Welcome to the IAC and Angi Third Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Christopher Halpin, Executive Vice President, CFO and COO of IAC. Please go ahead, sir. Thank you, operator. Good morning, everyone, Christopher Halpin here, and welcome to the IAC and Angi Inc. Third Quarter Earnings Call. Joining me today are 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 turn the call over to Joey to make a few brief introductory remarks, and we'll then open it up. Before that, I'd like to remind you that during this presentation, we may make certain statements that are considered forward-looking under the federal securities laws. These forward-looking statements may include statements related to our outlook, strategy and future performance and are based on our current expectations and on information currently available to us. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent quarterly report on Form 10-Q and our most recent annual report on Form 10-K and in the subsequent reports that we file with the SEC. The information provided on this conference call should be considered in light of such risks. 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. And now I'll turn it over to Joey.

Thanks, Chris. Obviously, the big news today is that we are contemplating a spin of Angi, which if we complete it would be the first spin out of IAC in four years, and obviously join a very long line of spin-offs out of this company. Besides creating two separate focused companies, this move would allow Angi to stand on its own, have a more liquid currency and a stand-alone ambitious strategy, whether that's M&A or capital allocation generally. But key to making this possible is the fact that profits and cash flow in the business have improved meaningfully. Consumer experience has improved significantly, and jobs done well has become a true driving obsession of everybody in the business. Jeff and I believe strongly that the business has revenue growth, again, in its future and profitability will be stable from here. So we're in a position to do this, a strong position to do this, and grateful for the opportunity to have another spin-off out of IAC. I'm sure we'll have a lot of questions on all of this and IAC's generally, which we think was very good this quarter. People worked hard, and we're very proud of the work everybody did this quarter. So let's get to the questions to talk about it.

Operator, first question please.

Our first question will come from Cory Carpenter with JPMorgan.

Joey, could you expand on why now on exploring the Angi spin? And then second question related to that, which you just mentioned, what's giving you the confidence in Angi returning to revenue growth? And is there any impact you're expecting next year from the FCC's 101 content rule?

Yes. I'll take the first one, and I'll let Jeff do the second, but I can weigh in there. The answer to why now is, as we've said through many spins we've done in the past, it's not a particular formula or a specific automatic trigger on these things. It's a confluence of things. One is the business being spun, and the other is the impact on what's left behind. In the case of Angi, the key is, is it stand-alone, strong and healthy, and capable of being on its own in the public markets? The business is now comfortably profitable, comfortably generating cash flow. We think it is on the right path strategically. It has all the pieces it needs to really deliver for the consumer, and there's a lot of execution ahead in terms of product, but there's also a lot of execution behind it in terms of product and seeing that come through on things like retention and customer satisfaction. So we like the path that Angi is on right now and like Jeff's ability to execute against that. There are also benefits to a more liquid currency. There's more direct investor access. There is the ability to use that liquid currency, whether it's for M&A or compensation. I think being spun off and standalone, those things can help. And of course, this is also a tax-efficient concept in the sense that the spin, if we do it, would be tax-free. The other piece is that it allows IAC to focus. We've really been on a campaign of slimming down, focusing, and we think that can allow us to do fewer things better. And that's what we plan to do with IAC.

