Q1 2025 Angi Inc Earnings Call
and a lot of other people. So, I think it's going to be a pretty good film. I'm looking forward to it. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so. I hope so.
Welcome to the Angie First Quarter 2025 Earnings Conference Coal
Speaker Change: All participants will be in listen only mode. Should you need assistance, please signal conference specialists by pressing the start key followed by zero.
Speaker Change: After introductory remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Andrew Russikov, CFO . Please go ahead.
Speaker Change: Thank you, operator. Good morning, everyone. Andrew Russikoff here, CFO of Angie Inc. And welcome to the Angie Inc. First quarter earnings call. As a note, I go by Rusty, so everyone should please feel free to refer to me as Rusty. And joining me today is Jeff Kip, CEO of Angie Inc.
Speaker Change: Angie has also published a shareholder letter which is currently available on the Investor Relations section of Angie Inc's website
Speaker Change: We have also made some changes to our metrics disclosures this quarter and have published a short deck on the website to provide more helpful context and explanations.
Speaker Change: We will not be reading the shareholder letter or presenting the metrics primer deck on this call.
Speaker Change: I will soon pass it over to Jeff for a few introductory remarks and then open it up to Q and A. But before we get to that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward looking under the federal securities laws. Thank you very much.
Speaker Change: These forward-looking statements may include statements related to our outlook, strategy, and future performance, and our base on our current expectations and on information currently available to us.
Speaker Change: Actual outcomes and results may differ materially from the future results expressed or implied in the statement.
Speaker Change: Due to a number of risks and uncertainties, including those contained in our most recently recent quarterly report on Form 10Q, our most recent annual report on Form 10K, and in the subsequent reports that we file with the SEC.
Speaker Change: The information provided on this conference call should be considered in light of such risks.
Speaker Change: We'll also discuss certain non-GAAP measures which, as a reminder, include just EBITDA which we'll refer to today's EBITDA for simplicity during the call.
Speaker Change: Also, refer you to our earnings release, Shareholder Letter, our public filings with the SEC, and again, to the Investor Relations section of our website for all comparable GAAP measures and full reconciliation for all material non-GAAP measures .
Now let's jump right into it, Jeff. [inaudible]
Jeff Kipp: Thanks Rusty, and welcome everyone to Angie's first quarter earnings call and our first as an independent public company I'm going to offer modestly longer introductory remarks today than we would normally give in our release in the new operating metrics that Rusty just mentioned
Jeff Kipp: Overall, our first quarter performance was solid. As many of you know, we implemented homeowner choice in the quarter. Homeowner choice means that every lead sent to a pro on Angie is sent because a homeowner has specifically an affirmatively taken action to choose that pro in our user interface.
Jeff Kipp: A year ago about 40% of our leads were auto matched and today essentially none are we could explore some auto matched leads in the future for customers who want that product but today we have none [inaudible]
Jeff Kipp: For context, homeowners are happier when they're able to choose the pros who contact them and are significantly more likely to hire a pro with whom they have selected versus a pro with whom they've been auto matched.
Jeff Kipp: Since we implemented homeowner choice in January , we have seen our homeowner net promoter score key metric for homeowner satisfaction near positive for the first time since we started tracking the metric the metric was below negative 32 years ago [inaudible]
Jeff Kipp: A positive 30-NPS move and that kind of time frame is a significant accomplishment I've got to tip my hat to the entire organization for their hard work over the last couple of years [inaudible]
Jeff Kipp: Further, our pro win rate, the percent of the time a pro wins a job on a lead they pay for, jumped 10% from before homeowner choice to after. And that is a key indicator too, pros don't come to the platform to chat with homeowners, they come to win work.
Jeff Kipp: Both metrics are key indicators that were getting more jobs done well. A job done well is the North Star experience for customers on both sides of the marketplace. Homeowners come to Angie to find a skilled reliable pro to get their job done well and as I just mentioned, pros come to Angie to be hired to do jobs well.
Jeff Kipp: Of course, what we believe the driving job is done well is the key to long-term value creation for Angie, for our homeowners, for our shareholders, for our team, to move to homeowner choice did impact our financial performance in the short term. Nearly all of our first quarter revenue drop can be attributed to the impact of homeowner choice on lead volume in our network channel.
