Q4 2023 Angi Inc IAC Inc Earnings Call

Operator: Good morning, and welcome to the IAC and ANGI fourth quarter 2023 earnings conference call. All participants will be in listen only mode.

Good morning, and welcome to the I E C and Angi <unk> fourth quarter 'twenty twenty-three earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. Please note this event is being recorded. Good morning everyone, Christopher Helfstein here, and welcome to the IAC and Angie Inc. fourth quarter earnings call. Joining me today is Joey Levin, CEO of IAC and CEO and Chairman of Angie Inc., which, similar to last quarter, is supplemental to our quarterly earnings releases. IAC has also published its quarterly shareholder letter, which is currently available in the Investor Relations section of IAC's website. We will not be reading the shareholder letter on this call.

After today's remarks, there will be an opportunity to ask questions. Please note. This event is being recorded.

I'd now like to turn the conference over to Christopher helping C. F O N C O O of I E. C. Please go ahead.

Christopher: Thank you.

Christopher: Good morning, everyone, Christopher helping here and welcome to the IAC and Angi, Inc. Fourth quarter earnings call.

Christopher Merwin: Joining me today is Joey Levin, CEO of IAC, and CEO and chairman of <unk> Sim.

Christopher Merwin: Similar to last quarter supplemental to our quarterly earnings releases I see has also published its quarterly shareholder letter, which is currently available on the Investor Relations section of Iac's website.

Christopher Merwin: We will not be reading the shareholder letter on this call.

Jason Helfstein: I'll shortly turn the call over to Joey to make a few brief introductory remarks, and we'll 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.

Joseph M. Levin: 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.

Joseph M. Levin: We anticipate or similar statements.

Jason Helfstein: These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from those expressed. Some of these risks have been set forth in IAC's and Angie Inc.'s fourth-quarter earnings releases and our respective filings with the SEC. We'll 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 reconciliations for all material non-GAAP measures. Now I'll turn it over to Joey. Good morning. Happy Valentine's Day. I think I've done this call many times on Valentine's Day over the years, so I'm not gonna try another bad Valentine's joke.

Joseph M. Levin: 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 Ics and Angie Inc's fourth quarter earnings releases and our respective filings with the SEC.

Joseph M. Levin: 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.

Joseph M. Levin: 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 reconciliations for all material non-GAAP measures now I'll turn it over to Joey.

Joseph M. Levin: Good morning, Happy Valentine's Day, I think I've done this call on Valentines day, many times over the years, so I'm not going to try another bad Valentine's joke.

Joseph M. Levin: Hopefully, you've all had a chance to read the letter and review the numbers. I want to start again by giving a very big thank you to all the teams across the businesses at IAC and the corporate folks at IAC, Angie. Got to ask Meredith, MGM, and Turo for making our job much easier this quarter. It's a heck of a lot easier to write these letters and get on these calls when the news is good, so thanks to everyone for making that happen. And it wasn't just one quarter. 2023 was a year of real hard work, changing our mindset, getting things done on behalf of our customers and the long-term health of our businesses. And it really, it really paid off in this last quarter. So thank you all. Hopefully, some of you are listening in this Valentine's morning. And that's why Chris and I have a spring in our step this morning. It's not just Valentine's Day.

Joseph M. Levin: Hopefully you've all had a chance to read the letter and review the numbers I want to start again by giving you a very big Thank you to all the teams across the businesses at IAC and the corporate folks that I see at Angi.

Joseph M. Levin: Got dash Meredith M. G M turo for making our job much easier this quarter.

Joseph M. Levin: A heck of a lot easier to write these letters and get on these calls when the news is good so thanks to everyone for making that happen and it wasn't just one quarter of 2023 was a year of real hard work changing our mindset getting things done on behalf of our customers in the long term health of our businesses.

Joseph M. Levin: And it really it really paid off in this last quarter. So thank you all hopefully some of you are listening in this Valentine's morning, and that's why Chris and I have a spring in our step. This morning, it's not just Valentine's day, that's performance drew let's get the question.

Operator: That's performance. So, Drew, let's get the question. Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the key.

Speaker Change: Thank you.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Cory Carpenter with J.P. Morgan. Please go ahead. Thank you. I have two on Angie.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Cory Carpenter with Jpmorgan.

Cory A. Carpenter: Please go ahead.

Cory A. Carpenter: Thank you.

Joseph M. Levin: Maybe, Joey, first, could you just expand on the trends you saw in the fourth quarter and what led to the upside relative to your guide for Angie? And then, secondly, it would be helpful to hear your expectations on the revenue side for Angie this year and what's embedded within your 24-profit outlook. Thank you. Sure, Cory. I'll take the first, and Chris will do the second.

Cory A. Carpenter: E Mail.

Cory A. Carpenter: Joey first could you just expand on the trends you saw in the fourth quarter and that led to the upside relative to your guide for Angi and then secondly would be helpful to hear your expectations on the revenue side for Angi this year and what isn't.

Cory A. Carpenter: Netted within your 'twenty quarter profit outlook. Thank you.

Joseph M. Levin: Sure. Thanks, Cory I'll take the first and Chris will do the second the biggest thing that we've underestimated and we've really continually underestimated. This is notwithstanding talking about it a lot is service professional retention.

Joseph M. Levin: The biggest thing that we've underestimated, and we've really continually underestimated this, is, notwithstanding talking about it a lot, service professional retention. And the progress there has been tremendous. It's the result of a lot of things we've done to drive satisfaction. First of all, targeting better service professionals with sales, giving them more compelling, committed offers, and giving them a chance of success. Some things we've done on the demand side to improve the mix of demand to help their win rates. And that retention has continued to move up, and I think we haven't gotten as good at modeling that upside, and we look at it conservatively, but as that comes through, it makes each individual transaction for us, the unit economics, more profitable because we have more service professionals active and engaging with service requests. Related to that are things like bad debt.

Joseph M. Levin: And the progress there has been tremendous it's a result of a lot of things we've done to drive satisfaction first of all targeting better service professionals with sales giving them.

Joseph M. Levin: And then a more compelling committed offer is giving them a chance of success.

Joseph M. Levin: Things, we've done on the demand side to improve the mix of demand to help their win rates.

Joseph M. Levin: And that retention has continued to move up and I think we haven't gotten as good at sort of modeling that upside and if we look at it conservatively, but add back for them through it make each individual.

Transaction for US unit economics, more profitable because we have more service professionals active in engaging with our service request.

Related to that is things like bad debt, we've been outperforming on bad debt all year, because again, we have happier service professionals.

Jason Helfstein: We've been outperforming on bad debt all year because, again, we have happier service professionals. The other thing is the margins on our paid marketing, and we've been expanding the margins on our paid marketing through, I think, a combination of smarter spend and some conversion improvements. And obviously, that's good for margins. And all year, 2023 relative to 2022, we've been much tighter on fixed costs and costs in general. And so the combination of those things all came through on profit. And I think a lot of those trends are, almost all of what I just said, I think, is durable and sustainable for the future. So that's, I think, a good thing for Angie's margin. Again, thanks, Cory. In terms of Outlook for 24, you know, we expect the revenue trend to improve over the course of the year from the declines you saw in Q4, but we also think it's important to maintain flexibility in terms of revenue growth in order to do what we need to to keep improving the foundation for user experiences, both on the pro side and the homeowner side. What does that mean?

Joseph M. Levin: The other thing is the margins in our paid marketing and we've been expanding the margins in our paid marketing through I think a combination of smarter spend and some conversion improvements and obviously that that's that's.

Joseph M. Levin: That's good for margins and all year.

Joseph M. Levin: 2023 relative to 2020, two we've been much tighter on fixed costs and costs in general and so the combination of those things all came through on profit and and and I think a lot of those trends are.

Joseph M. Levin: Almost all of what I just said I think is is durable sustainable for the future. So that's I think a good thing for Andrew's margin.

Speaker Change: Yeah. Thanks Corey.

Speaker Change: In terms of outlook for 'twenty four you know, we expect the revenue trend to improve over the course of the year from the declines you saw in Q4, but we also think it's important to main flex retain flexibility in terms of revenue growth in order to do what we need to to keep improving the foundation.

Speaker Change: For user experiences both on the pro side and the homeowner side.

Jason Helfstein: In Q1, we'd expect the decline in revenue year over year to be roughly the same rate as we experienced in aggregate in Q4 of 23, maybe a little bit better in Q1. The bulk of the actions that we took last year to eliminate low margin and low quality revenues really showed up in Q2 of last year, so the comps do get easier. Q1 will be the most challenging. We expect year-over-year revenue declines throughout 2024 but expect that percentage to narrow as we lap the easier comps and also the fruits of some of the actions that Joey has talked about and we're taking on the demand side begin to show, but we're not forecasting a return to revenue growth this year. On profitability, you know, we expect to sustain the 10% plus EBITDA margins we demonstrated in this last quarter when you normalize for the

Speaker Change: Does that mean in Q1, we'd expect the decline in revenue year over year to be roughly the same rate as we experienced in aggregate in Q4 of 'twenty, three maybe a little bit better in Q1.

Speaker Change: The bulk of the actions that we took last year to eliminate low margin and low quality revenues really showed up in Q2 of last year. So the comps do get easier Q1 will be the most challenging we expect year over year revenue declines.

