Earnings Call Transcript - IAC Q3 2023

Operator, Operator

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

Christopher Halpin, CFO and COO

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC and Angi Inc. Third Quarter Earnings Call. Joining me today is Joey Levin, CEO of IAC and CEO and Chairman of Angi Inc. Similar to last quarter, supplemental to our quarterly earnings releases, IAC has also published its quarterly shareholder letter, which is currently available on the Investor Relations section of IAC's website. We will not be reading the shareholder letter on this call. I will shortly turn the call over to Joey to make a few brief introductory remarks, and we'll then open it up to Q&A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate or similar statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in IAC's and Angi Inc.'s third quarter earnings releases and our respective filings with the SEC. We'll also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during the call. I'll also refer you to our earnings releases, the IAC shareholder letter, our public filings with the SEC and again, to the Investor Relations section of our respective websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. Now I'll turn it over to Joey.

Joey Levin, CEO

Thank you, Chris. Good morning, everybody. Thanks for spending time with us this morning. It's nice to have both Dotdash Meredith and Angi growing again on the bottom line, and I think we have a lot of great work happening at the businesses that should be able to keep that profit momentum going. At Dotdash, the momentum really starts with audience, and those trends are good right now, even with Hollywood on strike, because we're investing a lot in our content and our platform. We have an attractive and growing audience, a unique high-performing ad product to sell, and industry-leading e-commerce capabilities. If we have a decent ad market through the rest of the year and into next year, I think we're in great shape, and all the work we've done on the cost side should help more of those dollars flow through. At Angi, we're making our paying customers happier. The service professionals are retaining longer and spending more over their lifetime, which means they're making more homeowners happy. We believe that means we're delivering a better overall experience, which is how we earn our margin, and you can see that showing up in profitability in the business. Profitability isn't our only priority or even really our biggest right now, and I don't think we've reached maximum profitability yet on our existing service professional and homeowner base, but one of the things we're learning is that optimized customer experience, the way we're looking at it today, which is our biggest priority, happens to line up well with profitability because it means we're making more and better matches on our platform, which makes each transaction more valuable. When we're making more matches on our platform, we think we're lifting win rates for pros and we're lifting customer satisfaction for homeowners. So all the steps we're taking may not yet optimize the P&L, but they do prioritize optimization for customer experience, and we believe that's long-term how we're going to win this category. I know patience here isn't easy, but that's how we're thinking about it, and we're generating more cash flow in the meantime. We've got a lot to work with throughout IAC right now. MGM and Turo are, in my opinion, in excellent shape with exceptional leadership, and we're grateful to be a part of those businesses. But we've got plenty to discuss today, so let's get to questions, operator.

Operator, Operator

We will now start the question-and-answer session. Our first question will come from Jason Helfstein with Oppenheimer. Please go ahead.

Jason Helfstein, Analyst

Thank you for taking the question. Good morning, everybody. So kind of one two-part question. So can you help us understand with respect to kind of the guidance for the full year, in some cases being at the low end of the prior range, how much of that is revenue-related versus margin-related? So just if you can give us some color as far as we are seeing, particularly Meredith Dotdash and Angi with respect to the revenue outlook. And then secondly, particularly with Angi, I would imagine that the business is suffering from given where rates are and the pressure on homeowners and borrowing costs, et cetera, as well as lack of housing transaction volume. If we get into an environment where rates come down in the back half of next year, housing volume comes up, et cetera, maybe how do you think about that impacting Angi and on the discretionary side? Thanks.

Joey Levin, CEO

Sure. Thanks, Jason. Maybe I'll let Chris do the guidance question. But overall, on Angi macro, I still think that what's happening to the business today is much more our hand than it is the market happening to us. And that's the proactive actions we've taken, and we've talked about a lot on improving the quality of our customer experience, our homeowner experience, our pro experience. And we're continuing to make improvements there. And that does take a hit out of revenue. I think from our estimate was in the beginning of the year, the market was probably down, overall market, not us, probably down in the 5% to 10% range. And I think now it's probably our estimates are closer to flat to maybe up a touch. But the changes that we're making obviously have taken us down. The active real estate market or a more active housing market, I think is generally good for the demand side of our business. And when homes transact about $15,000, we think in work that happens per home transaction. So that creates a lot of movement in the industry. The flip side to that is that pros are busier. And so pros may need less business in those times. And so we've talked about that kind of natural hedging in our business where if pros are doing less work, they're more eager to be on our platform. And the flip side is homeowner demand goes up in those scenarios. We are not anticipating any meaningful movement in the market up or down. We think we're reasonably well-positioned to handle either one of those scenarios, but we're not anticipating either one of those up or down. And we think that we have room to expand profitability in the business kind of regardless in that scenario. But on the revenue side, it is proactive actions that we are taking that I think is most guiding what's happening on revenue in the business.

