Good day and welcome to the IAC and Angi’s Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to hand the call to Christopher Halpin, Chief Financial Officer and COO of IAC. Please go ahead.

Thank you. Good morning, everyone. Christopher Halpin here, and welcome to the IAC and Angi Inc., second quarter earnings call. Joining me today is Joey Levin, CEO of IAC, and Chairman of Angi Inc. and Jeff Kipp, 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 we'll then open it up to Q&A. Before we get to that, I'd like to remind you that during this presentation, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as, we expect, we believe, we anticipate or similar statements. These forward-looking views are subject to risks and uncertainties and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in IAC's and Angi Inc.'s second quarter earnings releases and our respective filings with the SEC. We'll also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to as EBITDA for simplicity during the call. I'll also refer you to our earnings releases, the IAC shareholder letter, our public filings with the SEC and again to the Investor Relations section of our respective websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. With that, I will now turn it over to Joey.

Thank you all for joining us this morning. Special thank you, again as always to the incredibly brilliant and resilient IAC team. Any of you who are on this call today, we are incredibly grateful for the work that everyone has been doing here. This is a team of fighters, grinders, builders and that's what we saw come through not just really this quarter but for the last 18 months is the team that figures out how to make things work and deliver for our customers. At DDM, we have been incredibly focused on delivering for viewers to give them a compelling customer experience and converting for advertisers and we have not been distracted from those focuses and now that's really working and helping to gain share. And we really have the same story at Angi, the focus on jobs done well there to make pros and homeowners happy has been the focus. Over time that's going to show through in a business that can grow and share its category. The same is true for businesses that we are minority owners of; Bill Hornbuckle at MGM and Andre Haddad at Turo are totally customer obsessed and we're incredibly grateful to be associated with those businesses right now. I see ahead, I think a great quarter this past quarter and we're feeling some good momentum looking forward. And so we'd love to talk about that with all of you and let's get your questions. Operator, first question, please.

The first question comes from Ross Sandler of Barclays. Please go ahead.

Hey guys. Just maybe starting with Dotdash Meredith, so the letter said you could grow 15% or better in 3Q. That looks great relative to what we've heard broadly from the digital advertising landscape thus far in the earnings season. So what are you seeing right now in terms of macro trends that are allowing you to accelerate while others are kind of fading here? And then, the DDM licensing line picked up a little bit quarter-on-quarter and year-on-year. So how much of a contributor to that was the recent AI licensing deals? And how should we think about that going forward? Thanks a lot.

Thanks, Ross. I'll take the first one and Chris could take the second one. Obviously, digital revenue is traffic and monetization and let's do those one at a time. Traffic side has been going very well for DDM. And that's a lot of things. Obviously, it starts with investing in content and investing in the best content. But it's also figuring out distribution. I think DDM has done a really great job in holding court within the Google and search ecosystem notwithstanding a lot of things that are happening and changing that system but also diversifying from there. Email has been great. Social media, we’ve now lapped the sort of Facebook turning our publishers event and we now see growth in social media and opportunities for growth in social media going forward. Big platforms, Apple News, and Google has a similar concept called Google Discover, video, all these things are areas where we have started to or see real upside and continuing to grow traffic. And so that's been helpful in the business and that's what led to the acceleration in the second quarter and what we think is continued acceleration and what we're seeing as we sit here in August. On the monetization side, that's both direct premium sales and that's also programmatic. And I think it's important to understand that we have been growing inventory, but a solid base of inventory has always been there or has been there for a while. The performance and the measurement of that performance intent has always been there. What's happening right now is we're getting the demand of advertisers to come in and start to more efficiently price and that's why you saw our programmatic ad rates up substantially and we think more than the market and if you look at domestic up even more, that that is a product of advertisers coming in realizing the value of that inventory and pricing it up to the point where it continues to drive performance for them. That lifting of that programmatic pricing and the lifting of the premium also feeds each other because you start to have less inventory available, which means that the best stuff starts to get higher prices over time. The licensing business also did well. I’ll let Chris to answer that part of the question. But we are starting to have the open AI money in there and other licensing partners that are paying us. That grew healthy. And we still see upside in each of those things as we look forward from here.

