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

Thank you. Good morning, everyone. I appreciate you joining us today. I won’t reiterate the numbers that have been shared. We had an excellent quarter, making significant strides in increasing profit and free cash flow, positioning us well for capital deployment moving forward. The most notable update this quarter is our entry into the new AI ecosystem in a concrete financial manner. We announced a deal yesterday with OpenAI, where we will be compensated for enhancing the ChatGPT experience. We anticipate gaining some additional users to our platforms through ChatGPT, and we will collaborate on D/Cipher, a product within Dotdash Meredith that we believe represents the future of advertising on the OpenWeb, where we have been experiencing strong growth and gaining market share. We hope this agreement is just the beginning of more opportunities in the AI ecosystem. We are extremely appreciative of OpenAI, a pioneering force in this category from the start, particularly with their first product that opened the floodgates for competition in the field. We trust they will continue to lead as they have with our agreement, paving the way for new opportunities for us. I also want to welcome back Mr. Kip, who previously participated in this call eight years ago and is returning as the new CEO of Angi. I’m not only pleased about this because it eases my responsibilities at Angi, but also because Jeff has had meaningful involvement in this business for many years, dating back to his role as CFO of IAC, where he engaged extensively with what was formerly known as HomeAdvisor and spent eight years deeply involved in managing the international operations for Angi. As we've reported, we've seen remarkable progress in that sector. I am truly excited that Jeff now oversees the entire Angi business and is intensely focused on the key to our success, which is delivering quality work. I expect nothing less from Mr. Kip. Welcome, Jeff. Now, let's move on to questions. Operator, please proceed with the first question.

Our first question comes from John Blackledge with Cowen.

Two questions. First, for DDM, overall revenue growth beat our forecast. Could you just unpack the growth within DDM digital revenue across advertising performance and licensing? And maybe how should that trend going forward? And then I have a follow-up on the OpenAI deal.

We are very pleased with the performance of Dotdash Meredith digital in the first quarter. Overall, digital revenue increased by 13%, driven by a 19% rise in digital advertising. This growth is attributed to an 8% increase in core sessions and enhanced monetization in both premium and programmatic advertising. Advertiser spending is stabilizing; while the market isn't extremely hot, it is improving, which positively impacts our premium sales. In terms of programmatic advertising, we believe we are outpacing the market thanks to our advanced technology and performance. However, performance marketing only rose by 3% during the quarter due to a significant 30% drop in services, particularly financial products like brokerage accounts and insurance. On the other hand, performance marketing for e-commerce grew by 18%. We understand the need to keep investing and innovating in performance marketing, especially in services, and we are optimistic about returning to strong growth in that area. A notable success was our licensing segment, which grew by 9%, largely due to strong performance from Apple News and syndication partners. This segment has been a challenge since we completed the Meredith acquisition, but we believe it will now become a positive contributor, with OpenAI playing a role in this. Looking ahead, we expect to see over 10% revenue growth in Digital each quarter and for the year, with robust performance across all three segments. Advertising is expected to lead this growth as we continue to see increases in session count and monetization. What is your second question, John?

Yes. Second question, could you talk about the DDM, OpenAI deal at a high level, including key terms of the deal? And can we expect similar deals with other LLMs, like Google, Anthropic, Meta, et cetera? And if you don't strike a deal with those companies, are they precluded from training their models on DDM content?

Yes. We can't disclose specific terms, but at a high level, the OpenAI deal has three main components. First, it involves displaying content and links attributed to DDM in relevant ChatGPT responses. Second, it utilizes historical and current DDM content to improve their model's performance. Third, it includes a partnership with DDM and OpenAI to develop a cookie-less, intent-based targeting ad solution, which is a unique collaboration that we believe could significantly enhance the future of privacy-protected advertising. We're excited to work with them on this. It's a multiyear agreement that encompasses all the components mentioned, including financial compensation, and we are thrilled about the deal. Regarding potential opportunities with others, OpenAI has pioneered showcasing the possibilities of GenAI and chat interfaces. I hope they will lead the way in their interactions with publishers, journalism, and content. I anticipate that other companies will eventually follow suit, although it may take time and there may be initial resistance. The deal is non-exclusive, allowing us the opportunity to explore further possibilities, and we appreciate OpenAI's efforts to make this collaboration happen. Under Sam Altman's leadership, they have maintained a focus on fostering a healthy Internet ecosystem and ensuring that OpenAI, and AI more broadly, serves as a positive force in the world, which they have consistently shown.

And congrats, Jeff.

Thank you.

Your next question comes from Cory Carpenter with JPMorgan.