Christopher Halpin, CFO and COO

Yeah. Just a couple of elements on that. We did guide to the low end of our EBITDA range of 100 to 130 last quarter. We feel we've just heightened where we are there. As Joey said, it's overwhelmingly driven by revenue softness from the proactive actions taken to improve lead quality. Some of those had a larger impact in the short term than were initially anticipated. Probably the bigger factor also is a few of the channels that were reduced have ramped up more slowly than we anticipated, but we're fully confident they will come back and are seeing that happen. So, it is for Angie, it's the relatively short-term impacts of the actions taken, nothing on margin degradation relative to your question. For Dotdash Meredith, it's due to a confluence of factors, predominantly macro. We guided in the letter and in our call last quarter for some softness in Q4. As we began to experience some softness in Q3 traffic in our entertainment sites, we really started to see that in August, driven by the strike and just the lack of activity in Hollywood. That pulled down Q3 results a bit. The bigger story right now is we anticipated and had been pretty clear with the market that we expected a much more solid Q4 environment for advertising this year than last year. When really last holiday season, the market totally froze up. We'd seen steadily strengthening premium demand and programmatic pricing in Q3, but similar to a number of other publishers and platforms, that reversed for a bit in October, clearly driven by war, macro concerns, higher rates, et cetera. So, we lost some momentum. Trends have been better so far in November, but it's still an uncertain environment. So, we're expecting a holiday season that's only mildly better from a macro perspective on advertising. We talked in the letter and have talked about 80% incremental margins. That drives growth year-over-year in EBITDA. But on the flip side, versus a plan, if advertising revenue is lower, that goes to the bottom-line. So, and then performance marketing continues to be strong, and we expect that to continue apace, I guess, absent a major consumer slowdown. But we feel good about where we are. Things have been better so far in November relative to what was a broader slowdown in October, and we're going to continue to monitor it.

Jason Helfstein, Analyst

Thank you.

Christopher Halpin, CFO and COO

Thanks Jason. Operator, next question.

Operator, Operator

Our next question will come from Brent Thill with Jefferies. Please go ahead.

Brent Thill, Analyst

Good morning. You talked about Angie in the buyback utilizing the 1.4 million shares left. You didn't buy any IC stock in Q3. Can you just talk about the rationale behind repurchasing Angie versus IC?

Christopher Halpin, CFO and COO

Sure. Just to clarify, Brent, the authorization involves 14 million shares for Angie. The purchases at Angie are fairly simple. While the volume isn't significant, we aim to mitigate dilution or potential dilution, and buying back within the authorization assists with that. If we're making purchases, we find it appealing. Regarding IIC, we have invested $165 million in IIC this year. This is something we consistently evaluate. We chose to pause this quarter after seeing the unexpected reaction to Angi last quarter, which surprised us in its scale, and we wanted to see how things stabilize. This will remain an area of review for us.

Brent Thill, Analyst

And quickly on care and the growth accelerated from 2% to 4%, what do you think it's going to take to get back to double-digit?

Christopher Halpin, CFO and COO

Yes. So the slowdown there has been driven by predominantly the consumer side. We had a solid quarter, especially in enterprise there in the third quarter. We're excited about Brad Wilson, the CEO, and the management team he's brought in. It's really going to be around reigniting consumer growth. That's both on product and conversion challenges that have happened, probably a little bit of macro slowdown potentially, but we still really believe in the market opportunity and the position of care and believe it should be a consistent double-digit grower. And then we've got opportunities on marketing that we've talked about consistently for the last few quarters. So they are still working on repositioning the platform and getting the marketing going. We think we'll see steady improvement across 2024, and it's going to be consumer-driven. Enterprise is solid. You can see that corporate demand for backup care broadly for their employees is robust, albeit they're going to be more price sensitive or not be willing to spend as aggressively as they might have during the pandemic, but you're going to add accounts and continue to expand that market. So, it's really basic blocking and tackling. We're excited about what Brad and team are driving, and we're looking forward to 2024.

Brent Thill, Analyst

Thank you.

