Good morning, and welcome to the IAC and Angi Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. After today's remarks, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Christopher Halpin, CFO and COO of IAC. Please go ahead.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC and Angi Inc. fourth quarter earnings call. Joining me today is Joey Levin, CEO of IAC and CEO and Chairman of Angi Inc. Similar to last quarter, supplemental to our quarterly earnings releases, IAC has also published its quarterly shareholder letter, which is currently available on the Investor Relations section of IAC's website. We will not be reading the shareholder letter on this call. I'll shortly turn the call over to Joey to make a few brief introductory remarks, and we'll then 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's and Angi Inc.'s fourth quarter earnings 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 earnings releases, the IAC shareholder letter, our public filings with the SEC and again, to the Investor Relations section of our respective websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. Now I'll turn it over to Joey.

Good morning. Happy Valentine's Day. I think I've done this call on Valentine's Day many times over the years, so I'm not going to try another bad Valentine's joke. Hopefully, you've all had a chance to read the letter and review the numbers. I want to start again by giving you a very big thank you to all the teams across the businesses at IAC and the corporate folks at IAC, at Angi, Dotdash Meredith, MGM, Turo, for making our job much easier this quarter. It's a lot easier to write these letters and get on these calls when the news is good, so thanks to everyone for making that happen. And it wasn't just one quarter. 2023 was a year of real hard work, changing our mindset, getting things done on behalf of our customers and the long-term health of our businesses. And it really paid off in this last quarter. So thank you all. Hopefully, some of you are listening in this Valentine's morning. And that's why Chris and I have a spring in our step this morning. It's not just Valentine's Day; that's performance. So Drew, let's get to questions. Thank you.

The first question comes from Cory Carpenter with JPMorgan. Please go ahead.

Thank you. I had two on Angi. Maybe Joey first, could you just expand on the trends you saw in the fourth quarter and what led to the upside relative to your guide for Angi? And then secondly, it would be helpful to hear your expectations on the revenue side for Angi this year and what's embedded within your '24 profit outlook? Thank you.

Sure. Thanks, Cory. I'll take the first, and Chris will do the second. The biggest thing that we've underestimated, and we've really continually underestimated this is — notwithstanding talking about it a lot — is service professional retention. And the progress there has been tremendous. It's a result of a lot of things we've done to drive satisfaction, first of all, targeting better service professionals with sales. Giving them more compelling, committed offers; giving them a chance of success, and some things we've done on the demand side to improve the mix of demand to help their win rates. And that retention has continued to move up. I think we haven't gotten as good at sort of modeling that upside, and we look at it conservatively. But as that comes through, it makes each individual transaction for us, unit economics more profitable. Because we have more service professionals actively engaging with service requests. Related to that is things like bad debt. We've been outperforming on bad debt all year because, again, we have happier service professionals. The other thing is the margins in our paid marketing. We've been expanding the margins in our paid marketing through, I think, a combination of smarter spend and some conversion improvements. And obviously, that's good for margins. All year 2023, relative to 2022, we've been much tighter on fixed costs and costs in general. And so, the combination of those things all came through on profit. I would say almost all of what I just said is durable and sustainable for the future. So that's, I think, a good thing for Angi's margins.

Yes. Thanks, Cory. In terms of outlook for '24, we expect the revenue trend to improve over the course of the year from the declines you saw in Q4. But we also think it's important to maintain flexibility in terms of revenue growth to do what we need to do to keep improving the foundation for user experiences, both on the pro side and the homeowner side. What does that mean in Q1? We'd expect a decline in revenue year-over-year to be roughly the same rate as we experienced in aggregate in Q4 of '23, maybe a little bit better in Q1. The bulk of the actions that we took last year to eliminate low-margin and low-quality revenues really showed up in Q2 of last year. So the comps do get easier. Q1 will be the most challenging. We expect year-over-year revenue declines throughout '24, but expect that percentage to narrow as we lap the easier comps, and also the fruits of some of the actions that Joey talked about. We're not forecasting a return to revenue growth this year. On profitability, we expect to sustain the 10% plus EBITDA margins we demonstrated in this last quarter when you normalize for the insurance settlement. We expect Q1 adjusted EBITDA to be up slightly year-over-year, despite the lower revenue over what we generated in Q1 of '23. We'd forecast 10% to 12% adjusted EBITDA margins each quarter in '24. So that's how you get to the $120 million to $150 million of adjusted EBITDA on our guidance. Thank you. Next question operator.

