there.
Not growing their business as fast as we would like so the two stories are.
Pros are joining the AG services at such a fast rate.
You don't notice supply constraints, whereas on the <unk>.
The <unk> business, we do see the supply constraints affecting the rate of which.
People are able to add capacity.
In terms of the expanded contribution margin.
Sure.
We're not going to get into the specifics on the exact numbers, but the contribution margin year over year change was.
<unk>.
We are seeing it across the board, particularly concentrated in the earlier categories that we launched so the categories that have been around the longest the densest markets. The places where we built up to a small a.
Certain number of jobs per Geo, we see the expanded margin, we see expanded take rate lower op costs lower customer service costs, lower refunds claim rates et cetera, all contributing to expanded contribution margin, where we're also seeing.
Interesting data is on the expansion of revenue that we're getting when we expose our customers to angi services in the service request path. So for every every time, we exposed to energy services will generate about the same amount of lead revenue from a service request as we were a year ago.
But we're seeing a significant increase in the amount of revenue we're generating from energy services as a result of expanded expanded.
Conversion on site to increase conversion on site increased and more accurate average order value so better pricing and then the third one is increased fulfillment rate. So the three of those put together are expanding the monetization of an ASR from services whenever we show services on site. So all of that is coming through and also contributing.
Two greater density and ultimately more more contribution margin.
Great. Thank you.
Our next question, we'll go to Dan Salmon at BMO.
Okay. Good morning, everyone.
Maybe for Joey first just to I just wanted to go back you've mentioned the broad strokes.
The Meredith deal a moment ago I, just want to come back and ask specifically.
The announcement any any updates on any details how is the process going specifically anything that more that you've learned.
And then second for Neil the letter walked through.
<unk> kind of distinguishing characteristics of got dash.
Call that curation trust and privacy.
It seems like those things are particularly relevant this quarter. So could you just walk through those three and unpack them a little bit and why those are four important differentiators.
Sure I'll, let Joey do your first question first then I'll do the second.
Yes.
The second question is much more interesting, but I'll, let you I'll let anybody.
Interesting.
Okay.
Actually I mean.
On how we're doing so far we're really happy about everything we've learned so far.
We are.
We've got obviously, we can only go so far until we.
Have clearance to close but people are starting to at least get to know each other.
And we're doing as much research as we can to have a plan in place for when we close.
And I do think that we are as tightly planned in this one as we've ever been in.
We have them.
And that's a testament to the amount of diligence and work we did in advance of getting to a deal.
And a testament to the ongoing where people are doing right now so that when we get to closing we will hit the ground running and we know what needs to happen and who needs to be and what six et cetera, I think thats.
That's a great head start.
Neil you want to hit the three thing Hey, Dan.
I can actually do it like a full hour on these three things I'll try and keep it short.
Truth privacy curation.
Sort of the words Joey use, but that's pretty much how we look at things and I'll do them in reverse order.
The curation part, which we talked a lot about sort of like being everything as being something that's the key to what we do and.
The old problem that like about dot com hasn't even like some of the Meredith brands as you can.
Can't be everything to everyone and you need to be experts in things and the way we've built our brands and the way Meredith brands are set up as we can be the experts the single source of truth Trust expert for something Thats seemingly unimportant is like how does this smoky eyes. When you have a date to go on but thats very important for the woman Haynesville Smoky eyes versus like how did.
I do with this health diagnosis, which I got which is also which is fairly high stakes in a different way or what do I do to roll over my 401, K sure rating and providing the very best answer on the internet or in whatever medium. We are playing whether it's print or weather or something else is a fundamental tenet of our business and as the fundamental thing that has gotten us here and part of <unk>.
During the other things like having a second fast and not too many ads and all these things and that ties right into call It truth and trust and.
We don't do content, we're not like in news feed we're not.
<unk> news, we're not like.
Conspiracy, where none of that we are content.