Christopher Halpin, CFO and COO

Thanks, Brent. Operator, next question.

Operator, Operator

Our next question will come from John Blackledge with TD Cowen. Please go ahead.

John Blackledge, Analyst

Great. Thanks. On DDM Digital, you provided new engagement metrics, including core sessions, which is the bulk of engagement on your key properties. Could you talk about the third quarter growth in core sessions and kind of what you saw in October and maybe how that plays into kind of revenue trends in Q4 and going forward? Thank you.

Joey Levin, CEO

I'll start, which is, again, we mentioned this a lot, but core is where we're putting the investment and where we think the brands are that have a perpetual value and strong brand strength. So seeing those grow is nice, and seeing those accelerate growth is even nicer. That trend, we talked about what's happening in Q3 and continued to improve in October, and that includes entertainment, so that's notwithstanding that there's not a lot of news in entertainment right now. So that's an exciting place to be.

Christopher Halpin, CFO and COO

To provide some context, we believe this traffic offers valuable insights for investors regarding the key drivers of our business. As Joey pointed out, we are focusing on 19 key brands. Although total sessions reflect our entire portfolio, the decline in total sessions compared to the growth in our core brands is primarily due to underperforming long-tail sites from Dash or Meredith, where our investment is limited, as well as third-party sites previously managed by Meredith that we acquired. We anticipate that these non-core sites will gradually diminish to a minimal level, aligning core and total sessions in the future. For reference, core properties accounted for 67% of total sessions in the third quarter of 2022, and this past quarter, they represented nearly 80%, a trend that is expected to continue. We foresee ongoing growth in our core sites, with entertainment acting as a positive driver, which is an important aspect of our business narrative.

John Blackledge, Analyst

Great, thanks. If I could ask one more question on DDM Digital. You guys called out the performance marketing revenue accelerated to 22% growth year-over-year in 3Q. Just kind of what drove that acceleration, any color and verticals that were strong and that were drivers of that part of the business?

Joey Levin, CEO

Yeah, it's really the continued execution by Meredith on a core thesis of acquiring Meredith, which was Meredith has tremendous brands, traffic, and content, but definitely under punched its weight in modern e-commerce integrations to that content. And we talked extensively through the journey of integration last year that some of the delays pushed out those e-commerce integrations and really bringing back Meredith's expertise to the properties, but we've had them going this year, and you can see the steady growth from flat to 12%, to up 22% this past quarter in overall performance marketing. Across categories, it is overwhelmingly goods commerce, consumers buying products that is driving that. We have relationships with all the big retailers. We think we're the biggest partner of many of those, and we think we move from strength to strength with those folks where we're integrating and driving, and we expect that to be second derivative positive for a while, including going into this holiday season where we're excited about the integrations there, and performance marketing will be a key tailwind to monetization per session.

Christopher Halpin, CFO and COO

And the only thing I'd add to that is performance marketing, especially in this environment, is something where advertisers want to be and want to shift spend, and we have great inventory and great tools to be able to move that, and so I think we're capturing that overall trend.

John Blackledge, Analyst

Thank you.

Joey Levin, CEO

Thank you, John. Operator, next question.

Operator, Operator

Our next question will come from Justin Patterson with KeyBanc. Please go ahead.

Justin Patterson, Analyst

Great. Thank you very much. Good morning. I was hoping you could elaborate on just the work ahead to improve both the service provider experience and the homeowner's experience. You called that out in the letter as one area where there's still a lot of work to chop. Thank you.

Joey Levin, CEO

Service provider experience has seen significant improvements, particularly in retention and bad debt, as well as the lifetime value of professionals on our platform. We've noticed better interactions with service professionals, likely due to an improved return on investment on our platform. This improvement in pricing and quality has made professionals happier, which in turn contributes to greater satisfaction for homeowners. A critical aspect of the homeowner experience is matching them with service professionals. We are currently seeing enhancements at each stage of this process, and we have yet to launch many of the tools we have developed. While we have improved messaging on web and mobile, interactions still heavily rely on phone calls. Though pros appreciate calls, homeowners are less enthusiastic about them compared to the past, indicating a need for better messaging and interactions on our platform. We are also evaluating acquisition strategies to ensure we attract homeowners and pros who are likely to match effectively. By optimizing our marketing channels, we've identified unprofitable efforts to cut and are now focused on maximizing the effectiveness and customer experience of our remaining channels. Our brand spending is up year-over-year, and we are committed to ensuring that both homeowners and service professionals have more valuable interactions on our platform.

