Thank you. Good morning, everyone. Christopher Halpin here and welcome to the IAC and Angi Inc. First Quarter Earnings Call. Joining me today is Joey Levin, CEO of IAC and Chairman of Angi Inc., and Jeff Kip, CEO 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 will shortly turn the call over to Joey to make a few brief introductory remarks and then we will open it up for 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 first quarter earnings releases in 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 as EBITDA for simplicity during the call. I will 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 the full reconciliations for all material non-GAAP measures. Now I will turn it over to Joey.

Thank you. Good morning, everybody. Thank you for spending some time with us this morning. I won't repeat the numbers you've seen posted. I think we had a great quarter with real progress on growing profit and free cash flow. And that puts us in a solid position for deploying capital from here. Biggest news in the quarter was we've started to participate now in the new AI ecosystem in a tangible, financial way. We announced the deal yesterday with OpenAI, where we'll be compensated for enhancing the ChatGPT experience. We'll start to hopefully get some incremental users to our properties from ChatGPT and we are going to collaborate on D/Cipher, which is a product inside of Dotdash Meredith that we think is the future of advertising on the OpenWeb and where we've been growing nicely and we think generally taking share on the OpenWeb. And hopefully, that agreement is just the beginning of other opportunities for us in that AI ecosystem. And we're incredibly grateful to OpenAI who, from the very beginning, has been a leader in the category, including with their first product which really opened the floodgates for everybody competing in this area. And hopefully, they'll still similarly act as a leader as they have done in the agreement with us in starting to open the floodgates towards new opportunities for us in that area. I also want to welcome back Mr. Kip. He actually used to be on this call 8 years ago and is back in a new capacity as CEO of Angi. I'm not just thrilled about that because it lightens my load at Angi. I'm thrilled about that because I think Jeff has been already involved in this business in a meaningful way for a very long time, going all the way back to his role as CFO of IAC many years ago where he spent an enormous amount of time getting deep with what was the predecessor to Angi Inc., HomeAdvisor and then spent 8 years very much in the details of the business, in running the international business for Angi. And you've seen, as we've reported tremendous progress in that business. And I'm really excited now that Jeff has the entire Angi business and he's very focused on the key to succeeding in that business, which is delivering jobs done well and I expect the job done well out of Mr. Kip. So welcome, Jeff. Let's get to questions. Operator, first question please.

Our first question comes from John Blackledge with Cowen.

Two questions. First, for DDM, overall revenue growth beat our forecast. Could you just unpack the growth within DDM digital revenue across advertising performance and licensing? And maybe how should that trend going forward? And then I have a follow-up on the OpenAI deal.

We were really pleased with the performance of Dotdash Meredith digital in Q1. Digital revenue increased by 13%, primarily driven by a 19% rise in digital advertising. This growth stems from an 8% increase in core session activity and better monetization in both premium and programmatic areas. Advertiser spending is stabilizing; while it's not an exceptionally hot market, it is showing improvement, which positively impacts our premium sales. In terms of programmatic advertising, we believe we're excelling and outperforming in the market, thanks to our advanced technology and performance capabilities. Performance marketing saw only a 3% increase in the quarter, significantly affected by a 30% drop in services, mainly in financial products like brokerage accounts and insurance. However, performance marketing in e-commerce or goods grew by 18%. We acknowledge the need to continue investing and innovating in performance marketing, especially in services, but we are confident about returning to strong growth in this area. Another highlight was licensing, which grew by 9%, driven by solid performance from Apple News and our syndication partners. After facing challenges since the Meredith acquisition, we now anticipate it will contribute positively, and OpenAI will further enhance this area. Looking ahead, we expect to see over 10% revenue growth in Digital each quarter and for the year, supported by effective execution across all three segments. Advertising will lead this growth as we continue to see session increases and improved monetization. What's your second question, John?

