Curtis Nagle

Curtis Nagle asked for commentary on the organic revenue growth guidance for 2026, specifically how performance might vary by region (North America, EMEA, APAC) relative to 2025 trends. He also inquired about the expected realization and flow-through of restructuring actions in 2026, particularly how the $60 million run rate by year-end translates to actual benefits throughout the year.

Answer

Mike Burwell (CFO, NIQ) stated that NIQ does not provide specific regional guidance but suggested that trends in North America and EMEA are likely to continue, with ongoing investments in APAC expected to drive progress. He explained that approximately 140 basis points of the 200 basis points margin improvement in 2026 are attributed to restructuring, with the remainder from operating performance, emphasizing NIQ's commitment to delivering on its guidance.

Curtis Nagle asked for commentary on the organic revenue growth guidance, specifically how performance might vary by region (North America, EMEA, APAC) and if trends would align with 2025. He also inquired about the expected flow-through and realization of restructuring actions in 2026, given the projected $60 million run rate by year-end.

Answer

Mike Burwell, CFO of NIQ, stated that specific regional guidance is not provided, but current trends for North America and EMEA are expected to continue. He noted ongoing investments in APAC to improve coverage and drive progress. Regarding restructuring, Burwell explained that approximately 140 basis points of the 200 basis points margin improvement in 2026 will come from these actions, with the remainder from continued operating performance. He emphasized NIQ's approach to provide guidance with a 'beat and raise cadence.'

Curtis Nagle asked about the trends in data center services revenue, specifically how much project work is converting to service and contributing to a long-standing, durable base of high-margin recurring revenue.

Answer

President and CEO Russ Becker confirmed that project-related work in data centers is driven by existing relationships on hyperscaler campuses, where APi Group already provides inspection, service, and monitoring. He stated confidence in winning the inspection, service, and monitoring contracts for new projects, noting that while these accounts are smaller than project work, the company continues to build this business. He reiterated that APi Group generates $3 to $4 of service work for every dollar of inspection revenue, with this segment growing at a high single-digit rate, indicating the playbook is working.

Curtis Nagle asked about the trends in data center services revenue, specifically the pickup from project work converting to service and its contribution to a long-standing, durable base of high-margin recurring revenue.

Answer

President and CEO Russ Becker explained that data center project work is driven by existing relationships on hyperscaler campuses where APi already provides inspection, service, and monitoring (ISM). He noted that while project size is larger, ISM accounts are smaller but consistently grow. The company's playbook of generating $3-4 of service work for every dollar of inspection revenue continues to be effective in the data center space.

Curtis Nagle inquired about the commercial segment's adjusted EBITDA guidance, which implies a slight dollar decline, asking for clarification on how much of this is due to the re-platforming of shared costs from Homes.com back to the commercial segment.

Answer

CoStar Group CFO Chris Lown explained that the commercial segment's adjusted EBITDA margin is impacted by the exclusion of Apartments.com (now in residential) and the inorganic contributions from Matterport and Domain, which have an initial impact on margins. He noted that from an organic perspective, the margin is roughly similar to 2025, with inorganic factors having the biggest impact.

Curtis Nagle sought to understand the commercial EBITDA guide, specifically the slight dollar decline, and requested a disaggregation of how much of this was due to the re-platforming of shared costs from Homes.com back to the commercial segment.

Answer

CoStar Group CFO Chris Lown explained that the commercial segment's adjusted EBITDA margin is impacted by the exclusion of Apartments.com (a high-margin business) and the inclusion of inorganic companies like Matterport and Domain, which affect margins in their first full year. He noted that organically, the margin is roughly flat with 2025, indicating the inorganic additions have the biggest impact.

Curtis Nagle of Bank of America sought clarification on how CoStar Group is redirecting expenses to allocate 50% of software costs to AI for Homes.com, and the anticipated total Homes.com expenses for 2026.

Answer

CEO Andy Florance clarified that the 50% AI investment is an allocation of existing software development resources, not an increase in total spend. He projected "same or lower spend" for Homes.com investment in 2026, excluding the already factored-in sales force growth. CFO Chris Lown concurred.

Curtis Nagle questioned the allocation of 50% of software costs to AI development for Homes.com, seeking clarification on where these expenses are being redirected from and the outlook for Homes.com's total expenses in 2026.

