Angi Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 8, 2023

There are 12 speakers on the call.

Operator

Good morning, and welcome to the IAC and Angie Third Quarter 2023 Earnings Conference Call. All participants will be in a listen only mode. After today's remarks, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference Over to Christopher Halpin, CFO and COO of IAC.

Operator

Please go ahead.

Speaker 1

Thank you. Good morning, everyone. Christopher Halpin here and welcome to the IAC and ANGI, Inc. 3rd Quarter Earnings Call. Joining me today is Joey Levin, CEO of IAC And CEO and Chairman of Angie Inc.

Speaker 1

Similar to last quarter, supplemental to our quarterly earnings releases, IAC has also published its quarterly shareholder letter, which is currently available on the Investor Relations section of IAC's website. We will not be reading the shareholder letter on this call. I will shortly turn the call over to Joey to make a few brief introductory remarks. We will then open it up to Q and A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance.

Speaker 1

These forward looking statements typically may be preceded by words such as we expect, we believe, we anticipate or similar statements. These forward looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in IEC's and ANGI, Inc. 3rd 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.

Speaker 1

I'll also refer you to our earnings releases, the IEC shareholder letter, our public filings with the SEC and again to the Investor Relations section 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.

Speaker 2

Thank you, Chris. Good morning, everybody. Thanks for spending time with us Good morning. It's nice to have both Dotdash Meredith and Angie growing again on the bottom line and I think we have a lot of great work happening at the businesses that should be able At Dotdash, the momentum really starts with audience and those trends are good right now even with Hollywood on because we're investing a lot in our content and our platform. We have an attractive and growing audience, a unique high performing ad product Sell and industry leading e commerce capabilities.

Speaker 2

If we have a decent ad market through the rest of the year and into next year, I think we're in great shape. All the work we've done on the cost side should help more of those dollars flow through. At AMG, we're making our paying customers happier. Service professionals are retaining longer and spending more over their lifetime, which means they're making more homeowners happy. We believe that means we're delivering a better overall experience, which is how we earn our margin and you can see that showing up in profitability in the business.

Speaker 2

Profitability isn't our only priority or even really our biggest right Now, and I don't think we've reached maximum profitability yet on our existing service professional and homeowner base. But one of the things we're learning is that optimized customer experience We're looking at it today, which is our biggest priority, it happens to line up well with profitability because it means we're making more and better matches on our platform, which makes each transaction more valuable. When we're making more matches on our platform, we think we're lifting win rates for pros and we're lifting customer satisfaction for homeowners. So all the steps we're taking may not yet optimize the P and L, but they do prioritize optimization for customer experience. And we believe that's long term how we're going to win this category.

Speaker 2

I know patience here isn't easy, but that's how we're thinking about it and we're generating more cash flow in the meantime. We've got a lot to work with throughout IAC right now. MGM and Turo are in my opinion in excellent shape with Exceptional leadership and we're grateful to be a part of those businesses. We got plenty to discuss today, so let's get to questions, operator.

Operator

We will now begin the question and answer session. At this time, we will take our first question, which will come from Jason Helfstein with Oppenheimer. Please go ahead.

Speaker 3

Thank you for taking the question. Good morning, everybody. So kind of one two part question. So can you help us understand with respect to kind of The guide for the full year, in some cases being to the low end of the prior range, how much of that is revenue related versus This is margin related, so just if you can give us some color as far as we are seeing particularly Meredith Dotdash and ANGI With respect to the revenue outlook? And then secondly, particularly with Angie, I would imagine that The business is suffering from given where rates are and the pressure on homeowners and borrowing costs, etcetera, as well as lack of housing transaction volume.

Speaker 3

If we get into an environment where rates come down in the back half of next year, Housing volume comes up, etcetera, maybe how do you think about that impacting ANGI and on the discretionary side? Thanks.

Speaker 2

Sure. Thanks, Jason. Maybe I'll let Chris do the guidance question. But overall, on ANGI macro, I still think that What's happening to the business today is much more our hand than it is the market happening to us. And that's The proactive actions we've taken and we've talked about a lot on improving the quality of our customer experience, our homeowner experience, our pro experience And we're continuing to make improvements there.