The next question comes from John Blackledge with TD Cowen. Please go ahead.

Great. Thanks. Two questions. First on Dotdash, DDM Digital, the ad revenue growth acceleration was better than expected. Can you talk about the key drivers of the acceleration? And then for '24, how should we think about the trajectory of DDM Digital ad revenue growth and EBITDA for the segment, just given the acceleration in EBITDA upside in 4Q? And then second question on free cash flow in '24. It looks like IAC will return to kind of be a big free cash flow generator. Any way to kind of frame free cash flow conversion of EBITDA in '24? Thank you.

I'll start, and then I'll turn to Chris again. Digital revenue growth was really all the key factors: traffic, meaning volume; price, meaning ad sales rate; and premium sales monetization. And that was, I think, a big win for the business and a big change in direction that we're pretty proud of. You can see that core sessions, which is over 80% of traffic, grew 10% and continued to accelerate. I mean, that's a really nice trend to see. And the rate, if you just look at revenue per session, is up nicely, too. Premium sales is about two-thirds of our ad revenue, and that was solid really for the first time since the ad recession started in Q2 of '22. That's a credit to, again, performance of our product, but also the combined sales force just working well together. Programmatic was excellent. We mentioned this in the letter. But we think our CPMs are growing more than the market, and that's a combination of, again, technology and performance. And performance marketing, which has been a real source of strength throughout the year, continues to do well. One thing I want to add on performance marketing is in this area, performance — where we're delivering performance marketing, the product that we're creating is something that our users really want from us. Users really want to hear from food and wine on what is the best air fryer. We delivered that. We deliver that unbiased. We deliver that with real work put into the product. And then that also happens to monetize well, because it delivers performance marketing. But you do that across all the Dotdash Meredith brands, and there's a huge opportunity there. I think we've done a really good job. That was sort of central to the acquisition thesis with Meredith, and I think we've done a really good job executing against that, and it's shown up a lot over the course of 2023.

Thanks, Joey. For '24, John, how we would think about overall trends in phasing is we expect digital revenue to continue to grow for all the factors that Joey articulated, while print revenues will continue to decline. Digital traffic and monetization have continued their momentum into the first quarter of '24. The ad market is fine—not great, not bad. We think we're taking share. We definitely think we're taking share on traffic and also on some on revenue per session. So for the year, we'd expect 10% plus digital growth across '24. Conversely, print revenues declined 12% in Q4 of '23, and we'd expect similar declines next year. Especially in the first half, it may slow down a bit in terms of decline in the second half. When you look at our profitability, our guidance is $280 million to $300 million in adjusted EBITDA across all of Dotdash for the year versus $267 million in adjusted EBITDA in '23. That implies 5% to 10% EBITDA growth. But what's really happening is strong growth and margin expansion continuing in digital, offset by some profitability declines, which is what we'd expect. We've said our aim is to have the print EBITDA offset our Corporate segment. But in '23, print actually significantly outperformed corporate by $24 million. In this current fiscal year, we'd expect the two to be pretty much equal. All of that $280 million to $300 million of adjusted EBITDA guidance for this coming year is digital EBITDA. That pattern will be pronounced in the first quarter. We expect digital EBITDA to grow 40% plus year-over-year in the quarter. Print will be roughly breakeven on an adjusted EBITDA basis in the quarter. It's seasonally the smallest revenue. We also have some expense increases like postage flowing through. Finally, corporate expense should be roughly equal in the $9 million range to what we saw in Q4. For those looking year-over-year, just remember, we had the $44 million lease impairment that flowed through in Q1 of '23 in corporate. When you roll that up, adjusted EBITDA in aggregate will grow in Q1, but strong digital growth will be masked by declines in print. For the year, digital revenue should continue, as we said, at 10-plus growth. You'll see that margin scale, the incremental margins and the seasonal uplift. We feel good about the momentum trend across the business. Your last question on free cash flow conversion across all of IAC, if I'm getting that right, we felt good about getting back to free cash flow generation. Last year, it's been a major point of focus by Joey to all of us. We expect our conversion to only improve in '24 due to a couple of factors. One is aggregate EBITDA, as evidenced in our guidance, should be up even with the sale of Mosaic, led by DDM and Angi. CapEx should stay in the $70 million range. Last year, in that 15% conversion that you referenced, we purchased the land under our headquarters for $80 million. That's obviously not recurring. Net interest expense should only improve with higher yield for the full year than we had in our cash last year. Finally, we've got $1.4 billion of NOLs, which is a substantial tax shield. Roll all that up, and we would expect that 50% plus of adjusted EBITDA to convert into free cash flow in '24, and look forward to continue to improve going forward. Thank you, operator. Next question.

