People Inc Q4 FY2021 Earnings Call

Good morning, everyone. Welcome to the IAC and Angi Fourth Quarter Earnings Presentation. I'm Christopher Halpin, CFO of IAC. Joining me today are Joey Levin, CEO of IAC and Chairman of Angi; Oisin Hanrahan, CEO of Angi, Inc.; and Neil Vogel, CEO of Dotdash Meredith. Similar to last quarter, supplemental to our quarterly earnings release, IAC has also published its quarterly shareholder letter. We will not be reading the shareholder letter on this call. 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 will 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 and Angi's fourth quarter press 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 will refer to today as EBITDA for simplicity during the call. I'll also refer you to our press releases, the IAC shareholder letter, and again to the Investor Relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. With that, I will turn it over to Joey.

Good morning, everybody. Thank you for joining us. I just realized a few moments ago that we were courteous enough to have Chris introduce himself for the first time as a participant in the IAC earnings call. I think we could have staged that better, I realized, but I am nonetheless incredibly thrilled and relieved to have Chris here in the role of CFO. Chris has been here, I think, a few weeks so far, and already digging in, in really incredible ways, challenging assumptions, doing all the things that we would have hoped of a CFO. And I think he's going to be a tremendous, excellent addition to the team and we're thrilled to have him here for the first time. Hopefully, you guys will take it easy on him because he is still only a few weeks in but he's been doing a lot of studying and learning, so seems like a quick study. Also, of course, Neil is here, but for the first time in officially a much larger role. And so, I'm sure you'll have a lot of questions about that. And Oisin, as Chris mentioned, is here and most of you know Oisin by now. This is, he's done several calls but I'll just mention Oisin again for the opportunity to pronounce his name and hopefully you'll get the opportunity to learn it if I keep pronouncing it. So welcome Oisin again, rhymes with machine. That very quickly, 2021 was a good year, a year of a lot of change for IAC for many of our businesses, thinking about where we started the year with Vimeo, of course where we ended the year with Dotdash Meredith, where we started the year as HomeAdvisor Angie's List and ended the year as Angi. And so, 2022, where we have the pieces in place to start to execute on growth across a number of businesses and we plan to continue to invest throughout the year and really build from here. And I like the tools in our hands for building. And that's what we intend to keep doing. So let's get your questions. Mark? Oh, and also, by the way, thank you to Mark Schneider is not on camera today. But he was nice enough nonetheless to wear a tie here with us in the background and he'll be orchestrating this, as usual.

Thanks, Joey. Our first question will be from John Blackledge at Cowen.

Great, thanks, good morning. Maybe one for Neil and one for Joey. Neil, could you discuss the operating plans for Dotdash Meredith this year? And is the 15% to 20% year-over-year revenue growth, is that the expectation for 2022 which is more general expectation after this year? And then, for Joey, could you discuss those strategic rationale for increasing the stake in MGM and what does IAC playing for over the long-term with this investment? Thank you.