On the Angi CEO transition, Joey, why was now the right time? And Jeff, it'd be great to hear your vision and strategic priorities as CEO? And then I have a follow-up but I'll let you answer that one first.

Sure. Thanks, Cory. First of all, having a full-time CEO is clearly a positive step. As soon as it was possible, I was eager to make that happen. During my time, in addition to enhancing the business’s efficiency and customer focus, I sought to deeply understand the challenges and opportunities. It became evident to me how much progress had been made in the international sector and what is still being achieved there. This success can be attributed to Jeff and the excellent leadership team in the international segment, which extends beyond just Jeff. The talent and depth we have there provided the opportunity to promote Jeff to oversee the entire business. I believe he will excel in this role, but I’ll let him share his thoughts on it.

I don't think that there is really a change in strategic vision. I think Joey has rightly put the customer at the center of what we're doing at Angi and we're really focused on delivering a better experience online and then most importantly, delivering jobs done well on both sides of the marketplace. And so the work he's done with removing, let's call it, empty calories and moving the business forward in terms of being customer first is what I hope to continue. I hope we deliver more jobs done well each year from here on out. We plan to and there's no real change.

Cory, you had another one?

Yes, maybe perhaps for Chris, just could you give us an update on your Angi revenue expectations this year? And if you think you'll need to reinvest ultimately to return the business back to growth?

Sure. Thanks, Cory. First, regarding the revenue outlook, we believe that no additional investment is necessary to stabilize and grow revenue at Angi. Jeff can elaborate, but we are continuing the efforts started by Joey and see cost-saving opportunities that support our adjusted EBITDA forecast and ongoing margin improvements, despite the revenue declines. For the next quarter, we anticipate total revenue declines at Angi to be similar to what we've seen in the past two quarters, at a mid-teens percentage level. Additionally, we took steps this quarter to remove low-value revenue streams at Angi, including discontinuing an acquisition from 11 years ago called CraftJack, which operated a small professional network alongside Angi. While we initially thought it would enhance our service offerings, the reality is it was unprofitable and hindered our business. We expect some revenue loss from this, specifically around 5,000 service professionals, but we aim to reclaim many of the leads generated through CraftJack directly, viewing this as a beneficial move for our margins. Looking beyond the next quarter, we want to give Jeff the space to shape his vision for the company's future revenue and cost strategies. Overall, we remain confident in our adjusted EBITDA guidance of $120 million to $150 million for the year and look forward to continued margin improvements similar to what we experienced in the first quarter.

The next question comes from Jason Helfstein with Oppenheimer.

Two questions. The first, given the stronger first quarter EBITDA at both Dotdash and Angi, why not raise the full year guide? Are you seeing anything in your outlook that has given you pause? And then second and this will be multiyear repetitive, you talked in the letter about being frustrated with the stock price. What's the takeaway? Are you implying that you'll lean into buybacks if the stock does not start to improve? And just do you think about like the MGM stake as a source of capital or leverage if you need it? And welcome back, Jeff.

Thank you.

Chris, do you want to do the first one and I'll do the second?

On full year guidance for Dotdash, we are confident about the business's momentum and outlook, considering the revenue growth, the OpenAI partnership, and our margin visibility. However, due to the seasonality of the business, the full year tends to be more geared towards the second half. Therefore, we believe it is wise to wait until we are further into the year before making any adjustments to our guidance. As a result, we are reaffirming our adjusted EBITDA expectation of $280 million to $300 million for the year while also making targeted investments in areas such as content, D/Cipher, and performance marketing. We are optimistic about being at the higher end of that range and will keep the market updated as the year progresses. Regarding Angi, we achieved strong profitability in the first quarter even with declining revenues, which indicates that the revenues we have eliminated from the business had minimal profitability and value. There is still more to be done to enhance both the consumer and professional experience, which is a key priority for us. We aim to maintain flexibility to build a robust business for the future and are positive about achieving over $30 million in adjusted EBITDA per quarter for the rest of the year, so we are maintaining our guidance at $120 million to $150 million.