Thanks, Joey. Ross, with respect to the large language model licensing deal we've announced, if you look at the digital licensing line, revenue grew 19% in the quarter or $4.9 million of dollar growth. If you look at the prior quarter, the existing licensing business grew about 9%. So, it's fair to assume about half of the dollar growth to get you up to 19% came from our OpenAI license. And we note that represents revenue earned since the partnership started in early May within the quarter. So there's only about 60% of a quarter of revenue captured in the second quarter and will be full going forward. So, if you think about half the dollar growth and gross it up, you have insight on the fixed portion of our fee. Thanks. Thanks Ross. Operator, next question.

The next question comes from Cory Carpenter of JPMorgan. Please go ahead.

Good morning, I had two on Angi. Just you and Joey have been focused on improving the customer experience and profits at the expense of monetization for a while now. So my question is, what inning would you say we're in? What do you think you still need to do? I feel like you're in a position for revenue trends to turn. And then Chris, for you on Angi financials, could you talk about what drove the profit upside in the quarter and the outlook? Maybe expand a bit on your revenue expectations in the back half. Thank you.

So I'll start. If I'm going to answer your baseball analogy, I think I'm going to take the bottom of the fourth where the home team and we're on offense. What Joey has been focused on and what the company continues to be focused on is getting more jobs done well. Just for reference, we define that as jobs where a homeowner who missed a job on the platform hires a pro, pays for that lead on the platform effectively and the job gets done with a 4 or 5 rating. So we're completely focused there and driving the product and customer experience to give us the long-term repeat and retention required to give us long-term revenue and profit growth. If you want to get into the tactical elements, there are some pieces to this. On the homeowner side, as I think everybody knows, our SEO has been on a downward path for a while losing a significant amount of ground it once had. We see that as currently getting to a stable place and turning. That's a big job and a huge opportunity for us given the ground we’ve lost to reclaim. We've been systematically improving our SCM and really been significantly driving the SCM contribution growth. We think we still have work to do. We're still in the middle innings in terms of being able to reclaim ground and grow those jobs. Finally, the other area is really third-party where there have been the most questions around the quality of what’s happening there. We think it’s a little lower quality. We are continuing to do some work there to make sure that all of our customers have a great experience, which leads to the final category, which is really repeat which has been consistently growing over the last couple of quarters driven by the better experience and more jobs done well. On the pro side, I think you've seen remarkable increases in retention year-over-year the last couple of quarters. That's also being driven by the focus on jobs done well. We think we still have some territory to gain there which will contribute to long-term growth. We've significantly optimized our sales force and that work is stabilizing and turning back to growth in the near term. And then, finally, you know we're working on getting our online enrollment up and out in the United States. It’s been an incredibly successful tool for us. In Europe, that we believe is going to contribute. So we are going to put all the bricks in place. The honest truth is we will be growing revenue again. It will come when we have the experience and the product in a place that we think is great. It's not going to come immediately. But we are continuing to work on that and right now what we're doing is growing value long-term for the business and our customers and our shareholders.

And thanks Corey. With respect to Angi profitability and financial outlook, in the second quarter the growth and profit both on a year-over-year and sequential basis reflects the greater efficiency that we’ve been driving at Angi for some time. Joey started it and Jeff is continuing it. As Jeff said, we’ve improved marketing efficiency by stripping out lower value revenue streams and what in our view was wasted paid marketing. We’ve also improved matching and monetization through technology, again improving efficiency and that's of course feeding into Jeff’s strategies, you heard. Moreover, we've worked for some time to target higher quality professionals. That enables us to reduce our service professional acquisition spend while also improving retention and bad debt and we definitely see both manifest themselves. So the investments in experience and efficiency for the business have led to our revenue declines, which you referenced, but also helped to significantly improve both revenue quality and margins. Q2 in particular, there was also the benefit of some expenses that shifted from Q2 to Q3 this year, so a little bit of a flattering margin there. But big picture we feel good about the margins. We feel good about the profitability and expect that to continue. Looking forward, we've said we expect revenue declines in Q3 to be back down about 15%, that's higher than the second quarter but it is more in line with the first quarter and the end of last year. It’s really due to two factors. The second quarter last year was a particularly easy comp as it’s when we experienced the most pronounced impacts from shutting down certain demand channels that were producing lower quality leads. Secondly, a number of the actions that have been taken to improve consumer experience really started in the second half of last year and early this year. So we're continuing to feel the impact there. As for profitability in the third quarter, we are guiding to north of $30 million of adjusted EBITDA. That’s lower than our profit in the second quarter due partly to the shift of expenses I mentioned before. But also, due to targeted investments we’re making in customer experience to set us up for future growth.