Net written by experts with true knowledge of the topics. They are talking about and we're doing that combined with <unk> at a scale no one's ever done it before which is a very good for users because we have the resources to make the best stuff, but being great for advertisers. So.
You will now be able to spend at scale against intent driven segments, where you know what somebody wants at a level that we think we can take some money away from the platforms and the facebooks of the world.
Don't have that and.
The combination of the curation and.
The trust and the truth.
Great to intent and that is what we do best even in people people and entertainment is sort of a de facto go to source someone checks and they read something to see if thats true or not so across everything we're doing those are really the themes one through it and the last bit about privacy is something that we've been focused on for a very long time.
We haven't been right about everything, but we have been right about this we never thought that something that you couldn't build a business around that cookie that never really made any sense to us.
It's like my dad looks at a set of golf clubs online. It's also around for a week of freaks them out like that's not going to be a thing.
What we always knew is that.
Context, and content would work and Thats whats worked in media for the last 100 years right.
Enthusiasm magazine has always done grades still those great like a food magazines still those breaks. This so we don't need to attract people to know what they want and one of the beauties of Meredith as they have lots of market data and lots of first party data and lots of subscription data that we don't have that.
Data that people want you to have.
Because they're really interesting this thing and in most cases paying for something so between our ability to target by content and emeritus ability to certify our content and first party data and when we can learn from there.
We really look at privacy is an advantage and youll see a bunch of other media company with some fairly big headwinds because of changes Apple or whoever is made that's not really been a factor for us at all.
Out.
A couple of comments one.
Just.
Looking at the.
The.
Selection of.
Faces on this call you might need to explain what smoky eyes.
Neil.
Alright.
The debt.
That makeup.
So everybody knows.
The deep in this journey.
The.
Okay.
One important thing for us.
The trends that we're talking about here those three trends in particular are thing that we believed in for several years and Thats informed dot dash strategy for several years right now and execution for several years.
And it's only now a lot of those things are coming to the forefront with back for the last little while those things were pretty unpopular.
But now that things are coming to the forefront and that's why another.
Another reason why we felt confident that leaning in with Meredith and making this bet is as we see those trends we've seen those trends those trends of improvement and we think those trends have a significant runway still ahead of them right now.
That's great. Thank you we will make sure. We all of our makeup done better for next quarter go to British Columbia to see anyone with a smoky eyes on this call.
Uh huh.
Okay.
Our next question will be from Michael <unk> at Goldman Sachs.
Hey, good morning. Thank you very much for the question I was just wondering if you could talk a little bit about.
How we should think about gross margins for angi over the next couple of years, particularly as services becomes a larger part of the mix.
And then could you also talk a little bit more about the progress on angi and ancillary initiatives like Andrew pay.
<unk>. Thank you very much.
Sure. So in terms of the margins I think in terms of the core.
Ads and leads business, we've said, we ultimately expect that to get towards 35%.
The makeup of <unk> services is going to be different so within energy services, you've got smaller jobs. The 300 dollar jobs.
Where we have a <unk>.
<unk>, a significant opportunity to generate margin, where the take rate is strong.
The operations and customer service cost is mostly mostly something that we can automate and we expect to be able to get to.
To be able to get the good margins on that.
And then we've got the larger the larger jobs. The 10000 dollar jobs, where we will see lower lower percentage margins.
Ultimately, though we put it altogether and this isn't about driving towards a particular percent margin. This is about margin dollars and this is about us saying that we had a business before which was focused on focused on a very small subset of that half a trillion dollars of time or $500 billion Tam.
And now what we're saying is we're focused on the entire thing and we should be able to generate far larger margin dollars by focusing on that and if we do the right thing for the homeowner we do the right thing for the pro we ultimately think that we ultimately think that the margin dollars pay off the moat that we built around the business the degree to which we.
The degree to which we will be very differentiated from the competition will allow us to get to strong dollar margins over the long term.
What exactly that looks like in terms of margin percent, it's not something we're focused on we're focused on what the ultimate dollar margins will look like.
