Good morning, everyone. Glenn Schiffman here and welcome to the ANGI Homeservices second quarter earnings call. Joining me today is Joey Levin, Chairman of ANGI Homeservices and CEO of IAC; and Brandon Ridenour, CEO of ANGI Homeservices. Joey and I will also address any questions you may have on IAC's second quarter results and its investment in MGM. Similar to last quarter, 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 turn the call over to Joey shortly to make a few brief introductory remarks, and then we will open it up to Q&A. Before we get to that, I'd like to remind you that during this call, we may discuss our outlook and future performance as well as the prospects for IAC's investment in MGM. 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's, ANGI Homeservices and MGM's second 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 as EBITDA for simplicity during the call. I'll also refer you to our press releases, the IAC shareholder letter and again, to the Investor Relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. Joey, let's jump right into it.

Thanks, Glenn. The big news this quarter, on top of what I think is a very strong quarter for IAC generally, is the MGM investment. As you'd imagine, we've received a lot of questions and curiosity around that. The main point I'd like to emphasize is that while the form of this investment is a bit different than what we've done historically—in the sense that it's a public security and a minority investment—the concept is entirely consistent with what we do and what we've always done, which is to be opportunistic and seize opportunities when we see them. That means looking for large markets. We have that in gaming, for sure, which is a $450 billion global industry, with maybe a third of that in the U.S., and still less than 10% penetrated online, which serves as a good segue into the next topic—the offline-to-online transition and the natural tailwinds that come with it. That 10% penetration is definitely going to grow over time. While we might pick the wrong horse or the execution may not be perfect, it's undeniable that that percentage will increase, and we can benefit from those natural tailwinds. The dynamic of scale is also significant here. It's not a typical marketplace business, but rather a business where the customer experience improves, both online and offline, as more customers get involved, enhancing the experience for individual customers. Lastly, something that's always important to us is great value. At this time, we believe there is a temporary dislocation in the market. We have no idea when the world will return to normal, but we believe that it will eventually. When it does, this business is incredibly well-positioned to benefit from it, and we see a value opportunity right now. The key question is whether they have enough capital to navigate from now to then, and we're highly confident that they do. Considering all of this, the combination of offline-to-online dynamics, their unique competitive advantages, and established value leads us to see this as a significant opportunity for IAC, consistent with past opportunities we've capitalized on. We also began a monthly metrics experiment where we are publishing data monthly; we have figures out through July. This is important for understanding the business flow without relying on proxies. I would, however, caution everyone that we don’t manage the business for a month, nor a quarter, or a year. Months can be volatile, and while people will trade based on what they choose, we are not overly concerned with any specific month’s numbers. With that, I will turn it to questions. Mark Schneider has also joined us. You can’t see him on the camera here, but Mark Schneider, our Head of Investor Relations, is over six feet away from us and working the keyboard.

Thanks, Joey. We're going to start with the first question from Ross Sandler at Barclays.

Thanks for doing the call this way. I really appreciate it. So maybe we can start with MGM. Knowing you guys, you probably looked at the digital gaming space for a number of years, and there have been some interesting transactions. So the question is, what drew you specifically to MGM? Was it the licenses, their loyalty program, or something else? And, given their partnership with GVC, what does IAC bring to the table that they maybe don’t already have? Lastly, Glenn, what's the cost basis on the investment?