And I would add to what Jeff and Chris said, all of which I agree with I think it was very well said. Going back to your original question, Corey, Jeff said bottom of the fourth, we still have work to do here. We have work to drive the customer experience and both on the homeowners side and the pro side to what we think is possible in the category and what we think is a long-term winner and we are going to do all that work over time.

Thanks, Corey. Operator, next question.

The next question comes from Eric Sheridan of Goldman Sachs. Please go ahead.

Thanks so much for taking the question. Wanted to come back to two of the themes you talked about in the shareholder letter. First, Joey, there was a discussion in there about putting your cash to work in a smart manner going forward, as well as the theme of shrinking the discount that exists in the equity of IAC today. Wondering if you could expand upon that statement and how it sort of dovetails back to game on capital allocation more broadly. And the second part of that would be you also highlighted the stakes you have in MGM and Turo, they continued to rise and Turo’s percent ownership there. Any color you can give us on the pathway to either owning more of those equities over time or the path to creating or crystallizing value around those stakes? Thanks so much.

Yeah, thanks Eric. Those questions are certainly all closely intertwined. There's three things that shrink the discount that have always been true and I think that we've always done, but to varying degrees over time. Execution in the companies, smart capital allocation and crystallizing value. All those things are certainly a focus. All those things are certainly on the table and there will be a mix of all of them as we shrink the discount or there will need to be a mix of all them as we try to shrink the discount. We've lived with a discount in our past and we've shrunk a discount in our past. Generally, the discount is widest when the gap relative to our last crystallization event is longest. I understand. Now to us, that doesn't reduce the option value of any of those crystallization events. They still exist. They still have value, but I understand that that value may not be appreciated until some of those options are exercised, so to speak. We talked a lot already about execution in our companies. In the letter, obviously that will continue. The other two capital allocation and crystallizing value are certainly the harder ones to discuss because we haven't done either one of them in a little bit. Our view is, we are definitely looking for new opportunities in M&A. It's been the lifeblood of IAC for its entire history. It's been a great source of growth and shareholder returns and opportunity and we are looking there. We, as always, have to be disciplined there and we have to find things that we believe are screaming and disputable opportunities. We haven't found those yet and when we do, you'll certainly know about it. On the crystallizing value side, there are a lot of ways to do that. I mean, if Turo does go public that's a - we'll see what the value is there. There are assets that we could consider selling and optimizing the portfolio whether it's spends or sales or whatever are things that remain on the table and will be considered to shrink the discount over time. Execution has for basically two years was the lion share of our focus. Now that we've got execution in a place that we feel much better about, I think the other two are getting a lot more attention. As it relates to MGM and Turo, we are very happy with the path that we're on in both of those businesses, which is we get to both hold on to our capital and accrete more ownership in the businesses. That was evident in the last quarter and we hope that to continue and hope both those businesses continue to execute as well as they have been.

And just building on that was in the letter, but for those who follow we executed our warrant in Turo on a net basis and increased our ownership to 32% without expending any incremental cash. Thank you, Eric.

The next question comes from John Blackledge of TD Cowen. Please go ahead.

Great. Thanks. Two questions. On the macro, Joey, just with renewed fears of macro softness. Just curious if you're seeing any signals of macro softness across any of IAC’s different business segments? And then, secondly on Dotdash Meredith, could you discuss the key drivers of expected accelerating DDM digital revenue growth in 3Q? And then, on the margins on incremental margins were better in 2Q. Can you talk about that outperformance and discuss the strong 3Q DDM digital EBITDA guide both of which I think kind of led to raising our total DDM EBITDA range for fiscal ’24. Thank you.

Yeah, John. I'll let Chris do the second. I’ll do the first. In our caveat the macro by saying two things. Number one, we're so small, we do have a view but I don't know how much it indicates the entire world. Two, I do think our view skews towards higher maybe mid-income just the nature of our businesses and brands are skewed more in that direction. The answer to your question is, we're not seeing that weakness. We had a really solid Prime Day last month at Dotdash Meredith on the commerce side. We've talked a lot about our view of how advertising - our advertisers our viewing DDM and spend there in terms of both pipeline and booked looks very good right now. So we're - those look healthy. We look by business. I think care, we've talked about this a little bit that those families. We may be seeing a little bit in the sense of families favoring daycare over individual care, nanny care and so. But that trend I wouldn't say became more pronounced in the last month. That's been true for the last year or maybe even a little bit more. Same is actually true on the Turo side. I mean Turo and MGM, but Turo specifically demand for travel as far as we can see has held strong. The one trend we have seen which has been again true for a little while is the mix shift towards cheaper cars. Although we haven't seen that sort of mix shift happening at MGM yet. In aggregate, it does feel healthy to us, but like I say, we're relatively small. So, I don't know we're indicative of the whole world and our slice of the world.

