ANGI Homeservices(ANGI)2024-02-14 20:01Financial Data and Key Metrics - Angi Inc reported improved profitability in Q4 2023, driven by better service professional retention, reduced bad debt, and expanded margins in paid marketing [9][10] - The company expects to sustain 10%+ EBITDA margins in 2024, with Q1 adjusted EBITDA projected to be slightly higher year-over-year despite lower revenue [12][13] - Dotdash Meredith's digital revenue grew significantly, with core sessions increasing by 10% and premium sales showing solid performance [16][17] - Dotdash Meredith expects 10%+ digital revenue growth in 2024, with print revenue declining by 12% in Q4 2023 and similar declines expected in 2024 [20] Business Line Performance - Angi's service professional retention improved due to better targeting, compelling offers, and demand-side improvements, leading to more profitable unit economics [9][10] - Dotdash Meredith's digital ad revenue accelerated, driven by traffic growth, premium sales, and programmatic performance, with CPMs growing faster than the market [16][17][20] - Performance marketing continued to perform well, with users engaging more with content that monetizes effectively, such as product reviews [17][18] Market Performance - Europe showed strong growth for Angi, with 20% growth in recent quarters, attributed to better customer experience and product optimization [28][42] - Dotdash Meredith's digital traffic and monetization momentum continued into Q1 2024, with the company taking market share in both traffic and revenue per session [20] Strategic Direction and Industry Competition - Angi is focusing on improving user experience, driving free and repeat traffic, and enhancing service professional retention to improve unit economics [40][41] - Dotdash Meredith is leveraging D/Cipher, a new targeting technology, to improve ad performance and integrate with demand-side platforms like Amazon and Google [31][32][33] - The company is shifting capital allocation towards businesses benefiting from the long-term trend of consumers moving from goods to experiences [69][70] Management Commentary on Operating Environment and Future Outlook - Management highlighted the durability of Angi's margin improvements, attributing them to better service professional retention, reduced bad debt, and cost control [9][10] - For Dotdash Meredith, management expressed confidence in continued digital growth, with strong performance in premium, programmatic, and performance marketing [16][17][20] - The company expects free cash flow conversion to improve in 2024, driven by higher EBITDA and lower non-recurring expenses [22][23] Other Important Information - Angi is working on integrating its ads and leads platforms to improve user and service professional experiences, with significant progress on the user side [67][68] - The company sold its Mosaic subsidiary, which impacted Emerging & Other segment EBITDA, with $20 million in transaction expenses expected in Q1 2024 [36][37] - Vivian, an emerging business in the portfolio, continues to grow in the travel nurse market despite industry contraction, driven by strong platform engagement [77][78] Q&A Summary Question: What drove Angi's Q4 outperformance and what are the revenue expectations for 2024? [8] - Answer: Angi's outperformance was driven by better service professional retention, reduced bad debt, and improved paid marketing margins Revenue is expected to decline year-over-year in 2024, but the rate of decline will narrow as comps ease and demand-side improvements take effect [9][10][12] Question: What are the key drivers of Dotdash Meredith's digital ad revenue growth? [15] - Answer: Growth was driven by traffic volume, ad sales rates, and premium sales monetization, with core sessions growing 10% and programmatic performance improving [16][17] Question: How is Angi balancing consumer and service professional experiences? [45] - Answer: Angi is improving matching algorithms to increase monetized transactions per service request, which benefits both homeowners and service professionals by keeping more jobs on the platform [47][48] Question: What are Angi's top priorities for 2024? [39] - Answer: Priorities include driving free and repeat traffic, improving service professional retention, and enhancing unit economics through better conversion rates [40][41] Question: How is Dotdash Meredith managing margins and growth? [46] - Answer: The company is achieving strong incremental margins in digital, with investments in content, performance marketing, and D/Cipher driving growth while reallocating costs from less strategic areas [50][51] Question: What is the outlook for Angi's international business? [39] - Answer: Europe has seen double-digit growth due to better customer experience, and learnings from Europe are being applied to the US market to drive similar improvements [28][42] Question: How is Angi improving its sales force efficiency? [53] - Answer: The company has reduced unproductive calls and is focusing on higher-commitment offers to improve retention and ROI for service professionals [54][55] Question: What is the status of Dotdash Meredith's D/Cipher adoption? [30] - Answer: D/Cipher is used in 30% of direct ad campaigns, with positive feedback from clients and plans to integrate with more demand-side platforms [31][32] Question: What is the outlook for IAC's capital allocation strategy? [66] - Answer: The company is focusing on businesses benefiting from the shift from goods to experiences and is looking for opportunistic external investments [69][70]