Jeff Kipp: This is a good transition to discuss the new metrics we released last night. Metrics we believe will help investors better understand the movements in our business. Given that this is new disclosure, new framework, I'd like to take a few minutes to walk through it. Thanks for advance for your patience.
Jeff Kipp: Let's start with a breakout of service requests and leads which we previously called monetized transactions into proprietary and network channels. The key distinction between proprietary and network channels is who is in control of the homeowner customer experience and service request details.
Jeff Kipp: In proprietary channels, we, Angie, control the experience and details of the job for proprietary channels include first ultra-Afric on our own den operative brands domains and apps which by definition go through our proprietary customer experience [inaudible]
Jeff Kipp: Secondly, traffic through referral partners who send homeowners directly into our customer experience and service requests submission path. And finally, customers of our retail and real estate partners from whom we can obtain the exact details we need to know for the job to be done and match well to our pros.
Jeff Kipp: The Angie Network Channel, on the other hand, consists of third party affiliate partners who bring homeowners through their own user experience and questions about the service request and show our pros for selection through our widget technology on their site. Obviously, in this case, our partner is in control of the experience in the job details. [inaudible]
Let's move to the actual numbers in the release.
Jeff Kipp: You'll note that you'll note the 33% and 57% step downs in network service requests and leads respectively. These declines were the result of requiring network channel homeowners to choose their pros. Before the January rollout of homeowner choice, all network service requests were auto matched to pros.
Jeff Kipp: Post rollout, we're seeing only about half of network homeowners choose at least one of our pros. It's a little lower than our proprietary customers taking action percentage, but this is driving the decline in lead volume and fewer SRs as well because we have less revenue per SR with which to market. [inaudible]
Jeff Kipp: As noted, this change accounts for nearly all of our lead volume drop and thus effectively nearly all of our revenue dropped in the first quarter [inaudible]
Jeff Kipp: Secondly, it's worth noting the proprietary service request to clients have decelerated materially and actually improved sequentially each month in the first quarter, and proprietary lead declines have decelerated to nearly flat for the quarter as a whole.
Jeff Kipp: Implicit in our 2026 Revenue Guidance is that the network channel will remain flatish year-over-year comparing to the significant drop we've experienced in the first quarter of 2025 and we expect to hold through the remainder of the year. And proprietary lead volume will move to growth.
Jeff Kipp: On top of that, with our move to selling a single pro product and with migration of our ads pros to the single pro platform in the third quarter, we expect revenue per lead to start growing in the second quarter of 2025.
Jeff Kipp: So, to do the basic math, flat network volume, plus growing proprietary volume, plus revenue per lead growth, mathematically adds up to revenue growth in 2026, and sequential quarterly improvements in revenue declines in 2025.
Okay.
Jeff Kipp: Moving now to our active pro network metrics, I would first note that the volume of newly acquired pros has been coming down [inaudible]
Jeff Kipp: Importantly, I would remind you that we know, as we noted in the shareholder letter, that the value creation on this smaller base of pros and smaller sales forces nearly 150% greater than a year ago despite acquiring 41% fewer pros in the first quarter. [inaudible]
Jeff Kipp: So, we're acquiring fewer pros, but with greater capacity and generating much more aggregate lifetime value which is we think pretty clearly the right way to run the business rather than paying for unprofitable volume growth So, let's move on to the next one.
Jeff Kipp: We anticipate that we'll grow the number of pros next year, i.e. 2026, and add to total capacity, both because we'll stabilize our sales head count and because we anticipate rolling out online pro acquisition the second half of this year, and we'll likely see growth in the raw number of pros by 2027.
Jeff Kipp: It's not the raw number of pros per se that drives capacity, it's the capacity per pro and in terms of our capacity for growth it's worth noting that if you do the math on leads for active pro looking back the last few quarters [inaudible]
Jeff Kipp: You'll notice that we're roughly 11 leads per pro in the first quarter, but 15-2 quarters ago in the third quarter of 2024. So we have significant capacity in the existing network, along with the capacity that we'll add during the rest of this year in 2026, meaning we have plenty of capacity to grow into in 2026.
