Earnings Call Transcript - ANGI Q1 2021

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

Good morning, everyone. Glenn Schiffman here, and welcome to the IAC and Angi Inc. First Quarter Earnings Presentation. Joining me today is Joey Levin, CEO of IAC and Chairman of Angi; and Oisin Hanrahan, CEO of Angi Inc. Similar to last quarter, supplemental to our quarterly earnings releases, IAC has also published its quarterly shareholder letter. We will not be reading the shareholder letter on this presentation. It is currently available on the Investor Relations section of IAC’s website. I will shortly turn the call over to Joey to make a few brief introductory remarks, and then we’ll open it up to Q&A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate, or similar such statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed here today. Some of these risks have been set forth in IAC’s, Vimeo’s, and Angi’s first quarter press releases and our respective reports and filings with the Securities and Exchange Commission. 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 this call. I'll refer you to our three press releases, the IAC shareholder letter, and again, to the Investor Relations section of our websites for all comparable GAAP measures and full reconciliations of all material non-GAAP measures. Now let's jump right into it. Joey?

Joey Levin, CEO, IAC; Chairman, Angi

Thank you, Glenn. Thank you all for joining us. I know it’s a very busy week for many of you. I'm participating in a lot of these calls across Match, Angi, and IAC, and I appreciate the time everyone is putting in to be here. I'm grateful to be here, grateful to be alive, healthy and well, and grateful for a lot of positive momentum in our businesses right now. We had a really strong Q1 and we have a great outlook for the businesses, for our leaders, and for how our customers are interacting with our businesses. It feels like good, solid positive momentum, and that's always a good place to be to start the year. I want to especially thank Glenn for his work in getting prepared for this, and again, not just preparing all of us, but also Anjali and Narayan for their first call, who I think did a great job. Also, as you know, Glenn is acting as CFO of Angi, so he's got a few full time jobs right now and is doing a wonderful job and prepping Oisin who joins us for the first time. I want to welcome Oisin, who is doing phenomenally in his first few weeks — it already feels like months — on the job, moving at a breakneck pace to get things going in the business, change things, grow things and start to take some risk with a big, ambitious vision. I'm sure you'll have plenty of questions for him, and so I don't want to get in the way of that, but we're in a fun place right now, and it's good to be here with all of you. So, let's get to those questions.

Mark Schneider, Moderator, Investor Relations

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

Cory Carpenter, Analyst, JPMorgan

Great. Thanks for the question. I think Joey is right. Oisin, we're looking forward to hearing from you, so hoping you could start off with your broader vision for Angi. Key priorities, maybe what changes, what stays the same. And then a follow-up for Glenn, just around the rebranding: why was now the right time? Could you unpack some of the investment areas you talked about in the letter? Thanks.

Oisin Hanrahan, CEO, Angi Inc.

Thanks so much, Cory, great to be here. I'm really excited to share the vision for Angi. I'll start at the very top. This is a $500 billion market. We've alluded to it before, but we've never really staked our claim to it. We've talked about the take-rate model and all the different ways that we can play in it, but today we're shifting away from thinking about this as a percentage of a percentage. Instead, we're going to think about the whole market. The reason that's important are two things I'm going to talk most about today, which are what we're doing for the customer and what we're doing for the pro. If you think about what the customer really wants, when they come to Angi and say they want to get a toilet replaced or they want to get a deck installed, what they want is to get the job done. That's the critical thing. It's not that they want to be matched with a pro and then step away and say, so long, thanks. They actually want to get the job done. Where we offer that service — where we offer the ability for the customer to get the job done — we're seeing really strong momentum. You've seen the results on Angi Services: $55 million in Q1, growing 66% year-over-year. The most significant part of that is that we're growing without spending on consumer marketing. So, we're growing that off of the demand we've got in our marketplace business and off the demand we've got in the leads and ads business. That's a significant shift. On the pro side, it's about ROI for the pro. It's about how we help them grow the business — whether it's a pro at the beginning of their lifecycle trying to make payments on their F-150, a pro in the middle of their lifecycle trying to buy a house, or a more mature pro trying to hire more people and take some time off. All of them are turning to us to help grow their business. That's a significant shift we're going to make. Those two things — help consumers get the job done and help pros grow their business — and within all that we're going after the $500 billion account.

