Angi - Earnings Call - Q3 2020

Transcript

Speaker 0

Good morning, everyone. Glenn Schiffman here, and welcome to the IAC and ANGI Homeservices Third Quarter Earnings Call. Joining me today is Joey Levin, CEO of IAC and Chairman of ANGI Homeservices and Brandon Ridenour, CEO of ANGI Homeservices. Similar to last quarter's supplemental to our quarterly earnings releases, 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 Relations section of IAC's website. I will shortly turn the call over to Joey to make a few brief introductory remarks, and then we'll open it up to Q and A. Before we get to that, I'd like to remind you that during this call, 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 such statements. These forward looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed here today.

Some of these risks have been set forth in IAC and ANGI Homeservices third quarter press releases and our respective reports filed with the SEC. We'll also discuss certain non GAAP measures, which as a reminder include adjusted EBITDA, which we'll refer to today simply as EBITDA during this 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.

Speaker 1

Let's jump right into it. Joey? Thanks, Glenn. Good morning, everybody. You're very fortunate to be here right now.

The fact that you're

Speaker 2

on this call

Speaker 1

means you've got your health. It means you're working, probably able to work remotely. And if you're working, god knows you're not doing these earnings calls for fun. But if you're working, it also means you're probably doing pretty well because because, as a shareholder, things have have worked out for IC during this period, which we're we're all very grateful for, and very much appreciate everyone's support. I know it's a very, very busy week, between, corporate stuff and, of course, what's going on in the the country.

As usual, we put some big news in the letter, so I do wanna also get to to questions quickly. And and I know you'll have a bunch. And, and then after that, we can all get back to watching John King on that map. So I guess, Mark, why don't you open up the first question?

Speaker 2

Sure. We'll we'll take our first question from John Blackledge at Cowen.

Speaker 0

Great. Thank you. Joey, could you discuss further the rationale and timing for Vimeo's spin and how it might differ from the recent Match spin? And then also on Vimeo, could you just discuss the success on the enterprise side this year? And Vimeo went EBITDA positive this quarter.

Maybe discuss the near and longer term margin potential for the business?

Speaker 1

Yes, definitely. So rationale and timing on the Vimeo spin. There's as we say when we're doing them also, when we're not doing them, there's not a magic bullet on timing on any of these things. That's that's crystal clear catalyst that pushes things one way, or the other. But the sort of mounting, case on Vimeo has been Vimeo is the the the category where Vimeo operates, which is enterprise software.

And the the currency of enterprise software is very different than the IAC currency. And, that's a gap that we can bridge relatively easily, but that continues to grow, wider and wider. And the question is, does it at some point start to limit, Vimeo's options? And, we wanna make sure Vimeo has the greatest options possible for for Vimeo's success. And and the other thing that that has held it back historically is is whether Vimeo was ready, both in terms of revenue scale, in terms of profit scale, in terms of ability to control its own destiny, meaning a money losing business, you want to make sure that it has enough capital or can it choose to not be a money losing business.

So I think and this will get into your second question a little bit too, but we've proven now that Vimeo can generate cash. We've proven that that clearly to ourselves, and now I think we've we've proven that externally. So, really, Vimeo is now in control of its own destiny. We, over the last few quarters, have, seen seen very good accelerating growth. And over the last few years, we've been very successful in adding to Vimeo with m and a.

We in the the live category, we did this through livestream. In the OTT category, we did that through VHX. In the creation category, we did that through, Magisto. And all of those things so far are working out pretty well. And the reason they're working out well is we're able to add them onto the Vimeo platform.

In fact, in all cases, we've we've sort of rebuilt the products completely, onto the Vimeo platform, but we're able to do that much faster when when we bought something, and it comes with both, a lot of learning, and customers and things that we can test and and things like that. And so when you when you have that collection of things, you think you wanna have access to currency to continue to be aggressive and to continue to execute in that category. I think it's also important to as a potential, branding event for Vimeo. The sort of noise and drumbeat of of information on Vimeo continues to get louder. I think that's important.

We still have people who say, isn't Vimeo just the other YouTube or the cooler YouTube or whatever what whatever it is? And that's not really Vimeo's business model at all today. And it's helpful as we start talking about these things for people to understand that. And so to some extent, it it it can also be a branding event to to get Vimeo out there, and in the news. And and and this is Vimeo's moment to really get that that definition for itself.

It's not a rush. It's it's it's and it's not definitive. And, as I said, Vimeo has both the capital we just raised and, of course, backed by all of IAC's capital. And Vimeo could be profitable right now if we wanted to continue to be profitable. So it's not like we have to get out there to get access to cash.

But I do think it could be good for Vimeo long term to to be in that position. Second question was, I think, around what's driving the growth. Was that it, John? Enterprise. Enterprise.

Okay. So enterprise is doing incredibly well right now, and that's that's led by a few things. I mean, mostly, it's, internal communications, but also external communications. So employee town halls, webinars, seminars, training. Great examples are some of the biggest companies you've heard of now on our platform doing town halls, Columbia University doing its graduation on Vimeo.

And that small businesses, I guess, going away from enterprise, but small businesses that we've talked about this example all the time, fitness, yoga, things like that, where you're accessing a broader audience. We're actually seeing growth across every product in Vimeo right now, accelerating growth across every product in Vimeo right now. But enterprise definitely the fastest growing and definitely the biggest. It's just it is now a default thing where it makes sense for enterprise to need a solution like Vimeo, in their organization. And and, of course, we're adding to that acceleration with, incremental sales both in The US and internationally where we are we're almost nowhere on sales internationally.

Speaker 0

And I think that's a huge opportunity for us. Yes, just what you asked about the timing of Vimeo. Look, spins in the past typically have been have taken us kind of six to nine months post decision. We've yet to make our decision. In all likelihood, if we move forward with Vimeo, it will be much simpler.