Answer

CEO Andy Florance clarified that the 50% AI investment is an allocation of existing resources, not an increase in total spend. He anticipates Homes.com's investment spend in 2026 to be similar or lower, with no material cost increases beyond the already factored-in salesforce expansion. CFO Chris Lown concurred with the CEO's assessment.

Curtis Nagle from Bank of America asked for context on Homes.com's new member growth and followed up on the Q3 adjusted EBITDA guidance, questioning if the sequential dip was primarily due to timing.

Answer

CFO Christian Lown declined to provide detailed guidance on new member growth. Regarding EBITDA, he confirmed the Q3 outlook is primarily affected by the timing of investment spend, with some growth initiatives that were planned for Q2 now occurring in the second half of the year, which also explains the Q2 EBITDA outperformance.

Curtis Nagle asked for context on Homes.com's new member growth guidance and questioned the drivers behind the Q3 adjusted EBITDA guidance.

Answer

CFO Christian Lown clarified that specific guidance on Homes.com member growth is not provided. Regarding EBITDA, he explained that the Q3 forecast reflects a timing shift, with certain growth initiative spending moving to the second half of the year, which accounts for the sequential change from the strong Q2 performance.

Curtis Nagle inquired about the key drivers for the 2026 Adjusted EBITDA margin guide, including the impact of restructuring, and sought an update on the long-term margin framework. He also asked about the pacing of debt paydown and the planned use of proceeds from the asset sale.

Answer

CEO Jennifer Scanlon highlighted a philosophy of continuous improvement underpinning the margin guide. CFO Ryan Robinson detailed drivers such as operational leverage from price and volume, increased lab and staff utilization, and restructuring initiatives, noting that approximately 120 basis points of the Q4 margin shift were related to restructuring. For cash, Ryan stated proceeds would initially repay debt, with a focus on reinvesting in organic CapEx and evaluating acquisition opportunities.

Curtis Nagle inquired about the key drivers for the 2026 margin guide, including the impact of restructuring, and asked for an update on the long-term margin framework and the expected cadence of margin performance beyond 2026. He also asked about the pacing of debt paydown and the planned use of proceeds from the asset sale.

Answer

CEO Jennifer Scanlon highlighted a philosophy of continuous improvement underpinning the margin guide. CFO Ryan Robinson detailed that the 2026 margin improvement would stem from operational leverage, increased lab and staff utilization, and the cost benefits of the restructuring initiative, while also noting revenue reductions from exited businesses and the divested EHS software. For capital allocation, Ryan Robinson stated that initial proceeds from the asset sale would repay debt, with a priority on reinvesting in organic CapEx and evaluating acquisition opportunities.

Curtis Nagle with Bank of America inquired about Moody's Analytics' (MA) portfolio strategy, specifically whether the company possesses the optimal assets for high growth and investment, or if further portfolio adjustments (pruning) are anticipated.

Answer

Robert Fauber, President and CEO of Moody's Corporation, expressed confidence in current assets, highlighting proprietary data as crucial for AI and the strategy of linking data for insights. He noted that portfolio trimming allows for greater focus on scalable growth opportunities in lending and credit decisioning, KYC and compliance, and insurance.

Curtis Nagle inquired about the strategic positioning of Moody's Analytics' portfolio, specifically whether the current assets are optimally aligned for growth and if further divestitures are anticipated.

Answer

President and CEO Robert Fauber affirmed confidence in the existing assets, emphasizing the value of proprietary data as fuel for AI and the focus on high-growth areas like lending, KYC, and insurance. He noted that pruning the portfolio allows for greater focus on scalable growth opportunities.

Curtis Nagle followed up on the free cash flow guidance, which exceeded expectations. He asked about the components, specifically if net investments in loan receivables from the cash from investing line were included, and sought clarification on how these components rounded out within the guidance.

Answer

CFO Paul Evans highlighted presort prepayments as a significant component of free cash flow, noting a strong Q4 performance despite not fully controlling its timing. He reiterated that the specific detail on restructuring amounts included in free cash flow guidance is not typically disclosed.

Curtis Nagle followed up on the free cash flow guidance, asking about the components, specifically if net investments in loan receivables from the cash from investing line are included.

