IAC/Interactivecorp

NASDAQ:IAC

Earnings Call Transcript 2021-Q4

[Christopher Halpin, CFO, IAC]

Good morning, everyone. Welcome to the IAC and Angi Fourth Quarter Earnings Presentation. I'm Christopher Halpin, CFO of IAC. Joining me today are Joey Levin, CEO of IAC and Chairman of Angi; Oisin Hanrahan, CEO of Angi, Inc.; and Neil Vogel, CEO of Dotdash Meredith. Similar to last quarter, supplemental to our quarterly earnings release, IAC has also published its quarterly shareholder letter. We will not be reading the shareholder letter on this call. It is currently available on the Investor Relation section of IAC's website. I will shortly turn the call over to Joey to make a few brief introductory remarks and then we will open it up to Q&A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words, such as we expect, we believe, we anticipate or similar statements. These forward looking views are subject to risks and uncertainties and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in IAC and Angi's fourth quarter press 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 will refer to today as EBITDA for simplicity during the call. I'll also refer you to our press releases, the IAC shareholder letter, and again to the Investor Relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. With that, I will turn it over to Joey.

[Joey Levin, CEO, IAC & Chairman, Angi]

Good morning, everybody. Thank you for joining us. I just realized a few moments ago that we were courteous enough to have Chris introduce himself for the first time as a participant in the IAC earnings call. I think we could have staged that better. I realized, but I am nonetheless incredibly thrilled and relieved to have Chris here in the role of CFO. Chris has been here I think, I don't know a few weeks so far, and already digging in, in really incredible ways, challenging assumptions, doing all the things that we would have hoped of a CFO. And I think he's going to be a tremendous, excellent addition to the team and we're thrilled to have him here for the first time. Hopefully, you guys will take it easy on him because he is still only a few weeks in but he's been doing a lot of studying and learning. So seems like a quick study. Also, of course, Neil is here, but for the first time in officially a much larger role. And so I'm sure you'll have a lot of questions about that. And Oisin, as Chris mentioned, is here and most of you know Oisin by now. This is, he's done several calls but I'll just mention Oisin again for the opportunity to pronounce his name and hopefully you'll get the opportunity to learn it if I keep pronouncing it. So welcome Oisin again, rhymes with machine. That, very quickly, 2021 was a good year, a year of a lot of change for IAC for many of our businesses, thinking about where we started the year with Vimeo, of course where we ended the year with Dotdash Meredith, where we started the year as HomeAdvisor Angie's List and ended the year as Angi. And so, 2022, where we have the pieces in place to start to execute on growth across a number of businesses and we plan to continue to invest throughout the year and really build from here. And I like the tools in our hands for building. And that's what we intend to keep doing. So let's get your questions. Mark? Oh, and also, by the way, thank you to Mark Schneider is not on camera today. But he was nice enough nonetheless to wear a tie here with us in the background and he'll be orchestrating this, as usual.

[Mark Schneider, SVP, Finance & IR]

Thanks, Joey. Our first question will be from John Blackledge at Cowen.

[John Blackledge, Cowen]

Great, thanks, good morning. Maybe one for Neil and one for Joey. Neil, could you discuss the operating plans for Dotdash Meredith this year? And is the -- and the 15% to 20% year-over-year revenue growth, is that the expectation for 2022 which is more general expectation after this year? And then, for Joey, could you discuss those strategic rationale for increasing the stake in MGM and what does IAC playing for over the long-term with this investment? Thank you.

[Neil Vogel, CEO, Dotdash Meredith]