Yes. Second question, could you talk about the DDM, OpenAI deal at a high level, including key terms of the deal? And can we expect similar deals with other LLMs, like Google, Anthropic, Meta, et cetera? And if you don't strike a deal with those companies, are they precluded from training their models on DDM content?

Yes. We can't go into the specific terms of the deal, but at a high level, there are three main components to the OpenAI agreement. First, it involves displaying content and links attributed to DDM in relevant ChatGPT responses. Secondly, it utilizes the historical and ongoing DDM content to enhance their model's performance. Finally, there is a partnership with DDM and OpenAI to develop a new cookie-less, intent-based targeting ad solution. This partnership is unprecedented and we believe it will significantly improve privacy-protected advertising, and we are pleased to collaborate with them on this initiative. It's a multiyear deal that includes all the mentioned components, as well as financial compensation, which makes us very excited about it. As for other partnerships, I believe OpenAI has set the standard for showcasing the potential of GenAI and chat interfaces. I hope they will continue to lead in their interactions with publishers, journalism, and content. While it may take time for others to catch up or adapt, I do anticipate that they will eventually follow suit. Importantly, this deal is not exclusive, allowing us the chance to pursue more partnerships. We appreciate OpenAI's efforts in making this happen and under Sam Altman's leadership, they've maintained a positive approach toward creating a healthy internet ecosystem, ensuring that AI is a force for good in the world, which they have consistently demonstrated.

And congrats, Jeff.

Thank you.

Your next question comes from Cory Carpenter with JPMorgan.

On the Angi CEO transition, Joey, why was now the right time? And Jeff, it'd be great to hear your vision and strategic priorities as CEO? And then I have a follow-up but I'll let you answer that one first.

Sure. Thanks, Cory. Having a full-time CEO is definitely a positive step, and I was eager to make that happen as soon as possible. While I was in my role, I focused on improving the business's overall performance and customer focus. I aimed to gain a deep understanding of both the challenges and opportunities we faced. One of the key insights during my time was recognizing the achievements in the international sector, which continues to thrive. This success is largely due to Jeff and a remarkable leadership team in that area, which extends beyond Jeff himself. We knew we had the right talent and depth to elevate Jeff to lead the entire business. I believe he will excel in this role, and I’ll let him share his thoughts.

I don't think that there is really a change in strategic vision. I think Joey has rightly put the customer at the center of what we're doing at Angi and we're really focused on delivering a better experience online and then most importantly, delivering jobs done well on both sides of the marketplace. And so the work he's done with removing, let's call it, empty calories and moving the business forward in terms of being customer-first is what I hope to continue. I hope we deliver more jobs done well each year from here on out. We plan to and there's no real change.

Cory, you had another one?

Yes, maybe perhaps for Chris, just could you give us an update on your Angi revenue expectations this year? And if you think you'll need to reinvest ultimately to return the business back to growth?

Certainly. We don't believe we need to make additional investments in the business at Angi to stabilize and grow revenue. Jeff can elaborate, but we continue to identify cost-saving opportunities, which reinforces our confidence in our adjusted EBITDA forecast and ongoing margin improvements despite revenue declines. For the upcoming second quarter, we expect revenue declines in total revenue at Angi to be similar to what we've experienced over the past two quarters, around the mid-teens percentage. Additionally, we made further efforts to eliminate low-value revenue, notably by shutting down an acquisition from 11 years ago called CraftJack, which was not profitable and was a burden on the business. While this will result in a loss of approximately 5,000 pros, we anticipate recapturing many of the leads generated through CraftJack, viewing this as a beneficial move for our margins. As we look beyond the next quarter, we want to give Jeff the opportunity to shape his perspective on the business's future direction, including both revenue and cost opportunities. Overall, we remain confident in our guidance of $120 million to $150 million in adjusted EBITDA for the year and expect to see margin improvements continuing from the first quarter.

The next question comes from Jason Helfstein with Oppenheimer.