The next question comes from Brian Fitzgerald with Wells Fargo. Please go ahead.

Thanks. On Angi, thanks again for the comments on the shape of the year there. We wanted to ask more specifically on consumer demand. I think the service request decline was one of the steepest we've seen, since you've been prioritizing quality and profitability. Are you closing in on getting the customer acquisition engine where you want it and getting to scale that back up? Do you have line of sight for when that hits sometime in '24?

Sure, Brian. I would say not yet in terms of line of sight. We are making real progress. I will also just point out, and I think you said some layer of monetized transactions are doing better than the trend line in service requests, because we are doing a better job with stuff that monetizes well and matching that better with service professionals. So that service request decline, while steep, is not as steep to the business as it appears. It may be helpful to talk about some of the things that we're working on and how those impact the business. I mentioned before, and I'll keep mentioning this because it's so important to the business, the service professional retention trends and, relatedly, the improvement in monetized transactions per service request. Those things improve our margins on the unit economics of any transaction. They also are going to start to improve our marketing allowables, which means that we can go out in our paid marketing, buy more, buy better, because we have better matching behind it. The sources of demand beyond paid marketing is really a combination of direct and SEO, and that's going to come from improvements in the product experience. We know what drives homeowner satisfaction and homeowner repeat rate. That's better matching with service professionals and a better chance of getting a job done well. We are starting to drive those underlying metrics. We shared some of those stats in the letter. We need that now to show up over time in direct and SEO. It's not going to be automatic, where it just sort of flips a switch. But over time, with a better experience, you start to see those users coming in more often, coming in through our free channels, and referring their friends and family. That's what happens with a better product experience. That does take time for people to realize it. The other thing I'll say is that is what we saw happen in Europe. Europe has grown 20% the last couple of quarters. Europe is — I don't know that we'll hold down to 20% exactly, but double-digit growth is very real in Europe. It has been real for a while. That's a product of, I think, a better customer experience. The other thing, just tactically, is that the comps do get easier starting in Q2.

Got it. Thanks, Joey. Appreciate it.

Thanks, Brian.

Drew, next question.

The next question comes from Jason Helfstein with Oppenheimer. Please go ahead.

Thanks guys. Good morning. Two questions on Dotdash Meredith and then a quick housekeeping question. So what percent of ads, or coverage does D/Cipher cover? And is there still risk that CPMs fall post cookie deprecation? How do you think potentially about offsetting that with a higher mix of performance inventory, so D/Cipher? And then how are you thinking about the impact of the Amazon retail media partnership and then thoughts about expanding that to other DSPs, and retail partners in '24? And then I've got a housekeeping question after that?

Sure. I'll start. A lot of those questions are related. We have D/Cipher in about 30% of our direct ad campaigns since we launched it less than a year ago. I think that's like 150 clients. The folks who are buying it are, as far as we can tell, very happy so far. No sign that people won't be repeating on that. When we've done case studies, and we've done a couple. One with a large well-known beauty brand, we did a case study with Amazon. In both cases, we saw a meaningful lift relative to cookie-based targeting. We have a lot of confidence in D/Cipher's ability to deliver for our customers. One of the things that will drive that D/Cipher adoption is plugging into the pipes and the purchase path of DSPs, demand-side platforms, so that advertisers can access D/Cipher's targeting easier, or access it in areas where they're already organizing their money and spending their money. Amazon is the first example of that, but we hope and expect that there will be many more beyond that. We're obviously targeting the biggest ones first. Working with Amazon is already happening. We're working on something with Google and then we'll look to really integrate with every ad agency. This is a thing that's a win-win. It's a win for the advertiser on performance. It's a win for the partner, where their data combined with our data delivers better performance, and certainly, it's a win for us. If we can build into those pipes, which I think is totally doable, then we've got big opportunities for growth from here.