Justin Patterson, Analyst

Thank you.

Joey Levin, CEO

Thank you, Justin. Operator, next question?

Operator, Operator

Our next question will come from Ross Sandler with Barclays. Please go ahead.

Ross Sandler, Analyst

Hey, guys. Going back to Dotdash Meredith, so you talked about the strength and performance, but the premium side of the business down 12, I think, was a tad worse than the industry, although improving. So how do you feel about that? And then looking forward, how do we think about the cadence of digital ad growth at DDM in the context of the new session growth rates? Are we likely to see revenue run ahead or behind session growth in 2024, and is that like a function of ad load or improving EPM or some combo of those? How do we think about that? Thanks a lot.

Joey Levin, CEO

Okay. Thanks, Ross. You know, for when you compare to the market and think about overall digital advertising growth at Dotdash, I would blend the advertising and performance marketing lines. The third leg of Digital is licensing, which is a little bit of a different beast. But we think of those on a blended basis when looking at comparables. That was down about 3.5% in the third quarter, which when we look at publishing peers, we actually felt like we were holding serve versus what we saw there. We'd like it to be better. We've got a little bit of demonetization going on versus third quarter of 2022, when we still had probably over ad load in some of the Meredith properties and some suboptimal traffic. So a little bit is a comp issue, but overall, we view it as down 3.5%, and we expect those numbers to be improved in Q4, even with a soft ad market in October. So, you know, in our mind, we feel good about the progress we're making. There are small things that were headwinds, like, you know, the impact of the labor strike from Hollywood and in our entertainment categories. But we're head down and looking to get those ad numbers to flat and to growth. That talks to, you know, 2024. We're not providing guidance yet, but when you look at the sessions, which you highlight, core should continue to grow even better. The actor strike got behind us, and there was more entertainment content to talk about. But core is going to be, you know, total and core will be second derivative positive in Q4. Core should grow solidly, and we expect that to continue into next year. So traffic will be a tailwind. A monetization, you know, premium sales are soft right now. The programmatic CPMs, even in this Q4, should be up the over year, and we think we're outperforming the market on open market CPMs. So hopefully, you know, advertising revenue, digital advertising revenue is flattish, and then performance marketing is a source of strong growth in Q4 and continuing into next year. So we are optimistic on 2024 to drive Digital – overall, Digital revenue growth, and then given what we've said about incremental margins, that should drive continued improvement in profitability. Okay, thanks, Ross. Operator, next question.

Operator, Operator

Our next question will come from Brian Fitzgerald with Wells Fargo. Please go ahead.

Brian Fitzgerald, Analyst

Thanks. A couple follow-ups on DDM, on Decipher. It sounds like there's been an encouraging response as cookie deprecation kicks off in '24. Where do you think penetration of that product could go for your general interest sites, and how are you thinking about potential revenue uplift there for both general interest and total DDM digital? And then, Joe, any further thoughts on AI and defending copyrighted evergreen content from DDM? Thanks.

Joey Levin, CEO

Sure. Regarding Decipher, intent is a strong indicator of ad performance, even more so than cookies based on our tests. The positive aspect is that cookies are being phased out, pushing the market in that direction. We believe our intent data is quite good and unique. The top-performing ad platform in the world has outstanding intent, and we aim to leverage that with what we gather on our platform. We anticipate this will significantly benefit Dotdash Meredith throughout 2024. We're noticing increased advertiser interest in our RFP responses and in their campaign spending. We expect this trend to continue as we improve our mapping capabilities across the internet and partners, making it easier for advertisers to purchase our product. Concerning AI, we are committed to protecting our content. We believe a key question that needs resolution is whether these platforms have the right to utilize and transform content for their purposes. We think current copyright law indicates they do not have that right, but it may require judicial clarification. Once that issue is resolved, we can work collectively to find a solution that benefits everyone in the ecosystem. Several lawsuits are in progress, and we anticipate more will arise over time.

Brian Fitzgerald, Analyst

Thanks, Joey. Appreciate it.

Joey Levin, CEO

Thank you. Operator, next question.

Operator, Operator

Our last question here will be from Ygal Arounian with Citigroup. Please go ahead.