So I would say it could be inside of the six months until we're able to affect it, but we'll see. Just some factoids around the enterprise side. You saw in the letter, it grew 100% year over year. Bookings actually grew faster than that. And as Joey said, we're really just scratching the surface on the enterprise side.

It's less than 25% of revenue and obviously growing. The price point around enterprise, we've talked about this before, is on average $15,000 to $20,000 per customer per year. The self serve piece, which obviously we have a vast majority sorry, almost all of our 1,000,000 subscribers, that's a great feeding ground to our enterprise. And in fact, 35% of our bookings on the enterprise business come from that funnel. We talked in the letter, there's only 3,500 enterprise customers right now.

So we've got a tremendous opportunity on enterprise. Lastly, you asked about margin. Yes, we were profitable this quarter, you saw in the letter, somewhat by default instead of by design. I think we're going to continue to invest in this business for the ensuing quarters. It's about product development.

It's clearly around sales. Joey highlighted international. It's a big focus of ours. We're scaling the sales force. And unlike at ANGI, where we've

Speaker 1

been at

Speaker 0

sales for probably greater part of a decade, we're probably, what, one years, point two years into it. So we're still in addition to hiring people, we're still optimizing getting efficiency out of sales. So that's going to obviously be an investment for us. Marketing is going to be an investment. So I wouldn't expect profitability again for several quarters, if not longer, again, as we invest into growth.

The one last thing in terms of long term margin, to answer your question, we talked about this business being a 20% EBITDA margin business eventually. We also mentioned we think that's conservative. One of the reasons why we think that's conservative is because we're making great progress on gross margin. We talked about 70% being our target. And this quarter, we're kind of in and around that number.

So we're raising our targets and raising the bar for Vimeo and appropriately so.

Speaker 1

Great. Thank you.

Speaker 2

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

Speaker 3

Thanks, guys. I wanted to ask about, Angie. And when we think about the supply constraint problem there, it seems to be like a good problem to have. It's more funnel focused, and you're innovating. You're rolling out tool sets and fixed price, and all that seems to, give you ability to kind of, hone the the funnel and and slide stuff down the funnel, and and and ultimately solves that problem.

So I wanted to if you could kind of talk about you're seeing with the supply constraint problem on ANGI and how you're fixing that.

Speaker 4

Yeah. Great question. You know, we talked about last quarter that we've been quite pleased with the resiliency of our business in the face of the pandemic. And, you know, we've seen more homeowners turn to us for for help with their home care needs than than really ever before. At the same time, we haven't, you know, we haven't gone without impact from the pandemic, and the industry itself has not gone without impact.

A couple of key challenges that we face. One is is just service providers are are fairly overwhelmed, particularly in the back half of this year. You have the the period of of March, April, May, which is typically a time when a lot of these providers will be scaling up. But rather, as we all know this year, they were, you know, pulling back and locking down. And by June, you know, we'd seen a pretty massive resurgence or or or surge in consumer demand.

And I think a lot of these companies have, you know, are operating with a little bit less capacity than they otherwise would be, and then have been met with this sort of unprecedented surge in demand. So what we're seeing, quite frankly, is just many companies can't take on new customers. And so that's something that, is, just a reality of the situation. In terms of when it resolves, you know, the way we think about it is largely that it will, you know, that it is somewhat tied to the pandemic. And as the as the sort of situation at large normalizes, we would expect, we would expect the operations capacity of these companies to normalize and their appetite, you know, to pay to meet new customers would, you know, would rebound to to former levels.

The other challenge that we have faced specifically is, you know, we we came into the year with pretty ambitious plans to grow our sales force. We were, ahead of where we expected to be going into March. But unfortunately, obviously, during the second quarter, we had to sort of freeze everything, you know, very, very quickly find a way to get several thousand people working remotely for the first time in history. And then, subsequent to that, we've had to learn, how to hire and train, you know, new salespeople remotely, which is not easy for a variety of reasons. And so we are we are what I would say, are effectively about six months behind where we expected to be in terms of the size of our sales force.

Our sales force that we do have has performed, well during this period, which I think is is a bright note. But, growing the sales force and and having those those incremental salespeople bring on, you know, more more service providers and growing our overall network at a faster rate is is critical to, you know, to at least being one contributor to solving, the supply challenge. On the other side of our business, fixed price, which, you know, is is somewhat nascent, but important, really works quite a bit differently, and we we have seen that grow very quickly. That's an area, you know, if if on one side of our business, service providers are paying us to meet customers, and they've they've they've got a lower appetite for that. On the fixed price side of our business, you know, we're able to take advantage of that those higher levels of consumer demand, and we're actually paying service providers.

So we saw growth there, really meet our expectations, but it's a it's a, you know, it's a it's a newer part of our business and small relative to the traditional component. As we look forward to next year, you know, the are things we can control and things we can't. We think we'll have our sales force back where it needs to be by the end of this year. But those folks will be hired much later than we expected, and it'll take time to get them fully ramped up and productive over the first part of next year. Fixed price, we expect to continue to grow very quickly and bringing on additional capacity via that platform.

And then we have new products that we will go to market with that we think can tap into different segments of the SP universe than than we traditionally have. So is it a good problem to have? I I think having lots of consumers relying on your service and having that demand, which is intrinsically valuable, is obviously incredibly important, and the most important thing, frankly. But we've got a lot of work to do to get, to get our provider capacity back to where it needs to be, and we, frankly, would like to see some some normalization of the environment at large.