Answer

EVP, CFO, and Treasurer Paul Evans highlighted presort prepayments as a significant component of free cash flow, noting a strong Q4. He again declined to provide specific details on restructuring payments.

Curtis Nagle asked about the company's capital allocation strategy, specifically regarding a potential refinancing of its term loan, and also inquired about the potential materiality of the commercial business opportunity.

Answer

CFO Liz Coddington stated that the top priority is continued deleveraging, noting the company's strong cash position. Regarding the term loan, she explained that a 1% prepayment penalty (approx. $10M) remains until May 2026, making an immediate refi less attractive, though options are always being evaluated. President & CEO Peter Stern added that the commercial business unit, combining Precor and Peloton, is already back to growth and represents a significant growth vector with a presence in nearly 100,000 facilities.

Curtis Nagle questioned the drivers behind the strong Q2 free cash flow and the full-year guidance raise, and also asked about the factors contributing to the encouragingly low churn rate.

Answer

CFO Liz Coddington attributed the Q2 free cash flow beat to both timing benefits and permanent improvements like EBITDA outperformance and faster cost reductions. CEO Peter Stern explained that the low 1.4% churn rate is driven by a tenured, loyal member base and increased user engagement. Liz Coddington added that while Q3 churn should be stable, a modest full-year increase is expected due to a subscriber mix shift toward the secondary market.

Curtis Nagle from Bank of America sought clarification on the DAU outlook, asking if the 'no big change' comment for Q3 referred to sequential or year-over-year growth. He also asked what specifically is driving higher revenue from the new 'Energy' feature and when its rollout would be complete.

Answer

CFO Matt Skaruppa and CEO Luis von Ahn clarified that the comment referred to the year-over-year growth rate, which is not expected to change significantly from Q2's 40%. Regarding the 'Energy' feature, von Ahn explained that it drives revenue by more effectively monetizing high-usage free users, aligning with the company's philosophy that those who use the app heavily should pay. He stated the rollout is more than halfway complete on iOS and will be finished for all users in a 'couple of months.'

Curtis Nagle from Bank of America sought clarification on the DAU growth outlook for Q3 and asked about the drivers of higher revenue from the new 'Energy' system, as well as its full rollout timeline.

Answer

CFO Matthew Skaruppa and CEO Luis von Ahn clarified that by not providing specific DAU guidance, they signal that they do not expect a major change in the year-over-year growth rate from Q2's 40%. Regarding the 'Energy' system, von Ahn explained it drives revenue by more effectively monetizing high-usage free users. He stated the rollout is more than halfway complete on iOS and will be fully rolled out across platforms within a 'couple of months.'

Curtis Nagle from BofA Securities inquired about the full-year gross margin cadence, given Q1 outperformance, and the strategic role of new subjects like math, music, and chess as either engagement drivers or monetization tools.

Answer

CFO Matt Skaruppa reiterated the full-year gross margin guidance, projecting a 150 basis point decline with a sequential dip in Q2 followed by a ramp-up in H2. CEO Luis von Ahn explained that new subjects, like the AI-prototyped chess course, are primarily for user growth but are already monetized through the existing subscription model that removes ads.

Curtis Nagle asked for the reasoning behind the expected step-down in the revenue growth rate and inquired about the company's aspirations for Duolingo Max penetration by year-end.

Answer

CFO Matt Skaruppa clarified that the projected revenue growth moderation is a direct mathematical result of the guided bookings growth rate and includes a sizable foreign exchange headwind. Regarding Max penetration, both he and CEO Luis von Ahn stated that while they expect it to be a material contributor to 2025 bookings, it is too early to provide a specific year-end target as they are still in the early stages of innovation and optimization.

Curtis Nagle inquired about the drivers behind the Family Plan's growth to 21% of subscribers and asked for an update on the contribution from 'resurrected users' in Q3 compared to Q2.

Answer

CEO Luis von Ahn Arellano stated that increased visibility has been the main driver of Family Plan adoption, more so than new features. Regarding resurrected users, he highlighted their growing importance, noting they now represent over half of the 'top of funnel' on a given day. He sees this as a major opportunity, as the company has not yet fully optimized the experience for returning users.