Speaker Change: Throughout 'twenty, four but expect that that percentage to narrow as we lap the easier comps and also the fruits of some of the actions that Joey talked about and we're taking an on demand side begin to show up.

Speaker Change: But we're not forecasting return to revenue growth. This year on profitability, we expect to sustain the 10% plus EBITDA margins, we demonstrated in this last quarter.

Speaker Change: When you normalize for the insurance settlement.

Jason Helfstein: We expect Q1 adjusted EBITDA to be up slightly year over year despite the lower revenue over what we generated in Q1 of 23. And, you know, we forecast 10 to 12% adjusted EBITDA margins each quarter in 24. So, and that's how you get to the $120 to $150 million of adjusted EBITDA in our guidance. Thank you. Next question operator. The next question comes from John Blackledge with TD Cowan. Please go ahead.

Speaker Change: We expect Q1, adjusted EBITDA to be up slightly year over year. Despite the lower revenue over what we generated are to be up over what we generated in Q1 of 'twenty three and you know we'd forecast, 10% to 12% our adjusted.

Speaker Change: Adjusted EBITDA margins each quarter in.

Speaker Change: In 24, so and that's how you get to the $120 million to $150 million of adjusted EBITDA in our guidance.

Speaker Change: Thank you our next question operator.

Next question comes from John Blackledge with TD Cowen. Please go ahead.

John Blackledge: Great, thanks. Two questions. First, on.dash, DDM Digital, the ad revenue growth acceleration was better than expected. Can you talk about the key drivers of the acceleration?

John Blackledge: Great. Thanks, two questions first on <unk> Dot Dash D. DM digital AD revenue growth acceleration was better than expected can you talk about the key drivers of the acceleration and then for 'twenty four how should we think about the trajectory of D. D. M digital AD revenue growth and EBITDA up for the segment just <unk>.

John Blackledge: And then for 24, how should we think about the trajectory of DDM Digital ad revenue growth and EBITDA for the segment, just given the acceleration and EBITDA upside in 4Q? And then the second question on free cash flow in 24. It looks like IAC will return to, you know, kind of be a big free cash flow generator. Any way to kind of frame the free cash flow conversion of EBITDA in 24? Thank you. I'll start, and then I'll turn to Chris again.

John Blackledge: Given the acceleration in EBITDA outside of the <unk> and then second question on free cash flow in 'twenty four it looks like I I. If you will return to kind of be a big free cash flow generator any way to kind of frame the free cash flow conversion of EBITDA in 'twenty four thank you.

Speaker Change: Yeah, I'll start and then I'll.

Speaker Change: Turning to Chris again.

Joseph M. Levin: Uh, Digital revenue growth was really all the key factors, traffic, meaning volume, price, meaning ad sales rate, premium sales monetization, and that was, I think, a big win for the business and a big change in direction that we're pretty proud of. You can see the core sessions, which are over 80% of traffic, or 10%, and continue to accelerate. I mean, that's a really nice trend to see.

Speaker Change: Digital revenue growth was really all of the key factors traffic, meaning volume price, meaning our AD sales rate premium sales monetization.

Speaker Change: And.

Speaker Change: That was a I think a.

Speaker Change: Big win for the business and a big change in direction.

Speaker Change: But they were pretty proud of.

Speaker Change: You can see that core sessions, which is over 80% of traffic grew 10% and continued to accelerate I mean, that's a that's a really nice trend to see and.

Joseph M. Levin: The rate, if you just look at revenue per session, is up nicely, too. Premium sales are about two-thirds of our ad revenue, and that was solid, really, for the first time since the ad recession started in Q2 of 22. That's a credit to, again, the performance of our product, but also the combined sales force just working well together. And programmatic was excellent.

Speaker Change: The rate if you just look at revenue per session are up nicely too.

Speaker Change: Premium sales is about two thirds of our AD revenue and that was a solid really for the first time since the AD recession started in Q2 of 'twenty two.

Speaker Change: That's a credit to again performance of our product, but also the combined sales forces working well together and programmatic was excellent and we mentioned this in the letter, but we think our C. P. EMS are growing more in the market and that's a combination of again technology and performance.

Joseph M. Levin: We mentioned this in the letter, but we think our CPMs are growing faster in the market, and that's a combination of, again, technology and performance. And performance marketing, which has been a real source of strength throughout the year, continues to do well. And the one thing I want to add on performance marketing is, in this area, where we're delivering performance marketing, the product that we're creating is something that our users really want from us. Users really want to hear from food and wine on what is the best air fryer.

Speaker Change: And performance marketing, which has been a real source of strength throughout the year is continues to do well and the one thing I Wanna add on performance marketing is in this area performance, where where we're delivering performance marketing.

Speaker Change: The product that we're we're creating is something that our users really want from us. It users really want to hear from from food and wine on what is the best Air Fryer, and we deliver that we deliver that unbiased, we deliver that with a real work put into the prop.

Joseph M. Levin: And we deliver that, we deliver that unbiased, we deliver that with real work put into the product. And then that also happens to monetize well because it delivers performance marketing. But you do that across all the dot-dash Meredith brands, and there's a huge opportunity there.

Speaker Change: And and then that also happens to monetize well because it delivers performance marketing, but you do that across all the doctor as Meredith brands and there's a huge opportunity there and I think we've done a really good job that was started central to the.

Jason Helfstein: And I think we've done a really good job. That was sort of central to the acquisition thesis with Meredith, and I think we've done a really good job executing against that. And it's shown up a lot over the course of 2023. Thanks, Joey.

Speaker Change: The acquisition thesis with Meredith and I think we've done a real good job executing against that and it's shown up a lot over the course of 2023.

Thanks George.

Jason Helfstein: For 24, John, how we would think about, um... Overall trends and phasing, we expect digital revenue to continue to grow for all the factors that Joey articulated while print revenues will continue to decline. Digital traffic and monetization have continued their momentum into the first quarter of 24. The ad market is fine, not great, not bad, and we think we're taking share.

Speaker Change: 24, John how we would think about.

Speaker Change: Overall trends in phasing is we expect digital revenue to continue to grow for all the factors that Joey articulated.

Speaker Change: While print revenues will continue to decline.

Speaker Change: Digital traffic and monetization of continued their momentum into the first quarter of 'twenty four.

Speaker Change: The AD market is.

Speaker Change: Fine not great not bad and we think we're taking share we definitely think we're taking share on traffic and also on.

Jason Helfstein: We definitely think we're taking share on traffic and also on some revenue per session. So for the year, we'd expect 10% plus digital growth across 24. Conversely, print revenues declined 12% in Q4 of 23.

Speaker Change: Some on revenue per session.

Speaker Change: So for the year, we'd expect 10% plus digital growth.

Speaker Change: Across across 24, Conversely print revenues declined 12% in Q4 of 'twenty three and we would expect similar declines next year, especially in the first half.

Jason Helfstein: And we'd expect similar declines next year, especially in the first half, but it may slow down a bit in terms of decline in the second half. When you look at our profitability, our guidance is $280 to $300 million in adjusted EBITDA across all of DOTDASH for the year versus $267 in adjusted EBITDA in 2023. But there are some layers to that.

May it may slow down a bit in terms of decline in the second half.

Speaker Change: When you look at our profitability, our guidance is $2 $80 million to $300 million and adjusted EBITDA across all of Dot dash for the year versus 267, and adjusted EBITDA in 'twenty, three but theres some layers to that it implies 5% to 10% EBITDA growth, but what is really happening is.

Jason Helfstein: It implies 5 to 10% EBITDA growth, but what is really happening is strong growth and margin expansion continuing in digital and then offset by some profitability declines in EBITDA, which is what we'd expect. We've said our aim is to have our print debit offset our corporate segment, but in 23, print actually significantly outperformed corporate by $24 million. In this current fiscal year, we'd expect the two to be pretty much equal. So, you know, really all of that 280 to 300 million of adjusted EBITDA guidance for this coming year is digital EBITDA. That pattern will be pronounced in the first quarter.

Speaker Change: Strong growth and margin expansion contingent contingent continuing in digital and then offset by some profitability declines.

Speaker Change: Which is what we'd expect.

Speaker Change: Said, our aim is to have our print EBITDA offset our corporate segment, but in 'twenty three print actually significantly outperformed corporate by $24 million in this in this current fiscal year, we'd expect that to be pretty much equal.

Speaker Change: So.

Speaker Change:

Speaker Change: Really all of that $2 80 to 300 million of adjusted EBITDA guidance for this coming year is digital EBITDA.

Speaker Change: That pattern will be pronounced in the first quarter, we expect digital EBITDA to grow 40% plus year over year in the quarter print will be roughly breakeven on adjusted EBITDA basis in the corner. It seasonally the smallest revenue and also we've got some expense increases like postage flowing through.

Jason Helfstein: We expect digital EBITDA to grow 40% plus year over year in the quarter. Print will be roughly break-even on an adjusted EBITDA basis in the corner. It's seasonally the smallest revenue, and also we've got some expense increases like postage flowing through.