Speaker 2

And that does take a hit out of revenue. I think from a our estimate was in the beginning of the year, the market was probably down overall market, Probably down in the 5% to 10% range. And I think now it's probably our estimates are closer to flat to maybe up a touch. But the changes that we're making obviously have taken us down. The Active real estate market or a more active housing market, I think is generally good for the demand side of our business.

Speaker 2

And when homes transact about $15,000 we think in work that happens per home transaction, so that creates a lot of Moving in the industry, the flip side to that is that PROs are busier and so PROs may need less business in those times. And so we've talked about that kind of Our business where the pros are doing less work, they're more eager to be on our platform. And the flip side is homeowner Demand goes up in those scenarios. We are not anticipating any meaningful movement in the market, up or down. We think we're reasonably well positioned to handle either one of those scenarios, but we're not anticipating either one of those up or down and we think that we have room to And profitability in the business kind of regardless in that scenario.

Speaker 2

But on the revenue side, it is proactive That we are taking that I think is most guiding what's happening on revenue in the business.

Speaker 1

Yes. Just A couple of elements on that. We did guide to the low end of our EBITDA range of $100,000,000 to $130,000,000 last quarter. We feel we've just tightened where we are there. As Joey said, it's overall it's overwhelmingly driven by revenue softness from the proactive actions taken to improve lead quality.

Speaker 1

Some of those had a larger impact in the short term than were initially anticipated. Probably the bigger factor also is a few of the channels that were REDUCE have ramped up more slowly than we anticipated, but we're fully confident they will come back And are seeing that happen. So it is a for ANGI, it's The relatively short term impacts of the actions taken, nothing on margin degradation relative to your question. For Dotdash Meredith, it's due to a confluence of factors, predominantly macro. We guided in the letter and in our call last quarter for some softness in Q4 as we began to Some softness in Q4 Q3 traffic in our entertainment sites.

Speaker 1

We really started to see that in August, Driven by the strike and just the lack of activity in Hollywood. That pulled down Q3 results a bit. The bigger story right now is, we anticipated and had been pretty clear with the market that we expected a Much more solid Q4 environment for advertising this year than last year, when really last Holiday season, the market totally froze up. We've seen steadily strengthening premium demand and programmatic pricing in Q3, But similar to a number of other publishers and platforms,

Speaker 2

that reversed for a

Speaker 1

bit in October, clearly driven by war, macro concerns, higher rates, So we lost some momentum. Trends have been better so far in November, but it's still an uncertain environment. So we're expecting a holiday season that's only mildly better from a macro perspective on advertising. We talked in the letter and I've talked about 80% incremental margins that drives growth year over year in EBITDA. But on the flip side, You know, if versus plan, if advertising revenue is lower, you know, that goes to the bottom line.

Speaker 1

So, and then performance marketing continues to be strong and we expect that to continue apace, I guess absent a major consumer slowdown. But we feel good about where we are. Things have been better so far in November relative to There was a broader slowdown in October and we're going to continue to monitor it. Thank you, John. Thanks, Jason.

Speaker 1

Operator, next question.

Operator

Our next question will come from Brent Thill with Jefferies. Please go ahead.

Speaker 4

Good morning. You talked about ANGI in the buyback Utilizing the 1,400,000 shares left, you didn't buy any IAC stock in Q3. Can you just talk about the rationale Behind repurchasing ANGI versus IAC?

Speaker 2

Sure. Just one correction Brent, but it's 14,000,000 shares In the ANGI authorization, the purchases at Angie, I think are relatively straightforward. I think it will be there's not a ton of volume there, but one of the things We want to do is offset dilution or potential dilution there. And so buying back up to the authorization helps accomplish that. And of course, if we're buying, we view it as attractive.

Speaker 2

As it relates to IAC, look, we bought $165,000,000 worth of IAC so far this year, it's something that we have considered, we always consider. I think we took A pause this quarter when we saw the reaction to ANGI last quarter, which I think even in terms of its magnitude and we wanted to look and see where things settle out and that's something that we will continue to evaluate.

Speaker 4

And quickly on Care and the growth accelerated from 2% to 4%. What do you

Speaker 2

think it's going to take

Speaker 4

to get back to double digit?