Two questions. The first, given the stronger first quarter EBITDA at both Dotdash and Angi, why not raise the full year guide? Are you seeing anything in your outlook that has given you pause? And then second and this will be multiyear repetitive, you talked in the letter about being frustrated with the stock price. What's the takeaway? Are you implying that you'll lean into buybacks if the stock does not start to improve? And just do you think about like the MGM stake as a source of capital or leverage if you need it? And welcome back, Jeff.

On full year guidance for Dotdash, we are confident in our momentum and outlook for the business due to the revenue growth, the OpenAI partnership, and our visibility on margins. However, because of the seasonality of the business, the full year is significantly weighted towards the second half. Therefore, we believe it is wise to wait until we are further into the year before making any adjustments to our guidance. For now, we are reaffirming our adjusted EBITDA target of $280 million to $300 million for the year while making targeted investments in areas such as content, D/Cipher, and performance marketing. We feel optimistic about reaching the higher end of that range and will keep the market updated as the year unfolds based on our observations. Regarding Angi, we achieved strong profitability in the first quarter despite a drop in revenues. This indicates to us that many of the revenues we have cut from the business had limited profitability and value. We still have work ahead to enhance both the consumer and professional experience, which remains a key priority. We aim to be adaptable to build the best business for the future. We are projecting over $30 million a quarter in adjusted EBITDA for the rest of the year, so we are maintaining our guidance of $120 million to $150 million.

Yes. Regarding buybacks, there are a few points to consider. First, buybacks are definitely an option we are considering. Our initial focus was on getting our operations streamlined and ensuring our business is in good health, and we believe we've made significant progress there. We still have additional goals to achieve in this area. Secondly, we have excess cash and are generating more cash, which is a positive situation for us. A key factor we need is an attractive valuation, ensuring a solid return on investment, and I think we've met that requirement. We must also have no restrictions on our ability to buy back shares, which can occur from time to time. Additionally, we constantly evaluate the opportunity costs associated with our cash as we consider various options, including potential mergers and acquisitions both within and outside our business. The encouraging news is that we can manage both situations due to the cash available on our balance sheet and the additional cash we are generating. We also have a significant and valuable stake in MGM, which we plan to maintain. This stake contributes positively to IAC's overall liquidity. It's worth noting that we are pleased with MGM's performance, especially since we now hold over 20% of the company, aided by MGM's own aggressive stock buyback strategy, which has reduced their share count significantly. Therefore, to answer your question, considering buybacks as a potential strategy is definitely on the table.

The next question comes from Justin Patterson with KeyBanc.

Actually wanted to build off of Jason's last question. Joey, now that you're full-time IAC CEO and no longer wearing 2 CEO hats, would love to hear about just how you're thinking about the evolution of IAC here. I know in the past, you talked about looking at marketplaces as your preference for M&A. We've obviously seen a lot of changes within the Internet landscape with GenAI. So would love to hear more about just how you're spending your time these days and how you're thinking about the future of IAC.

Thank you, Justin. That's an important question. Regarding your point about spending time, it really relates to our capital allocation, both for existing and new opportunities. We are actively learning about AI and identifying potential areas for growth. However, from an M&A standpoint, it's less likely we'll pursue pure-play AI options since they are currently highly valued, making it difficult to invest capital. Many businesses, including ours, particularly with Dotdash Meredith, can gain from AI, which we consider as we explore new opportunities for IAC. We're not focused on any specific sector right now and are learning across various fields while remaining opportunistic. Historically, we have performed well in marketplace businesses, and we have a solid understanding of them, but that doesn't limit our considerations. The travel and leisure segment has also historically performed well for us, outperforming other areas in consumer wallet share, and we expect to continue benefiting from prevailing technology trends. We are examining opportunities broadly, and our M&A priority is to explore internal opportunities first, meaning expanding what we already own and finding synergies with those businesses before seeking new M&A. However, I anticipate that we will eventually expand into new opportunities, and we are actively pursuing those at this time.

The next question comes from Eric Sheridan with Goldman Sachs.