Jeff Kipp: The next change in the metric I would point to is that we've moved our pro network to an average monthly active basis from a quarterly paying or transacting basis because first
Jeff Kipp: Our operating focus is to drive pros to engage with homeowner service requests because without engagement there are no jobs done well Hence the shift from transacting to active pros [inaudible]
Jeff Kipp: Secondly, because we run the business on an active monthly basis, we think showing the metrics this way more accurately reflects our operating approach.
Jeff Kipp: We've also placed our previously acquired pros into cohorts so that you can see the year-over-year retention in each cohort clearly.
Jeff Kipp: Newly acquired pros in the last 12 months have what we would term an activity rate rather than a retention because by definition they have no prior to your activity. We are focused on activating and retaining our pros in their first year.
Jeff Kipp: Pros acquired more than 12 months and up to 24 months ago have different retention characteristics than what we call the base cohort, which are pros acquired more than 24 months ago, and thus we have split the cohorts to show the performance separately.
Jeff Kipp: I would note the retention for each cohort is meaningfully improving. Base cohort retention is up 8% for the trailing 12 months versus the prior period as of Q1 2025, and retention for pros acquired in the 12 months ended, Q1 2024 is up 16%, 16%.
Jeff Kipp: Activation Raid is improved as well also by approximately 16% .
Jeff Kipp: The apples to apples had acquisition of new pros been level over the last several years. The network would be growing driven by the improvements in customer experience which have turned translated into significant retention and activation campaigns across each cohort. [inaudible]
So, to wrap up.
Jeff Kipp: Our Split of Service Request and Leeds and the proprietary network channel show more clearly the drivers of revenue declines in 2025 and are pathed back to growth in 2026 .
Jeff Kipp: Looking at Leeds, Per active pro on an average monthly basis, also shows the capacity in our network to absorb the growth going forward
Jeff Kipp: Finally, our move to active broker, which allows investors to more clearly see the dynamics between declining acquisition and improving retention and activation of our network, and with the anticipated acceleration of new pro acquisition in 2026, shows the path back to network growth.
Jeff Kipp: Thanks everyone for taking the time to listen to my explanation and now we can move on to your questions [inaudible]
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. If you're using the speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster.
Speaker Change: And our first question comes from Eric Sheridan from Goldman Sachs. Please go ahead.
Eric Sheridan: Thanks so much for taking the questions and thanks for all the detail and the shareholder letter and explanation. The first one would be on the macro environment. When you think about the macro environment you're operating in right now, we don't know if you could contrast. You're not going to be able to contrast.
Eric Sheridan: The type of growth you're talking about in 2026 and beyond. Thanks so much.
Eric Sheridan: All right, thanks, Eric. This is Russy. I can take these both on the macro as you're, you know, all well aware, virtually. [inaudible]
Speaker Change: Every business is prioritizing macro and in home services just like in other industries it's typical and rational for consumers to pull back on large and discretionary purchases in recessionary environment .
Speaker Change: and instead focus more on necessary maintenance and work that will prevent larger expenses down the line. And that's what the survey data is suggesting. So for our business,
Speaker Change: In early April , we did see a modest bump down in home owner volume.
along with some mixdown in job size. [inaudible]
Speaker Change: Leading to what we think is an impact versus our run rates of three to five percentage points is pointed out in the shareholder letter. And so we've incorporated this into our outlook for the rest of the year for some broader context.
Speaker Change: In our position within the industry, there are some counter-cyclical dynamics that do tend to factor into the mix for us.
Speaker Change: We're a small fraction of the overall industry, and our biggest competitor is still word of mouth.
So what general macro weakness means for pros? [inaudible]
Speaker Change: is that pros are seeing their audiobooks shrink and their calendars open up and that it's coming generally, meaning from all directions, including their bread and butter, referrals, and repeat customers. When that happens,
Speaker Change: They need to fill that void with additional sources of demand, which in turn naturally drives them to rely more on us.
Speaker Change: And when that happens, it leads to easier customer acquisition, stickier customer behavior and increase share of wallet. And so if you look back into some past cycles.