Curtis Nagle asked for more details about the 'new dating app concept' mentioned in the prepared remarks, inquiring if it would be a new form factor or target a specific demographic.

Answer

CEO Spencer Rascoff declined to share specifics about the new app concept for competitive reasons. He confirmed that the company is actively incubating a new application that he is excited about and may provide an update in the future.

Curtis Nagle asked for an explanation of the surge in advertising revenue during the first quarter and whether this higher level of performance is expected to continue for the rest of the year.

Answer

CFO Steven Bailey confirmed that Q1 was a record quarter for advertising, driven by strong advertiser demand around Valentine's Day from a few large partners. However, he stated that this performance should not be expected to continue. The company is not changing its full-year guidance for advertising revenue, which is projected to be approximately flat year-over-year, and noted that macro effects on advertisers remain a factor to watch.

Curtis Nagle asked for clarification on why the Q1 guidance implies a slowdown in payer and revenue growth despite management's comments about a solid start to the peak dating season.

Answer

Incoming CFO Steven Bailey explained that the Q1 revenue outlook is impacted by stabilizing but still negative MAU trends at Tinder, planned trust and safety initiatives, and a one-point headwind from 2024 being a leap year. He reiterated confidence in improving year-over-year trends as 2025 progresses, with a larger impact expected in the second half.

Curtis Nagle asked for more detail on the expected advertiser pullback during the holidays and the rationale for shifting marketing spend into the seasonally weaker fourth quarter.

Answer

CFO Gary Swidler explained the ad revenue softness is due to a few large advertisers pausing for the crowded holiday season. He clarified the marketing shift is not an overall increase but a reallocation between brands: reducing spend on Tinder while product iterates, and increasing spend on Hinge to fuel its strong momentum.

Curtis Nagle from Bank of America asked about the planned allocation of the $25 million in expense reductions, specifically the balance between flow-through to profit versus reinvestment, and where any reinvested funds would be directed.

Answer

CFO Lawrence Fey stated that the exact ratio is yet to be determined, but given the difficult incremental yield on marketing spend, reinvestment would likely focus on the other competitive lever: the customer value proposition. This could include base pricing, loyalty programs, or promos. The goal is to enhance LTV (Lifetime Value) in an environment where CAC (Customer Acquisition Cost) is under severe pressure.

Curtis Nagle sought clarification on whether macro uncertainty is causing artists to delay tours and asked about the change in take rate expectations for the remainder of the year.

Answer

CEO Stan Chia confirmed that there has been volatility and a seasonal low in new events coming to market, which could be due to multiple factors. CFO Larry Fey explained the revised take rate guidance of 15.5% to 16% reflects a strategic shift, noting that prior rates near 17% likely over-prioritized take rate relative to volume.

Curtis Nagle questioned the assumptions behind the forecast for a return to growth in the second half of 2025, asking about expected competitive intensity and the role of easier comparisons. He also requested guidance on the quarterly revenue cadence for the year.

Answer

CFO Larry Fey explained that the back-half growth forecast assumes persistent high competitive intensity but benefits from easier year-over-year comparisons and the ramp-up of new partnerships like United Airlines. For seasonality, Fey advised that 2025 will be more back-half loaded than a typical year due to the timing of these new partnerships, and cautioned against extrapolating from 2024's atypical cadence.

Curtis Nagle requested an update on the outlook for total CPG budgets for the year and the status of supply constraints on the platform.

Answer

Bryan Leach, Founder and CEO, noted that while macro factors like tariffs create some uncertainty, the primary focus is on improving sales execution and shifting the client conversation with the new CPID model. He explained that by proving incremental sales with credible measurement, Ibotta can move clients from episodic promotional spending to an 'always-on' investment, which he believes will ultimately overcome traditional supply constraints and unlock a larger portion of CPG budgets.

Curtis Nagle asked for an update on the scaling and performance of the Instacart partnership relative to initial expectations.

Answer

CEO Bryan Leach stated that the fundamental aspects of the Instacart program, like implementation and redemption rates, are very healthy. However, he clarified that the financial contribution is currently constrained by the overall lack of offer supply. He expressed confidence that as offer supply recovers, the partnership will ramp significantly, noting that the potential with Instacart's user base is 'very, very exciting.'