Okay, I'll go first. So I think the 15% to 20% is what we're up to through the year. Let me give you a little background on where we are, we are day 76 of this acquisition, James Harden day, if you're me and a basketball fan. We made some changes to print last week, and I'll break this down for you guys direct, sort of like look at print, look at digital, we will look at the ad business, look at the commerce business. The print business, we've said all along, we were buying brands, and I think we fairly well telegraphed that we were going to do and as Joey said quite eloquently in his letter, we're going to invest behind print brands that people are willing to pay for. And I think we're very fortunate that our major brands and most of our brands are brands people are willing to pay for and we are very optimistic about print, we're very optimistic about how it's going to help our branding, we're very optimistic about how it's going to support our digital. This is obviously a very different perspective than Meredith has had historically. We're talking a lot internally sort of about our big six. The big six in print that are going to be the anchors to what we're doing, which is People, Southern Living, Better Homes & Gardens, Real Simple, Food & Wine, Travel & Leisure. And as also Joey said in the letter, it is not a business plan to make cuts and do nothing different and hope something changes. So what we're really going to be doing is focusing on what we can do to enhance this product, better paper, better art direction, better content, all of these things to do to make a much more premium product that gives these things a real lifespan and really sports digital, and is the proper manifestation of these brands in the world. And look, it's no fun to do what we did last week. But it's also fairly evident that parents don't really wish to receive parenting advice magazine they want from the Internet. So it was really an evolution as much as anything. And I think we're really off to the races. We have a very strong print team from Meredith and we're pretty optimistic. Digital which is the real crux of what we're doing, we have made substantial changes in the two plus months we've been here. First is structuring. We've taken what was essentially a matrix structure. And we've put everything into our structure where every brand, all of our brands, now have clear leadership and dedicated resources, a GM that functions almost as a mini CEO that owns all pieces of that brand, from content to product to tech, we've arranged everything into groups. So food is with food and homes with home. And when you look at this, again, it's worth reminding everybody, we're the number one player in food, we are the number one player in home, we're the number one player in beauty, we're the number one player in entertainment, we're near the top in health, we're near the top in finance. So we have an incredible amount of clay to work with. And now that we've got the leadership team in place, we can start running our playbook. And we've talked about this a lot. And the thing about the playbook that is most excited is we're at the point now where most of it is pattern recognition. We know we've seen this before, we've talked to you guys we're like 12 for 12, 13 for 13, when we get these incredible brands and we can run a remediation program which is again, make the content as good as you can get it, make the sites as fast and responsive you can get it and make the ads respectful. And one thing I would say is IAC is the best possible place to do this because the only conversations I have with Joey are him telling me to go do this now and telling us to go do this now and get this done without regard to the short-term make all the changes that will get us the 15 to 20, get us to the $450 million in EBITDA next year and we feel really good about where we are. Quickly on advertising, we're going to be rolling out a fully restructured ad sales team in the next two weeks, which we're very excited about again that's going to parallel more vertical structure like what we had. We feel really good; we are out right now for the first time doing some combined pitches where the one plus one plus one plus one equals three theory which seems to have legs and seems to be working which we feel very good about. Unified ad stacks can help us programmatically. Meredith, I think if you look historically digitally, I think we have been much more focused on content and user experience. Meredith has been much more focused on revenue. So we're learning a lot from them on the ad side of how to optimize, how to maximize what we have, which we're excited about. And then the last sort of the, I guess the fourth leg of the table of this three-legged stool; fourth leg of the table would be commerce. There's two really exciting things that have come out of this. One is we built an incredible commerce business and an incredible testing capability growing as quickly as we were growing. We now we went from three test kitchens to literally 50 test kitchens, and we now have a couple hundred thousand square feet in various places that we can really test products and get into being as good as we are in commerce, we can be that good and helping people decide what to buy, which is for intent driven traffic, sort of the logical next step for what we're doing. And we have stood up plans to get our style of commerce, the consumer report style of commerce up on all of the historical Meredith brands. So there's obviously a lot going on, our team is very busy. Obviously, when you get into these things, not everything is rosy, some things are better, some things are worse, some things are a lot worse, some things are a lot better. We're slogging through it, we are deep, deep, deep in it. But we feel really good about where we are.

And building off that, John, relative to your question of Neil's overall message, I think when you think about the year and how it's going to play out, there are a few key buckets and then we can talk about what that looks like. Print, we announced last week, the conversion to 100% digital of some titles. That's an example of just general noise that will be in the print numbers as we optimize our print portfolio. We executed, as Neil articulated, we're going to be moving the Meredith titles onto the Dotdash platform, calling content, reinvesting in content, rebuilding their distribution, that'll have some noise in the revenue numbers as that's executed over the first half of the year. The sales consolidation, as Neil said, it is a great future that combined sales forces, but you've got to bring them together and get them across the board. And then finally, as you look at the financials this year, you're going to have hard to read through, it's going to take some work with the application of purchase accounting, and other changes to the financials. So it'll be a noisy year with respect to the financials. On an overall basis, we expect the first half year revenue to be flattish driven by the transitions we're talking about, sort of going a little bit back before we go forward on the Meredith digital titles, but all of it building with the Salesforce in optimized shape, to a very strong rhythm to leave the year and that 15% to 20% year-over-year growth. And then that brings us to the $450 million of 2023 EBITDA, so that's the plan. And this year, we expect profitability because of those trends to be back-end weighted. That's due to seasonality in the business. It's due to optimization of the combined digital portfolio in the second half for all the actions that Neil's taking. And then thirdly, you'll just see the full run rate of the cost savings even at that point. And I think all of that is consistent with what we expected going in which was 2022 would be a bit messy and 2023 is where we have to show the proof of the work done going into that point. On MGM, John, it is first and foremost if we're going to invest capital where it has to be attractive value. And I think that's still the case with MGM. We have, if you look at MGM as you can still look at some of the parts and if you believe that there's any future in Macau, if you believe that the digital business has real value, the joint venture and if you believe that groups come back to Las Vegas at some point at scale, then it is still very in our opinion very attractively priced, and we believe all of those things. So that's the first piece. Second piece is the groundwork is still being laid and real progress is made over the course of the year in delivering an omni-channel experience, so one component of that is delivering a consistent brand experience. You saw MGM sold Mirage is buying Cosmo, Cosmopolitan. And you'll also start to see some of the work that MGM is doing in branding MGM boards and tying the entire system together. You also see digital is doing incredibly well ahead of what we expected going into the original investment. And that's all the groundwork for putting a consistent omni-channel branded rewards experience together. And we like to see the progress there. So when we look at that, when we look at that combination, we say that's a good place to put capital. The other factor and the catalyst for this was just when we first got involved in MGM, we spent a lot of time with Keith Meister, and Corvex and Keith had been a big agent of change at MGM. And I think has become a very welcome agent of change at MGM, by management and the rest of the board. And one of the components of his business is he is to capital more finite. And so, it was a very natural transition when he was looking to sell some stock that that would that stock moved into more long-term hands, like ours and MGM repurchasing a portion of those. And so that all happened very naturally. That was something that Bill Hornbuckle, CEO, and Paul Salem, the Chairman encouraged and we were excited to do, given our view on valuation right now. And I don't know where it goes from here on MGM, it's just sort of the same thing we've said all along, which is it's a great business; we're excited to be involved in it. And it's kind of one step at a time. And we're really happy with our involvement so far or not to be given the results, and don't know where it goes from here.

