Q4 2021 IAC/InterActivecorp and Angi Inc Joint Earnings Call
Actual results could differ materially from any forward looking.
We treat our guests.
Sure.
Good morning, everyone.
Welcome to the IAC and Angi <unk> fourth current quarter earnings presentations I'm, Christopher Halpin CFO of IAC. Joining me today are Joey Levin CEO of IAC and chairman of Angi, a sheen hanrahan CEO of Angi, <unk> and Neil Vogel CEO of Dod Dash Meredith.
Similar to last quarter supplemental to our quarterly earnings release.
He has also published its quarterly shareholder letter.
We will not be reading the share common letter on this call is currently available on the inner in Investor Relations section of Ice's website.
I will shortly turn the call over to Joey to make a few brief introductory remarks, and then we'll open it up to Q&A.
Before we get to that I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward looking statements typically may be preceded by words, such as we expect we believe we anticipate or similar statements.
These forward looking views are subject to risks and uncertainties and our actual results could differ materially from the views expressed today.
Some of these risks have been set forth in IAC and Angi <unk> fourth quarter press releases and our respective filings with the SEC.
We will also discuss certain non-GAAP measures, which as a reminder include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during the call.
I'll also refer you to our press releases, the Iowa, IAC shareholder letter and again to the Investor Relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures with that I will turn it over to Joey.
Good morning, everybody. Thank you for joining us.
We just realized a few moments ago, we are courteous enough to have Chris introduce himself for the first time as a participant in the IMC earnings call.
I think we've got a staged that better I realize but I am nonetheless, incredibly thrilled and relieved to have Chris here and the role of CFO .
Chris has been here I think I don't know a few weeks, so far and already digging in and really incredible ways challenging assumption is doing all the things that we would have hoped.
Of a CFO .
And I think he is going to be a a tremendous excellent addition to the team and we're thrilled to have him here for the first time.
Hopefully you guys will take it easy on him because he is still only a few weeks in but <unk> been doing a lot of studying and learning. So it seems like a quick study.
Also of course, Neil is here, but for the first time and officially a much larger role and so I'm sure you'll have a lot of questions about that and Athene as Chris mentioned is here and most of you know machine by now.
This is snap was done several calls without this.
Mentioned machine again for the opportunity to pronounce his name and hopefully I'll get the opportunity to learn of it by key pronouncing. It. So welcome machine again trends with machine.
That.
Very quickly.
21 was a good year a year of a lot of change for IAC for many of our businesses thinking about where we started the year with vimeo over where we ended the year with that dash Meredith.
Where we started the year as our home advisor Andy's lifts and ended the year as Andrey.
And so 2022, where we're.
We have the pieces in place to start to execute on.
Growth across a number of businesses.
And we plan to continue to invest throughout the year and really build from here and unlike the tools in our hands for building and that's what we intend to keep doing.
So let's get to your questions.
Mark O M and also by the way Thank you to Mark Saad who's not on camera.
Today, but he was nice enough nonetheless aware tie here with us in the background and you'll be orchestrating that step back as usual.
Kelli <unk>, our first question will be from John Blackledge at Cowen.
Great. Thanks for the good morning.
What maybe one for Neil one for Joey.
Neil could you discuss the operating plans forgot to ask Meredith this year.
And is the 15% to 20% year over year revenue growth was that the expectation for 'twenty, two or just more general expectation. After this year.
Then for Joey could you discuss those strategic rationale for increasing mistaken MGM and what did I see.
Planes more over the long term with this investment thank you.
All of the hub of ours, So I think the 15% to 20% is.
What we're gonna ramp too through the year.
Let me give you a little background on where we are but we are day 76 of this acquisition James Harden day, if you're me in a basketball fan.
We made some changes to print last week and I'll break this down for you guys strictly sort of like look at print will get digital will get the AD business under the commerce business.
The print business. We've said all along we were buying brands and I think we fairly well telegraphed that we were going to do and as Joey said quite eloquently in his letter we're going to invest behind print brands that people are willing to pay for and I.
I think we're very fortunate that our major brands and most of our brands. Our brands people are willing to pay for and we are very optimistic about print and we're very optimistic about how it's going to help our branding we're very upbeat about how it's going to support our digital this is obviously a very different perspective than.
And then Meredith has had historically.
We're talking a lot internally sort of about our big six the big six and print that are going to be the anchors at what we're doing which is people southern living better homes and gardens real simple food and wine travel and leisure.
And as I'll, let Joey said in the letter with it it is not.
Our business plan to make cuts and do nothing different in hope something changes. So what we're really going to be doing is focusing on what we can do to enhance this product better paper better art direction.
Content all of these things to do to make it much more premium product that gives me things are real lifespan and really sports digital and is that the proper manifestation of these brands in the world and look at it it's no fun to do what we did last week, but it's also like fairly evident that parents don't really wish to receive parenting advice magazine that one from the Internet.
So it was really an evolution as much as anything and and I think we're really off to the races.
Have a very strong print team for Meredith Martinez and we're pretty optimistic.
Digital which is the real crux of what we're doing we have made substantial changes in the two plus months we've been here.
First is structuring.
Taking what was essentially a matrix structure and we have put everything into our structure, where every brand all of our brands now have clear leadership and dedicated resources of G. M that functions almost as a mini CEO , but owns all pieces of that brand from content to product attack, but we've arranged everything into groups. So food is with food and homes with home.