Yes. Regarding buybacks, there are a few key points to discuss. First, I want to emphasize that buybacks are definitely an option we're considering. The initial focus was on getting our operations organized and ensuring our business is in strong shape, and I believe we've made significant progress in that area. However, there's still work to be done. Additionally, we are in a good position concerning our cash flow and the generation of extra cash. A key requirement, as you mentioned, is having an attractive valuation and the confidence in obtaining a solid return on capital, which we feel we have met. We also need to ensure there are no restrictions on share buybacks, which can arise from time to time. Moreover, we constantly assess various opportunities for our cash, including potential mergers and acquisitions both inside and outside our current businesses. The positive aspect right now is our capacity to handle both, supported by our cash reserves and the additional cash we’re generating. It's important to note that we hold a significant and valuable stake in MGM, which we plan to maintain. MGM’s aggressive stock buybacks, which have reduced the company's outstanding shares by more than a third, contribute positively to our liquidity profile. In summary, the short answer to your question is yes, we are considering buybacks as a viable option moving forward.

The next question comes from Justin Patterson with KeyBanc.

Actually wanted to build off of Jason's last question. Joey, now that you're full-time IAC CEO and no longer wearing 2 CEO hats, would love to hear about just how you're thinking about the evolution of IAC here. I know in the past, you talked about looking at marketplaces as your preference for M&A. We've obviously seen a lot of changes within the Internet landscape with GenAI. So would love to hear more about just how you're spending your time these days and how you're thinking about the future of IAC.

Thank you, Justin. That's an important question. Regarding your inquiry about spending time, we are focused on capital allocation for both existing and new opportunities. AI is an area where we are continuously learning and exploring options. While there are many opportunities in AI, pure-play AI companies are currently highly valued, making it difficult to invest. However, many businesses, including ours, particularly Dotdash Meredith, can leverage AI, which factors into our consideration for new opportunities at IAC. I'm not pinpointing a specific sector at the moment; we are learning and exploring various areas and remain opportunistic. We have had success with marketplace businesses that we understand, but we’re not limiting ourselves to just that. The travel and leisure segment has historically performed well for us and continues to capture consumer spending, and we expect to benefit from ongoing technological trends in that space. We're maintaining a broad focus, and our priority for M&A is first on enhancing what we already own with add-ons that create synergies, followed by new mergers and acquisitions. At some point, I anticipate that we will explore new opportunities to further diversify our portfolio, and we are actively seeking those right now.

The next question comes from Eric Sheridan with Goldman Sachs.

Thanks for the question and all the details. Also, I'll echo, welcome back to Jeff into the new operating role as CEO of Angi. Maybe I'll follow up on Dotdash Meredith. When you think about coming out of the advertising environment of last year and sort of building some momentum in the advertising environment this year, how should we be thinking about the conversion of revenue into EBITDA and the cadence of that between now and the end of the year, measured against the potential volatility up or down on revenue against things that you believe you need to invest in to make sure Dotdash Meredith, especially on the Digital side is set up for success on the longer term?

Thanks, Eric. So a few things on that front. First, last quarter, just to re-anchor folks, when we provided the full year guidance of $280 million to $300 million of adjusted EBITDA for 2024, we said we expect essentially all of the consolidated EBITDA to come from Digital. Print EBITDA and corporate expense should roughly offset each other this year, with corporate expense pretty consistent in each quarter, around $10 million. As we expected, Print started off the year at a low profit level, $2.9 million, due to seasonality and secular revenue declines. We expect Q2 Print EBITDA to be $9 million to $11 million and then about $13 million to $15 million a quarter in the third and fourth quarters. Turning to Digital. We like seeing the profit scale this past quarter with adjusted EBITDA for Digital growing nearly 50% and increasing adjusted EBITDA margins. Looking forward on the revenue side, we continue to feel good about 10% plus revenue growth each quarter this year. And again, that's a combination, traffic growth, improved monetization for both advertising and performance marketing and licensing growth. On the cost side, we're making specific targeted investments in strategic areas. Those are clearly content that we know will perform, D/Cipher and growing the capabilities of that strategic product, and performance marketing. And we talked about our initiative to reposition performance marketing growth for growth and particularly in the context of services. And we think those investments will build on our strengths and position us to grow for years. The impact of those investments will be most felt in Q2. We're forecasting incremental adjusted EBITDA margins of 30% year-over-year in Q2. And then that will be followed by 50% plus incremental margins for the third and fourth quarter as we would expect in the ordinary course. The result is, EBITDA growth each quarter and improving margins and the first half, second half weighting for the year, which is very comparable to the 1/3, 2/3 on adjusted EBITDA that we saw last year.

The next question comes from Brian Fitzgerald with Wells Fargo.

A couple from us. Maybe more broadly on AI, as we've seen Google scaling up their own Search Generative Experience, are you getting any visibility in changes, if any, in terms of referral traffic to you either as AI is integrated more deeply into traditional search?