Our next question will be from Cory Carpenter at J.P. Morgan.

Thanks. Oisin, hoping you could provide an update on where you're at with the Angi rebrand and the Angi Services business. And then maybe tying it back to the financials if you could just help frame your expectations around growth and profit more broadly for Angi in 2022? Thank you.

Sure, thanks Cory. So let me start with the January numbers, which is obviously not the start to the year we wanted. But it's the start we got with Omicron, we saw a pretty significant uptick in Omicron call-offs, customer call-offs, pro call-offs, we saw an 8x increase in January versus a normalized number for the year; we've since seen that drop off. What that'll mean is in March, we will be lapping the brand. So that's a pretty significant event for us. We obviously rebranded the business in March of last year. We will have easier comps after that, particularly in the ads leads business so that will be a natural tailwind. And the other significant thing going on this year is we've got this growing services business that we've all talked about, we all know about made up 15% of revenue, Q4 2020, got up to 27% of revenue, Q4 2021, that business still more than doubling Q4 about doubling at January. And that becomes an ever-increasing part of the business. So you put all those things together and we're pretty happy with where we're going overall. We embarked on this journey just over a year ago to really change what Angi stands for to really position it as a consumer brand. And I think we're starting to see that, we're starting to see that come to life where we know what pros want. We know they want to grow their business, we know customers want to get the job done. And it's starting to feel more and more like every single day we're starting to deliver on that pretty consistently. We see it in customer set; we see it in pro satisfaction. So I think we've historically, I think the last thing we said in this week was that we'd be in the 15% to 20% range. Obviously, we've broken the bottom end of that in Q1. But it is still our goal to get to that range, stay in that range and ideally break the upper end of that as we think about where things go for the rest of the year. Chris, do you want to?

Thank you, Oisin. Cory and I believe that we will experience some unique volatility on a month-to-month basis this quarter. For January and February, we expect to be close to the higher end of our target range, while March will compare to a strong performance last year, which means we'll likely fall below that range. Looking ahead, as we gain momentum due to the growth in services and easier comparisons following last year's rebranding, we anticipate returning to that range and progressing as the year continues. Regarding EBITDA, we expect total adjusted EBITDA for the year to be similar to last year. One point to note is that the quarterly trend will likely reverse from last year, where profitability declined during the rebranding and reinvestment phases. This year, given the usual seasonality of our business, we see Q2 and Q3 being the strongest periods along with some strength in Q4, alongside growth throughout the year. Thus, we expect early parts of the year to be less profitable than the latter part, but overall profitability for the year should remain on par with last year.

Our next question will be from Jason Helfstein at Oppenheimer.

Thanks. Just two. Just a follow-up on the Angi question first, I mean if we're thinking about core marketplace, just given the shift in consumer spending to travel and experiences. I mean, do we just consider this a transitionary year for the marketplace side of the business meaning think of it as like a flat year and then all the growth coming from services, or do you think just given all the headwinds that you'll be in a position to kind of recapture marketplace revenue growth at some point later in the year? And then second, Joey, you didn't give any update in the letter on Care.com and it's probably a consolidated asset with the most upside to valuation over the next few years. And so maybe just get an update on fourth quarter on how you're thinking about full-year 2022 for Care? Thanks.