And then, John, on DDM, I'll take Q2 margins first. Just to do it sort of chronologically. Incremental margins did exceed our expectations in Q2. A combination of a little more traffic growth than maybe we conservatively forecast for and also monetization was better. Joey talked about strength in programmatic and also momentum in premium and that really drops to the bottom-line. Looking forward, as Joey talked about before, really traffic and monetization are strong. We're seeing solid traffic growth across the portfolio of titles and an acceleration so far this quarter. Entertainment is strong as we're lapping strikes, but also doing a good job of targeted content and also driving traffic from new distribution sources as Joey said. Food has been very strong and the team has done a great job re-energizing all recipes and other key properties there. We see more opportunity. On monetization, it continues to be very solid across premium and programmatic. The recovery/momentum in the broader advertising market is solid and feels to be broadening. It's definitely not a booming advertising market, but it is solid and key categories for us like health, pharma, retail, beauty remains strong. Then we've seen stability/recovery in categories that we've said previously have been weak. Food and beverage, home and technology. So those patterns and then continued improvement in programmatic monetization where we really feel like our advertising tech stack and our programmatic relationships are differentiated as well as our inventory led us to guide to 15% or more revenue growth on digital in Q3 and 25% plus EBITDA growth. Obviously, our financial plan is back-end weighted. We've said before roughly two-thirds of our profit comes in the second half of the year. But we see momentum, we expect performance marketing to return to growth in the second half and licensing continues to be strong. So we're head down executing. Thank you.

The next question comes from Jason Helfstein of Oppenheimer. Please go ahead.

Thanks for taking the questions. Really more two follow-ups on Eric’s questions. First, given the improvements at DDM and Angi this quarter, your positive outlook and comments in the last letter on the discount versus some of the parts, I would assume the only reason IAC did not repurchase stock was the company was restricted due to M&A talks. The press has obviously reported that you were interested in Paramount, that's true or not. So maybe comment on this. And if you can talk about specific areas you find most attractive for M&A right now.

Thanks, Jason. I’ll do them in reverse order. Turo management is still very focused on getting public. I think if there's not a milestone that to advance into board I think is a threshold to that happening. I think it's more the markets meaning the banks always like to offer someone a discount to buy into an IPO. I think that the discount has given the market volatility that discount is looked to be very wide. Turo being in a very healthy position as a business, with a very healthy balance sheet doesn't need to accomplish that with too wide a discount. So they're waiting for a favorable environment to do that. Whether it ultimately happens, I don't know when it ultimately happens. I don't know but there is not a - to answer your specific question, there's not a business milestone that needs to be hit in order to accomplish that. I think Turo does have the scale to be a public company. I've said all along and continue to say we're relatively indifferent to whether it's a public company or a private company. We're much more focused on how it operates as a company. I am not sure that that IPO has a meaningful impact on that one direction or the other. But the main thing is just the market environment and getting it into a healthy start with the markets. On your other question, there’s a lot in there. Paramount, we did look at that, our Chairman, as you know has a great history with that asset. It's an iconic asset and in a way it is similar to our feeling about DDM, which is content is enormously valuable. And the people who invest in and own the best content, the best IP are in a good position and in a better position as distribution diversifies. We think DDM, you can see now is a beneficiary of that notwithstanding the sort of prevailing narrative in markets. And so, we like that concept. The reality is that that deal didn't work for us financially. The elephants put together a deal that's very hard to beat. On M&A and share repurchases, I'll start with that there's lots of things that can happen in quarters and restrict or complicate our ability to accomplish share repurchases. But we generally reject the notion that share repurchase is an essential baseline requiring explanation every 90 days. I know it is. It does we have explained it every 90 days for many, many years. But it is a thing that is important. It is a thing that we have not been averse to historically, we've had huge amounts of shares in our history and we don't have an institutional opposition generally to share repurchases. The only thing we're averse to is the notion of share repurchases as signaling which we think is a truly foolish game and that's something that that's ever done. And just to make one more on that, but certainly Monday this week felt like a nice day to look at our treasury and see a heavy stockpile. All that said, Chris and I believe we are outrageously cheap. We would use some cash to buy the things we know so well attractively. We think we have the ability to afford both share repurchases and M&A. This is the subject of significant internal debate. The reality is our Chairman wants to put pressure on all of us for pursuing M&A and to look for those new avenues for IAC that have always been an important source of growth for us. We're keeping that pressure on the organization before we allocate to repurchases. It doesn't mean that we can't or won't or won't soon or won't ever. It just means that we are very focused on M&A right now. Our Chairman doesn't think we have enough capital for both—or maybe said differently wants to cash as wide a berth as possible for the next opportunity. Certainly, more capital opens up a wider array of opportunities. So that's where we are right now. Again, I think it still as always has been and will be true. Anything is possible as it relates to share repurchases, but that's the way that we're thinking about it. There are real opportunities in M&A right now. I think we are familiar with it in our own cases. There are lots of companies that continue to look to deliver better and better results with the same or shrinking share prices which means multiples if you're not an AI are generally shrinking. As far as public companies, there's a lot of opportunities that we believe are attractively priced. The longer that trend goes, the more businesses are open to transact at reasonable premiums to those numbers. It's an interesting area, but we're certainly not restricted to just the public markets. We talk to opportunities in the private markets and unique opportunities and we'll continue to look at all those. I think our sweet spot has been in the $300 million to $700 million range. Generally, we're focused on acquisitions of control or complete acquisitions. But we look at a very wide range and we'll continue to look at a wide range.

