Good morning, everyone. Glenn Schiffman here, and welcome to the IAC and ANGI Homeservices Fourth Quarter Earnings Call. Joining me today is Joey Levin, CEO of IAC and Chairman of ANGI Homeservices; also, Brandon Ridenour, CEO of ANGI Homeservices; and Anjali Sud, CEO of Vimeo, will be joining the call. Welcome, Anjali.

Thanks, Glenn. I just want to correct one mistake Glenn made there in the opening comments, which is in reference to a call. He's stuck a little bit in the past right now. I want to welcome everybody here to our video. Those of you who'll be reading the transcript, you're missing out. We've got the beautiful smiling faces of all of our analysts, Anjali, Glenn, Brandon coming from Denver. And this is not just a new way of doing things. It's also a great display of what is really central right now or the exciting story at IAC right now, which is Vimeo. And the fun part of this is not just that we've got everybody on video and we've got logos here and our names and chirons and things like that, which is pretty cool, using Vimeo's Livestream technology, but the other piece is this is just the beginning of this video's journey with Vimeo. So after this, it will be edited and will be shared. It will be archived. It will be part of our corporate library, and we'll have access to that forever on Vimeo. And it's a pretty cool display of what can be done. And obviously, we're seeing that happen quite a bit all over the world now in really fun and interesting and exciting ways. And I'm sure we'll talk about that today.

Great. Thanks, Joey. So for our first question, we'll go to Eric Sheridan from UBS.

Maybe two questions, if I can. Joey, for you, maybe you can help explain why a spin-off of Vimeo was the right choice in entirety for both Vimeo and IAC? And maybe lay out some of your views about how you kind of repositioning IAC ex Vimeo on the equity side for the long term on the other side of the spin? And maybe, Anjali, if I could sneak maybe one in for you. Obviously, a super interesting year for Vimeo on the demand side. How should we be thinking about aligning investments in product innovation against what you learned in 2020 against what you're trying to do on sort of a 5-year view and grow Vimeo as a platform?

Sure. Regarding the IPO full spin versus partial spin, we successfully raised capital in the private markets for Vimeo, which I believe is sufficient for its needs for some time. This process was quick and straightforward, causing minimal distraction for the team. Completing it this way allowed us to concentrate on growing the business, with Anjali's team focusing on product, sales, and marketing rather than fundraising. This facilitated the operations similar to an IPO or capital raising. Concerning the choice between partial and full spin, our objective was to allow Vimeo to operate independently, with its own currency and a clear narrative. A complete spin achieves that. We often receive questions about timing related to value, but our priority is to ensure that the business is clearly defined and operates best independently. We believe Vimeo is capable of standing on its own successfully, and there's no reason to retain a portion of IAC. IAC shareholders will benefit from this arrangement in a straightforward manner.

So to your question about incremental investment and product innovation of Vimeo over the next few years. And the thing that we've learned since the pandemic is how much just bigger the market opportunity is than what we thought. And we really believe our TAM is every professional, every team, every organization in the world who now needs to use video to reach their customers and employees. And we've had so many organizations and businesses knocking on our door in recent months, asking to use Vimeo in ways that we don't yet have the product for. So it's an early market. I think product innovation is where we will be focusing our long-term investments. And some of the things that we're trying to do is we want to be the single corporate video solution for any organization of any size to share content internally and externally. We have a great position now in certain parts of that. We can power town halls and training, but there's so many other ways that video is proliferating throughout organizations. And everything from sharing product demos and creative walkthroughs, to rethinking how webinars work to making every interaction with video more engaging. And so we see lots of opportunity, and you'll see both our near-term and our long-term investments really designed to solve these needs. We'll also be investing in areas like sales and marketing on the sales side in the near term, expanding our sales force, both domestically and outside the U.S. We see a big opportunity to increase our marketing spend, particularly on mobile where we have an opportunity. We've been historically very web-focused. And you'll also see us do things like diversify our acquisition channels by investing in areas like partnerships and in our free product. So it's an early market. I think we have a great head start with a leading all-in-one software solution, but we want to turn that head start into a definitive lead, and we're excited with the capital and the focus to do that.

