Q2 2024 Angi Inc and IAC Inc Earnings Call
we anticipate, or similar statements. differ materially from the views expressed today.
Speaker Change: Some of these risks have been set forth in IAC's and Angie Inc's second quarter earnings releases and our respective filings with the SEC.
Operator: 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 gap measures and full reconciliations for all material non-gap measures. With that, I will now turn it over to Joey.
Speaker Change: 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.
Speaker Change: With that, I will now turn it over to Joey.
Joey: Thank you all for joining us this morning.
Joseph Levin: incredibly brilliant and resilient. IAC team, any of you who are on this call today, we are incredibly grateful for the work that everyone's been doing here. This is a team of fighters, grinders, builders, and that's what we saw come through, not just really this quarter, but for the last 18 months. This is a team that figures out how to make things work and deliver for our customers.
Joey: Incredibly brilliant and resilient.
Joey: IAC team, any of you who are on this call today, we are incredibly grateful for the work that everyone's been doing here. This is a team of fighters, grinders, builders, and that's what we saw come through, not just really this quarter, but for the last 18 months.
Speaker Change: And we really have the same story at Angie, the focus on jobs done well there to make pros and homeowners happy has been the focus, and over time that's going to...
Speaker Change: show through in a business that can grow and win share in its category.
Speaker Change: And same true for businesses that we are minority owners of. Bill Hornbuckle at MGM and Andre Haddad at Turo are totally customer obsessed, and we're incredibly grateful to...
Operator: Operator, first question, please.
Operator: The first question comes from Ross Sandler of Barclays; please go ahead.
Speaker Change: the digital advertising landscape thus far in earnings season. So what are you seeing right now in terms of macro trends that are allowing you to accelerate while while others are?
Speaker Change: Kind of fading here. And then the the DDM licensing line picked up a little bit quarter on quarter and year on year So how much of a contributor to that was the recent AI licensing deals? And how should we think about that going forward? Thanks a lot
Speaker Change: Obviously, digital revenue is traffic and monetization, and let's do those one at a time. The traffic side has been going very well for DDM.
Speaker Change: and we now see growth in social media or opportunities for growth in social media going forward, big platforms.
Speaker Change: Apple News, Google has a similar concept called Google Discover, video, all these things are areas where we have started to or see real upside in continuing to grow traffic and so that's been
Speaker Change: a help in the business and that's where what led to the acceleration in the second quarter and what we think is continued acceleration what we're seeing as we sit here in August .
Joseph Levin: On the monetization side, that's both direct premium sales, and that's also programmatic. And I think it's important to understand that, obviously, we've been, as I say, growing inventory, but a solid base of inventory has always been there or has been for a while. And the performance and the performance intent, and the measurement of that performance intent have always been there.
Speaker Change: On the monetization side, that's both...
Joseph Levin: What's happening right now is we're getting the demand of advertisers to come in and start to more efficiently price it. And that's how you saw our programmatic ad rates go up substantially, and we think more than the market, and if you look at domestically, even more. That is a product of advertisers coming in, realizing the value of that inventory, and pricing it up to the point where it continues to drive performance for them. That lifting of that programmatic pricing,
Speaker Change: What's happening right now is we're getting the demand of advertisers to come in and start to more efficiently price it. And that's how you saw our programmatic ad rates up substantially, and we think more than the market, and if you look at domestic, up even more.
Speaker Change: That is a product of advertisers coming in, realizing the value of that inventory, and pricing it up to the point where it continues to drive performance for them. That lifting of that programmatic pricing...
Speaker Change: And the lifting of the premium also feed each other because you start to have less inventory available, which means that the best stuff starts to get higher prices over time.
Chris: The licensing business also did well, Electris answered that part of the question, but we are starting to have the OpenAI money in there and other...
Chris: licensing partners that are paying us that grew healthy and we still see upside in each of those things as we look forward from here.
Joseph Levin: The large-language model licensing deal we've announced, if you look at the digital licensing line, revenue grew 19% in the quarter, or $4.9 million in dollar growth. If you look at the prior quarter, the existing licensing business grew about 9%. So it's fair to assume about half of the dollar growth to get you up to 19% came from our open AI license. And we'd note that represents revenue earned since the partnership started in early May during the quarter.
Chris: And we'd note that represents revenue earned since the partnership started.
Joseph Levin: So there's only about 60% of a quarter of revenue captured in the second quarter and will be fully booked going forward. So if you think about half the dollar growth and gross it up, you have insight on the fixed portion of our fee. The next question comes from Cory Carpenter of J.P. Morgan. Please go ahead.