<unk>.
And when you look at this again, it's worth reminding everybody. We are the number one player in the food with an important player in home with an <unk> player beauty with an online play and entertainment, we're near the top in health, we're near the top in finance. So we have an incredible amount of clay to work with and now we've got the leadership team in place.
We can start running our playbook and we've talked about this a lot.
And the thing about the playbook that has us most excited is we're at a point now where most of it is pattern recognition. We are we've seen this before we've talked to you guys. We're liking of 12 for 12 or 13 for 13, when we get these incredible brands and we can run a remediation program, which is again make the content is good as you can get it make the sites as fast.
And our sponsors you can get it and make the ads.
Respectful.
And one thing I would say is.
I see as the best possible place to do this because the only conversation to have with Yahoo. Joey telling me to go do this now and telling US to go do this now and get this done without regard to the short term make all the changes that will get us the 15% to 20 get it through the 415 EBITDA next year and we feel really good about where we are quickly on advertising where to be rolling out a fully restructured ad sales.
Team in the next two weeks, which we're very excited about again, that's going to parallel more vertical structure like what we had.
We feel really good we are out right now for the first time doing some combined pitches or the one plus one plus one plus one equals three theory, which seems to have legs and seems to be working which we feel very good about.
Unified AD stacks can help us programmatically.
Meredith I think if you look historically digitally I think we have been much more focused on.
Content and user experience and merit has been much more focused on revenues. So we're learning a lot from them on the AD side.
Of how to optimize how to maximize what we have which we're excited about and then the last sort of the I guess the fourth leg of the table a disruptor elektrostal towards like the table would be commerce.
There's two really exciting things that have come out of this one is we built an incredible commerce business and an incredible testing capability growing as quickly as we were growing.
Now we went from three test kitchens to literally 50 test kitchens, and we now have a couple hundred thousand square feet in various places that we can really test products and get into being as good as we are in commerce and it can be that good and helping people decide what to buy which is which is for our intent driven traffic sort of the logical next step for what we're doing and we have stood up plans.
To get our our style of commerce, the consumer reports filed commerce up on all of the historical Meredith brands. So.
There's obviously a lot going on our our team is very busy.
Obviously, when you get into these things not everything is rosy. Some things are better some things are worse and things or a lot worse and things are a lot better.
We're slogging through it we are deep deep deep in it but we feel really good really good about where we are.
And.
Building off that Jon relative to your question.
Niels.
Overall message I think when you think about the year and how it's going to play out.
There are few key buckets and then we can talk about what that looks like print, we announced last week the conversion to 100% digital of some titles. That's an example of just general noise that'll be in the print numbers as we optimize our principles.
Executed as Neil articulated we're going to be moving the Meredith titles onto the dot dash platform choline con and reinvesting in content are rebuilding.
Their distribution that'll have some noise in the in the revenue numbers as that said executed over the first half of the year.
<unk> consolidation as Neil said.
It is it has a bright future of the combined sales forces, but you've got to bring them together and get them.
Across the board and then finally as you look at the financials this year youre going to have.
Hard to read through its been picked some work with the application of purchase accounting and.
Other changes to the financials, so it'll be a noisy year with respect to the financials.
On an overall basis, we expect the first half year revenue to be flattish.
Driven by the transition we're talking about.
Sort of going a little bit back before we go forward on the on the Meredith digital titles, but all of the building with with the sales force and optimize shape to a very strong.
Rhythm to leave the year in that 15% to 20% year over year growth and then that brings us to the $450 million of 23 EBITDA.
So that's that's the plan and this year, we expect profitability because of those trends to be back end weighted.
That's due to seasonality in the business is due to optimization of the combined digital portfolio in the second half for all the actions that you're taking.
And then thirdly, you'll just see the full run rate.
The cost savings and even death.
And I think all of that is consistent with what we expected going in which was 22 would be a bit messy and 'twenty threes, where we'd have to.
To show the throughput of the work done.
Going into that point.
On MGM John It is a.
First and foremost if we're going to invest capital where it.
It has to be attractive value and I.
I think that's still the case with nvme.
We have if you look at MGM as even still look into some of the parks in if you.
I believe that there's any future in Macau. If you believe that the digital business has real value of the joint venture and if you believe that groups come back to Las Vegas at some point at scale then it is still a very in.
In our opinion very attractively priced and we believe all of those things.
So that.
That's the first piece.
Pes is.
The groundwork is still being weighed in real progress we've made over the course of the year in <unk>.
Delivering an omnichannel experience. So one component of that is delivering a consistent brand experience and so I M M.
So broad spine Cosmo.
Cosmopolitan and you'll start to see some of the work that MGM is doing in branding MGM.
Boards and tying the entire system together.
You also see digital is doing incredibly well ahead of what we expected going into the the original investment and the that's all the groundwork for putting a consistent omnichannel branded rewards experience together and.
We like to see the progress there so when we look at that.
When we look at that combination we'd say that's a good place to put capital.
The other factor in the catalyst for this with just when we first got involved in MGM. We spent a lot of time with our key meister in core Vacs and Keith had been a big agent of change at MGM and I think a.
Has become a very welcome agents of change at MGM, but by management and the rest of the board and but one of the components of it.