Speaker Change: We have typically seen some combination of pro acquisition increases and cost decreases.
Speaker Change: and Higher Lead Consumption for Pro. And this usually gives us some downside protection when consumer confidence falls.
Speaker Change: We actually experienced this in both directions. So during COVID, when home improvement, demand soared.
Speaker Change: You'll remember everyone in America wanting to build a pool in the summer of 2020.
Well, Bruce had their phones ringing off the hook. [inaudible]
and we were limited in our ability to...
Speaker Change: Fully participate in the upside that was flowing through the rest of the industry.
Speaker Change: Then, over on the homeowner's side, an offsetting factor is that when it becomes more difficult for people to frayed up with their homes,
Speaker Change: People do end up shifting behavior so rather than moving to a bigger house [inaudible]
Maybe they'll build an edition.
Maybe they'll buy an older house in need of repair. [inaudible]
And in fact, that lower velocity environment.
Speaker Change: is one that we've already been living with for a little while, so some of that behavior has already become normalized into our performance.
Speaker Change: And then finally, as we highlighted in the letter, roughly two-thirds of our business is non-discretionary, and that's whether you look at it by SRs, by leads, or by revenue, and this is...
Speaker Change: The most protected pocket of volume because the roof obviously doesn't wait for the economy to recover before it's ranked the league [inaudible]
Speaker Change: So, you know, the way I look at it will continue to carefully monitor the impact of the tariffs.
and Macro on certainty on our customers.
Speaker Change: On the other hand, operationally, we are in the fortunate position of not having a direct supply chain and having to disrupt the operations of our business, trying to re-engineer one.
We've given our full year guidance.
Speaker Change: You know, based on our best understanding of the state of the industry and the consumer today.
Speaker Change: As we all know, there are a lot of puts and takes and a lot of moving pieces, but we carefully assess where the business is running
Speaker Change: What we know about the rest of the year and what we know based on evidence about the impact our initiatives may have on our performance and we put the best foot forward.
Speaker Change: I think your next question was about investment in our margin framework. On that, you know, over the last few years.
Speaker Change: We've made material investments in the customer experience and we have dropped a significant amount of revenue to do so.
Speaker Change: You know, where are we as a result of that? We've not only seen the positive impacts in our customer metrics, most notably
Speaker Change: The NPS and wind rate improvements that Jeff mentioned before, but we've also been able to drive material operating efficiency.
Speaker Change: So simply, you know, we've been growing profit despite the lower revenue. Additionally,
We have been very disciplined with our fixed costs.
Speaker Change: You know, if you look at the combined total of six expenses and catbacks [inaudible]
Speaker Change: We reduced our overhead by $100 million versus 2022 and we still believe we are well staff to drive the investment we need to deliver 2025.
and Return to Growth in 2026.
We've been talking a lot about homeowner choice. [inaudible]
and the Salesforce consolidation. [inaudible]
Speaker Change: And these really represent the last material investments in the ecosystem that can set the stage for that profitable growth into 2026. And as you know, there will be always puts and takes, but we think that in general. Thank you very much.
We are done with shedding material pieces of the business.
This means...
We believe we can continue to drive.
Speaker Change: Both our customer experience and revenue growth at this level of fixed cost, fixed cost investment we have today
Speaker Change: One area that we would look to look, we would expect to look more closely at in 2026 . . . . . . . .
Speaker Change: It's whether we spend more on TV and offline advertising. We decided to run a little bit lighter in 2025 to allow some time to absorb the change to homeowner choice. [inaudible]
Speaker Change: We'll monitor the performance of our TV spend over the course of this year.
Speaker Change: And then factor that into our planning for 2026. And of course, if we identify any incremental high ROI opportunities that weren't substantial investment, it would just be appropriate for us to consider them.
And so our guidance for the year reflects. Thank you very much.
stability
from an investment standpoint.
Speaker Change: And then sort of reiterate what Jeff laid out. The formula for the near future is to focus on the talons from revenue per lead. The formula for the near future is to focus on revenue per lead.