And then just the housekeeping question. The Search and Emerging & Other were both weaker as far as the outlook versus the Street. I guess, with Search, is this the new baseline for Search? Just any color? And then are there any one-time factors you want to call out why Emerging & Other was weaker than the Street as well?

Yes. Thank you, Jason. On Search, the business definitely experienced a tougher market environment at the end of last year. You can see that in it producing $7.5 million of adjusted EBITDA in the fourth quarter. This has continued in the first quarter of this year, but we believe we've reached the baseline where we are and it should grow from here. That business has always done a great job of finding new areas in digital advertising to create value and profit streams. That's our goal for '24. But hitting a baseline in profitability recently is what drives the $20 million to $40 million of adjusted EBITDA guidance, and that's really just a reflection of the softer environment for that business. On Emerging & Other, it's a different story. Last year, that business in '23 generated $41.8 million of adjusted EBITDA. We disclosed a month ago that we signed a definitive agreement to sell our Mosaic subsidiary for $160 million in cash. That is expected to close very shortly, that transaction. Last year, and this is going to be in our disclosure, Mosaic generated about $37 million of revenue per quarter and averaged about $5 million of EBITDA. So think of it as $20 million of the $41.8 million of EBITDA is being sold closing this month. Additionally, and this is in the guidance section in Joey's letter, we disclosed that in Q1 of this year, we expect to incur about $20 million of transaction expenses associated with that sale. That's obviously nonrecurring, but we'll hit our definition of adjusted EBITDA in the first quarter and for the year. Emerging & Other guidance of zero to 20—half of that is nonrecurring brought down - is impacted by $40 million related to Mosaic. Half of that is nonrecurring transaction expenses, and then half is run rate profitability that we sold for $160 million. On an ongoing basis, think of it as a $20 million to $40 million adjusted EBITDA segment, and the bulk of that would be CARE. Does that help, Jason?

Yes. Thank you very much.

Okay. Thank you. Drew, next question?

The next question comes from Justin Patterson with KeyBanc. Please go ahead.

Great. Thank you very much and good morning. Just two on Angi. You've kind of alluded to it a little bit so far, but would love to hear just what the top two or three priorities are for the business in 2024, which is to keep executing on the foundation you've built. And just around international, you've mentioned taking some of the learnings from abroad and bringing it domestically into the Angi product. Could you elaborate a little more just what that means and how long that could potentially play out? Thank you.

Yes. So I'd say driving free and repeat traffic through better user experiences obviously has big impacts on our business, on our P&L. That's something that everybody in the Angi organization is thinking about. Second, I'm a broken record on this, but we'll keep going to help with the active SP network. The retention gains we've seen, holding those, growing those, and making sure pros are active and spending more and getting wins for that spend. That's better targeting within the sales to reach our SP network. You can see that we've been delivering that through better targeting as well with a smaller sales force. Better targeting speaks to the health of the active SP network. The third would be unit economics, which is certainly partially number one and number two in terms of demand and supply. Driving things like conversion is also very important. We've had some big wins recently on conversion, but we still have a long way to go in terms of upside on driving conversion. We went through a period where conversion across most of our channels leaked a little bit, and I think we can get a lot of that back. We are very focused on driving conversion in ways that are a win-win for users on our platform. Those are the big three. In terms of international, one is—first, you saw Jeff Kip, who was running the international business. He did a great job getting all of Europe onto a common platform and improving user experience. Now he's in the U.S. Some others from his team are now also helping out in the U.S. We brought the Head of Performance Marketing in Europe and now running Performance Marketing in the U.S. The product and marketing leadership from Europe and the U.S. are now much more closely intertwined and interacting. We did a lot to optimize user experience in Europe over short-term monetization for long-term benefit. That took a while to come through, but it has delivered in a meaningful way. Those trade-offs are things we've been making in the U.S., and we expect to continue to make in the U.S. The European business is almost entirely online self-enroll, as opposed to a phone sales force. Sorry, Europe is almost entirely online self-enroll, and the U.S. is basically the inverse. We’re working on a lot of the learnings there to see how we can drive more online self-enroll in the U.S. and rely less on phone sales, focusing phone sales on opportunities that warrant it.