Yes, Oisin take the Angi question.

You should keep in mind that when referring to the marketplace, you are discussing the ads and leads segment of the business. This segment depends on both consumer demand and professional capacity. Over the past year, we have made significant changes to target higher quality professionals who have greater capacity and are willing to invest more. If consumer demand shifts towards categories like travel or entertainment, professionals will also have more capacity and be more inclined to spend. We view the business as having a natural advantage because our services are directly linked to consumer demand. The more people want to purchase home services, the more aggressively our services business will grow. However, if consumers begin to reduce their spending on home services, professionals will need to spend more to maintain the same revenue. In such a scenario, we anticipate that advertising professionals and lead professionals will engage more with our platform. We track a measure called active matcher ability, which indicates the capacity to be available and receive new leads at any time; we expect this to increase along with budgets if consumer demand for services declines. So far, we have not observed this decrease. There are complexities involved as we are currently undergoing a rebranding effort, but we have seen progress in that traffic levels for Angi are now back to where Angie's List was, which is a significant achievement. We still have work ahead to return the combined Angi and HomeAdvisor brand traffic to previous levels. We are actively working on creative marketing initiatives this year, focusing on how we position Angi differently. We are just a few weeks into the year, and our media spending is weighted towards the middle of the year. We believe that as our efforts expand, the combined traffic of Angi and HomeAdvisor will surpass prior levels.

On Care, Jason, there’s no particular significance to the lack of mention in the letter. The letter this quarter focused on a longer-term opportunity with Bluecrew and Vivian, and we aimed to keep it concise. We want to emphasize a theme and will cover other topics in this venue or elsewhere. Care is performing well, especially the core Care business, which supports families with childcare. This segment is growing in terms of subscribers and revenue, and we are improving conversion rates. We now have an alpha version, although I haven't used it myself yet as Tim Allen, the CEO, is currently using it exclusively. Our instant book product allows families to book a Care provider on short notice. A key advantage of this product is its capability to address more frequent needs, shifting from requiring a nanny one to two times a year to needing a babysitter five to ten times a year. This shift influences our subscription products and enhances the user experience through additional tools. We find this promising, though it hasn't become the norm for all our users yet. Beyond our core offerings, we’ve launched a daycare product that has engaged around 1,000 daycare centers. We are also exploring opportunities in senior care and pet care, while our enterprise business continues to be a focal point for investment. Although there’s some complexity in the enterprise segment due to COVID-related comparisons from 2021, customers are satisfied with our enterprise product, and we expect to grow this area. I’m optimistic about our future prospects and potential value creation, but we recognize that it’s still early, and we have much to demonstrate and many opportunities to pursue.

Our next question will be from Eric Sheridan at Goldman Sachs.

Thanks for taking the question maybe two if I can sort of following up on themes we've talked about Oisin, if I could follow-up on Angi, there was a paragraph in Joey's letter about fulfillment. And I want to make sure we better understand some of the messages about where you're pushing it on the investment side to improve fulfillment on the platform. And what those improvements might mean in terms of driving a mixture of growth in margin in the years ahead. And then Neil to follow-up on, I think it was the third of the four pillars you lay down for Dotdash Meredith would be on the advertising monetization side, beyond just purely the Salesforce integration, how should we be thinking about you positioning the asset in the broader advertising community? We've talked before in public forums about contextual advertising, and where the assets sit in the broader funnel and what sort of advertising part of the world you're going after? Can you just go a little deeper there, that'd be super helpful. Thanks so much, guys.

Sure. I’ll address the Angi part first. When you come to Angi to buy a service job, usually a low-value job in the hundreds of dollars, we work hard to ensure that the job gets done. We don't always have a pro available at the right time for every category or task, so we model our resources to match consumer demand with pro supply. Our goal is to increase the rate at which we fulfill these services every month. It becomes more challenging as we expand our categories and geographical coverage, but we're committed to improving fulfillment in a systematic way. We have to get the pricing right for both the consumer and the pro, ask the right questions to both, and transfer that information efficiently to the pro. We're continually enhancing our fulfillment process. When we do this successfully, we see two main results. Firstly, the customer repeat rate significantly increases, meaning satisfied customers are more likely to return, which reduces future marketing expenses and enhances customer lifetime value. Secondly, we earn more on each job if we price it correctly for the consumer and the pro. Our success in fulfilling these low-value jobs continues to improve each quarter, and we notice this progress in fulfillment rates and customer satisfaction, as reflected in our earnings per share. We also observe positive trends in the gross margin from these services. Overall, we see an increasing fulfillment rate for smaller, low-value tasks, which is crucial for our long-term success in the service sector. Additionally, we’re seeing improvement in fulfillment rates for larger jobs, like those costing $5,000 to $20,000. Here, we track metrics such as the proportion of jobs completed by pros who have previously worked with us, helping us gauge pro satisfaction. We know we have a strong Net Promoter Score in this area, which is significantly better than our leads business. We’re also working on ensuring our take rate is adequate, which has been stable and healthy over the last few quarters. We need to manage operational costs to ultimately improve our contribution margin. Overall, enhanced fulfillment rates significantly improve our service business across all dimensions, making it a key focus for us at a strategic level as well as operationally.