Speaker Change: And performance from our proprietary channels, those two things, being the main driving forces behind return to revenue growth in 2026.
and then additionally the back row. [inaudible]
Speaker Change: We'll come with high incremental margins as we expect to be able to hold on to all of the improved unit economics as we grow that revenue and gain operating leverage over a fixed cost base that won't need to grow into 2026 [inaudible]
Alright, thank you Rusty.
Speaker Change: Great. Alright operator, next question please. Next question comes from Cory Carpenter from JP Morgan. Please go ahead.
Corey Carpenter: Hey, good morning. Thanks for the questions. I had two. Maybe just tying together your common trusty on macro and Jeff what you said earlier about the home where you're at in the homeowner experience. Could you just speak to what's giving you confidence? I don't know, I don't know. I don't know. I don't know.
Corey Carpenter: in the revenue trends, continuing to improve through the year given those dynamics. And then secondly, now that you're staying on company it would be great to hear your capital allocation priorities. Thank you.
I can take those. Thanks
Corey Carpenter: I think in terms of, I think we sort of laid out our confidence in our revenue trends with a significant improvement in the trajectory of proprietary SRs and leads plus what we anticipate to be solid growth in our revenue per lead.
Corey Carpenter: We're going to be able to get to improving revenue comparisons year-over-year and dust.
Corey Carpenter: There's some benefit in terms of compares in the third and fourth quarter as we started to implement some of the principles of homeowner choice
Corey Carpenter: So we think we're in good position in terms of the rest of the year and then heading into next year. We're again, we think that the network channels flatten out. So when you grow an 80% of the business and flat and 20% of the business you get growth. So that's how we're thinking about that. [inaudible]
Corey Carpenter: In terms of use of capital, I think there's a few categories [inaudible]
Corey Carpenter: Obviously, we just bought back a reasonable chunk of shares and our approach is to, from time to time, as appropriate, buy back shares to account for delusion either backward looking or forward looking, and we've demonstrated that we will do that over time [inaudible]
Corey Carpenter: in terms of other capital allocation questions, which is likely what's our acquisition approach. We'll see you next time.
Corey Carpenter: As we said before, we're still in the process really of digesting multiple acquisitions in the American business [inaudible]
Corey Carpenter: that we've acquired over time. We've got a significant amount of work there to do. So we do have core opportunities that mean adding another big chunk would require additional integration. That being said,
Corey Carpenter: Even though we're focused on our core operations, if we thought there was something to do that was accretive to our shareholders and a positive use of our capital and strategically critical, we wouldn't hesitate to take a look and maybe even do of it.
Corey Carpenter: I don't think that our stock would be a major acquisition currency, there's some limitations with what you're able to do around a tax-free spin-off But I think that's generally how we think about our capital approach over the next couple of years [inaudible]
Thank you.
Justin Patterson: The next question comes from Justin Patterson from Keybank, please go ahead [inaudible]
Justin Patterson: What do you do as the next product initiative to take more friction out of the ecosystem and improve jobs done well? Related to that, how does AI change your view on the product experience you can provide and potentially introduce some operating efficiencies over time? Thank you.
Great, those are great questions. So,
Justin Patterson: We anticipate that we are going to continue on our most core initiatives through the next several months, and those are
Justin Patterson: Getting the conversation with the homeowner to ask the right questions to get the right job details to get the right match. We're doing that both through significant iteration on our set of questions, which we expect to be materially done in the second half of the year. And...
Justin Patterson: Just a reference your second question. We've added a LLM based AI helper in that full motor path.
Justin Patterson: which is going to help increase and already is increasing the quality of the match without actually hurting conversion the team's done a great job with that product [inaudible]
Justin Patterson: And so we have a very high focus on making sure we get the job details right from the homeowner in a way that the homeowner understands to be able to match to the pro so the pro gets the work the pro wants.
Justin Patterson: I think the second piece there also drives matching and it's the single pro product initiative we've been talking about.
Justin Patterson: specific choice over the tasks they opt into than the leads pros given the nature of the platform in the product.