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

On the back of that vision, excitement, and opportunity, we're going to invest. We talked about in the letter a couple of different examples when we saw different things inside of Vimeo and Dotdash that caused us to get excited and enthusiastic about going all in. That's what we're doing here against the vision for Angi Services and the vision for making it very simple to do tasks and jobs on your home. In terms of how that translates into numbers, we talked about a $60 million investment this year in Angi Services. Recall we invested about $40 million last year in Angi Services. So on a year-over-year basis, that's an incremental $20 million. We talked about in the letter the short-term investment and financial impact on the rebrand is $40 million. You'll also see some expenses against service professional acquisition, retention, engagement, and all the service professional initiatives that Oisin talked about. We're trying to change that ROI dynamic for the service professional, so that'll be a significant investment year-over-year. To help you with the quarterly cadence, we did about $23 million of EBITDA in the first quarter. We think that's about the number for the next couple of quarters — second, third, and fourth — and then we'll revisit how we think about 2022 as we get closer. On the back of the vision and redefining the TAM, we were looking at single-digit margins this year, and in all likelihood, single-digit margins for next year.

Mark Schneider, Moderator, Investor Relations

Our next question will be from Brent Thill at Jefferies.

Brent Thill, Analyst, Jefferies

Thanks. Good morning. Joey, Dotdash accelerated again 67%. You said in the letter it's underappreciated. I'm curious if you can walk through the underappreciated component that you see, and as a follow-up, I'd love to hear a little more about Care and what the next chapter is there?

Joey Levin, CEO, IAC; Chairman, Angi

Sure. There are two big things happening at Dotdash right now leading to the current performance and what I think is a sustainable future outperformance relative to other publishing businesses. The reason I say underappreciated is maybe it's our own insecurities — people don't talk about Dotdash as much as they talk about other publishing businesses, and that's okay. The two things working for the business are: one, it performs for advertisers. We've talked about the Top 25 advertisers concept in Dotdash before. I think of the Top 25; that cohort in aggregate is spending 110% in Q1 2021 compared to 2020. The fact those advertisers are coming back — you typically don't see that in a publishing business because advertiser spend can be more variable — but ours are recurring because the content performs. The second point is that the content has real utility and context. We don't need personally identifiable information to know what's relevant. If someone searches for making lasagna, they want lasagna. The people who want to sell products to people making lasagna can reach them at that moment. Same for planning a trip or thinking about healthcare. A large portion of the market was using other content to aggregate personally identifiable information and then triangulate interests. That was effective, but what's happening now is platforms and individuals are changing their trade-offs; that model is less acceptable. Advertisers who spent on that model need another model to reach users. They can do that through our platform without personal information; our users can remain anonymous and still see relevant ads. That works for both users and advertisers. The thing that underlies all of that is fantastic fresh content. We're investing a lot in content — spending more as a percentage of revenue than ever before — and we want that to continue to outpace the market. Put those things together and it's a compelling business. We'll continue acquisitions there because we have a system that works and a team that can scale. On Care: it's early but we're making good progress. In the core business, we'll make enrollment simpler for seekers and providers, collect better information for matching, and ultimately complete the transaction closer to on demand. Care at Work for enterprises is a good example of a part that was small and is now large and growing very fast — the fastest-growing piece of the business, growing over 100% year-over-year for the last four quarters. COVID-led macro trends have impacted workforce diversity and childcare; enterprises recognize they need solutions like Care to keep diversity. We're seeing large corporations look at our platform. Longer-term, we can expand from childcare to senior care, remote care, mental health, and healthcare adjacencies. Short-term, it's nailing the product, making enrollment seamless for seekers and providers, and bringing enterprise and government into the system to help fund some of it. We see a very large market; $77 million of revenue in the quarter is a tiny drop in the bucket of what can happen.

Oisin Hanrahan, CEO, Angi Inc.

That's correct.