Great. Our next question, we'll go to Cory Carpenter at JPMorgan.

Great. I had two questions on ANGI. First, for Brandon, could you give us an update on where you are just in terms of addressing your supply constraint challenges and how impactful you think some of your product initiatives could be this year? And then as a follow-up for Glenn. It would be good to hear your comments on some of the puts and takes to the January metrics that we got in the shareholder letter and then also an update on how you're thinking about the trajectory of the business through the year.

Yes, sure. Thank you. So the business performed pretty consistent with our expectations in Q4 and into January. A lot of the factors that have affected us since the start of the pandemic are still present. Our traditional business was resilient, I think, in the face of these externalities. But we've seen 2 things. I talked about these consistently over the past year. One is we saw a pullback in small business advertising spend. And put simply, small businesses were paying a little bit less than they were before, spending a little bit less to meet new customers. And the other thing which I said we had to accomplish was to grow our sales force. And we end the year with the biggest sales force in the history of the company. That is up 30% from the trough we experienced in the middle of last year as a result of just externalizing our workforce and figuring out and learning how to onboard and train sales reps. So as we enter this year, we have a large sales force. We're off to a great start. And the benefits of those incremental sales reps will accrue over the course of the year to provide more capacity. The other thing is just when and how does the spend from our existing customers normalize or get back to previous levels. I think that's a really difficult question to answer. The way we're approaching that is, I think it makes rational sense that it normalizes, but we're not banking on that. We believe we can reaccelerate our traditional business, whether that happens or not irrespective of the timing of it. If it does happen, it will provide, obviously, a nice tailwind. But through larger sales force and through our own internal activities, we believe very firmly that we can get that traditional business accelerating from where we are today. Separately, we're very happy with the benefits fixed price delivered throughout Q4. When you look at the sort of the modest acceleration in the overall business, most of that is a credit to the growth in fixed price. Not only has it sort of exceeding our expectations, but it had a nice counter-seasonal effect where it's really quite strong in Q4 relative to the normal seasonal patterns of our traditional business. We expect that growth to continue strong throughout this year. It does bring meaningful capacity to the market, the ability to serve more customers. So we're excited to see that grow and sort of be a counterbalance to the ebbs and flows of the way our traditional business works. And then on the product front, we have a lot going on both to supply just to address supply challenges, but also meaningfully to pursue our most important goal, which is to develop a very large and strong direct to brand consumer audience. And simply put, we are trying to build the largest audience and most loyal audience of homeowners in the industry and we think that is the fundamental thing we need to accomplish to build a very strong, long-term business.

Thanks, Brandon. Just to translate that into numbers and the puts and takes for the year. Revenue in January was as expected. You'll recall last year, we changed from net revenue accounting to gross revenue accounting for prepriced or fixed price business. And if you look back on the fourth quarter, that provided a lift of about $22 million to our revenue. So the fourth quarter grew revenue about 6%, again similar to January and as expected. We still expect, as we talked about on the last earnings call, a 9% to 10% revenue growth for the ensuing quarters until probably the third, more likely the fourth quarter as all the initiatives that Brandon spoke about begin to kick in. That's on the sales. Obviously, that's the scaling of fixed price. And that's on the other product innovations that we've been talking about for a while. In terms of the monthly metrics, I'll ask you as we report the monthly metrics this year to have one eye on the monthly metrics this year and one eye on the monthly metrics last year. Because obviously, last year, there was a lot of volatility in respect of how SPs behaved due to COVID, how consumers behaved due to COVID. So February was our strongest month of the year last year. We grew 21%. And March, obviously, was flat and April was even down. So you will see some volatility in the monthly metrics. But again, we are very comfortable with the 9% to 10% quarterly growth, again until the third and fourth quarter when we expect to hit our 20% targets, our 20% targets, and then given all the work that Brandon and his team are doing accelerate into 2022.

Our next question, if we can go to Brent Thill from Jefferies.

For Anjali, if you could talk through the confidence in the Vimeo trends, they're not temporary and how you're anticipating a post-pandemic recovery.

