Q2 2023 IAC/InterActive Corp Inc Earnings Call
Website, we will not be reading the shareholder letter on this call I will shortly turn the call over to Joey to make a few brief introductory remarks and will then 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> second quarter earnings 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 earnings releases the IAC shareholder letter, our public filings with the SEC and again to the Investor Relations section of our respective websites for all comparable GAAP measures and full reconciliation.
<unk> for all material non-GAAP measures now I will turn it over to Joey.
Thanks, Chris I appreciate everyone, taking the time with US this morning, and I appreciate all the people across IC companies, who are working hard for our customers.
I want to share part of a note I shared with employees yesterday, which I think is apropos of some of the decisions we made in Q2.
We win by building exceptional differentiated products that take the hard work off our customers' places we do it so they don't have to.
Angie does the work to find the right pro to fix your garbage disposal, while doing the work to help that pro grow his business.
Dash Meredith does the research. So you can choose the right product plan, the right trip or make a great meal and dot Dash Meredith also doesn't work to help advertisers find the right customers. That's what decipher is.
Third is the work to help families find caregivers and caregivers find jobs Vivien doesn't work so burned out clinicians can discover their dream opportunity and does the work for hospitals to get clinicians helping patients faster.
The better more efficient and seamless we are doing the heavy lifting across IC. The more time, we can give back to our customers and the more they appreciate and depend on us.
But every day every quarter every year, we have to set the bar higher for ourselves and we have to constantly do a better job for our customers. That's what this past quarter was about and that's how we win lets.
Let's go to questions.
Operator first question.
Thank you can I ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
Our first question comes from Cory Carpenter with Jpmorgan. Please go ahead.
Thanks on Angi could you expand on what drove the larger than expected revenue decline in <unk> and how this impacts your outlook for the rest of the year and then secondly, you were a bit less active in deploying capital in this quarter, how much of that was due to business trends versus other considerations. Thank you.
Yes, I'll do the second one first quickly and then I'll go to the first.
As you know we buy.
Buyback stock periodically, we deploy capital periodically and there is not.
We haven't historically and arent likely in the future to have a consistent pattern on that other than.
Buying shares when we think it's the most attractive use of our cash in the period, we deployed a lot of cash in the first five months of the year and we thought that that was it.
Attractive time to do it.
And we took a breather this past few months and we'll continue to evaluate that as we always do.
On opportunities for for deploying our cash whether it's buying back shares.
I see her.
Angie or any other opportunities in front of us.
On the first question I've been saying for a while that there were areas, where I thought Angie that focused on optimizing for shorter term revenue over the longer term health of the business and our customer experience and that we were going to make changes along those lines and for the past few quarters, we've been doing that.
In the second half of <unk>.
This past quarter, we saw a further opportunity to do that and I made the call to make that change which I.
No doubt was the right call in the business I think the impact of that call, which was really restructuring some demand channels.
Wrapping down channels pretty quickly over the course of the quarter and this was.
Revenue in the quarter and it was also profitable revenue in the quarter.
We ramp that down pretty quickly.
And the impact of that would be most pronounced in Q2 I think.
We're already seeing.
July .
Better on a July was better on a profit perspective, and I think we will see the benefit of some of the changes we made in Q2 over the coming quarters. So that impact was most pronounced.
But the substance of it was.
Turning to our channels of demand or reducing channels of demand that we thought and deliver the ideal customer experience and that in exchange for that we're going to drive is longer term retention of crows and better homeowner experience on our platform.
Operator next question please.
Our next question comes from John Blackledge with.
<unk> TV Cowen. Please go ahead.
Got it great. Thanks.
What are you seeing in terms of revenue trends at DBM digital exiting <unk>.
And thus far in <unk> and the performance marketing growth was good to see how does that kind of momentum play in the back half for.
<unk> digital Rep trajectory and then just on the margins.
What type of cadence could we see in the back half. Thank you.
Thanks, John I'll take those one at a time so topline.
For us in June it was a key moment in the integration and the performance of the combined Dot Dash and Meredith assets. We had said since the beginning of the year, we were aiming to get to flat on digital revenues and on traffic. We achieve both we actually had 1% digital growth.