Thank you, Jason. Operator, next question.

The next question comes from Youssef Squali of Truist. Please go ahead.

Great. Thank you. I have two questions. Just as a follow-up to the prior question on M&A, it seems like in the letter, you're telegraphing the possibility of maybe entering a new category. Historically, you’ve focused on marketplaces. I'm not sure if that's a correct assumption or not, but if it is, how will you get investors comfortable with the risk of venturing into a new category at a time when the stock discount is so high? And then second, on the data licensing deal, could you maybe share with us just broadly speaking, how is the pipeline for similar deals historically when we've seen peers do deals like that? Once OpenAI comes in, then you have a whole slew of others in the pipeline. Maybe, if you can provide some either qualification or quantification of just how big is the opportunity in front of you for that? Some companies gone in similar situations have been able to sign literally multi-$100 million multi-year deals. Any reason why you guys would not be in that position? Thank you.

I'll do them in reverse order again. No reason why we would not be in that position to answer the last question. But we are in active conversations with a number of players for further licensing deals. I expect we will have more deals and if you multiply the OpenAI deal times every other LLM or similar concept, you could get to very large numbers. But we don't know how the market plays out. I do say with high confidence that there will be more. I expect that there will be many more. I think that one of the things that you're seeing in terms of other deals that have been announced recently are relatively tiny players doing revenue share kinds of deals, which are maybe interesting. Those kinds of deals if they have happened wouldn’t generate real earnings until obviously those businesses start to generate real revenue. You’ll see these things play out over time. I think there will be some sort of cash deals. I think there will be some kinds of revenue share deals. I think it is tipping in aggregate in favor of everyone realizing that content is important, content is valuable and content cannot be stolen or taken for free. Payment will happen one way or another over time. As for new categories, Youssef, this has been true again for IAC’s history. Every time we've gotten into something new it's been definitionally getting into something new. Most recently, probably with MGM. That was in a minority way and on a majority way, but when we got into MGM in the first place, people were confused by that. But we saw an opportunity. We thought it was a unique opportunity and we seized it with a sort of billion dollar bet. That one worked out and I can go through a bunch of other examples that work out. The one thing I'll say, which is also been true for our history and probably the only rule that we truly follow is we don't bet the company. We know there's risk in new opportunities and we will never bet the company on something like that. We'll take manageable risk and we'll have to have high confidence that we can deliver that over time.

All right. The only thing I had on the licensing deals is, there are active discussions as we've said each LLM and operator sort of has their own approach and philosophy. But we are - we were disciplined in our discussions and approach that led to the OpenAI deal. Also, Joey referenced it in the letter. Given some of the travails on answers that we've seen from LLMs publicly, we believe that our preeminent brands and trusted content will only increase in value for sources in generative AI answers and large language models. The puck is moving in that direction where it's not about the cheapest answer to get to, it's about the best one, the most respected one and the most likely to be useful to the consumer or users entering the query. We think that's a positive trend and reflects the portfolio of titles and brands that we built.