Speaker 1

Brian, the the the way that that you frame it is is very consistent with the way that I think about it, the way that we think about it, which is it it by the way, everything Brandon says is, of course, true. But when if you just take a step back, we're aggregating demand, and that's a very good position to be in, to be aggregating demand and growing demand the way we've been growing demand and getting the the homeowner. And in that experience, even though we're not monetizing, we're doing all the things that Brandon said to monetize or even though we're not monetizing at the level we'd like to be, I think a lot of that's pandemic related. We've never had a problem at IC, figuring out how to monetize things. And I don't think long term we're gonna have a problem figuring out, how to monetize this one if we've got the homeowner and we've got the demand, continuing to come.

And the people who are coming to our platform are generally being satisfied. Now we show them fixed price and they don't transact, that actually could very frequently be a satisfactory experience. We show them what the price is of that job. We show them when they could get that job done and how they could get that job done. And very, very often, they're choosing not to get that job done, which I think if you all think back to your own personal experience, probably 65% of the time, you're not doing the job you thought you might wanna do when you went, and inquired about it.

So that actually is that's a zero monetization event for us, but that's also a satisfactory experience. And I do think that if we keep these customers coming back and we keep delivering them satisfactory experiences that over time, our ability to monetize that, I feel very, very confident in.

Speaker 2

And we'll take our next question from Cory Carpenter at JPMorgan.

Speaker 5

Great. Thank you. Brandon, just sticking with Angie, I think on product, you highlighted payments, in the shareholder letter. Hoping you could expand some on the opportunity there and then maybe some of the other key initiatives you have in the product pipeline. And as a follow-up, Glenn, just how we should maybe think about that translating to the level of investment needed to support these initiatives and what that could mean for margins over the coming quarters.

Speaker 4

Yeah. Thanks, Corey. You know, we've been very, very fortunate this year, that our businesses stayed resilient enough that our teams have, remained 100% focused on the the initiatives and, you know, strategic areas that we that we came into the year focused on. And we have made across the board the progress that we were hoping to make, particularly around product innovation. Payments, obviously, is a completely new feature that we've offered our providers.

And we recently crossed sort of the $1,000,000 a week mark. Fixed price has scaled, I think, very, very fast. And obviously, that's a great new line of growth for us. But perhaps as important is the the innovation it brings to the consumer. And what we're seeing with a lot of the early cohort data is a really a a a significantly different set of consumer behaviors for those folks that engage in that product.

So that's true that's true of the payments feature. That's true of fixed price. That's true of folks that we get into our mobile app. All of these experiences are driving a much stronger relationship, with the consumer that ultimately is is resulting in a much higher LTV. And as we've said coming into the year, that that is probably the single most important thing that we need to do to create a durable business over the long term.

As we as we think about next year, if I think about this year, you know, I I believe we're largely putting together building blocks and understanding how they work and ensuring that they create the experience that, that we aspire to and that we're seeing the impact from a behavioral standpoint. We've created a lot this year. Most of the most of the the engagement or scale of which these, experiences have achieved is relatively small. When I think about 2021, now that we know we have these building blocks and we know the impact they have on our relationship with homeowners and just the improvement of the experience that they bring, 2021 will be largely about scaling engagement and scaling penetration. And so we'd love you know, we absolutely are focused on moving as much of our audience into our mobile app as we possibly can, and we have, tools at our disposal that we think are gonna move the dial significantly.

We wanna see payments, scale to be as large as it as it can possibly be. Right now, our thinking around payments is perhaps less about, you know, what specific transaction fees we can make on each payment, but rather the change in behavior it creates on the consumer side. You know, consumer once they've used the payments feature, they've got we have their credit card on file. The the process then to buy a fixed price service is incredibly low friction. And overall, we see, you know, we see those consumers provide a much higher LTV.

And then on the provider side, the more they use our, you know, our platform to run their business and to collect money from from homeowners, that's, we think that's a a a, you know, a significant improvement to the relationship we have with advertisers. And then they're also starting to use this payments feature, with their own customers that are acquired outside of our marketplaces. And the great thing about that is ultimately those homeowners, who do, who end up paying those professionals come back or come to HomeAdvisor for the first time to make that payment. So it effectively uses our network as a way to introduce us to new homeowners. And then with fixed price, you know, we'll continue to scale that.

But the thing I am very excited about is the opportunity to, offer, customers the ability to bundle fixed price services together, to get fixed price you know, certain fixed price services on a recurring basis. And again, all this to say, how can we get more share of the home services that homeowners are doing? How can we keep how can we start thinking about our acquisition of homeowners? Not as a twelve month, span, but a five year span or a ten year span and really create, you know, very, very strong relationships. So we'll we will focus on, really just scaling a lot of the things we've already talked about.

We do have finance, you know, offering sort of point of sale financing options for consumers that'll come here in q four. And so that's another thing we'll add to the mix for next year.

Speaker 0

And Corey, as you requested, translating that into investment, we'll be investing significantly over the next next year. This past year, we talked about a 30,000,000 to $50,000,000 incremental investment largely in fixed price, a little bit in international. And I think that pace of investment clearly continues. What that then therefore means for margin, of course, will depend on revenue growth. And as Brandon said earlier, we think we're going to be in and around this kind of 9% to 10% revenue growth for the at least the next couple of quarters, maybe beyond.

We have to lap the pandemic, which gets us to the second quarter. And I don't think we should expect a V shaped snapback given some of the sales initiatives that Brandon talked about and the time it takes those to spool up and the time it takes SPs to work through their backlog. So I don't think we'll be back towards the 20% target towards probably towards the end of the year. That, of course, has implications for margin because at this 9% or so revenue growth level, we don't create a lot of incremental margin, and we're going to be investing that back in. So we're probably talking about margin increases deferred till the 2021, maybe the third or fourth quarter, probably the fourth quarter, because this investment is born of what we're seeing every single day in the business and the positive feedback that we're seeing in the business.