In June .
Strong performance marketing and we were able to reach.
Stability in sessions and in traffic during the month of June on digital across the portfolio.
That was led by the merit, the former Meredith assets broadly across the portfolio there we.
We feel good about the.
Where those assets are on the migration and growth plans, we can continue to optimize.
We're very focused on continuing the momentum behind in style and people we feel good about but we will always have more volatility just due to the entertainment category.
It sets us up well for the second half the third quarter, where we as we indicated in the letter we expect.
At or around flat, maybe slightly negative.
That's due to a combination of ups and downs with continued growth in a lot of the Meredith properties stability in certain dot dash properties, we had a very strong Amazon Prime day.
But also we've seen some some softer traffic trends in the entertainment category as well as some partner sites. So Q3, we expect sequential growth, but year over year on.
On the top line flattish to slightly down, but we expect a very strong Q4.
And.
The performance the comps the trends.
We feel good about where we are including this.
The tailwind of.
Performance marketing, which we really werent able to fully rollout to the Meredith properties last holiday.
As well as support from decipher.
Performance marketing was a key theme of the acquisition and really rolling out the Dot Dash E Commerce integrations to the best in class Meredith.
Meredith brands, 12% growth in the quarter was great to see.
We are heads down continuing to improve that and expect.
Accelerating growth there on a forward basis.
And Theres a lot of opportunity and then on margins, we said we expect incremental.
EBITDA margins.
Given how where we have the cost structure and the efficiencies we've driven to be in the 80%.
Plus range and you can see in sequential digital revenue growth and EBITDA improvement.
Or better.
We expect to continue to.
See improved margins year over year and also on a sequential basis in Q3, and then Q4 seasonally is always a major quarter for dot dash and narrative.
And both both in terms of advertising in performance marketing revenues, but also margin scale.
And we see we forecast.
Strong.
In the fourth quarter.
Operator next question.
Our next question comes from Eric.
Eric Sheridan with Goldman Sachs. Please go ahead.
Thanks, so much for taking the questions maybe two on AMG, if I could first following up on <unk> question from earlier really stuck out to us and the weather that you talked about loss revenue and used a phrase like good returns can you talk a little bit about how much of this process of mix shift Tom revenue is inside your control versus outside your control and where.
We might be in the evolution of getting the type of revenue you want in the <unk>.
Angie business and then the second along the same lines. It was interesting to see a paragraph on international and AMG and the letter can you talk about some of the key learnings from international I think you've used the phrase that it's a good leading indicator for the trajectory. The U S might eventually take and maybe give us a little bit of color on that trajectory. Thank you.
Yes, Thanks, Eric.
So.
We.
We did win win.
Making a lot of the changes at Angi, we did obviously the easiest stuff first and then maybe I'll break the revenue down in a few buckets.
There is the revenue that came with either zero earnings or negative earnings.
And that stuff is easy to get rid of especially if it has a.
Bad customer experience or not an ideal customer experience.
And you saw a lot of that happen.
Early in Q4, and Q1, so things like manage projects.
More complex services, which we discontinued or other channels, where we were doing unprofitable revenue.
That's relatively straightforward and I think we've cleaned up all of that.
The second bucket and I think we're pretty far along in the second bucket, though not completely the second bucket is where we were bringing service professionals onto the platform that werent really well set up for the platform and so really didn't end up covering their sales cost and that that meant they turned to.
Quickly and Ah.
We're far along through that so those folks would have generated some revenue, but probably would not have generated profit over the lifetime relative to their sales cost because they they didn't stay long enough. The third bucket, which is probably the foot which was was what you saw happening in Q2 and.
And where we do still have some work is where we're bringing in demand, we're bringing in revenue and that revenue.
That that demand can generate revenue in the period.
But can drive higher retention, sorry can drive higher churn.
Among our service professionals or among our homeowners, meaning that there would.
Would be detrimental to the lifetime value of that customer experience and that was really what the focus was the change in the second half of Q2.