It’s a great point and there aren't a lot of true broad scaled sources of truth out there and we think we have one of the most valuable ones.

Don't put glue in your pizza. Operator, next question, please.

The next question comes from Nick Jones of Citizens JMP. Please go ahead.

Good morning. Thanks for taking the questions. I guess, two on DDM. In the letter, you spoke to driving up programmatic ad rates being up around 36% in the quarter versus prior expectations of 15% to 20%. How much more growth do you see for programmatic ad rates, I guess from here on DDM? And then, another question, regarding the Adweek article on the case study with Pandora. It sounds like decipher guarantee went well. Can you speak to how many brands or how many think decipher guarantee and how the conversations are changing after Pandora's performance? Thanks.

I'll take those and Joey definitely jump in. Programmatic has been very strong and the team has built an excellent tech stack but also integrations to the various players in the industry and really moving from strength to strength. What you referenced we said in the letter was our average programmatic rate was up 36% in the second quarter versus a broader market that from a few different data points we'd say up is 15% to 20% on price. That premium represents both superior technology performance, but we also think it highlights or we know it highlights how performance DDM’s inventory is that given the intent-based and high conversion dynamics and predictable nature of Dotdash Meredith’s users. The ads will just work very well for both premium advertisers, but also for programmatic coming through. We’re not going to give forward guidance on programmatic. But we have confidence we can outperform the market and that aligns. Decipher is a part of that. Right now, decipher, as you referenced the Adweek article and we'd encourage everyone to read it. It is a differentiated product for our direct premium sales force. It is in over half our premium deals and aligns with a number of factors that brands and agencies are looking for - better performance, better ROI, privacy-friendly, non-cookie-based. We're excited about the partnership with OpenAI to bring their capabilities, greater scale, greater compute integration of video and images in the targeting and in the performance forecasting. All of these align with where we think the puck is going, which is intent-driven, privacy-friendly, highly performant advertising. We appreciated our partner in Pandora allowing us to disclose that case study. We have over 27 case studies at DDM that show decipher is, depending on which metric a client chooses, twice as performant as cookies. That metric along that line was mentioned in the Adweek article. We will look to provide more case studies to investors. But we feel very good about the product. We feel very good about the product roadmap including eventually integrating it into programmatic platforms. All that gives us optimism about continued outperformance on monetization. Thank you.

The next question comes from Brent Thill of Jefferies. Please go ahead.

Great. Hey guys. It's James on for Brent. Thanks for the questions. Can you just talk a little bit more about Google’s latest plans and not deprecate third-party cookies? How that impacts your medium to long-term outlook for Dotdash Meredith and your ad business more broadly? And then, could you also just talk about some of the alternative identifiers in the market like UID and whether you're deploying this tool across your portfolio? Thank you.

Sure. The punch line on the Google decision that the deprecation of cookies is we think the end state is more or less the same, maybe the timeline is different, but the end state is more or less the same which is users or Google rather will offer users choice, users depending on how that's presented will likely choose not to continue cookies and the universe of audience that is cookied will shrink. By the way, the universe of audience that cookies have shrunk and has been shrinking for a while. It shrank very dramatically when Apple turned out cookies and made cookies unavailable for all of iOS, which by the way is a very valuable audience, a more valuable part of the market. We think that that cookied audience continues to shrink. This is one of the reasons we're so excited about DDM. What we offer advertisers is the ability to access the non-cookied audience and the ability to access that non-cookied audience with intent and performance. What’s been happening in the market is a cookied audience that's been shrinking that has all the infrastructure around it to target a cookied audience has had a lot of demand chasing shrinking supply which means price has been going up in the cookied audience and everyone's chasing the exact same customers at a higher and higher price. What DDM is now offering and people are now seeing - advertisers are now seeing is we can access the rest of that audience including the especially valuable iOS audience that is being a naturally more valuable audience. If you just look at demographics and that's really important. The way we do that is, we have intent. So our content DDM’s brands but we have travel and leisure, food and wine, we have all recipes, we have products that we have brands rather that are reviewing products and recommending products based on proprietary research we’re doing on those things like better homes and gardens. That audience has significant intent which proves out in the case studies we do. I think we had 27 case studies showing a 2x lift in performance for these advertisers, it is very real and it is accessing an incremental audience if they can't access. We view what's happened with Google and what will continue to happen with cookies as long-term beneficial for Dotdash Meredith and we are seizing that opportunity. Thanks, James. Thank you.