Yes. In terms of our confidence in the stability and future growth of the business, I'm going to start by going back two years to when Joey took over the business with tremendous opportunity to improve at the time. Joey and the team committed to improving the quality of the business, the customer experience, and returning the business to profitable growth. We've moved a fair amount of lower quality traffic off the ship. We removed some of our lower-quality third-party traffic, and we moved a significant portion of the business to consumer choice, which I'll come back to in a minute. The result has been that our jobs done well rate has grown about 30% in the last year. Pro retention has risen materially each quarter, and we've referenced that. Homeowner NPS year-over-year is up by almost 60% in this last quarter. Those are big markers and a tribute to what has been accomplished to drive the long-term experience and growth of the business. We've also taken our unit economics apart and put them back together. We've rightsized our sales effort to drive long-term ROI, and we've reengineered our paid marketing to drive material profit growth despite revenue declines. You can see it in the nearly 30% paid channel profit growth in the last quarter. We delivered profit growth in 2023 despite revenue declines. We're doing so again this year, and we'll hold our profit again next year, as Joey referenced, as we make the next major investment in our customer experience by moving really the vast majority of our traffic that comes through our core customer journey to consumer choice. We've really been progressively moving our business towards consumer choice because we believe it's the best way to drive the customer north star experience of jobs done well in this marketplace. You may recall that our European business, which has had an estimated jobs done well rate materially higher than Angi US, operates completely on a consumer choice model. We're accelerating our move in the U.S., consistent with both the European model and the FCC order related to the TCPA that I think most of you are aware of. Thus we are taking one last big step in our two-year path of effectively reducing revenue but making material improvements in the customer experience and the long-term trajectory of the business. For those of you who aren't familiar with the FCC order, the portion of the order I'm referring to requires a business contacting a customer and using autopilot technology to have one-to-one consent from the customer to do so. The order is going to go into effect in January 2025, and we'll be ready for our move to consumer choice. We do welcome this change, although we do expect some volatility in the first half of next year, and we don't know precisely how the impact is going to play out. But with the size and quality of our network and our ability to provide deep liquidity and one-to-one consents across that network, we believe we're uniquely positioned to benefit from the new landscape that's going to emerge post-order. We do think that the order will have the greatest impact on our third-party channel. However, we also expect to see incremental gains in jobs done well, NPS, and retention that will place us squarely where we want to be with our customer experience. This is going to mean another decrease in revenue. I would say we expect our first quarter to be down about as much as the quarter just ended and in line with what we expect in the fourth quarter. But from there, we do expect to stair-step up and grow in 2026 based on what we know and is in front of us. We have confidence in that. We fully expect to hold our profit in 2025. Joey referenced it, and I referenced it. Given everything I've already mentioned, I think in the first quarter of 2025, we'll probably bump down from Q4 of '24, similar to the bump down from Q4 '23 to Q1 of '24, but then will improve sequentially each quarter along with the revenue after that. All of this together gives us real confidence in the financial trajectory of the business and our return to growth.

Thank you. Operator, next question.

Next question will come from Jason Helfstein with Oppenheimer.

Just one question, then a housekeeping question. So just to elaborate on that, I guess, for Joey and Jeff. I mean many of us have covered Angi HomeAdvisor for a long time, there's always been this big promise of a TAM you talked about in the letter. It's historically been hard to unlock, whether it's just word-of-mouth, Google, social media. Fully appreciate the improvement in efficiency in the business that you've been able to do. But I guess, why should investors get excited now that you finally figured out how to really unlock the growth that has been elusive for about 15 years, basically, in this vertical? And then a follow-up, just remind us the basis of the MGM stock and what's the tax treatment if you were to potentially sell that stake?

Thanks, Jason. Chris will take the second one. But the first one is the fundamental difference right now, which hopefully you've been hearing for a while, is an absolute obsession with customer experience. The folks who have succeeded at disintermediating Google, which is obviously a very tall order, or going after things like word of mouth, are the ones who have complete customer obsession in jobs done well. I think that change in our mantra is what's going to drive both pro retention that changes the economics of the business and allows us to reinvest in compelling ways. The homeowner repeat rate and homeowner satisfaction are also areas that allow us to reinvest compellingly. That is the difference, and that we're doing on a brand that is entirely dedicated to home services. That doesn't really exist in the market, and I think that just sides with us. Throughout the past, there has probably been an overemphasis on more shorter-term results and less on the longer-term investment in obsessive customer experience. That's what we've put in place and continue to put in place. If we continue to do that, I think we can build a compelling direct brand with homeowners that goes after those other portions of the market that you mentioned. You want to add to that, Jeff?

No, I completely agree.

And then, Jason, regarding the MGM stake, we currently own 64.7 million shares of MGM, with a basis just below $1.3 billion. IAC has net operating losses exceeding $1 billion, down from $1.4 billion at the end of last year. We are likely to utilize some of this year's losses to offset profits. However, with current trading levels indicating about a $1.1 billion gain, we have more than sufficient losses to cover this. Therefore, our approach is to view the market value of the shares as the appropriate perspective on our holdings since we can offset any taxable gains right now. Thank you. Operator, please proceed to the next question.