In response to your question about our sales strategy and vendor contact scale, I want to highlight two key aspects. First, we're in the process of integrating our sales team. Notably, out of our top 20 clients, only two or three overlap, indicating a very different advertiser base. We have strong representation in finance, healthcare, and consumer packaged goods, which complement each other well. By combining our ad stack and improving efficiencies, we anticipate significant yield improvements. As we enhance site performance, programmatic ads will gain value, especially when they become more viewable. What excites us the most is our capability to deliver intent-driven contextual advertising at scale, an unprecedented achievement on the internet. This form of advertising consistently outperforms cookie-based methods. As cookies and trackers phase out, we find we no longer need them. For instance, if someone searches for ways to speed up their router, we understand precisely what they need—whether to fix their existing router or purchase a new one—based solely on that context. Our track record demonstrates our effectiveness in making contextual advertising work, as reflected in our quarterly renewal rates for our top 25 advertisers. We're adept at winning repeat business, even from brands that were unknown just a few years ago. The Meredith sites, which share similar profiles with ours, are rich in intent signals across various categories, enabling us to leverage these signals for intent-based performance at scale. As the largest digital publisher in the U.S., we have the opportunity to compete with platforms like Facebook. Our content is entirely owned and safe, focusing on positive and helpful information. Combining these intent signals with contextual targeting in a secure environment provides a unique market offering. While our current models don't predict a shift in dollars from Facebook, discussions with advertisers indicate interest in this approach. We need to deliver on our performance promises for the Meredith assets. We're already working on improving their ad stack by removing underperforming ads, and the potential is enormous. Our go-to-market strategy is to explain the effectiveness of contextual targeting and intent-based advertising. For example, if someone is researching paint colors for their newborn's bedroom, we gather valuable insights about them beyond what cookies can provide. This level of understanding at scale is incredibly exciting for us.

Thanks, Neil. Our next question will be from Ross Sandler at Barclays.

Great, thanks for the presentation, guys. Joey, can you put some numbers around Bluecrew and Vivian, we have that was pretty good disclosure in the paragraph, but maybe just help us like pre-pandemic to today understand the scale of those two businesses. And if you had to kind of draw an analogy to other IAC franchises from back in the day, it's like a Tinder 2015 stage of development for those to kind of help us understand where they are in terms of their development? Thanks.

That's a great question, Ross. To give you some context, pre-pandemic, I believe each business might be three to five times larger than they are now, but I welcome corrections if I'm off. Making an analogy to Tinder is challenging because Tinder has that natural viral quality, spreading quickly once it gained global traction. In contrast, while I view both of these businesses as exceptional marketplace enterprises with some viral aspects, they don’t experience that same level of rapid growth. Both require significant effort to scale. One business is projected to reach nine figures this year, while the other will be a larger eight-figure business. The critical aspect for both is building liquidity. For Vivian, it's vital to increase the number of health professionals using the platform. They've excelled in attracting travel nurses, and once a nurse establishes a profile, they engage with job opportunities regularly based on their certifications and location preferences. We are now focused on bringing more employers into the fold. In contrast, Bluecrew has many employers already but needs to attract more workers to increase fill rates. Once liquidity is achieved in both markets, we notice a shift where more jobs and workers engage through the platform, allowing people to find secondary jobs and create repeat business—a transformative process. Observing other businesses in IAC's portfolio shows that building liquidity in smaller geographies leads to significant outcomes, prompting that essential flywheel effect once both sides of the marketplace are sufficiently developed. While these markets may not be winner-takes-all, first movers will enjoy considerable advantages, and we anticipate several key players emerging that can achieve substantial scale. The labor markets we are operating in are massive and currently underserved, indicating that, if executed properly, we have the potential for limitless growth from this point forward.

Our next question will be from Youssef Squali at Truist.

