Good morning, everyone. Mark Schneider here, and welcome to the IAC and ANGI Inc. third quarter earnings presentation. Joining me today is Joey Levin, CEO of IAC and Chairman of Angi; Oisin Hanrahan, CEO of Angi; and Neil Vogel, CEO of Dotdash. Similar to last quarter, supplemental to our quarterly earnings releases, IAC has 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&A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate or similar statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in IAC and Angi's third quarter press releases and our respective filings with the SEC. We'll also discuss certain non-GAAP measures, which as a reminder, include adjusted EBITDA, which we'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. Now let's just jump right into it. Joey?

Thanks, Mark. Hello, everybody. Thanks again for joining us, as always. Busy, busy quarter for IAC as they usually are. We announced the Meredith deal and it wasn't long since we saw you last. We've been hard at work trying to figure out how to get everything right for a time when we can close that deal, which we're still hoping to do by the end of the year. And all the other businesses are humming along right now. It's Angi — I'm sure we'll talk a lot about it today, but the services business is in a really great place and we're making progress on the rebrand. Care.com is doing really well. We didn't talk about Care yet, but Care is growing really nicely, hitting all-time records, which we're excited about. And our small businesses are doing well. Bluecrew and Vivian are breaking growth records, which is incredibly exciting. And even Daily Beast had a really nice revenue growth quarter. We're all in different locations today so hopefully we get all the logistics right, but we are feeling good about the business and where we're headed. And I know we've got a lot of questions so we brought Oisin, of course, from Angi and Neil, again from Dotdash so we could talk about all the big things going on. And I'm here, of course, to talk about anything IAC. So let's get started on the first question.

Great. Our first question will be from Cory Carpenter at JPMorgan.

I had two on Angi. Maybe first, Oisin, could you just give us an update on the rebrand in Angi services? And then second, either for you or Mark, 3Q for Angi was better than you guided so hoping you could discuss the drivers of the upside there and any changes to your expectation going forward?

Great. Thanks, Cory, so let me back up for a second. We started this journey about nine months ago to really put the homeowner and the pro at the center of everything we're doing at Angi. And overall, we're incredibly happy with how that's going. So you referenced the services business. We've obviously crammed a lot of change into this first year. I think last quarter was no different. The services business was up 160% year-over-year, about half of that organic, half of it from our Roofing acquisition. It still continues to perform in line with expectations. We actually pulled out the plan that we made in Q4 last year for where we wanted to take the services business in our upside case, our mid case. And we're in line with the upside case of where we wanted the services to be. So we're really happy with the things we're proving out there. There are three things that we always talked about. The first was, are we going to get anyone to buy this at scale and what does that look like? The second is, can we fulfill at scale? And the third is, can we drive margin? And we've obviously proven that we can get people at scale to buy it. So the conversion rates on site are in a really strong spot. We've proven that we can get contribution margin from it, so the contribution margin last quarter was better than expected, frankly. And the fulfillment, it's good. It needs some work. So in certain categories, it's great. In certain categories, it needs work, and we're going to take some of that margin and reinvest it back in, reinvest it back into the business to make sure that we continue to drive an amazing experience for the homeowner, an amazing experience for the pro when they use Angi Services. So overall, we're super happy with how Angi Services is going. I think we're still just getting started, frankly. I mean, obviously, it's a sizable part of the business. If you flash forward, you think about the major categories within Angi Services, I said this before. There's probably a dozen categories or so that we could build billion dollar-plus revenue businesses just within that category alone. The TAM is enormous. We're no longer just going after the advertising spend for those small businesses. It is the full TAM of everything a homeowner spends on their home. So we're really, really excited about how that's going and expect to continue to see things progress well there as we continue to build out the team. In terms of the rebrand, we published in the letter that we are generating more revenue from the Angi brand than ever before and more than the HomeAdvisor brand. If you flash back a year ago, with the majority of our revenue coming from the HomeAdvisor brand, we've worked tirelessly and the team has done an amazing job to rapidly transition our homeowners to that Angi brand. We now have 50-plus percent aided awareness for the new Angi brand, which for a new brand less than a year old is phenomenal, especially given the volume and media dollars we've spent on it. We've continued to work to drive up that brand to make sure that the experience is great, to make sure that we're driving it to a single mobile experience for that brand. And I think there's still some work left to be done. We obviously still have the HomeAdvisor brand that is helping us consume SEO real estate and consume mindshare for people who don't yet know Angi that we're working to transition. And we still have some other legacy bits and pieces. So we've got the Handy brand in retail, and we've got some other stuff going on that we've got to gradually work over to this primary brand. Overall, we're turning the corner on the brand. I think it is a milestone that the majority of the revenue now does come from the Angi brand. And I think we'll continue to see the impact of the rebrand into '22. But overall, we're starting to feel more and more positive about where we've taken that brand and where we can go with it. In terms of the guidance on where we've been and where we're going, yes, we've put the stake in the ground that it's most important to us to do the right thing for the homeowner and the right thing for the pro and not to focus on short-term EBITDA. We've guided to revenue growth in and around where we've been in this 15% to 20% range, including the acquisition. And we've said we'd take it to EBITDA flat, EBITDA neutral. Some quarters might do a little better, some quarters might do a little worse. But overall, that's still the outlook. Our long-term position is we obviously want to take as much market share as possible and get this to over 20% growth rate, knowing we've got $0.5 trillion TAM out there.