Justin Patterson: They're also required to take certain sets of zip codes, certain territories without having the flexibility to pick and choose
Justin Patterson: We're moving all of those pros and all of the new pros into a situation where they are able to pick and choose upfront. This is going to drive multiple things. First of all, the homeowners are going to get contacted more. The contact rate is lower with the ads pros because they get some leads that they don't actually want because of the basket they bought. [inaudible]
Justin Patterson: Secondly, the pros will actually very specifically pick what they want, meaning we'll have higher engagement and we will know much better exactly which jobs to match to exactly which pros based on task and geography. So we see moving to a single pro product as a significant uptick in the customer experience because we're going to match better, matching better means you're more likely to get a higher and a job done well. [inaudible]
Those are two critical pieces. I think beyond that...
Justin Patterson: We have opportunities to drive the connection and interaction post match. We've had a reasonable amount of success.
Justin Patterson: Driving our messaging and communication in Europe and we've been able to drive up our higher rate nearly 50% over a couple of years. We've obviously had big gains in the US too, but we think we have more runway in terms of driving the post-match experience. [inaudible]
Justin Patterson: And then I think let's moving to AI. We think about AI as a technology that can facilitate our experience everywhere. The first place we're getting it out with impact on the customer is obviously what we call the SR path and the conversation with the homeowner to ensure we understand the job correctly and get the right match. There's obviously a number of other applications. [inaudible]
Justin Patterson: As we roll out online pro acquisition, there's opportunities to use AI to enhance that path.
Justin Patterson: You then can imagine that the AI and LLM interface allows us to move to smoother chatbots that we can use not only on site in the app but also through voice and text but also through voice and text and text and text and text and text and text and text
Justin Patterson: And make it a easier, smoother and higher converting conversation, not just to the placement of SR or the onboarding of a new pro, but the actual connection and conversation between the homework and the pro that leads to a job done well.
Thank you
Justin Patterson: The next question comes from Steven Jew from UBS, please go ahead.
Stephen Ju: Okay, great. So I was wondering if you can give us some color on the cross-currents of what might be affecting your revenue growth, particularly in international, as that seems that's swamped you. Sorry, a year of your decline.
Stephen Ju: And secondarily, thanks for the disclosure, by the way, the monthly active prose, it seems like that number has basically had a trough, or is in the process of hitting a trough
Stephen Ju: As you turn off those, you're acquired previously so it seems like directionally the number of pros you're acquiring right now and I guess the implied turn is starting to converge so it's I guess it's sort of inevitable that that'll hit a 12th and start hopefully accelerating so I'm just additional color there. Thanks.
Speaker Change: Right, so I can take these. So first of all, in terms of international, there's a couple of pieces there. The first piece is...
Speaker Change: Our Canadian business was in a bit of a tough shape on its old platform. It was a high consideration negative ROI, high outbound sales model.
Speaker Change: And so what we are doing there is we are churning off that high value but lower customer experience [inaudible]
Speaker Change: Subscription Value, we've eliminated our sales force, we've moved to online acquisition and so the revenue is coming down but the profitability has already jumped materially. This is something in smaller scale we've done in each of our European businesses over time and we've gotten tremendous margin leverage and profit growth there along with some solid revenue growth over the last few years. [inaudible]
Speaker Change: That is mathematically because we're dropping that revenue significantly. It's mathematically pulling international down.
There is also some impact from regulatory matters in Europe . [inaudible]
Speaker Change: About a little over a year ago, we started having to take newly acquired pro IDs [inaudible]
which is a conversion hit. [inaudible]
Speaker Change: And potentially we were getting some pros on the platform who didn't have the proper ID and weren't uploading it, but we've taken some conversion hit in our new pro acquisition. And then as of the beginning of this year, we had to roll in ID checks for all of our existing pros. This is the Digital Services Act in Europe , it's a no-your-customer for marketplace businesses. This is the Digital Services Act.
And so we've taken a...
Speaker Change: 5-8% impact on our network just based on this conversion on the ID which is a temporary slowdown which effectively will annualize and there's a couple of other matters with GDPR that are impacting cookies and other things that impact there. That being said, the core of the business is very healthy as I've noted earlier over the last couple of years we've improved the rate at which a homeowner submitting an SR on the platform hires a pro on our platform so we're pretty pleased we have double digit . . . . . .
