Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Angi Inc (ANGI, Financial) is contemplating a spin-off, which could provide it with a more focused strategy and a liquid currency for M&A or capital allocation.
- The company has seen meaningful improvements in profits and cash flow, indicating a strong financial position.
- Customer satisfaction and retention have improved significantly, with a 30% increase in jobs done well over the past year.
- Angi Inc (ANGI) has successfully reengineered its paid marketing to drive profit growth despite revenue declines.
- The company is confident in its ability to maintain profitability in 2025 and expects revenue growth in 2026.
Negative Points
- The transition to a consumer choice model in response to FCC regulations is expected to cause revenue volatility in the first half of 2025.
- There is uncertainty regarding the impact of the FCC's one-on-one consent rule, which could affect revenue streams.
- The company anticipates a revenue decline in the first quarter of 2025, similar to the decline experienced in the fourth quarter of 2024.
- Angi Inc (ANGI) is still in the process of integrating its ads and leads products, which could pose operational challenges.
- The macro environment for digital advertising remains uncertain, with some categories experiencing slowdowns.
Q & A Highlights
Q: Joey, could you expand on why now on exploring the Angi spin? And what's giving you the confidence in Angi returning to revenue growth? Is there any impact you're expecting next year from the FCC's one-on-one consent rule?
A: Joey Levin, CEO of IAC, explained that the decision to explore the Angi spin is based on a confluence of factors, including Angi's improved profitability and cash flow, which make it capable of standing alone in the public markets. Jeff Kip, CEO of Angi, added that the company has improved customer experience and retention, and expects to maintain profitability despite revenue declines. The FCC's one-on-one consent rule is expected to cause some volatility, but Angi is well-positioned to benefit from the new landscape.
Q: Why should investors get excited now about unlocking growth in the home services market, which has been elusive for years?
A: Joey Levin emphasized a shift towards an absolute obsession with customer experience as the key differentiator. This focus is expected to drive both Pro retention and homeowner satisfaction, allowing for reinvestment in the business. The strategy is to build a compelling direct brand with homeowners, which has not been effectively done in the market before.
Q: Can you talk about the drivers of the 3Q overall revenue outperformance in digital advertising?
A: Joey Levin noted that digital advertising revenues grew 26%, driven by 14% growth in core sessions and strong direct ad sales. Programmatic rates were up over 30%. However, performance marketing was down 7% due to weakness in financial services. The fourth quarter is expected to see mid to high single-digit revenue growth, with a return to 10% digital revenue growth as a baseline for 2025.
Q: With the decision to break out Care as a reported segment, where does that business sit today and what is the market opportunity?
A: Joey Levin described Care as a scale business with $365 million in revenue and $45 million in adjusted EBITDA over the last 12 months. It is the category leader in online digital marketplaces for care services. The focus is on improving product and customer experience using AI and machine learning to drive conversion and optimize pricing. The enterprise portion of the business is a growing tailwind.
Q: Are you fully distributed within the ad tech ecosystem, and do you need incremental investments to achieve full Decipher coverage on programmatic?
A: Joey Levin stated that the programmatic stack is well-optimized, but there is ongoing work to integrate Decipher into demand-side platforms and agency workflows. This includes developing managed service capabilities to make Decipher more programmatic-like on a direct basis. Some ad tech acquisitions may help in this effort.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