Yes, Ross, it’s a little bit of all of that and more. I’ll probably answer that in reverse order. What do we bring to the table that they don’t already have? The answer is, we don’t know. When we entered travel, we didn’t bring anything to the table in travel. Similarly, when we came into home services and dating, we didn’t bring anything then either. What we looked at is what we believe the future looks like. As I mentioned earlier, I’m confident that the 10% penetration will be significantly higher in the coming decade. When we get involved, we learn more and find out where we can help. We have certain dynamics we are familiar with, and we hope to share them with MGM. Things we’ve learned about conversion channels, successful and unsuccessful metrics in various channels. MGM’s partnership with GVC is significant; GVC is a top player operating in over 20 countries and has built the technology and scaled businesses effectively. In conjunction with MGM's assets, which we see as incredibly valuable, we believe this is a winning combination. Interestingly, we entered this category several years ago with a brand called Draft Street, but the outcome wasn’t favorable. We have been following the gaming category closely and waited for the right opportunity. MGM’s unique positioning integrates offline and online experiences. Their customer interactions enhance the digital experience, allowing them to generate a digital footprint at a time that benefits them financially—this is something we consider a tremendous advantage. The gamers of today should find this combined experience compelling. Thus, MGM’s active stance in these areas positions them well, and we are excited about the potential.

And then just some of the housekeeping items. We own 59 million shares. We paid $1.018 billion for that, so our basis is about $17.25 or so. After this investment, we'll have $2.9 billion in cash available. Don't forget to include the 59 million shares in your sum of the parts. From a housekeeping perspective, you saw in our balance sheet that was in marketable securities. In this quarter, going forward, it will transition to long-term investments as we adapt our posture. It will be marked-to-market quarterly, thus reflecting the ebb and flow in the income statement.

This basically means net income will be less relevant moving forward. Not that everyone focuses on that specific metric, but I see it as a relatively less useful data point.

There will be volatility for sure.

Our next question will go to Cory Carpenter at JPMorgan.

Great. Thanks for the question. On ANGI, Brandon, I was hoping you could give us more color on the demand and supply trends we saw in July and how those compare to your expectations. Also, how do those trends inform your thinking for the second half of the year?

Thanks. We finished Q2 strong, particularly in May and June. In July, we continued those trends. Specifically, globally, July's revenue was about flat compared to June and slightly increased in North America, which aligns with our expectations for sequential performance, perhaps even slightly exceeding our internal views. From an operating standpoint, service request volume and consumer demand are elevated compared to the post-COVID trends. We've maintained a rapid pace of new sales originations; the last four months, including July, represent the highest volume in the company’s history. In July, we saw a 53% increase in new service provider sales year-over-year, marking it as a strong continuation from late Q2. Year-over-year comparisons can be tricky due to last year's volatility. In the first half of last year, we experienced unusually wet conditions which affected demand. As we currently see it, consumer demand trends appear robust and are likely to remain steady into the foreseeable future. For us, the challenge is the provider side—which has faced pressures. We conduct a weekly sentiment survey, showing that over two-thirds of service providers are affected by COVID, with about 40% operating at reduced capacity. We monitor this weekly and have seen some incremental improvements throughout June and July, albeit slower than we'd hoped. I initially expected a quick rebound in capacity after lockdowns, but instead, we're experiencing a gradual recovery. Providers report supply chain issues and challenges in hiring. However, I don't believe we need to see an end to COVID-19 for these businesses to operate at full capacity. We expect this to be an incremental process throughout the latter half of the year.

Just to support what Brandon mentioned, our service requests exhibited a 24% growth in July, marking the third highest growth rate since 2018. Just to put it into perspective, last year we grew revenue by 20%, with monthly growth dispersing between 15% to 26%. We need to consider year-over-year comparisons. For context, we had five Mondays last July and only four this month. That said, we expect to continue accelerating growth based on July's trends.

In terms of expectations for Q3, we do anticipate acceleration beyond the 9% growth we experienced in Q2. We expect that as SPs recover, our ability to monetize transactions and add value will increase, especially in light of ongoing sales performance.

Our next question will be from Eric Sheridan at UBS.

Brandon, maybe I'll follow-up on Cory's question and pull the frame out a little bit. When we see the environment you're sitting in right now, how do you think about aligning your strategic priorities with what's in your control versus what's outside of it, addressing both demand and supply?