And ultimately what drives all of these decisions is are we delivering a great customer experience or are we delivering a sustainable durable customer experience, meaning one that that is economically viable.
And.
Are we able to grow the platform grow those pros grow the homeowners and grow the revenues and that's what drives us from here.
We are much closer to a healthy place right now I think it's not impossible that we.
Consider other things we might change a restructured in the in the context of revenue our demand channels that come in but I think.
The first bucket is as I say, the sort of negative earnings revenue is done and or.
Zero earnings revenue is done and the second bucket is pretty far along in the third bucket. I think is also pretty far along but that may be where we still have a little bit of work to do.
As far as international the.
<unk>.
One of the great things about internationally as we are able to try a lot of different models and able to try that with relatively little.
Sort of outside attention.
So each country that we were in our main countries. They are U K, France, Germany and Netherlands.
In each one of those countries, we started with a different model and a different technology platform and we learned a lot about each of those models.
And pick.
Pick the best parts of each.
And the things that we were able to get working in Europe , which we have not yet gotten working in the U S. But gives US great hope is one something much closer to self enroll on the service professional side, not 100% self enroll but much closer to self enroll on the service professional side. So.
Meaningfully lower sales cost.
Two we made big changes to some demand channels pretty quickly and got passed those demand issues in particular in France, where we were heavily dependent on the affiliate channel, we really completely redid that.
And last thing from the homeowner experience is.
Double opt in so meaning.
Oh.
Customer experience where the.
The homeowner chooses the pro and the approach uses the homeowner and when those two things both together both come together as the billing event.
And that seems to be working from a product perspective.
I don't know yet whether it will go all the way there in the U S on a product, but that product is workers working in Europe and.
And it's impressive.
The other thing is is just getting the hard work done of integration. So we've now got as I said in the letter three of the four platforms are integrated and we're going to integrate the fourth platform soon and.
That allows us to operate a lot more efficiently with with lower costs.
Is your platform to innovative.
The only thing I'd.
Add on top of that is the second quarter last year was sort of peak for us.
<unk> four.
Empty calories.
Either low calorie revenues or regretful revenues in terms of poor pro experience or higher approach or and so you can see some of that.
In the graphs on.
SP retention, we're coming out of that period, you had some of the real drops and SP retention.
You also have roofing, which had its peak revenue in the second quarter last year, which is still not the business still isn't where we want it but has an oversized impact on angi revenue declines in aggregate year over year.
Thank you operator next question.
Our next question comes from Jason <unk> with Oppenheimer.
Please go ahead. Thanks.
Everybody now knows how to spell Oppenheimer.
So two questions first just a little more color on dock Dash Marathon dash.
Are you seeing any competition for engagement given the massive increase in short video.
<unk> Tic Toc Youtube shorts et cetera, and then you did kind of talk about your outlook, but maybe go into some detail on categories, what you're seeing in the second quarter and what you're looking at the third and then second question just on MGM, obviously, a very timely investment there.
There were thoughts originally behind it to get exposure to online sports betting and gaming.
While it's obviously participated in the rebound in Vegas is there a way to parlay that into a more direct path.
Play on online sports betting our I gaming thanks.
I'll go first and I'll turn it to <unk>.
Chris.
Quickly on the social media sites look we compete for attention with any other form of media and we compete for advertisers with any other form of media I am not sure that the.
We can attribute anything that we're seeing directly to things like <unk> or taking share from.
The con.
Content consumption that we drive the sort of content consumption that we drive.
But as I say, we compete with all media in that context.
Yeah.
On MGM we are.
<unk> actually spent quite a bit of time looking at opportunities in this space.
Came close on one, but we've learned a lot in our.
We've learned a lot in our investment with MGM in terms of.
Gaming gambling and opportunities there and what's working and I think that that's an area that is interesting but.
Nothing immediately on the horizon, there and continue to be excited about the progress that MGM and bet MGM is making which is very impressive.
Yeah, and going back relative to building on Joey's point, the demos, we have and where we excel.
We wouldn't we don't we don't see losing any traffic to those sites and in fact, they are revenue in.