Thanks for the question and all the details. Also, I'll echo, welcome back to Jeff into the new operating role as CEO of Angi. Maybe I'll follow up on Dotdash Meredith. When you think about coming out of the advertising environment of last year and sort of building some momentum in the advertising environment this year, how should we be thinking about the conversion of revenue into EBITDA and the cadence of that between now and the end of the year, measured against the potential volatility up or down on revenue against things that you believe you need to invest in to make sure Dotdash Meredith, especially on the Digital side is set up for success on the longer term?

Thanks, Eric. I want to share a few updates. Last quarter, we provided guidance for full-year adjusted EBITDA of $280 million to $300 million for 2024, expecting nearly all of this to come from Digital. Print EBITDA and corporate expenses should balance each other out this year, with corporate expenses remaining steady at around $10 million per quarter. As anticipated, Print began the year with a low profit of $2.9 million due to seasonal and ongoing revenue declines. For Q2, we expect Print EBITDA to range from $9 million to $11 million, and around $13 million to $15 million in the third and fourth quarters. On the Digital side, we were pleased to see nearly 50% growth in adjusted EBITDA and an increase in adjusted EBITDA margins. We remain optimistic about achieving over 10% revenue growth each quarter this year, driven by traffic growth, better monetization in advertising and performance marketing, and licensing growth. On the cost front, we're making targeted investments in key areas, particularly in content we know will perform well, D/Cipher capabilities, and performance marketing. Our initiative to enhance performance marketing, especially in services, is aimed at supporting our growth. We believe these investments will leverage our strengths and position us for sustainable growth. The effects of these investments should be most apparent in Q2, where we forecast an incremental adjusted EBITDA margin of 30% year-over-year. This will be supported by over 50% incremental margins in the third and fourth quarters, aligning with our expectations. Ultimately, we anticipate EBITDA growth each quarter, improved margins, and a similar distribution of adjusted EBITDA as we saw last year, with a weighting favoring the second half of the year.

The next question comes from Brian Fitzgerald with Wells Fargo.

A couple from us. Maybe more broadly on AI, as we've seen Google scaling up their own Search Generative Experience, are you getting any visibility in changes, if any, in terms of referral traffic to you either as AI is integrated more deeply into traditional search?

I'll take that one. I think it's hard to see specifically. So the short answer is, not really but I'd say long term, Google is taking more of the page and holding more traffic for themselves. That's basically been a, I don't know, multiyear, if not decade trend. And so I do expect that to continue. And I think we've done a nice job in navigating that through our history and we actually and Dotdash Meredith site continues to grow inside of Google because we have, I think, the best content where we've invested more than others and do a very nice job in addressing users' needs with the content that we've created. And so I think we're in a pretty good position there. But I expect over time that Google continues to try to keep more for themselves. But we have not seen any direct impact of that yet.

Got it. And then at Angi, Jeff, we wanted to ask kind of what ideas or portions of the international playbook you expect to bring to bear at Angi as you take over there.

So if we take a moment to reflect, looking back five years, we held a leading position in the European market. This was achieved through the acquisition of four different companies and platforms, where we were incurring losses of $10 million, dealing with four distinct products, business models, and technologies. We initiated changes by first shifting our product focus to prioritize homeowner choice and pro online enrollment. Next, we restructured our performance marketing and unit economics, enhancing both our technology and operational efficiency. We also reinforced the business foundation by refactoring, rebuilding, and migrating our core technology. Recently, we completed the migration of our fourth business in the U.K., and we have improved with each transition, operating now on a single platform with a more streamlined organization. Our focus has now shifted to enhancing the core experience, specifically the offline interactions when a homeowner hires a skilled professional through our platform to complete a job successfully. About a year and a half ago, Joey had a tougher role in the United States, where there was a lot of low-quality revenue that was neither profitable nor provided a good user experience, which he had to manage. He and his team have made significant progress, allowing me to step in at this moment. Although the market landscape has changed, it is larger and our brand presence and market share have strengthened. We still need to adhere to the successful strategies Joey and his team have implemented. Importantly, the crucial elements that worked in Europe are being applied effectively in the United States, and we need to see this through. Additionally, by 2022, we had turned the business around and were finally achieving profit growth after a period of stagnation. Currently, we are nearing 20% revenue growth in the first quarter and around 20% EBITDA margins, and with some luck, we aim to replicate this success in the United States in due time.

