Welcome, everybody.
Great. Thank you.
Thanks for being here.
I think we're ready to start.
Let's do it.
Perfect. So I will, I'll kick off here with a few questions. Alice Takhtajan with JP Morgan. Got the pleasure here with Joey from IAC. Why don't we just dive right in? Of course, please, submit or ask questions as we go along. So why don't we just, just start? Can you just level set and talk to us a little bit around the portfolio, right? Where are you focused in terms of the key businesses, investments, and maybe we could just open up with that question.
Sure. Our three biggest businesses, majority-owned businesses or wholly owned businesses at IAC right now are Dotdash Meredith, which is the biggest publisher in the world, mostly digital, a little bit of print. Publish magazines like, or properties like People, Food and Wine, Southern Living, Better Homes and Gardens, Travel and Leisure, and that was the merger of a company we own called Dotdash and Meredith, which was also Time Inc. at that time, all combined, and again, now the biggest publisher. We have Angi, which was originally the combination of Angie's List and HomeAdvisor. That's the biggest home services marketplace in the U.S. and also in five countries in Europe. That's a public company, but IAC owns 85%-ish of that business.
We have Care.com, which we own 100% of, the biggest marketplace in the U.S. for finding care, home care, that's babysitters, nannies, but also we now service pet care and senior care. Then we have two very large minority positions. One is MGM, which is MGM Resorts, publicly traded. We own about a little over 20% of that company. We have Turo, which we own about a third of, which is a private company, although you can see their numbers in a S-1 on file right now. Turo is a peer-to-peer car-sharing marketplace, by far a leader in its category and general share taker in the rental car marketplace. Those are the biggest.
We've got some smaller businesses, startup-y businesses, including one in the nursing category called Vivian, but the first five are the biggest assets in IAC, in addition to $1 billion of cash at the parent company, with no debt at the parent, but some debt at the subsidiaries.
Great. Thank you for that. And you have such a unique view on the economy, right? Just given the breadth and depth of different businesses. How would you characterize the macro environment, and what are the key trends that are mostly impacting your business? Maybe today, right, in kind of a near term and over the longer term as well.
Sure. I mean, right now, it feels pretty healthy to us. Advertisers are spending again, which is great for Dotdash Meredith. Consumers are spending at MGM and at Turo. I think one of the things that we are seeing is it's a little bifurcated in the sense that the higher-end consumers seem to still be doing quite well, and the lower-income consumers, more feeling the pinch of inflation, are perhaps pulling back a little bit. We could see that in advertisers, too, the mix of type of advertisers and advertiser spend and what products they're getting behind, food and beverage, things like that, where inflation is more impactful. We're seeing things like that impact advertiser spend.
But I'd say again, in aggregate, probably much to my surprise, it does still feel pretty healthy right now on consumer spending.
Great. Thank you. So why don't we dig in into some of the different businesses? Let's start with Dotdash Meredith, right? It's been nearly three years since you've made the acquisition. Could you talk a little bit around the original thesis, right? How are you thinking about the progress you've made, right? What's the kind of view going forward for this business?
Yeah, so the original thesis was we thought that brands, premium brands and premium content would matter significantly in the publishing category. What we had before we combined with Meredith was brands we had built from scratch that were relatively young, you know, sub five years old. And we were doing well on traffic, and we were doing very well on monetization, but we had the view that more durable brands, and, and, a more significant content operation would be important going forward. And we also had the view that Meredith, in particular, was relatively under-monetized on things like e-commerce and performance marketing. And we had done very well with those things at Dotdash Meredith, sorry, at Dotdash, at a very smaller scale. And we turned out to be very right about that.
There were other things that we were wrong about, but we turned out to be very right about that. And when we put the performance marketing commerce concepts into Meredith, that was a significant lift to monetization. And when we look at the brands and products that are doing best in terms of audience and traffic, it is those original Meredith brands that have tremendous resonance with consumers and have had for a very long time. And so we got that thesis right. What we got wrong was at the time that we bought it, it was, I think, both our business and Meredith's business were COVID beneficiaries, just in terms of people spending more time online.
We thought that a significant acceleration forward in traffic was more significantly our doing than we deserve credit for. So when post-COVID, some of the traffic balloon deflated, the original revenue projections were harder to achieve, but the concept of what we thought was there turned out to be, you know, fortunately, I think, exactly right. And we are now a share taker in with Dotdash Meredith in terms of both advertising and audience. And we've got, we think, a world-class team and a world-class product with our intent-driven traffic and our performance-based advertising.
That's led to growth on both the traffic and the monetization side, and we think that business is in a good place right now.
Great. And can you talk about the partnership with OpenAI, right? What are the different elements of the relationship, right? How do you think about the data licensing opportunity-
Sure.
... just more broadly?
Yeah, we're very excited about the partnership with OpenAI. There's basically three important components to it. There's a fixed component, there's a variable component, and then there in terms of compensation, and then there is a sort of attribution/traffic component before I get to the collaboration on D/Cipher, our ad product. All of those elements are, we think, very important. One, just starting to get paid for our content and enhancing their experience, we think is very important and hopefully a blueprint for other opportunities for Dotdash Meredith. And having the fixed component and the variable component, we think, aligns incentives well.