And business is he has to capital is more finite.
And so it was a very.
Natural transition when he.
We're looking to sell some stock that the wood.
That stocking into more long term hands.
Like ours, and MGM repurchasing a portion of those and so that all happened very naturally that was something that.
Bill Hornbuckle, CEO and Paul Salem, Chairman encouraged and we were excited to do given our view on valuation right now and.
I don't know where it goes from here on MTM, It's just sort of the same thing we've said all along which is it.
It's a great business, we're excited to be involved in it and it's kind of one step at a time and we're really happy with our involvement so far are not to be given the results and don't know where it goes from here.
Thank you.
Okay. Our next question will be from Cory Carpenter of Jpmorgan.
Thanks, Ashish, hoping you could provide an update on where you're at with the EG rebrand and the AG services business and then maybe tying it back to the financials could you just help frame your expectations around growth and profit more broadly for angi in 2022. Thank you.
Sure. Thanks, Greg So let me start with let me start with the January numbers.
Which is.
I'll start with where we wanted but we got with omicron, we saw pretty significant uptick in.
Omicron call offs customer callouts pro callouts on eight X increase.
January versus a normalized number for the year, which since seen that drop off.
What that will mean is in March we will be lapping the brand. So it's a pretty significant event for us. We obviously rebranded business in March of last year.
We will have easier comps after that particularly in the at leisure business that will be a natural tailwind and the other significant thing going on this year.
Is we've got this growing services business that we've all talked about we all know about it made up 15% of revenue in Q4, 2020 got up to 27% of revenue Q4, 'twenty, one that business still more than doubling archie or about doubling in January .
And that becomes an ever increasing part of the business. So you put all those things together and we're pretty happy with where we're going overall, if we embarked in this journey just over a year ago to really change what Angie stands for to really position. It as a consumer brand and I think we're starting to see that we're starting to see that come to life, where we know of pros.
We know they want to grow their business, we know customers want to get the job done and it's starting to feel more and more like every single day, we're starting to deliver on that pretty consistently we see at any customer sat we see it in pro satisfaction. So I think we've historically I think the last thing we said and this was that we'd be in the 15% to 20% range, obviously, we've broken.
The bottom end of that.
Q1, but it is still our goal to get to that range stay in that range and ideally break the upper end of that as we think about where things go where things go for the rest of the year Chris.
Chris do you want to yes.
Thank you Ashish.
So Korea, and I think financially.
We're going to see.
Sort of idiosyncratic volatility in those months to months over over this quarter.
<unk> was mentioned for January February .
It should be at the top end of our of our target range and then March.
It will be against it.
Record comp last year, so it will be.
Below the range when we look forward.
As as the momentum builds for all the reasons our sheet articulated.
Growth in services and easier comps as we went through the rebranding last year.
We would expect to get back into that range.
And advantage through the year.
The other with respect to EBITDA, our expectation is for the year.
Total adjusted EBITDA is similar to last year, one point, we'd highlight.
As the trend by quarter.
We will likely be inverted from last year.
Where there was a decline in profitability.
As the rebrand and the reinvestment occurred this year.
With the <unk>.
Regular seasonality of the business of Q2 Q3.
The strongest for a lot of this work and also.
Q4 strength.
But also the growth through the year.
We expect.
The early part of the year to two.
The less profitable than the back end of the year, but overall for the year we're expecting.
Profitability was similar to last year.
Great. Okay. Our next question will be from Jason <unk> at Oppenheimer.
Thanks, Jim.
To just a follow up on on the Angi question first I mean, if we're thinking about core marketplace.
Just given the shifting consumer spending to travel and experiences and when do we just consider this a transition out of Europe , where the marketplace side of the business.
David as I got flat year, and then all of the growth coming from services or do you think just given all the headwinds that youll be in a position to kind of recapture marketplace revenue growth at some point later in the year and then second.
Joe you didn't give any update in the latter on care dot com and its probably a consolidated asset with the most upside to valuation over the next few years and so maybe just get an update on fourth quarter and how you're thinking about full year trying to break out. Thanks.
So yes.
And so.
I think you've got to remember that the marketplace. So I think when you say marketplace. You are talking about the adds at least part of the business. So the athlete part of the business as a function of both consumer demand, but also pro capacity. We've done a lot of work over the last year to change the type of pros that we're going after to go after a higher quality.
<unk> pros that have more <unk> and they're willing to spend more if the consumer demand changes too.
Two categories like travel or.
Other entertainment categories.
Both side of that is pros up more capacity and as a result are willing to spend more so we think about it as the business has some element of a natural edge in it where services is directly related to consumer demand. So the more people want to buy home services. The more our services business will continue to grow at a very aggressive rate.
As consumers are if consumers pulled back from buying home services pros will need to spend more to drive the same revenue. So we expect that if that were to occur we would see AD pros elite pros engage more with the platform. We have a measure we track, which is active or match or their ability to be on getting leads at any point in time.
We would expect that to increase and we would expect budget to increase if consumer demand for services was to pull back we havent yet seen that there is some.
Implication and that obviously as we have this rebrand, but we're still in the mid in the midst of lapping we have seen it just in terms of the rebrand directly we have seen angi now back to the traffic level that <unk> list was back at which is obviously, a big milestone for us and where we still have work to do is to get the combined Angie home advisor.