Speaker 1

Yes. So the slowdown there has been driven by predominantly the consumer side. We had a solid quarter, especially in enterprise there in the Q3. We're excited about Brad Wilson, The CEO and the management team he's brought in, it's really going to be around reigniting consumer growth. That's both on product and conversion challenges that have happened, probably a little bit of macro slowdown potentially, We still really believe in the market opportunity and the position of care and believe that it should be a consistent double digit grower.

Speaker 1

Then we've got opportunities on marketing that we've talked about consistently for the last few quarters. So, we are they are still Working on repositioning the platform and getting the marketing going, we think we'll see steady improvement across 24 And it's going to be consumer driven. Enterprise is solid. You can see that corporate demand For backup care broadly for their employees is robust, albeit they're going to be more price sensitive or Not be willing to spend as aggressively as they might have during the pandemic, but you're going to add accounts and continue to expand that market. So It's really basic blocking and tackling.

Speaker 1

We're excited about what Brad and team are driving and we're looking forward to 2024. Thank you. Thanks, Brent. Operator, next question.

Operator

Our next question will come from John Blackledge with TD Cowen. Please go ahead.

Speaker 5

Great. Thanks. On DDM Digital, you provided new engagement metrics, including Core sessions, which is the bulk of engagement on your key properties. Could you talk about the Q3 growth in core sessions and kind of what you saw in October and Maybe how that plays into kind of revenue trend in 4Q and going forward? Thank you.

Speaker 2

Yes. I'll start, which is again, we mentioned this in a lot of, but core is where we're putting the investment and where we think the brands are that have a Perpetual value and strong brand strength. And so seeing those grow is nice and seeing those accelerate growth It's even nicer. That trend, we talked about what It happened in Q3 and continued to improve in October and that includes entertainment. So that's notwithstanding that there's not a lot of news in entertainment right now.

Speaker 2

So that's an exciting place to be.

Speaker 1

Yes. Just to add for context, This traffic we thought is good information for investors to highlight the drivers behind the business. One thing we flagged, as Joey said, core, the 19 key brands we're investing actively behind. The Total sessions is the whole portfolio and the difference, which is the spread of non core is what drove the Decline in total sessions versus a growth in core, it really comprises Weaker long tail sites that were part of Dotdash or Meredith, where we're not prioritizing investment, as well as third party sites That Meredith historically did the advertising sales for that we acquired in the deal. So we expect those non core sites To continue to a trip to probably a de minimis level, so that core in total will be the same at some point.

Speaker 1

For a sense of those trends, the core properties represented 67% of total sessions in Q3 of 'twenty 2 And are just under 80% of total sessions this past quarter and that will only continue. So that is we expect those core sites to continue their growth, Hope to have entertainment, as Joey said, be a tailwind and it's a key story of the business.

Speaker 5

Great, thanks. If I could ask one more question on DDM Digital. You guys called out the performance marketing revenue accelerated To 22% growth year over year in 3Q. Just kind of what drove that acceleration? Any color on verticals that We're strong and that we're drivers of that part of the business.

Speaker 1

Yes. It's really the continued execution By Gotdash Meredith on a core thesis of buying of acquiring Meredith, which was Meredith has tremendous brands, traffic and content, but definitely under punched its weight in modern e commerce integrations And we talked extensively through the journey of the integration last year that some of the delays Pushed out those e commerce integrations and really bringing Dotdash's expertise To the properties, but we've had them going this year and you can see the steady growth from flat to 12% to Up 22% this past quarter in overall performance marketing. Across categories, It is overwhelmingly goods commerce, consumers buying products That is driving that. We have relationships with all the big retailers. We think we're the biggest partner of many of those.

Speaker 1

And we think we move from strength to strength with those folks of where we're integrating and driving. And we expect that to be second derivative positive for a while, including going into this holiday season where we're excited about the integrations there And performance marketing will be a key tailwind to monetization per session. And the The only thing

Speaker 2

I'd add to that is performance marketing, especially in this environment is something where advertisers want to be and want Ship spend and we have great inventory and great tools to be able to move that. And so I think We're capturing that overall trend. Thank you.

Speaker 1

Thank you, John. Operator, next question.

Operator

Our next question will come from Justin Patterson with KeyBanc. Please go ahead.

Speaker 6

Great. Thank you very much. Good morning. I was hoping you could elaborate on just the work ahead to improve both the service provider experience and the homeowners experience. It called that out in the letter as one area where there's still a lot of what the chop.

Speaker 6

Thank you.