Thank you. Operator, next question?

The next question comes from Dan Kurnos with The Benchmark Company. Please go ahead.

Great, thanks. Good morning. Joey, just two quick follow-ups on Angi. You've been talking about it a lot this morning. I guess, just how do you balance the consumer and the user and SP experience if you start going back towards showing multiple SPs per service request? To follow up from Brian's question, are there any verticals where you've started to make a change or you're starting to see a return to service request growth? Just help us think about how you're attacking that a little bit more. Chris, just on Dotdash on the margins, appreciate the color for the year. You've taken a lot of costs out of that business already. So I understand the cadence for '24, but what are we waiting for? Is it a revenue level like you talked about in the past? Or do we need to see premium continue to stay strong this year to kind of get that real inflection that I think we're still waiting for on Dotdash margins? Thanks.

The balance is so far a win-win. When we match homeowners with more service professionals, we drive homeowner satisfaction, meaning Net Promoter Score, and ultimately, repeat rate. We've been seeing ROI for pros increase. We can't measure this exactly, but our thesis is that more jobs are getting done on the platform as opposed to off-platform. While there may be more competition within our platform, we want to keep driving that number up, giving both homeowners and pros a better chance of success on the platform. In terms of verticals, the short answer to your question, I think, is no. We're trying to focus on user paths and user experiences. We organize around those paths to make sure they deliver a winning consumer experience and a winning pro experience. A lot of our revenue has been modifying those experiences to reduce some revenue, but if we want to talk about being confident, Europe did that and has seen real success. That’s the path in the U.S.

Dan, thanks for the question on margins. You can see the scale in our margin structure by the incremental margins across '23 and particularly in Q4 of '23, where we were at basically 90% incremental adjusted EBITDA margins on digital. For '24, if you think about it as 10%, but just for simplicity, say 10% digital revenue growth would be $89 million of incremental revenue. If you pick the midpoint of the $280 million to $300 million adjusted EBITDA guidance and that is equivalent to digital EBITDA, you're talking about $47 million of adjusted EBITDA uplift. You have north of 50% incremental margins. Our investments in cost in digital are really content, especially video, which is performing well for us. Our partners want more video out of our brands and performance marketing. Also, investments in D/Cipher. We can fund those in part through reallocating costs from historical activities that are less strategic. We feel pretty good about our ability to continue to manage our cost structure and feel good about incremental margins. We've said we expect 50% to 60% incremental digital adjusted EBITDA margins in this business. We may be able to do better, but we also want to keep the growth momentum going.

Thanks, guys, appreciate it.

Thank you, operator. Next question.

The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the questions. Maybe two, if I could. First, just following-up on John's question earlier around Dotdash Meredith. In the letter, you talked about aspects of the business through the lens of premium programmatic and performance marketing. Can you talk us through some of the key learnings from 2023, and how you're thinking about the opportunity set through those three prisms for the business, looking out to 2024 and beyond? Second, turning to Angi, you talked in the letter about transacting SPs declining, but improving from a second derivative standpoint, and you're still shrinking the sales force. Can you talk about the balance between driving efficiency and returns in the sales force while aiming for the optimized level of service provider growth? Thank you.

I'll do the last one first before I forget it. This is – we've been reducing the size of the sales force over the last 18 months. The main thing is to drive our productivity by eliminating unproductive calls. We were making a lot of phone calls to many pros that in the end didn't make economic sense. We've cut back on that meaningfully. That is a driver of the retention gains that we've seen, and that's a driver of the efficiency gains too. We’re also prioritizing prospects more smartly now. We've built a system last year to deploy against this. We have data now to rate prospects that we call and make sure that we're focusing the effort of the sales on the best prospects that are most likely to impact our business for the better. Meaning most likely to stick with our platform, and most likely to get jobs done well for our homeowners. That's also the type of offer we're pushing to our sales force. So, we’re focused on higher commitment offers that we’ve known about for a long time. It’s long-term better because those sales are going to be more valuable, and those pros have a better chance of succeeding with the platform. I’ve forgotten what the other questions were.