Chris: in early May within the quarter, so there's only about 60%.
Speaker Change: of a quarter of revenue captured in the second quarter and will be full going forward. So, if you think about half the dollar growth and gross it up, you have insight on the fixed portion of our fee.
Speaker Change: The next question comes from Cory Carpenter of J.P. Morgan. Please go ahead.
Cory Carpenter: So my question is, what inning would you say we're in? What do you think you still need to do to feel like you're in a position for revenue trends to turn?
Speaker Change: If I'm going to answer your baseball analogy, I think I'm going to take the bottom of the fourth, we're the home team and we're on offense.
Speaker Change: I think, as you know, what Joey's been focused on, and what the company continues to be focused on, is getting more jobs done well.
Joey: Just for reference, we define that as jobs where a homeowner who...
Joey: Submits a job on the platform, hires a pro, who pays for that lead on the platform effectively, and the job gets done with a 4 out of 5 rating.
Joseph Levin: Although losing a significant amount of ground it once had, we see that as currently getting to a stable place and turning. That's a big job and a huge opportunity for us given the amount of ground we've ceded that's there to be reclaimed. We've been systematically improving our SEM and really been significantly driving the SEM contribution growth. We think we still have work to do. I think we're still in the middle innings there in terms of being able to reclaim ground and grow those jobs.
Speaker Change: losing a significant amount of ground it once had. We see that as currently getting to a stable place and turning. That's a big job and a huge opportunity for us given the amount of ground we've ceded that's there to be reclaimed.
Speaker Change: Finally, the other area is really third-party, where there have been the most questions around the quality of what's happening there. We think it's a little lower quality. We'll continue to do some work there to make sure that all of our customers have a great experience.
Speaker Change: On the pro side, I think you've seen really remarkable increases in retention year over year the last couple of quarters. That's also being driven by the focus on jobs done well. We think we still have some territory to gain there, which will contribute to long-term growth.
Speaker Change: And then finally, you know, we're working on getting online enroll up and out in the United States. It's been an incredibly successful tool for us in Europe , and we believe it's going to contribute. So, we're going to put all the bricks in place.
Speaker Change: The honest truth is we will be growing revenue again. It will come when we have the experience and the product in a place that we think is great. It's not going to come immediately. But we are continuing to work on that. And right now what we are doing is growing value long term for the business and our customers and our shareholders.
Speaker Change: As Jeff said, we've improved marketing efficiency by stripping out lower-value revenue streams and what, in our view, was wasted paid marketing.
Speaker Change: We've also improved matching and monetization through technology, again improving efficiency, and that's a core theme in Jeff's strategy, as you heard. And then, moreover, we've worked for some time to target higher quality professionals.
Speaker Change: and that enables us to reduce our service professional acquisition spend while also improving retention and bad debt. And we've definitely seen both manifest themselves. So the investments in experience and efficiency...
Speaker Change: for the business have led to our revenue declines, which you referenced, but also helped to significantly improve both revenue quality and margins.
Speaker Change: Q2 in particular, there was some also benefit of some expenses that shifted.
Speaker Change: So, a little bit of flattering margins there, but big picture, you know, we feel good about the margins, we feel good about the profitability, and expect that to continue. Looking forward, we've said we expect revenue declines in Q3 to be back down about 15%.
Joseph Levin: That's higher than the second quarter but is more in line with the first quarter at the end of last year. It's really due to two factors. The second quarter last year was a particularly easy comp, as it's when we experienced the most positive impacts from shutting down certain demand channels that were producing lower quality leads. And then, secondly, a number of the actions that have been taken to improve the consumer experience really started in the second half of last year and early this year. So we're continuing to feel the impact there.
Speaker Change: That's higher than the second quarter, but is more in line with the first quarter in the end of last year. It's really due to two factors.
Speaker Change: The second quarter of last year was a particularly easy comp, as it's when we experienced the most pronounced impacts from shutting down certain demand channels that were producing lower quality leads.
Speaker Change: And then secondly, a number of the actions that have been taken to improve consumer experience really started in the second half of last year and early this year, so we're continuing to feel the impact there.
Speaker Change: As far as profitability in the third quarter, we're guiding the north of $30 million of adjusted EBITDA. That's lower than our profit in second quarter, due partly to the shift of expenses I mentioned before, but also targeted investments we're making in customer experience.
Speaker Change: to set us up for future growth.
Speaker Change: And I'll just add to what Jeff and Chris said, all of which I agree with and I think was very well said.