Next question will come from John Blackledge with TD Cowen.

Can you discuss the factors contributing to the overall revenue outperformance in DDM Digital, particularly how ad revenue has increased faster than expected, while performance marketing and licensing have been slightly lower? Additionally, can you explain the reasoning behind the mid- to high-single-digit revenue guide for Q4, especially in contrast to our previous low double-digit revenue growth in that quarter? Finally, could you provide any insights on the anticipated top line growth for DDM Digital in 2025?

Sure, John. Thank you. The third quarter digital performance was excellent across both traffic and monetization. Digital advertising revenues grew 26%, led by 14% growth in core sessions. We're happy to see overall sessions were positive for the quarter for the first time in a while. Traffic growth was particularly strong in our entertainment and food properties, and we continue to see momentum there. Direct ad sales were strong as well, perhaps even aided a little bit by advertisers pulling some spend forward into September ahead of the election. Programmatic was superb, with rates up 30% plus in the quarter. Performance marketing was disappointing, down 7%, with continued weakness in financial services, such as insurance and brokerage. That segment has improved this quarter, and we expect growth in the fourth quarter across performance marketing broadly. Licensing continues to be solid, driven by both our OpenAI partnership and Apple News, up 17% in the quarter. Overall, it added up to 16% digital revenue growth, our best quarter since we acquired Meredith. We were also happy with how that flowed down to adjusted EBITDA. We would highlight that aggregate adjusted EBITDA only grew slightly in the third quarter, but that growth rate is dragged down by an $8 million favorable tax release related to the Meredith acquisition that benefited our corporate expense a year ago. Digital EBITDA grew 28% this past quarter, and incremental margins were 42%. When you look at the fourth quarter, October was softer on both advertising spend and traffic than we expected, resulting in digital revenues being only up 7% in October for the month. We knew there'd be some challenges with the election, but consumer distraction and advertiser caution exceeded our expectations. For those who are newer to the story, please note Dotdash Meredith does not sell digital inventory on its titles to political advertisers. So there's no benefit from the election, just headwinds for the properties. The good news is DDM was the election was rapidly decided, and things are shaping up to come in during November and December with advertisers steadily returning. We know Thanksgiving is a week later, making things tighter in the overall holiday shopping period. DDM is pushing hard across its properties to drive both advertising and performance marketing, but we thought it prudent to guide fourth-quarter digital revenue to the mid- to high-single digits at this point. Now looking to 2025 and beyond, we are still confident in 10% digital revenue growth as the baseline for the DDM business. As we've said before, that will be roughly driven half by traffic growth and half by improved monetization. Individual quarters may bounce around above and below that 10% target, but we still have confidence in that as the long-term driver of the business. Thanks, John. Operator, next question.

Next question will come from Eric Sheridan with Goldman Sachs.

Two, if I could. First, with the decision to break out Care as a reported segment, I want to know if you could hit the refresh on where that business stands and how you're thinking about the market opportunity set ahead for Care in the years to come. And then secondarily, Joey, there were some cross currents in the letter, the depressed valuation of IAC ex-NG and MGM, but you also talked about the M&A environment being challenging from a valuation standpoint. Any reset or refreshed view on capital allocation broadly against what you see as the opportunity set?