So Eric, on DDM, you hit on the three key digital revenue categories, drivers of premium, programmatic and performance marketing. The one top of the funnel element is traffic. To talk about all the supports or drivers of revenue growth, traffic is growing. You see we're getting to stability on overall sessions, and core grew 10% in the quarter. Those trends have continued and strengthened so far this year. Overall traffic, sessions, and impressions are increasing. That then, from an ad perspective, falls into — the first is premium that we sell directly to our advertising brands and agencies. What's left over essentially is the programmatic. Premium, it's been tough for us since we acquired DDM — since we acquired Meredith, really starting in May of '22 when the ad market fell out. We are seeing momentum there. As Joey said earlier, we’re seeing performance by the combined sales force, and we’ll keep that momentum going. Programmatic, the team has done a great job with our ad stack and continuing to optimize and improve the performance of our ads and monetization. D/Cipher will definitely be a tailwind for premium. We think that as we connect to things like Amazon, other DSPs, we think we’ll increase our programmatic yield, which will be a tailwind there. Performance marketing, Neil and the team are exceptional performance marketers. You can see the acceleration quarter to quarter across the portfolio, and performance marketing going zero plus 12, plus 22, plus 31. We expect it to continue. Comps will get tougher, but we think we're as good as anybody in that space.

Thanks, guys. Appreciate it.

Thank you, operator. Let's have one last question.

The next question comes from Kunal Madhukar with UBS. Please go ahead.

Hi, thanks for taking my questions. One on organic traffic. Can you talk about what percentage of your total traffic on both DDM as well as Angi is organic? And then the second question relates to Angi. You talked about it earlier in terms of the number of transactions per service request, the monetized transaction per service request being at 127%. Can you talk about, in an ideal state, what is this percentage level that you are targeting? What does it mean for a revenue per monetized transaction? Thank you.

Sure, sure. On the breakdown of traffic, we don't provide that publicly. We've given some data on DDM in the past, but that we don't share. Obviously, organic is a very important and a large portion of the mix, but we don't do the breakdown. In terms of monetized transactions per service request, it's a very good and fair question. The answer is we don't know yet. It gets back to Dan's earlier question. We want to keep pushing that up. We want to keep giving homeowners and pros a better chance of a job done well on our platform. There is a point that you would go too high; we don't want to go beyond that point, and we haven't found that point yet. There’s certainly room from here, but it doesn't go up to infinity. In terms of revenue per service request, that's a little different. Monetized transactions per service request is going to be a big driver of that. The quality of the service request, but quality may be an unfair word. It's about what mix it is. A home remodel job is worth meaningfully more than a home cleaning job. The channel that comes through matters. How far down the purchase funnel the homeowner might be matters. How much information there is within the service request matters. As we refine the service request, those can drive revenue per service request up. We've been improving the mix shift and improving the quality of those service requests to help drive the win rate. That's something we hope to continue.

The only thing I'd add is just we've become increasingly focused on monetized transactions per service request as an indication of the two-sided health of the platform and quality of the experience. No silver bullet to optimize that. Clearly, having it greater than one is good because that's a better consumer experience. If it got to four, that's suboptimal for service providers because of the experience. There's something in there. The more that number increases, the higher the quality of service requests we're getting and also the quality of our matching technology and of our service provider base. We believe there's room to run, as Joey said, and it's a key metric for us in terms of the improvement in our overall two-sided marketplace.

The next question comes from Ygal Arounian with Citigroup. Please go ahead.