It's repeat rate at fixed price. It's what the payments product does for the relationship with the SP. It's the customer satisfaction level on fixed price. It's the growth in fixed price. And this year, we think we'll pierce through $150,000,000 of revenue in the fixed price product.

And as you recall, that's virtually from a standing start twelve to eighteen months ago. So on the back of that strength, we're going to continue to invest.

Speaker 2

Great. Can we do our next question from Brad Erickson at Needham?

Speaker 6

Great. So, I guess a couple of questions on the service provider front. One, just understand, obviously, there's ongoing constraints there. I think to date, you've kept the sales efforts to work on that pretty separated. Between the core business and fixed price, does it make sense at some point to maybe commingle those efforts, might alleviate the situation, get a little bit more efficient?

And then second, just on the sales and marketing spend, obviously, has been sort of ticking up the last few quarters. How much of that can you just kind of talk about the allocation of sales and marketing between acquisition versus service provider acquisition? Thanks.

Speaker 4

Yep. You know, on the, on in terms of commingling fixed price in our traditional network, right now, I feel pretty strongly that the the best way to build capacity is to keep those efforts separate. The traditional network, you know, these are businesses that are you know, they're they're they're they're flesh with customers, and many of them are booked up through the end of the year. So I I don't think there's a tremendous amount of excess capacity there to tap into. At the same time, you know, it's not that difficult for us to scale the fixed price side of the business in terms of the the providers.

You know, we're going out and offering to pay providers to do these jobs, and that team has, had a lot of success even even during, you know, what is a relatively challenging period, with that value proposition and with bringing the necessary providers online. It it is it is, you know, a human constrained effort. And as much as, you know, we don't have a provider for a particular type of project, we have to go find someone in that geography and and for that particular task. And we're, you know, we're working through month after month, trying to keep up with a really fast consumer growth rate, to to build up that provider network. But it's it's overall, you know, it's not that challenging.

And, I don't think I don't think, you know, further cannibalizing or taxing our traditional advertiser network is a meaningful, is a meaningful breakthrough in terms of adding, you know, quick capacity. Clearly, someday we will, begin to commingle those things more for the benefit of our providers and more for you know, because we think we think the value proposition for fixed price is so compelling, and, we'll wanna we'll wanna make sure that that's something that our advertisers and and other traditional service providers can tap into if they want to. But it's more oriented toward value proposition for them and less about, overall aggregate capacity. In terms of sales and marketing, you know, a couple of things. We said at the end of q two, coming into q three that we were gonna get we're gonna lean in and get more aggressive on consumer marketing.

We saw in June a strong, you know, a strong environment, a strong rebound from a consumer demand standpoint and frankly, you know, relatively attractive ad rates across a number of channels. And we did just that. You know, we we we got aggressive. We spent quite a bit to acquire homeowners and that manifests in really some of the fastest service press growth that we've seen in a couple of years. We obviously didn't monetize that as well as we had hoped.

Progressively throughout the quarter, you know, we saw that sustained consumer demand, you know, really take a toll on on provider capacity of providers, you know, becoming too busy. But as Joey said, you know, acquiring these homeowners and having them come and use our service, even if we didn't monetize it, we think is is the right move and important in terms of, you know, growing our share, of of the market. And those folks, you know, even if we didn't monetize them, you know, millions of them saw and experienced, the opportunity to to buy a fixed price service for the first time. That's something that's really never meaningfully existed, at this scale, in the way that we're offering it. And so even if folks didn't purchase it, now they've seen it for the first time.

And, you know, today's, today, you know, today's person that, you know, had an impression of it is tomorrow's purchaser. And also, we know from our own data that the folks that, you know, folks that we acquire, whether we monetize them or not, they are they're gonna come back. We look at it on a twelve month, horizon, and they come back and repeat at the same rate as somebody we did monetize. So they all of these consumers we acquired in q three will will ultimately, benefit us, you know, over the next twelve months. And hopefully, we see monetization improve over that period and and are able to better, you know, better, capitalize on on those repeat visits.

In terms of increase in SP marketing, we have also increased, we've also we've also increased SP marketing over the course of the year. I think on balance, more of the spend is really about consumers and driving consumer acquisition. We're spending a bit more on the provider side as well, but it's been more the consumer side. In particular, we spent we came into the quarter and spent quite a bit on television, which had a favorable rate environment. We didn't spend in Q2, for obvious reasons.

As we go into Q4, we pull back on that a bit because it's just not as strong it's not the strongest season for home services, but that's the gist of it.

Speaker 0

The other interesting thing that's happening inside of the service requests, and we may I think we touched on this in previous calls, is our service requests from new users, people who've never tried our platform before. That's been up this year since the pandemic between 2530%. That compares to like 0% to 5% historically. So we're creating a freshman cohort of users on our platform and that really bodes well for the future. That's the millennials who are beginning to own purchase homes.

And that's people who again will become repeat users. And that's I think a real demonstrable display of offline to online conversion of which we will be a significant beneficiary.

Speaker 2

Our next question will be from Brent Thill at Jefferies.

Speaker 1

Thanks. Good morning. Glenn, any more color as it relates to the mix of fixed price and where you think that can end up?

Speaker 0

Brandon, do you want to do that?

Speaker 4

Well, yeah. If you're talking in the long term, we I think our ambition it's really a bit difficult to project something that's as nascent as this with it being about eighteen months old. Glenn referenced earlier that we expect to end the year at north of $150,000,000 in that particular product line. Our ambition is to get this to be about half the size of the business, and we think that's very attainable. In terms of the horizon, you know, five years, six years, seven years is probably the right duration to think about that just given the given the growth rate there relative to our traditional business and how we expect those to play out over time.