Speaker 1

Yes. So,

Speaker 2

Service provider experience is, I just want to highlight again some of the work that's been done here. It is we talked about retention a lot. We also, I think last quarter talked about it, but we continue to raise meaningful improvements in bad debt, Meaningful improvement in the lifetime value of the service professionals coming on to our platform. And just Anecdotally, the interactions we're having with service professionals have in tone improved meaningfully. And they see that because I presume and we can measure that to some extent and they can measure this better than us that they're getting a better ROI on our platform, Which means we've improved pricing and which means we've improved quality and when those things are happening, Pros are happier.

Speaker 2

And as I said multiple times, PROs, when they're happier and more engaged, make homeowners happier and more engaged. The key fundamental element of what a homeowner comes to our platform for is to match with a service professional and the More whether they match with a service professional at all is a huge cliff than the more service professionals they match with up to a point is very important. That increases their odds of connecting with a service professional and then that increases their odds of hiring a service professional. We're seeing each of those levels of the funnel Improve right now. And we still have a lot of tools in there that we haven't launched yet.

Speaker 2

We've improved messaging, for example, and improved on web and mobile and brought those things to parity, but we have not yet really fundamentally driven the Transaction more heavily towards messaging. Still our interaction between homeowners and pros relies heavily on the telephone. That's good. That's helpful. Fro's like to receive phone calls, but Homeowners are less eager to receive phone calls than they have been historically.

Speaker 2

And so getting people to message and getting that back and forth Started on our platform, I think in an area where we still have room to improve. Also, we're looking at acquisition economics and making sure that we're acquiring Both homeowners and pros that are more likely to match on our platform. And so we're taking a look at all of our marketing channels, We've been doing for a while. Some stuff that was unprofitable was easy to cut and we've talked a lot about that. But We're now looking at channels and saying how can we demand more out of our existing channels, not just demand more profit out of our existing channels, Demand better customer experience out of our existing channels and we think we still have work to do there and we think that will lead to Again, both more profitability and better interactions, better experiences between homeowners and service professionals.

Speaker 2

And I'll just add one more thing on that, which is people have asked me the question, well, are you cutting marketing here in ways that's kind of Overstating the profit or where you're borrowing from the future to cut marketing, the areas where we're generally cutting marketing are performance channels. And so performance channels Our near term performance channels and brand spend is actually up year over year And it will be up again year over year in Q4. So that part of the business is healthy, but we're looking at all the channels and deciding what we want to do and Demanding more again in customer experience out of each of them so that when we bring a homeowner to our platform and when we bring a pro to our platform, the interactions between Those 2 are much more valuable for each other and for our platform.

Speaker 6

Thank you.

Speaker 1

Thank you, Justin. Operator, next question?

Operator

Our next question will come from Ross Sandler with Barclays. Please go ahead.

Speaker 7

Hey, guys. Going back to Dotdash Meredith, so you talked about the strength in performance, But the premium side of the business down 12%, I think was a tad worse in the 3, although improving. So how do you feel about that? And then looking forward, how do we think about The cadence of digital ad growth at DDM in the context of the new session growth rates, are we likely to see Revenue run ahead or behind session growth in 2024 and is that like a function of ad load or improving CPM or some combo of those? How

Speaker 1

When you compare to the market and think about overall digital advertising growth At Dotdash, I would blend the advertising and performance marketing lines. The 3rd leg of Digital is licensing, which is a little bit of a different beast. But we think of those on a blended basis when looking at comparables. That was down about 3.5% in the Q3, which when we look at Publishing peers, we actually felt like we were holding serve versus what we saw there. We'd like it

Speaker 2

to be better. We've got a

Speaker 1

little bit of Demonetization going on versus Q3 of 'twenty two when we still had probably over Add mode in some of the Meredith properties and some suboptimal traffic. So A little bit is a comp issue, but overall we view it as down 3.5 and we expect those numbers To be improved in Q4 even with soft ad market in October. So in our mind, we feel good about the progress we're making. There are small things that were headwinds like The impact of the labor not small, but labor strike from Hollywood and in our entertainment categories. But We're head down and looking to get those ad numbers to flat into growth.