And attribution is, we think, critically important, meaning the ability for OpenAI and some of the new products, their current products and new products they're releasing to generate incremental audience for Dotdash Meredith. We're very excited about, and hope that OpenAI can grow that and drive more audience to DDM. The last piece, which is, I think, unique and pretty interesting, is we're collaborating with OpenAI on developing the D/Cipher ad product. So the thing that D/Cipher does, I think, uniquely and exceptionally well, is drive performance for advertisers with audience with intent. So vast majority of Dotdash Meredith's content is around concepts that have intent.
If you are reading about recipes or making dinner, you likely are making recipes and making dinner, and so advertisers who want to reach you in that state can do that. If you're looking at how to build a nursery, advertisers can reach you in that state. Don't need to know who you are, don't need to know really anything about you other than you're building a nursery, and there are advertisers who want to reach you when you're at that state, and we can say with high confidence that you're - if you're reading about that, you're interested in that. We've mapped our entire ecosystem with those kinds of segments and that kind of targeting and that kind of intent, which works very well for advertisers.
What OpenAI allows us to do, and we've done a bit of this on our own, but what they allow us to do is to scale that significantly beyond our properties and understand more components of content. So what we built is significantly understanding text. What OpenAI is capable of doing is understanding images and videos, and so our ability to map that intent across things we've learned across the DDM ecosystem, which touches 200 million users a month, and basically all women in the U.S., we've learned what that intent is, and how that intent maps to content, and how that maps to performance, and OpenAI, hopefully, in that collaboration, allows us to expand that well beyond what we have already.
Great. Thank you for that. And let's talk a little bit around Google, right? And the changes that they've announced around search. So what are your thoughts around how that could impact, right, traffic, monetization, just broadly for Dotdash?
Sure. So, I mean, let's start with what they've said, and let's start with, hopefully, we can trust what they've said, which is they've said these GenAI overviews generate more traffic to publishers. They've said that these GenAI overviews generate clicks. They've said that they intend to continue to support the open internet and send traffic to publishers over the open internet. And then, even if you pause and presume not to trust them for a bit, it is not possible to continue to create content and create healthy, good, dynamic content without an open internet and without publishers creating that content.
And how everyone gets compensated in that ecosystem, I think, is yet to be determined, but the necessity of all components of that ecosystem, I don't think is in dispute with anybody in that ecosystem. You know, I believe that there's a place for all of us in that sandbox. Some of the products are live. We have not seen any impact meaningfully one way or the other at Dotdash Meredith on those new products, and it's still early, so we have to see how it plays out over time. This is also, though, I'll point out, not new for us.
You know, Smart Answers was a new thing that came out a long time ago, which was Google taking snippets of content, moving it to the top of the SERP, and then having a link in there. And, you know, that at the time that came out, that was the portending allegedly the death of publishers, and that turned out to be actually a net positive for Dotdash Meredith. We invest more in our content. We make sure that our content has the most rich, robust, current answer for the categories that we cover, and as a result, we benefited in traffic from those things.
There's also, I think, the reality that on certain kinds of content, users want to engage deeply, whether that's text, whether that's images, whether that's video, whether that's interacting with the publishers or authors. You know, for example, in recipes, which the GenAI is certainly capable of writing a recipe. They could write a recipe about anything. What we've found is that time on site with recipes is among our highest, and engagement in depth with recipes is among our highest, and we think that users appreciate that experience and want that experience of again, text, images, video, in a way that comes with both taste and comes with an author.
Google, for a very long time, for almost eternity, has said, you know, thin content that is automatically generated and content that doesn't come with an author and content that is relatively generic is the least valuable content. It's a little paradoxical that they are now putting that type of content at the top of the page, but we continue to believe that having authors, having taste, having tastemakers is something that has existed for hundreds or thousands of years, and we think that Dotdash Meredith produces a lot of the important tastemakers for content of various kinds, from literally taste, like recipes, to taste, like what's the right hotels or travel experiences or things like that.
We think Dotdash Meredith, as a result of that, is in a good place. But we're obviously watching it closely, and we'll see how things develop over the next few weeks and months in terms of traffic and audience.
Great, thank you for that. So why don't we move on to Angi? So you recently passed the CEO reins to Jeff Kip, but how do you think about the key learnings, right, during the CEO tenure, right? How does it shape your outlook for the business?
Sure. I think that I did the job for about a year and a half, and on the negative side, I learned that some of the things around our customer experience were not what we want them or need them to be. On the positive side, we substantially advanced the customer experience over that period, and Jeff is very focused on continuing to advance that customer experience and has a great experience, again, doing that in our European business. And when we look at things like customer retention on the pro side, it has improved dramatically as we've advanced the product. When we look at unit economics and profitability, that has advanced dramatically. Those two things actually go hand in hand, and those two things actually feed off each other.