Reader lead generation opportunities given many of these top Meredith brands had limited social media presence, so Neil Neil Vogel and team have been very focused on building.
The social media integrations as a channel for a lot of these brands also expanding our own video presence. There. We've got good infrastructure to do it but increasing the short form and medium form video that is produced stuff our properties for Youtube for tick tock.
And Instagram and other channels. So we don't view it as much of a threat and more of an opportunity macro.
We would say the market is.
Is still soft from a premium.
The demand side in brands, but it is <unk>.
Second derivative positive, where if the programmatic market is down 5% to 10% as we said in the letter that's definitely an improvement over what it looked like in Q1 and parts of Q2 categories that are strong retail beauty and style.
<unk> and auto as we said in the in the letter some of that is due to just straight absolute growth in those categories.
Some of it is due to how soft.
The second quarter was for them last year wed be it supply chain or retailer backup.
And then weakness finance continues to be weak I think the category is trying to find its footing in a higher interest rate environment and lapping comps that were very aggressive a year ago.
Telecom, we don't see much spend outside of one or two players.
And the big players are trying to figure out how they want to position themselves and.
And then entertainment and streaming.
Streaming we think that is both the category that is.
Streaming.
The operators are focused on their model going forward and profitability and entertainment and screaming were concerned about the strikes and ongoing strikes there leading to reduced advertising for new shows.
And fighting churn.
So that's it we expect the comps to get easier even if the absolute strength than it does in the market does not improve.
But it's.
One step at a time in the AD market today.
Thanks, Operator next question.
Our next question comes from Stephen Ju with Credit Suisse. Please go ahead.
Okay, great. Thank you.
So Julien I had a question on <unk> sypher so yes.
Yes versus the environment in which we were still using cookies, how do you think advertiser rois.
Before and after wondering.
I'm wondering if there is an opportunity for you to capture more wallet share as a result of this move in and looking a bit longer term I think Google has been working to also move to a cookie less world with an implementation targets I guess sometime next year.
So should we be thinking that this potentially shield you from a potential sort of external risks.
Yeah. Thanks Steven.
Exactly the goal with decipher so.
Dr. Meredith has data now that that says intent outperforms cookies like for like and it's not not surprising to us I mean, we've been as an advertiser for across billions of dollars across many of our products.
We see the same thing Google has historically, Google, which which delivers intent has historically outperformed every other channel for us demographic targeted channels cookie targeted channels et cetera intent is a very meaningful signal and decipher really mapped intent successfully and so we are now proving that for advertisers.
Key for US is just giving out getting advertisers to give it a try and then we can move the ROI.
And.
Yes.
That also is very important right now on the cookie less platforms like iOS and Google has said in 2024, Theyre going Cookie list and so we should be well positioned for that.
And we're going to keep building the kind of content that that chose intense heat mapping that content and then proving that content with the ROI for advertisers.
And I guess secondarily on AG.
Reading between the lines on the shareholder letter it sounds like Youre looking to play a little bit more offense.
2024, you've cleaned up and shut some empty calories. There. So you know what do you think still needs to be done from a product perspective. Thank you.
Yeah.
Yes.
We talked about a lot of the work we've done on the pro side. Obviously the work is never done on either side in terms of product, but we've we're very encouraged by the progress we've seen on the work we've done on the pro side, improving the Pearl experience and that progress is most evident in pro retention.
We showed in the letter.
The second half of the year is really focused on the homeowner side again, we're constantly doing both but we're looking to launch more innovation from the product experience on the homeowner side over the course of the second half of this year to set us up for.
For offense in 2024.
There is there's a bunch of things that we're working on there, but probably the most noteworthy change is something I mentioned not this quarter, but I think the last quarter or the quarter before.
Where we start to surface the directory earlier, meaning that homeowners can come to our platform and find and interact with pros more quickly on our platform.
We think that has a great opportunity for the pros on our platform. We think that is a great opportunity for homeowners to drive engagement, we think that has the opportunity to drive conversion.
And ultimately what will matter on the homeowner side similar to what we've done on the pro side is driving retention and repeat rate.
And that's what we're aiming to do and get to a healthy place to really start rocking in 2024.