I'll take that one. It's difficult to see specific changes. The short answer is not really, but I believe that in the long term, Google is increasingly occupying more space on their pages and retaining more traffic for themselves. This trend has been ongoing for multiple years, if not decades, and I expect it to keep going. We have managed this well in the past, and Dotdash Meredith's site continues to grow on Google because we have the best content. Our investment in content has outpaced others, and we effectively meet users' needs with what we've created. I think we are in a solid position. However, I anticipate that Google will attempt to retain more resources over time, though we have not experienced any direct impact from that yet.

Got it. And then at Angi, Jeff, we wanted to ask kind of what ideas or portions of the international playbook you expect to bring to bear at Angi as you take over there.

Reflecting on the past few years, we held a market leadership position in Europe five years ago, achieved through acquiring four different companies and platforms. At that time, we were losing $10 million with four distinct products, business models, and technologies. We initiated a process that began with pivoting our product to prioritize homeowner choice and professional online enrollment. Next, we restructured our marketing and improved our unit economics, enhancing our operations and technology. We also focused on the foundational aspect of our business by refactoring, rebuilding, and migrating our core technology, completing the migration of the fourth business in the U.K. just recently. Each migration has led to improvements, and now we operate on a single, more efficient platform and organization. Our main focus is on enhancing the offline experience for homeowners hiring professionals through our platform to ensure jobs are completed successfully. About 1.5 years ago, Joey faced more challenging circumstances in the United States, dealing with low-quality revenue and negative profitability, which he has worked hard to rectify. I feel fortunate to join now as the market is larger and our brand presence stronger. We need to continue on the path Joey and his team have established, and the strategies that were effective in Europe are being applied properly in the U.S., where we have to complete the task. Notably, by 2022, we turned the business around, achieving growth and profitability after several stagnant years. Currently, we are nearing 20% revenue growth in the first quarter and close to 20% EBITDA margins. Assuming everything goes well, we aim to replicate this success in the United States in due course.

Your next question comes from Dan Kurnos with the Benchmark Company.

Welcome back, Jeff. Joey, a little in the weeds for you, maybe but just on the D/Cipher benefits around the algo from the AI partnership. Just thoughts on incremental data signals, a shift to incrementally more probabilistic and what that kind of means in terms of driving outperformance relative to sort of the publishing peer group with that asset? And then maybe just an update on Care would be helpful.

Sure, I'm not completely clear on the question, but let me address the first part regarding D/Cipher's average. Currently, we've collaborated with Dotdash Meredith on D/Cipher by mapping intent across a subset of the Internet, not only on our own platforms but also on other publishing sites. This helps us identify where intent exists and measure its performance in comparison to our own properties. The collaboration with OpenAI aims to enable us to scale this mapping to cover a much larger section of the Internet, capturing those intent signals so we can leverage them for advertising. Our focus remains on a cookie-less, privacy-protected approach that emphasizes content intent rather than individual user privacy. We are aiming for significantly increased scale and access to much larger inventory with reliable data for intent-based targeting. If successful, we believe this could significantly boost the business, and so far, it has been working well. We see considerable potential in this area.

Yes. And just incremental area that excites us, which OpenAI is able to bring to D/Cipher that we don't have the scale to do would be additional media. So beyond just text, image and video and those things that are part of a user's experience being able to draw intent-driven linkages and monetize against them and drive performance. And we expect to have a number of those flowers bloom as the two teams work together.

Dan, does that answer your question?

It does. And then just update on Care?

Care is performing very well from a profit standpoint. The enterprise business is experiencing solid growth, and our main focus is now on boosting the consumer segment. We have several promising projects underway, including optimizing marketing fundamentals and enhancing access to instant booking, as well as improving the customer experience in that area. We are optimistic about the future potential of Care. Additionally, both the senior care and pet care segments are showing positive trends and present further growth opportunities, with early signs of progress in those businesses as well.

Yes. We have noticed a slowdown in consumer demand for some time. We acknowledged in previous quarters the need to enhance our marketing efforts and product offerings. With new leadership in place, including a Chief Technology Officer, Chief Product Officer, and Chief Marketing Officer, we believe we have a clear strategy moving forward. While we don't want to attribute everything to external factors, there are indeed macro trends affecting childcare and daycare at the moment, though we are seeing growth in senior care and pet care. We are confident in our ability to address these specific challenges in marketing and product development and see a promising opportunity ahead.

The next question comes from Brent Thill with Jefferies.

Joey, in the past, you've talked about the M&A environment being somewhat irrational on multiples. I'm curious if you could just update us kind of what you're seeing now? Have some of these expectations come back to earth? Or are you still seeing the similar environment?