Mark Schneider, Moderator, Investor Relations

Our next question will be from Justin Patterson at KeyBanc.

Justin Patterson, Analyst, KeyBanc

Great, thank you. For Oisin, welcome to the IAC and Angi calls. Could you talk about the opportunities you see from unifying Angi under one brand? Likewise, service professional capacity has long been a challenge for Angi; does it make sense for you to take a more aggressive approach around controlling the supplier relationship like Zillow and others have done? And then for Glenn, given the past experience with transitions from about .com and ServiceMagic, what's your expectation for when we could see that Angi brand and domain changes switch from a headwind to a tailwind?

Oisin Hanrahan, CEO, Angi Inc.

Thanks, Justin. I'll start with the brand question. If an outsider assessed Home Services and saw our brand chart and our org chart with three customer service teams, three product teams, three operations teams, and three pro acquisition teams, they would think our brand is a work in progress. We have a huge opportunity to pull it together under a single brand and focus on the problems customers and pros actually face: getting the job done for customers and growing the business for pros. Today we're segmenting by brand, but customers care about verticals. A customer who wants a toilet repaired, a deck replaced, or a bathroom remodeled only cares about an amazing experience in that category at that moment. By focusing on category brands instead of multiple brands, we can segment by vertical and point teams at taking each vertical from tens of millions of dollars to a category-leading business. That will take time and significant investment. On capacity, we have a huge opportunity to gain more capacity in our marketplace business. Our marketplace gives us breadth — 32 million service requests from roughly 20 million households served by a quarter-million pros — more breadth than anyone else. Where it has failed is depth, and that's where the services business comes in. The services business provides deeper supply and we've seen the impact: in April last year our biggest day in services was around $300,000 of work done in a single day; in April this year we hit over $1 million of work done in a single day. That's a large increase in capacity adding to our marketplace via services. We need to do better on raw capacity in the marketplace and leads business, which is about better self-enroll, better pricing, and better retention via ancillary benefits for pros. One of the biggest things we rolled out is a payments product that's clipping about $2 million a week in payment volume — a $100 million run rate. In the last few weeks we've seen multiple days over $400,000 in payments processed in a day. Pros that use payments retain at a far higher rate. So, we are looking holistically: how do we get the job done for consumers vertical-by-vertical under a single brand and deliver more ROI to pros through better pricing, Angi Services, and ancillary benefits like payments?

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

To answer your question on headwinds and tailwinds with the brand, brand unification will probably create a headwind for the entire year and maybe into the first quarter of 2022. Supply constraints are a slight headwind and some comps may be a headwind. The massive tailwind is the Angi Services business. Notwithstanding the headwinds, we think we still hit the revenue numbers we talked about for this year, maybe a little higher. For the second quarter, we think probably mid-double digits, maybe a little lower, in revenue growth; third quarter mid-double digits; fourth quarter, again on the back of Angi Services, hopefully some supply constraints lifting and the more muted effect of the brand change, we think we'll pierce through to 20% and accelerate into next year. The path will not be linear and you'll see volatility in monthly metrics. For example, May last year we were down roughly 2% year-over-year; in May we were up 15%. So I think you'll see a May uptick in our monthly metrics around 10%, probably June 10%, but we'll average mid-double digits for the quarter and then accelerate. We're also seeing potential wonkiness in underlying metrics where SRs may decline in May, June, and into the third quarter, but since we're servicing customers better you'll see monetized transactions go up — and remember, we get paid on monetized transactions, not service requests. That's what we're doing with our investments in SP acquisition, retention, and engagement and with Angi Services. We're changing that dynamic under Oisin's leadership.

Mark Schneider, Moderator, Investor Relations

Our next question is from Ross Sandler at Barclays.

Ross Sandler, Analyst, Barclays

Hey Joey, going back to Dotdash, the Q1 and the April run rate are robust and both the one-year and two-year stacks are accelerating. Digital advertising is on fire right now. Can you put some numbers around how to think about growth for the balance of the year, 2Q and beyond as you get to tougher comps later this year? Do you need to build out revenue beyond that Top 25 you mentioned? And lastly, given the M&A activity recently with other media assets changing hands, now that Dotdash is firing on all cylinders, has that changed your thinking about appetite for larger versus smaller tuck-in acquisitions?