<unk> brands and brand traffic back to where that is or got a lot going on in terms of the creative that we're going out with this year.
In terms of the rebranding what the what and extends for positioning in a different way.
Obviously, only a few weeks into the year. So far so our media spend is in a middle of the year weighted so as we continue to see that expand we think that the combined traffic of engie and home advisor.
We hope that this year will surpass where it was previously.
On care.
Jason definitely nothing to read into the lack of mentioned in the letter we just.
The letter was focused this this quarter on a longer term opportunity with <unk> grew and Vivian.
Would we.
The.
Interested in keeping a tight we wanted to focus on.
<unk> and figured we get the opportunity to cover other things in there.
Venue or elsewhere.
Care is doing great care is the.
The best part of care right now is the core care business, which is.
Serving families around child care and Thats growing in subscribers growing in terms of revenue we're driving conversion.
We have now a.
Alpha version I still haven't been able to use it unfortunately, I'd like to but Tim.
Alan our CEO is only using EMS is keeping the products on itself right now.
But we have an alpha version, our instant book product, which is you can broker.
Care provider on four hours notice.
And one of the benefits of that product is that that will close with a lot of things actually that that matter in the care service offering, but one of the key components of that.
Go from frequency of needing a nanny, which is one to two times a year for a family to meeting a babysitter, which is five to 10 times a year for a family and that starts to impact our subscription products that starts to impact our user experience and the tools that we can bring into the product. So we're excited about that but that.
Still isn't still is an outlier for all of our collective use yet.
That's the core product.
On the core product, we now have a take care product, which we launched where we think we have a 1000 customers now engaging with that customer as being day care centers.
We are doing work on the senior care side, we're starting to think about the pet care side.
We are.
Of course entered the enterprise business is continuing to be an area of investment focus for us and we think a long term opportunity.
There's a little noise in the enterprise business right now just because of the Covid pumps are making it complicated.
Yeah.
In 2021, we had a massive lift in backup air days and that is something that is not repeated and so at the same scale and so we're just dealing with some components around that but the enterprise business is great customers are happy with the enterprise product and so we're going to grow that business.
<unk>.
And I'm very optimistic for where we go here and the potential value creation there.
But like like everything it's still early and we've got a lot to prove and we got a lot of.
Opportunity at.
Our next question will be from Eric Sheridan at Goldman Sachs.
Thanks for taking the question maybe two if I can just sort of following up on James' we've talked about machine if I could follow up on angi. There was a power Griffin and Joey's letter about fulfillment until I want to make sure we better understand some of the messages about where you're pushing it on the investment side to improve fulfillment on the platform and what those improvements might mean.
In terms of driving a mixture of gross margin in the years ahead, and then Neill to follow up on I think it was a third of the four pillars you laid out for Doc Dash Barrett it would be on the advertising monetization side beyond just purely the salesforce integration, how should we be thinking about your positioning the asset in the broader ALS.
<unk>, we've talked before in public forums about contextual advertising and where the assets sit in the broader funnel and what sort of advertising part of the world Youre going after can you just go a little deeper there established brown Paul Thanks, So much guys.
Sure.
I guess I can answer part first so just so that we're all aware what fulfillment needs. When you come to Angie as you buy a service job typically a low value service job in the hundreds of dollars range.
We work our butts off to go and make sure that that job gets done. So we don't necessarily for every single category every single pro or every single test have a pro available to do it in exactly the right time, we do some modeling to make sure that we match consumer demand with with pro supply, we don't necessarily always have a CRO available.
We're working to make sure that when you purchased that service the rate at which we fulfill it continues to go up month after month after month. It gets harder as you add more categories as you cover more geographies, but we're making sure that we go category by category Geo by Geo and it's a function of a number of different places, whether we get the pricing right the consumer whether we get the pricing right.
So whether we accurately asked the pro accurately off the customer the right questions, whether we pass that information onto the pro in the right way and we're continuously improving.
Government, if we get that right. There is two things that happened.
Firstly consumer repeat rate goes way up so obviously, if we do the job successfully the customer their likelihood to back those way up that reduces marketing spend in the future as we increased customer LTV second thing that happens is we just make more money on the job if we price it right to the consumer and we price it right to the program the rate at which we're doing that the rate of which were successfully.
Fulfilling on these low value jobs continues to increase quarter after quarter. So we're getting better and we see that in both the fulfillment rates, we see it in the customer sat in NPS numbers coming out of the book now business. We also see it in the take rate contribution margin or gross margin contribution margin from that business. So overall in the.
Small low value tasks, we see fulfillment rates continuing to go up it's one of the key drivers of us being long term successful in the service business. The second area of fulfillment rate to think about it in larger and larger jobs. So these are the 520000 dollar jobs and what we see there is we're getting better overall.
And the metrics. We're tracking there are the percentage of jobs that are being done by pros that have already done a job with us. So are we making pros happier. We already know we have great NPS in that category of the NPS in that particular vertical that particular segment of the business is.
Multiple better than if you come through the surpass the leaf business.
And overall, what we're starting to get our arms around there.
Our take rate sufficient gone up for the last three or four quarters now its stabilized that we think is a help right. We've got to work on operational cost to support that business. So that eventually it will drop down to contribution margin. So overall fulfillment rate makes the business. The services business way that are in every dimension and it's one of the key metrics that we target at a high level, obviously the simple it's bill.