Ygal Arounian, Analyst

Hey, good morning, guys. Two questions. First on Dotdash and not to beat a dead horse here on the macro, but we've heard over the course of earnings a lot more incremental concern on the consumer, especially in discretionary, and I know the e-commerce advertising and performance is really important. Do you guys have any insight there specifically that's maybe different? I know you talked about a softer October, but it still sounds relatively hopeful around holiday. Just any insight on that, and then on Angi, you're selling the roofing business, you're paring down on services. Is that part of the business now where you want it to be, or is there still more with the chop there as well? Thanks.

Joey Levin, CEO

I'll do the second one first. The services business, look, every business we want to always be better, but the services business is where we want it to be right now, meaning there are not other things that we are paring out of the services business. You can still see in the comp things down year-over-year, but that was when we were in the higher consideration managed projects business, and there is this final step in roofing. But where we are right now in services is a place from which we think we can build. We think it's very healthy. We know it's a very good customer experience, our best customer experience, and we're excited to expand it. There is the reality in services, which services participate in service requests sort of downstream in Angi, which means that the services business revenue growth will be somewhat tied to what happens on demand overall and service requests overall at Angi. But in terms of the business that we're doing there and want to be doing there, I think that's all in a healthy place and where we want it to be. And we're happy to close the roofing chapter and move on from there. I've already forgotten the first question.

Christopher Halpin, CFO and COO

Yes, and just one technical point related to the roofing transaction. We're thrilled to have that business in the hands of a private third-party who will operate it well and it's returned to being a customer. We flagged this in the footnote on Page 2 of the earnings release. But under GAAP, roofing will be a discontinued operation starting next quarter for Angi, but given materiality, will not be for IAC. So, in order to keep the Angi financials consistent between what Angi will put out standalone and what is rolled up in IAC, we will move roofing on a historical basis into emerging another. On a go-forward basis, there will be no impact because we've sold the business, but just on a historical basis starting next quarter, roofing will be within emerging another and then will be a discontinued ops for Angie. I'm sure we'll continue to work through that to explain that to investors, but just one thing we wanted to flag. Your first question on Dotdash Meredith and what we're seeing macro, we are vigilant on the point. You can't have interest rates on consumers go from zero to five and higher percent without some impact. There are elements that are just distinct to DDM that we expect to grow and take share just because we didn't have these integrations a year ago and the Meredith assets are such a big platform. But relative to expectations and broader trends, we're looking. What is hard is that the cadence of e-commerce and holiday shopping keeps changing year to year. If you go back to 21, things were pulled forward because everyone was worried about the supply chain issues and not being able to get their child or loved one the right holiday present because they would run out. So things got moved up to November. Last year, consumers waited because they weren't worried about supply chains, so things moved into much more packed up in Thanksgiving and even into December. We flagged that last year. This year, we've seen discussion among competitors and retailers about consumers being more deal oriented and waiting. There was the Amazon Prime Deals Day, which was strong. That probably pulled some demand forward. And then we'll see how the cadence works of consumer spending and also how promotional e-commerce players are. But I'd say we're cautious, but not seeing any specific signs of a slowdown. But we're managing our business, expecting anything could happen in this environment. Thank you.

Operator, Operator

Our last question will come from Tom Champion with Piper Sandler. Please go ahead.

Tom Champion, Analyst

Hey, good morning, guys. Joey, can you just talk about the evolution of the business model at Angie? It was discussed a little bit in the note, but the movement away from lead gen to a marketplace, what does that mean? Can you expand on it? And then maybe for Chris, just to clarify the comment around the Angie buyback, that's the existing buyback, right? So the point that you're driving home is that you want to lean into it. It's a statement around timing. Any comments would be helpful. Thanks.

Joey Levin, CEO

Sure. Lead gen to marketplace is very important for Angie. It's a big sort of rallying cry internally. What that means is going from acquiring a customer or a service request and moving that over to the service professional as quickly as possible and moving on. That is more akin to lead generation. There's nothing wrong with lead generation. It's just hard to build brand and loyalty and drive what is another important feature for us, which is customers for life on Angie with that mindset. And so what's changing is trying to drive more interactions on the platform and making those interactions on the platform richer and building signs on the platform of which customers on both sides, homeowners and service professionals, do the best job and interact with each other most productively and rewarding those behaviors. That's how I think a marketplace builds and grows upon itself. And I think in the past, we were a little too much lead generation, which was getting that first transaction and moving on. And now it's more get those transactions, those interactions, and those systems of reward happening on our platform. Just one more example that I referenced earlier, but that's the difference between just sending the homeowner's phone number to a service professional and having the service professional call them to driving messaging and helping messaging back and forth on the platform and allowing them to contact each other and less of the one-way transactions or one-way communications. There's many, many things in the roadmap and things that we've launched along those lines to improve that experience. And we're seeing the benefit of that in terms of transactions, monetized transactions per service request. But that's the theme of what we're trying to accomplish.