The next question comes from Yugal Arouninan of Citigroup. Please go ahead.

Hey thanks. Good morning guys. Back to Angi and Jeff if you could give us a little bit more color on what the focus is on the consumer experience improvement right now? They're understanding we're in the fourth inning and you’ve done some and there is more to do. But what are the key areas of focus at this point? And then on the SEO side, I think a little bit more color on what's needed to get SEO from this kind of stabilization point to where it's actually driving improvements. Thanks.

So, I’ll take it and starting with the second first. On SEO, there's a range of execution things that we need to do. We have just rebuilt the infrastructure to put our content on and to do our site linking that's in place with some encouraging early indicators, but it's too early to call it. I think secondly, we have to have a disciplined program of producing the right content and keeping the content refreshed, which you've heard talked about with DDM over the years effectively. There's a playbook there. We believe we have the team in place. We believe we have the technology in place. We believe we have the path to execute here. Now it just has to be done. Secondly, in terms of improving the consumer or what we might call the homeowner experience, we've done a fair amount of work here already. At the core, what we've been focused on as rule one over the last year and a half or so is improving matching. What we've been able to do is improve the number of homeowners who are matched and the number of matches they get significantly and that's been part of what's driven the job said well right. What we're now working on is driving better matches. We’ve talked about improving our Q&A, making it conditional. What that means is we reduce the number of questions because we only ask the questions that are necessary once you've answered the last question. An example would be is it painting, is it interior, exterior, there are different paths you go down. By doing this, we can get more certain about what the job is and how to price the lead and get a better match of the right pro. Having the right pro makes the higher and the job being well done much more likely. That is really our core focus there. We're doing a number of things obviously, but I’d just sort of stop there with that. Let's do one more question.

Yep.

The next question comes from Tom Champion of Piper Sandler. Please go ahead.

Hi, good morning guys. Joey, can you talk a little bit about engagement trends on DDM properties? Peers have harnessed new formats and ML models to drive personalization and higher time spent. Is this an opportunity for DDM? And then, Jeff, I’d just be curious to get your thoughts if the Fed cuts rates next month. Is that a tailwind for the Angi business? Thank you.

Sure, Tom. Yes, that is an opportunity. I'm glad you raised it on when we think about DDM’s growth. There is, on the traffic side, certainly it is just volume, engagement and different properties are at different levels of frequency and engagement. We think we have real opportunities across many of them to grow that more deeply. As you might imagine, recipes have very deep engagement. For us, there may be an opportunity to drive frequency or scale there and something like People Magazine would have very significant scale and volume. The opportunity there would be to do things like driving deeper engagement. AI is a fantastic tool for that. We have been playing with that. The main tool is figuring out what the next article to suggest is, and AI is much better at that than people are. We're using those tools to deploy there to figure out how to drive engagement. I think we can get real wins there on the engagement side.

On the rate cut, Angi obviously, there's a lot of complexities in the macro environment right now, a lot of different forces. By itself, a rate cut would provide homeowner demand because it would be more likely to increase the rate of home buying and thus the repairs you do to your house to sell it and the repairs you do - the repairs and improvements you do to the house that you plan as you're moving in. The other thing it would theoretically do is, it would lower the cost of home equity lines and encourage improvements. That's in a vacuum. It's a little bit hard to predict all the forces that are going on right now. We have some evidence that people have shifted their own personal capital towards improvements because they can't move. The rate cut would have to be material to impact all the people out there who have 2.5% rates and make them willing to move in terms of the value trade-off they'd make. So, I think there's a little more complexity to it, but by itself, a rate cut should help consumer demand in particular and give us a tailwind there.

And just to put some numbers around that, it is every time a home turns over on average is $15,000 of home improvements that happens. So, fewer turnovers, which is what the market has seen for a while now, means that $15,000 events aren't happening to the same degree. So, you'd like to see more home turnover, but there are some natural hedges there, as Jeff alluded to, and there's also the reality that we've said for a while that I think 60% of our business is non-discretionary. So, as we always say at the locksmith, you're not waiting for the locksmith for rates to turn. I think that covers it. Thank you all for joining us. Thanks for a lot of great questions. Thanks for the support as we continue on this journey and especially thanks to the IT folks on here who are making all this happen. Talk to you all next quarter.

Thank you.

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