Thanks, Eric. We've been considering the Care segment for some time, particularly in light of a potential Angi spin-off. Establishing Care as its own segment is logical as it operates at scale, reporting $365 million in revenue and $45 million in adjusted EBITDA over the past year. It stands out as the leader in the online digital marketplace, surpassing competitors in brand strength, audience reach, and the number of providers and families served. This creates significant potential for the business. The site currently receives between 7,000 and 10,000 job postings daily, along with 70,000 to 100,000 applications, yet we're only turning a small fraction of those into paying customers. This indicates that we have strong liquidity on both the supply and demand sides, suggesting untapped potential. Our new CEO, Brad Wilson, who has been with us for about a year, is focusing on enhancing the product and customer experience, particularly by leveraging AI and machine learning to improve match quality and gather better information from both families and caregivers. Enhancing these aspects could increase conversion rates and allow us to optimize pricing and packaging. COVID introduced some volatility in the business; it possibly accelerated demand for in-home childcare, though this faced challenges as people returned to out-of-home options. However, the enterprise side of our business has gained momentum, with more companies taking on childcare and eldercare responsibilities similarly to how they approach healthcare. This trend is expected to persist, allowing Care to benefit significantly from it. Additionally, while childcare currently dominates our business, sectors like senior care, adult care, and pet care are relatively underdeveloped but have potential for innovation. We have initiatives for senior care launching soon, which we believe will help tap into that market. We're optimistic about our growth in this sector. Brad Wilson is actively managing these efforts, and we'll monitor progress closely. Regarding capital allocation, nothing has fundamentally changed. We’ve been cautious, holding onto cash rather than pursuing M&A opportunities. This strategy is acceptable until we identify high-quality opportunities. We've discussed Barry's preference for share repurchases in the previous quarter, but all options remain open for capital allocation, and we continue to maintain a strong cash balance.

Thanks, Eric. Operator, next question.

The next question will come from Ross Sandler with Barclays.

Great. Back to DDM. Guys, on D/Cipher, there's a bunch of new information in the letter about how that's driving some improvement. Could you just talk about how the approach has changed with OpenAI now powering some of the number crunching at D/Cipher and how quickly you can roll that out to all your advertisers? And then more broadly, as we look out over the next five years, how can you take this technology to outside DDM inventory? And how big of an opportunity might that be?

Yes. It's a really important question. I'll start, and then I'll turn it to Chris. I'd say that the approach has changed with respect to D/Cipher. What we add to D/Cipher with the OpenAI integration is the ability, as you referenced, to start to address the off-DDM inventory. For a little while now, we've had DDM's inventory mapped nicely to outperform generally the market on intent, given the nature of DDM's inventory and the data we have, the unique inventory, and the unique data surrounding that. The performance has benefitted from outsized growth in CPMs and some of the stats we talked about regarding how D/Cipher advertisers perform relative to non-D/Cipher advertisers. What the OpenAI integration did was take that same mapping that we have inside of DDM and map it to around 30 million more URLs, or somewhere in that neighborhood. Now the ability, whether through partnership or by purchasing some of that inventory, is to upsell that inventory to advertisers to increase the size of their buy with us and to deliver better scale packages. We think we can deliver that in 2025, and we expect that to be a driver of growth unbound by the size of DDM's existing inventory. Do you want to add to that?

Yes. The only additional element to think about when you consider third-party properties is you have both the demand and the supply side. Right now, D/Cipher can address 100% of our supply. We've significantly increased our supply through the capabilities that OpenAI has brought to the product to score, and we can now transact across those additional 30 million websites that are in categories similar to DDM. The effect of supply that we can D/Cipher will only increase. On the demand side, Joey talked about this in the letter; right now, in terms of how our advertisers and agencies buy, only about half of the $640 million of digital advertising revenue is going through demand channels that were D/Cipher as addressable. As of now, demand that comes through essentially forward-contracted orders from advertisers and agencies can utilize D/Cipher. About half the revenue is coming from D/Cipher-inclusive campaigns, and the other half from non-D/Cipher-inclusive campaigns. We mentioned in the letter that the former, where D/Cipher is an element, are growing 25%, while the latter are growing about 5%. This clearly shows the growth driver that D/Cipher represents, but that's currently only half of our digital advertising demand. The other half comes either from direct programmatic orders essentially to Dotdash Meredith or fully programmatic orders across open ordering. The roadmap for D/Cipher is to make this offer applicable to those channels and to significantly increase the addressable demand side. So it's all part of the roadmap, and OpenAI was a key step. We continue to grow the supply side, and we also believe we will grow the addressable demand side through product investment and development. Thank you, Ross. Operator, next question.