Okay, I'll go first. So I think the 15% to 20% is what we're up to through the year. Let me give you a little background on where we are, we are day 76 of this acquisition, James Harden day, if you're me and a basketball fan. We made some changes to print last week, and I'll break this down for you guys direct, sort of like look at print, look at digital, we will look at the ad business, look at the commerce business. The print business, we've said all along, we were buying brands, and I think we fairly well telegraphed that we were going to do and as Joey said quite eloquently in his letter, we're going to invest behind print brands that people are willing to pay for. And I think we're very fortunate that our major brands and most of our brands are brands people are willing to pay for and we are very optimistic about print, we're very optimistic about how it's going to help our branding, we're very optimistic about how it's going to support our digital. This is obviously a very different perspective than Meredith has had historically. We're talking a lot internally sort of about our big six. The big six in print that are going to be the anchors to what we're doing, which is People, Southern Living, Better Homes & Gardens, Real Simple, Food & Wine, Travel & Leisure. And as also Joey said in the letter, it is not a business plan to make cuts and do nothing different and hope something changes. So what we're really going to be doing is focusing on what we can do to enhance this product, better paper, better art direction, better content, all of these things to do to make a much more premium product that gives these things a real lifespan and really sports digital, and is the proper manifestation of these brands in the world. And look it it's no fun to do what we did last week. But it's also like fairly evident that parents don't really wish to receive parenting advice magazine they want from the Internet. So it was really an evolution as much as anything. And I think we're really off to the races. We have a very strong print team from Meredith and we're pretty optimistic. Digital which is the real crux of what we're doing, we have made substantial changes in the two plus months we've been here. First is structuring. We've taken what was essentially a matrix structure. And we've put everything into our structure where every brand, all of our brands, now have clear leadership and dedicated resources, a GM that functions almost as a mini CEO that owns all pieces of that brand, from content to product to tech, we've arranged everything into groups. So food is with food and homeless with home. And when you look at this, again, it's worth reminding everybody, we're the number one player in the food, we are the number one player in home, we're the number one player in beauty, we're the number one player in entertainment, we're near the top in health, we're near the top in finance. So we have an incredible amount of clay to work with. And now that we've got the leadership team in place, we can start running our playbook. And we've talked about this a lot. And the thing about the playbook that as its most excited is we're at the point now where most of it is pattern recognition. We know we've seen this before, we've talked to you guys we're like 12 for 12, 13 for 13, when we get these incredible brands and we can run a remediation program which is again, make the content as good as you can get it, make the sites as fast and responsive you can get it and make the ads respectful. And one thing I would say is IAC is the best possible place to do this because the only conversations I have with Joey telling me to go do this now and telling us to go do this now and get this done without regard to the short-term make all the changes that will get us the 15 to 20, get us to the $450 million in EBITDA next year and we feel really good about where we are. Quickly on advertising, we're going to be rolling out a fully restructured ad sales team in the next two weeks, which we're very excited about again, that's going to parallel more vertical structure like what we had. We feel really good; we are out right now for the first time doing some combined pitches where the one plus one plus one plus one equals three theory which seems to have legs and seems to be working which we feel very good about. Unified ad stacks can help us programmatically. Meredith, I think if you look historically, digitally, I think we have been much more focused on content and user experience. Meredith has been much more focused on revenue. So we're learning a lot from them on the ad side of how to optimize, how to maximize what we have, which we're excited about. And then the last sort of the, I guess the fourth leg of the table of this three-legged stool; fourth leg of the table would be commerce. There's two really exciting things that have come out of this. One is we built an incredible commerce business and an incredible testing capability growing as quickly as we were growing. We now we went from three test kitchens to literally 50 test kitchens, and we now have a couple 100,000 square feet in various places that we can really test products and get into being as good as we are in commerce, we can be that good and helping people decide what to buy, which is for intent driven traffic, sort of the logical next step for what we're doing. And we have stood up plans to get our style of commerce, the consumer report style of commerce up on all of the historical Meredith brands. So there's obviously a lot going on, our team is very busy. Obviously, when you get into these things, not everything is rosy, some things are better, some things are worse, some things are a lot worse, some things are a lot better. We're slogging through it, we are deep, deep, deep in it. But we feel really good feel, really good about where we are.

[Joey Levin, CEO, IAC & Chairman, Angi]

And building off that, John, relative to your question of Neil's overall message, I think when you think about the year and how it's going to play out, there are a few key buckets and then we can talk about what that looks like. Print, we announced last week, the conversion to 100% digital of some titles. That's an example of just general noise that will be in the print numbers as we optimize our print portfolio. We executed, as Neil articulated, we're going to be moving the Meredith titles on to the Dotdash platform, calling content, reinvesting in content, rebuilding their distribution, that'll have some noise in the revenue numbers as that's executed over the first half of the year. The sales consolidation, as Neil said, it is a great future that combined sales forces, but you've got to bring them together and get them across the board. And then finally, as you look at the financials this year, you're going to have hard to read through, it's going to take some work with the application of purchase accounting, and other changes to the financials. So it'll be a noisy year with respect to the financials. On an overall basis, we expect the first half year revenue to be flattish driven by the transitions we're talking about, sort of going a little bit back before we go forward on the Meredith digital titles, but all of it building with the Salesforce in optimized shape, to a very strong rhythm to leave the year and that 15% to 20% year-over-year growth. And then that brings us to the $450 million of 2023 EBITDA, so that's the plan. And this year, we expect profitability because of those trends to be back-end weighted. That's due to seasonality in the business. It's due to optimization of the combined digital portfolio in the second half for all the actions that Neil's taking. And then thirdly, you'll just see the full run rate of the cost savings even at that point. And I think all of that is consistent with what we expected going in which was 2022 would be a bit messy and 2023 is where we have to show the proof of the work done going into that point. On MGM, John, it is a first and foremost if we're going to invest capital where it has to be attractive value. And I think that's still the case with MGM. We have, if you look at MGM as you can still look at some of the parts and if you believe that there's any future in Macau, if you believe that the digital business has real value, the joint venture and if you believe that groups come back to Las Vegas at some point at scale, then it is still very in our opinion very attractively priced, and we believe all of those things. So that's the first piece. Second piece is the groundwork is still being laid and real progress is made over the course of the year in delivering an omni channel experience, so one component of that is delivering a consistent brand experience. You saw MGM sold Mirage is buying Cosmo, Cosmopolitan. And you'll also start to see some of the work that MGM is doing in branding MGM boards and tying the entire system together. You also see digital is doing incredibly well ahead of what we expected going into the original investment. And that's all the groundwork for putting a consistent omni channel branded rewards experience together. And we like to see the progress there. So when we look at that, when we look at that combination, we say that's a good place to put capital. The other factor and the catalyst for this was just when we first got involved in MGM, we spent a lot of time with Keith Meister, and Corvex and Keith had been a big agent of change at MGM. And I think has become a very welcome agent of change at MGM, by management and the rest of the board. And but one of the components of his business is he is to capital is more finite. And so, it was a very natural transition when he was looking to sell some stock that that would that stock moved into more long-term hands, like ours and MGM repurchasing a portion of those. And so that all happened very naturally. That was something that Bill Hornbuckle, CEO, and Paul Salem, the Chairman encouraged and we were excited to do, given our view on valuation right now. And I don't know where it goes from here on MGM, it's just sort of the same thing we've said all along, which is it's a great business; we're excited to be involved in it. And it's kind of one step at a time. And we're really happy with our involvement so far or not to be given the results, and don't know where it goes from here.