So as well.
Yes.
To read your question back to around what we're going to go with sales where the vendors are contact scale. So this is.
My favorite question and Theres two pieces, one we're integrating our sales team and one very basic thing is out of the top 20 clients, maybe I think two or the number of study around two or three overlap. It is a very very different base of advertisers were very strong.
Finance and health care are there very strong CPG, so that is very complementary.
The AD stack, we're going to see great yield improvements on the AD stack by combining and through efficiencies and as we make their sites much more performance.
Particularly programmatic ads become much more valuable than the more available and all the other metrics, we can do but what we're really doing and what underpins all of this and what gets us the most excited.
We can do intent driven contextual advertising at scale like has never been done before on the Internet and what that means is intent driven conjectural advertising b.
<unk> Cookie based advertising performance every time and add to that co pays and all these trackers are going away and the long term, we don't need them.
To simplify it if somebody is searching on how to speed up my router, we know everything about them, we need to know we don't need to know anything about them other than the router is too slow in Europe to fix it or they have to get a new one and once you know that you pretty much have all the info.
And you can see the evidence of our ability to make contextual advertising work in stat that Joey likes to talk about so I talked about as well.
Each quarter, our top 25 advertisers 'twenty three 'twenty four renew every quarter Meredith isn't anywhere near that level and look it's very easy to sell someone something once it is very hard to sell someone something twice, we're very good at selling some one something twice and we did it with brands that frankly, no one had ever heard of four years ago, something that didn't even exist. So now what we have with these.
Meredith sites that profile wise look just like ours. They are all about intent signals and home and food even in entertainment to an extent, where we get harnesses intent signals match them up with ours and we can deliver the intent based performance at scale I mean, we're the largest digital publisher in the U S.
And and that allows us to do things like we actually have a punters chance to compete with platforms like Facebook because there's other stuff going on all of our content is ours. All of it is safe all of it is made by US. There is no news. There is nothing that is going to put you in a bad mood. It is all for the most part continent is going to help you we drilled Ala moana.
<unk> content that generally makes you happy and the combination of these intense signals and contextual targeting with the new scale, we have with the fact that it's an incredibly safe environment permit is an offering that hasnt been in the market before now our models don't reflect taking dollars away from Facebook, but I can tell you from talking to advertisers that in.
The conversation what we need to do is we can deliver on this promise and we can bring a level of performance of the mirth assets, which were already down the path on where Arctic cleaning up their AD stack has already taken off some of the most egregious ads.
The Sky's the limit of what we can do here and and.
To be very specific the go to market strategy is a much more eloquent version of what I. Just said, it's explain to people why contextual targeting and why intent works like if we if somebody is reading content on what color do I need to pay my newborn boys bedroom, we know everything about them we know.
They have a newborn we know that theyre likely in the market for the credit card for a new car often a new house, we know that they're great for home improvement retailer. We know all these things about them that are cookie Couldnt tell you and when you can do that at scale.
Very very excited it's the thing one of the things that gets us most excited.
Thanks Neil.
Our next question will be from Ross Sandler at Barclays.
Great.
Thanks for the presentation guys.
Joey can you put some numbers around blue crew and Vivian.
Pretty good disclosure on the paragraph, but maybe just help us like pre pandemic to today understand the scale of those two businesses and if you had to kind of draw an analogy to other IC franchises from back in the day it looks like.
<unk> 2015 stage of development for those to kind of help us understand where they are in terms of the development banks.
Sure.
It's a really good question Ross.
A.
Sure.
First just some stats.
Pre pandemic today I don't know each business would be three.
345 times the size is my guess.
Somebody can correct me if im far up on that but we're in that neighborhood, it's hard to make an analogy to something like tender.
Worldwide Love to do that it is tinder has a very naturally viral business.
These and it sort of once tinder entered the global context.
Spread naturally.
These businesses are not that kind of business. There I think fantastic businesses, I think they're both marketplace businesses and I think that scale.
Create the moat in both of those businesses and they have some natural viral tendencies in their categories.
It's not that kind of thing and which is why the catches fire. It just goes both of these businesses require a lot of Brian .
<unk>.
The way to think about scale.
Combined.
One of them ought to be a nine figure business. This year the other one ought to be come.
Comfortably or he is in a bigger business.
<unk> be a bigger a bigger business this year they are.
In a a.
The key in both of them in their category is building liquidity.
So in the case of Vivian.
The key is having more.
Health professionals on the platform they have done this phenomenally, well and nurses and really specifically in travel nurse is such that most traveling there is have a profile.
Once you build the profile on the we'll call that the demand side.
Workers booking for work once you have that profile built than you are in the system and you are getting information regularly.
And you can engage with job regularly and jobs can engage with you regularly on a much more pointed basis because.
Our.
Relevance matters, we don't certifications are we know what.
Geographies you are looking for we know what.
Specific qualifications youre looking for and.
With that solid base.
People, who can work we're now in the process of building up.
B the employers on the other side.
And I think that that.
Every marketplace, one side or the other is moving.
Faster than the other and the key for US now in the case of Vivienne is building up the supply of employers.
Blue crew is.
Probably a little bit more of the opposite that may be a a.