Sure. Look, we're obviously watching the demand trends carefully, and they are holding. Our sales pipeline is strong. January was the strongest we've seen, even stronger than the peak of the pandemic in March. Our days to close on our sales cycle have stayed short. And on the self-serve side, our highest tiers are growing over 200% year-on-year in bookings. So certainly, from a demand perspective, no signs of a slowdown. But the bigger thing that we see is the use cases and our customers using video in ways that we would expect to ensure and in ways that are helping them drive better outcomes for their business. And there, we see it very clearly. You've got companies like Starbucks and Lowe's training their store associates using video or Nike training their retail partners like Foot Locker in Europe. And then you see those organizations be able to reach their associates in ways that are more engaging, more scalable at a fraction of the cost, you don't see them going away from that. Same with fitness studios, performing arts venues, cultural institutions, they're finding that they can access larger audiences than they ever could before, in some cases, 10 times the number of audience that they have. And so we just don't see a rationale for why they would go back from that. And you see small businesses who are able to get higher clicks, more customers from using video than a major text. And by the way, that's in an environment where a lot of small businesses are shut down. And many more, hopefully after the pandemic will come back. So just it gives us a lot of confidence that video is going to settle. We don't know exactly where from a demand perspective, but certainly at an elevated level than what we saw pre-COVID. What that means for our growth trajectory? Also hard to predict. Before the pandemic, we said we expect to grow between 20% and 30% in terms of revenue. Obviously, if you look at some monthly metrics, that no longer applies as a range. How much higher than that is what is hard to predict. But again, certainly expect to be growing faster than we anticipated before pandemic started.

The revenue recognition dynamics of this business, as you know, the SaaS-based subscription business, that deceleration from where we are today north of 50% to the north of 30%. That will be staged over the next few quarters. It will probably bottom out in the fourth quarter. Maybe it will come close to the 30% in the fourth quarter of this year. And then we do expect given all the product work we're doing, given all the investments we're doing, across the we do expect to, again, accelerate from there into 2022.

Our next question, we will go to Ross Sandler from Barclays.

Just one for Glenn and then one for Anjali. So Glenn, yes, nothing more exciting for IAC enthusiast than reading 487-page spin documents, so thanks for dropping that during earnings season, by the way. But a question on the spin mechanics. So it looks like IAC will get 88% of the EMEA will be spun out. There's a $6 billion post-money valuation right now or about 161 million shares, so about 1.6 million or thereabouts Vimeo shares for each IAC share. Is that correct in terms of the ratio? And then what's the mechanics from here in terms of the timeline?

Let me start with the first point. Ross, that's impressive. However, there are still around 150 pages left to review. I believe the document is 620 or 630 pages long. Regarding the timing of the process moving forward, we refilled the S-4 earlier this week. As we address SEC comments, we will likely need to refile again in the next week or two, coinciding with year-end financials for Vimeo and IAC. We hope to navigate through the SEC process throughout February. Ideally, this will set us up for mailing to shareholders in March, followed by a shareholder vote potentially at the end of March or early April. We aim to complete the spin sometime in April, or at worst, early May. So, we are looking at early second quarter for the timing. As I mentioned, the document is a great read. After the two capital raises, we own 88% of Vimeo, amounting to about 146 million shares of Vimeo and 86 million shares of IAC. Therefore, the spin ratio will be 1.6 based on these current estimates, which could change. Every IAC shareholder will receive 1.6 shares of Vimeo, based on the current numbers and calculations. Additionally, considering the $6 billion post-money valuation from Vimeo's latest capital raise, that translates to a stock price of $35 for Vimeo.