Yes. Just to add on a little bit to what Oisin said. Remember that we said last quarter that you should expect, for the foreseeable future, our organic growth number to be in that mid single-digit range, which was roughly 7%, give or take, and then layer on the Roofing acquisition. So I think you've seen, since then, July to October, that range between 15% to 21%, so consistent with what Oisin just said. That's what we expect for the foreseeable future as we navigate this brand, the rebranding, as we continue to navigate out of this pandemic. And then on the bottom line, yes, in and around breakeven, Q3 came in a little bit better but we're going to continue to push, and as Oisin said, push that investment back into the experience to make that product as the best as possible. So our next question will be from Ross Sandler at Barclays.

A question for Neil or Joey on Meredith. So guys, how should we think about the cadence near term in 2022, given the digital advertising and you guys have some challenging comps in the first half? Second is, what are the lowest-hanging fruit opportunities around traffic or monetization? You talked a lot about this on the last call, but maybe what are we going to go to first? And are these more iterations or are they potentially pretty quick needle-moving revenue opportunities? And then lastly, the Print business, what's the overall strategy for Meredith's Print business?

Sure. Joey, I can take it first on the 2022 margin and the lowest-hanging fruit, that's all sort of a related question. And I know as Joey said and we said, we have a lot of work to do and we think we can do most of it in 2022. So that's going to make 2022 financials maybe a little bit tricky to read. As you know, with all the other things we've bought, we've tended to take a small step back before we take some big steps forward. And obviously, we're buying something very big here so there's going to be some steps back. We do that to address the low-hanging fruit. I think in the long term, we would expect the margin of the whole business to look like our margins have looked historically. The low-hanging fruit question is, I think one of the things that has us most excited is the low-hanging fruit or the things we know how to do very much align with what we've historically been good at. We're going to make their sites much faster. We understand a formula for content improvement in the way that we've done things, changing how they use ads and the mix of ads they use and some of the ad load stuff. That's all very easy for us. So there's going to be an initial phase of changes that we can do very quickly that you qualify as low-hanging fruit that I do think are going to make a really big impact. But then as we get more into it through 2022 and then ongoing, this model is the same as our model. It's just work, it's doing the right things. It's making the very best content for all the things they cover and essentially taking their brands, which will be our brands, which we think are some of the best brands in publishing and putting them in their proper place on the Internet. I've said this before: there's no reason why The Spruce is twice the size of Better Homes and Gardens online. That doesn't make any sense. So the opportunity to get Better Homes and Gardens to its rightful place online in some combination of this low-hanging fruit and the really hard work we have to do. And that's going to start sort of immediately at closing. It's going to take us through 2022. But heading into 2023, we're very confident with the numbers we've put forth. We're confident where we're going. Print, again, I think we've been fairly straightforward with what we said we're going to do with print. Print historically, they've been focused on a very traditional rate-based model, which is print a lot of magazines and sell ads against large audiences. The best days of that business have probably passed. We're not the guys that are going to change the secular advertising decline on print. However, their magazines are beloved and the editorial is amazing. So what we're going to do is we're going to work on the magazines and make them as good as they can be. But we're going to focus the economic model on being much more of a consumer model, which means it's some combination of subscriptions and advertising leaning much more on subscriptions and other things like newsstand, a little less on advertising, which means circulation is going to go down in a lot of these titles. And that's all part of the evolution of media and how to make these things healthy in the long term for Food & Wine and for Southern Living and for People and for all these properties. Print is going to be a long-term part of this mix. We just want to do it in a way that's right for 2021.