Speaker 1

That talks to 24. We're not providing guidance yet, but when you look at the sessions which you highlight, Core should continue To grow even better, the actors strike got behind us and there was more entertainment content to talk about. But core is going to be total and core will be second derivative positive in Q4. Core should grow solidly and that We expect that to continue into next year, so traffic will be a tailwind. On monetization, Premium sales are soft right now.

Speaker 1

The programmatic CPMs even in this Q4 should be up year over year and We think we're outperforming the market on open market CPMs. So hopefully, digital Digital advertising revenue is flattish and then performance marketing is a source of strong growth in Q4 and continuing into next year. We are optimistic on 2024 to drive digital overall digital revenue growth. And then Given what we've said about incremental margins that should drive continued improvement in profitability. Okay.

Speaker 1

Thanks, Ross. Operator, next question.

Operator

Our next question will come from Brian Fitzgerald with Wells Fargo. Please go ahead.

Speaker 8

Thanks. A couple of follow ups on DDM on DECIPHER. It sounds like there's been an encouraging response As cookie deprecation kicks off in 2024, where do you think penetration of that product could go for your general interest sites? And how are you thinking about potential revenue uplift there for both general interest and total DBM Digital? And then, Joe, any further thoughts on AI and defending copyrighted evergreen content from DVM?

Speaker 8

Thanks.

Speaker 2

Sure. On Decipher, I think you hit the main point, Brian, which is Intent is a very powerful indicator for ad performance and I think much more powerful and Based on our testing, much more powerful than cookies. And the good news is that cookies are being deprecated and so the market I think It is sort of forced in that direction regardless. Our intent data is, we think, pretty good and also pretty unique. The best Performing ad platform in the world has exceptional intent.

Speaker 2

And we sort of follow in the wake of that with What we are able to gather in our platform with intent and we expect that to really help overall Dotdash Meredith Over the course of 2024. We're seeing it in advertiser interest just in terms of responding to RFPs, but we're also seeing it in advertiser Spend in terms of making it a part of their campaigns and again we expect that to continue especially as we get better at Mapping it broader across the Internet and broader across partners and as it gets easier for partners or advertisers to buy that product from us, In terms of AI, look, we are going to To send our content, we've been clear about that. And I think that there's one sort of Small and relatively straightforward question that needs to be answered that hopefully if it's answered in the way we expect it will, we'll get everybody To the table to get to reasonable conclusions, which is, do these platforms have the right To take everybody's content and transform it and use it for the purpose that they're using it. We think the existing copyright law is pretty clear that they do not have the right to do that, but it will probably take a court to reach that determination.

Speaker 2

And Once that happens, everybody can get together and figure out a solution that works for everybody in the ecosystem and that's our plan. There's a number of those suits underway right now and we expect that there will be a number more of those over time.

Speaker 8

Thanks, Joey. Appreciate

Speaker 1

it. Thank you. Operator, next question.

Operator

Our next question will come from Igal Arounian with Citigroup. Please go ahead.

Speaker 9

Hey, good morning, guys. Two questions. First on Dotdash and not to beat a dead horse here on the macro, but we've heard over the course of earnings, a lot more Do you guys have any insight there specifically that's maybe different? I know you talked about the softer October, but Those sound relatively hopeful around holiday. Just any insight on that?

Speaker 9

And then on ANGI, you're selling the roofing business, you're You know, pairing down on services, is that part of the business now where you want it to be or is there still more of what the job there as well? Thanks.

Speaker 2

I'll do the second one first. The services business, look, every business we want to always be better, but the services business It is where we wanted to be right now, meaning there are not other things that we are pairing out of the services business. You can still see in the comps things down year But that was when we were in the higher consideration managed projects business and there is this final step in roofing. But where we are right now in Services is a place from which we think we can build. We think it's very healthy.

Speaker 2

We know it's a very good customer experience, Our best customer experience and we're excited to expand it. There is the reality in services which services Participate in service requests sort of downstream in ANGI, which means that the services business revenue growth will be somewhat Tied to what happens on demand overall and service requests overall at ANGI. But in terms of the business that we're doing there and want to I think that's all in a healthy place and where we want it to be. And we're happy to Close the roofing chapter and move on from there. Already forgot the first question.