But I think that's the right I level of ambition. I think that's the size we think about when we think about it over the long term.

Speaker 2

Our next question is from Jason Helfstein at Oppenheimer.

Speaker 1

Thanks. Two questions. Maybe just the first, Brandon, I mean, help us understand what gives you the confidence to lean into the marketing given that many of these leads, you will not be able to monetize them the first at the first action. It's kind of over the kind of life of that lead, three months, six months, nine months. And so kind of what do you know now that you didn't know, you know, nine or twelve months with bringing those leads in the funnel?

And then second, Joey, congrats on your ten year extension. You know, just kind of to the extent if you do move ahead with Vimeo, obviously, a huge amount of value is gonna be then Angie with an IAC. Wouldn't it make sense to kind of bring Angie back into the folds formally given the small stub out there, just to kind of simplify the process and etcetera? Thanks.

Speaker 4

Yep. I'll I'll start off. Look. It's a very uncertain environment. I think it's probably an understatement.

And coming into a situation like this, coming into the the third quarter, you know, you have to make a decision as to what where your bias is. And our bias is towards growth. We don't know how quickly monetization will normalize, but we do know it's a favorable environment to acquire consumers and and gain more share of the consumer market. And you can see we were very successful in that, in spite of, perhaps not monetizing as well as we, had hoped. I anticipate and expect that we'll be able to better monetize those those customers when they do repeat over the course of the next twelve months.

We got more of those people into our app than, like, significantly more than we ever have before. And, you know, I I you know, our our we lean into this thinking that more consumer share and and driving future growth is the most important priority. You could have taken the opposite tack, which is to say pull back, get very conservative, and, you know, make make sure that everything is absolutely profitable within the quarter. You know, we didn't we didn't choose that path, I, you know, personally feel strongly that, in this market and with what we're trying to accomplish, leaning in, focusing on growth and focusing on consumer share and more exposure to our products, and and, the innovative features we're offering, is the right path. We'll see how that plays out, obviously, over the next six, you know, nine, twelve months, But I expect it to bear fruit, and I expect it to to propel growth next year.

Speaker 1

To me, that huge increase in the the mobile app conversion is is a very big one and a very sticky one, or hopefully a very sticky one I mean, we do see that today in behavior, how mobile app user behaves and and our ability to convert those mobile app those web users to mobile users has been been very nice this year. On your your question, Jason, look. It is it's definitely something to think about. I think the question for us is is same thing we do in the reverse direction.

Is it valuable to us, to Angie, to have a currency out there? And some periods that is valuable and for some currencies that is valuable and for some it's not. And so I think that'll be it would be long term, medium term, short term really dependent on that. And, if the currency isn't an asset to Angie and and being out there, then that's maybe something we consider. And if it is, then then maybe we won't.

Speaker 2

Our next question is from Ross Sandler at Barclays.

Speaker 7

Guys. Joey, I guess, related to that last question, if we go if we just rewind, you know, the clock a little bit, there was a lot of corporate strategy in 2008 when you broke up into the five different pieces, and then there was this period of time from o eight to 2014 where, you know, you're incubating a lot of the businesses and buying back stock and, you know, shares, you know, appreciated nicely, but there wasn't a lot of corporate activity. So now that we're announcing Vimeo, should should shareholders expect that this is kind of the next stage of of the the IAC era? What what other things are are you looking at, given the cash balance and the overall capitalization? What should investors expect out of this next phase now that Vimeo is moving out the door?

Thank you.

Speaker 1

Yeah. Ross, look, that's a very important question. And I don't have a definitive answer to that, but I'd give you some flavor. We haven't definitively made up our mind on Vimeo, but presuming we did that, there's not a obvious to me candidate for another spin, for example, for a while. I mean, there there is you can make arguments, and that always changes, and our thinking on these things can change very quickly, but there's not an obvious candidate for another spin.

You're right. We will be, very well capitalized with cash, And we'll think about the whole range of options with cash, which we which we always have, which is maybe that share repurchases, maybe that's investment in businesses, maybe that's picking up new businesses. But the focus definitely for the next x years, but a while is building. And that building can come inside of IC because we have a lot of great I mean, think about just just x Vimeo for a second. We've got Angie.

We've got a leader in its category, a huge category. We've got Care, leader in a category, a huge category. We've got, Dotdash, leader in publishing, huge category. And within Dotdash, probably at a minimum, I'd say four really big categories, and I could I could argue even bigger than that. And then we've got very large positions or or, where we're the biggest shareholder of other things that are huge and big in very large categories, Turo, MGM.

All those things present options to us for more capital, to deploy, different ways of working with those companies over time. And we're pretty excited about the the that that menu of things to to be able to execute against. That that so I I can't sort say that this year, there's there's more acquisition I'm sorry. There there's no more spins or we're just focused internally, and we're just focused on that growth period. I wouldn't say it as definitively as that because we do change a lot and circumstances create opportunities and we'll always take advantage of those opportunities.

But I do think realistically there's not much left to spin post Vimeo in the reasonably near term. And that means we're really focused on the building part inside of IC and with a huge amount of capital to deploy against that.

Speaker 0

And all the assets Joey mentioned, natural tailwinds benefit from offline to online conversion, play in very large addressable markets where we're the leader or close to being the leader, and that includes some of the assets that we have in the emerging and other bucket, some of the future work initiatives. So if we don't acquire another thing, there's a long runway of substantial and significant organic growth.

Speaker 2

Can we get our next question from Eric Sheridan at UBS?

Speaker 8

Thanks so much for taking the question. Maybe two, if I can. One, going back to Vimeo, just wanted to better understand what you're seeing from some of the newer customers. We get a lot of incoming from investors on who the new customer cohorts are at Vimeo, how you expect them to age going forward, why they're choosing Vimeo for their video solutions. So just better understanding that landscape would be one.