Curtis Nagle questioned what gives management confidence that CPG brands will significantly increase their budgets in 2025, and asked how the revenue ramp for the new Instacart partnership should be framed relative to the previous Walmart rollout.

Answer

CEO Bryan Leach pointed to a 96% client retention rate, direct conversations indicating budget increases, and a favorable macro environment where CPGs need measurable, performance-based marketing. Regarding the Instacart ramp, he stated it will be gradual and comparable to Walmart's, with key technical and marketing features rolling out in phases over the first 180 days to ensure a smooth launch.

Curtis Nagle of Deutsche Bank Research asked about the risk to advertising revenue if high tariffs pressure seller margins and how the collectibles business might perform in a macro slowdown.

Answer

CFO Stephen Priest stated that potential ad revenue impacts are contemplated in their guidance and expressed confidence due to the global nature of the platform. CEO Jamie Iannone addressed collectibles, noting that the category's recent strength is more sustainable as it's driven by sold item growth, not just average selling price (ASP) inflation as seen in 2021. He highlighted ongoing innovation for hobbyists as a key driver of resilience.

Curtis Nagle asked for confirmation of the 2025 marketing spend forecast as a percentage of revenue and inquired about the specific factors that led to hard goods outperforming consumables in the fourth quarter.

Answer

Executive David Reeder confirmed that advertising and marketing spend for 2025 is expected to remain in the 6% to 7% of net sales range, consistent with prior years. Both he and CEO Sumit Singh explained that the outperformance in hard goods was broad-based across categories like beds, toys, and tech, driven by a combination of improved site experiences, higher attachment rates via the mobile app, and purchasing from the strong new customer cohort.

Curtis Nagle questioned the significant year-over-year increase in planned Q4 advertising and marketing spend, asking for the specific drivers and whether it represents a one-time investment. He also requested a comparison of pet adoption trends between Q2 and Q3.

Answer

Executive David Reeder explained that the increased Q4 marketing spend is a strategic decision to lean into positive momentum from Q3 and a normalizing industry to drive growth into 2025. CEO Sumit Singh added that the investment is justified by compelling ROI, noting that recent customer cohorts show 300-500 basis points higher reorder rates. Regarding adoption trends, Singh stated the net positive adoption rate improved by a low to mid-single-digit range in Q3 compared to Q2.

Curtis Nagle of Bank of America Merrill Lynch asked about competitive trends from large online platforms, especially in hard goods, and inquired about what aspects of the Chewy Vet Care proposition are resonating most with veterinarians.

Answer

CEO Sumit Singh stated that competitive trends are stable, and Chewy's hard goods business has stabilized due to internal improvements in assortment and conversion, not increased discounting. Regarding Vet Care, he highlighted the power of the Chewy brand, a partner-first approach, and proprietary technology that reduces administrative work for vets. CFO David Reeder added that these clinics create a powerful synergy, with about half of clinic customers subsequently shopping on Chewy.com.

Curtis Nagle of Bank of America inquired about the sustainability of Chewy's net customer additions, asking if low single-digit growth remains the correct framework for the year, and sought an update on the company's outlook for pet industry growth and household formation.

Answer

CEO Sumit Singh confirmed that while low single-digit growth is a good baseline for customer count, performance is trending towards the higher end due to strong execution in gross additions and retention. He stated that the industry is projected to grow 3-4%, and Chewy's guidance reflects a share-gaining plan to grow at approximately twice that rate, without factoring in potential tailwinds from market normalization.

Curtis Nagle from Bank of America inquired about the sustainability of Chewy's active customer growth and whether a low single-digit growth framework for the full year remains appropriate. He also asked for an update on the company's outlook for pet industry growth and household formation.

Answer

CEO Sumit Singh confirmed that a low single-digit growth rate for active customers is a solid baseline, noting that current momentum is driven by strong internal execution on both customer acquisition and retention, not just market tailwinds. He stated that the quality of new customers is improving. For the industry, Singh estimated 3-4% growth and reiterated that Chewy's plan is to grow at roughly twice that rate, thereby gaining market share.

Curtis Nagle from Bank of America inquired about the sustainability of net customer additions, asking if low single-digit growth is still the correct framework for the year, and requested an update on industry growth and household formation trends.