Joseph Levin: Going back to your original question, Cory, Jeff said at the bottom of the fourth, we still have work to do here, we still have work to drive the customer experience both on the homeowner side and the pro side to what we think is possible in the category and what we think is a long-term winner, and we're going to do all that work over time.
Speaker Change: Jeff said bottom of the fourth. We still have work to do here. We still have work to drive the customer experience and the both on the homeowner side and the pro side to what we think is possible in the category and what we think is a long-term winner. And we're going to do all that work over time.
Operator: The next question comes from Eric Sheridan of Goldman Sachs. Please go ahead.
Speaker Change: The next question comes from Eric Sheridan of Goldman Sachs. Please go ahead.
Eric Sheridan: Thanks so much for taking the question. I wanted to come back to two of the themes you talked about in the shareholder letter. First, you know, Joey, there was discussion in there about putting your cash to work in a smart, patient manner going forward, as well as the theme of shrinking the discount that exists in the equity of IEC today. I wonder if you could expound upon that statement and how it sort of tails back to thinking about capital allocation more broadly. And the second part of that would be you also highlighted the stakes you have in MGM and Turo. They continue to rise in terms of percent ownership there. Any color you can give us on pathway to either owning more of those equities over time or the path to creating or crystallizing value around those stakes. Thanks so much.
Joseph Levin: There are three things that shrink the discount that have always been true. And I think that we've always done them, but to varying degrees over time.
Speaker Change: There's three things that shrink the discount that have always been true, and I think that we've always done but to varying degrees over time.
Joseph Levin: Execution in the Companies, Smart Capital Allocation, and Crystallizing Value. All those things are certainly a focus. All those things are certainly on the table, and there will be a mix of all of them as we shrink the discount, or there will need to be a mix of all of them as we try to shrink the discount. We've lived with a discount in our past, and we've shrunk a discount in our past.
Speaker Change: Execution in the Companies, Smart Capital Allocation, and Crystallizing Value.
Speaker Change: all those things are
Joseph Levin: Generally, the discount is widest when the gap relative to our last crystallization event is the longest, and so I understand that. But, to us, that doesn't reduce the option value of any of those crystallization events. They still exist.
Speaker Change: We've lived with a discount in our past, and we've shrunk a discount in our past. Generally, the discount is...
Speaker Change: is widest when the gap relative to our last crystallization event is longest. And so I understand that. Now, to us, that doesn't reduce the option value of any of those crystallization events.
Joseph Levin: They still have value, but I understand that that value may not be appreciated until some of those options are exercised, so to speak. We have talked a lot already about execution in our companies and in the letter, and obviously, that will continue. The other two, Capital Allocation and Crystallizing Value, are certainly the harder ones to discuss because we haven't done either one of them in a little bit. As it relates to MGM and Turo, we are very happy with the path that we're on in both of those businesses, which is that we get to both hold on to our capital and accrue more ownership in the businesses. And that was evident in the last quarter, and we hope that will continue, and we hope both those businesses continue to execute as well as they have.
Speaker Change: They still exist, they still have value, but I understand that that value may not be appreciated until some of those options are exercised, so to speak.
Speaker Change: We talked a lot already about execution in our companies and in the letter and obviously that will continue.
Speaker Change: The other two, Capital Allocation and Crystallizing Value, are certainly the harder ones to discuss because we haven't done either one of them in a little bit.
Speaker Change: Our view is we are definitely looking for new opportunities in M&A. It's been the lifeblood of IAC for its entire history. It's been a great source of growth and shareholder returns and opportunity.
Speaker Change: We are looking there. As always, we have to be disciplined there, and we have to find things that we believe are screaming, indisputable opportunities, and we haven't found those yet, and when we do, you'll certainly know about it.
Speaker Change: On the crystallizing value side, there's a lot of ways to do that. I mean, if Turo does go public, that's a, you know, we'll see what the value is there.
Speaker Change: As it relates to MGM and Turo, we are very happy with the path that we're on in both of those businesses, which is we get to both hold on to our capital and accrete more ownership in the businesses.
Speaker Change: and that was evident in the last quarter and we hope that to continue and hope both those businesses continue to execute as well as they have.
Speaker Change: The next question comes from John Blackledge of TD Talon. Please go ahead.
John Blackledge: of Macrosoft. I'm just curious if you're seeing any signals.
Chris: Yeah, John , I'll let Chris do the second. I'll do the first.
Joseph Levin: in our caveat. The answer to your question is we're not seeing that weakness.
Speaker Change: In our caveat
Speaker Change: SKUs towards higher, maybe mid-income, just the nature of our businesses and brands skew more in that direction.