Thank you.
Thanks, Steven Operator next question.
Our next question comes from Brad Erickson with RBC capital markets. Please go ahead.
Yeah. Thanks, just two follow ups on angi talking a lot about the pros. This morning, I guess in some of the pruning youre doing there.
Angie I guess always also had a tough time on fulfillment rates for the demand that was coming into the home advisor. For example, so how do you kind of balance this proof point pros or reconcile it strategically longer term you have to have the right asps, but also having enough to support growth. That's the first question and then.
<unk>.
On energy services.
Where are you there from a category perspective do you feel like you are kind of fully baked in terms of the range of services you offer.
The demand that youre talking about or is there still work here to bring on new categories that can be kind of a further vector of growth there over time. Thanks.
Thanks, Brad.
The.
Great question and something that we are both are things, we're very focused on.
On fulfillment, we've been improving on fulfillment.
Withstanding the lower nominal service professional account and we look at something which is a horrible internal acronym but.
Zach bar, which is zero, except contact or booking rate and so it's looking at how often we offer no solution and we've been shrinking the extent to which we offer no solution and that's a good segue into services. So so one of the things will offer is matching.
With elite pro or an AD pro in one of the things will offer is.
The opportunity to get <unk>.
<unk> gone through our services platform.
And not everyone will convert into services, but offering people services can be a significant value add and can drive repeat rate in the sense that sometimes customers are looking for pricing and they can find pricing there sometimes customers aren't ready to make up their mind, but they want to see what the options are and so giving them a fulfilling experience meaning they know.
They are they at least have the option to get something done and they know what the price would be to get something done.
Can drive customers back to the platform and we think services is enormously valuable in that context, and we think services.
Significant competitive advantage.
That gets to your second question is how do we.
Expand services and we absolutely believe we can expand services, obviously, we shrank services over the course of 2023, because I think we grew it too quickly, but we absolutely believe we can right now were in services that we can price accurately remotely and where we can generate.
Our margin that's a good healthy place to be and the way we expand from here is figuring out the next categories.
Ken first step being price accurately remotely.
And we have tools for doing that we have we have.
Cat specific categories, which we think are the likely next candidates for that.
But we're not rolling that out this year, we are that's something that we'll do in the future, but we do absolutely have the potential to expand that and do intend to expand that when we're when we're in a place where we feel comfortable.
Got it.
Thank you operator next question.
Our next question comes from Ross Sandler with Barclays. Please go ahead.
Hey, guys on.
Top notch Mariners as we look into 'twenty four.
What are the puts and takes that would allow the business to grow faster or slower than the overall digital AD market, how do we think about that.
And then.
On the SCO impact from from these new AI search pages, one of your peers recently said that.
Traffic to their premium properties, which many of which are like Marin sites.
Are seeing.
Benefit actually from from beings changes since earlier this year with.
SCO traffic growing a couple of orders of magnitude faster than the baseline.
So what are you guys seeing Google now adds hyperlinks to these new.
Serge generative experience pages, what are you expecting to see.
If anything from.
That has downstream traffic thanks a lot.
The first one yes sure Jonathan.
Thanks, Ross in terms of 24 or do you think about the rest of 'twenty three.
There's three main digital revenue streams advertising, both premium and programmatic sales.
Performance marketing.
E Commerce and services.
Execution, there and then licensing.
There is there is good reason to.
For our project both for all three going into 2024.
On the advertising side.
We've worked through the toughest of the pandemic.
Nick elevated comps.
Like we've got the sales force.
And a good structured unified way executing across categories and with decipher.
We think we can take share in both premium and programmatic overtime.
At attractive monetization rates.
The performance marketing has really been moving from strength to strength, we expect to continue to do that and create more content more.
More integrations and fine tune them in a better way and there is there.
No reason why it shouldn't continue to be a strong source of growth in 'twenty four and then similarly.
Licensing is passed some of its tougher comps working through things at Apple news and other markets and we should see growth there. So the and then on the audience side.
We expect both the historic Dot dash and Meredith sites to be to be increasing traffic.
Ill turn it over Joey but relative to.