[Mark Schneider, SVP, Finance & IR]

Our next question will be from Cory Carpenter at J.P. Morgan.

[Cory Carpenter, J.P. Morgan]

Thanks. Oisin, hoping you could provide an update on where you're at with the Angi rebrand and the Angi Services business. And then maybe tying it back to the financials if you could just help frame your expectations around growth and profit more broadly for Angi in 2022? Thank you.

[Oisin Hanrahan, CEO, Angi]

Sure, thanks Cory. So let me start with -- let me start with the January numbers, which is obviously not the start to the year we wanted. But it's the start we got with Omicron, we saw a pretty significant uptick in Omicron call offs, customer call offs, pro call offs, we saw an 8x increase in January versus a normalized number for the year; we've since seen that drop off. What that'll mean is in March, we will be lapping the brand. So that's a pretty significant event for us. We obviously rebranded the business in March of last year. We will have easier comps after that, particularly in the ads leads business so that will be a natural tailwind. And the other significant thing going on this year is we've got this growing services business that we've all talked about, we all know about made up 15% of revenue, Q4 2020, got up to 27% of revenue, Q4 2021, that business still more than doubling Q4 about doubling at January. And that becomes an ever increasing part of the business. So you put all those things together and we're pretty happy with where we're going overall. We embarked on this journey just over a year ago to really change what Angi stands for to really position it as a consumer brand. And I think we're starting to see that, we're starting to see that come to life where we know what pros want. We know they want to grow their business, we know customers want to get the job done. And it's starting to feel more and more like every single day we're starting to deliver on that pretty consistently. We see it in customer set; we see it in pro satisfaction. So I think we've historically, I think the last thing we said in this week was that we'd be in the 15% to 20% range. Obviously, we've broken the bottom end of that in Q1. But it is still our goal to get to that range, stay in that range and ideally break the upper end of that as we think about where things go, where things go for the rest of the year. Chris, do you want to?

[Christopher Halpin, CFO, IAC]

Yes, thank you, Oisin. So Cory and I think financially, we're going to see sort of idiosyncratic volatility in those month to months over this quarter. Omicron was mentioned for January, February, should be at the top end ish of our target range and then March will be against a sort of record comp last year. So we'll be below the range. When we look forward as the momentum builds for all the reasons Oisin articulated of growth in services and easier comps as we went through the rebranding last year, we would expect to get back into that range and advance through the year. The other, with respect to EBITDA, our expectation is for the year, total adjusted EBITDA is similar to last year. One point we'd highlight is the trend by quarter will likely be inverted from last year, where there was a decline in profitability as the rebrand and reinvestment occurred this year with -- due to the regular seasonality of the business of Q2, Q3 strongest for a lot of this work and also Q4 strength, but also the growth through the year. We expect the early part of the year to be less profitable than the back end of the year, but overall for the year, we're expecting profitability similar to last year.

[Mark Schneider, SVP, Finance & IR]

Our next question will be from Jason Helfstein at Oppenheimer.

[Jason Helfstein, Oppenheimer]

Thanks. Just two. Just a follow-up on the Angi question first, I mean if we're thinking about core marketplace, just given the shift in consumer spending to travel and experiences. I mean, do we just consider this a transitionary year for the marketplace side of the business meaning think of it as like a flat year and then all the growth coming from services, or do you think just given all the headwinds that you'll be in a position to kind of recapture marketplace revenue growth at some point later in the year? And then second, Joey, you didn't give any update in the letter on Care.com and it's probably a consolidated asset with the most upside to valuation over the next few years. And so maybe just get an update on fourth quarter on how you're thinking about full-year 2022 for Care? Thanks.

[Joey Levin, CEO, IAC & Chairman, Angi]

Yes, Oisin take the Angi question.

[Oisin Hanrahan, CEO, Angi]

So I think you got to remember that the marketplace. So I think when you say marketplace, you're talking about the ads and leads part of the business. So the ads and leads part of the business is a function of both consumer demand, but also pro capacity. And we've done a lot of work over the last year to change the type of pros that we're going after to go after higher quality pros that have more capacity, and they're willing to spend more. If the consumer demand changes to categories like travel or other entertainment categories, the flip side of that is pros have more capacity and as a result are willing to spend more. So we think about it as the business has some element of a natural edge in it, where services is directly related to consumer demand. So the more people want to buy Home Services, the more our services business will continue to grow at a very aggressive rate. As consumers or if consumers pulled back from buying Home Services, pros will need to spend more to drive the same revenue. So we expect that if that were to occur, we would see ad pros and lead pros engage more with the platform, we have a measure we track which is active for matcher ability to be on and get new leads at any point in time. We would expect that to increase and we would expect budget to increase if consumer demand for services was to pull back. We haven't yet seen that. There is some complication in that obviously as we have this rebrand but we're still in the midst of lapping. We have seen it just in terms of the rebrand directly, we have seen Angi now back to the traffic level that Angie's List was back at which is obviously a big milestone for us and where we still have work to do is to get the combined Angi HomeAdvisor brand -- brands and brand traffic back to where that is before got a lot going on in terms of the creative that we're going out with this year. In terms of rebranding, what the -- what Angi stands for positioning in a different way. We're obviously only a few weeks into the year so far, so our media spend is a middle of the year weighted. So as we continue to see that expand we think the combined traffic of Angi and HomeAdvisor we hope that this year will surpass where it was previously.