Result of overall macro dynamics, we have lots of employers on the platform. We continue to of course grow employers on the platform and right now the key is.
Bringing workers onto the platform and.
Driving fill rates, but.
Once you have liquidity in both of these markets. It changes the dynamics and we can see it in.
Micro categories are in micro geographies.
When you have enough jobs and when you have enough workers that are lot more starts to go through the platform and that people can find the second job on the platform and people can do.
That sort of repeat business and once you have that going that is transformational and so when we look at other businesses in the IC portfolio are in Ice's history. That's an analogy that that does work, which is looking at small geographies building liquidity seen what happens when you build liquidity and seeing that proverbial flywheel start to.
When both sides are built up enough.
The offering become a much more compelling both the employer and and for the employee.
And I think that these are are not necessarily a winner take all type markets, but I think they are there is significant advantage to the early movers and I think that there'll be probably a few key players in each and I think that they can get to enormous scale and again the other thing we talked about it is.
The size of these markets. These labor markets are absolutely enormous and absolutely underserved right now and so if we're doing it right, we ought to be able to grow forever and there.
Thanks, John .
Our next question will be from Youssef Squali at truest.
Okay, great. Thank you guys. Thank you for taking the questions.
Sue first maybe for Chris.
Dash Mary if you could double click on that $460 million in EBITDA that you're targeting for 2023, just kind of the linearity to get there and probably more and even more importantly.
Our cash has historically been a really profitable business. So how do you kind of look at long term sustainable margins for that business relative to that 50% to 20% growth that you discussed and just quickly for Joey I believe you guys had an option to increase your ownership of churro, if I remember correctly whats the maximum <unk>.
And one of it and just what's your long term objective with that investment.
Yes.
Sure.
I'll start with Taro discuss.
Okay.
We are.
We own about.
<unk> by percent of the business I think right now.
And the warrants as to our.
One another 10% of the business, so 35 ish percent.
Okay.
I think give or take 5% on those figures, but that's the ballpark.
We are.
Right.
Loved the business end and love being owners of the business and generally our philosophy on everything as we are.
Long term and this is no different.
The goal is as always is to too.
Find businesses that we think have incredible long term potential and stick with those businesses.
I would love to talk more about <unk>, but I guess, we are restricted on that one right now given they have a.
Filing out there so I can't say anything good about the business or don't probably want to say anything bad about the business, but it is.
We're happy with where we are right now.
Thank you.
Or dot Dash Meredith.
When you think about the 23 EBITDA targets and levels that we can get to the key elements. There are the scale that comes and incremental profitability from the digital business.
So as Neil and team have that growing in.
In the bands that we're targeting.
You've got the sales force you've got a fixed cost infrastructure, but you will have margin scale.
And so the and then also.
That's the digital EBITDA number the print business is one that we will continue to optimize and manage it.
It is one that we will continue to manage with an eye towards key unit profitable and also a good user experience.
So as we look into next year.
And where we see the cost savings come in.
As we integrate the businesses as we see the.
Digital revenue momentum.
On a on an efficient cost base at that those are the drivers as we grow to that $450 million or 23 digital leader.
Okay. Thanks, Chris Our next question will be from Brent Thill at Jefferies.
Good morning, Joey search had great growth and great profitability. Many are asking about sustainability of that business and maybe for Chris Welcome. Maybe just talk through your top priorities and kind of where you see with your new lens. The biggest the biggest opportunity from your side.
Sure.
Search it is remember there is some short term things going on in search which is the desktop business.
Is.
And we're essentially exiting not by our choice but by.
<unk>.
<unk>.
The evolution of the ecosystem.
We are so that led to some because we had revenue coming in on that business, but we are no longer marketing. It that is short term <unk>.
Significant profitability.
Unusually high margins as we think of that as run off the flip side is that there's another part of that business, which is the.
The ask.
Marketing part of that business, where.
We're driving people to our properties through marketing and monetizing them with at.
That piece of the business is doing well and I think we expect to make up for the what we lose in the desktop business over time.
So overall, we think that business stable ish right now.
But I wouldn't read too much into this sort of short term.
Benefits, you've seen there where it is a little bit.
It's a little bit is that that's temporary that the magnitude of how we're exiting the other business and benefiting from the write off.
Okay.
Thank you.
I think my priorities would be first of all continuing to get up to speed on the core businesses in the portfolio.
And then looking at ways to drive value there and there is two main.
The two points that we're looking across that one is.
Any dollars being invested on an operating basis generating maximum ROI. So.
Being disciplined and focused.
Our strategic initiatives at each of the companies.
And also.
In how we're measuring ROI and continuing to push that forward. The good news being an IAC is that it is forever.
Capital is Joey says and we are committed to long term value creation.
So that's.
Thats, a long horizon, but we need to be thoughtful working with <unk>.
Working with Neil and team on the integration and driving those properties forward and then on the medium and small smaller companies.
Other big bucket would be capital allocation.
We have <unk>.
A variety of interesting opportunities at any given time.
Are there investments in portfolio companies as well as entering new sectors. There's obviously been movements in the public valuations and by.
By extension in the private markets so constantly looking at.
Our cash or our capital structure and the.
Set of opportunities in front of us to drive the greatest long term value.
It's been a great start, but I've got a lot more work to do.
Thanks, Chris.