Ross, on your question about upselling our free base, our free users into paid customers, we see a huge opportunity to do that. And a lot of our product investment is designed to unlock that. So a couple of things that we see. So today, I think about 60% of our paying subscribers start as free first, and then about 60% of our enterprise customers come from that free or self-serve base. So already, you kind of have a freemium model. but if you actually look at what you can do for free on Vimeo using video, we see an opportunity to get every one of those free users to be creating content. So one of the things we've done is we've launched our Vimeo create app and are offering a version of that for free to our user base. We recently launched a screen recorder tool called Vimeo Record, also free for our user base. And this is a way in which we're looking to really drive sort of bottoms-up, product-led growth by having employees, small businesses just creating content, which is usually the biggest barrier to getting people to use video. And then from there, expanding to branding and customization, then upselling to a higher tier. Or security, if you want to put your content in a secure portal. Or expanding team size. That's a big opportunity. You'll see us do a lot to really be a sort of per-seat or team-driven model in the future. So we've got quite a few levers to kind of move that base. And if you just look at the base itself, nearly 70% of Fortune 500 companies have an account on Vimeo, and we have less than 4,000 enterprise customers today. So just huge opportunity. And we think the biggest unlock will be product and having the right mechanisms to both get people creating content for free and then the reasons to upgrade.

Our next question will be from John Blackledge at Cowen.

Great. So two questions. One on Vimeo subs. Just curious what the mix of new subs was in 2020 business versus creative pros? And any color on the overall sub mix ending 2020, again, business versus creative pros? And then within business, the mix of enterprise versus SMBs, which I think Anjali just referenced enterprise subs and how that could trend in 2021. And then on Care.com, if you could just discuss the engagement metrics that you referenced in the letter and then perhaps frame the drivers of the business in the next three years.

On the Vimeo sub question, most of our new subscribers in 2020 are businesses, which include a good mix of smaller businesses and larger organizations. We've seen a shift from professional users towards businesses, a trend that has continued and even accelerated since the pandemic, which we expect to persist. Regarding enterprise versus small and medium-sized businesses, our subscription volume is heavily skewed towards small businesses. Currently, we have around 4,000 customers on the enterprise side, which includes anyone our sales team has approached. However, many of the actual users in our customer base are from larger organizations using our free and self-serve offerings. We are focused on how to seamlessly expand within these organizations from one user or buyer to other departments and teams, allowing them to discover and utilize our products. Therefore, on the enterprise side, we aim to acquire new customers from our existing base through our sales team and also to grow usage within each organization, increasing how they use video across the board.

John, regarding Care, the significant change we made in our product is worth noting. We have begun certifying all caregivers, which has made it more challenging to become a caregiver. This increase in barriers has initially resulted in a decrease in the number of caregivers on our platform. Although that might sound negative at first, the positive aspect is that the caregivers who do join are much more engaged. The interactions we are now witnessing between caregivers and families are significantly more productive. This means we can receive fewer applicants for a job while still achieving a higher success rate in filling those positions. We're experiencing this change quite noticeably; previously, a job listing could attract dozens or even hundreds of applicants, but that number has reduced to just a few, making the process easier for caregivers. This also simplifies things for families, allowing them to sort through fewer candidates while still feeling confident that the caregivers they connect with have undergone proper background checks and certifications. In some cases, we've added friction to our process to boost engagement, and that strategy seems to be working effectively. Overall, metrics indicate that, while there’s been decreased engagement from families—since they’ve been needing care less often—retention rates are strong. People recognize the value of our product and remain hopeful about using it more in the future. It's very encouraging to see retention stable, even with less immediate demand. Looking ahead to the future of Care, our focus will be on increasing engagement, which includes being relevant more frequently. We intend to simplify processes, such as implementing features like instant booking for caregivers, allowing families to connect with caregivers who meet specified criteria quickly. Enhancing visibility into availability for both families and caregivers will strengthen our subscription appeal and engagement on both sides of the marketplace. Moreover, a significant opportunity for growth lies in our care work and enterprise product, which we’ve mentioned previously. This has become increasingly relevant as many companies seek to support their employees with childcare and senior care solutions. We are seeing impressive growth in this area, and we plan to continue innovating, potentially unlocking a much larger market than what currently exists.

For our next question, we'll go to Brian Fitzgerald at Wells Fargo.

Maybe this for Glenn and Brandon. On ANGI, fixed price or preprice is roughly 10% of the business now. Where do you think that gets to longer terms? And then in terms of the long-term margin structure, is that predicated on fixed price hitting certain thresholds?