[Joey Levin, CEO, IAC & Chairman, Angi]

On Care, Jason, definitely nothing to read into the lack of mentioned in the letter, we just -- the letter was focused this quarter on a longer-term opportunity with Bluecrew and Vivian and we are interested in keeping it tight, we want to focus on a theme and figure we get the opportunity to cover the things in this venue or elsewhere. Care is doing great. Care is and the best part of Care right now is the core Care business, which is serving families around childcare. And that's growing in terms of subscribers, it's growing in terms of revenue, we're driving conversion, we have now a alpha version, I still haven't been able to use it, unfortunately, I'd like to but Tim Allen, the CEO is only using it and keeping the product to himself right now. But we have an alpha version. Now our instant book product, which is you can book a Care provider on four hours' notice. And one of the benefits of that product is that will flow to a lot of things actually that that matter in the Care service offering. But one of the key components of that is you go from frequency of needing a nanny, which is one to two times a year for a family to needing a babysitter, which is five to 10 times a year for a family. And that starts to impact our subscription products that starts to impact our user experience, the tools that we can bring into the product. And so we're excited about that. But that still isn't an outlier for all of our collective use yet. That's the core product. Beyond the core product, we now have a daycare product, which we've launched, where we think we have 1,000 customers now engaging with that customers being daycare centers. We are doing work on the senior care side, we're starting to think about the pet care side, we are of course entered the enterprise business is continuing to be an area of investment focus for us. And we think long-term opportunity, there's a little noise in the enterprise business right now, just because the COVID comps are making it complicated. In 2021, we had a massive lift in backup care days. And that is something that's not repeated. And so at the same scale and so we're just dealing with some components around that. But the enterprise business is great, customers are happy with the enterprise product. And so we're going to grow that business. And I'm very optimistic for where we go there and the potential value creation there. But like everything, it's still early, and we've got a lot to prove. And we got to offer a lot of opportunity at.

[Mark Schneider, SVP, Finance & IR]

Our next question will be from Eric Sheridan at Goldman Sachs.

[Eric Sheridan, Goldman Sachs]

Thanks for taking the question maybe two if I can sort of following up on themes we've talked about Oisin, if I could follow-up on Angi, there was a paragraph in Joey's letter about fulfillment. And I want to make sure we better understand some of the messages about where you're pushing it on the investment side to improve fulfillment on the platform. And what those improvements might mean in terms of driving a mixture of growth in margin in the years ahead. And then Neil to follow-up on, I think it was the third of the four pillars you lay down for Dotdash Meredith would be on the advertising monetization side, beyond just purely the Salesforce integration, how should we be thinking about you positioning the asset in the broader advertising community? We've talked before in public forums about contextual advertising, and where the assets sit in the broader funnel and what sort of advertising part of the world you're going after? Can you just go a little deeper there, that'd be super helpful. Thanks so much, guys.

[Oisin Hanrahan, CEO, Angi]

Sure. I'll answer the Angi part first. So just so that we're all aware what fulfillment means when you come to Angi, and you buy a service job, typically a low-value service job in the hundreds of dollar range, we work our butt off to go and make sure that that job gets done. So we don't necessarily for every single category, every single pro or every single task have a pro available to do it at exactly the right time, we do some modeling to make sure that we match consumer demand with pro supply, we don't necessarily always have a pro available. We are working to make sure that when you purchase that service, the rate at which we fulfill it continues to go up month after month after month. It gets harder as you add more categories as you cover more geographies, but we're making sure that we go category by category, geo by geo and it's a function of a number of different things. It's whether we get the pricing right to the consumer, whether we get the pricing right to pro, whether we accurately asked the pro, accurately asked the customer the right questions, whether we pass that information on to the pro in the right way. And we're continuously improving fulfillment. If we get that right, there's two things that happen. Firstly, consumer repeat rate goes way up. So obviously if we do the job successfully, the customer they're likely to come back. It goes way up that reduces marketing spend in the future as we increase customer LTV. The second thing that happens is we just make more money on the job, if we price it right to the consumer and we price it right to the pro. The rate at which we're doing that, the rate of which we're successfully fulfilling on these low-value jobs continues to increase quarter-after-quarter. So we're getting better. And we see that in both the fulfillment rates, we see it in the customer set and EPS numbers coming out of the book now business. We also see it in the take rate contribution margin, or gross margin contribution margin from that business. So overall in the small low-value tasks, we see fulfillment rate continue to go up. It's one of the key drivers of us being long-term successful in the services business. The second area of the fulfillment rate to think about is in these larger jobs. So these are the $5,000, $10,000, $20,000 jobs. And what we see there is we're getting better overall. And the metrics we're tracking there are the percentage of jobs that are being done by pros that have already done a job with us. So are we making pros happier? We already know we have great NPS in that category. The NPS in that particular vertical, that particular segment of the business is a multiple better than if you come through the SPs [ph] the leads business. And overall, what we're starting to get our arms around there is, is our take rate sufficient it's gone up for the last three or four quarters. Now it's stabilized that we think is a healthy rate. We've got to work on operations cost to support that business so that eventually it'll drop down to contribution margin. So overall, fulfillment rate makes the business, the services business way better in every dimension. And it's one of the key metrics that we target at a high-level and obviously, the so-forth below as well.