Generative AI and be it Google or being we have not seen any loss of traffic so far in our properties.
And they are having active discussions about how we can be a partner, but I'll turn it over to Joe the only thing I'd add to that is it.
Those platforms are.
Are built on a healthy internet ecosystem and sending traffic their fundamental business model is sending traffic out to the rest of the internet.
And.
What they've said and I believe they intend to continue is that doing exactly that and doing more of that every year and so.
I think it is very easy to imagine a scenario, although we really don't know how this is going to play out and I'm not sure. They know how this is going to play out it is very easy to imagine a scenario, where they figure out how to use these tools to send more traffic out to the rest of the internet.
And there is again that's.
Fundamental to their business model, but theres also.
Real value in that in the sense that we've talked about.
The fact that these platforms say and this technology is.
Not yet reliable and not yet accurate and so it can provide information or snippets or <unk>.
The answers that users will look to <unk>.
Platforms and brands like ours to for validation and which we think that the platforms can send to us for validation.
And we view that as the that certainly has the potential to be a positive, but again I don't think the.
User interfaces are heartened yet.
The way, where we know exactly what's going to happen there.
Thank you operator next question.
Our next question comes from Brian Fitzgerald with Wells Fargo. Please go ahead.
Thanks, guys wanted to ask about a cure.
Leadership change there given the new phase of the business and the leadership change does that imply anything about how you are planning to invest around care dot com. Thanks.
Yes, Thanks, Brian No I don't think that changes anything along those lines I think that.
Brad is very much focused I think on a continuation of the existing strategy and meaning execution against instant book and getting that product working.
And and fundamentally growing the care caregiver base.
And family base in ways that delight both sides.
But I don't think theres any fundamental shift in and.
Either the core business strategy, nor from Ics prospective capital allocation up or down from there.
Okay.
We like the margins at that business, it's scaled well.
As as it's grown and the incremental margins gross margins are very solid so.
We look to drive organic growth and then as always with IAC. If there are M&A M&A or inorganic opportunities, we will pursue them as they as they arise and makes sense.
Okay. Thanks, Chris Thanks, Chuck.
Of course, thanks, Brian .
Operator next question.
Our next question comes from Youssef Squali with <unk> Securities. Please go ahead.
Great. Thank you very much so maybe just a follow up to Brian's question on care maybe.
Maybe can you talk about how big the transactional book offering is today and maybe how should we be thinking about that opportunity relative to subscription and <unk> are there any common characteristics cognizant.
The titles like parents in solid shape.
Trail in terms of traffic and what are you guys doing to reverse that thank you.
Yes.
I don't think we will disclose specific breakdown our revenue in care, but the one thing I want to sort of correct in your question or how you're thinking about it is.
I actually view transactions long term as a driver of subscriptions.
So the.
We can offer user transaction on.
Booking.
But really the goal and that is to show the value of transactions show the value of the platform and ultimately show the value of subscriptions to the product. So I think if we're successful on that I'd like to see transactions actually ultimately drive.
More subscriptions through the platform and drive more retention through the platform on the existing subscriptions.
We want to do that.
The only other thing.
Add on items through book is it really opens up there's so much traffic that comes through that doesn't sign up to a subscription so allowing them at a higher rate to.
Pursue a transaction prior to a subscription increases the engagement on the property increases the experience and may lead to transaction only customers or may lead them to execute a subscription but very much increases.
The breadth of offerings to the traffic, we get with respect to the properties that we characterize as laggards.
In the Meredith portfolio.
It is pretty idiosyncratic of y.
The.
In style is a good property that.
Was struggling when we bought it it also in the theme of.
Empty calorie revenues they would've had.
The most.
Empty or low calorie impressions.
And sort of off spec things that were driving clickbait type activities with the management team has really looked to clean that out we've also.
Excited by.
The new editor, we brought on there and just repositioning it so we feel good about the property and where it will end up it's just.
No.
A bit behind the behind the curve relative to some of the others, but we feel good about the prospects of their parents is again in a category.