Joseph Levin: We are, you know, we had a really solid prime day last month at Dades Meredith on the commerce side. We've talked a lot about our view of how advertising or advertisers are viewing DDM, and spend there in terms of both pipeline and booked looks very good right now. So we look healthy if we look by business, I think. Care, we've talked about this a little bit, those families, we may be seeing a little bit in the sense of families favoring daycare over individual care or nanny care, but that trend, I wouldn't say, became more pronounced in the last month; that's been true for the last year or maybe even a little bit more. The same is actually true on the Turo side.
Chris: Spend there in terms of both pipeline and booked looks very good right now So we're those look healthy we look by business I think
Chris: Care, we've talked about this a little bit, those families, we may be seeing a little bit in the sense of families favoring daycare over individual care, nanny care, and so, but that trend I wouldn't say became more pronounced in the last month, that's been true for the last year, or maybe even a little bit more.
Chris: Uh, same is actually true on the Turo side. I mean, Turo...
Chris: and MGM, but Turo specifically demand for travel, as far as we can see, has held strong.
Joseph Levin: And then, John, on DDM, I'll take Q2 margins first, just to do it, chronologically. Incremental margins did exceed our expectations in Q2, thanks to a combination of a little more traffic growth than maybe we'd conservatively forecast for, and then also monetization was better. Joey talked about strength and programmatic and also momentum and premium, and that really drops to the bottom line. Looking forward, as Joey talked about before, you know, really, traffic and monetization are strong.
John Blackledge: And then, John , on DDM, I'll take Q2 margins first, just to do it.
John Blackledge: Sort of chronologically, incremental margins did exceed our expectations in Q2.
John Blackledge: As Joey talked about before, you know, really traffic and monetization are strong. We're seeing solid traffic growth across the portfolio of titles that's in an acceleration.
Joseph Levin: We're seeing solid traffic growth across the portfolio of titles that's in an acceleration so far this quarter. Entertainment's strong as we're lapping strikes, but also doing a good job of targeted content and also driving traffic from new distribution sources, as Joey said. Food has been very strong, and the team has done a great job reenergizing all recipes and other key properties there, and we see more opportunity. On monetization, it continues to be very solid across premium and programmatic. Thank you. Operator, next question.
Speaker Change: traffic from new distribution sources, as Joey said. Food has been very strong and the team has done a great job re-energizing all recipes and other key properties there and we see more opportunity.
Joey: is solid and feels to be broadening. It's definitely not a booming advertising market, but it is solid.
Joey: key categories for us like health, pharma, retail, beauty, remain strong. And then we've seen
Speaker Change: stability slash recovery in categories that we've said previously have been weak food and beverage home and technology
Speaker Change: Those patterns and then continued improvement in in programmatic monetization where we really feel like our advertising tech stack and our programmatic relationships
Speaker Change: are differentiated as well as our inventory.
Speaker Change: led us to guide to.
Speaker Change: You know, obviously our financial plan is back end weighted. We've said before roughly two-thirds of our profit.
Speaker Change: but you know we we see momentum we expect performance marketing to return to growth in the second half and licensing continues to be strong so we're head down executing
Speaker Change: Thank you, Operator. Next question.
Operator: The next question comes from Jason Helfstein of Oppenheimer. Please go ahead.
Speaker Change: The next question comes from Jason Helfstein of Oppenheimer. Please go ahead.
Speaker Change: talks, the press has obviously reported that you were interested in Paramount, that's true or not true.
Speaker Change: Terrell management is still very focused on getting public. I think there's not a milestone that that management or the board I think is...
Speaker Change: is a threshold to that happening. I think it's more the markets, meaning...
Speaker Change: The banks always like to offer someone a discount to buy into an IPO and I think that the discount has given the market volatility that discount is
Speaker Change: looked to be very wide.
Speaker Change: So, they're waiting for a favorable environment to do that.
Speaker Change: Whether it ultimately happens, I don't know. When it ultimately happens, I don't know. But there is not a, to answer your specific question, there's not a business milestone that needs to be hit in order to accomplish that. I think Toro does have the scale to be a public company. I've said all along and continue to say.
Speaker Change: We're relatively indifferent to whether it's a public company or a private company. We're much more focused on how it operates as a company.
Joseph Levin: Your other question, there's a lot in there. Paramount.
Joseph Levin: We did look at that. Our chairman, as you know, has a great history with that asset. It's an iconic asset. And in a way, it is similar to our feeling about DDM, which is that content is enormously valuable, and the people who invest in and own the best content with the best IP are in a good position and in a better position as distribution diversifies. And we think DDM, you can see now, is a beneficiary of that, notwithstanding the sort of prevailing narrative in markets. And so we like that concept.