Your next question comes from Dan Kurnos with the Benchmark Company.

Welcome back, Jeff. Joey, a little in the weeds for you, maybe but just on the D/Cipher benefits around the algo from the AI partnership. Just thoughts on incremental data signals, a shift to incrementally more probabilistic and what that kind of means in terms of driving outperformance relative to sort of the publishing peer group with that asset? And then maybe just an update on Care would be helpful.

I'm not completely sure I understood the question, but let me address the first part regarding D/Cipher. We have been working with Dotdash Meredith on D/Cipher, where we have analyzed user intent across a range of online platforms, not just our own, to identify intent and measure its performance against what we observe on our properties. The collaboration with OpenAI will allow us to expand this analysis across a larger part of the Internet, gather intent signals, and utilize them to attract advertisers. Our approach emphasizes a cookie-less, privacy-focused method that prioritizes the intent of the content rather than individual user data. Our goal is to access a much larger inventory with quality data for intent-based targeting. If we succeed in this, we believe it could significantly boost the business, and so far, it has shown promising results. We see this area as having substantial potential for growth.

Yes. And just incremental area that excites us, which OpenAI is able to bring to D/Cipher that we don't have the scale to do would be additional media. So beyond just text, image and video and those things that are part of a user's experience being able to draw intent-driven linkages and monetize against them and drive performance. And we expect to have a number of those flowers bloom as the 2 teams work together.

Dan, does that answer your question?

It does. And then just update on Care?

Yes. Look, Care is very healthy right now from a profit perspective. I think the enterprise business is growing nicely. We're really focused now on driving growth in the consumer part of the business. And we have a number of good projects in the works there, both on just optimizing some fundamentals around marketing but also on the new product side in terms of improving access to instant booking and improving the customer experience in instant booking. And so we've got optimism for where we think Care can go from here. And in addition to both consumer and enterprise, there's also the other segments of Care, which are right now doing nicely. So senior care and pet care, we think are opportunities for growth from here. And we're starting to see some green shoots in those businesses, too. Do you want to add to that?

Yes. We've observed a slowdown in consumer activity for some time now. As mentioned in previous quarters, we recognized the need to enhance our marketing strategies and improve our products. With new management in place, including a Chief Technology Officer, Chief Product Officer, and Chief Marketing Officer, we believe we have a clear path forward. While we don't want to attribute everything to macroeconomic factors, there are certainly challenges in the childcare sector compared to daycare, along with a slight decrease in childcare services and an increase in daycare, senior care, and pet care, where we are experiencing growth. We are confident in our ability to address these specific marketing and product challenges, and we see great potential ahead.

The next question comes from Brent Thill with Jefferies.

Joey, in the past, you've talked about the M&A environment being somewhat irrational on multiples. I'm curious if you could just update us kind of what you're seeing now? Have some of these expectations come back to earth? Or are you still seeing the similar environment?

I believe there are opportunities available now. We have experienced times when everything was priced perfectly and appeared irrational, as well as times when things were priced for failure, which presented us with significant opportunities—like when we invested in MGM. Currently, it's more of a balanced situation. Some sectors, like AI, seem to be overheating. Not every AI company will become a multibillion-dollar enterprise; while some will succeed, certainly not all will. Nevertheless, there are still many rational opportunities out there, and that is where we are concentrating our efforts. Overall, it feels balanced at the moment. This could make it a more challenging time to invest since it’s not clear whether to enter or exit. However, we are confident that we will find opportunities here.