Joey Levin, CEO, IAC; Chairman, Angi

Sure, Ross. I'll let Glenn do the growth rates and cover the other two points. Beyond the Top 25, yes, we have to build out the broader advertiser base. There are two areas to think about: the Top 25 are direct-sold premium relationships with premium pricing; then there's private marketplace and the rest of automation and programmatic. Many of those advertisers come in and out of the market frequently. The work for us is to move those advertisers into direct relationships at higher price and more guaranteed inventory. That's how we grow the Top 25 to the Top 50, Top 100, or Top 500. The performance side is a fantastic business and has been a big beneficiary of strong demand; those growth rates probably aren't sustainable forever and will decelerate as people go back into the real world. But we still have many categories to go into on the performance side. We're methodically looking at categories where users need help making decisions and where existing content is biased or over-monetized. We build pure editorial content that helps consumers make decisions and then monetize the links. So there's probably a macro deceleration but micro opportunities to grow into more categories. On acquisitions, yes, we're looking bigger. There's not a lot big available, but we have appetite for larger deals. Everything we've done so far has been relatively small — maybe $50–$75 million — but we'd like to look bigger if we find the right thing.

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

Ross, we're still an attacker; we're not number one in these categories and each category is tens of billions in size, so there's a lot of runway. For revenue cadence, two stats: nine of the last 11 quarters greater than 20% revenue growth; five of the last eight quarters greater than 30% revenue growth. Advertising growth will decelerate through the year — we're enjoying strong ad rates and a favorable comp as companies tapped brakes on advertising in 2020. Performance-based marketing grew nearly 100% this quarter and will naturally decelerate as we comp COVID behavior. I think you'll see a steady deceleration, but we feel confident this business is north of 20% grower for the foreseeable future at attractive margins.

Mark Schneider, Moderator, Investor Relations

Our next question will be from Kunal Madhukar at Deutsche Bank.

Kunal Madhukar, Analyst, Deutsche Bank

Thanks. Couple if I may. I was intrigued by the chart in the letter talking about frequency changes with the fixed price experience, and at the top of that chart was member with apps which was almost seven times. That would suggest for every service request a customer could have in their household they are coming to Angi. From that, how much of those service requests are you able to fulfill now? As you invest another $60 million in liquidity this year, how much more will you be able to do by the end of this year?

Joey Levin, CEO, IAC; Chairman, Angi

Kunal, I'll let Oisin answer the detail, but one piece: we've talked about homeowners doing maybe 6 to 8 jobs a year, and when you see a member with the app doing 6.9 jobs with us that could be all of them. We also believe homeowners could do a lot more jobs if the process were easier. The default experience in the category is unpleasant — a lot of haggling and hassle — so frequently people avoid the job. If we deliver a pleasant default experience, which we've been doing at a relatively small scale, homeowners will likely do more jobs and that could be transformational. What portion we get is hard to know but we think it's possible.

Oisin Hanrahan, CEO, Angi Inc.

It should be easier to get the job done at a fair price for the customer and at an ROI-positive price for the pro, but it's hard. That's why we're proud of the chart. I'll walk through it. On the left is the repeat rate for a consumer who comes into our traditional service request business: 1.8 times in the first 365 days. To the right are three segments where the consumer's first booking is a full Angi Services job — they check out, enter payment, Angi Services fulfills the booking, sends the pro, the pro does a great job, and we pay the pro. You see three segments there and repeat goes from 1.8 to 3.3. We've layered on membership: consumers can become members for $30 a year and get up to 20% off a number of services; with that, repeat goes to around 5.8 in the first year. We have about 100,000 members today in that category. The 5.8 is a combination of Angi Services bookings and service requests — people who make an Angi Services booking also submit more service requests. It's a positive loop. The 6.9 bar is consumers who had an Angi Services booking as their first booking, joined as a member, and downloaded the mobile app — our most engaged users. That's where we're trying to go. We have a business at roughly $250 million run-rate, $55 million last quarter growing 66% year-over-year, and importantly, we're doing that without spending incremental consumer marketing; the growth comes from repeat use and our monetized demand. Yes, we must bring on more supply to fulfill these jobs; we're working hard on that and Glenn spoke to the investment to bring on that supply. If we unlock this, it unlocks growth for Angi Services.