Jason Helfstein: And then finally, corporate expense should be roughly equal in the $9 million range to what we saw in Q4. For those looking year over year, just remember we had the $44 million lease impairment that flowed through in Q1 of 23 in corporate. When you roll all that up, adjusted EBITDA and aggregate will grow in Q1, but strong digital growth will be masked by declines in print. And then for the year, digital revenue should continue, as we said, at 10 plus growth. You'll see that margin scale, the incremental margins, and seasonal uplift.

Speaker Change: And then finally corporate expense should be roughly equal in the $9 million range to what we saw in Q4 for those looking year over year. Just remember we had the $44 million lease impairment that flowed through in Q1 of 'twenty three incorporate.

Speaker Change: When you roll all that up adjusted EBITDA and aggregate will grow in Q1, but.

Speaker Change: Strong digital growth will be masked by declines in print and then for the year digital revenue.

Speaker Change: Should continue as we said it 10 plus growth Youll.

Speaker Change: You'll see that margin scale, the incremental margins in the seasonal uplift.

Jason Helfstein: And we feel good about the momentum trend across the business. Your last question on free cash flow conversion across all IAC, if I'm getting that right, we felt good about getting back to free cash flow generation last year. It's been a major point of focus for Joey for all of us, and we expect our conversion to only improve in 2024 due to a couple of factors. One is aggregate EBITDA, as evidenced in our guidance, should be up even with the sale of Mosaic, led by DDM and Angie, while CapEx should stay in the $70 million range.

Speaker Change: And we feel good about the momentum trend across the business.

Speaker Change: Your last question on free cash flow conversion across all of IAC.

Speaker Change: Getting that right.

Speaker Change: We felt good about getting back to free cash flow generation last year, it's been a major point of focus by Joey to all of Us and.

Speaker Change: And we expect our conversion to only 24 do due to a couple of factors one is aggregate EBITDA as evidenced in our guidance should be up even with the sale of mosaic there.

Speaker Change: Led by DD M&A, Angie Capex should stay in the $70 million range last year in that 15% conversion.

Operator: Last year in that 15% conversion that you referenced, we purchased the land under our headquarters for $80 million; that's obviously not recurring. Net interest expense should only improve with a higher yield for the full year than we had in our cash last year, and then we've got $1.4 billion of NOLs, which is a substantial tax shield. So, roll that all up, and we would expect 50% plus of adjusted EBITDA to convert into free cash flow in 2024, and look forward to continuing to improve going forward. Thank you. Operator, next question. The next question comes from Brian Fitzgerald with Wells Fargo. Please go ahead.

Speaker Change: You referenced we purchased the land under our headquarters for $80 million, that's obviously not recurring.

Speaker Change: Interest net interest expense should only improve with higher yield for the full year than we had in our cash last year and then we've got 1 billion four of Nols, which is a substantial tax shield. So roll that all up and we would expect 50% plus of adjusted EBITDA to convert into free cash flow in 'twenty four and look forward.

Speaker Change: To continue to improve going forward.

Thank you operator next question. The next question comes from Brian Fitzgerald with Wells Fargo. Please go ahead.

Brian P. Fitzgerald: Thanks. Regarding Angie, thanks again for the comments on the shape of the year there. We wanted to ask more specifically about consumer demand, but I think the service request decline was one of the steepest we've seen since you've been prioritizing quality and profitability. Are you closing in on getting the customer acquisition engine where you want it and beginning to scale that back up? Do you have a line of sight for when that happens sometime in 2024? Chair Bryan, I would say, not yet in terms of line-of-sight.

Brian P. Fitzgerald: Thanks on Angi, Thanks, again for the comments on the shape of the year. There. We wanted to ask more specifically on consumer demand I think the service request decline was one of the steepest we've seen.

Brian P. Fitzgerald: That's essentially been prioritizing quality and profitability are you closing in on getting the customer acquisition engine, where you want it and getting them to scale that back up do you have line of sight for when that hits sometime in 'twenty four.

Speaker Change: Sure Brian.

Speaker Change: I would say.

Speaker Change: Not yet in terms of line of sight.

Speaker Change: We are making real progress we are.

Joseph M. Levin: We are making real progress. We are, and I'll also just point out, and I think you said this in the letter, monetized transactions are doing better than the trend line and service requests because we are doing a better job with stuff that monetizes well and matching that better with service professionals. So that service request decline, while steep, is not as steep to the business as it appears.

Speaker Change: Also just point out and I think he said this in the letter to monetize transactions are doing better than the trend line in service requests because we are.

Speaker Change:

Speaker Change: Doing a better job with the stuff that monetize as well and can matching that better with our service professionals. So that service requests declined while steep is not as steep to the business is as it appears.

Joseph M. Levin: But maybe it's helpful to talk about some of the things that we're working on and how those impact the business. I mentioned before, and I'll keep mentioning just because it's so important to the business, the service professional retention trends and, and, and relatedly, the improvement in monetized transactions per SR. Those things improve our margins on the unit economics of any transaction, and they also are going to start to improve our marketing allowables, which means that we can go out in our paid marketing and buy more, buy better, because we have better And that's going to come from improvements in the product experience. We know what drives homeowner satisfaction and homeowner repeat rates, and that's better matching with service professionals and a better chance of getting a job done well.

Speaker Change: But maybe it's helpful to talk about some of the things that we're working on and how those impact the business.

Speaker Change: I mentioned before and I'll keep mentioning just because it's so important to the business the service professional retention trends and.

Speaker Change: And relatedly, the improvement and monetize transactions per S. R.

Speaker Change: Those things improve our margins.

Speaker Change: The unit economics of any <unk>.

Transaction and they also are going to start to improve our marketing allowable, which means that we can go out and our paid marketing and by more by better because the.

Speaker Change: Have a better matching behind it.

Speaker Change: Yeah.

Speaker Change: The forces of demand beyond paid marketing is really good.

Speaker Change: A combination of direct and SCO and that's going to come from improvements in the product experience. We we know what drives homeowner satisfaction and homeowner repeat rate.

Speaker Change: And that's better matching with service professionals, and a better chance of getting a job done well and.

Joseph M. Levin: And so we are starting to drive those underlying metrics. We shared some of those stats in the letter, and we need those now to show up over time in direct and SEO. It's not going to be sort of an automatic where it just sort of flips on a switch, but it is something that, over time, with a better experience, you start to see those users coming in, coming in more often, coming on our free channels and referring their friends and family. That's what happens with a better product experience.

Speaker Change: And so we are starting to drive those underlying metrics, we shared some of those stats in the letter.

Speaker Change: And we need that now to show up over time indirect in <unk>, it's not going to be sort of an automatic we're just sort of flip on a switch.

Speaker Change: Switch, but it is something that over time with a better experience you start to see those users coming in and coming in more often coming in our free channels and referring their friends and family.

Speaker Change: That's what happens with a better product experience that does take time for people to realize it and the other thing I'll say is is that is what we saw happened in Europe.

Joseph M. Levin: That does take time for people to realize it. And the other thing I'll say is that is what we saw happen in Europe. Europe has grown 20% in the last couple of quarters. Europe is, I don't know that we'll hold on to 20% exactly, but double-digit growth is very real. Europe has been real for a while.

Speaker Change: Europe has grown 28% the last couple of quarters Europe as you know I don't know that that will all down to 20% exactly but double digit growth is very real that Europe has been real for awhile.

Joseph M. Levin: And that's the product of, I think, a better customer experience. And the other thing, just tactically, is that the comps do get easier starting in Europe. I got it. Thanks, Joey.

Speaker Change: And that's a product of I think a better customer experience and the other thing just just tactically as the comps do get easier starting in Q2.

Got it thanks, Joe I appreciate it.

Brian P. Fitzgerald: I appreciate it. Thanks, Brian. Drew, next question.

Joe: Thanks, Brian.

Joe: Next question. The next question comes from Jason <unk> with Oppenheimer. Please go ahead.

Operator: The next question comes from Jason Helfstein with Oppenheimer. Please go ahead. Thanks, guys. Good morning. Two questions on Dr. Eshmerez and then a quick housekeeping question.

Jason: Hey, Thanks, guys good morning.

Jason: Two questions on <unk>.

Jason: Dr. Meredith and then a quick housekeeping question, so what percent of ads or coverage. The FIFO cover and is there still restaurants Dpm's fall post Cookie deprecation and then how do you think potentially about offsetting that with like a higher mix of performance.

Jason Helfstein: So, what percent of ads or coverage does Decipher cover, and is there still a risk of CPMs falling post-cookie defecation, and then how do you think potentially about offsetting that with like a higher mix of performed inventory. So, the Cypher. And then, how are you thinking about the impact of the Amazon Retail Media Partnership and then thoughts about expanding that to other DSPs and retail partners in 24? And then, I've got a housekeeping question.

Jason: Inventory so the fiber and then how are you thinking about the impact of Amazon The Amazon retail media partnership and then thoughts about expanding that to other DSP and retail partners in 'twenty four and then I've got a housekeeping question after that.