Great, thank you, guys. Thank you for taking the questions. So I have two, first maybe for Chris, on Dotdash Meredith, if you could double click on that $450 million in EBITDA that you're targeting for 2023 just kind of linearity to get there and probably and even more importantly, Dotdash has historically been really profitable business. So how do you kind of look at long-term kind of sustainable margins for that business relative to that 15% to 20% growth that you discussed. And just quickly for Joey, I believe you guys have an option to increase your ownership of Touro, if I remember correctly, what's the maximum you guys can own of it? And just what's your long-term objective with that investment? Thanks.

Sure, I'll start by discussing Touro for a moment. We currently own about 25 percent of the business, and we have the option to acquire an additional 10 percent, bringing our total to roughly 35 percent, give or take 5 percent on those estimates. We are really enthusiastic about the business and appreciate being part of it. Our approach is always long-term, and this situation is no exception. Our goal remains consistent: to identify businesses with significant long-term potential and to remain invested in them. I would like to share more about Touro, but we’re currently limited in what we can disclose. They have a filing available, so I can't speak positively or negatively about the business at this time. However, we're pleased with our current position.

Thank you. And for Dotdash Meredith, when you think about the 2023 EBITDA targets and levels that we're going to get to, the key elements there are the scale that comes in incremental profitability from the digital business. So as Neil and team have that growing in the bands that we're targeting, you've got the Salesforce, you've got fixed cost infrastructure, but you will have margin scale. And so, and then also, that's a digital EBITDA number, the print business is one that we will continue to optimize and manage. It is one that we will continue to manage with an eye towards keeping it profitable, and also a good user experience. So as we look into next year and where we see the cost savings coming as we integrate the businesses as we see the digital revenue momentum on an efficient cost base, those are the drivers as we grow to that $450 million of 2023 digital EBITDA.

Our next question will be from Brent Thill at Jefferies.

Good morning. Joey, Search had great growth and great profitability. Many are asking about the sustainability of that business. And maybe for Chris, welcome. Maybe just talk through your top priorities and kind of where you see with your new lens, the biggest opportunity from your side?

Sure. In Search, we're experiencing some short-term changes, particularly in the desktop business, which we are moving away from not by choice, but due to the evolution of the ecosystem. This has affected our revenue in that area since we are no longer marketing it. The high margins we see now should be viewed as a temporary phase. On the positive side, the ask marketing segment of the business, where we promote our properties and generate revenue through ads, is performing well. We believe that over time, we will compensate for the losses in the desktop segment. Overall, while the business appears stable at the moment, it’s important not to read too much into the short-term gains, as they are somewhat fleeting and influenced by our transition out of the desktop business.

Thank you. My priorities include first getting up to speed on the core businesses in our portfolio, and then exploring ways to create value there. We are focused on ensuring that every dollar invested on an operating basis yields maximum ROI. This means being disciplined in our strategic initiatives across all companies and consistently measuring ROI to drive improvement. The positive aspect of being at IAC is our long-term commitment to value creation, as emphasized by Joey. However, we must be strategic and collaborate with Oisin, Neil, and their teams on integration and advancing our properties, particularly for the medium and smaller companies. Another key area is capital allocation. We continually evaluate interesting opportunities, whether it involves further investments in our portfolio companies or entering new sectors. Given the fluctuations in public valuations and their impact on private markets, we are always assessing our cash, capital structure, and available opportunities to ensure we maximize long-term value. It has been a strong start, but there is much work ahead.

Our next question will be from Brian Fitzgerald at Wells Fargo.

Thanks, guys. Want to ask a couple of questions around Angi's deal with Walmart. Anything you could tell us about the customer acquisition cost profile there versus variable channels? How are you thinking about the value of being in 4,000 stores and the halo effects for the brand and for customer acquisitions more generally? And then last one, in the announcement, you talked about this being the first retail integration with Angi, what's the opportunity to go back to some of your other retail partners on the Handy side and convert them to Angi branded relationships with the expanded service offerings that you're going to roll-out to Walmart?