Question will be from Brian Fitzgerald at Wells Fargo.
Thanks, Scott wanted to ask a couple of questions around Andrews deal with Walmart anything you could tell us about the customer acquisition.
Cost profile there versus variable channels, how are you thinking about the value of being in 4000 stores in the Halo effect.
For the brand and for customer acquisitions more generally.
And then last one.
In the announcement you talked about this being the first retail integration with Angie, but what's the opportunity to go back to some of your other retail partners on the handy side and.
And convert them to Angie branded relationships with the expanded service offerings that youre going to rollout of Walmart.
Okay.
Thanks for asking.
For everyone's benefit the way the way. This works is you can go to Walmart Dot com or you can go to Walmart store for those stores and if you are buying TV you can at point of sale by a TV service for about $80 $79. Similarly.
A number of other categories, including flooring in page eight when you buy product actually by service by service sale or to schedule that service you take your overspend of our CTO at any dot com site Walmart.
You cite the schedule directly or start to go to <unk> Dot com platform art.
<unk>.
Titan ability scheduled directly with edge.
As you pointed out this is an extension or I guess, a rebrand of some of the prior relationships that <unk> had.
We are expanding both the number of retailers.
That LNG will be as a Walmart is first we expect to rollout into other retailers for context, the other retailers that Andy.
<unk> is currently include <unk>.
Target Lowe's sleepwear and others.
I would expect over time that those would be rebranded to angi and you're also correct that we would expand past the small set of services.
That were available or retailers are open to it we would sell some of the broader services. We have we have about 200 plus services available now right now.
Backpass.
Traditional services.
Available in terms of the opportunity, but we fundamentally believe that having a single brand is the right thing to do single primary brand as a reason why.
We focus on LNG.
Look at any of the materials that we've got out there and she feels different now that antitrust it a year of change for the home advisor did hear change ago.
Our reserve Board meeting later today and even if you split the board deck. It feel different if you look at any of our social channels, we look at the creative of television.
Feels different and having that new brands in 4000 stores, we think will make a difference we noticed that when those customers do buy.
Through through a retailer and they come in and engage directly with the energy. We do see follow on purchases. We know that we can get a percentage of them to download the mobile app. So we do think of it as an important.
An important channel for US we think it's.
Interesting way for us to gain exposure to more customers and we know that it's great for the retailers.
The other side of all this is why does the retailer do it.
And what we see from talking to retailers is that drives up the order value.
It gives them increased conversion increases customer satisfaction and reduces returns so from the retailer's perspective.
We see some of the retailers are back selling the services at or below cost because they get so much sundry benefit.
Service to product. So overall, we think it's a win.
And when it plays into the trends that retailers are moving towards which is less selling product for yourself instead of selling a full solution into the customer customers homes. So.
Is that still possible return, we knew one extra selling into the person's life.
And we think this.
Great partnership for us and for each of the retailers and we're excited to have more and more of our customer touch points eventually branded to <unk> edge and so overall, we think we're really excited about.
And if you think about it from a customer perspective, they're going to start their job.
Generally one of two ways that are going to say.
Hi.
Eight a new floor.
Do I get for installs and hopefully we find them there or they're going to say I need a new floor.
What do new floors looked like or where.
Can I get a new floor and then we want to find them there too and book that I think that second one is a really interesting channel for us and that's why we that was one of the original drivers for us getting into the Andy acquisition was that channel is going to be an important channel.
We think that there's a lot of room in that channel for us.
I think thats, a really good point joyously the difference between service started surgery products started to search and we've obviously got a great.
Great way to think about service initiated search weather.
Over to the energy side of <unk>.
We have a great.
Great funnel with captures a tenant that is driven by people taking services. We don't have a great way to think about product search.
And this is a way for us to engage with consumers that are making products for facilities.
In the quarter supported wafers.
Our next question will come from Dan Salmon of BMO.
Great Good morning, everyone.
One for Neil one for Ashish.
So Neil we continue to hear a lot more about the impact of privacy changes this earning season and Google just announced their plans for Android.
We know your intent based model is more insulated from these types of changes. So does news like this help drive incoming calls to your sales team how are they engaging advertisers about these issues and helping them address them.
And then Ashish could you just give us an update on the uptake of Angi key Andrew.
And your financing partnership with a firm.
So I'll go first on request.
In terms of the privacy stuff. So we're not really in that base business that we've been immune to some of the stuff but.
Privacy writ large is going to be a long term benefit for us now when something happens, we don't get a phone call right away, but the more we can tell our story.
And the more we are out there with this message to more appeal it is and.
There is.
As you know we've talked about before there's an entire ecosystem in advertising built around cookies and things like cookies.
That doesn't really work anymore is increasingly not working the less it works and the more we can be very good at telling our story and getting into places the better we're going to be in.
Again, if you go back a second and see a lot of the Doc Dash renewables I mean, we have built our own systems to target contextually across all of our sites. We're obviously growing without the acquired merit sites. It is a really really big opportunity for us if privacy tracking exits the intranet entirely that is a long term very positive thing for us.
So on an <unk>, which is our pay to save membership program. We are currently tracking over 200000 members growth continues to be strong, but it's a small program to date, we know that we've got to go past Asap.
But that's not the only value prop we want to offer per membership, we want Angie and membership to be it was a way to think about taking care of your mall.