Speaker 1

Yes. And just one Technical point related to the roofing transaction, we're thrilled to have that business in the hands of Private third party who will operate it well and its return to being a customer. We flagged this in the footnote on Page 2 of the earnings release. But under GAAP, roofing will be a discontinued operation starting next quarter For ANGI, but given materiality will not be for IAC. So in order to keep the ANGI financials Consistent between what Angie will put out standalone and what is rolled up in IAC, We will move grouping on a historical basis into emerging and other.

Speaker 1

On a go forward basis, there'll be no impact We've sold the business, but just on a historical basis starting next quarter, roofing will be within emerging and other And then we'll be a discontinued ops for ANGI. I'm sure we'll continue to work through that to explain that with investors, but just one thing we wanted to flag. On your first question on Dotdash, Meredith and what we're seeing macro, we are Vigilant on the point, you can't have interest rates on consumers go from 0% to 5% higher percent Without some impact, there are elements that are just distinct to DDM that we expect to grow and take Just because we didn't have these integrations a year ago and the Meredith assets are such a big platform. But relative to expectations and broader trends, we're looking. What is hard is that The cadence of e commerce and holiday shopping keeps changing year to year.

Speaker 1

If you go back to 2021, things were pulled forward because everyone was worried about the supply chain issues Not being able to get their child or loved one the right holiday present because they would run out. So things got moved up to November. Last year consumers waited, because they weren't worried about supply chain. So things moved into much more packed up in Thanksgiving and even in December, we flagged that last year. This year, we've seen discussion among competitors and retailers About consumers being more deal oriented and waiting, there was the Amazon Prime Deals Day, which was strong That probably pulled some demand forward.

Speaker 1

And then we'll see how the cadence works of consumer spending and also How promotional e commerce players are, but I'd say we're cautious, but not seeing any specific signs Of a slowdown, but we're managing our business expecting anything could happen in this environment. Got it. Thank you. Operator, next question.

Operator

Our next question will come from Tom Champion with Piper Sandler. Please go ahead.

Speaker 10

Hey, good morning guys. Joey, can you just talk about the evolution of the business model at ANGI? It was Discussed a little bit in the note, but the movement away from lead gen to a marketplace, what does that mean? Can you expand on it? And then maybe for Chris, just to clarify the comment around the Angie, buyback, that's the existing buyback, right?

Speaker 10

So the point that you're driving home is that you want to lean into it. It's a statement around timing. Any comments would be helpful. Thanks.

Speaker 2

Sure. On Lead Gen to Marketplace, it's very important to Angie as a big sort of rallying cry internally. What that means is going from acquiring a customer or a service request and moving that Over to the service professional as quickly as possible and moving on. That is more akin to lead generation. There's nothing wrong with lead generation.

Speaker 2

It's just hard to build brand and loyalty and drive what is another important Feature for us, which is customers for life on ANGI with that mindset. And so what's changing is trying to drive more interactions on the platform Making those interactions on the platform richer and building signs on the platform of which Customers on both sides, homeowners and service professionals do the best job and interact with each other most productively and rewarding those behaviors. That's how I think our marketplace builds and grows upon itself. And I think in the past, we were a little too much lead generation, which was Getting that first transaction and moving on and now it's more get those transactions, those interactions and those systems of reward happening on our platform. Just one more example that I referenced earlier, but that's the difference between just Sending the homeowner's phone number to a service professional and having the service professional call them to driving messaging and Helping messaging back and forth on the platform and allowing them to contact each other and less of The one way transactions or one way communications.

Speaker 2

There's many, many things in the roadmap and Things that we've launched along those lines to improve that experience and we're seeing the benefit of that in terms of transactions, Monetize transactions for service requests, but that is that's the theme of what we're trying to accomplish.

Speaker 1

And then, Tom, thanks for the question. On the buyback, yes, our message was that we are Going to be buying, obviously subject to price and liquidity levels, but that we are putting a plan in, just in relative to anticipating that question from

Speaker 2

Thanks a lot guys.

Speaker 1

Thank you. Operator, one last question.

Speaker 2

And our

Operator

last question here will be from Kunal Madhukar with UBS. Please go ahead.

