Q2 2024 Earnings Summary
- Angi's focus on improving customer experience and increasing efficiency has led to significant profit growth, positioning the company for future revenue growth.
- Improvements in SEO and matching technology are expected to enhance customer acquisition and engagement, further driving growth prospects.
- Potential macroeconomic tailwinds, such as possible interest rate cuts, could boost home buying and home improvement demand, benefiting Angi's business.
- Angi continues to experience significant revenue declines, with Q3 revenue expected to decline about 15%, which is higher than the second quarter's decline, indicating ongoing challenges in reversing the negative revenue trend.
- Angi has lost significant SEO traffic, being on a downward path and losing a significant amount of ground, which may hinder customer acquisition and growth prospects.
- The current macroeconomic environment, including low levels of home turnover, is negatively impacting Angi's business, as fewer home sales lead to fewer high-value home improvement projects, potentially limiting demand for Angi's services.
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Capital Allocation and M&A Strategy
Q: Why not repurchase stock; are M&A talks restricting you?
A: The company is very focused on M&A opportunities and believes there are real opportunities right now. While they have bought back shares historically, they are currently prioritizing M&A to pursue new growth avenues. Their Chairman wants to keep capital available for potential acquisitions, generally in the $300 million to $700 million range, focusing on acquisitions of control or complete acquisitions. Regarding interest in Paramount, they did look at it, but the deal didn't work financially. -
Dotdash Meredith's Revenue Growth and Margins
Q: What's driving DDM's accelerating revenue growth and strong margins?
A: Dotdash Meredith (DDM) is seeing solid traffic growth across its portfolio, with acceleration so far this quarter. Monetization is strong across premium and programmatic advertising. Key categories like health, pharma, retail, and beauty remain strong, with recovery in previously weak categories like food and beverage, home, and technology. These factors led them to guide to 15% or more revenue growth on digital in Q3 and 25% plus EBITDA growth. Incremental margins exceeded expectations due to higher traffic growth and better monetization. -
Angi's Turnaround and Revenue Outlook
Q: What inning are you in for improving Angi, and when will revenue trends turn?
A: They consider themselves in the bottom of the fourth inning in improving Angi. They've focused on getting more jobs done well, enhancing customer experience, and driving repeat usage. Work remains on SEO stabilization and growth, optimizing SEM, and enhancing the matching process. Revenue growth will return when the experience and product reach the desired state, but it won't be immediate. -
Data Licensing Deals and AI Opportunities
Q: How big is the opportunity for data licensing deals like OpenAI?
A: They are in active conversations with multiple players for further licensing deals and expect to have more. There's potential for significant revenue if similar deals are made with other large language models. They believe content is valuable and cannot be taken for free; payment will happen over time. -
Programmatic Ad Rates and D/Cipher Product
Q: How much more growth do you see in DDM's programmatic ad rates?
A: Programmatic ad rates were up 36% in the second quarter, outperforming the broader market, which was up 15% to 20%. While not providing forward guidance, they are confident in continuing to outperform the market due to superior technology and highly performant inventory. The D/Cipher product is in over half of their premium deals and is twice as performant as cookies, offering better ROI and privacy-friendly solutions, which bodes well for future monetization. -
Macroeconomic Impacts on Business Segments
Q: Are you seeing macro softness across your business segments?
A: Currently, they are not seeing macro weakness. They had a solid Prime Day at DDM, advertiser spend and pipeline look good. Demand for travel at Turo remains strong, though there's a mix shift towards cheaper cars. In aggregate, the business feels healthy, but they acknowledge their view may not reflect the entire market. -
Turo IPO Plans and Value Realization
Q: Why not IPO Turo now with strong travel demand?
A: Turo management is focused on going public but is waiting for a favorable market environment. The company's strong financial position means they don't need to accept a wide discount typically required by banks in volatile markets. There are no specific business milestones needed before IPO; timing depends on market conditions. -
Google's Cookie Decision and Impact on DDM
Q: How does Google's delay in deprecating cookies impact DDM?
A: The end state remains the same; the cookied audience continues to shrink, especially after Apple's changes. DDM benefits by offering advertisers access to the non-cookied audience with intent and performance. They can reach valuable audiences, including iOS users, through their content and intent-driven strategies, which is long-term beneficial for DDM. -
Engagement and Personalization at DDM
Q: Is personalization an opportunity to drive engagement on DDM?
A: Yes, using AI and machine learning to drive personalization and higher time spent is a significant opportunity. They are applying AI to suggest next articles and enhance engagement across properties like People Magazine and their recipe sites. They see real potential for increasing engagement using these tools. -
Angi's Consumer Experience and SEO Improvements
Q: What's being done to improve Angi's consumer experience and SEO?
A: They've rebuilt the infrastructure for content and site linking, with encouraging early indicators in SEO. Focus is on a disciplined content program and keeping content fresh. On consumer experience, they're improving matching by refining the Q&A process to better understand jobs and match homeowners with the right pros, leading to higher satisfaction and jobs done well.