Christopher Halpin, CFO and COO

And then, Tom, thanks for the question. On the buyback, yeah, our message was that we are going to be buying, obviously, subject to price and liquidity levels, but that we are putting a plan in just in relative to anticipating that question from investors.

Tom Champion, Analyst

Thanks a lot, guys.

Christopher Halpin, CFO and COO

Thank you. Operator, one last question.

Operator, Operator

Our last question will be from Kunal Madhugar with UBS. Please go ahead.

Kunal Madhukar, Analyst

Thank you for taking my questions and squeezing me in. A couple, if I could, one on Angi and one on Dotdash. So on the Angi side, what I'm seeing is, based on our map is ads and leads revenue per monetized transaction that declined about 11% on a year-over-year to about $40. Marketing costs declined only, more modestly at like 8% to about 27.5%. So can you talk about how the LTV-to-CAC is changing within this dynamic of marketing costs not declining as much as the revenue? And then on the Dotdash side, the whole concept of premium advertising was, you going out and talking to advertisers on a one-on-one basis, and selling them ads, high-intent ads or high-intent leads. How does the Amazon, the recent agreement with Amazon, how does that change that view, or maybe it doesn't? Thank you.

Joey Levin, CEO

You broke up for a second, Kunal, on the last question. I think I got it. You're talking about the announcement of Amazon around D/Cipher, and is that what you're referring to?

Kunal Madhukar, Analyst

Yeah, so the Publisher Cloud, the Amazon DSP that they just announced at the unBoxed 2023 conference.

Joey Levin, CEO

Yes. With D/Cipher and Dotdash Meredith being involved, I believe I can address both questions. Essentially, this means that it's now easier for advertisers within Amazon's retail media network to access our inventory. We see this as a significant win for Dotdash Meredith and a strong endorsement of the work we're doing with D/Cipher. This sets up a long-term advantage for DDM, allowing us to capture advertising revenue now that the necessary infrastructure and support are established. I trust that answers your question, but if not, we can revisit it, and Christy can provide more details. Regarding Angi, the revenue from monetized transactions is currently down. In some areas, we haven't optimized our pricing strategy, leading us to set prices too high. We've adjusted our pricing in certain markets. There's also the factor of transaction rates per service request. As we cut back on marketing and demand more from our current channels in terms of returns and quality, we see an increase in accepted service requests. Similarly, as service professionals become more engaged, they are handling more service requests. Both of these factors contribute to an increase in accepted requests per service request. Consequently, revenue per service request could rise even if each individual transaction generates less revenue. I hope that clarifies things.

Kunal Madhukar, Analyst

Sure.

Joey Levin, CEO

No, go ahead.

Kunal Madhukar, Analyst

No, just wanted to follow it up in terms of the marketing cost. So the marketing cost did not decline as much. So how does that impact the LTV2CAT dynamic within your plans?

Christopher Halpin, CFO and COO

Yeah. LTV2CAT is heading in the right direction, and that is the transactions that we are retaining are more valuable. There are some short-term things that are in there, which Chris and I referenced earlier, which is the channel that we talked about in Q2, where we made some meaningful adjustments there in the name of quality, and that's taking a longer time to ramp back up. And so that has some short-term impact in the economics. But generally, LTV2CAT is heading in the right direction.

Joey Levin, CEO

Yeah, and we also had some brand, specifically TV ramp up year-over-year in that number you're calculating. So I think we feel good about the trends and would just say the metrics that you're backing into wouldn't be given the full picture. And then, on the Dotdash question, did we answer where you were coming from?

Kunal Madhukar, Analyst

Yeah. Thank you.

Joey Levin, CEO

Perfect. And just to add one more to that, just to make it clear, you can see monetized transactions per SR going up. We talked about that in the letter. That's been a trend. And that is a counter to revenue for monetized transactions.

Christopher Halpin, CFO and COO

Right.

Joey Levin, CEO

Well, thank you, everyone. Thank you, Operator. Thank you, everyone, for your questions. And have a great morning.

Christopher Halpin, CFO and COO

Thank you all. Bye-bye.

Operator, Operator

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