Joseph M. Levin: Sure. I'll start. A lot of those questions are related. So first, we have... We've been using Decipher in about 30% of our direct ad campaigns since we launched it less than a year ago, and I think that's about 150 clients, and the folks who are buying it are, as far as we can tell, very happy so far. No sign that people won't be repeating that. And then when we've done case studies, and we've done a couple, one with a large, well-known beauty brand; we did a case study with Amazon, and in both cases, we saw a meaningful lift relative to cookie-based targeting. So we have a lot of confidence in Decipher's ability to deliver for our customers. One of the things that will drive that adoption is plugging into the pipes and the purchase path of DSPs, Demand Side Platforms, so that advertisers can access Decipher's targeting easier or access it in areas where they're already organizing their money and spending their money. So Amazon is the first example of that, but we hope and expect that there will be many more beyond that.

Jason: Sure.

Jason: The.

Jason: A lot of those questions are related so.

Jason: First we have.

Speaker Change: Decipher and about 30% of our direct AD campaigns since we launched it less than a year ago.

Speaker Change: And I think that's like 150 clients and the folks who are buying it are as far as we can tell very happy so far.

No sign that people won't be repeating on that and then when we've done case studies and we've done a couple one with a large well known beauty brand. We did a case study with Amazon and in both cases, a meaningful lift relative to cookie based targeting and so we have a lot of confidence in <unk>.

Speaker Change: Ability to deliver for our customers.

The one of the things that will drive that decipher adoption is plugging into the pipes in the purchase path of.

Speaker Change: DSP demand side platforms.

Speaker Change: So that advertisers can access decipher is targeting easier or access it in areas, where there are already organizing their money and spending their money. So Amazon is the first example of that but we hope and expect that there will be many more non that we're obviously targeting the biggest ones first.

Jason Helfstein: We're obviously targeting the biggest ones first; working with Amazon is happening already, we're working on something with Google, and then we'll look to really integrate with every ad agency. And this is a thing that's a win-win, it's a win for the advertiser on performance, it's a win for the partner, where their data combined with our data delivers better, more spend, and certainly it's a If we can build into those pipes, which I think is totally doable, then we've got big opportunities for growth. And then just a housekeeping question for Chris.

Speaker Change: Working with Amazon is happening already we're working on something that Google and then we'll look to really integrate with every AD agency and this is a thing that is a win win it's a win for them.

Speaker Change: On the advertiser on performance, it's a win for the partner where their data combined with our data.

Speaker Change: Delivers better more spend in and certainly it's a win for us if we can build into those pipes, which I think is is totally doable than we've got big opportunities for growth from here.

Speaker Change: And then just a question go ahead.

Speaker Change: Yes for credit concerns yards in emerging in other more bolt weaker as far as the I think the 24 outlook versus the street.

Jason Helfstein: The Search and Emerging and Other were both weaker as far as the 24 Outlook versus the Street. I guess with Search, is this the new baseline for Search? Just any color?

Speaker Change: I guess, we'll start to this the new baseline for search.

Jason Helfstein: And then are there any one-time factors you wanna call out why Emerging and Other was weaker than the Street as well? Thanks. Yeah, thank you, Jason. On search, you know, the business definitely experienced a tougher market environment at the end of last year, and you can see that in it producing $7 and a half million of adjusted EBITDA in the fourth quarter. This has continued in the first quarter of this year, but we believe we've reached the baseline where we are, and it should grow from here. That business has always done a great job of finding new areas in digital advertising to create value and create profit streams. That's our goal for 24 hours.

Speaker Change: Any color and then are there any one time factors you want to call out why emerging in other was weaker than the street as well. Thanks.

Yes, Thank you Jason on search the.

Speaker Change: The business definitely experienced a tougher market environment at the end of last year, you can see that in producing seven 5 million of adjusted EBITDA in the fourth quarter. This is it's continued in the first quarter of this year, but we believe we've reached.

Speaker Change: The baseline, where we are and it should grow from here.

Speaker Change: The business has always done a great job of finding new areas in digital advertising to create value and create profit streams. That's our goal for 'twenty four.

Jason Helfstein: But hitting a baseline in profitability recently is what drives the 20 to 40 million of adjusted EBITDA guidance, and that's really just a reflection of the software environment for that business. On emerging and other, it's a different story. Last year, that business in 23 generated 41.8 million of adjusted EBITDA.

Speaker Change: But hitting.

Speaker Change: Hitting our baseline and profitability.

Speaker Change: Recently is what drives the $20 million to $40 million of adjusted EBITDA guidance, and that's really just a reflection of the softer environment for that business on emerging and other it's a different story last year that business in.

Speaker Change: 23 generated $41 $8 million of adjusted EBITDA, we disclosed a month ago that wed signed a definitive agreement to sell our mosaic subsidiary for $160 million in cash that.

Jason Helfstein: We disclosed a month ago that we'd signed a definitive agreement to sell our Mosaic subsidiary for 160 million in cash. That transaction is expected to close very shortly. Last year, and this is going to be in our disclosure, Mosaic generated about 37 million in revenue per quarter and averaged about 5 million of EBITDA. So think of it as 20 million of the $41.8 million of EBITDA is being sold closing this month. Additionally, and this is in the guidance section in Joey's letter, we disclosed that in Q1 of this year, we expect to incur about $20 million of transaction expenses associated with that sale. That's obviously non-recurring, but will hit our definition of adjusted EBITDA in the first quarter and for the year.

Speaker Change: As expected to close very shortly that transaction last year and this is going to be in our disclosure.

<unk> generated about $37 million of revenue per quarter and averaged about $5 million of EBITDA.

So.

Speaker Change: Think of it as $20 million of the $41 $8 million of EBITDA is being sold closing this month. Additionally, and this is in the guidance section in Joey's letter, we disclosed that in Q1 of this year.

Speaker Change: We expect to incur about $20 million of transaction expenses associated with that sale. That's obviously nonrecurring, but we will hit our our definition of adjusted EBITDA in the first quarter and for the year. So the emerging and other guidance of zero to 20.

Jason Helfstein: So the emerging and other guidance of zero to 20, half of that is non-recurring, is brought down, or it's impacted by $40 million related to Mosaic. Half of that is non-recurring transaction expenses, and then half of that is the run rate profitability that we sold for $160 million. So on an ongoing basis, I think of it as a $20 to $40 million adjusted EBITDA segment, and the bulk of that would be CARE. Does that help, Jason?

Speaker Change: Half of that is nonrecurring is brought down.

Speaker Change: It's impacted by $40 million related to mosaic half of that is nonrecurring transaction expenses and then half of that is run rate profitability that we sold for $160 million. So on an ongoing basis I would think of it as a $20 million to $40 million.

Speaker Change: Adjusted EBITDA segment.

Speaker Change: And the bulk of that would be care.

Speaker Change: Jason.

Jason Helfstein: Yeah, thank you very much. Okay, thank you. Drew, next question.

Jason: Yes, thank you very much.

Jason: Thank you drew next question. The next question comes from Justin Patterson with Keybanc. Please go ahead.

Operator: The next question comes from Justin Patterson with KeyBank. Please go ahead. Thank you very much and good morning.

Justin Patterson: Alright, Thank you very much and good morning.

Justin Patterson: Just two on Angie. You've kind of alluded to it a little bit so far, but we'd love to hear just what the top two or three priorities are for the business in 2024, to just keep executing on the foundation that you've built. And then just around international, you've mentioned taking some of the learnings from abroad and bringing them domestically into the Angie product. Could you elaborate a little more on just what that means and how long that could potentially play out?

Justin Patterson: Two on angi, you've kind of alluded to it a little bit so far but would love to hear just what the top two or three priorities are for the business in 2024, but just keep executing on the foundation that you build.

Justin Patterson: And then just around the international you've mentioned, taking some of the learnings from abroad and bringing it domestically.

Justin Patterson: The AMG product could you elaborate a little more just what that means and how long that could potentially play out. Thank you.

Joseph M. Levin: Yeah, so, I'd say driving free and repeat traffic through better user experiences. Obviously, that has a big impact on our business, on our P&L, and it's something that everybody in the Angie organization is thinking about. Second, and again, I'm not a broken record on this, but we'll keep going, the health of the active SP network. That's the retention gains we've seen, holding those, and growing those. That's making sure pros are active and spending more and getting wins for that spend.

Justin Patterson: Yeah, So I'd say driving free and repeat traffic through better user experiences obviously that's a.

Justin Patterson: It was a big impact on our business on our P&L in and.

Justin Patterson: Something that everybody in the Angi organization is thinking about.

Justin Patterson: Second and again.

Justin Patterson: Broken record on this but we'll keep growing the health of the active SP network.

The retention gains we've seen holding those growing those.

Justin Patterson: That's making sure.

Justin Patterson: Pros are active and spending more and getting wins for that spend.

Joseph M. Levin: That's better targeting within the sales organization to reach our SP network, and you can see that we've been delivering that through a smaller, better targeted sales force. But again, that all speaks to the health of the active SP network. And the other one within, again, that same framework is starting to drive online self-enrollment for SP. The third would be unit economics, which is certainly partially number one and number two in terms of demand and supply, but it's also driving things like conversion.

Justin Patterson: That's better targeting within the.

Justin Patterson: <unk> sales to retard, our SP network.

Justin Patterson: And you can see that we've been delivering that through better.

Justin Patterson: Through a smaller sales force better targeted but again that all speaks to the health of the equity that's the network and the other one within again that same framework is starting to drive online self enroll for SP.