Yes, that's a great question. We finished the year with about 11%. Our internal target and ambition is to increase this to about half the size of the business. We believe that our traditional business and the preprice business are very synergistic. As the preprice business grows, it not only enhances customer satisfaction but also boosts our buying power, enabling more investment in market participation, which benefits both product lines. Additionally, as the prepriced ecosystem expands, the quality of service, reliability, and overall transactional economics improve because we can fulfill at a higher rate and with greater quality. Thus, getting it to half the size of the business is our goal. Regarding the time frame to achieve this, it's challenging since our traditional business is substantial and expected to grow. A reasonable estimate for reaching this goal would be over a 5 to 7-year time frame.

Yes, regarding the long-term margin structure, fixed pricing does have an impact. We see our opportunity in a $400 billion to $500 billion market. Previously, our revenue opportunity came from our take rate in traditional business. However, with the introduction of fixed pricing, financing, and additional products like subscriptions, we are now aiming to capture the entire $400 billion to $500 billion opportunity. While the margin opportunity may be less significant on some larger jobs, the EBITDA potential remains substantial. For our traditional business and lower consideration jobs under fixed prices, our margin targets of 35% are still entirely feasible. To clarify, sales and marketing costs account for 50% to 55% of revenue, and it was 52% this past year. Product development and general administrative expenses make up 20% to 25% of revenue, which was 25% last year. If you analyze that against our current margin of 10% to 15%, you can expect 5 to 10 points from the G&A and product development category and 10 to 15 points from sales and marketing, leading to a 35% margin target. However, as we scale medium consideration jobs, where propay and material costs are higher, achieving 35% may be challenging. Nonetheless, we have redefined our entire opportunity to pursue the full total addressable market of $400 billion to $500 billion.

Our next question will be from Jason Helfstein at Oppenheimer.

Yes. Two questions. First for Anjali. Maybe talk a bit about the behavior of your cohort. So when you think about your 2019 cohorts, the way they act in 2020, what drove the increase in the value of those cohorts when you think about what they did, any pricing changes you made, the way you were able to drive usage? And then second, Joey, maybe I want to dig a bit more into the use of cash, $3 billion. I mean in the letter, you did talk about a wish list for Dotdash. Historically, the content digital media has been small for you. I mean should we expect you guys to move much more meaningfully in that if there are assets that could be bought? Or could it be more things to bolster or accelerate, things like the Care.com business or maybe perhaps more investments in gaming to follow what you've already done?

So on the Vimeo cohort behavior, we're seeing two trends. One, our existing customers from prior cohorts are paying us more today than they were before, so our net revenue retention on enterprise has been increasing for 7 consecutive quarters. And that's coming from the investment we're making in the products, expanding the use cases and sort of optimizing our sales motion. And then we also see that just new cohorts in general are paying us more than in 2020 than the new cohorts were in '19 and '18. And that's because we are seeing greater demand for our higher-priced offerings, areas like Livestream. And as we shift the mix of our subscribers, more businesses looking for advanced marketing tools, that's analytics, customization, we just see that there's more desire to pay, willingness to pay for those features. And that's why even on the self-serve side, our two fastest-growing plans are our two highest-priced ones. And then the other piece, of course, is just general retention and product engagement. There, we've been watching this very closely since the pandemic began. And we see no indication of deterioration in retention. Product engagement has been holding really strong. And in some areas, like live streaming has been higher among recent cohorts. And so generally, looks like a very solid, healthy cohort behavior. And there's also tons of room for us to go. And this is where we look at, again, the use cases we serve right now. We have so many customers asking to use Vimeo and video in a bunch of other ways. And the quicker we can get some of the things that we're working on and our roadmap out into the market, the quicker we'll be able to expand that net revenue retention even further.