Hi, good morning, guys. First, on Angi. We've been talking a lot about the optimizations. But maybe just to dial in specifically on the user side, because about a year ago, we started talking about—Joey started talking about bringing back a greater focus on the integration, I guess, between ads and needs and services and the optimization around the user. How much is left there? Can you give us a little update on specifically on the user side and what users are seeing today that might be better than they were seeing a year ago and how much is left? And then on the broader IAC business, in the letter, you talked about being more offensive on capital allocation with your individual businesses being in a healthier position now. You also talked about the shift from goods to experiences, seeing that as sustaining for longer, right around the MGM story. How does that fit into your M&A strategy? Where you're focused on finding the right capital allocation? Thanks.

Sure. In terms of ads and leads integration, that's a really astute question and top of mind for us right now. You focused on the user side, which is where we've made the most progress. We have some big things rolling out shortly, actually, along those lines in terms of—I’m talking the homeowner side. Previously, the algorithm for how a homeowner would match to historically ads pros and leads pros was complicated and somewhat illogical. We have now improved the algorithm to the point which we're getting ready to roll out, which we've been testing for six or nine months now, to better distribute and better match. A little bit of what we've been doing and seeing on monetized transactions for service requests is a result of what we've been testing there, so that a homeowner comes in and has the best chance of matching right with pros, independent of whether they were historically ads pros or leads pros. That is a very big deal for driving the business. On the pro side, which you didn't ask about, but is also important, is still a lot of work to do on that integration. We have multiple apps, and multiple back-end systems. We’re slowly but steadily migrating folks onto common systems, which will reduce our OpEx and improve our speed of execution. We still have a lot of work to do on that side of the integration. Work hiding in the background that we're now tackling and is really important for our operating efficiency. In terms of capital allocation and the shift towards experiences, those do go hand-in-hand. That is an area of focus for us for sure. We believe this trend has been long-term and will be a trend for a while still to come. We like the idea of businesses that benefit from that trend. We've spent a lot of time recently looking in that area and looking deeply. No imminent action on that, but it is a focus of our capital allocation.

Thank you. Operator, let's take one last question.

The next question comes from Brent Thill with Jefferies. Please go ahead.

Joey, just a follow-up question on capital allocation. I guess, when you think about what you're seeing in the private market and asset prices, I'm just curious. Many have asked why you have not been more aggressive last year when we've had this downturn? Are you starting to see asset prices go back up? Are you seeing things maybe not as buoyant as most would expect given the public market recovery? Just curious in terms of what you're seeing from your perspective?

Yes. Brent, we tried on a couple of things last year to be opportunistic. That was more public market than private market. While the valuations were down a lot, to your point, the expected premiums were up a lot, and we couldn't quite get there on those things. The private market, I think, is still totally irrational, if you think about it. These businesses did a phenomenal job raising enough capital to be able to weather markets. There’s still a lot of capital that has been raised to go after private opportunities, and that capital has a fuse to be deployed. The private markets need not be rational on those things. Unless something is on the verge of running out of money, nobody has to face reality on valuations. Therefore, it is not a productive place for opportunity. That's a broad generalization. There will be exceptions, if not many, but that's been our experience so far in looking at opportunities there.

Yes. Maybe if you have just the time, one quick one on the emerging assets. Anything surprising you in the portfolio that we haven't talked about as it relates to the smaller emerging stories in the portfolio?

I'm glad you raised it. We didn't talk about Vivian at all. But Vivian is a growing product and business. It's kind of amazing what the business has done. Continues to grow very healthily in a market that is shrinking dramatically. Not many people are familiar with Vivian, so let me explain. They're in matching nurses with jobs. They focused primarily on the travel nurse category, which turned out to be a very big category, especially during the pandemic. Still is a very big category, but the growth in that category or that category shrank a lot post-pandemic. Still bigger than what it was pre-pandemic, but it shrank. Throughout that whole period, Vivian has been growing. Their incredible concentration of the available nurses in the market using the platform, actively building profiles on the platform, looking for jobs. While there's been some near-term volatility in that market post-pandemic, the supply-demand imbalance is still enormous, meaning, there are many more facilities that need nurses than there are nurses available for the jobs. Vivian is very well positioned there. Parth Bhakta, who runs and founded that business, is a phenomenal entrepreneur and has done a wonderful job growing through that. We think that business has a lot of potential.

Thanks.

Thank you.

Thank you all for your participation this morning. Operator, that's it.

Thank you. Bye-bye.

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