[Neil Vogel, CEO, Dotdash Meredith]

Hey, to read your question back to you around what we're going to do with sales, where the vendors are contact scale. So this is my favorite question, and there's two pieces. One, we're integrating the sales team. And one very basic thing is out of the top 20 clients, maybe I think two, or maybe the number is slightly wrong, two or three overlap. It is a very, very different base of advertisers, they're very strong finance and healthcare they're very strong, CPG. So that is very complimentary. The ad stack, we are going to see great yield improvements out of the ad stack by combining and through efficiencies. And as we make their sites much more performant, particularly programmatic ads become much more valuable when the more viewable and all the other metrics we can do. But what we're really doing and what underpins all of this, and what gets us the most excited is we can do intent-driven contextual advertising at scale, like has never been done before on the internet. And what that means is intent-driven contextual advertising beats cookie-based advertising in performance every time. And add to that cookies and all these trackers are going away. In the long-term, we don't need them. Like to simplify it, if somebody is searching on how to speed up my router, we know everything about them we need to know. We don't need to know anything about them other than their router is too slow, either they have to fix it, or they have to get a new one. And once you know that you pretty much have all the info you need and you can see the evidence of our ability to make contextual advertising work in a stat that Joey likes to talk about. And we obviously like to talk about it as well. Each quarter, our top 25 advertiser is 23, 24 renew every quarter, Meredith isn't anywhere near that level. And look, it's very easy to sell someone something once it's very hard to sell someone something twice. We're very good at selling some something twice. And we did it with brands that frankly, no one had ever heard of four years ago, something didn't even exist. So now what we have at these Meredith sites that profile wise look just like ours. They are all about intent signals in home, in food, even in entertainment, to an extent where we can harness these intent signals, match them up with ours, and we can deliver the intent-based performance at scale. I mean, we're the largest digital publisher in the U.S. And that allows us to do things like we actually have a puncher's chance to compete with platforms like Facebook, because there's other stuff going on. All of our content is ours. All of it is safe. All of it is made by us. There is no news. There's nothing that is going to put you in a bad mood. It is all for the most part content that is going to help you, when we drill down a little more on people, content that generally makes you happy. And the combination of these intent signals and contextual targeting with the new scale we have with the fact that it's an incredibly safe environment is an offering that hasn't been in the market before. Now our models don't reflect taking dollars away from Facebook, but I can tell you from talking to advertisers, that's in the conversation. What we need to do is that we can deliver on this promise and we can bring a level of performance to the Meredith assets, which we're already down the path on. We're already cleaning up their ad stack. We've already taken off some of the most greatest ads. The sky is the limit of what we can do here. And the -- to be very specific, the go-to-market strategy is a much more eloquent version of what I just said. It's explain to people why contextual targeting and why intent works like if we -- if somebody is reading content on what color do I need to paint my newborn boys' bedroom, we know everything about them. We know that they have a newborn; we know that they're likely in the market for a credit card for a new car, often a new house; we know that they're great for home improvement retailer; we know all these things about them that a cookie couldn't tell you. And when you can do that at scale, we're just very, very excited. So one of the things that gets us most excited.

[Mark Schneider, SVP, Finance & IR]

Thanks, Neil. Our next question will be from Ross Sandler at Barclays.

[Ross Sandler, Barclays]

Great, thanks for the presentation guys. Joey, can you put some numbers around Bluecrew and Vivian, we have that was pretty good disclosure in the paragraph, but maybe just help us like pre-pandemic to today understand the scale of those two businesses. And if you had to kind of draw an analogy to other IAC franchises from back in the days, it's like a Tinder 2015 stage of development for those to kind of help us understand where they are in terms of their development? Thanks.

[Joey Levin, CEO, IAC & Chairman, Angi]

Fair, it's a really good question, Ross. It's a) first just some stats, pre-pandemic to today, I don't know each business would be three, four or five times the size is my guess. Somebody can correct me if I'm far off on that. But we're in that neighborhood. It's hard to make an analogy to something like Tinder and while I'd love to do that, it is Tinder is a very naturally viral business these and sort of once Tinder entered the global context, just sort of spread naturally. These businesses are not that kind of business. They're I think, fantastic businesses, I think they're both marketplace businesses. And I think that scale, it creates the moat in both those businesses, and they have some natural viral tendencies in their categories. But it's not that kind of thing, which is once it catches fire, it just goes, both of these businesses require a lot of that [ph]. The way to think about scale, combined with one of them ought to be a nine figure business this year, the other one ought to be comfortably or is an eight figure business will be a bigger eight figure business this year, they are in a -- the key in both of them in their category is building liquidity. So in the case of Vivian, the key is having more health professionals on the platform. They've done this phenomenally well in nurses and really specifically in travel nurses such that most travel nurses have a profile. Once you build the profile on the -- we call that the demand side of I guess workers looking for work. Once you have that profile built, then you are in the system and you are getting information regularly. And you can engage with jobs regularly and jobs can engage with you regularly on a much more pointed basis because relevance matters. We know what certifications are, we know what geographies you're looking for, we know what specific qualifications you're looking for. And with that solid base of people who can work, we're now in the process of building up the employers on the other side. And I think that that in every marketplace, one side or the other is moving faster than the other. And the key for us now in the case of Vivian is building up the supply of employers. Bluecrew is probably a little bit more the opposite. That may be a result of overall macro dynamics. We have lots of employers on the platform; we continue to first grow employers on the platform. And right now the key is bringing workers onto the platform and driving fill rates. But once you have liquidity in both of these markets, it changes the dynamics and we can see it in micro categories or in micro geographies that when you have enough jobs and when you have enough workers that a lot more starts to go through the platform and that people can find their second job on the platform and people can do that sort of repeat business. And once you have that going that is transformational. So when we look at other businesses in the IAC portfolio or in IAC's history, that's an analogy that that does work, which is looking at small geographies, building liquidity, seeing what happens when you build liquidity and seeing that proverbial fly wheels start to work when both sides are built up enough that the offering becomes much more compelling both for the employer and for the employee. And I think that these are not necessarily winner take all type markets, but I think they are. There's significant advantage to the early movers. And I think that there'll be probably a few key players in each and I think that they can get to enormous scale. Again, the other thing we talked about is just the size of these markets. These labor markets are absolutely enormous and absolutely underserved right now. And so if we're doing it right, we ought to be able to grow forever from here.