That's a great question. Our goals and pipeline of initiatives haven't changed since the beginning of the year. While COVID has presented additional supply challenges, our two primary goals remain: first, create a stickier and more durable relationship with homeowners, and second, enhance provider capacity. For key investments, we aim to rapidly grow our sales force in the back half of the year. We initially planned to do this in Q2; however, shifting to a remote workforce required us to adapt and learn new hiring methods. We continue to scale our fixed price model, which is crucial for bringing more capacity to the marketplace. We were delayed in ramping up our provider scaling, but we are aggressively pursuing this now. Additionally, we are testing various new monetization models that could drive engagement significantly in the upcoming months. We have introduced a new payment platform, HomeAdvisor Pay, that is growing rapidly, and we are set to add a consumer financing option soon. We are particularly excited because we believe this has not been available before, giving consumers greater control over financing home projects. We are also focused on increasing engagement with our mobile app, which has crossed over 1 million active users in recent months, growing 85% year-over-year. All these initiatives are aimed at driving deeper engagement, establishing long-lasting relationships with consumers, and improving value propositions.

Eric, another great data point that bodes well for the future is the growth of service requests from new consumers, which increased by 25% this quarter and even accelerated throughout, indicating we are either taking market share or effectively driving offline to online conversions.

From our weekly sentiment survey, surprisingly, about 50% of service providers report lower consumer demand, which contrasts with what we’re observing on our platform. We believe we sit at the intersection of two positive trends: increased focus on home improvements, with consumers disproportionately seeking digital solutions for their needs. This provides a positive structural tailwind.

Our next question will come from Brad Erickson at Needham.

Just a couple of follow-ups for Brandon. We've talked about sp constraints before, but I want to dive deeper. I heard that around 50% of service requests went unmonetized this quarter. Is there a concern that if this trend continues, you risk losing customers permanently? Secondly, regarding Google, do you think HomeAdvisor is targeting the same service providers that Google is? Or is there a distinction in the types of providers attracted to HomeAdvisor versus Google?

Yes, both are excellent questions. Just because we don’t monetize a request doesn’t mean we've failed to satisfy a customer. Even unmonetized requests build our database, allowing us to connect consumers with service providers. The demand surge we’re currently observing will positively affect us moving forward, regardless of monetization. Even with our fixed price offering, we ensure customers receive reasonable solutions. It’s essential to clarify that whether we monetize or not, our goal is to enhance the consumer experience. In regard to Google, the products differ significantly. Google is generally reactive, responding to searches for specific providers without the deep targeting we employ. Service providers attracted to Google might prioritize inbound calls over our targeted leads. The competitive landscape does seem distinct in that sense, with limited direct overlap observed.

Our next question will come from John Blackledge at Cowen.

Great, thanks. On Vimeo, the mid-teen ARPU growth was a great outcome, particularly with enterprise ARPU leading at plus 20% year-over-year. Could you discuss enterprise adoption during COVID-19 and demand signals thus far in Q3? Should we expect enterprise ARPU growth levels to sustain into Q3 and towards the year’s end? Also, Glenn, could you share insights regarding Vimeo's gross margins from the quarter?

Enterprise is performing exceptionally well. The product is effective, and timing couldn't be better. Just to use IAC as an example: prior to COVID, I was questioning the expense of town hall software; now, having realized its essentiality, the mindset has shifted. This format of operation is becoming standard, and we will continue to adhere to it. Enterprises find they need a reliable solution, and our product perfectly fits that demand, promoting deeper integration at multiple units. Our sales cycles have shortened meaningfully due to COVID, from about 30 days down to approximately 20 days. Consequently, our spending levels and ARPU remain robust, and we are continually enhancing our features. Thus, I anticipate sustained ARPU growth in the foreseeable future.

Indeed, enterprise was our fastest-growing line of business, seeing over 70% growth this quarter, with bookings in triple digits. One major reason for this remarkable growth is ARPU increases, exemplified by case studies showing significant upticks in revenue from converted enterprise customers.

Our next question comes from Youssef Squali at SunTrust.