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

Let's have some fun with numbers. 32 million service requests last year from 18 million homeowners get you to the 1.8 repeat. If we can take that 18 million homeowner base and take 1.8 to 2.0 — and our ambition is significantly higher — that 0.2 against 18 million is 3.6 million additional service requests that we don't have to pay any marketing for. We monetize service requests at roughly $70 per SR. If we can achieve that, that's about $250 million of high-margin revenue that would fall straight to the bottom line over time. That's why we're excited and why we green-lit a significant investment.

Operator, Operator

Our next question, can we go to Jason Helfstein at Oppenheimer.

Jason Helfstein, Analyst, Oppenheimer

Thanks. Joey, I want to ask about M&A and uses of capital. Post-Vimeo you have businesses generating meaningful cash flow. First, is it important that you have a business that generates cash flow after the spin? Second, to the extent you guys are value-oriented buyers, some verticals have high valuations like Dotdash and gaming. How should we think about uses of the balance sheet? Do you need to buy a cash-flow-generating business given the investment motive in Angi in the short-term?

Joey Levin, CEO, IAC; Chairman, Angi

That's a discussion we have internally. I wouldn't say we have less cash flow than prior spins; Glenn can verify, but in aggregate I think we're in a similar neighborhood. Having cash flow provides an important safety net and runway for reinvestment, and that's something we'll consider. There are opportunities in every market. Things seem rich in gaming and some verticals, but we've found attractive opportunities before — Care.com was one. We don't have to buy things at low current multiples; we have to buy things where we have a clear vision for a large future. That's possible in any market, though perhaps harder now. Our priority is our existing businesses and finding bolt-ons in publishing, care, and Angi. Post-Vimeo, IAC is in a position where buying back stock makes sense and we'll buy back stock when appropriate. Historically we've bought back significant amounts after spins or bought new companies. Both are possibilities. We're optimistic we'll find acquisitions that make economic sense. Our sweet spot has been several-hundred-million-dollar acquisitions, and that's probably where we'll focus, but we'll remain opportunistic.

Mark Schneider, Moderator, Investor Relations

Our next question is from Dan Salmon at BMO.

Dan Salmon, Analyst, BMO

Good morning, everyone. Could you get into details of the $16 million investment at Angi? In particular, how much is about learning to price jobs? Is it fair to compare that to promotional spend in other marketplaces like mobility and delivery, or do you really have critical mass on both sides and it's simply a matter of learning how to price at scale? Glenn, given what you said about the reframe to a gross approach, is north of 20% still the right long-term growth target?

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

We think north of 20% is still the right long-term growth rate. We're reframing the opportunity to a larger TAM, not just a take-rate of a smaller TAM. On the $60 million investment in Angi Services, it's not just promotional; it's diligence around pricing the jobs at national scale across roughly 40% of our categories, which is about 200 categories. There's an investment to price the jobs correctly. Second, there's investment to fulfill the jobs and ensure the pro shows up on time. Third, investment to ensure the job was done well, follow-up and intervention through the process to ensure an excellent experience. There's human intervention in those three elements. Fourth — and probably the biggest investment — is to automate the top three over time so humans are not involved. We want to productize home services the way the Handy team did well. That's our blueprint. We see how it got done and we're applying that across our categories.

Mark Schneider, Moderator, Investor Relations

For our next question, can we go to Nick Jones at Citi?

Nick Jones, Analyst, Citi

Thanks for taking the questions. An update on consumer behavior at Angi: are homeowners more willing to let service providers into their homes today? Second, on creating liquidity at Angi, how much is becoming more focused on driving volume to the best service providers versus continuing to add breadth? Many providers have lumpy work; by providing consistent work, you might reduce prices or get more consistent metrics. Any color would be great.