[Mark Schneider, SVP, Finance & IR]

Our next question will be from Youssef Squali at Truist.

[Youssef Squali, Truist]

Great, thank you, guys. Thank you for taking the questions. So I have two, first maybe for Chris, on Dotdash Meredith, if you could double click on that $450 million in EBITDA that you're targeting for 2023 just kind of linearity to get there and probably and even more importantly, Dotdash has historically been really profitable business. So how do you kind of look at long-term kind of sustainable margins for that business relative to that 15% to 20% growth that you discussed. And just quickly for Joey, I believe you guys have an option to increase your ownership of Touro, if I remember correctly, what's the maximum you guys can own of it? And just what's your long-term objective with that investment? Thanks.

[Joey Levin, CEO, IAC & Chairman, Angi]

Sure, I'll start with Touro discuss couple of points. We are -- we own about 25 ish percent of the business, I think right now. And the warrant is to own another 10% of the business, so 35 ish percent. I think, give or take 5% on those figures, but that's the ballpark. We are, right, love the business and love being owners of the business. And generally, our philosophy on everything is we are long-term, and this is no different. The goal is as always is to find businesses that we think have incredible long-term potential and stick with those businesses. I would love to talk more about Touro, but I guess we are restricted on that one right now. Even they have a filing out there, so I can't say anything good about the business or don't probably want to say anything bad about the business. But it is, we're happy with where we are right now.

[Christopher Halpin, CFO, IAC]

Thank you. And for Dotdash Meredith, when you think about the 2023 EBITDA targets and levels that we're going to get to, the key elements there are the scale that comes in incremental profitability from the digital business. So as Neil and team have that growing in the bands that we're targeting, you've got the Salesforce, you've got fixed cost infrastructure, but you will have margin scale. And so, and then also, that's a digital EBITDA number, the print business is one that we will continue to optimize and manage. It is one that we will continue to manage with an eye towards keeping it profitable, and also a good user experience. So as we look into next year and where we see the cost savings coming as we integrate the businesses as we see the digital revenue momentum on an efficient cost base, that -- those are the drivers as we grow to that $450 million of 2023 digital EBITDA.

[Mark Schneider, SVP, Finance & IR]

Our next question will be from Brent Thill at Jefferies.

[Brent Thill, Jefferies]

Good morning. Joey, Search had great growth and great profitability. Many are asking about the sustainability of that business. And maybe for Chris, welcome. Maybe just talk through your top priorities and kind of where you see with your new lens, the biggest, the biggest opportunity from your side?

[Joey Levin, CEO, IAC & Chairman, Angi]

Sure. So Search it is, remember there's some short-term things going on in Search, which is the desktop business, which is we're essentially exiting not by our choice but by the evolution of the ecosystem. We are so that led to some because we had revenue coming in on that business but we're no longer marketing it that short-term significant profitability, sort of unusually high margins is to think of that as runoff. The flip side is that there's another part of that business, which is the ask marketing part of that business where we're driving people to our properties through marketing and monetizing them with ads. That piece of the business is doing well. And I think we expect to make up for the -- what we lose in the desktop business over time. So overall, we think that business stable-ish right now, but I wouldn't read too much into the sort of short-term, the benefits you've seen there where it is a little bit. It's a little bit, that's temporary, the magnitude of how we were exiting the other business and benefiting from the runoff.

[Christopher Halpin, CFO, IAC]

Thank you. I think my priorities would be, first of all, continuing to get up to speed on the core businesses in the portfolio. And then, looking at ways to drive value there, there's two main viewpoints that that we're looking across that one is, any dollar being invested on an operating basis is generating maximum ROI. So being disciplined and focused in our strategic initiatives at each of the companies and also in how we're measuring ROI and continuing to push that forward. The good news being at IAC is that it is forever capitable -- capital as Joey says, and we are committed to long-term value creation. So that's a long horizon. But we need to be thoughtful, working with Oisin, working with Neil and team on the integration, and driving those properties forward and then on the medium and smaller companies. The other big bucket would be capital allocation. We have a variety of interesting opportunities at any given time, both further investments in portfolio companies as well as entering new sectors. There's obviously been movements in the public valuations and by extension in the private markets. So constantly looking at our cash, our capital structure, and the set of opportunities in front of us to drive the greatest long-term value. So it has been a great start, but got a lot more work to do.

[Mark Schneider, SVP, Finance & IR]

Our next question will be from Brian Fitzgerald at Wells Fargo.

[Brian Fitzgerald, Wells Fargo]

Thanks, guys. Want to ask a couple of questions around Angi's deal with Walmart. Anything you could tell us about the customer acquisition cost profile there versus variable channels? How are you thinking about the value of being in 4,000 stores and the halo effects for the brand and for customer acquisitions more generally? And then last one, in the announcement, you talked about this being the first retail integration with Angi, what's the opportunity to go back to some of your other retail partners on the Handy side and convert them to Angi branded relationships with the expanded service offerings that you're going to roll-out to Walmart?