Your sorry. Your second question was on the Android Hey in other cases, yes, yes. So we've got a number of other things going on as you pointed out we've got Angie.
Angie key membership we've got payments, we've got financing all of them continue to grow pretty nicely. So the angi key membership as a reminder for people as you pay $30 or $29, a year and you get up to 20% off hundreds of everyday home services.
That increases consumer retention rates increased likelihood to transition over to mobile app and that the data that we showed before in terms of where that's tracking for retention rates continue to hold and we're pretty happy with pretty happy with the fact that the member who generates or the member who downloads the mobile apps.
Spends an awful lot more than the average consumer so that's in a pretty strong spot the rate at which we're adding members continues to hold so we're very happy with the growth in the membership payments. We previously rolled it out to our lead pros with more recently rolled it out to our AD pros so the rate at which we're adding.
Rate at which we're adding.
Consumers and pros to the payment experience continues to grow nicely I think we had our first our first $600000 day yesterday or the day before in terms of volume of payments that were processing, so really happy with the consumer feedback on it really happy with the pro feedback when pros use payments and generate revenue.
From the platform that we process for them their retention rate is materially materially ahead of our other pros so very happy with how thats going and the third one is financing so were.
Financing is still small relatively it's growing rapidly in terms of the growth rate or in the for the quarter high single digit millions of dollars of a financing.
We provided two are provided to our homeowners began satisfaction rates on that are really strong.
Pros love it because it allows them to allows them to engage customers they might not have been able to engage customers love it because of the convenience financing where they are where they are at the point of sale. The three of those things combined are not yet having a material impact on the business, but we hope that as we get into 2022, when they scale that we will start to see some impact in 2020 late 'twenty.
'twenty two.
From at least one of those initiatives overall I think.
You think about where we're going Holistically, we've got to make sure that we have a deep <unk>.
<unk> deep knowledge and a very robust payments platform I don't know any large consumer marketplace. That's been built recently that doesn't have payments is a core part of the product. So we're going to continue to push on that financing, obviously very topical important and the early read we get from membership gives us the confidence that it's the right thing for us to do and I think on member.
<unk> in particular, it's a pretty light program right now it's pay to save it.
It's the equivalent of two day shipping or the energy equivalent of.
Of.
Our Costco like membership will pay it pay to pay to save I think in the coming weeks and months Youll see us make that a little richer one of the first things we will be we'll be starting to rollout in terms of making that Richard has to do with that.
As to do with a tax base service, where we'll give people access to a home experts who can we'll give our members access to a home expert in a trial to allow them to communicate with someone who will make bookings on their behalf help them out with with issues that they've got for their home as we start to build that program into something where you really will turn to Angie.
Key or Angie key four for everything inside your home. So early read is super positive on all three still.
Hello, and thanks for the thoughts thank.
Thank you. Our next question will be from Nick Jones of Citi.
Great. Thanks for taking the questions I guess, one on angi and one on <unk> dot.
Dash Meredith.
Angie.
How much of the kind of.
Requests are related to kind of people, who have purchased new homes and is there kind of a risk that if the housing market cools off.
That request might slowdown I think buying home generally triggers.
If I kind of think about doing repairs and then I'll have a follow up on <unk> Dot dash.
Yes in terms of the.
In terms of the volume of requests look the bigger driver of of request value almost in the volume of dollars flowing through the platform is just the.
The size of home and the age of home.
And people's ability to invest in it so yes, youre right that youre right that people buying new homes does trigger a percent of the service requests. However, the bigger drivers are just the size of home age of home and capacity to invest so that's the driver of service requests.
On the other side of the platform, we know that our pros are so supply constrained right now that their willingness to pay for <unk>.
As a function of how much demand they have got from other sources. So we don't feel particularly exposed to shift and shift in housing.
Housing demand instead, I would say that if we see a normalization of consumer demand it will probably be very beneficial for our AD business in our <unk> business as those pros experiencing experienced less of a less of a supply constraint overall, the other thing I would add and Mark Schneider, probably hasnt number I think 60%.