The next question will come from Dan Kurnos with The Benchmark Company.

Chris, can I follow up on that? Are you fully distributed as you want to be within the ad tech ecosystem? Do you need to make any additional investments? We know it was quite a significant effort to bring Meredith up to Dotdash standards. Is there any more work needed to achieve complete D/Cipher coverage on programmatic? And then, Joey, we've been discussing this for a long time. You mentioned de-conglomeration. Is this a long-term shift in your approach regarding M&A for companies in your portfolio, potential spin-offs, or increased focus? What does this mean for your investments in Turo and MGM?

Sure, Dan, that's a good question. It's not a long-term change. We've always been de-conglomerating and re-conglomerating. Right now, our focus is on slimming down and executing strongly on fewer priorities. That’s our immediate goal. In the future, we might consider adding new segments to IAC, but for now, we are concentrating on refining and executing. We do have a substantial cash reserve, which gives us the ability to explore other options, and we will remain curious and open to new opportunities, whether they are part of our current portfolio or potential new additions. That focus hasn’t changed. However, in the short term, especially with the step involving Angi, we are more about reducing than expanding.

Dan, thanks. On the DDM question, breaking it down into a couple of elements. Post the combination of Meredith onto the Dotdash platform, we feel excellent about our programmatic stack and programmatic capabilities broadly. So the ability for us to transact with inventory that we don't sell directly and achieve excellent monetization is there. We feel great about the state of our ad tech stack and optimizing price, survey, frequency, etc., and Neil and his team have done an excellent job building that out. The two continuing efforts, which we've talked about in the past, are one, continuing to have D/Cipher integrate into demand-side platforms. We've previously mentioned the Amazon platform, and we're chipping away at others. The key step there is for them to accept non-cookie-based targeting and ad buying within their DSE. For some, this can be natural or a relatively straightforward step; others are entirely cookie-based, which requires them to reconsider their algorithms. However, we're making progress. The second is further integrating ourselves directly into the workflows of agencies and then large advertisers that transact directly. For us, that's a focus on developing the managed service capability that DDM can offer, where D/Cipher becomes increasingly productized and programmatic-like on a direct basis. We have talked about some ad tech acquisitions which may assist in this last initiative. All these elements are part of the D/Cipher roadmap and a core focus of DDM management, which is heads down, executing to make D/Cipher addressable to even more of the ad market. Thank you. Operator, next question.

The next question will come from Tom Champion with Piper Sandler.

Maybe for Jeff, I was wondering if you could elaborate a little bit on the comments in the letter on the Ads Pro product and the Leads Pro product unification. Is this a test? Did it already happen, maybe something you did in Europe? And then curious if you could talk to the relationship with the jobs done well metric, any connection there? Or would this amplify that trend?

Sure. So right now, the Ads and Leads business exists as two different products, but also on two different platforms. Fundamentally, it's the same transaction that happens. Pros pay us several hundred dollars for a bundle of leads or contacts with homeowners. So at the end of the day, the business deal isn't that different. However, operating it in two formats with some inconsistencies and setup on different technical platforms isn't necessarily optimal. We have set out to create a unified platform so that we can market consistently and run the business smoothly, and sell a single product to our customers rather than multiple products through various sales forces. We have been running a test to understand the efficacy of selling the single product. It is performing better than leads, and almost on par with ads, and we see a pathway to merging onto the same product. The same product will have a pro paying several hundred dollars for bundled leads. We would expect this change to be disruptive commercially or to the customer experience, since it’s fundamentally the same business deal. We believe migrating to the same platform will greatly improve our business. This is also likely to enhance the jobs done well metric. Currently, the difference between our Ads and Leads products is that Ads effectively buy a bill of ZIP codes across a single category, whereas Leads can specify tasks within a category and specify ZIP codes. This means the Leads product lends itself better to matching than the Ads product does. What we will effectively do is take the Ads product, which is a commitment product, and move it onto the Leads platform as a commitment product, but with the enhanced matching features that will materially improve jobs done well for that piece of our customer base. In short, we believe we will drive commercial efficiency and effectiveness in jobs as well. Additionally, this migration is similar in size to what we've already performed five times in Europe, and we are about to do the sixth by moving the Canadian business to the European platform. This is a core competency for Angi, and while these things aren't simple or easy, this is about as close to business as usual as it comes when it comes to executing one of these.