The only thing I'll add to that, I agree with everything Neil said. The only thing I'll add to that is from IAC's perspective, what we've said to Neil and the team is that 2022 is a rebuilding year and should be a rebuilding year, which means get everything done in 2022. So as it relates to financials that year, I'm not particularly focused on what that looks like and am instead looking towards 2023 because we don't want to push big decisions out. We don't want to push big changes or efforts out. We want to get everything done relatively quickly and reflect all those transitional costs in 2022.

Great. Our next question will be from John Blackledge at Cowen.

Maybe a couple of questions for Joey. Joey, what does IAC look like kind of post the Meredith deal? How should we think about capital allocation and maybe an update on the CFO search?

Sure. So I think probably the best way to think about pro forma cash is somewhere in the neighborhood of $1.5 billion. We have about $3 billion of cash right now, and we'll — we've said we're going to raise $1.6 billion of debt for the Meredith transaction. And then there's probably another, realistically, a couple of hundred million of costs that all in, once you get through everything, all the costs related to clean up on Meredith that will come through over the course of the year. We also have a — we've talked about this a little bit. We have a warrant with respect to Turo that is another potential use of cash, which we would expect to exercise at some point. And so with that all in, we think about right in the neighborhood of $1.5 billion of sort of totally free cash to spend. And remember, there's no debt at the parent level so that we also have greater spending capacity than just $1.5 billion. And there's a lot of currencies that we can invest in or that we can issue or go any direction with. We've got the IAC currency. Of course, there's the Angi currency. There's MGM, there's, maybe at some point, Turo. And so all of these things are areas where we can think about cash going in one direction or the other, and that provides us a significant amount of flexibility. The priorities aren't going to be the same they've always been, meaning, number one is investing into our existing businesses that can look like what we're doing with Angi right now, where we're reinvesting most of the P&L. That could look like reinvesting in our existing businesses through share repurchases. And that could also — and I think that probably a significant portion of our time right now is spent on looking at new things. We see a lot of new areas that are fun, small scale. We're building businesses with NewCo. We've built a few businesses already, and we've got a great list of businesses that we're trying to build with NewCo. And again, we're always looking for new things. And so that's going to be a factor for our cash, too. Second question was CFO search. The good news on the CFO search is twofold. One is we're seeing phenomenal candidates. I've met with another half dozen this week and a lot of interest in the role. And the other good news is we have the luxury of being able to take our time to make sure we get the right fit. You all have met Mr. Schneider who's doing a phenomenal job in FG&A and Investor Relations. We have Mike Thormann, who is doing an exceptional job and has been with us for a very long time as a controller. Nick our Treasurer and the list goes on. We have a phenomenal finance staff. I'm not worried about where we are. It's not to say we don't need a CFO and want the CFO, want to get one quickly. But we have an exceptional finance staff that keeps the trains running very well with high confidence for all of us internally. And we're going to make sure we find the right person for the role and take our time doing it.

Our next question will be from Brent Thill at Jefferies.

Dotdash has been decelerating on a tough comp, and the October growth rate was also a deceleration on an easing comp. Just curious if your confidence still on the organic 20% sustainable growth. And any commentary you can provide on the tailwinds they're experiencing from an IDFA front?

Sure, I'll take that. The first thing is that IDFA, there's no tailwind. One of the things we talk about a lot in our business is we don't need personally identifiable information to do what we do. Again, if someone is coming looking for diabetes information, we know pretty much what we need to know about them. If they're trying to figure out what color to paint their children's room, we know everything we need to know about them without knowing any of that. So none of the changes have provided a headwind. I think if there is a headwind, it is, as you said, it's a hard comp. This time last year, people were not shopping in stores at all. It was all e-commerce. I think at this time last year, there weren't any supply chain issues. Both of those things are fairly big headwinds. I feel good about the 20% long-term target. I think we had an exceptionally good time period last year. I think things are just, I guess, evening out a little bit. But I think in the long term, 20% is something that we're pretty comfortable with.