Justin Patterson: The and probably the third would be unit economics, which is certainly partially number one and number two.

Justin Patterson: In terms of.

Justin Patterson: Demand and supply, but it's also driving things like conversion.

Joseph M. Levin: We've had some big wins recently on conversion, but we still, I think, have a long way to go in terms of upside on driving conversion. We went through a period where conversion across most of our channels leaked a little bit, and I think we can get a lot of that back, and so we're very focused on driving conversion in ways that are a win-win for users on our platform. And when that comes through, that affects unit economics. So those are the big three.

Justin Patterson: We've had some big wins recently on conversion, but we still I think have a long way to go.

Justin Patterson: In terms of upside on driving conversion, we went through a period where conversion.

Justin Patterson: Across most of our channels leaked a little bit and I think we can get a lot of that back and so we're very focused on driving conversion in ways that are.

Justin Patterson: Win win for users and our platform and when that comes through that that moves the unit economics. So.

Justin Patterson: Those are the big three in terms of.

Joseph M. Levin: International, One is, well first you saw Jeff Kipp, who was running the international business, who did a great job getting that, all of Europe onto a common platform, and winning user experience, now he's in the U.S., and some others from his team are now also helping out in the U.S., brought the head of performance marketing in Europe, and now running performance marketing in the U.S., and the product and marketing leadership from Europe and the U.S., are now much more closely intertwined and interacting. The other thing, and this has been a theme for us for a while, is the, and maybe it was easier to do this in Europe quietly than it is sort of in the U.S. with the public disclosure, but we did a lot to optimize user experience in Europe over short-term monetization for long-term benefit, and that took a while to come through, but it has delivered in a meaningful way, and those trade-offs are trade-offs that we've been making in the U.S., and we expect to continue making in the U.S. And then the last one is, and this is very, very early for us, but the European business is almost entirely online self-enroll as opposed to a, Phone Sales Force, and Europe is almost entirely online self-enroll, and the U.S. is basically the inverse.

Justin Patterson: International.

Justin Patterson:

One is of course, you saw Jeff cable was running the international business, we did a great job getting that.

All of Europe onto a common platform and.

Justin Patterson: Winning user experience now he is in the U S.

And some others from from his team are now are also helping out in the U S.

Justin Patterson: Brought the head of performance marketing in Europe, and not running performance marketing in the U S.

Justin Patterson: And the product and marketing leadership from Europe, and the U S are now much more.

Justin Patterson: Closely intertwined and interacting.

The other thing and this has been a theme for us for a while is the and maybe it was easier to do this in Europe quietly than it is sort of in the U S with the public disclosure, but we did a lot to optimize user experience in Europe over short term monetization for long term benefit and.

Justin Patterson: That took a while to come through but it has delivered in a meaningful way in <unk>.

Justin Patterson: And those tradeoffs are tradeoffs that we've been making in the U S and we expect to continue making in the U S.

Justin Patterson: And then the last one is.

Justin Patterson: And this is very very early for us, but the the European business is.

Justin Patterson: Almost entirely online self enroll as opposed to a.

Justin Patterson: Phone sales force and the Europe is almost entirely online self enroll and U S is basically the inverse so we're working on a lot of the learnings there to see how we can drive more online self enroll in the U S and rely less on fall in sales and really focus the phone sales on the apo.

Joseph M. Levin: So, we're working on a lot of the learnings there to see how we can drive more online self-enrollment in the U.S. and rely less on phone sales and really focus the phone sales on the opportunities that warrant them. Thank you. Operator, next question. The next question comes from Dan Kernos with the Benchmark Company. Please go ahead. Great, thanks. Good morning, Joey.

Justin Patterson: Attunity is that that warranted.

Justin Patterson: Thank you operator next question. The next question comes from Dan <unk> with Benchmark Company. Please go ahead.

Dan: Great. Thanks, good morning.

Dan: Joey just two quick follow ups on <unk> been talking about a lot. This morning, I guess, just how do you balance.

Dan Kernos: You've been talking about it a lot this morning. I guess just how do you balance the consumer and the user and the SP experience if you start going back towards showing, you know, multiple SPs per service request? And to follow up from Brian's question, are there any verticals where you've started to make a change, or you're starting to see a return to SR growth? Just help us think about how you're attacking that a little bit more. And then, Chris, just on DotDash, on the margins, you know, appreciate the color for the year.

Dan: The consumer and the user and SP experience, if you start going back towards showing multiple Sps per service request and to follow up from.

Dan: Brian's question just are there any verticals, where you have started to make a change or you're starting to see a return to start growth just help us think about.

Dan: How you are attacking that a little bit more and then Chris just on <unk> dot dash on the margins.

Speaker Change: I appreciate the color for the year, you've taken a lot of cost out of that business already.

Joseph M. Levin: You've taken a lot of cost out of that business already. So, I get sort of the rhythm for 24, but, like, what are we waiting for? Is it a revenue level like you talked about in the past, or do we need to just see premium continue to stay strong this year to kind of get that real sort of vertical inflection that I think we're still waiting for on DotDash? So, uh, first question, Dan: it is. This is so far a win-win, meaning when we are matching homeowners with more service professionals, we are driving homeowner satisfaction, meaning that promoter score, and we think, ultimately, repeat rate, and we have been seeing ROI for pros increase. And while we can't measure this exactly, our thesis on this is that more jobs are getting done on the platform as opposed to off the platform.

Chris: So I get sort of the cadence for 'twenty four but like what are we waiting for is at a revenue level like you talked about in the past or do we need to just see premium continue to be strong this year to kind of get that real sort of vertical inflection that I think we're still waiting for on the cash margins.

Chris: Okay.

Speaker Change: So far.

Speaker Change: First question Dan It is.

Speaker Change: This is so far a win win meaning when we are matching homeowners with more service professionals.

Speaker Change: Driving homeowner satisfaction.

Speaker Change: Meaning net promoter score and we think ultimately repeat rate.

Speaker Change: And we have been seeing.

Speaker Change: For pros increase and while we can't measure this exactly our thesis on this is more jobs are getting done on the platform as opposed golf platform. So.

Joseph M. Levin: So while there may be more competition within our platform, meaning if we were previously matching with less than one, and now we're matching with more than one, I think, you know, monetized transactions per SR were 1.27 in the last quarter. While we're matching with more, and there is therefore more competition, we think more of that is staying on our platform as opposed to the kind of unknown competition for that same job that was previously happening off the platform So we want to keep driving that number up, and we want to keep giving both homeowners and pros a better chance of success on the platform. And we can see that play out in the numbers so far.

Speaker Change: While while there may be more competition within our platform, meaning if we were previously matching with less than one and now we're matching with more than one I think.

Speaker Change: Monetize transactions per <unk> was one seven in the last quarter.

Speaker Change: While we are matching with more and there is therefore more more competition.

Speaker Change: We think more of that is staying in our platform as opposed to the kind of unknown competition for that same job that was previously happening off platform. So we want to keep driving that number up and we want to keep giving both homeowners and <unk> has a better chance of success on the platform and we can we can see that play out in the numbers so far so that.

Speaker Change: Is that that that that balance that you're asking about is a we want to continue pushing it up we can't push it up forever, but we want to continue pushing it out because we think it's a win for all on the platform.

Joseph M. Levin: So that balance that you're asking about, we want to continue pushing it up. We can't push it up forever, but we want to continue pushing it up because we think it's a win for all on the platform. In terms of verticals...

Speaker Change: In terms of verticals.

Joseph M. Levin: The short answer to your question, I think, is no, but again, the things that we're trying to do are focus on certain user paths and user experiences, so where a user comes in from and then what we do with that user as they move through our ecosystem. And that's kind of how we're organized, thinking about each of those paths into our ecosystem and making sure they deliver a winning consumer experience and a winning professional experience. And a lot of that, as you've seen in our revenue, is modifying those experiences to reduce some revenue, but we are, as I say, if we want to talk about a region, Competitive. Europe did that, and Europe has had real success, so that's the path to take in the U.S.

Speaker Change: The short answer to your question I think is is no but again the things that we're trying to do our our focus on certain user past and user experiences so where a user comes in from and then what what we do with that user as they move through our ecosystem.

Speaker Change: And that's kind of our organizes is thinking about each of those paths into our ecosystem and making sure they deliver a winning consumer experience and a winning pro experience and a lot of that as you've seen in our revenue is modifying those experiences to reduce some revenue.

Speaker Change: But we are as I say, we want to talk about a region.

Confident.

Speaker Change: Europe did that and Europe has had real success.

Speaker Change: So that's the path in the U S.

Jason Helfstein: Thanks for the question on margins. You can see the scale in our margin structure by the incremental margins across 23 and particularly in Q4 of 23, where we are, you know, we're at basically 90% incremental adjusted EBITDA margins on digital. For 24, if you think of it as 10% plus, but just for simplicity, say 10% digital revenue growth, that would be 89 million of incremental revenue. If you pick the midpoint of the 280 to 300 million adjusted EBITDA guidance and say that is equivalent to digital EBITDA, you're talking about 47 million of adjusted EBITDA uplift. So there you have north of 50% incremental margins. Our investments in cost and digital are really content, especially video, which is performing well for us. And frankly, our partners want more video out of our brands, as well as performance marketing and then investments in deciphering. And we can fund them in part through the reallocation of costs from historical activities that are less strategic.