Speaker Change: Paramount, we did look at that.
Speaker Change: Chairman, as you know, has a great history with that asset. It's an iconic asset. And in a way, it is similar to our feeling about DDM, which is content is enormously valuable.
Joseph Levin: The reality is that that deal didn't work for us financially, and I think the Ellisons have put together a deal that's very hard to beat in terms of M&A and share repurchases. You know, we do generally reject the notion that share repurchases are an essential baseline requiring explanation every 90 days. I know it is. It does.
Joseph Levin: We have explained it every 90 days for many, many years. But it is a thing that is important, and it is the thing that we have not been averse to historically. We've brought back huge amounts of shares in our history, and we don't have an institutional opposition generally to share repurchases. The only thing we're averse to is the notion of share repurchases for signaling, which is, we think, a truly foolish game and not something that we've ever done.
Joseph Levin: And just to make one more point on that, but certainly Monday this week felt like a nice day to look at our treasury and see a heavy stockpile. All that said, Chris and I believe we are outrageously cheap. We would use some cash to buy the things we know so well, and we think we have the ability to afford both share repurchases and M&A. This is the subject of significant internal debate, and the reality is that our chairman wants to put pressure on all of us to pursue M&A. And Also,
Speaker Change: Pursuing M&A.
Speaker Change: And to look for those new avenues for IC that have always been an important source of growth for us and are something that we expect to be an important source of growth for us in the future and so we're sort of keeping that pressure on the organization before we allocate to reap.
Speaker Change: <unk> that doesn't mean that we can't or won't or sooner.
Speaker Change: Soon or won't ever it just means that we are very focused on.
Speaker Change: M&A right now and our chairman doesn't think we have enough capital for both or maybe said differently. Once the cast as wide a berth as possible for the next opportunity and certainly more capital opens up a wider array of opportunities. So that's where we are right now again I think.
Speaker Change: Still as always has been and will be true anything is possible as it relates to share repurchases, but thats the way that we're thinking about it.
Speaker Change: And there are to answer your last bit there are real opportunities in M&A.
Speaker Change: Now I think.
Speaker Change: Familiar with it in our own cases, there are lots of companies that continue to deliver better and better results with.
Operator: Thank you, Jason. Operator, next question.
Operator: Great, thank you. I have two questions. Just as a follow-up to the prior question on MNA, it seems like in the letter you're telegraphing the possibility of maybe entering a new category. Historically, you focus on marketplaces. I'm not sure if that's true, a correct assumption or not, but if it is, how will you get investors comfortable with the risk of moving to a new category at a time when the stock discount is so high?
Operator: And then second, on the data licensing deal, can you maybe share with us, just broadly speaking, how the pipeline for similar deals is? Historically, when we've seen peers do deals like that, once open AI comes in, then you have a whole slew of others in the pipeline. Maybe if you can provide some either qualification or quantification of just how big the opportunity in front of you for that is. Some companies, kind of in similar...
Joseph Levin: So, we know there's risk in new opportunities, and we will never bet the company on something like that. We'll take manageable risks, and we'll have to have high confidence that we can deliver on that over time.
Joseph Levin: The only thing I'd add about the licensing deals is that there are active discussions. As we've said, each LLM and operator sort of has their own approach and philosophy, but we were disciplined in our discussions and approach that led to the OpenAI deal. And also, Joey referenced it in the letter, but given some of the travails on answers that we've seen from LLMs publicly, we believe that our preeminent brands and trusted content will only increase in value for sources in generative AI answers and large language models, and that the puck is moving in that direction where, you know, it's not about the cheapest answer to get to.
Joseph Levin: It is about the best one, the most respected one, and the most likely to be useful to the consumer who's entering the query or user who's entering the query. So we think that's a positive trend and reflects the portfolio of titles and brands that we've built.
Operator: Don't put glue on your pizza. Operator, next question, please.
Operator: The next question comes from Nick Jones of Citizens JMP. Please go ahead.
Joseph Levin: You know, off the kind of Adweek article and the case study with Pandora. Sounds like Decipher Guarantee went well. Can you maybe speak to how many brands are kind of using Decipher Guarantee and how the conversations are changing? you know, after Pandora's performance. Thanks.
Speaker Change: If you went well.
Speaker Change: Can you maybe speak to how many brands are kind of you think this type of guarantee and how the conversations are changing.
Speaker Change: After Pandora's performance. Thanks.