Yes. Just to add on a little to what Neil said. Remember that the comp last year, we grew 33% in Q4, which is a high point of the year. So it is a tougher comp and it's something that we've been discussing throughout the year that the comps would get tougher. On a two-year stack, that growth in October would have been closer to 40% relative to where we came in, so still a really healthy number. And then I would just also highlight the macro environment. You saw some of our other businesses report, Amazon, their U.S. commerce business only up 3%, so that just illustrates what Neil was saying about some of the headwinds up against our performance marketing business, but still up over — in and around 10% the last couple of months.

And just a quick follow-up for Joey on search. It's doing really well. Can you walk through what you're seeing on that side?

Yes. The search business now is primarily performance marketing in the sense that we go out and acquire users and we monetize them when they get to our site. There's two components to that. There's our efficiency in acquiring users where we had a technology upgrade that got us better at the acquisition. And then on the monetization side, that's been good, pretty steady. We found as a result of some of the work we've been doing on some new channels for marketing where we go out and find users with a new ad unit significantly. Historically, we've generally acquired users from search into a search experience. Now we've opened up the ability to acquire users from display advertising, and so that opens up inventory on a lot of publishers where we now can market there and drive back to the site for monetization. That effort really started at zero at the beginning of this year and is going very, very well, and it's something that we'll continue to lean into and grow. It doesn't change my overall view on the segment, which is it's a segment that has some ups and downs, but for us, has been a reliable cash flow generator and we think can continue to be a reliable cash flow generator.

And Brent, just to talk about the numbers a little bit to help you understand the trajectory there. So growth for total search was 57% in Q3, accelerating throughout the quarter with 78% in October. We do expect that to moderate going forward. The comps last year, again Q3 2020, Ask Media, which grew 88% in Q3 and over 100% the last few months, was down 7%. So it was an easier comp versus the 40% growth that we saw in Q4 2020. So we do expect that to moderate somewhat but still healthy based on all the things we're doing and what Joey went into. The other piece of search is desktop. And as you know there, the biggest piece of that is our B2C desktop applications business, which we've effectively stopped marketing earlier this year. So you have the dynamic of the tail of that revenue continuing but that will continue to erode over time but no marketing really against that. So that is why you're seeing profits at search jump the last couple of quarters. We do expect continued healthy profits from search, given what's going on at Ask but certainly not at the levels we've seen in Q3 long term. So our next question, we will go to Brian Fitzgerald at Wells Fargo.

On Meredith, you've talked about the site speed, the brand search, some of the complementarity around monetization. Wanted to ask about audience composition. Do you think the audience is a little older, more female? And wanted to ask if it helps you tap into wallet share in categories like CPG.

I think the answer to all of that is yes. One of the things we're really excited about, and you can do this in any of the verticals in which Meredith competes and we compete also, and just take food, for instance. You can take the food brands that are the Meredith food brands. Food & Wine is a high-end brand and a piece of the market that we don't occupy. AllRecipes is user-generated content and a piece of the market we don't occupy. You can go down the line and compare it to where The Spruce sits which is sort of like your local supermarket or where Serious Eats sits, which is like Brooklyn hipster food. Almost to every brand they have sits in a place in the market where we don't sit. So it is very, very complementary. You can take that and you can start to look at some of the sales clients and a lot of this, we knew beforehand. The people we sell to, there is surprisingly little overlap; there is a lot less overlap than one would expect. We do very well in endemic pharma and endemic finance and we do okay in lifestyle. They do tremendously well in lifestyle and don't really play as much in some of the areas in which we play. So it's all very complementary: complementary audiences, complementary advertising partners, even the way we do commerce is different. They're very focused on commerce that's deals, and we're very focused on commerce that's product review-based, which we're going to make the whole company focused on. The more we learned and the reasons we got more excited is exactly — it's almost like everything is complementary. That's what we're really, really excited about. Even taking a step further, we're very good at making money in transactions and they're very good at making money selling ads. And that's something that Joey highlighted in the letter as being very complementary. It's a really nice fit. It almost fits together like a perfect puzzle piece.

Our next question will be from Jason Helfstein at Oppenheimer.

Want to ask a bit more about Angi Total Roofing. First, can you — what did that grow kind of maybe just pro forma so how much did your top funnel benefit that asset? And to the extent that that was successful, is this a playbook should you buy three or four more of these in other verticals? And then just another question on Angi. You said transaction services perpetual was up 7%, yet the business kind of growing pretty minimally. I mean, just is there certain service professionals you're moving in while others may be moving out? So those are two questions.