Okay, great. Joey, a couple of questions on MGM again. How do you effect change as a minority investor in a public company like MGM? Historically, you’re known for taking full control of businesses for value extraction. How do you achieve that as a minority shareholder? Also, will you need to be licensed by gaming authorities as a minority shareholder?

To address your second question, yes, we will need to go through regulatory processes that vary by state, with specifics around ownership thresholds. While it's burdensome, we expect to navigate this without significant concern. Regarding your first question, our aim as a minority investor is not to impose change but to be helpful. MGM has indicated their intent to invite us to join the board, which we believe will enable us to contribute valuable insights. We plan to share data, learnings, and experiences to help them in any way possible. We maintain a collaborative approach, offering a wealth of experiences from previous business efforts to assist MGM in reaching its potential.

Our next question will come from Jason Helfstein at Oppenheimer.

Could you elaborate on the Vimeo product pipeline for the second half of the year? Additionally, Joey, regarding acquisition strategy, will investors see a return to your historical approach of finding opportunities to control and improve businesses?

Starting with your second question, yes, we expect our focus to shift back towards acquiring entire businesses and reshaping them, which historically has been our preference over minority investments. While we remain open to opportunities, acquiring entire businesses is where we would like to allocate the bulk of our capital. Regarding Vimeo, there is a robust pipeline where we aim to tailor products for specific verticals like education, fitness, etc., focusing on relevance for these segments. We also recognize the opportunity for new tools in data recording and collaboration within enterprises. With Vimeo producing stronger cash flow, we’re putting more resources into expanding our product pipeline as we strive for continuous improvement and investment.

Our next question will come from Benjamin Black at Evercore.

Could you discuss the marketing environment at ANGI? Is it as favorable as mentioned last month? If you face supply tightness, how willing are you to increase marketing investments in the latter half of the year? Additionally, regarding fixed price services, you're currently at 200 tasks; how high could this number go? Will fixed price contribute to revenue growth at ANGI over the next 12 to 18 months?

Great question. The marketing environment remains favorable, characterized by generally lower rates across channels and heightened consumer intent. We noticed an improved TV environment, with rate reductions of around 20-30% compared to expectations. Initially, we pulled back in Q2 due to market uncertainties. However, we began ramping up marketing efforts in June, primarily on TV, focusing on ROI to justify ad spend. As for fixed price services, we're currently on 200 tasks, covering about 30% of customer requests. We've launched higher-priced categories this year and confirmed consumer willingness to pay for larger projects. We expect fixed price growth to rapidly escalate and become a meaningful contributor to our growth not just in the next 12 to 18 months but over the subsequent five years.

As Brandon stated, our focus on marketing and fixed pricing supports our EBITDA projections for the year, where we do not anticipate margins increasing. Our emphasis will continue to revolve around capturing market share. The potential of our service requests is significant—currently, we have 9.4 million SRs this quarter. Considering a historical average of monetized SRs, even a 10% increase in our monetized transactions could equate to substantial revenue.

Our next question will be from Michael Ng at Goldman Sachs.

I have a couple of questions regarding MGM. First, could you discuss your views on the incrementality of online betting? If it turns out to be cannibalistic, would that be a net positive for MGM? Secondly, do you believe MGM is well-positioned to capture online gaming share relative to its traditional gaming base?

I believe that a significant portion of online betting will be incremental; there’s always a risk of cannibalization. However, I see this as meaningfully incremental. Their ability to capture share is fortified by the integration of offline and online experiences. In this category, customer experience is crucial. MGM's capability to differentiate their offerings excites us, and we hope they can achieve substantial market share.

As a follow-up, could you elaborate on your long-term vision for the MGM stake in the next three to five years? Do you expect to increase your stake, or might there be opportunities with the online betting joint venture?

While I don’t have a definitive answer right now, I can say we intend to remain invested long-term. MGM had previously focused on share repurchases with available capital while pursuing an asset-light strategy, and if that opportunity arises, we hope our stake increases. However, many variables could impact this, and we approach every potential path openly, with no intention of flipping this stake quickly.