Joseph Levin: I'll take those, and Joey, definitely jump in. Programmatic has been very strong, and the team has built an excellent tech stack, but also integrations with the various players in the industry, and is really moving from strength to strength. What you referenced, we said in the letter, was our average programmatic rate was up 36% in the second quarter versus a broader market that, from a few different data points, we'd say is up 15% to 20% on price.
Speaker Change: I'll take those and Joey I'd definitely jump in.
Joey: You know programmatic has been very strong and the team has built in excellent tech stack, but also integrations to the various players in the industry and really moving from strength to strength.
Speaker Change: You referenced we said in the letter was our average programmatic rate was up 36% in the second quarter versus a broader market that from a few different data points, we'd say up is 15% to 20% on price that premium represents both.
Joseph Levin: That premium represents superior technology performance, but we also think it highlights, or we know it highlights, how performant DDM's inventory is, that given the intent-based and high conversion dynamics and also predictable nature of DotDash Meredith's users, the ads will just work very well for both premium advertisers but also for programmatic coming through. We're not going to give forward guidance on programmatic, but we have confidence we can outperform the market, and that aligns. Decipher is a part of that.
Speaker Change: Superior technology performance, but we also think it highlights are we know it highlights how performance.
Speaker Change: DDS inventory is that given the <unk>.
Speaker Change: Intent based and.
Speaker Change: Hi conversion dynamics and also predictable nature of Dot Dash Meredith users.
Speaker Change: The ads will just work very well for both premium advertisers, but also for <unk>.
Speaker Change: Programmatic coming through.
Joseph Levin: Right now, Decipher, as you referenced in the AdWeek article, and we'd encourage everyone to read it, it is a differentiated product, as Joey said in the letter, for direct premium Salesforce. It is in over half our premium deals, and it aligns with a number of factors that brands and agencies are looking for. Better performance, better ROI, privacy-friendly, non-cookie-based, and we're excited about the partnership with OpenAI to bring their capabilities, greater scale, and greater compute integration of video and images in the targeting and in the performance forecasting.
Joseph Levin: All of these align with where we think the PUC is going, which is intent-driven, privacy-friendly, highly performant advertising. And we appreciated our partner at Pandora allowing us to disclose that case study. We have over 27 case studies at DDM that show...
Operator: The next question comes from Brent Thill of Jeffries. Please go ahead.
Operator: The next question comes from Brent Thill of Jeffries. Please go ahead. Great. Hey, guys, it's James on for Brent. Thanks for the question. Can you just talk a little bit more?
Joseph Levin: Sure, uh, the punchline on the Google decision not to deprecate cookies is we think the end state is more or less the same, maybe the timeline is different, but the end state is more or less the same, which is users, or Google, rather, will offer users choice. Users, depending on how that's presented, will likely choose not to continue cookies, and the universe of audience that is cookied will shrink. By the way, the universe of audiences, Cookied, has shrunk and has been shrinking for a while.
Joseph Levin: It shrank very dramatically when Apple turned off cookies and made cookies unavailable for all of iOS, which is, by the way, a very valuable audience, a more valuable part of the market. And so we think that the Cookied audience continues to shrink. This is one of the reasons we're so excited about DDM.
Joseph Levin: What we offer advertisers is the ability to access the non-cookied audience and the ability to access that non-cookied audience with intent and with performance. And so what's been happening in the market is a cookied audience that's been shrinking that has all the infrastructure around it to target a cookied audience. There's been a lot of demand chasing shrinking supply, which means prices have been going up in the cookied audience, and everyone's chasing the exact same customers at a higher and higher price.
Joseph Levin: What DDM is now offering, and people are now, So what we're seeing, and advertisers are now seeing, is that we can access the rest of that audience, including the especially valuable iOS audience that is a naturally more valuable audience, or should be a naturally more valuable audience if you just look at demographics. And that's really important. The way we do that is we have intent.
Joseph Levin: So our content, you know DDM's brands, but we have travel and leisure, food and wine, we have all recipes. We have products that we have brands, rather, that are reviewing products and recommending products based on proprietary research that we're doing on those things, like within Better Homes and Gardens, that that audience has significant intent, which proves out in the case studies we do. I think we had 27 case studies showing a 2x lift in performance for these advertisers.
Joseph Levin: It is very real, and it is accessing an incremental audience that they can't access. And so we view what happened with Google and what will continue to happen with Cookies as long-term beneficial for Dash Meredith, and we are seizing that opportunity.
Operator: Thank you. Operator, next question.