And then second, maybe pivoting away from ANGI but to Care. Obviously, that's an asset you acquired. You're trying to reposition that asset for the medium to long term. Maybe an update on how you're doing in terms of your marketing initiatives, sorting out the supply and the demand side of that marketplace? Thanks so much, guys.

Speaker 1

Sure. So Vimeo customers, yeah, enterprise being the biggest driver recently, and that's the the names you've heard of, Fortune 500 companies that that kind of or or big brands you've heard of, using it very significantly for for internal communications, and we just launched a new internal product called, screen recording, which allows people in an enterprise to record their own screen and then share it with their colleagues. So imagine with with remote work, you're talking about a product and trying to fix a product or where you want something to go. You you the engineering team, for example, is doing that on their own screen and sending that to their colleagues of saying what what they want something to look like or what what they want fixed. So it starts to really go to a much broader part of the organization.

I think our wedge into the organization has been one to many communications. So town halls being a significant example or big meetings being another example or big demonstrations to customers or conferences, things like that. That has been the the wedge in, and that seems to be very sticky because people are now recording those, events and ship and storing them, archiving, sharing them and creating a corporate library and then embedding those videos across their properties. That that so far seems to be very sticky among the the larger enterprises. But again, Columbia University graduation, that's another great example of a one to many broadcast when you don't think of a corporation, but still a town hall.

Concerts, music, we're seeing, I can't think of the name of it, but famous music, venues, things like that where they're using Vimeo as a tool to to, do shows for their audience. And then on the small side, I think it's hugely encouraging where businesses that that obviously have nothing to do with video, nothing to do with performance are using our tools just to make videos to to give their business a business a presence, whether it's on social media, whether it's on their own website, whether it's embedded video player, but they're using those those videos to communicate a sale, a special, whatever it might be that's relevant for your their business. It's just more natural now, and I think will be increasingly so, to tell that story through video than it will be through a billboard or through a static text or through through static images. And we really are, I think I mentioned this earlier, but we're seeing those demand curves across all of those products and all of those customers grow enterprise being by far the base. That's the did that answer your question, Eric, on the Vimeo customers?

Is that what you were looking for? Oh, we we knocked them off of, communication.

Speaker 8

That was great. Thank you, guys. Yeah. And then just care would be the second one. Thanks so much.

Sorry. Yeah.

Speaker 1

So on care supply and demand, that that definitely took a hit on both sides, with the pandemic for obvious reasons. Demand, people weren't going out on on Saturday nights, and they weren't, leaving their kids, and they weren't letting people into their homes. So you can imagine that, childcare took a hit. That is changing now. That's reversed.

So people, I think, net growing subscribers again right now. First quarter

Speaker 0

of sequential net adds since the pandemic and double digit growth

Speaker 1

overall. So that's very encouraging. I think that that's another area actually where the enterprise is doing very well, positively surprising us. I think that what we're seeing is enterprises start to feel a responsibility to help their employees with childcare, and senior care. It's now that people are home, more often or children are home more often that's becoming something where it's in the enterprise's interest.

Before it was a, it was focused on making sure that everyone in the household was able to keep working and that one person wasn't had had to be responsible to stay home with children. And that was a driver of that historically. Now it's because kids are at home and because people are stuck at home, it's relevant to all the workforce. And that's, I think, a really nice tailwind for care generally. The senior care side also, think, has a really nice tailwind in the sense that just the way that, hey, people are aging, people are preferring, of course, to age in place.

And when you see what's happening, of course, with this pandemic, the idea of putting somebody in a very what's turned out to be very dangerous situations, getting people care in their home, senior care in their home, think is a very nice long term tailwind there. So we like the supply and the demand dynamics long term. Short term, I think we're I definitely can't say that we're out of the woods, but we've definitely turned a corner on the things that would be holding back supply and demand as a result of the pandemic.

Speaker 8

Great. Thank you.

Speaker 2

For our next question, can we go to Nicholas Jones from Citi?

Speaker 9

Great. Thanks for taking the question. Maybe just a a follow-up on Vimeo. Can you talk about, you know, the integrations with GoDaddy, Shopify? You know, what what other opportunities are to make integrations, and and what kind of early engagement are you seeing from subs on those platforms with Vimeo?

Thanks.

Speaker 1

Sure. I think those integrations are going to be very important certainly for us. And I think for the platforms that we're working with too, the the you you should think of all the all the sort of competitors analogies to GoDaddy in terms of site builders. I think those are all relevant. I think any platform that's working with lots of small businesses to enable them to sell their their products.

That I travel, for example, is is a vertical we're now going after. If you've searched on any of these platforms to to look for accommodations, frequently, you'll find video there. Frequently, the owner of that, accommodation is not well versed in video. And so you can use our tools to, for example, to make video on their platform. Website builders, of course, I referenced shopping platforms.

I referenced all those things are when you think of their when you think of the the people who are paying those platforms for their services, do they want video on that platform to supplement the the way that they're selling their services? And I think the answer, the vast majority of the time is going to be yes. And hopefully, could be the platform that doesn't. I think we built a product that services that very well, both services the platform very well and services the end user very well. And we view that as a big, big potential growth area.

In terms of engagement so far, there were some great stats on JabbaBio, which I now can't recall or I don't know if we're supposed to disclose, but I think getting getting really nice, engagement with those platforms so far. I think GoDaddy, I don't even know if it's launched yet, but I think it's very early there. I don't know if you know what Yeah.

Speaker 0

We announced it last week. Okay.

Speaker 9

Great. Our

Speaker 2

next question, can we go to Youssef Squali at Truist? Alright. Thank you very much, guys. A few very quick ones. One, can you just remind us what the zero match rate was this quarter?