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

A quick one on ANGI and then one on Dotdash. Any updates on consumer intent or comfort levels regarding indoor versus outdoor jobs, discretionary versus nondiscretionary work? What have you observed over the last few months? Regarding Dotdash, we noticed some advertisers paused their advertising throughout Q2; what trends are you seeing in terms of a resurgence of brand advertising versus performance?

We observed robust recovery in all categories of work, but outdoor tasks and essential projects have seen the strongest recovery. Larger indoor discretionary projects like bathroom and kitchen remodels have remained relatively flat to slightly positive year-over-year, which is encouraging. Indoor projects, albeit delayed due to close contact, should recover further as consumer comfort grows. In terms of Dotdash, although I can't broadly speak to the overall ad market, Dotdash has exceeded my expectations, generating steady ad revenue and interest from advertisers. While travel advertising is virtually non-existent, other sectors have compensated, and we aren’t facing issues because we don't operate in a controversial news space.

Our next question will come from Ygal Arounian at Wedbush.

I have two questions—one on MGM and M&A and another on ANGI. Historically, after entering markets, you’ve continued to consolidate. With a minority stake in MGM, how does this roadmap apply? Can you still be active and take full stakes elsewhere, or are you tied to MGM’s path? Secondly, regarding ANGI, I'd like to learn more about the Lowe's partnership and how it could drive service provider and service request growth short-term and long-term.

Regarding MGM, we’ll remain active and flexible in the market, eager to assist MGM in being aggressive when opportunities arise. They seem committed to succeeding, which creates ample avenues for growth. Our strategy is adaptable, allowing us to consider various options. As for the Lowe's partnership at ANGI, we’re excited. It’s multifaceted. ANGI experienced 29 million service requests in the last year, which is significant. Partnering with Lowe's creates synergies as they supply building materials. We’re launching fixed price services within Lowe's retail environment and offering memberships to ANGI's services for their customers, creating a loyalty link. This partnership fosters a win-win situation for both Lowe's and providers, enhancing our network. We hope to obtain considerable synergies from this collaboration.

Our last question will come from Dan Salmon at BMO.

Joey and Glenn, we know you'll keep your cash plans confidential. However, would it be fair to say that another significant acquisition is less probable now? Or do you still see a potential for a multibillion acquisition among the options you’re currently evaluating? Brandon, regarding your earlier statements about separating fixed price and traditional service provider teams, could you provide details on that integration process expected to take place in the latter half of the year?

I perceive your question correctly regarding any intentions of mega-acquisitions. There’s nothing of that scale planned currently, nor do I believe this changes likelihood. Our preference has always been towards smaller, tuck-in acquisitions. Presently, we are pursuing smaller targets rather actively. Larger purchases have a higher bar now as many assets have inflated in value recently. We aim for more prudent acquisitions in a favorable market. The ongoing SPAC phenomenon may create more opportunities in our sector, which we find encouraging. It might allow companies that otherwise wouldn’t make it public to emerge, leading to a more extensive range of viable targets for us. We anticipate this will create a better landscape in the medium term. On Brandon’s point about fixed pricing, you’re correct; we maintain separate sales forces for both models. It’s probable we’ll retain this separation due to differing structures. Nonetheless, we aim to integrate offerings such that providers entering our ecosystem can explore both models without barrier. We want to maintain a unified experience for providers once they are engaged in our platform, cultivating diversity in service options they have.

To clarify further, we will likely maintain separate sales forces because the sales approach for fixed price, which focuses on offering services, differs from traditional sales tactics focused on advertising. Our aim is to integrate offerings such that a single provider can engage across our models. Providers should have the ability to access all products available within our platform, which we anticipate implementing towards the end of this year or early next year.

Great, thank you all for joining us and adapting to this new format, which I genuinely appreciate. I hope everyone remains safe and healthy, and we look forward to speaking again soon.

It has been terrific to see you.