Thank you, Tom. Operator, next question.

The next question will come from James Kenny with Jefferies.

Can we just get a little bit more detail on the comment that you made around reducing corporate costs post an Angi spin? What specifically are some of those areas? And how much could we expect in terms of savings over the near, medium, and long term?

Sure. I'll start, and Chris can add to this. We're not putting a number out on it, James. We'll look at all corporate costs. Everything is on the table in figuring out what we need for a slimmer IAC that currently provides services for Angi. Some of those costs may go with Angi, and some of those costs may go away. We're beginning that exercise now, ensuring we preserve the ability to grow at IAC while doing it more efficiently and tightly.

Yes. It's an active analysis. Part of it is also looking at the corporate functions that Angi utilizes and understanding what the needs and level of infrastructure will be for those areas post spin. Also historically, when we have spun a company off, sometimes our people join the spun company to help build out functions that don't exist at the spun entity, as they've relied on corporate. So we're undergoing active analysis and will likely come back to you next quarter when we're setting out guidance for next year.

Yes. We have ongoing active conversations on efforts that we can continue in terms of optimizing our structure, but we have not fully fleshed any of it out yet.

Great. And maybe just one more quick follow-up on the macro environment that you're seeing within digital advertising. Obviously, a very strong quarter in Q3, but I'm curious what you're seeing, maybe by vertical or just generally in the macro landscape?

Yes. We talked about October already being a little bit light. From what we can see from the consumer standpoint, it seems reasonably healthy right now. When we look at MGM, Turo, and basket sizes in the commerce segment of Dotdash Meredith, we don't see the consumer we are interacting with retreating in any meaningful way; it seems relatively stable. However, October was a challenging month, with a lot of distractions.

Specifically regarding advertising categories at DDM, the slowdown in advertising spend was fairly broad-based. We saw in the last couple of weeks of October ahead of the election. Since that time, we've seen categories like retail, technology, and health come back strongly. Food and CPG had a robust September but were returning more slowly since the election. Home and travel continue to be slow, but that has been due to secular slowdowns for a while. Entertainment and media remains weak as streamers are broadly re-evaluating their strategies. We expect many of these categories to recover in the coming weeks as we ramp into the holidays. As we've said before, the Super Bowl for our food property is Thanksgiving and December, and the team is actively working to maximize that opportunity. Thanks, James.

Next question will come from Youssef Squali with Truist.

So a couple of questions. First on the data licensing deal, can you talk about OpenAI's contributions to the core? And generally, what does the pipeline look like, Jeff, with these types of deals? Once you do a deal with one big platform, you typically do deals with a whole slew of others, and we haven't heard of any yet. So maybe just provide some color on that. Then Joey, on the Angi spin-off, why just float the idea as a potential event at this point? What are you hoping to gauge before you make a final decision, and what is the potential timing for that?

Sure. I'll start, and Chris can add some detail regarding the licensing. Regarding the broader licensing landscape, you've got a number of term sheets since the OpenAI deal. There is some activity in the market, though we haven't reached any others of noteworthy scale in terms of transacting or announcing them. There is active dialogue. Different platforms have different perspectives on licensing. Some respect intellectual property more than others and may need some assistance getting there. We'll see how that evolves. Still, there are numerous active dialogues ongoing along those lines. On the timing question, it’s both tactical and legal. When you consider that, you must make a disclosure as an 85% shareholder, and that also allows us to explore the details of this with everyone necessary in the ecosystem. I do think it is highly likely that we will conclude that we will spin off Angi, but there are some processes and boxes we need to check with all constituents to get that done.