I think last quarter was around 40%. Second, on the fixed price,

Speaker 10

how do you how good

Speaker 2

is the ALDO to try to price a job Sight and scene. What have you seen so far in terms of just the accuracy of of pricing? And on that, I think you guys talked about a $180,000,000 in revs. Just wanna make sure I understand. Is that for 2020?

Or is that contribution that you expect for 2021?

Speaker 0

Yes. I'll knock off the last one. It's 150,000,000 of revenues for the entirety our fixed price entirety of our fixed price business, and that's 2020.

Speaker 1

2020. Yes.

Speaker 0

And then Brandon, you do the middle question. The zero metric was about 50%. Just divide in our disclosure, monetized transactions divided by service requests, and that's the quick math falls out of that. It's still laboring at around 50%, which as we talked about earlier, is a terrific opportunity. If we just get back to our 40%, that's 10% increase on 9,800,000 SRs, that's 980,000 SRs, which we monetize SRs, as you know, at $60 a pop.

So that's north of $50,000,000 of very high margin quarterly revenue. That's our opportunity. That's the unlock, Brandon and Joey spoke about earlier. It'll take a couple of quarters, obviously, to flow through, but that's why we're so bullish on it. Brandon, sorry.

Speaker 4

Yes. No, in terms of the accuracy of pricing on fixed price, the way I would think about that, first of all, in terms of the performance of fixed price this year, it's been margins on those transactions have been a little better, than we anticipated. So we've been we've been pleased with how that played out. I think when you think about, though, pricing accuracy, it's a question of how can you price, as optimally as possible, you know, given the market for that particular job and given the cost that it ultimately, will require for us to to fulfill on it. And, right now, I think there's lots of room for improvement to get more sophisticated.

Know, there's hundreds of these jobs. Right? So there's well, over 200 individual job types at this point. And it's really it's really a process of going job by job and understanding what inputs are needed to price as optimally as possible. And, and then also understanding the local market dynamics in terms of what the cost of fulfillment ultimately will be.

And then with those two sets of inputs, you know, having the the the algorithms, if you will, to, you know, to calculate the right price at the right time. What you really get from that, is is increased consumer demand and and increased consumer engagement. Right now, just to be to be frank, you know, we are growing fast, and we are, not constrained on the consumer demand side. We are, really getting as many transactions as we can keep up with. And so and so the benefit of pricing more optimally or pricing, more accurately in a market and driving even more consumer demand is really not at the top of our list.

We do want to refine the way we price these jobs because ultimately, maximizing total transactions and maximizing as many you know, getting as many customers and consumers engaged with this as possible will come down to having really competitive pricing for every job in every market. I spent some time looking at at this this weekend actually, and and some of the jobs I think we're doing a a good job pricing. And some of them we haven't gotten to yet, and the pricing is pretty rough, and it's largely a sort of an hourly based rate. I expect that to be something that we iterate on and and, make improvements on certainly over the course of the next year and perhaps the next two years, just given the the the breadth of offerings that we have and the number of markets that we, you know, that we provide them in.

Speaker 1

Alright. We got only time for a few more. So

Speaker 2

Yeah. Our next question, let's go to Dan Salmon at BMO.

Speaker 1

Is Dan frozen?

Speaker 2

Alright. Well, Dan is figuring that out. Let's go to Justin Patterson at KeyBanc.

Speaker 9

Great. Thank you. On Vimeo, could you frame how we should think about the pace of sales and marketing investments given the success you're seeing in the enterprise, the return in the self serve channel and what sounds like a TAM that's expanded? And then quickly on Dotdash, you mentioned looking to add more brands to the portfolio. Should we think of that as more within the existing verticals or looking to enter new categories?

Thanks so much.

Speaker 1

Vimeo investment, I think it's really across everything, and I I think we're gonna try and accelerate. So let me elaborate from everything. Product and r and d, we're hiring people as best as we can in product and r and d. I think there's we we have a very exciting list of things, products to develop. You know, I I just mentioned screen record, which came out in the last few weeks, but we've got a really long list of things that we think are going to work for the enterprises that we've already entered, let alone new enterprise.

So definitely R and D. Sales, yes, We think we've got the the returns. We know we've got the returns on incremental salespeople, and we know we're not in in a bunch of markets where there are are big bases of customers like APAC and Europe, and we're adding those sales people now. Think we just did added a couple in APAC and one in Europe, but we're going as fast as we can there too. And in marketing, when you have a five to one return, you want to keep pushing that.

We've been growing our marketing spend. Can't really grow it immediately to infinity. It just doesn't work that way. We always ask that question and we always try and push to that end, but it doesn't work that way because you got to find the new marketing channels and test the new marketing channels and you end up burning a lot of money if you push that too fast. But we are going to look to spend more in marketing to drive the self serve.

I think we're seeing really nice conversion right now, which allows us to spend healthily. I don't know if that conversion holds post pandemic. I think that we're not seeing it that conversion weaken yet. In fact, we've seen conversion strengthen. But that will be the question in terms of how much we can push that spend.

Right now, we're pushing it, and we're certainly seeing the retention, the stickiness hold, which is what's most encouraging. In terms of Dotdash acquisitions, I think the bias is definitely just as it is with IC, the bias is definitely in verticals where we already are. We've been able to do those quickly, effectively, and where we're able to, I think, capture a lot more margin in those examples. But we'll definitely look at new verticals too. There's not a particular vertical right now that I'd say it's in our mind that we covet to enter.

But I think the priority will be on on the existing verticals. And and if we find one, we'll we'll act if we find one outside there, we'll act on it. It's just less likely.

Speaker 2

Hey. We'll try Dan Salmon again.