Operator: The next question comes from Ygal Arounian of Citigroup. Please go ahead.
Joseph Levin: Thanks, guys. Back to Angie, and if you could just give a little bit more color on kind of what the focus is on consumer experience improvement right now. I understand, you know, we're in the fourth inning and you've done some, and there's more to do, but what are the key areas of focus at this point? And then, on the SEO side, a little bit more color on kind of what's needed to get SEO from this kind of stabilization point to where it's actually driving improvements. Thanks.
Joseph Levin: So, I'll take it and start it with the second verse. On SEO, there's a range of execution things that we need to do. We have just rebuilt the infrastructure to put our content on and to do our site linking. That's in place with some encouraging early indicators, but it's too early to call it. I think, secondly, we have to have a...
Speaker Change: To put our content on our site linking that's in place.
Speaker Change: With some encouraging early indicators, but it's too early to call it.
Speaker Change: I think secondly, we have to have a.
Joseph Levin: Discipline the program of producing the right content and keeping the content refreshed, which you've heard talked about with DDM over the years. And there's a playbook there. We believe we have the team in place. We believe we have the technology in place, and we believe we have the path to execute here now. It just has to be done Secondly, in terms of improving the consumer or what we might call the homeowner experience. We've done a fair amount of work here already. At the core, what we've been focused on as rule one over the last year and a half or so is improving matching.
Speaker Change: Disciplined program of producing the right content and keeping the content refresh, which you've heard talked about with DM over the year as effectively and Theres a playbook there.
Speaker Change: We believe we have the team in place. We believe we have the technology in place and we believe we have the path to execute here no. It just has to be done.
Speaker Change: Secondly in terms of improving the consumer or what we might call the homeowner experience.
Speaker Change: We've done a fair amount of work here already.
Speaker Change: At the core.
Speaker Change: What we've been focused on.
Speaker Change: Rule, one over the last year and a half or so is improving matching and what we've been able to do is improve the number of homeowners who are matched.
Joseph Levin: And what we've been able to do is improve the number of homeowners who are matched and the number of matches they get significantly. And that's been part of what's driven the jobs done well rate. What we're now working on is driving better matches. And so, you know, we've talked about improving our Q&A, making it conditional. What that means is we reduce the number of questions because we only ask the questions that are necessary once you've answered the last question. An example would be, "Is it a painting?". Is it interior or exterior?
Speaker Change: And the number of matches they get significantly.
Speaker Change: And that's been part of what's driven the jobs done well right. What we're now working on is driving better matches and so.
Speaker Change: We've talked about improving our Q&A, making a conditional what that means is we reduced the number of questions. Because we only ask the questions that are necessary. Once you've answered. The last question example would be is it painting is an interior exterior theres different past you go down.
Joseph Levin: There are different paths you can go down. By doing this, we can get more certain about what the job is and how to price the lead and get a better match of the right pro. Having the right pro makes the hire and the job being well done much more likely. So that is really our core focus there. We're doing a number of things, obviously, but I just sort of stopped there with that.
Speaker Change: By doing this we can get more certain about what the job is and how to price the lead and get a better match of the right pro having the right pro makes the higher end the job being well done much more likely so.
Speaker Change: That is really our core focus there we're doing a number of things, obviously, but just sort of stop there with that.
Speaker Change: One more question.
Operator: The next question comes from Tom Champion of Piper Sandler. Please go ahead.
Speaker Change: The next question comes from Tom Champion of Piper Sandler. Please go ahead.
Operator: Let's do one more question. Tom Champion of Piper Sandler.
Operator: Please go ahead. Hi, good morning, guys. Joey, can you talk a little bit about engagement training?
Tom Champion: Hi, good morning, guys.
Tom Champion: Joey can you talk a little bit about engagement trends on DM properties peers have harnessed new formats in.
Speaker Change: Ml models to drive personalization and higher time spent on.
Speaker Change: An opportunity for <unk>, and then Jeff I'd, just be curious to get your thoughts if the fed cuts rates next month.
Speaker Change: A tailwind for the anti business. Thank you.
Joseph Levin: your account. Yes, that is an opportunity. So I'm glad you raised that. When we think about... DDM's growth, there is, on the traffic side, certainly, it is just volume, it is engagement, and it is frequency. And different properties are at different levels of frequency and engagement, and we think we have real opportunities across many of them to grow that more deeply. I mean, as you might imagine, recipes have very deep engagement, and so I think for us, maybe the opportunity to drive frequency or scale there, and something like People Magazine would have very significant scale and volume, and the opportunity there would be to do things like drive deeper engagement.