Speaker Change: And thanks for the question on margins.

Speaker Change: You can see the scale in our margin structure by the incremental margins across 23.

Speaker Change: And particularly in Q4 of 'twenty three.

Speaker Change: Where we.

Speaker Change: Where it basically 90% incremental adjusted EBITDA margins on digital.

Speaker Change: For for 'twenty, what do you think about it is 10% plus but just for simplicity say, 10% digital revenue growth that would be.

Speaker Change: $89 million of incremental revenue, if you pick the midpoint of the $2 $80 million to $300 million adjusted EBITDA guidance and you said.

Speaker Change: That is equivalent to digital EBITDA youre talking about $47 million of adjusted EBITDA uplift.

Speaker Change: So there you have north of 50% incremental margins are.

Speaker Change: Our investments in cost and digital are really content.

Speaker Change: Especially video, which is which is performing well for us and frankly, our partners want more video out of our brands.

Speaker Change: Also performance marketing and then investments and decipher.

Speaker Change: And we.

Speaker Change: We can fund those.

Speaker Change: In part through reallocation of costs from historical activities that are less strategic so we feel pretty good about our ability to continue to manage our cost structure and feel good about incremental margins. We've said, we expect 50% to 60% incremental digital EBITDA adjusted EBITDA margins.

Jason Helfstein: So we feel pretty good about our ability to continue to manage our cost structure and feel good about incremental margins. We've said we expect 50 to 60 percent incremental digital adjusted EBITDA margins in this business. And we may be able to do better, but we also want to keep the growth momentum going. Thanks, guys.

Speaker Change: This business and.

Speaker Change: We may be able to do better, but we also want to keep the growth momentum going.

Speaker Change: Thanks, guys I appreciate it.

Operator: Thank you, operator. Next question. The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Speaker Change: Thank you operator next question. The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan: Thanks so much for taking the questions, maybe two if I could. First, just following up on John's question earlier about DotDash Meredith. In the letter, you talked about the aspects of the business through the lens of premium programmatic and performance marketing. Can you talk us through some of the key learnings from 2023 and how you're thinking about the opportunity set through those three prisms for the business looking out to 2024 and beyond? And then second, turning to Angie, you talked in the letter about transacting SPs declining but improving from a second derivative standpoint, and you're still shrinking the sales force. Can you talk about the balance between driving efficiency and return in the sales force and aiming that towards the optimized level of service provider growth? Thank you. Yeah, I'll do the last one first before I forget it.

Eric Sheridan: Thanks, so much for taking the questions maybe two if I could first just following up on John's question earlier around Dr. Meredith in the letter you talked about the aspects of the business through the lens of premium programmatic and performance marketing.

Eric Sheridan: It goes through some of the key learnings from 2023, and how you're thinking about the opportunity set through those three prisoners from the business looking out to 2024 and beyond and then second turning to Angie you talked in the letter about transacting Sps declining, but improving from a second derivative standpoint, and you are still shrinking.

Eric Sheridan: The sales force can you talk about the balance between driving efficiency and return and the sales force and aiming that towards the optimized level of service provider.

Speaker Change: Thank you.

Angie: Yeah I'll do the last one first before I forget it and this is.

Joseph M. Levin: This is, you're right, we have been reducing the size of the sales force over the last 18 months. And the main thing is driving up productivity by eliminating unproductive calls. I think we were making a lot of phone calls to a lot of pros that, in the end, didn't really make economic sense. So we've cut back on that meaningfully.

Angie: So.

Angie: We you're right we have been reducing the size of the sales force over the last 18 months and the main thing is <unk>.

Speaker Change: Driving our productivity by eliminating unproductive calls I think we are making a lot of phone calls to a lot of pros that in.

Speaker Change: In the end didn't really make economic sense. So we've cut back on that meaningfully.

Joseph M. Levin: That is... That is a driver of the retention gains that we've seen, and that's a driver of the efficiency gains that we've seen, too. We're also prioritizing prospects more smartly now. So we have data. We built a system last year to deploy against this. We have data now to rate prospects that we call and make sure that we're focusing the effort of the sales on the best prospects that are most likely to impact our business for the better, meaning most likely to stick with our platform and most likely to get jobs done well for our homeowners. Um, that's also the type of offer we're making.

Speaker Change: That is a.

Speaker Change: <unk>.

Speaker Change: That is a driver of the retention gains that we've seen and that's the driver of the efficiency gains that we've seen too.

Speaker Change: We're also prioritizing prospects more smart more smartly now so we have data we built the system last year to to deploy against this we have data now too right prospects that we call and make sure that we're focusing the.

Speaker Change: The effort of the sales on the best prospects that are most likely to impact our business for the better meeting most likely two to stick with our platform and most likely to get jobs done well for our homeowners.

Speaker Change: With that also the type of offer where we're.

Joseph M. Levin: Pushing through our sales force, we're focused on higher commitment offers. We've known this for a long time, but I think there was a period where we deviated from it. We really have to give pros a chance to succeed, and so that means getting them to a higher commitment so that they can see enough volume through our platform to see a positive ROI. That's a little bit harder in the beginning because you're not going to make as many sales, but it's better in the long run because those sales are going to be more valuable, and those pros have a better chance of succeeding with the platform. I think those are the big ones on the sales force, and now I forget what the other questions were. I'll start.

Speaker Change: Pushing through our sales force, we're focused on higher commitment of offers that we've known this for a long time, but I think there was a period, where we deviated from it that we really have to give pro the chance to succeed and so that means getting them to a higher commitment. So that they can see enough volume through our platform to see the positive ROI.

Speaker Change: That's a little bit harder in the beginning because youre not going to make as many sales, but its long term better because those sales are going to be more valuable than those pros have a better chance of succeeding.

Speaker Change: Succeeding with the platform.

Speaker Change: I think those are the big ones on the sales force and now I forgot what the other questions, but I'll start.

Speaker Change: So Eric on EDM, you hit on the three key digital revenue categories drivers of premium <unk>.

Speaker Change: Grammatically and performance marketing.

Speaker Change: The one.

Speaker Change: Top of the funnel so to speak element, though is traffic so to talk about all the the supports our drivers of revenue growth traffic is growing.

Jason Helfstein: Traffic is growing. You know, we're getting to stability on overall sessions, and core is growing 10% in the quarter. Those trends have continued and or strengthened so far this year. So overall traffic sessions, and impressions are increasing. That then, from an advertising perspective, either falls into the first is premium that we sell directly to our advertising brands and agencies, and then what's left over, essentially to programmatic. Premium, it's been a tough market for us since we acquired DDM, since we acquired Meredith, really starting in May 22, when the ad market fell out of bed, but we are seeing momentum there. And as Joey said earlier, we're seeing performance by the combined sales force, and we'll keep that momentum going. Programmatic, you know, the team has done a great job with our ad stack and is continuing to optimize and improve the performance of our ads and our monetization.

Speaker Change: You saw.

Speaker Change: We're getting to stability on overall sessions and core is growing 10% in the quarter those trends have continued into our strengthened so far this year. So overall traffic sessions impressions increasing.

Speaker Change: That then from an AD perspective, either falls into the first is premium that we sell directly to our to our advertising brands and agencies and then what's leftover essentially relates to programmatic premium.

Speaker Change: Been a tough market for us since we acquired <unk> since we acquired Meredith.

Speaker Change: Really starting in May of 'twenty, two when the AD market fell out of bed, but we are seeing momentum there and as Joey said earlier, we're seeing performance by the combined sales force.

Speaker Change: And we will keep that momentum going.

Speaker Change: Programmatic you know the team has done a great job with our <unk>.

Speaker Change: Add stack and continuing to optimize and improve the performance of our ads and our monetization.

Jason Helfstein: Decipher will definitely be a tailwind for premium, bless you, and then increasingly, as we do the connections into things like Amazon, other DSPs, platforms, we think we'll increase our programmatic yield, which will be a tailwind there. And then finally, performance marketing, the Neil team are exceptional performance marketers, and you can see the acceleration, quarter to quarter, across the portfolio in performance marketing going, you know, zero, plus 12, plus 22, We expect it to continue. Competitors will get tougher, but we think we're as good as anybody in that space.

Speaker Change: Decipher will definitely be a tailwind for premium plus U and then increasingly as we do the connections into things like Amazon. Other DSP platforms, we think will increase our programmatic yield.

Speaker Change: Which will be a tailwind there and then finally performance marketing the Neal team our exceptional performance marketers and you can see the acceleration quarter to quarter.

Speaker Change: Across our across the portfolio and performance marketing going zero, plus 12, plus 22 plus 31.

Speaker Change: We expect it to continue comps will get tougher, but we think we're as good as anybody in that space and then finally, we don't talk about it much but licensing which has been a drag on digital revenue.

Jason Helfstein: And then finally, we don't talk about it much, but licensing, which has been a drag on digital revenue due to some syndication partners and other dynamics, is starting to get stronger. And, you know, we think some of our syndication partners could be a source of growth in 24. So they're all separate factors, but, you know, we feel good about the pace and executing on those this year forward to drive growth. Thanks, Eric. Operator, next question. The next question comes from Kunal Madhukar with UBS. Please go ahead.