So just in terms of how we're feeling about Roofing overall, we're incredibly happy with how Roofing is going. The early read is that it's doing exactly what we wanted it to do. When you change ownership you want to make sure that everything is doing what you thought it was going to do. So that's happening. The two dimensions in which we're expanding that business: one is geographically. We're in three new markets. In Q3, we'll be going into two more new markets in Q4. And overall, we're driving the majority of the top of funnel in those new markets from Angi. So Angi is the primary source of leads in those three new markets, Q3, two new markets Q4. And overall, we're seeing comparable conversion rates to what they were seeing in the existing markets. The early read is that it is going in the right direction. So we're very, very happy with the team and very happy with our performance in the existing markets. There's no reason at this point to believe we won't be able to expand that out into many more markets next year. I think there's a lot we can do with that. By getting deeper into that funnel, it exposes us to more players in the supply chain: the manufacturer, the distributor, financing partner, gives us a lot more exposure to the different parts of the value chain that go into Roofing. We haven't even started to really play there yet. But I think you can expect, as we scale that business out, we are going to wait for the first three markets we've expanded into to mature a little bit, hit some critical mass. And then we will expand that number of markets again next year, assuming everything continues to go on track with Roofing. The follow-up on that — are we going to do the same thing in other categories? As Joey pointed out, this is a material change for the business but a relatively small financial transaction for us to buy that business. We are actively exploring the same thing in other categories. I think I've referenced before some of those categories that we think could be billion-dollar stand-alone categories: things like fencing, driveways, exterior painting, interior painting to a degree. And we are actively looking at how we might repeat that again while we're developing confidence that this playbook is the right one for us. Our early read tells us that, yes, we're going in the right direction with it. If you zoom all the way out on this, this is effectively the playbook that we've had with Handy, where Handy was small in a small number of categories, and we've expanded Handy out now to be Angi Services and the BookNow business in 100-plus categories across the nation. So the early read is very positive and we are likely to continue down that path. In terms of transacting service professionals, we made a commitment nine months ago to put the customer and the pro at the center of everything. That means when we bring on a pro, we want them to be incredibly successful on the platform. So we've done a lot of work to change how the sales team is structured, compensation plan, in terms of verticalizing that sales force and that started to play out. It's starting to play out in the types of service professionals that we're bringing on in terms of how we throttle their spend in the first 60, 90 days up through the first six months, how we expose them to features on the platform, how we gradually increase their exposure. The early read on that data is that by doing that, we're seeing higher levels of retention, higher levels of ongoing engagement from those pros. The ROI for pros is going to be much higher. The things we're trying to get done are for the homeowner; we want to help them get the job in their home done. What we want to do is help the pro grow their business. We're not successful long term unless we truly help that pro by delivering them great ROI. In addition to that, yes, obviously, we're facing supply constraints and that's putting a damper in terms of engagement. There's also stuff going on in the Services business in terms of transacting pros, where we are seeing a concentration, in some cases, in larger pros, which is resulting in fewer pro counts for the volume of service work that we're doing. So the mix shift is changing what it means to have a transacting pro. You can look at the transacting pro count and think, yes, we're driving towards fewer, higher-quality, larger transacting pros who we know are going to be more successful in leads and more successful in services. Ultimately, we want pros that are buying across or transacting across leads, ads and services where it's right for them.

So for our next question, we'll go to Ygal Arounian at Wedbush.

I guess I have a couple of Angi questions, too. So first, there's been a lot of talk especially this quarter around supply chain constraints, especially in Angi's line of business. Is that having an impact on you guys at all, especially on the Angi Services side? Labor costs, taking longer to finish jobs, waiting for construction materials? And then you talked also a bit about expanded contribution margins. Any color you could add around that? Is it coming from certain categories? Where are you along that path? How much more improvement is there left?