Our service requests are in.
Sort of necessary jobs.
So somewhere in that ballpark.
Yes, we said I think we've said historically roughly two thirds are non discretionary and.
Non discretionary that was the word I was looking for thank you and then the other thing I'd say is yes.
When.
Home sales slow and Theres less turns that also.
Has a natural hedge in that which is people do more work on their existing homes.
Seen that historically I mean, it's really hard to predict any of these things in COVID-19 changed a lot of things so maybe historical trends won't be indicative, but that's what we've seen in the past.
Great.
We'll have a report coming out in the coming.
The coming quarter.
It shows a significant change in the percentage of time people are spending at home in a significant change in the percentage of dollars that they're spending on their home, which we think again.
Yes.
Reflects the.
The change in consumer behavior to focus on the home, which we don't think is going away anytime soon.
Okay. That's helpful and then on that as Meredith, there's some interesting charts on.
In the shareholder letter on page four and it sounds like kind of making Meredith.
Property is faster is kind of a key thing you're going to work towards that that sounds like kind of taking the entire library and re platforming to the dot Dash Tech stack when you think about maybe improving SCO.
So I think in some cases due to kind of the code actually on the content and how your format. The content is that kind of.
Rejiggering, the entire library or is it more on kind of all future content and it's going to take some time.
For those benefits trickle through couple of answers to that and this is probably a little bit more in the weeds, maybe one but I'll give you the answer anyway, there <unk> is actually quite good.
Actually both the new and so I'm not entirely sure.
We're going to migrate.
Going to migrate everything over we May we may use some of their things and thats going to sort of like be consistent with a lot.
They're very smart over there and they actually just completed a migration of all their brands onto one unified Tech stack, that's pretty good. So we're going to we're going to work on all of that but what I would say the answer is works for <unk> and it also works for everything else, we do and we've said this many times.
We're very focused on search because we are very focused on algorithms and if youre going to be a publisher today or if they're going to be on the consumer internet anyway being travelers I mean anything algorithms are going to be between you and your users and what the algorithms. We care about are the algorithms that care about where they send users. So that means Google that means pinterest that means Apple news.
That means flip board that means.
Sort of like the different algorithms within Google we care a lot about so.
When we look at a new site consistent with what we've done with other things you bought its very very comprehensive and we are as concerned with the oldest piece of content as your newest piece of content. So.
Because our user doesn't care and an algorithm doesn't care. They just want to know what's on that domain and what is it coverage is it the best thing and that's our focus so when we make new things, they're obviously going to be made.
With an island some different things and Merck has done historically, but one of the really really big opportunities as these brands and these websites are.
Some of the brands 100 years old the website I'm, sorry, 100 years old, but they are 10, 15, 2025 years old and the opportunity to go back and get a look at some of that content and apply some of the things. We know now that they wouldn't have known than to some of the some of their content in there.
They've been working to update and some they havent.
Really really big opportunity, but I think the key takeaway for this question is what we do and what we do to brands. When we go to websites and actually we're going to print magazines as comprehensive it's not.
Cherry picking and again there is one of the things we say we stole from another.
Another publishers like not all of our content that we have made.
It makes us money and we don't care about that but all of it supports the content that makes us money, which means that if youre going to have health domains is obviously going to be some topics that are very big in some traffic that are very small the small topics has to be treated with the respect in the care of the big topics because the person who uses that are the advertisers that sees it it doesn't matter to them that it's a small town.
I can understand that that's their topic and we've looked at all domains that way.
Thanks.
Our next question will be from Justin Patterson at Keybanc.
Great. Thank you and thank you Joey for clarifying Smoky eyes, I actually I think Google that a moment ago.
Two if I can so first one for Oceana you brought on that your first Chief data Officer would love to hear how you're thinking about just ways to leverage data on the angi platform over the next few years and how we should think about that those benefits manifesting. Unlike for Joey would love to hear about top priorities for <unk> dot com it looks like trends are going well.