[Oisin Hanrahan, CEO, Angi]

Great question. Thanks for asking. Just for everyone's benefit, the way this works is you can go to walmart.com or you can go to Walmart store, the 4,000 stores. And if you're buying a TV, you can at point of sale buy a TV mounting service for about $80, or $79 similarly, on a number of other categories, including flooring and painting. When you're buying products, you can actually buy service buy service at the point of sale. In order to schedule that service, you then take your code, that's printed on the receipt, you go to any.com/walmart. And you type in code and you schedule directly or certainly you go to angi.com/walmart. You type in the code, you schedule directly with Angi. As you pointed out, this is an extension or I guess a rebrand of some of the prior relationships that Handy had. We are expanding both the number of retailers that Angi will be in, so Walmart is the first we expect to rollout into other retailers for context. The other retailers that Handy is currently an include Target, Lowe's, Wayfair, and others. We would expect over time that those would be rebranded to Angi. And you're also correct that we would expand past the small set of services that were available before and if retailers were open to it, we would sell some of the broader services we have. We have about 200 plus services available in the book right now. There's no reason to expand past the traditional services that we had available. In terms of the opportunity, look, we fundamentally believe that having a single brand is the right thing to do here. Single primary brand is a reason why we've focused on Angi. If you look at any of the materials that we got out there, Angi feels different now than Angi just did a year and a change ago. It feels different than home advisor did a year change ago. We've got our board meeting later today. And even if you just split the board deck, it feels different. You look at any of our social channels, if you look at the screen of our TV, it feels different. And having that new brand in 4,000 stores, we think we'll make a difference. We notice that when those customers do buy through a retailer and they come and engage directly with Angi. We do see follow-on purchases. We know that we can get a percentage of them to download the mobile app. So we do think of it as an important channel for us. We think it's an interesting way for us to gain exposure to more customers. And we know that it's great for the retailers. So the other side of all this is why does the retailer do it? And what we see from talking to retailers is, it drives up their order value. It gives them increased conversion. It increases customer satisfaction, and it reduces returns. So from the retailers' perspective, we see some of the retailers in fact, selling the service at or below cost, because they get so much sundry benefit attach a service to product. So overall, we think it's a win-win, plays into the trend that retailers are moving towards, which is less selling product, but instead selling a full solution into the customer's home. So they've got to sell past the return. We know an extra to sell into the person's life. And we think this is a great partnership for us and for each of the retailers. And we're excited to have more and more of our customer touch points, eventually branded to a brand advantage. So overall, we think, we're really excited about it.

[Joey Levin, CEO, IAC & Chairman, Angi]

And if you think about it from a customer perspective, they're going to start their job. Generally, one or two ways, they're going to say, I need a new floor. How do I get flooring installed? And hopefully, we find them there, or they're going to say, I need a new floor. What do new floors look like? Or where can I get a new floor? And then we want to find them there too. And, but that, I think that second one is a really interesting channel for us. And that's why we -- that was one of the original drivers for us getting into the Angi acquisition was that channel is going to be an important channel. And we think that that there's a lot of room in that channel for us.

[Oisin Hanrahan, CEO, Angi]

Got it. I think that's a really good point, Joey. It's like the difference between service started search or product started search, and we've obviously got a great way to think about service initiated search, whether it's come to the Angi site or come to Angi mobile app. We have a great funnel that captures intent that is driven by people thinking service works. We don't have a great way to think about product search directly on Angi. And this is a way for us to engage with consumers that are thinking product first. So it's an important -- it's an important way for us think about the product.

[Mark Schneider, SVP, Finance & IR]

Our next question will come from Dan Salmon at BMO.

[Dan Salmon, BMO]

Great, good morning, everyone. I got one for Neil, one for Oisin. So Neil, we continue to hear a lot more about the impact of privacy changes this earning season, and Google just announced their plans for Android. We know your intent-based model is more insulated from these types of changes. So does news like this help drive incoming calls to your sales team? How are they engaging advertisers about these issues and helping them address them? And then, Oisin, could you just give us an update on the uptake of Angi Key and your financing partnership with the firm? Thanks.

[Neil Vogel, CEO, Dotdash Meredith]

I'll go first, I'll be quick. In terms of privacy stuff, so we're not really an app-based business, so we've been immune to some of this stuff. But call it; privacy grid large is going to be a long-term benefit for us. Now, when something happens, we don't get a phone call right away, but the more we can tell our story and the more we are out there with this message, the more appeal it is. And there's been, as you know, we've talked about this before. There's an entire ecosystem in advertising built around cookies and things like cookies that doesn't really work anymore. It's increasingly not working the less it works. And the more we can be very good at telling our story and getting into places the better we're going to be. And again, to go back to that set, you see a lot in the Dotdash renewals. I mean, we have built our own systems to target contextually across all of our sites. We're obviously rolling that out to the acquired Meredith sites. It is a really, really big opportunity for us. If privacy tracking exits the internet entirely, that is a long-term, very positive thing for us.