Jeff: Sure Tom.
Jeff: Yes that is an opportunity so I'm glad you raised it on.
Speaker Change: When we think about Dd's.
Jeff: <unk> growth there is.
Speaker Change: On the traffic side certainly it is.
Speaker Change: Volume.
Speaker Change: His engagement and it is frequency and different properties are at different levels of frequency and engagement and we think we have real opportunities across many of them to to grow that more deeply I mean E mail might imagine recipes very deep engagement.
Speaker Change: And so the thing for us maybe the opportunity to drive frequency or scale there.
Speaker Change: And.
Speaker Change: Something like people magazine would have very significant scale and volume and the opportunity there would be to do things like driving deeper engagement and AI is a fantastic tool for that we have been playing with that they're the main tool is figuring out what the next article to suggest is and.
Joseph Levin: And AI is a fantastic tool for that. We have been playing with that there. The main tool is figuring out what the next article to suggest is, and AI is much better at that than people are, and so we are using those tools to deploy there to figure out how to drive engagement. And what was the second question?
Speaker Change: AI is much better at that than people are and so where we are using those tools too.
Speaker Change: To deploy there to figure out how to drive engagement and I think we can get real wins there.
Speaker Change: On the engagement side.
Speaker Change: What was the second question.
Joseph Levin: Oh. On the rate cut, and Angie, obviously there's a lot of complexity in the macro environment right now and a lot of different forces. By itself, a rate cut would stimulate homeowner demand because it would be more likely to increase the rate of home buying and thus... The repairs you do to your house to sell it and the repairs you do, the repairs and improvements you make to the house that you plan as you're moving in.
Speaker Change: On the rate cut and AMG.
Speaker Change: Obviously, theres a lot of complexity in the macro environment right now and a lot of different forces.
Speaker Change: By itself.
Speaker Change: A rate cut would provide homeowner demand because it would be more likely to increase the rate of home buying and thus the repairs you due to your house to sell it and the repairs you do the repairs and improvements you due to the house that your plan as you're moving it.
Joseph Levin: The other thing it would theoretically do is it would lower the cost of home equity lines and encourage improvements. But that's in a vacuum. It's a little bit hard to predict all the forces that are going on right now.
Speaker Change: The other thing that would theoretically do is it would lower the cost of a home equity lines and encourage improvements.
That's in a vacuum it's a little bit hard to predict all the forces that are going on right. Now we have some evidence that people have shifted their own personal capital towards improvements because they can't move.
Joseph Levin: We have some evidence that people have shifted their own personal capital towards improvements because they can't move. The rate cut would have to be material to impact all the people out there who have two and a half percent rates and make them willing to move in terms of the value trade-off they'd make. So I think there's a little more complexity to it, but by itself, a rate cut should help consumer demand, in particular, and give us a tailwind there.
Speaker Change: The rate cut would have to be material to impact all of the people out there who have two 5% rates and make them willing to move in terms of the value tradeoff they'd make so I think theres, a little more complexity to it but by itself.
Speaker Change: The rate cut should help.
Speaker Change: Consumer demand in particular and give us a tailwind there and just to put some numbers around that it is every time a home turns over an average of $15000 of home improvement that happened so fewer turnovers, which is what the market has seen for a while now.
Joseph Levin: And just to put some numbers around that, every time a home turns over, on average, there's $15,000 of home improvements that happen. So fewer turnovers, which is what the market has seen for a while now, means those $15,000 events aren't happening to the same degree. So you'd like to see more home turnover, but there are some natural hedges there, as Jeff alluded to, and there's also the reality that we've said for a while that I think 60% of our business is non-discretionary. So, as we always say, the locksmith, you're not waiting for the locksmith for rates to turn. Ah, I think that covers it.
Speaker Change: $15000 events are arent happening to the same degree.
Speaker Change: So you'd like to see more more home turnover, but there are some some natural hedges there as Jeff alluded to and Theres also the reality that we've said for a while and I think 60% of our business is non discretionary.
Speaker Change: So.
Speaker Change: As we always say the locksmith, we're not waiting for the locksmith for rates to turn.
Joseph Levin: Thank you all for joining us. Thanks for a lot of great questions. Thanks for the support as we continue on this journey and, especially, thanks to the IAC folks on here who are making all this happen. Talk to you all next quarter.
Speaker Change: I think that covers it.
Speaker Change: You all for joining us thanks for a lot of great questions. Thanks for the support and.
Speaker Change: As we continue on this journey and especially thanks to the IC folks on here, who are making all this happen to talk to you all next quarter. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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