Great question. Thanks for asking. Just for everyone's benefit, the way this works is you can go to walmart.com or you can go to Walmart store, the 4,000 stores. And if you're buying a TV, you can at the point of sale buy a TV mounting service for about $80, or $79 similarly, on a number of other categories including flooring and painting. When you're buying products, you can actually buy service at the point of sale. In order to schedule that service, you then take your code, that's printed on the receipt, you go to any.com/walmart. And you type in code and you schedule directly or certainly you go to angi.com/walmart. You type in the code, you schedule directly with Angi. As you pointed out, this is an extension or I guess a rebrand of some of the prior relationships that Handy had. We are expanding both the number of retailers that Angi will be in, so Walmart is the first we expect to rollout into other retailers for context. The other retailers that Handy is currently an include Target, Lowe's, Wayfair, and others. We would expect over time that those would be rebranded to Angi. And you're also correct that we would expand past the small set of services that were available before and if retailers were open to it, we would sell some of the broader services we have. We have about 200 plus services available in the book right now. There's no reason to expand past the traditional services that we had available. In terms of the opportunity, look, we fundamentally believe that having a single brand is the right thing to do here. Single primary brand is a reason why we've focused on Angi. If you look at any of the materials that we got out there, Angi feels different now than Angi just did a year and a change ago. It feels different than home advisor did a year change ago. We've got our board meeting later today. And even if you just split the board deck, it feels different. You look at any of our social channels, if you look at the screen of our TV, it feels different. And having that new brand in 4,000 stores, we think will make a difference. We notice that when those customers do buy through a retailer and they come and engage directly with Angi. We do see follow-on purchases. We know that we can get a percentage of them to download the mobile app. So we do think of it as an important channel for us. We think it's an interesting way for us to gain exposure to more customers. And we know that it's great for the retailers. So the other side of all this is why does the retailer do it? And what we see from talking to retailers is, it drives up their order value. It gives them increased conversion. It increases customer satisfaction, and it reduces returns. So from the retailers' perspective, we see some of the retailers in fact, selling the service at or below cost, because they get so much sundry benefit attach a service to product. So overall, we think it's a win-win, plays into the trend that retailers are moving towards, which is less selling product but instead selling a full solution into the customer's home. So they've got to sell past the return. We know an extra to sell into the person's life. And we think this is a great partnership for us and for each of the retailers. And we're excited to have more and more of our customer touch points, eventually branded to a brand advantage. So overall, we think, we're really excited about it.

From the customer's viewpoint, they typically begin their search for flooring in one of two ways: they might say they need a new floor and wonder how to get it installed, or they might ask what new floors look like or where to find one. We aim to connect with them in both scenarios. The second approach is particularly intriguing for us, which is one of the main reasons we pursued the Angi acquisition. We believe this channel holds significant potential for us.

I understand. That's an excellent point, Joey. It's similar to the distinction between service initiated searches and product initiated searches. We have a solid approach to service driven searches, whether users are accessing the Angi site or the Angi mobile app. Our funnel effectively captures intent from individuals focused on service. However, we lack an effective strategy for product searches directly on Angi. This presents an opportunity for us to connect with consumers who prioritize products. Therefore, it's a significant aspect of how we approach product engagement.

Our next question will come from Dan Salmon at BMO.

Great, good morning, everyone. I got one for Neil, one for Oisin. So Neil, we continue to hear a lot more about the impact of privacy changes this earning season, and Google just announced their plans for Android. We know your intent-based model is more insulated from these types of changes. So does news like this help drive incoming calls to your sales team? How are they engaging advertisers about these issues and helping them address them? And then, Oisin, could you just give us an update on the uptake of Angi Key and your financing partnership with the firm? Thanks.

I'll go first, I'll be quick. In terms of privacy stuff, so we're not really an app-based business, so we've been immune to some of this stuff. But call it; privacy grid large is going to be a long-term benefit for us. Now, when something happens, we don't get a phone call right away, but the more we can tell our story and the more we are out there with this message, the more appeal it is. And there's been, as you know, we've talked about this before. There's an entire ecosystem in advertising built around cookies and things like cookies that doesn't really work anymore. It's increasingly not working the less it works. And the more we can be very good at telling our story and getting into places the better we're going to be. And again, to go back to that set, you see a lot in the Dotdash renewals. I mean, we have built our systems to target contextually across all of our sites. We're obviously rolling that out to the acquired Meredith sites. It is a really, really big opportunity for us. If privacy tracking exits the internet entirely, that is a long-term, very positive thing for us.