With the family and a bit of mental health that weaves into it were very high traffic patterns, a year ago, but theres an action plan there to improve and then shape is tiny Neil and team would love us to remove shape, because it's non core and small, but we keep it on there just to for completeness. So each of them has there.
One situation and definitely two of them, we feel good about the opportunities in those brands, we just got to keep executing.
Thank you thank you Bob.
Operator next question.
Our next question comes from Brent Thill with Jefferies. Please go ahead.
Julian Angie when do you believe it can return to a growth asset and ultimately.
What's it going to take one of the pieces to make that recovery.
Yes, we said, we think we'll get back to growth in 2024 and the.
There's a bunch of pieces to that I think the margin part is easier I mean, we're already back to growth on margins and profitability year.
Year to date, we've generated $55 million of cash flow, that's up $110 million per year. So so I don't want that to get lost in all of this narrative in terms of what's what's happening there, but I assume your question is mostly focused on revenue growth, which is fair and certainly.
Because of ours, which.
As I say I think is is in 2024. There is there is a few.
Elements of that one is.
SCO or traffic or top of funnel audience. So we still have the reality that the AMG brand Angie Dot com.
<unk> is growing healthily.
And the the home advisor Dot Com legacy site is declining.
Declining now the magnitude of that continues to.
In a sense get better over time in that home advisor is a smaller and smaller piece of the total, but we're still dealing with that drag as we get into 2020 forward it becomes easier.
The other piece is we talked a lot about and we'll continue to talk a lot about retention on pros. So we're bringing our pro base into 2024 that is healthier retaining longer spends more.
And I think that will be.
Our help there.
The other pieces driving conversion and repeat rate on the homeowner side. That's the focus of the second half of this year and I think that can be a real driver to.
Growth if we deliver on the things that were.
Working on right now.
And the other thing that I that I want to mention we talked about a little bit on this call is services I think services is a meaningful competitive differentiator I think it's a great product with very high customer satisfaction very high repeat rate and we have to figure out how to start feeding more demand into that product.
Cuz, we're starving it a bit for demand right now, but if we can figure out how to feed more demand into that product and get that product exposed to more customers in a healthy way then I think that can also be.
A driver of growth going forward.
Thank you.
Brian .
Operator next question.
Our next question comes from Michael <unk> with Citigroup. Please go ahead.
Hey, good morning, guys I want to go back to the Gen III.
Question for a second two points on that first.
In terms of like internally.
Constant creation.
Because utilized in China had been a benefit at all.
Or your thoughts around that and then.
Following up on the kind of search.
And <unk>.
Training piece, there's been a lot of discussions that.
There's going to be pushed back from publishers and new media.
Media Alliance around.
How.
They use your.
Your content or publisher content.
Form there.
AI.
Any thoughts around that and how you guys are approaching that.
Sure I'll start and Chris can add.
Yeah.
We're using gen AI and a bunch of places that that that's what we have to actually across all the businesses, but at the.
As Meredith specifically.
We're doing things that are sort of.
Back of house with Gen III, meaning.
Content briefs, so starting to put together outlines.
Do that part of the our production process more efficiently.
We're seeing increased productivity from from doing things like that.
We also think we can we're experimenting with some things on the user experience personalization side. So.
<unk> done I think historically, a very good job of.
Getting users at the top of funnel and sort of answering their fundamental questions.
But we haven't done as good a job on keeping them retaining them and sort.
Rotating them through our system and I think that Gen. AI offers us a lot of tools to do that she is figuring out what the related questions are and then figuring out how to use our content specifically to answer those related questions.
We're starting to experiment around things like that and are optimistic about what that can deliver the other pieces on the ad side.
We we can start to customize ads and really expand.
Expand creative infinitely and tests creative infinitely.
For our advertisers both to find better AD copy you can find a better targeting and I think that can can can work very well.
On the training side of the <unk> look I think our position on this is clear ultimately this will be sorted out one way or another.
But.
Fair use as a sort of very clear standard I think we probably have a different interpretation of fair use than than the folks with the llm's do but we are we don't think that our content can be repurposed for the same commercial use we use it for <unk>.
And we're going to protect our intellectual property rights along those lines.