And we've been testing a number of other pillars.
I guess that Bill passed Bay to say one of the pillars. We're testing right now has a more personalized way of booking services that seems to be.
So also in 2000 people to engage in occupancy strong in a couple of other thoughts but.
We're testing right now as well as we build out those other pillars, we've got a huge opportunity to expand where we're showing membership right now we're only showing it to people buying services.
Uptake on that is strong, but we're not pushing a top of funnel.
In our marketing, it's nowhere other than in that purchase loan. So overall the retention rate is good on it we feel.
Feel good about where it's going but it's still very early and we think we've got to build out some of the other pillars of membership around personalization and convenience. So that we can more broadly more broadly expose it but all the data tells us that we're going in the right direction with MGE and <unk>.
It's something that.
And what's important to us and we think that 2022.
There will be a good year for Nicky in terms of figuring out what the next pillars of the arc on financing and finance that goes alongside payments. So I'll talk about two of them together as we said in the letter of the release, we did $100 million.
Payment processing last year in terms of financing.
Partners referenced a firm I think altogether and financing we get around $10 million of financing last quarter. We think that we've got excellent at this and we're not making any significant money from a payments or financing or customers money right now.
Sure could turn on.
For them it take a small payments, but that's not the goal the goal is to.
The goal is to help the pro grow their business and help customers get the job done and we fit payments financing fits really well into that.
We noticed that when pros use the payment feature they're happier that retained better when customers use financing generally they're happier.
They're more engaged the product overall it helps us get data out of closing the loop. So we're going to continue to invest and to continue to scale. It.
And over time, we will.
We'll look at how we monetize it but I think it's it's tracking it's going the right direction and we feel good about.
Thank you for the questions everyone looking at the clock Mark why don't we do one more great. Our last question will be from Justin Patterson at Keybanc.
Thanks, and Joe Congratulations on becoming a prolific podcast or im waiting for Spotify that operating an exclusive one of its Dennis.
Two just didn't from Mike overviews.
Two simple ones for me for Oshima, how are you thinking about setting the right controls to attract the right type of pros, while also expanding contribution margin. It seems like a difficult problem to solve just given variability in region pro experience of job type and then for Neil just revisiting Eric's question around <unk>.
A lot of advertisers are investing a lot of AI. There how do we think about just the capabilities of the AD Tech stack today and competition for engineers.
Okay.
So in terms of pro Onboarding, we have a pretty rigorous pro onboarding program across the different programs at Ags as he leads the edge services all have different criteria for joining.
Looking at how to.
Modulus standardize that Onboarding experience.
One of the things that we are pushing on us more online enroll across the board. So almost all AG services froze, particularly at a lower value engaging in online a global program, where they do a background check.
Green.
The screen in the flow. We've recently started to look at how to do that in etch leads invest early traction on that we will eventually get to LNG as well.
But overall, we look at both the.
The initial screening of froze as they are more of a platform and then the more we close the loop so whether it's through payments financing or any services to more of a closed the loop the mobile gaming yet in terms of customer feedback and we can proactively monitor and manage Roe.
Our approach behavior more directly in AG services, we continue to grow and know what they're going to show up our client quality.
And then of course, we closed the loop to collect feedback from customers. So it is a relatively tight loop that starts with the onboarding experience, where you digitize that the more data you get upfront and then the closing the loop on customer rates customer feedback customer reviews and.
And again, you think about.
Think about what causes the behaviors that feedback loop of knowing that there was a consequence.
A consequence.
Well, clearly and we think that it actually we've got a pretty accurate with Eric benefit because there is so much volume going through the platform that we can close the loop more frequently.
Incentivize approach to the right and we see that we see that.
So.
I will answer your questions backwards.
AD stack, we have a different view on NASDAQ on a lot of companies do.
We always want the simplest fastest cleanest AD stack possible because the AD stack doesn't solve your problems is having a great product that solves your problems.
<unk> adds that are performance and well placed in.
In places, where the audience is contextually relevant to the add those will perform.
If you did if you took every single AD tech product in the world. They all tell you to give your territory reps that left and you put them altogether youre not going to get like a five X doesn't work that way so.
Our AD stack, which we're now putting the two together and there's obviously some complexity to that but it's fairly straightforward our AD stack will be good because our focus is good and we keep it fast and simple.
In terms of.
There's a million different ways and buzzwords people are saying to mimic contextual targeting or to align with contextual targeting.
Judging by like whatever deficient AI would be like we use it to it just means that things learn as they go and we do a lot of learning as we go.
Most important thing for US now is.
We're doing whatever 30 million user sessions. So much data, we can lean as to what's working is performing and we know the path of every single user. We don't know who they are doesn't matter, but we know what path to take and Thats really really really valuable.
I would say the governor on that is your other questions engineers, which are we are no different than anybody else engineers are very hard to get engineers are very hard to keep it engineers out there very distinct views on whether or not they should be coming back to the office.
There's all kinds of things and we're very fortunate that we have a terrific CTO who's been with us from the Jonathan since we started with eight nine years ago.
Yes, we have the same engineering challenge everybody does.
Alright, well. Thank you all for joining us this week this quarter rather and.
Lots to do this year, we're excited for 2022, and we will see you all in a quarter.
Sure.
Okay.