So what are the next areas to lean into for growth. Thank you.
Thanks, I'm curious if my wife, and my wife will have Smoky us for our data.
<unk>.
Logical conclusion of this.
<unk>.
So in terms of data I look the feedback I've gotten here has been everything from how did you not have achieved data officer before too.
This is obviously something we should be doing to how can we put more money into investing in <unk>.
Investing in using our data we have so much opportunity in data that it is almost embarrassing so the use of.
The use of our data to accurately price our leads and ads for our pros is a huge opportunity right now we set pricing for our leads approximately once a year, we don't really change that.
That's a very obvious and very easy way that we can very quickly.
Very quickly start to realize some benefit there.
Second big opportunity is bringing our products together in the most thoughtful way.
From a data perspective, the wind to show an AD Pro Winter show Elite Pro Winter show services right now the.
Some logic behind it which is intelligent, but it is not dynamic doesn't respond to the availability of supply doesn't respond to availability of demand.
And the likelihood that we will have future budget from pros. So that's a second significant opportunity and then the third is <unk>.
The third is on consumer experience. So the more we can know about your home and we know a lot about your home already you've put in multiple service request. We can obviously access access public databases to know a lot about your home the more we can deliver a customized experience to you that makes it easier for you to care for your home. So I think there is.
A huge opportunity for us to become.
The the repository for all of your information about your home in a way that.
Reinforces Angie as deep place to go to take care of your home. So the more we know about your home from you from other places online the more we can the more we can thoughtfully help you taken care take care of your home taking care of your home is a huge task as we all know biggest financial purchase for most people.
Biggest spend item overall and it is.
The average person needs a dozen plus things done in their home every single year. Most people don't even know what those dozen things are those dozen things are not the same in.
In Florida in Miami as they are in.
In new England in Portland, Maine pick anywhere it's a different doesn't take so we got to be very thoughtful down to ZIP code level down to a home level down to address level on how to use the data and I think those are the three big opportunities, it's pricing, it's matching and it's actually delivering a truly unique experience.
The homeowner and I think we are.
We're best place to do it so if anyone out there we've got more data and we've got this opportunity to bring it altogether unfilled on amazing profile for you as a homeowner that helped you helps you take care of your home.
And Jess in eye care.
Biggest factor right now is just back to the core business and blocking and tackling on the core business, where we've been able to move conversion Onboarding flows.
Data gathering that makes the matching more efficient between both sides that makes it more likely that when you make a posting.
Youre going to find people applying for that job and that you'll have good robust applications that makes sense.
And that a lot of that's why subscribers are up I think.
Two a third.
In this quarter.
I still think we have more to drive thereafter, we're benefiting in there at the moment from just.
People back to work and people back to going out and things like that but.
Our naturally helping the business and on the flip side easy comps in the prior period.
But beyond that and again theres still more work to do there, but beyond that there is enterprise, there's instant book, which is similar to what we've done at AMG and there is day care facilities, which is a new opportunity for us where we're just starting to do some experimentation and then there is.
Also tying it altogether with consumer and enterprise and homepage and I think one of the big macro trends that we are.
Okay.
Owned and care and we're excited about and care.
Is this notion of the enterprise starting to take a meaningful role in care and their employees and it makes a big difference on getting the right people into the workforce.
It is a.
The burdens on.
Women against men in childcare are very significant in this country and meaningfully less significant in a country like Sweden, where theyre subsidized childcare and.
Workforce participation is basically equal between genders, and so I think.
<unk> little bit of macro tailwind I think potentially some regulatory help there which would be a phenomenal thing for this country.
And then just execution on these things where enterprises are starting to realize the benefit of this service and enrolling. This service I think all of those are going to be drivers for the next little while.
Great I think we've reached the top of the hour so.
Do you have any final final thoughts.
That's it. Thank you all for joining us really appreciate it and see you next quarter.