I believe there are currently opportunities. We've experienced times when everything was priced perfectly and appeared irrational from our viewpoint, and also periods where valuations suggested failure, which presented significant opportunities—like when we invested in MGM. At this moment, it seems more balanced. Some sectors, like AI, appear to be overheated, and not all AI companies will become multibillion-dollar enterprises; while some will succeed, many will not. However, there are numerous areas that present rational opportunities, which is where we're concentrating our efforts. Overall, it feels balanced right now, and while this might make deploying capital more challenging since it's not clear whether to enter or exit the market, we are confident we'll identify some opportunities.

Okay. Great. And then just a quick follow-up on the emerging business. Anything else to call out that you're really energized by in terms of what you're seeing in the momentum, in the other parts of the portfolio?

I want to emphasize that we've already discussed Care, which I believe is a leading category with strong fundamentals. Additionally, I want to highlight two others. One is Vivian, which offers an excellent product that connects healthcare professionals, mainly travel nurses, with job opportunities. This market has strong long-term growth potential due to the supply and demand imbalance for nurses and healthcare professionals in general. Vivian has been successful in facilitating these connections while achieving significant revenue growth without requiring much capital. They've also effectively implemented AI tools to improve the chat experience between healthcare professionals and employers, leading to exciting engagement outcomes. The second one, while quite small for IAC, generates significant attention relative to its size. Daily Beast is under great leadership with Ben Sherwood and Joanna Coles, who are revitalizing the business and injecting a lot of energy into it. It's an exciting time for them, and I’m eager to see where it goes.

The last question comes from Tom Champion with Piper Sandler.

Maybe just 2 quick ones on DDM, maybe for Chris. Just looking at Core Sessions growth of 8%. Certainly solid and consistent with the fourth quarter but there was an extra day in the quarter. All else, fairly easy comp year-over-year. Just curious if there was any onetime or a headwind or anything else that we should think about that in the context of a trend that was previously improving sequentially? And then just any comments on the Amazon partnership? Would love to hear about that.

Yes, Tom, thanks for the question. We wanted to discuss the trends in Core Sessions. The decrease from 10% core growth in Q4 of last year to 8% growth this quarter is mainly due to reduced traffic from Facebook to our properties. This decline has affected the entire publisher ecosystem since the middle of last year, impacting the industry significantly. Fortunately, it represents a small portion of our overall growth, which allows us to continue expanding. However, we've noticed that Facebook has intensified this trend recently. In the first quarter, our traffic from Facebook fell by 50% compared to last year, as they focus more on attracting audiences to their own platform. Thankfully, Facebook now only makes up about 4% of our traffic, down from 7% last year. We anticipate this trend will continue this quarter. Despite this, we are optimistic about growth in other areas and our ability to increase sessions. Additionally, we are experiencing strong growth on Apple News, although that growth is not reflected in our session numbers since it occurs on their platform and instead contributes to our licensing revenue. While we face declines on one platform, there's significant growth on another where we see great potential. In summary, we are confident about session growth across our portfolio. Furthermore, we are optimistic about our entertainment properties as we progress through the year, especially as we move beyond the strikes.

I just want to add one thing on that, which is, whether 8% versus 10% or 1 more day in the quarter or whatever, 8% growth in Core Sessions is excellent, where primarily U.S. businesses, generally, the Internet is not growing right now in terms of users. And so what you're seeing happen is the folks who invested in content and we've invested an enormous amount in content and continue to invest an enormous amount in content, are being rewarded with increasing share of audience and we feel very good about that. And again, whether it's 8% or 10% or whatever, growing in that environment and growing healthily in that environment is a real testament to a winning product.

Tom, regarding Amazon and the demand-side integrations for D/Cipher, I believe it's a testament to Neil and the team that we are well-positioned with D/Cipher, especially given current industry trends. The data science and underlying technology are robust. Companies, whether associated with Amazon or part of its retail media network, are increasingly focused on privacy-friendly solutions and moving towards cookie-less platforms as they emerge. We are having productive discussions with other large demand-side platforms to enhance their infrastructure for utilizing D/Cipher and offering cookie-less targeting. We also anticipate that integrating generative AI will positively influence advertisers' perceptions. We are committed to executing the integrations and communicating our story clearly, and we feel very optimistic about these dynamics.

Yes. This integration of generative AI just meant advertisers, not investors, although perhaps both.

Of yes, sorry, advertisers. I have investors on my mind, but I meant advertisers.

Thank you all very much for joining us. I know it's a busy morning and appreciate the questions and support and we'll talk to you next quarter.

Thanks all.

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