We are definitely exploring acquisition opportunities, starting with Dotdash. We believe there is potential for growth, though nothing is urgent at the moment. Our motivation stems from the success of our business and the effective acquisitions we have made. If we were to think of this as a software business, all of our top 25 advertisers renewed their contracts from 2019 to 2020 and increased their spending, reflecting over 100% net revenue retention, which is quite impressive for a publishing business. The reason for this success is the strong performance of our advertisements. We maintain a competitive edge by running fewer ads while still ensuring great results for our advertisers. We are investing heavily in content while monetizing it less effectively than our competitors. This strategy allows us to maintain our formula, and I believe we can continue to build on it. Our primary focus will be on organic growth—adding more quality content while ensuring freshness without over-relying on existing tools. We aim to invest significantly more in our content compared to our competitors. We are actively seeking areas for acquisition, whether that be a publication, site, or brand where we can implement our successful system. So far, we have made some small acquisitions, with the largest being in the range of $20 to $30 million. While I believe we can pursue larger opportunities, we may find that our options are limited or not within our budget. Nevertheless, there are many brands that could benefit from our approach, and we are committed to addressing that need. However, I don’t foresee large acquisitions being a major part of our $3 billion cash reserve due to the current landscape. Our priorities for cash allocation also include Care, where we recently made an acquisition that appears to be yielding positive results, enhancing our revenue and customer base. We aren’t looking at more acquisitions in Care at the moment as we focus on growth. Gaming is another promising sector, especially considering the impressive growth we are witnessing at Bet MGM. The numbers from Michigan have been remarkable, proving a strong market entry for MGM, given their robust offline presence there. The initial results in this early market stage are encouraging, demonstrating that the system we’ve put in place is effective. This growth is not only reassuring for MGM but also for us as we see a new user base emerging, which is exciting for our capital investments. Recently, we assessed a potential acquisition related to MGM and are open to capital investments in this area; it is encouraging to see such transformation and growth in the category, particularly with MGM's success aligning with our initial strategy. While the recovery from COVID for MGM remains uncertain, they maintain a strong balance sheet. This ongoing opportunity in gaming holds a lot of excitement for us right now. I believe this addresses your question.

Yes, that's it. If you want, you can call Dotdash ad tech because that's back and load right now. So there you go.

Can we go to Yoni Yadgaran at Crédit Suisse.

So two questions for Brandon on ANGI, if I may. So the first one is on the supply side. So you guys have called out seeing some phenomenal kind of engaging metrics for early consumers using fixed price. On the SP side, are you guys seeing similar kind of benefits to retention? What kind of like engagement are you seeing with SPs who are opting into your fixed price network versus your core lead gen business? And then second question, you guys, intra-quarter, have called out some kind of price increases due to overwhelming demand on fixed price. We'd love to hear some more details around that, the magnitude of those increases and how that maybe impacted unit economics of fixed price?

Thank you for your question, Yoni. On the service provider side for fixed price, this offering is quite different. Unlike our traditional service where providers pay us, in this model, we pay the providers and essentially offer them work. They have the freedom to decide if the job and pricing are appealing and whether they are available. There's no downside for providers since they can either accept the job or pass on it and potentially take the next opportunity. This setup makes bringing providers into our marketplace much more attractive. Generally, for provider retention, having a consistent flow of demand encourages activity. If there’s a long gap where we have a job today but nothing for the next two months, we may see providers become inactive. It’s not that they are leaving our service, but maintaining regular activity is key for engagement. Overall, acquiring these providers is inexpensive, and with steady demand, retention remains high. We approach it differently than an advertising business where retention isn't always the main focus; it's about ensuring we have enough providers and coverage to meet growing demand. As long as we continue to grow at our current rate, scaling our provider base will be the main challenge. Regarding the price increase for fixed price, we're constantly trying to balance rapid consumer demand growth with our capacity to meet it. Last year, we had to raise prices due to demand fluctuations caused by the pandemic and our initial inability to keep up with provider availability. We will lower prices as necessary once we can better fulfill demand. Currently, we have improved that balance and are continuously getting better. The challenge of scaling remains, especially with our goal to grow transactions in fixed price significantly across many projects and markets, which we expect will continue for some time.

Our next question, can we go to Ygal Arounian from Wedbush.

I have a question for Anjali and one for Joey. Anjali, you briefly mentioned the e-commerce side regarding Vimeo. You have partnerships with Shopify and GoDaddy. We are hearing more about live streaming opportunities for direct-to-consumer companies selling products. Can you elaborate on the e-commerce opportunities? Joey, your insights on MGM and online gaming were helpful. Can you share how the relationship with MGM has developed over the past few months and what both sides have contributed to this collaboration?