Thanks, Joey. And Youssef, with respect to the OpenAI deal, if you look at it, there are two parts to that license; one is a fixed component that we recognize ratably, and the other is a variable component that will true up at future dates depending on metrics. Right now, we're representing the fixed component. In Q3 of '24, licensing revenue was up about $4.1 million year-over-year. The majority of that would be driven by the OpenAI license. So on a quarterly basis, that's a good proxy for the revenue we're recognizing. The variable components will be calculated and recognized in the future. Thanks.

Next question will come from Ygal Arounian with Citigroup.

Can you provide more details on the licensing issue mentioned earlier? You indicated that AI addresses about 20% of queries. What trends are you noticing in that area, and what are your expectations for its evolution over time? Currently, it seems that traffic isn't heavily impacted; do you anticipate that this will continue? Additionally, you discussed term sheets, but you also mentioned the importance of protecting your intellectual property in your letter. Could you elaborate on that as well?

Sure. In terms of what we're seeing so far, when it's there, we see low to mid-digit impact. Sometimes actually it's positive; sometimes it's more, and at times it's less. It really depends on the category and our content. Remember that while the entire rollout indicates 20%, that’s only a subset of our traffic. So when you put all that together, the overall impact on Dotdash Meredith is minimal. We don’t know how the UI evolves, nor do we know how penetration will evolve. I do believe that penetration will continue to grow, and we expect to continue to feature prominently in the AI overviews because our content usually is, from my perspective, some of the best. We invest a lot in that content, ensuring it is accurate and well-sourced. Therefore, it earns its place in AI overviews and other contexts in terms of users digging deeper into our content. So we think we're in a good position and believe we've held our ground, expecting to continue to do so. However, markets evolve quickly, and it's something we're keeping a close eye on. This connects back to your second question regarding traffic; if users utilize our content without sending us audience or compensating us in another manner, we have to protect our intellectual property to ensure fair compensation. So far, that has not been a problem, but if it becomes one, we will certainly protect it.

Operator, one more question, please.

And the last question will come from Nick Jones with JMP Securities.

Jeff, regarding Angi, the monetized transactions per service request are showing improvement, but we observe a decline in the number of service professionals and a slower decrease in monetized transactions compared to service requests. How should we approach this metric moving forward? As we anticipate growth in 2026, can we expect this metric to remain stable or continue to increase? Are there any obstacles we should consider as we plan for growth in this business? Joey, on the topic of M&A, what insights can we gain from the recent valuations, which seemed to outpace the market? Following the election, there are indications that valuations could rise. Does this suggest a prolonged period of difficulty for M&A activities? Are there any lessons from previous experiences that might lead to different outcomes this time?

I'll start with the first question. There are several elements to address. Our monetized transactions per service request are increasing as we manage our service requests according to the capacity in our system. With the anticipated increase in revenue growth in '26, we also expect monetized transactions to start growing again. Additionally, the current base of service professionals is surpassing our growth expectations, as our retention rates are improving. If you look at acquisition normalized over the past couple of years, growth in the service professional base becomes evident. However, because we have reduced acquisitions of low-profitability service professionals, you may notice a decline. As we approach what you referred to as a floor, by eliminating lapsing traffic through our shift to consumer choice and optimizing our sales force and acquisition strategy with our professional marketing, we plan to effectively launch in 2025 and increase across all these metrics in 2026. I hope that clarifies the different aspects and explains why we are observing growth despite some apparent declines in our metrics.

Regarding your other question, what's essential in any environment is having an edge in the pursuits you undertake. That’s certainly what we’ve aimed for and will continue to pursue. Reflecting on our last major acquisition, the largest being Meredith, the timing wasn’t ideal and we missed some aspects related to the benefits of COVID. However, the strategic value of that transaction has proven true. The reason we are managing to do reasonably well with that acquisition, even if not as well as we initially hoped, is due to the strategic execution we implemented, modernizing what was previously an outdated digital business and enabling us to gain market share as a publisher. We did face significant macro challenges that we underestimated, but the strategic component was crucial for our survival and success as a digital publisher. We will keep searching for that edge. When we identify it, it becomes a possibility, which is what we’re always striving for.

Thank you, everyone. Thank you, operator. I wish everyone a good day, and thank you for your time.

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