And I do think there are productive conversations with everybody in the ecosystem because even if you want to argue fair use and even if you want to argue with intellectual property rights and things like that.
The owners and operators of the <unk> know and understand that if they will move the economic incentive for creating the content upon which these things are based that is not a sustainable ecosystem for everybody and so <unk> seen some deals get done and I think theres conversations happening that that hopefully will be <unk>.
<unk> for everybody in the ecosystem.
Thanks, Joe the only thing I'd add.
It is.
In terms of real time, we're having a two day.
Hum.
<unk>.
Going on right now and when you've got the collection of companies we have it.
Interesting to see the diversity of applications. So.
Much as Joey said.
Things like application development coding customer service and Onboarding functions, where you can apply AI and create new interfaces.
Engaged with whether it's a nurse being on boarded or a.
Potential customer et cetera, and really access the depth of your database.
Clearly anything where there's optimization oriented and to be fair. Many of our businesses have been using AI and machine learning for years.
That's continuing to evolve and then generative AI.
Prevents presents even more.
Applications conventions across advertising.
Matching.
Tools for content development to your question et cetera, I think broadly with the CFO hat on you can see the line of sight on both productivity enhancements and in many cases, which should be fairly deflationary cost impacts the businesses good customer service.
Or are people intensive activities such as advertising version in testing those types of things. So it is obviously is such a cliche, but evolving rapidly, but just seeing our summit and the number of different applications across our companies.
<unk> has been definitely exciting for all of us.
Thank you.
Operator next question.
Our next question comes from Tom Champion with Piper Sandler. Please go ahead.
Good morning, Thank you Joanne Angie how important is getting <unk> back to growth. It was flattish sequentially this quarter and it sounds like better retention, but how are you thinking about the gross adds side of equation.
Look we're definitely going to need to get the gross adds at some point it hasnt been the focus.
Recently, but ultimately we need to get gross adds going to there's a lot going through.
The service professionals math remember, we lost a lot in the services side.
And moving out of the more complex services and so there is there's a lot happening there.
And still dollar value is more important than nominal count, but we ultimately we are going to be nominal count to grow to an end.
Ah.
I believe that's possible.
In in 2024, probably more like late 2024, but I believe that's possible.
Thank you.
Thanks, Tom and then one last question operator.
Our last question comes from.
No matter who call it.
UBS. Please go ahead.
Hi, Thanks for taking my question a couple if I could one more on the housekeeping side, which is based.
Based on the Q and assurance to June quarter into Q2.
You heard about the 85 and change.
In terms of number of shares.
Press release, Lee talked about shares outstanding as of August 4th.
Just two point something.
So have you bought back more shares.
The quarter ended just a housekeeping one and then <unk>.
Just trying to understand.
Hello, Bing and.
And <unk> is for the Clinton differently need to learn so multiple different sites.
So just to choose a specific part or maybe a couple of partners.
To learn from and maybe to be.
For the corporate entity for the learning experience.
Granted that Chris York properties.
And the good and within that context people things. Thank you.
Okay, I can take both and Joe jump in Delta is the shared between that share count as the shares associated with our CEO Grant.
To Joey and not counted because of performance triggers related to the to those shares.
That is a.
That's the delta between the 85% to 82 with respect to your question. There is an inherent philosophical question, which is.
We're focused on having the best of the Internet or.
A subset of the Internet in terms of what their learnings and their models learn at <unk>.
One of the key.
Elements of search and the Internet to date has been identifying the best as Joey likes to say and surfaces.
Rapidly.
For individuals and doing that in a constantly evolving in a way that is.
Ideally in a fair and mayor Meritocratic manner due to the best of the Internet of things.
Use a subset of content.
To train these models they will have inferior results they will have a narrower and less expensive.
Body of information from which they are providing answers to consumers and as evidenced by the inaccuracy of answers to date and hallucination as they call it.
Greater risk of that.
That seems to be reversing many of the best things of the Internet and decades of progress and information provisioning.
I think that's well said.
Okay. Thank you operator, thank you all for the questions and have a good day. Thank you everybody.
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