On the partnership front, we see partnerships as a way to acquire customers and expand our market by showcasing the power of video across various platforms. We have announced integrations with GoDaddy and Shopify, and more recently, HubSpot. We are actively investing in partnerships and aim to integrate our capabilities into these platforms, allowing customers to interact directly with Vimeo as needed. Although it’s still early, we are observing encouraging signs in this growth area. We are exploring several sectors, including live streaming, website builders, marketing, CRM software companies, and e-commerce, which is one of the areas where we are seeing success. Our Shopify app is receiving excellent reviews and high engagement. For e-commerce store owners, we enable them to quickly and automatically create videos for product detail pages using existing content, allowing for easy editing and customization. We plan to focus more on e-commerce, helping businesses leverage video to boost sales and conversion rates, but this is just one aspect of our overall video strategy and partnership efforts.

I think the relationship with MGM is fantastic. Leadership at MGM is great, and Bill Hornbuckle is doing a wonderful job with the business. He is very keen on our help in digital, which is clearly our area of expertise. MGM has just hired a new CFO, John Halkyard, who brings great experience and seems impressive. Additionally, the company has a very engaged board. They have been wonderful to work with, and our role is to help them and be available when needed. This could involve supporting them in digital initiatives or assisting in talent recruitment; we have already helped bring some people into the company and will continue to do so in areas where we have a strong network. It's beneficial to have a significant shareholder with deep pockets and a long-term commitment, which facilitates open and valuable discussions with MGM leadership. We can express where we can provide support, invest capital, and mobilize our organization to back their initiatives. From our perspective, this collaboration has been productive, and we hope it continues. Being invested for the long term with significant capital means we will pay a lot of attention to it and do everything possible to be helpful where they see fit, and we hope this successful partnership continues.

Can we go to Kunal Madhukar at Deutsche Bank.

A couple on ANGI, if I may. One, with regard to fixed price versus the traditional marketplace business, it looks like the marketplace business was flat in 2020 year-over-year. Wanted to understand if you are deliberately funneling customers along the fixed price route in order to kind of get scale in that side? So that's one. Second, as we look at the guide that Glenn just talked about in terms of 9% to 10% growth in the first two quarters and then getting to 20% by the fourth quarter. As we look I'd like the comps, the comps get easier in the second and third quarters, and then it gets slightly tougher in the fourth quarter. So as we look at the guide versus the comps, can you help us reconcile in terms of what is driving the confidence in your ability to get to the 20% growth in the fourth quarter and not in the second when the comps get much easier?

Thank you, Kunal. Regarding directing customers to fixed pricing versus our traditional business, every customer entering our marketplace for projects with prepriced services has a choice. They can either connect with a local provider, which generates revenue through our traditional matching business, or they can utilize the preprice on-demand offering and purchase the service directly. The reality is that we have seen, and continue to see in 2020, more customer demand than we can currently service on both sides of the business. The moderate growth of our traditional business year-over-year can be attributed mainly to small businesses reducing their spending, reflecting their capacity to manage more customers. The pandemic has impacted these small businesses in various ways, leading them to decrease their willingness to spend on acquiring new customers. Some research indicates that most small businesses anticipate increasing their advertising expenditures in 2021. While predicting the future is challenging right now, our current situation is not a result of our customer funneling strategy. We are facing a surplus of consumer demand for services. Glenn, would you like to address the question about comparisons and guidance?

Yes, our confidence comes from several factors. First, there’s the increase in our sales force that Brandon mentioned earlier. Traditionally, it takes about 6 to 9 months for a sales force to become effective. Additionally, we have growth initiatives in place, and the fixed price model continues to expand. However, the primary factor is that the world needs to return to normal. Service providers (SPs) have faced challenges, whether in hiring or dealing with supply chain issues, and the comfort level of having SPs enter homes has been impacted as well. We believe the world will normalize, which is crucial for overcoming these challenges. Furthermore, as Joey noted in the letter, SPs are currently experiencing a high level of demand, partly from our platform and partly independently. We anticipate that the service requests (SRs) will stabilize over the year, leading to an increase in monetized transactions, which we expect to benefit from. We have a significant amount of demand and ample supply at the top of the funnel, and now we need to eliminate friction and effectively match them. We believe our monetization metrics will strongly reflect this dynamic.