Joey Levin, CEO, IAC; Chairman, Angi

A few macro trends: there's a snapback as people leave their homes and return to normalcy, which has led to softness in outdoor tasks as people shift toward indoor tasks. We're also seeing pent-up demand from new homeowners — millennials are buying homes and those homes need more work due to low inventory. Third, there's a shift from offline to online. Those trends together mean we may see softness in service requests in the near months, but we expect the shift toward homeownership to be positive for us over time. Regarding distribution of demand across the pro base, for Angi Service pros where we achieve density in a market — and density is fewer jobs than you might think — pros engage more on the platform. As we drive more jobs to a market, the individual pro does more bookings and stays longer on the platform. In the marketplace business we need to improve pricing for pros. Glenn mentioned the significant EBITDA upside if we can drive more consumer demand. We can invest that into better pricing for pros to help them grow. Our pros want to grow their businesses. We need to help them self-enroll, fine-tune their geo-task combos, and get better pricing for the leads they need. We have more pros than anyone else — about a quarter million — and if we maniacally help them grow, we can grow capacity in a positive way. That likely involves combining our products — leads, ads, and Angi Services — historically under different brands, but pulling them together gives us the opportunity to help pros grow across segments of our marketplace.

Mark Schneider, Moderator, Investor Relations

Our next question is from John Blackledge at Cowen.

John Blackledge, Analyst, Cowen

Thanks. On MGM, could you provide thoughts on the investment, which was a different use of capital than typical for IAC? What's the endgame there and would you look to get a bigger stake over time? Also, online employment marketplaces — you have stakes in Bluecrew and Vivian (formerly NurseFly) — what's the opportunity in this emerging segment? With Bluecrew, are you seeing a tight labor market given stimulus?

Joey Levin, CEO, IAC; Chairman, Angi

On MGM, we're very happy with where we are. We had a few hopes and those are largely playing out, perhaps faster than we thought. MGM is over-capitalized now and the Vegas rebound is occurring — the convention business is the remaining proof point but we're optimistic. The digital business is compelling: they recently shared growth of roughly 400% year-over-year in digital, which is very strong. The full integration of physical and digital consumer experiences is an area with a lot of potential. We'd love to own more and it could make sense for us, but we're open-minded. On Bluecrew and Vivian, these are small but promising businesses. Bluecrew saw a near-term tight labor market where for a period people were unwilling to take on work even at a premium; that's thawing. Our thesis is that in certain categories where hire-ability is somewhat binary (you have the certification, you can lift a certain amount, you can show up on time), software can match employers and workers more efficiently. We can verify capability and past reliability, and platforms can enable employers to scale up or down faster. Software improves commute costs and many other frictions. We view the future as obvious: for many categories, employers and workers will use software to match rather than phones or informal methods. Both Bluecrew and Vivian are tiny but growing nicely and we're putting capital behind them, though we have more to prove in both businesses. We would absolutely consider building or buying other verticals in that segment.

Mark Schneider, Moderator, Investor Relations

Our next question will be from Youssef Squali at Truist.

Youssef Squali, Analyst, Truist

Great. Two quick ones. Glenn, on Angi Services fixed-price revenue is recognized on a gross basis, not net. As the mix shifts, shouldn't growth accelerate more than historically discussed because of accounting? And on long-term margins, you historically talked about Angi supporting maybe 35%-plus margins. With the accounting changes and Angi Services becoming larger, can you help us think about potential long-term margin? Oisin, you've had success with Handy; as you scale that playbook to a much larger platform, what are the one or two toughest friction points investors should worry about?