Great. So in terms of the supply constraints, we're seeing it in pockets in Angi Services. However, the product-market fit that we have there is so strong that it's growing through the supply constraint. At an approximately 80% organic growth rate in that business, the product-market fit is so strong it's basically growing through the supply constraint. Yes, there's stuff on the margin that's impacting it so some of that business is sold through our retail partners. Some of our retail partners obviously have supply chain constraints. We've all read about the backup on the ports, particularly in California. That's affecting that. Some of our pros are having issues getting materials, that's affecting that. But the product-market fit is very strong on Angi Services. Where we're experiencing more of the supply constraint issue is actually on the lead business, where the lead pros and the ad pros are scaling back in certain cases their willingness to continue to invest in leads and ads when they know they're struggling to get more capacity, when they're struggling to get tools and equipment, and they're not growing their business as fast as we would like. So the two stories are: pros are joining Angi Services at such a fast rate that you don't notice supply constraints, whereas on the ad and lead business, we do see the supply constraints affecting the rate at which people are able to add capacity. In terms of the expanded contribution margin, we're not getting into the specifics of the exact numbers, but the contribution margin year-over-year change was significant. We are seeing it across the board, particularly concentrated in the earlier categories that we launched. So the categories that have been around the longest, the densest markets, the places where we built up to a certain number of jobs per geography, we see expanded margin, expanded take rate, lower ops costs, lower customer service costs, lower refunds, lower claim rates, all contributing to expanded contribution margin. We're also seeing interesting data on the expansion of revenue that we're getting when we expose our customers to Angi Services in the service request path. For every time we expose Angi Services, we're generating about the same amount of lead revenue from a service request as we were a year ago, but we're seeing a significant increase in the amount of revenue we're generating from Angi Services as a result of expanded conversion on site, increased and more accurate average order value due to better pricing, and increased fulfillment rates. The three of those put together are expanding the monetization of a service request whenever we show services on site. All of that is coming through and also contributing to greater density and ultimately more contribution margin.

Our next question, we'll go to Dan Salmon at BMO.

Maybe for Joey first, I just want to go back. You mentioned the broad strokes of the Meredith deal a moment ago. I just want to come back and ask specifically since the announcement, any updates on any details? How is the process going? Specifically, anything that more that you've learned? And then second for Neil, the letter walks through three distinguishing characteristics of Dotdash: curation, trust and privacy. It seems like those things are particularly relevant this quarter. So could you just walk through those three and unpack them a little bit and why those are more important as differentiators?

Sure, I'll let Joey do your first question first, then I'll do the second.

Yes. The second question is much more interesting, but I'll let you two — I'll let you do both of them actually. I mean, just on how we're doing so far, we're really happy about everything we've learned so far. We can only go so far until we have clearance to close, but people are starting to get to know each other. We're doing as much planning and research as we can to have a plan in place for when we close. I do think that we are as tightly planned in this one as we've ever been in any of them. That's a testament to the amount of diligence and work we did in advance of getting to a deal and a testament to the ongoing work people are doing right now so that when we get to closing, we will hit the ground running and we know what needs to happen and who needs to be in what seats, et cetera. I think that's a great head start.

Dan, I could actually do a full hour on these three things so I'll try and keep it short. Curation, trust and privacy — those are the words Joey used and that's pretty much how we look at things. I'll do them in reverse order. The curation part, which Joey talks a lot about — being everything to being something — that's the key to what we do. The old problem that About.com had and even some of the Meredith brands have is you can't be everything to everyone. You need to be experts in things. The way we've built our brands and the way Meredith brands are set up is we can be the experts, the single source of truth, the trusted expert for something that seems unimportant like how to do smoky eyes for a date, but that's very important to the person who wants that answer, versus high-stakes topics like dealing with a health diagnosis or how to roll over a 401(k). Curating and providing the very best answer on the Internet or in whatever medium we're playing, whether it's print or digital, is the fundamental tenet of our business and is the fundamental thing that has gotten us here. Part of curating is doing the other things well, like having a fast site and not too many ads. That ties into truth and trust. We don't do content as a news feed. We're not conspiracy or misinformation. We produce content written by experts with true knowledge of the topics they're talking about. We're doing that, combined with Meredith, at a scale no one's ever done before, which is, A, very good for users because we'll have the resources to make the best stuff, and B, great for advertisers. You will not be able to spend at scale against intent-driven segments where you know what somebody wants at a level that we think can take some money away from platforms that don't have that. The combination of curation, trust and truth gets straight to intent, and that is what we do best. Even in People, People is the de facto go-to source when someone checks whether something is true. The last bit about privacy is something we've been focused on for a very long time. We never thought you could build a long-term business around a cookie that never really made sense to us. What we always knew is that context and content would work. That's what's worked in media for the last 100 years. A food magazine still does great; you know what it is. So we don't need to track people to know what they want. One of the beauties of Meredith is they have lots of login data and first-party data and subscription data that we don't have, but that's data that people want you to have because they're really interested in the topic and, in many cases, are paying for something. Between our ability to target via content and Meredith's ability to target via content and first-party data, we really look at privacy as an advantage. You'll see other media companies with some fairly big headwinds due to changes Apple or others have made; that's not been a factor for us at all.