Speaker Change: Positive Homeowner, MPS, we're pretty pleased with the core operation of the business. It's approaching 20% margins, it's high teens and we think we'll get that back on track. In terms of monthly active pros.
Speaker Change: As I said earlier, we expect some to continue declines in the gross number. It's the byproduct of a couple things. Very high and unprofitable acquisition in prior, where we're still keeping some of those pros, but we never would have had them. We've been acquiring it the same ROI and margin generation we were today. So that's got to kind of wind down over time. And we have lower acquisition. However, we've never heard of it. We've never heard of it. We've never heard of it.
Speaker Change: Our acquisition is at higher capacity with each newly acquired pro so what optically is gonna look like declines continuing into 2026 is masking what's real capacity growth and untapped capacity in the network which is why I said earlier we have plenty of capacity to achieve the growth we need in 2026 [inaudible]
Speaker Change: We think that that number will cross over by 2027. It depends a little bit on how online enroll works as it rolls out. A couple of facts there. We're acquiring close to 140,000 pros a year in Europe in a
Speaker Change: Smaller market because we don't cover all of Europe with online at all. We don't expect anything like that in the US, but we do expect to get some yield
Speaker Change: We've also run a test in the Boston market using our European platform which has suggested that online enroll can directionally work as well in the United States as it does in Europe obviously it's a small market test [inaudible]
Speaker Change: That's a relatively high GDP per cap market. And so we've got to prove it out at larger scale, but we should have that out. We should have the online marketing program that we've sort of iterated on into very solid execution in Europe ready to go out. We have some optimism there. And thus we do see our pro network growth crossing over into 2027, although we really have to see how it all plays out. And so we're going to do that. We're going to do that. We're going to do that. We're going to do that.
Thank you.
Speaker Change: Again, if you have a question, please press star then one [inaudible]
Speaker Change: And our next question comes from Dan Kurnos from The Benchmark Company.
Please go ahead.
Speaker Change: Great, thanks. Good morning, Jeff. Can we just follow up on that for a second, let the pro pool? I mean, if we think about, you know, the rich history, data history that Angie has
Speaker Change: And we think about either reactivations versus attacking new pros that you build the pool. Should we think of kind of like a
Smaller, more concise, but more engaged, and, you know...
Call it like top 20% .
Speaker Change: And then I'm marketing channels to talk on it. But again, now that you guys have this reset, you know
Thanks.
So I think...
Speaker Change: What you got to there, Dan, is a pretty good way of talking about what we're doing on pro acquisition, which is we've significantly reduced the sales base
Speaker Change: We've reduced our pro-acquisition less, but we've materially increased our capacity per acquired, bro [inaudible]
Speaker Change: And to your point on lower acquisition costs, that's why when we say our net margin, we mean what's the lifetime value of the pros acquired minus the cost of that sales force in any marketing. So the fact that we're up nearly 150% year over year is actually the data behind the hypothesis. You just suggested that we're concentrating on higher value, higher capacity pros and spending a lot less money doing it. And we're generating a lot more forward value, which again, as I said earlier, I think.
Speaker Change: Exactly what we want to do. You're also right. We do have a rich database of pros who've used us at one time and frankly the move to the new model gives us an excellent opportunity to reengage and attack with reactivations that we think will help us a great deal over the next year or two in terms of our acquisition. Thank you very much.
Speaker Change: So we expect smaller sales force fewer pros, but that number flattening out and then growing in 2026 and more capacity per pro so we see capacity growth, but probably not raw volume growth that way
In terms of your comment on paid channels both.
Speaker Change: What you're suggesting is are we attacking paid channels? Are we getting better yield? Are we getting better acquisition there? This is exactly how we brought our proprietary lead growth.
Speaker Change: back to neutral, and the de-cellerating declines, how am I saying that? All right, the decreasing declines through the forest corner in SR growth and our expectation that we grow that in the coming year.
Speaker Change: So we have had actually tremendous success at turning and growing our SEM acquisition believe it or not, I realize Google is the traditional source but we are really materially growing that source year over year
Speaker Change: We've also had success getting into display networks and now Meta's ecosystem to create a new system.