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

We changed revenue recognition in 2020, which gave an artificial lift then. Now all numbers are gross. There's a slight uptick as we get into larger tasks versus smaller ones — roughly a 1% accretion in growth rate from that mix shift — but it's not material. On long-term margins, we've long talked about a 35% target for the traditional marketplace business (HomeAdvisor/former Angi). We still believe that holds for that part. But as we push aggressively into Angi Services, which could be a significant part of mix — potentially even 50% over a multi-year horizon — Angi Services is not a 35% margin business and may not be EBITDA-positive for two to three years as we grow and go deeper into more tasks. So you need to think about the blend: apply 35% to our traditional marketplace and a substantially lower number, possibly negative for a number of years, for Angi Services to get to blended margin. We'll make progress on scale and marketing efficiencies and on product and G&A over years, but we'll give back much of that on increased cost of goods sold. The framing to keep in mind is we're less focused on percent margin and more focused on aggregate EBITDA dollars and the ability to add services and adjacent revenue such as payments, financing, and subscription. Percent margins may be down relative to past framing, but aggregate EBITDA opportunity can be higher over time, recognizing this is a long-term build and will take years.

Oisin Hanrahan, CEO, Angi Inc.

We're tiny relative to a $500 billion TAM. The opportunity is large and we're aggressively going after it. As we invest in Angi Services, we'll move from smaller tasks Handy was known for into much bigger tasks — $3,000 to $10,000 jobs and even larger remodels. Right now we have a couple of large tasks where we'll take full responsibility for the project and project-manage the job. That's where we have work to do. I split ownership of the business so Bryan Ellis runs the marketplace (leads and ads) and Umang, my co-founder from Handy, runs Angi Services. It will be bumpy and challenging; that's deliberate to give dedicated focus. Given current data, Angi Services may cost more than we think but could grow faster than expected. We're excited about potential because of customer retention, repeat use, and pro engagement when we help them grow their business using Angi Services alongside the marketplace. No one else is combining these approaches to be the category winner.

Mark Schneider, Moderator, Investor Relations

We'll take our last question from Ygal Arounian at Wedbush.

Ygal Arounian, Analyst, Wedbush

Thanks for squeezing me in. Quick ones: on the rebrand impact, can you quantify what's been so far? You talked about being at 40% of categories for Angi Services. Historically you discussed a 50:50 revenue goal — can you talk about the goal and timeline for reaching that kind of mix by category? On the payments side, that seems interesting: what are the benefits for pros using payments and do you expect to bring all pros using Angi Services onto your payments platform?

Oisin Hanrahan, CEO, Angi Inc.

I'll hit payments first. Today payments are available to marketplace pros and that's about $2 million a week — roughly a $100 million annual run rate. Interestingly, about a third of those payment requests are going to non-Angi customers; those pros request payment from their non-Angi customers, who then have to download the Angi mobile app to make payment. That's pros effectively doing customer acquisition for us. That shift is interesting. On the 40% point: today about 40% of our service requests are shown some version of Angi Services. That doesn't mean it's shown aggressively on the page — there are ways to show it in different positions: top of page, middle, bottom, slide-over — and currently we're probably only showing it aggressively to less than half of those people. Long-term, I believe we should be able to offer Angi Services as an option for nearly every single task. If we can do $150,000 or $200,000 remodels, we should be able to offer Angi Services for essentially every task as an option alongside the marketplace model of leads.

Glenn Schiffman, CFO, IAC (acting CFO, Angi)

Ygal, I'd rather not mark-to-market exactly where we are on the impact of the rebrand — it's been six weeks. Our observable inputs support the $40 million EBITDA impact for the year we mentioned. We think we've hit bottom and are building from here, but that build may be slow and headwinds could continue into the first quarter of next year. We may also decide to spend more to fuel recapture and domain authority around the new brand. As always, we'll keep you posted. I'll turn it over to Joey for closing remarks.

Joey Levin, CEO, IAC; Chairman, Angi

Just to add, we're past the most harrowing part of a rebrand. We've done these before: ServiceMagic and transitions at Dotdash. The biggest impact is in search traffic: traffic goes down and then comes back up. We're past the decline and in the recovery stage, which is comforting. The pace of recovery is hard to predict; we do our best but it's difficult. We're confident it was the right decision for the business and that we are doing what we should have done some time ago. We're in a position to build and win as a long-enduring brand in the category. We're excited about where we're headed. We've got big bets, scary bets, and fun bets, and we're excited about where we're going. Thank you all for joining us and we will speak to you next quarter.