A couple of comments. One, just looking at the selection of faces on this call, you might need to explain what smoky eyes is, Neil, but that's makeup just so everybody knows.

I'm deep in this, Joey.

The important thing for us is the trends that we're talking about here — those three trends in particular are things we've believed in for several years, and that's informed Dotdash strategy for several years and execution for several years. It's only now a lot of those things are coming to the forefront. For the last while, those things were pretty unpopular, but now they're coming to the forefront. That's another reason we felt confident in leaning in with Meredith and making this bet as we see those trends improving and having a significant runway ahead of them right now.

That's great. We'll make sure we all have our makeup done better for next quarter.

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

I was just wondering if you could talk a little bit about how we should think about gross margins for Angi over the next couple of years, particularly as Services becomes a larger part of the mix? And then could you also talk a little bit more about the progress on Angi ancillary initiatives like Angi Pay and Angi Key?

Sure. In terms of margins, for the core ads and leads business, we've said we ultimately expect that to get towards 35% gross margin. The makeup of Angi Services is going to be different. Within Angi Services, you've got smaller jobs — the $200 to $300 jobs — where we have a significant opportunity to generate margin because the take rate is strong and operations and customer service costs are mostly something we can automate, so we expect to be able to get to good margins on those. Then we've got the larger jobs, the $10,000 jobs where we'll see lower percentage margins. Ultimately though, we put it all together and this isn't about driving towards a particular percentage of margin. This is about margin dollars. We had a business before which was focused on a very small subset of that $0.5 trillion TAM. Now we're focused on the entire thing, and we should be able to generate far larger margin dollars by focusing on that. If we do the right thing for the homeowner and the pro, we think the margin dollars pay off. The moat that we build around the business and the degree to which we will be very differentiated from the competition will allow us to get to strong dollar margins over the long term. We're focused on what the ultimate dollar margins will look like rather than a single percent number. On other initiatives: Angi Key membership, payments, financing — all of them continue to grow nicely. Angi Key membership is $29 a year and gives up to 20% off hundreds of everyday home services. That increases consumer retention rates and increases likelihood to transition to the mobile app. The data we showed before on retention continues to hold and we're pretty happy with where that's tracking. Members who download the mobile app spend a lot more than the average consumer. The rate at which we're adding members continues to hold, so we're happy with growth in membership. Payments were previously rolled out to our lead pros and more recently to our ad pros. The rate at which we're adding consumers and pros to the payment experience continues to grow nicely. We had our first $600,000 day processing volume recently. We're really happy with consumer feedback and pro feedback. When pros use payments and generate revenue that we process, their retention rate is materially ahead of other pros. Financing is still small relatively but growing rapidly. For the quarter, it's in the high single-digit millions of dollars of financing provided to homeowners. Satisfaction rates are strong. Pros love it because it allows them to engage customers they might not have otherwise. Customers love it for convenience at the point of sale. These three things combined are not yet having a material impact on the business, but we hope that as they scale into 2022 we'll start to see impact in late 2022. Holistically, we'll continue to push on payments, financing and membership. Membership today is a simple pay-to-save program — the Angi equivalent of two-day shipping or a Costco-like membership. In the coming weeks and months, you'll see us make that richer. One of the first things we'll start to roll out is a text-based service giving members access to a home expert who can make bookings on their behalf and help with home issues. As we build that into a program where you will turn to Angi Key for everything in your home, the early read is super positive on all three.

Our next question will be from Nick Jones at Citi.

I guess one on Angi and one on Dotdash Meredith. On Angi, how much of the requests are related to people who have purchased new homes? Is there a risk that as the housing market cools off, requests might slow down? Generally buying a home triggers people to think about repairs. And then a follow-up on Dotdash Meredith: it sounds like making Meredith properties faster is a key thing you're going to work towards. Does that sound like taking the entire library and replatforming to the Dotdash tech stack? When you think about improving SEO and the code and formatting of content, is that a replatforming of the entire library or is it more for future content and will take time to trickle through?