Speaker 10

Thanks, Mike. Good morning, everyone. So, Joey, I wanted to return back to Vimeo as well. You know, the products evolved a lot. You talked about the live streaming, one to many streaming.

You also talked about how YouTube clearly is a competitor. We're all here on Zoom. I guess some of us are still figuring out how to use it properly. But is that a competitor? Is Zoom a competitor?

Just maybe review broadly what your competitive set is these days and how you look at it. And then for you, the letter has an interesting tidbit there about how you're currently getting about $5 of profit for every $1 of marketing. We know the ice way you're gonna lean into that metric until it doesn't make sense anymore. What do you think the runway is on that? Thanks.

Speaker 1

Yeah. On competitors, I think Zoom is is not a competitor today technically, but I do think it's it's probably highly likely that they become one or we become one one one way or the other. There's a lot of differences right now. We're we're we're Zoom is a fantastic product, and we're using Zoom right now, and we're happy to be using Zoom right now. I mean, there's it's just amazing what they've built and how well they've done it and how much we in in our organization and most organizations I know are relying on it.

It it's it's fantastic. And the reason we're using it is they've got this this, interactive communication video thing nailed. And to do that, you make compromises on other things, but they've just done it perfectly. And, I think they're gonna continue to get better at that, and I think that they're that that will, hopefully be able to continue to use them for events like this. We're also actually using Vimeo right now because we're gonna record this event.

We're going to put this event up on our website, and we're gonna, use an embedded video player to do that. And by the way, we can also add a bunch of graphics if we want. For those who didn't follow Mark's instructions on on the logos, we can maybe add those back in or other things like that to to make the video and and finish it. And that's just a different product and a different skill set. Not to say that they can't do this.

It's just something they're not doing today. And so so so we this event and and this company is a perfect example is using both and using both in a very complementary way very successfully. The the other thing is is is video quality. So we're able to do different things on video quality because we're not doing the two way and and or multi way communication there. And so we're able to broadcast video at a a much higher quality level, which is something that that things like musicians and other presentations are going to really do really appreciate, and has always been a differentiator for for Vimeo.

So I think that the the the best way to think about it is is Zoom today, and obviously, of these things can change on our side or on their side. But Zoom is is for that more ephemeral communication, and they've just they're they're a 10 out of 10 on that. And and Vimeo is more for that permanent communication. And and that's where we're really focused on all the the things pertinent to that, like graphics and switching scenes and and what you're able to do with the video after it's done, and those things are really important. Was is there another question?

Speaker 10

Find on the marketing spend.

Speaker 1

Oh, right. On the marketing spend. Yeah. You you're right. We're going to try and push that.

I don't know what the limits are. I I was saying earlier to Justin. The question is how how the the things that feed into that change. I feel very good about LTVs and retention long term and those things holding. Conversion is doing very well right now.

I don't know whether that holds or not. Meaning, think that the compelling Vimeo story is as compelling as it could be today given the broader environment. I think those dynamics should stick for a long time, but I wouldn't swear that conversion will hold where it is right now as we push the marketing spend. And then it's channels of where you can spend. And I think we're not spending nearly, either geographically on a map or nearly, geographically on platforms, at levels that we'd imagine we could spend.

In aggregate, when we look at the spend, it's a pretty small number from our perspective relative to the market size and relative to scale we've seen. We've been able to spend in other areas with with similar market sizes. So hopefully, there's there's still quite a bit left in there.

Speaker 2

So let's do one one more because we're we're at our time. Michael Ng from Goldman.

Speaker 9

Great. Thanks for squeezing me in. I just had a follow-up on the service professional constraints on ANGI. Given that one of the challenges you guys cited was there being actually too much demand for service providers outside of ANGI, could we perhaps unusually see improved revenue trends at ANGI if industry home service demand begins to wane and normalize? And how would you characterize the optimal home services demand environment for ANGI?

Speaker 4

Yes. That's a great question. I mean, obviously, any environment without a pandemic and without the associated challenges that come with it would be much better for us. There there are really two there are really two issues. One is the just sort of huge surge in consumer demand.

Obviously, as that moderates, these companies will have more appetite for, paying to meet new customers, to put it simply. And so, you know, it's a question of when that moderation happens. And, you know, from our perspective, I think I think when people can get out of their house and and resume normal lives, I think we would expect that, we would expect to see that moderation occur. But there's another side of it too, which is just the the operations of these companies, are are impaired to a degree. And what that means is they they are having challenges with staffing.

They're having challenges with hiring. They're having challenges with supply chain around materials and parts. It's taken them longer to do a job. So I think if you talk to a lot of the companies in this industry, even though they're busy, they're not necessarily killing it. This is a tough environment, to operate.

And so that too was obviously driven by the pandemic, and we would expect that aspect of it, to moderate as well. I also think, you know, even in the midst of the pandemic, these companies, they kind of got caught on their back heels here with just something that was completely unexpected in terms of the surge in demand. Hopefully, we go into the the next year and the busy season, we'll see these companies, staff up and and react to the market opportunity. You know, these are these are, you know, profit motive driven companies, and they'll they will scale, where the opportunity allows them to, and they'll have more time to do that. So I think the answer to your question is absolutely.

You know, we clearly saw our we've seen our customers pull back their spend. They haven't left our platform, for the most part. They're still here. These are longer term customers, bigger spenders, more successful companies. They've pulled back.

We expect them to bring that spend back to the marketplace. It's only a question of when. And I think our best guess right now is to think about that as being associated with normalization of these sort of pandemic effects.

Speaker 1

Thank you all. This was, great. Sorry we kept you overtime. Hopefully, next time we're together, we'll know who the president is, and things will be a little brighter.

Speaker 0

Thank you. Happy Friday, all.