Speaker Change: Due to some syndication partners and other dynamics.

Speaker Change: Starting to get stronger and we think some of our syndication partners.

Speaker Change: Can be a source of growth in 2004, so they are all separate factors, but.

Speaker Change: We feel good about the pace and executing on those this year forward to drive growth.

Speaker Change: Thanks, Eric.

Speaker Change: Operator next question. The next question comes from Kunal <unk> with UBS. Please go ahead.

Kunal Madhukar: Hi, thanks for taking my questions. One on organic traffic. Can you talk about what percentage of your total traffic on both DDM as well as Angie is organic? And then the second question relates to Angie, and you talked about it earlier in terms of the number of transactions per service request, the monetized transactions per service request being at 127%. So can you talk about, in an ideal state, what is this percentage level that you're targeting? And what does it mean for revenue per monetized transaction?

Kunal: Hi, Thanks for taking my questions.

Kunal: One on <unk>.

Kunal: Organic traffic can you talk about what percentage of your total traffic on both DBM as women's Angie is organic.

Kunal: And then the second question relates to LNG and you talked about it earlier in terms of the number of transactions per service request to monetize transactions for service requests being at 127%. So can you talk about an ideal state.

Kunal: What is this percentage level that you're targeting and what does it mean revenue could monetize comes action.

Operator: Thank you. Sure. Sure.

Speaker Change: Thank you sure sure on the.

Speaker Change: For the breakdown of traffic we don't.

Jason Helfstein: On the breakdown of traffic, we don't provide that publicly. I think we've given some data on DDM in the past, but that we don't share. Obviously, organic is a very important and large portion of the mix, but we don't do the breakdown.

Speaker Change: Provide that publicly.

Speaker Change: I think we've given some data on <unk> in the past, but that that we don't care.

Speaker Change: The organic is a very important and large portion of the mix.

Speaker Change: But we don't do the breakdown the.

Joseph M. Levin: In terms of monetized transactions per SR, it's a very good and fair question, and the answer is we don't know yet, and that gets a little bit back to Dan's question from earlier. We want to keep pushing that. We want to keep giving homeowners and pros a better chance of a job done well on our platform. There is a point where you would go too high, and so we don't want to go beyond that point, and we haven't found that point yet.

Speaker Change: In terms of monetize transactions for ISR.

Speaker Change: Ed.

Ed: Good and fair question and the answer is we don't know yet and it gets a little bit back to Dan's question from earlier.

Ed: We want to keep pushing that up.

Ed: Want to keep giving homeowners and pros a better chance of a job done well on our platform.

Ed: There is a point that you would go.

Ed: You would go too high and so we don't want to to go beyond that point and we havent found that point yet.

Joseph M. Levin: So there's certainly room from here, but it doesn't go up to infinity. And in terms of revenue per SR, that's a little bit different. Obviously, monetized transactions per SR are going to be a very big driver of that, but also the, I'll call it, quality of the SR, but quality may be an unfair word. It's what mix it is.

Ed: So certainly room from here, but it.

Ed: It doesn't go up to Infinity.

Ed: And in terms of revenue per <unk>, that's a little bit different obviously.

Ed: Monetize transactions, perhaps or is it going to be a very big driver of that but also the the.

Ed: The I'll call it the quality of the ASR, but quality may be an unfair award.

Ed: What mix. It is so a home remodel job is worth meaningfully more than our home cleaning job.

Joseph M. Levin: So a home remodel job is worth meaningfully more than a home cleaning job. The channel it comes through matters. How far down the purchase funnel the homeowner might be matters. How much information there is within the SR matters, and so those things, as we refine the service request, can drive revenue per SR up. And one of the things that's been happening, certainly over the course of the last year, is we've been both improving the mix shift and improving the quality of those SRs to help drive the win rate, and that's something that we hope to continue. The only thing I'd add is that we've become increasingly focused on monetized transactions per SR as an indication of the two-sided health of the platform and quality of the experience. So, and there's no silver bullet to optimize that. Clearly, having it greater than one is good because that's a better consumer experience. If it got to, you know, four, that's suboptimal for SPs in terms of their experience. So, there's something in there somewhere.

Ed: The channel it comes through matters, how far down the purchase funnel the homeowner might be matters.

Ed: How much information there is within the ISR matters and so those things as we refine the service request can drive revenue per <unk> are up and one of the things thats been happening certainly over the course of the last year is we've been both improving the mix.

Ed: Shift and improving the quality of those <unk> to help drive the win rate and that's something that we hope to continue.

Ed: The only thing I'd add is just we've become increasingly focused on monetize transactions per ESR as an indication of the two sided health of the platform and quality of the of the experience. So.

Ed: And there is no silver bullet to optimize that clearly having at greater than one is good because that's a better consumer experience.

Ed: If it got too.

Ed: For that sub optimal for Sps because in terms of their experience. So there's something in there, but the more that number increases the higher the quality of of Sars, We're getting and also the higher the quality of our matching technology.

Jason Helfstein: But the more that number increases, the higher the quality of SRs we're getting and also the higher the quality of our matching technology and of our SP base. So, we believe it has room to run, as Joey said, and it's a key metric to us in terms of the improvement in our overall two-sided market. Thank you. Drew, next question.

Ed: And of RSP base. So we believe it has room to run as Joey said and it's a key metric to us in terms of the improvement in our overall two sided marketplace.

Speaker Change: Thank you.

Speaker Change: Drew next question. The next question comes from Yigal <unk> with Citigroup. Please go ahead.

Operator: The next question comes from Ygal Arounian with Citigroup. Please go ahead. Good morning, guys. First, I have two questions. First on Angie, and we've been talking a lot about optimizations, but maybe just to dial in specifically on the user side, because about a year ago, we started talking about, Joey started talking about bringing back a greater focus on the integration, I guess, between ads and leads and services and the optimization around the user. How much is left there?

Yigal: Hey, good morning, guys.

Yigal: First two questions first on angi, and we've been talking a lot about.

Yigal: Optimizations, but maybe.

Yigal: Maybe just the dial and specifically on the user side because it was about a year ago. We started talking about Joe you started talking about.

Speaker Change: Bring them back.

Speaker Change:

Speaker Change: Greater focus on.

Speaker Change: On the integration I guess between ads and leasing services and.

Speaker Change: Optimization around the user how much is left there can you give us a little update on specifically on the user side and what users are seeing today that might be better than they were a year ago and how much is left and then on the broader IC.

Ygal Arounian: Can you give us a little update on, specifically on the user side, and what users are seeing today that might be better than they were seeing a year ago, and how much is left? And then on the broader IAC business. In the letter, you talked about being more aggressive on capital allocation with your individual businesses being in a healthier position now. And you also talked about, in the letter, the shift from goods to experiences and see that as kind of sustainable for longer, right around the MGM story. How does that fit into your M&A strategy and where you're focused on, you know, finding the right capital allocation? Sure, uh, so, in terms of the ads and leads integration, it's a really astute question and top of mind for us right now. You focused on the user side, which is where, as it relates to integration, we've actually made the most progress. And we have some big things rolling out shortly, actually, along those lines, in terms of, again, talking about the homeowner side. So previously, the algorithm for how a homeowner would match to, And I'd say somewhat theological.

Speaker Change: IC business in the letter you talked about being more offensive on capital allocation with.

Speaker Change: Europe individual business as being in a healthier position now and you also talked about in the letter the shifts from goods to experiences and see that as kind.

Speaker Change: Kind of sustaining for longer right around the MTN story.

Speaker Change: Does that.

Speaker Change: Sit into your M&A strategy, and where you're focused on.

Speaker Change: Finding the right capital allocation.

Speaker Change: Sure.

Speaker Change: So.

Speaker Change: In terms of the ads and leads integration.

Speaker Change: It really.

Speaker Change: Astute question and top of mind for US right now you're focused on the user side.

Speaker Change: Is where as it relates to integration.

Speaker Change: Actually made the most progress.

Speaker Change: And we have some big things rolling out shortly actually along those lines in terms of again talking to homeowner side.

Speaker Change: Previously the the algorithm for how a homeowner would match to historically ads frozen leads froze was complicated and I'd say somewhat illogical.

Joseph M. Levin: And we now have improved the algorithm to the point which we're getting ready to roll out now, which we've been testing for, I don't know, six or nine months now to better distribute and better match. And so a little bit of what we've been doing and seeing on the monetized transactions per SR as a result of what we've been testing there so that a homeowner comes in and has the best chance of matching with the right pros, independent of whether they were historically ads pros or leads pros. And that is a very big deal for driving the business. On the pro side, which you didn't ask about but is also important, is that I think there's still work to do on integration. So we still have multiple apps.

Speaker Change: And we now have.

Speaker Change: Improve the algorithm to the point, which we're getting ready to rollout now.

Speaker Change: We've been testing for I don't know six or nine months now.

Speaker Change: To better distribute and better match and so a little bit of what we've been doing and seeing on the monetize transaction for <unk> as a result of what we've been testing there. So that a homeowner comes in and has the best chance of matching with the right pros independent of whether they were historically ads froze release grows.