Answer

CEO Sumit Singh confirmed that low single-digit growth remains a solid baseline, driven by Chewy's own execution in customer acquisition and retention, not by market tailwinds. He stated that industry growth is estimated at 3-4% and Chewy's guidance reflects a share-gaining plan. He also noted that pet household formation is trending flat, which is viewed as an encouraging sign.

Curtis Nagle from Bank of America inquired about the sustainability of Chewy's active customer growth, asking if a low single-digit growth framework for the full year is still appropriate, and requested an update on the outlook for pet industry growth and household formation.

Answer

CEO Sumit Singh confirmed that while low single-digit growth is a good baseline for guidance, the company is currently operating at the higher end of that range due to strong internal execution on customer acquisition and retention. He stated that the pet industry is estimated to grow 3-4%, and Chewy's plan is to gain share by growing at roughly twice that rate. Singh also noted that household formation is flat but not declining.

Curtis Nagle of Bank of America inquired about the sustainability of net active customer additions, asking if low single-digit growth remains the correct framework for the full year.

Answer

CEO Sumit Singh confirmed that low single-digit growth is a solid baseline, noting that current momentum is driven by Chewy's own execution in gross additions and retention, not market tailwinds. He stated that the company's guidance reflects a plan to grow at roughly twice the rate of the overall pet market, which is estimated to be growing at 3-4%.

Curtis Nagle from Bank of America inquired about the sustainability of net customer additions, asking if low single-digit growth remains the correct framework for the year, and requested an update on industry growth and household formation trends.

Answer

CEO Sumit Singh confirmed that low single-digit growth is a solid baseline, driven by Chewy's own execution in improving gross additions and reducing churn, not market tailwinds. He stated the pet industry is growing at roughly 3-4%, and Chewy's plan is to grow at twice that rate, effectively gaining share. He also noted that household formation is currently flat.

Curtis Nagle inquired about the shape of margins for the upcoming year, specifically why Q1 adjusted EBITDA margin guidance is significantly lower than the full-year target, and asked for color on the assumed cadence of wholesale volumes throughout the year.

Answer

CFO Bill Zerella explained the lower Q1 margin is due to two factors: the significant expense of the NADA trade show which occurs in Q1, and the timing of investments made in Q4 that flow through to Q1. He noted the dollar difference is not large and advised not to read too much into it. CEO George Chamoun reiterated that the flat wholesale volume forecast is a prudent, middle-of-the-road assumption, given the contrast between a very strong January and a mixed February, which underscores market uncertainty.

Curtis Nagle asked if Etsy Ads, while driving higher take rates, might be negatively impacting GMS. He also questioned if the company would consider lowering its take rate to stimulate GMS growth.

Answer

CEO Josh Silverman clarified that Etsy Ads are neutral or beneficial to GMS, as the ads team is goaled on both GMS and take rate, ensuring a positive experience. He stated that the current take rate is not a hindrance to growth, as most fees are optional and sellers opt-in to value-added services like ads. CFO Lanny Baker added that they expect to sustain the current take rate of around 23% in Q1, driven by the value these services provide to sellers.

Curtis Nagle asked if Bumble observed a similar pickup in 'peak season' dating trends that its largest competitor had noted.

Answer

Outgoing CEO Lidiane Jones did not directly confirm or deny a specific 'peak season' trend. Instead, she highlighted a broader trend of younger users seeking more casual connections and friendships as an on-ramp. She reiterated the continued relevance of Bumble's women-first focus and safety features, concluding that the overall demand for connection remains very high.

Curtis Nagle asked if the $10 million increase in 2025 EBITDA guidance should be added to the 2026 target, and what provides confidence that consumer segment revenue will accelerate throughout 2025.

Answer

CFO Sarah Blanchard confirmed the 2026 adjusted EBITDA target remains $130M-$150M, outlining the path to achieve it. CEO Greg Brown and CFO Sarah Blanchard expressed confidence in consumer growth, citing a robust product roadmap, a new career focus, and marketplace enhancements designed to boost engagement and retention as key drivers for the expected acceleration.

Curtis Nagle asked when the gap between demand and revenue growth should narrow and inquired about potential demand synergies from the expansion of the Waterworks business.

