Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IAC Inc (IAC, Financial) is contemplating a spin-off of Angi, which could create two separate focused companies, allowing Angi to have a standalone strategy and more liquid currency.
- The company reported improved profits and cash flow, with a significant focus on enhancing consumer experience and job satisfaction.
- Angi's job completion rate has increased by 30% over the past year, with homeowner satisfaction up by almost 60% in the last quarter.
- IAC Inc (IAC) has a strong cash position and is focused on slimming down and executing fewer things better, which could lead to more efficient operations.
- The digital advertising segment showed strong performance, with a 26% growth in digital advertising revenues and a 16% total revenue growth, marking the best quarter since acquiring Meredith.
Negative Points
- The potential spin-off of Angi could lead to a reduction in corporate costs, but specific savings have not been quantified yet.
- There is expected volatility in the first half of 2025 due to the FCC's one-on-one consent rule, which could impact revenue.
- The digital advertising environment showed some softness in October, with a slowdown in advertising spend across various categories.
- The company is facing challenges in the M&A environment due to high valuations, which may limit acquisition opportunities.
- Angi's monetized transactions per service professional have been declining, although the company expects growth to resume in 2026.
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 spin off Angi is based on the business being strong and capable of standing alone in the public markets. Angi is now profitable and generating cash flow, with improved customer satisfaction and retention. Jeff Kip, CEO of Angi, added that the company has improved its customer experience and unit economics, which supports future growth. The FCC's one-on-one consent rule, effective January 2025, is expected to impact revenue initially but will ultimately benefit the business by improving customer experience.
Q: Can you elaborate on the potential of the Care business and the market opportunity ahead?
A: Joey Levin, CEO of IAC, highlighted Care as a scale business with significant potential, being a category leader in online digital marketplaces. The site receives a high volume of job postings and applications daily, indicating liquidity on both supply and demand sides. 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, providing care solutions for employees, is a growing opportunity.
Q: On DDM digital revenue, can you talk about the drivers of the 3Q overall revenue outperformance and the outlook for 4Q?
A: Joey Levin, CEO of IAC, reported that digital advertising revenues grew 26% in Q3, driven by strong traffic and monetization, particularly in entertainment and food properties. Direct ad sales and programmatic rates were strong. However, October was softer than expected due to consumer distraction and advertiser caution. For Q4, digital revenue is guided to mid to high single digits, with confidence in 10% digital revenue growth as a baseline for 2025.
Q: With the decision to break out Care as a reported segment, how are you thinking about the market opportunity set ahead for Care?
A: Joey Levin, CEO of IAC, stated that Care is a scale business with $365 million in revenue and $45 million in adjusted EBITDA over the last 12 months. It is a category leader in online digital marketplaces, with significant potential to improve product and customer experience using AI and machine learning. The enterprise portion of the business, providing care solutions for employees, is a growing opportunity.
Q: Are you fully distributed within the ad tech ecosystem, and do you need to make any incremental investments?
A: Joey Levin, CEO of IAC, stated that the company feels excellent about its programmatic stack and integrations. The focus is on integrating Decipher into demand-side platforms and developing managed service capabilities. Some ad tech acquisitions may help in this area, and the company is focused on making Decipher addressable to more of the ad market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