[Oisin Hanrahan, CEO, Angi]

So on Angi Key, which is our pay to save membership program we're currently tracking over 200,000 members. Growth continues to be strong, but it's a small program to-date. We know that we've got to go past pay to save. We know that that's not the only value prop we want to offer for membership. We want Angi Key membership to be the way you think about taking care of your home. And we've been testing a number of other pillars. We want to, like I said, build past pay to save. One of the pillars we're testing right now is a more personalized way of booking services. That seems to be -- it's exposed to a few thousand people being engaged in that seems to be strong. We have a couple of other thoughts that we're testing right now as well. And as we build out those other pillars, we've got a huge opportunity to expand where we're showing membership right now. We're only showing it to people buying services. The uptake on that is strong, but we're not pushing it top of funnel. It's nowhere in our marketing, it's nowhere other than in that purchase flows. So overall the retention rate is good on it. We feel good about where it's going, but it's still very early. And we think we've got to build out some of the other pillars of membership around personalization and convenience. So that we can more broadly expose it. But all the data tells us that we're going in the right direction with Angi Key. And it's something that -- it's something that's important to us. And we think that 2022 will be a good year for Angi Key in terms of figuring out what the next pillars of it are. On financing and financing goes alongside payments, so I'll talk about the two of them together. As we said, in the letter or the release, we did $100 million of payment processing last year in terms of financing. We've multiple partners who reference a firm; I think altogether in financing, we did around $10 million of financing last quarter. We think that we've got to become excellent at this, and we're not making any significant money from payments or financing or costing us money right now. We sure could turn on a charge for them and take a small payment. But that's not the goal. The goal is to help the pro grow their business and help customer get the job done. And we think payments and financing fits really well into that. We notice that when pros use the payment feature, they're happier. They retain better when customers use financing, generally they're happier. And they're more engaged in the product overall. It helps us get data on closing the loop. So we're going to continue to invest it and continue to scale it. And over time, we'll look at how we monetize it, but I think its tracking -- it's going in the right direction and we feel good about it.

[Joey Levin, CEO, IAC & Chairman, Angi]

Thank you for the questions, everyone, looking at the clock. Mark, why don't we do one more?

[Mark Schneider, SVP, Finance & IR]

Great. Our last question will be from Justin Patterson at KeyBanc.

[Justin Patterson, KeyBanc]

Great. Thanks. And Joey, congratulations on becoming a prolific podcaster, I'm waiting for Spotify to add offer an exclusive one of these days. Just two simple ones from me --

[Joey Levin, CEO, IAC & Chairman, Angi]

[Indiscernible].

[Justin Patterson, KeyBanc]

There you go. Two simple ones for me. For Oisin, how are you thinking about setting the right controls to attract the right type of pros while also expanding contribution margin? It seems like a difficult problem to solve just given variability in region, pro experience and job type. And then, for Neil, just revisiting Eric's question around contextual, a lot of advertisers are investing a lot of AI there. How do we think about just the capabilities of the ad tech stack today and competition for engineers?

[Oisin Hanrahan, CEO, Angi]

Okay. So in terms of pro onboarding, we have a pretty rigorous pro onboarding program across the different programs ads, Angi Ads, Angi Leads, and Angi Services all have different criteria for joining. We are looking at how to homogenize or standardize that onboarding experience. One of the things that we are pushing on is more online enroll across the board. So almost all Angi Services pros, particularly on the lower value, engage in an online enroll program where they do a background check, screen -- quality screen in the flow. We've recently started to look at how to do that at Angi Leads. We've got some early traction on that and we'll eventually get to Angi Ads as well. But overall, we look at both the initial screening of pros as they onboarding the platform. And then the more we close the loop. So whether it's through payments, financing or Angi Services, the more we close the loop, the more data we get in terms of customer feedback. And we can proactively monitor and manage pro, a pro's behavior more directly in Angi Services. We could geolocate the pro. We could know whether they're going to show up on time. We know the quality indicators in advance. And then, of course, we close the loop and collect feedback from the customer. So it is a relatively tight loop that starts with the onboarding experience, more you digitize that the more data you get upfront. And then the closing the loop on customer rating, customer feedback, customer reviews and again you think about what causes good behavior is the feedback loop knowing that there was a consequence, a consequence of performed well, performed poorly. And we think that Angi has got a pretty natural inherent benefit, because there's so much volume going through the platform that we can close the loop more frequently, and incentivize pros to do the right thing. And we see that -- we see that effect.

[Neil Vogel, CEO, Dotdash Meredith]

So I will answer your questions backwards. So ad stack, we have a different view on the ad stack than a lot of companies do. We always want the simplest, fastest cleanest ad stack possible because the ad stack doesn't solve your problems; it's having a great product that solves your problems. It's having ads that are performant and well placed in places where the audience is contextually relevant to the ad, those will perform. If you did, if you took every single ad stack product in the world, they all tell you, they give you 10% or 20% left, and you put them all together, you're not going to get like a 5x, it doesn't work that way. So we're our ad stack, which we're not putting the two together. And there's obviously some complexity to that. But it's fairly straightforward. Our ad stack will be good because our product is good and we keep it fast and simple. In terms of there's a million different ways and buzzwords people are saying to mimic contextual targeting or to align with contextual targeting judging by like, whatever definition AI would be like, we use it to, it just means that things learn as they go. And we do a lot of learning as we go. But the most interesting thing for us now is, we're doing whatever 30 million user sessions a day, there's so much data we can glean as to what's working, who's performing and we know the path of every single user. We don't know who they are, it doesn't matter, but we know what path they take. And that's really, really, really valuable. I would say the governor on that is your other question, which is engineers, which are, we're no different than anybody else. Engineers are very hard to get, engineers are very hard to keep, engineers have their very distinct views on whether or not they should be coming back to the office. There's all kinds of things and we're very fortunate that we have a terrific CTO who has been with us from the jump since we started this whole thing nine years ago. But yes, we have the same engineering challenge, everybody has.

[Joey Levin, CEO, IAC & Chairman, Angi]

All right. Thank you all for joining us this week, this quarter rather, and lots to do this year. We're excited for 2022 and we will see you all in a quarter.