On Angi Key, our membership program designed to save customers money, we are currently tracking over 200,000 members. While growth is strong, the program is still in its early stages. We recognize that we need to go beyond just saving money. We envision Angi Key membership as the primary way to manage home care. We are exploring several new features, including a more personalized booking service, which has shown positive engagement from a few thousand users. Additionally, we have other ideas in the pipeline. As we expand these features, we see a significant opportunity to increase exposure for the membership, which we are currently only promoting to service purchasers. The response has been encouraging, but we aren't prioritizing it in our broader marketing efforts. We are pleased with the retention rates, but we are still in the initial phases. Our focus will be on enhancing features around personalization and convenience to widen our reach. Overall, data indicates we are headed in the right direction with Angi Key, and we anticipate a productive year ahead in identifying further developments for the program. Regarding financing and payment processing, we've provided $100 million in payment processing last year, and $10 million in financing last quarter through multiple partners, including a firm. We aim to excel in this area, though currently, it is not significantly profitable and is more about supporting professionals in growing their businesses and assisting customers. We find that professionals using our payment features are generally happier and more engaged, and when customers use financing, they also report higher satisfaction. We will continue to invest and scale this service, and over time, we will explore monetization strategies, but we feel positive about its trajectory.

Thank you for the questions, everyone, looking at the clock. Mark, why don't we do one more?

Great. Our last question will be from Justin Patterson at KeyBanc.

Great. Thanks. And Joey, congratulations on becoming a prolific podcaster. I'm waiting for Spotify to offer an exclusive one of these days. Just two simple ones from me.

I think it's tracking in the right direction and we feel good about it. Thank you for the questions, everyone. Looking at the clock, Mark, why don't we do one more? Great. Our last question will be from Justin Patterson at KeyBanc. Great. Thanks. And Joey, congratulations on becoming a prolific podcaster. I'm waiting for Spotify to offer an exclusive one of these days. Just two simple ones from me.

There you go. Two simple ones for me. For Oisin, how are you thinking about setting the right controls to attract the right type of pros while also expanding contribution margin? It seems like a difficult problem to solve just given variability in region, pro experience and job type. And then, for Neil, just revisiting Eric's question around contextual, a lot of advertisers are investing a lot of AI there. How do we think about just the capabilities of the ad tech stack today and competition for engineers? In terms of professional onboarding, we have a comprehensive program across various services like Angi Ads, Angi Leads, and Angi Services, each with distinct criteria for participation. We are exploring ways to standardize the onboarding experience. One focus is increasing online enrollments across the board. Most Angi Services professionals, especially those in lower-value categories, participate in an online enrollment program that includes a background check and quality screening. We have begun to implement similar processes at Angi Leads and will eventually extend this to Angi Ads. We assess both the initial screening of professionals during onboarding and continuously gather data on customer feedback as we complete the process. The more we connect the entire experience—through payments, financing, or Angi Services—the richer the data we receive regarding pros' performance. This allows us to proactively monitor a professional's behavior in Angi Services, including their location and punctuality, while also gathering quality indicators beforehand. We close the loop by collecting customer feedback, creating a tight feedback loop beginning with onboarding. The more we digitalize this process, the more data we acquire early on, leading to better customer ratings and reviews. This feedback loop encourages desirable behaviors, highlighting consequences for performance. Angi benefits from a substantial volume of transactions on the platform, enabling us to close the feedback loop frequently and motivate professionals to perform well, which we have observed in practice.

So I will answer your questions backwards. So ad stack, we have a different view on the ad stack than a lot of companies do. We always want the simplest, fastest cleanest ad stack possible because the ad stack doesn't solve your problems; it's having a great product that solves your problems. It's having ads that are performant and well placed in places where the audience is contextually relevant to the ad, those will perform. If you did, if you took every single ad stack product in the world, they all tell you, they give you 10% or 20% left, and you put them all together, you're not going to get like a 5x, it doesn't work that way. So we're our ad stack, which we're not putting the two together. And there's obviously some complexity to that. But it's fairly straightforward. Our ad stack will be good because our product is good and we keep it fast and simple. In terms of there's a million different ways and buzzwords people are saying to mimic contextual targeting or to align with contextual targeting judging by like, whatever definition AI would be like, we use it to, it just means that things learn as they go. And we do a lot of learning as we go. But the most interesting thing for us now is, we're doing whatever 30 million user sessions a day, there's so much data we can glean as to what's working, who's performing and we know the path of every single user. We don't know who they are, it doesn't matter, but we know what path they take. And that's really, really, really valuable. I would say the governor on that is your other question, which is engineers, which are, we're no different than anybody else. Engineers are very hard to get, engineers are very hard to keep, engineers have their very distinct views on whether or not they should be coming back to the office. There's all kinds of things and we're very fortunate that we have a terrific CTO who has been with us from the jump since we started this whole thing nine years ago. But yes, we have the same engineering challenge, everybody has.

All right. Thank you all for joining us this week, this quarter rather, and lots to do this year. We're excited for 2022 and we will see you all in a quarter.