Answer

Chairman and CEO Gary Friedman responded that the demand-to-revenue gap should start to narrow as in-stocks improve, though it may remain bumpy with new product launches. He explained that exposing the Waterworks brand to RH's platform and customer base is a 'billion-dollar idea.' He also noted other synergies, such as new product returns driving the outlet business and successful designs being translated to the Baby & Child and Teen lines.

Curtis Nagle inquired about the outlook for product margins given the demand inflection from new products and the consolidation of the RH Contemporary catalog into other sourcebooks.

Answer

CEO Gary Friedman stated that product margins inflected positive in the third quarter and the company feels very good about the business's demand vector. He explained the catalog consolidation was an optimization strategy, as the lines between the Interiors, Modern, and Contemporary collections had become blurred, making it more efficient to create fewer, more dominant books.

Inquired about the sustainability of the recent housing activity bump, the outlook for 2025 existing home sales, the reasons for the slight market share decline in Q3, and whether competitors' aggressive ad spending could challenge Redfin's own marketing increase.

Answer

The recent strength in housing activity is surprising given rate hikes, and while it's hard to predict, 2025 volumes are expected to be better than 2024's lows. The Q3 market share dip was partly due to competitors' unprecedented ad spending while Redfin had pulled back, a situation they plan to reverse in 2025. They believe they can compete effectively as they don't expect competitors to increase their ad spend further, while Redfin will, supported by growing organic traffic.

Asked for reasons behind the muted consumer response to falling mortgage rates and what it might take to stimulate demand. Also inquired about the impact of Redfin Next on the partner referral business.

Answer

The muted response to lower rates could be due to late timing in the homebuying season, political distractions, and general fatigue, but a market reaction is believed to be inevitable. The partner business is expected to continue growing due to sales execution improvements and strategic routing of customers to the most profitable channel.

Curtis Nagle asked what drove the higher-than-expected Average Order Value (AOV) in Q3, given the company's commentary on high price elasticity and a consumer preference for smaller ticket items. He also asked about the potential impact of increased tariffs on goods from China.

Answer

CEO Niraj Shah explained that AOV is an output metric influenced by a mix of initiatives, such as the growth of the luxury Perigold platform (increasing AOV) and a focus on frequency items (decreasing AOV). The primary goal is growing total dollars per customer, not managing AOV itself. Co-Chairman Steven Conine and Niraj Shah addressed tariffs, noting that the industry is better prepared than in the past, with suppliers having diversified manufacturing. They also cited Wayfair's marketplace model and broad supplier base as a natural buffer.

Curtis Nagle questioned the recent pricing actions, asking what changed from previous commentary that pricing was in a 'good spot' and whether suppliers are sharing the cost burden. He also requested more details on the physical store strategy, including the potential ramp, productivity, and margins.

Answer

CEO Niraj Shah clarified that pricing adjustments are minor optimizations to maximize profit dollars, not a major shift. CFO Kate Gulliver added that suppliers are leaning in, enabling strong promos while maintaining gross margins above 30%. Regarding stores, Niraj Shah noted the Wilmette store's 'incredibly strong' start but said it's too early for detailed metrics, with a second store targeted for late next year.

Curtis Nagle inquired about GIPHY's revenue contribution in Q3 and how the new partnership with TikTok might affect GIPHY's path to its previously discussed potential revenue run rate.

Answer

CFO Jarrod Yahes stated that GIPHY's revenue was approximately $20 million at acquisition and is growing sequentially, but the company does not break out revenue for sub-segments of Data Distribution and Services (DDS). CEO Paul Hennessy added that while specific deal terms are confidential, the TikTok partnership is expected to drive monetization through increased user engagement, reinforcing his bullish outlook on GIPHY's revenue opportunity.

Curtis Nagle inquired about GIPHY's Q3 revenue contribution and whether the new TikTok partnership's potential monetization was factored into prior run-rate guidance.

Answer

CFO Jarrod Yahes stated that GIPHY's revenue at acquisition was approximately $20 million and is growing sequentially, but the company will not break out revenue for subcomponents of the Data Distribution and Services (DDS) segment. CEO Paul Hennessy added that while he could not discuss the specifics of the TikTok deal, he remains very bullish on GIPHY's overall revenue opportunity, driven by growing user engagement.