So our last question will be from Youssef Squali from Truist.

I have two quick questions. First, I'd like to focus on ANGI with Brandon. I'm trying to understand the challenges in scaling from 200 jobs to a larger number and capturing the total addressable market. Can you discuss the contribution margin of the prepaid and prepriced segments compared to the rest of the business? Are you at a point where there's parity between the two, or does that not play a significant role in your decision to accelerate growth? And for Anjali, the team has previously mentioned that Vimeo has the potential to grow at a rate of 20% to 30% over time with EBITDA margins exceeding 20%. As you become independent and approach your own investors, what message do you plan to convey as a SaaS company? Many SaaS companies reference the rule of 30, rule of 40, or rule of 50, which combines growth rate with operating or EBITDA margin. Can you elaborate on your perspective and what guidance you might provide once you're in a position to do so?

Thanks. Good question. On the ANGI question, so for fixed price, we have a lot of projects covered that are lower value, lower ticket priced. And we feel extraordinarily confident about the long-term margin profile of those project types as they mature. And they cover in excess of $100 billion of TAM alone. So there's a tremendous amount of room to run in terms of growth just in those project types. There are higher-value projects that I referenced earlier. They are around $5,000 a ticket. And we've been more in the experimental mode with those. But at this point, we feel pretty confident that we can drive growth there with good economics. We'll still prove that out during this year. In terms of getting to more TAM, it's really in this latter bucket. We started with a subset of projects and are going out and getting good at them, if you will. And as that playbook proves successful, we'll essentially go out to more and more of those larger projects and continue to offer more of a prepriced offering. So in terms of how much the $400 billion $500 billion do we ultimately get to? I don't know for sure, but I certainly feel comfortable and confident that we're going to get to well beyond half of that as our addressable market with preprice, and perhaps well beyond half. It will take time and iteration to get good at each of the project types. It's not a cookie-cutter process where the exact same method works for every project type. There's some learning integration involved.

Yes. Then on contribution margin, in aggregate, our fixed price or prepriced business is contribution margin positive. We passed that in 2020. Obviously, the path to profitability is the investments we're making to scale all that. But importantly, the contribution from our fixed price business is greater than the contribution we get from an equivalent SR. That's what excites us. That's what helps us reframe this opportunity about going after the entirety of that $400 billion to $500 billion market.

We think about the business like any SaaS company would. In 2020, we operated under the rule of 40 for SaaS businesses, and in Q4, we performed at a rule of 50. It's difficult to predict the near-term outlook for 2021 as we adjust post-pandemic. However, regarding long-term top-line growth, our original forecast of 20% to 30% now seems conservative. While it's challenging to estimate how much we might exceed that range, we believe we will be in a better position than we were before the pandemic. For margins, we've previously mentioned a target around 20% long term, and we believe we can surpass that. In the near term, we do not aim for immediate profitability as we are focused on growth and unit economics. Our lifetime value to customer acquisition cost ratio is strong, and we are enhancing our gross margins, which have surpassed 70%. We see potential for further improvement. Our attention remains on enhancing margins and maintaining robust unit economics, while the early market presents numerous growth opportunities, all dependent on creating the right products for our customers.

Youssef, I want to emphasize the importance of free cash flow when considering Vimeo. Despite this being an investment year for us and considering our previous investments in 2020 and what we anticipate in 2021, we still generated over $30 million in free cash flow, as noted in the S-4. Importantly, this figure remains stable, even with our revenue recognition dynamics and bookings. This highlights a valuable perspective for assessing EBITDA alongside our revenue growth.

All right, everybody. We've run over on time. Thank you for joining us. It's fun to have watched the entire sunrise and Brandon's background here in Denver, and we've got a new day starting. Talk to you all soon. Bye.