Speaker Change: and acquiring significant number of jobs at Good ROI. We have a very strong paid marketing team who has delivered excellent performance over the last year or two. And we have been able to really step up our acquisition and proprietary channels despite any impact on the kind of organic ecosystem. [inaudible]
Speaker Change: So we're pretty pleased with that. It's a key part of our success to date, and it's a key part of our success going forward. And again, I sort of have to tip my hat to the teams that have been involved in there across product tech marketing and elsewhere. Thank you very much for joining us today.
Super helpful, Jeff. Thank you very much.
Speaker Change: Thank you. All right operator, I think we'll take one one last call if you can queue it up please. Well, let's just ask how many calls do we have let how many questions we have left in the queue? We have one one more, sir.
Perfect, perfect [inaudible]
Eigel Arunian: And the next question comes from Ygal Arunian from Citigroup. Please go ahead
Eigel Arunian: Take good morning, guys. Maybe just since this is your first quarter, Stan Lone.
Eigel Arunian: kind of how much what your expectation is for how much that can grow the the pro the pro counter. I would just efficient to you could try as that comes on to the platform. Thanks.
Eigel Arunian: So in terms of our strategy with IAC versus without IAC, there's really no change [inaudible]
Eigel Arunian: What we've been saying and executing on the last couple of years is the same today as it was a couple of years ago We know that the North Star experience the place where we get [inaudible]
Eigel Arunian: World class MPS from our homeowners and higher retention from our pros is when a homeowner on our platform hires a pro on our platform and so we have been driving all of our experience towards improving that success rate. And so we have been driving all of our experience towards improving that success rate.
Eigel Arunian: That's not going to change. We have to serve our customers and we have to serve them with positive unit economics. Thanks.
and that's the core of what we're doing.
Eigel Arunian: I think we're very fortunate to be part of the IAC ecosystem. IAC has always looked to its companies to set their strategy and drive performance within their umbrella. And I think we're going to be continuing to do the same thing here. And obviously we're lucky to have Joe is our chairman as part of IAC and Joe is our chairman post IAC. And that will continue as well. Thank you very much.
Eigel Arunian: In terms of flexibility, the one piece you get is you get a more liquid publicly traded stock.
Eigel Arunian: That's great in terms of employee liquidity and stock based compensation and it's also of some value as a potential acquisition currency again that's not something with we're thinking aggressively about there's limitations on what we can do there in terms of the spin off. [inaudible]
Eigel Arunian: and the board would also want to feel that the stock was in a place where that made sense as a currency. So I think longer term, yes, there are advantages, shorter term, there's nothing that really changes in our mindset. Obviously, as I said earlier, whether it's cash or stock, we will do appropriate strategic...
Eigel Arunian: You know, operationally effective acquisitions so that we can create value and we'll figure out how to integrate them and execute.
Eigel Arunian: In terms of pro online acquisition, which I think you referred to as self serve You know what I mentioned earlier is we've been effectively doing this in Europe for years acquiring north of 10,000 pros a month
Eigel Arunian: The countries we operating in Europe are, I don't know, half the gross market value of the US market and so
Eigel Arunian: There are some differences in the composition of pros, pros in Europe tend to be more no employees as a percentage, roughly half, whereas we think it's more like a quarter in the United States, which may lend itself more to self-sterb, so we're not projecting 10,000 a month out of the gate or anything like that, but we definitely think...
Eigel Arunian: to replicate the unit economics that we've targeted with our sales force.
Eigel Arunian: And grow our pro base going forward. And then once they're on the platform, we'll have the opportunity to upsell and bring them into adjacent geographies and tasks. We think there's opportunity. That being said, it's not out yet. We don't have real numbers and we don't want to get too far over our skis in the spirit of setting reasonable expectations and outperforming. And then we'll have the opportunity to upsell and bring them into adjacent geographies and outperforming. And then once they're on the platform, we'll have the opportunity
Eigel Arunian: So I think with that we can wrap the call. I want to thank everybody for listening. Thank you operator for helping us. Thank you everybody for your questions and we look forward to talking to you next quarter. Thanks. Appreciate it.
Eigel Arunian: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.