Okay. Great. And then just a quick follow-up on the emerging business. Anything else to call out that you're really energized by in terms of what you're seeing in the momentum, in the other parts of the portfolio?

I want to highlight a couple of companies. We've already discussed Care, which I believe is a leader in its category and has strong fundamentals. The first one I want to mention is Vivian, which offers an excellent product for matching healthcare professionals, mainly travel nurses, with employment opportunities. This sector has significant long-term growth potential due to a supply and demand imbalance for nurses and healthcare professionals in general. Vivian has effectively navigated this space with impressive revenue growth while maintaining low capital requirements. They've also successfully integrated AI tools to improve the chat interactions between healthcare professionals and employers, leading to interesting engagement trends. The second company, though small in size for IAC, is generating considerable attention. Daily Beast has strong leadership with experienced figures like Ben Sherwood and Joanna Coles, who are implementing changes and bringing a lot of energy to the organization. There's an exciting transformation underway, and I'm keen to see how it develops.

The last question comes from Tom Champion with Piper Sandler.

Maybe just 2 quick ones on DDM, maybe for Chris. Just looking at Core Sessions growth of 8%. Certainly solid and consistent with the fourth quarter but there was an extra day in the quarter. All else, fairly easy comp year-over-year. Just curious if there was any onetime or a headwind or anything else that we should think about that in the context of a trend that was previously improving sequentially? And then just any comments on the Amazon partnership? Would love to hear about that.

Thank you for the question, Tom. We intended to address the trends in Core Sessions. The drop from 10% core growth in Q4 of last year to 8% growth this quarter is solely due to a decrease in traffic from Facebook. This trend has been significant across the publisher ecosystem since the middle of last year and has impacted the entire industry. Fortunately, for us, Facebook traffic constitutes a small portion of our overall growth, allowing us to continue expanding. However, we have observed that Facebook has intensified its efforts to drive audience engagement on its own platform during the middle of this quarter. In the first quarter, our Facebook traffic decreased by 50% year-over-year due to their aggressive approach. Thankfully, Facebook now only accounts for about 4% of our traffic, down from 7% a year ago. We anticipate that this decline will persist this quarter, but we remain optimistic about the strong growth we are seeing elsewhere, which will support our ability to increase sessions. Additionally, we are experiencing excellent growth in Apple News, which doesn't reflect in our session numbers as that consumption occurs on their platform, contributing instead to our licensing revenue. Therefore, while we have declines on one platform, we see substantial growth potential in another. Overall, we are pleased with session growth across our portfolio and feel optimistic about our entertainment properties as we progress further into the year, especially as we will be lapping the strikes.

I just want to add one thing on that, which is, whether 8% versus 10% or 1 more day in the quarter or whatever, 8% growth in Core Sessions is excellent, where primarily U.S. businesses, generally, the Internet is not growing right now in terms of users. And so what you're seeing happen is the folks who invested in content and we've invested an enormous amount in content and continue to invest an enormous amount in content, are being rewarded with increasing share of audience and we feel very good about that. And again, whether it's 8% or 10% or whatever, growing in that environment and growing healthily in that environment is a real testament to a winning product.

Tom, regarding the demand side integrations for D/Cipher, I believe it's a testament to Neil and the team for positioning us well in light of industry trends. The data science and technology supporting D/Cipher are robust. Companies, whether it's Amazon or its retail media network, are increasingly focused on privacy-friendly solutions and moving towards cookie-less platforms. We are actively engaging in constructive discussions with other large demand-side platforms to enhance their infrastructure for utilizing D/Cipher and enabling cookie-less targeting. Additionally, we see the integration of generative AI as a positive factor for advertisers' perceptions. We remain focused on executing these integrations and communicating our story, and we are optimistic about the prospects.

Yes. This integration of generative AI just meant advertisers, not investors, although perhaps both.

Thank you all very much for joining us. I know it's a busy morning and appreciate the questions and support and we'll talk to you next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.