Speaker 11

Hey, thank you for taking my questions and squeezing me in. A couple if I could, one on Angie and one on Dotdash. So on the Angie side, what I'm saying is Based on our math is ads and leads revenue per monetized transaction that declined about 11% on a year over year to about $40 Marketing costs declined only more modestly at like 8% to about 27.5%. So can you talk about How the LTV to CAC is kind of changing within this dynamic of marketing costs not declining as much as The revenue and then on the Dotdash side, the whole concept of like premium advertising was You going out and talking to advertisers on a 1 on 1 basis and selling them ads, high intent ads Hi, Tim. How does the Amazon, the recent agreement with Amazon, How does that kind of change that view or maybe it doesn't?

Speaker 1

Thank you.

Speaker 2

You broke up for a second, Kunal, on the last question, I think I got it. You're talking about the announcement with Amazon around Decipher and is that what you're referring to?

Speaker 11

On the publisher cloud, the Amazon DSP that they just announced at the Unboxed 2023 Conference?

Speaker 2

Yes. So and decipher Doss Meredith being a part of that. I think I can get both those questions. But What that means is, it's essentially easier for an advertiser in Amazon Retail Media Network to access Our inventory and to access our inventory on kind of any basis, but those That we think is a huge win for Dotdash Meredith, a huge validation of the work we're doing on DECIPRE and A long term benefit to CDM if we can capture those dollars now that the sort of Infrastructure and endorsement is in place there. I hope that answers the question, but if not, we can come back to it and you can add more to that.

Speaker 2

But on ANGI, the revenue per monetized transaction Is rate is down right now. I think that we in some areas It had not optimized price, meaning we had pushed too far on price and we've come back on price in certain areas. And so there is a question of rate, but there's also Transactions per service request. And so one of the things that's happening as we pair back marketing and demand more out of In channels both in terms of return and in terms of quality, we get more accepts for service requests. And Same is true as we're getting service professionals that are more engaged.

Speaker 2

They're engaging with more service requests and therefore both of those things lead to driving more access for service requests. And So revenue per SR can improve even if each individual transaction is worth less. I hope that answers the question. Sure. Okay.

Speaker 2

Go ahead.

Speaker 1

No, go ahead.

Speaker 11

No, just wanted to follow it up in terms of the marketing costs. So the marketing costs did not decline as much. How does that impact the LTV to CAC dynamic within your plans?

Speaker 2

Yes. LTV to CAC is heading in the right direction and that is the Transactions that we are retaining are more valuable. There are some short term things that are in there, which Chris and I referenced earlier, which is the channel that we talked about in Q2, where we made some meaningful adjustments there in the name of Quality and that's taking a longer time to ramp back up and so that has some short term impact in the economics. But generally,

Speaker 1

Yes. And we also had some brand, specifically TV ramp up year over year in that number you're calculating. So I think we feel good about the trends and would just say the metrics That you're backing into, Art wouldn't be given the full picture. And then on the Dotdash question, Did we answer where you were coming from?

Speaker 11

Yes. Thank you.

Speaker 2

Perfect. Just to add one more to that To make it clear, you can see monetized transactions for SR going up. We talked about that in the letter. That's been a trend and that is a Counter to revenue per monetized transaction. Right.

Speaker 1

Right. Well, thank you, everyone. Thank you, operator. Thank you, everyone, for your questions and have a great morning. Thank you all.

Speaker 1

Bye bye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

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Key Takeaways

  • Dotdash Meredith reported strong core session growth and a 22% year-over-year increase in performance marketing revenue, leveraging its high-performing ad products and e-commerce integrations—while premium ad revenues saw short-term softness from the Hollywood strike and broader macro pressures.
  • ANGI is shifting from basic lead-generation to a true marketplace model by improving on-platform messaging, boosting lead quality and match rates between homeowners and pros, which has driven better retention and lifetime value but weighed on near-term revenue from proactive channel adjustments.
  • IAC narrowed its full-year EBITDA guidance to the low end of the prior range, attributing the change overwhelmingly to ANGI’s lead-quality initiatives and slower ramp-up in certain channels, while expecting a modestly improved Q4 ad market and rising programmatic CPMs at Dotdash Meredith.
  • The company has repurchased $165 million of IAC shares year-to-date and will continue to buy back stock opportunistically, and ANGI remains authorized to repurchase up to 14 million shares to offset dilution.
  • IAC completed the sale of its roofing business (now a discontinued operation at ANGI) and confirmed that its remaining Services segment is in its target form, with no further carve-outs planned and ongoing opportunities to drive consumer and enterprise care growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Angi Q3 2023
00:00 / 00:00