In terms of the volume of requests, the bigger drivers are the size and age of the home and people's ability to invest in it. Yes, people buying new homes does trigger a percent of service requests. However, the bigger drivers are size of home, age of home and capacity to invest. Those are the drivers of service requests. On the supply side, our pros are supply constrained right now and their willingness to pay for service requests is a function of how much demand they've got from other sources. We don't feel particularly exposed to a shift in housing demand. If we see a normalization of consumer demand, it will probably be beneficial for our ad business and lead business as pros experience less of a supply constraint overall. We'll have a report coming out in the coming quarter that shows a significant change in the percentage of time people are spending at home and a significant change in the percentage of dollars that they're spending on their home, which we think reflects a durable change in consumer behavior to focus on the home, which we don't think is going away anytime soon.

The other thing I'd add: historically roughly two-thirds of service requests are nondiscretionary. When home sales slow and there are fewer turns, there's also a natural hedge where people do more work on their existing homes. COVID changed things, so historical trends may not be perfectly predictive, but that's what we've seen in the past.

Great. That's helpful.

On the tech stack question: their tech stack is actually quite good; they just built a new one, so I'm not sure we'll migrate everything. We may use some of their things. They're very smart and they recently completed a migration of all their brands onto one unified tech stack that's pretty good. We'll work on that. But what we care about most is algorithms. If you're going to be a publisher today, algorithms are between you and your users — Google, Pinterest, Apple News, Flipboard, etc. When we look at a new site, consistent with other acquisitions, it's very comprehensive. We are concerned with the oldest piece of content as much as the newest content. A user or an algorithm just wants to know what's on that domain and whether it's the best thing. That's our focus. When we make new things, they'll be made with an eye on different things and Meredith has done historically. One of the really big opportunities is these brands and websites have content that's 10, 15, 20 years old. The opportunity to revisit that content and apply modern know-how to it is a big opportunity. The key takeaway is what we do to brands, websites and print magazines is comprehensive — not cherry-picking. Not all content makes money, but it supports the content that does make money, which means you have to treat small topics with the same respect as big topics because for that user it's their topic. We look at all domains that way.

Our next question will be from Justin Patterson at KeyBanc.

Two if I can. First for Oisin: you brought on your first Chief Data Officer. Would love to hear how you're thinking about just ways to leverage data on the Angi platform over the next few years and how we should think about those benefits manifesting. And then for Joey, would love to hear about top priorities for Care.com. Trends are going well, so what are the next areas to lean into for growth?

On data: feedback has ranged from how did you not have a Chief Data Officer before to this is obviously something we should be doing. We have so much opportunity in data it's almost embarrassing. Three big opportunities: pricing, matching and consumer experience. For pricing, we currently set lead pricing approximately once a year and don't change that dynamically; that's an obvious way to quickly realize benefit. The second opportunity is bringing our products together in a thoughtful way from a data perspective — when to show an ad pro, when to show a lead pro, when to show services. Right now there's some intelligent logic but it's not dynamic and doesn't respond to availability of supply, demand or likelihood of future spend from pros. The third is consumer experience. We already know a lot about your home from multiple service requests and public databases. The more we can deliver a customized experience to you, the easier it is for you to care for your home. The average person needs a dozen-plus things done in their home every year. Most people don't even know what those dozen things are, and they're different by geography. So we have to be very thoughtful down to a zip-code, home, and address-level on how to use the data. Those are the three big opportunities: pricing, matching and delivering a unique homeowner profile to help you take care of your home.

On Care.com, the biggest factor right now is getting back to the core business and blocking and tackling fundamentals: moving conversion, improving onboarding flows and data gathering to make matching more efficient for both sides so when you post a job you get robust applications. That's driving subscriber growth — subscribers were up close to one-third this quarter. We're benefiting from people returning to work and from easy comps in the prior period. Beyond that there's enterprise, Instant Book similar to what we've done at Angi, and daycare facilities where we're starting experimentation. There's also tying consumer and enterprise together and home pay. A notable macro trend is enterprise increasingly taking a role in care for employees, which can materially impact workforce participation — especially for women. That trend and potential regulatory support would be beneficial. Execution on these initiatives where enterprises enroll will be drivers for growth.

Great. I think we've reached the top of the hour. So Joey, do you have any final thoughts?

That's it. Thank you all for joining us. Really appreciate it and see you next quarter.