Speaker Change: And that is a very big deal for driving the business on the pro side, which you didn't ask about but is also important is I think there is still work to do on the integration. So we.

Speaker Change: We still have multiple apps, we still have multiple backend systems were slowly, but steadily migrating folks onto common systems, which will reduce our opex to reduce our or improve our speed of execution.

Joseph M. Levin: We still have multiple back-end systems. We're slowly but steadily migrating folks onto common systems, which will reduce our output, or improve our speed of execution. But we still have a lot of work to do on that side of the integration. And it was work that was never done historically, that was sort of hiding in the background, and that we are now tackling and is really important to get done, and I think will yield real value in terms of our operating efficiency. In terms of capital allocation and this shift towards experiences, those do go hand in hand. That is an area of focus for us, for sure.

Speaker Change: But we still have a lot of work to do on that side of the integration.

Speaker Change: And it was work that was never done historically that was sort of hiding in the background and that we are now tackling and is really important to get done and I think will yield real value.

Speaker Change: In terms of our operating efficiency.

Speaker Change: In terms of capital allocation and and this shift towards experiences of those do go hand in hand that is an area of focus for us for sure.

Speaker Change: We believe this trend is a long term trend has been a long term trend and will be a trend for a while still to come.

Joseph M. Levin: We believe this trend is a long-term trend, has been a long-term trend, and will be a trend for a while still to come. And we like the idea of businesses that benefit from that trend. So we've spent a lot of time recently looking in that area and looking deeply into that area, and we'll continue to do so. There is nothing imminent about that, but that is certainly a focus of our capital allocation. And I think if we look at last year, you know, we bought back $165 million of IAC. We bought another $100 million of Turo. We bought $80 million worth of land.

Speaker Change: And we like the idea of businesses that benefit from that trend. So we've spent a lot of time recently looking in that area and looking deeply in that yeah.

Speaker Change: And.

Speaker Change: And we'll continue to do so.

Speaker Change: Nothing imminent on that but that is that is certainly a focus of our capital allocation.

Speaker Change: And I think if we look at last year we.

Speaker Change: We bought back $165 million of IAC, we bought another $100 million of Taro, we bought $80 million worth of land in and those were I think easy transactions in each case, given given the data that at the time now with steady cash flow and the <unk>.

Joseph M. Levin: And those were, I think, easy transactions in each case, given the data at the time. Now, with steady cash flow and the businesses, I think, in a more stable place, we're starting to look more opportunistically externally. Again, nothing immediately on the horizon, but I think we have the position to do that. Thank you. Operator, I have one last question.

Speaker Change: I think in a more stable place, we're starting to look more.

Speaker Change: Opportunistically externally again nothing to nothing immediately on the horizon, but I think we have the position to do that now.

Speaker Change: Thank you operator, let's have one last question.

Operator: Thank you. That question will come from Brent Thill on behalf of Jefferies. Please go ahead.

Speaker Change: That question will come from Brent <unk> with Jefferies. Please go ahead.

Brent Thill: Joe, just a follow-up question on capital allocation. I guess when you think about what you're seeing in the private market and asset prices, I'm just curious. Many have asked why we should not have been more aggressive last year when we had this downturn.

Brent: Joe just a follow up question on capital allocation I guess, when you think about what youre seeing in the private market.

Brent: In asset prices I'm just curious.

Brent: Many have asked like why not been more aggressive last year. When we've had this downturn are you starting to see asset prices go back up are you are you seeing.

Joseph M. Levin: Are you starting to see asset prices go back up? Are you seeing things, uh... maybe not as uh... as buoyant as most would expect given the public market recovery? Just curious in terms of what you're seeing from your perspective Yeah, Brent, we tried on a couple of things last year to be opportunistic, that was more public market than private market. And while the valuations were down a lot, to your point, the expected premiums were up a lot, and we couldn't quite get there on those things.

Speaker Change: Things, maybe not not us.

Speaker Change: As buoyant as most would expect given the public market recovery just curious in terms of kind of what youre seeing from your perspective.

Speaker Change: Yes, Brian we tried on a couple of things last year to be opportunistic that was more public market the private market.

Speaker Change: And.

Speaker Change: While while the the valuations were down a lot to your point.

Speaker Change: Expected premiums were up a lot.

Speaker Change: And we couldnt quite get there on on those things.

Brent Thill: The private market, I think, is still totally irrational if you want the real view. I think that these businesses did a phenomenal job, very smartly raising enough capital to be able to wait out markets. And I think there's still a lot of capital that has been raised to go after private opportunities, and that capital has a fuse on it to be deployed. And so the private markets need not be rational in all things.

Speaker Change: The private market I think is still.

Speaker Change: Totally irrational if you will.

Speaker Change: I think that these businesses did a phenomenal job very smartly raising enough capital to be able to wait out markets and.

Speaker Change: I think theres still a lot of capital that has been raised to go after private opportunities and capital.

Speaker Change: Our fuse on it to be deployed and so the private markets need not be rational on those things and so unless something is is on the verge of running out of money I don't think anybody has to face reality on valuations and are in.

Joseph M. Levin: And so, unless something is on the verge of running out of money, I don't think anybody has to face reality on valuations. And therefore, it is not, I think, a productive place for opportunities. That is a very broad generalization. And certainly, there will be exceptions to that, if not many exceptions to that.

Speaker Change: And therefore it is it is not I think a productive place for opportunities.

Speaker Change: That is a very broad generalization and certainly there will be exceptions to that if not many exceptions to that but that's been our experience so far and in looking at opportunities there.

Brent Thill: But that's been our experience so far in looking at opportunities there. Yeah, maybe just to tie in one quick one on the emerging assets. Anything surprising you in the portfolio that we haven't talked about as it relates to the smaller emerging stories in the portfolio? Well, I'm glad you raised it. We didn't talk about Vivian at all.

Speaker Change: Maybe if you can just at the time, one quick one on the emerging assets.

Speaker Change: And anything surprising you in the portfolio that we haven't talked about it as it relates to.

Speaker Change: The smaller emerging stories in our portfolio.

Speaker Change: Well.

Speaker Change: I'm glad you raised that we didn't talk about Vivien at all but Vivien is good.

Joseph M. Levin: But Vivian is a good growing product and business. I mean, it's kind of amazing what the business has done. Continues to grow, continues to grow very healthily in a market that is shrinking dramatically. So the... Many people aren't familiar with Vivian, so let me just explain what they do.

Speaker Change: Good growing product business I mean, it's kind of amazing what the business has done continues to grow continues to grow very healthily in a market that is shrinking dramatically. So.

Speaker Change: The.

Speaker Change: Not many people are familiar with Vivien. So let me just explain what they do they're in matching nurses with.

Joseph M. Levin: They specialize in matching nurses with jobs. They have focused primarily on the travel nurse category, which turned out to be a very big category, especially during the pandemic. It's still a very big category, but the growth in that category shrank a lot post-pandemic. Still bigger than when it was pre-pandemic, but it's shrunk. Throughout that whole period, Vivian has been growing, and the reason Vivian has been growing is because they have an incredible concentration of available nurses in the market using the platform, actively using the platform, building profiles on the platform, and looking for jobs. And while there's been some near-term volatility in that market with the pandemic and the need for nurses in hospitals and facilities, the supply-demand imbalance is still enormous, meaning there are many more facilities that need nurses than there are nurses available to do those jobs.

Speaker Change: Jobs, they have focused primarily on the travel nurse category, which turned out to be a very big category, especially during the pandemic still has a very big category, but the growth in that category.

Speaker Change: Or that category shrank a lot post pandemic.

Speaker Change: Bigger than what it was pre pandemic, but a trademark throughout that whole period Vivien has been growing and the reason Vivian has been growing is because they have an incredible concentration of the available nurses in the market using the platform actively using the platform building profiles on the platform looking for jobs.

Speaker Change: And while there has been some near term volatility in that market with with the pandemic and the need for nurses in hospitals and facilities. The supply demand imbalance is still enormous meaning there are many more.

Speaker Change: Facilities that need nurses than there are nurses available to do those jobs and so Vivien I think is very well positioned there.

Joseph M. Levin: And so Vivian, I think, is very well positioned there. Parth Bhakta, who runs that business, who founded and runs that business, is a phenomenal entrepreneur and has done a wonderful job growing and building through that. And we think that business has a lot of potential. Where it goes from here, we'll see, but the execution so far has been really tremendous and a fun, small business, not moving the needle for IAC. But since you asked about it, we do like that one in the emerging category.

Speaker Change: Paris, Bhakta, who runs that business founded and run that business is a phenomenal entrepreneur and has done a wonderful job growing and building through that and.

Speaker Change: And we think that business has a lot of potential.

Speaker Change: Where it goes from here, we'll see but it is a the execution. So far has been really tremendous.

Speaker Change: On small business not move the needle for IAC, but but.

Speaker Change: Since you asked about every do we do like that one in the emerging category.

Operator: Thanks. Thank you. Thank you all for your support and participation this morning, operator, that's it. Thank you. Goodbye. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: Thanks.

Speaker Change: Thank you.

Speaker Change: You all.

Speaker Change: For your support and participation. This morning, operator, that's it.

Speaker Change: Thank you goodbye.

Speaker Change: France has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Okay.