Healthy unit economics is a result of a healthy customer experience. We have the right to earn a margin by delivering a customer experience and doing work for them, and when customers see us doing work for them, we are rewarded with that margin. So, unit economics are healthy, profitability healthy, customer experience significantly improved, and room to continue to improve, and, that's what Jeff is focused on right now, continuing that narrative of delivering for homeowners, delivering for service professionals, and if we do that, as we did in Europe, and getting things, by the way, onto a common platform. So, in Europe, we started on five different platforms through acquisitions, and now, as of, I think March, have all of Europe on one platform.
We migrated the last business, the U.K., to that platform successfully, and all of Europe is now on one platform. Angi in the U.S. has had multiple platforms as a result of a number of acquisitions that were not fully integrated, and Jeff is very focused on that, which we think can lead to real operational efficiencies. Doing that at the same time as delivering a better customer experience, we think is a win, and that's why we're pretty optimistic about what we can do with Angi over the long term.
Great. And one question, you know, just given the turnaround of the business, right? The focus on profitability, the building blocks of growth, have you considered bringing Angi back in-house? You're comfortable keeping it public? Just how do you think about the outlook for the business?
Sure. We've absolutely considered it. We are also comfortable keeping it public, and we consider the range of alternatives on it, from bringing it all the way in to spinning it all the way out, as we have with all IAC businesses through our history. I think it is capable in either scenario. There's not much benefit right now for Angi being public, given where the share price is, but, you know, that's something that is fixed over time with execution, and our main focus right now is execution at the business, and very specifically, continuing to elevate the customer experience and making sure we're doing that with healthy unit economics and profitability, which you've now seen for the last 12 months or so.
Great. So why don't we talk about your stake in MGM? Right, can you talk a little bit around the original thesis, right? Around when you made the initial investment in 2020, right? Has it changed at all since then, right now that you've learned more? Just how do you think about it going forward as well?
Yeah, we were talking about this recently. So, kind of everything that we had hoped, close to everything that we had hoped for, probably besides the stock price over the last, you know, shorter history, has done at least or better than we had hoped and expected. So certainly, part of the thesis when we invested in the depths of COVID was that the business could make it to the other side. Obviously, that's more than proven out.
But the main thing, and we published a letter on this, was that we thought that MGM, both as a unique business in Las Vegas with a very powerful moat in terms of its size and scale on the Strip and sort of general trends favoring Las Vegas, we thought that there was a omni-channel opportunity in the business as digital starts to penetrate the United States. And all of that has largely happened. Where we are on digital is probably ahead of where we expected to be at the time that we got involved in MGM. Now we'd like to be doing better competitively in terms of market share.
But in terms of where we expected to be, the fact that they delivered $2 billion of revenue and profitability in the second half of last year is, we thought was very impressive. The earnings in Las Vegas and the growth on earnings in Las Vegas and the regionals, we found to be, ahead of what we thought was possible or likely at the time that we invested. The growth of Vegas generally, I mean, there was a both NFL and NHL there at the time, but now they've added Formula One, seems likely to add NBA, seems likely to add Major League Baseball, the Sphere came online. And so all of these things are driving, people to Las Vegas, driving events to Las Vegas, and importantly, driving audience to Las Vegas without incremental rooms.
That has been all of Las Vegas has been a great beneficiary of that, and we think that that's a really interesting and valuable trend. And then we add to the top of that, that MGM has bought back, I think, 35% of its stock since we've been involved, so our ownership has gone from the 12% where we started to over 20% now. That combination of things is very exciting to us, and we think long-term, very valuable. Obviously, the value of the stake relative to what we bought is up significantly, but we think still sort of strangely undervalued relative to MGM's incredibly shareholder friendly capital allocation and MGM's performance in their core business, which is both Vegas and regional, and meaningful progress.
Still work to be done on the product side in digital, but meaningful progress in the digital business.
Great. Thank you. So now, why don't we shift to capital allocation? So that's an area, of course, where you spend a lot of time, right? What is your thinking around buybacks, right, or acquisitions? You know, how... What do you think would be most impactful, right, to to IAC shares, and what do you think would get the most value in the market over the near term?
I'm not sure what would be the most impactful or get the most value over the near term, and we're generally focused, certainly focused on capital allocation over value over the long term. But all of the things that you listed are on the table. We're certainly very active in considering M&A opportunities. We are regularly evaluating anything we're doing against share repurchases. I think, as I said in the letter, I think we have enough capital to consider both and further investment in our existing assets. Over time, we've added to our position in Turo. Over time, we've added to our position in MGM. Both businesses are doing very well, and I think all those things are on the table.
Generally, historically and going forward, our biggest priority in capital allocation is where we think we have a unique advantage, which generally means that adding to M&A in our existing portfolio. So if Angi had an acquisition or if Dotdash Meredith had an acquisition or Care, et cetera, where we had a unique angle on understanding the business and its ability to deliver for IAC and realize synergies and things like that, those are the biggest priorities on our capital. But we're certainly looking for new businesses, and we've always grown through new businesses. And we're certainly looking at share repurchases as another alternative for our cash.
Mm-hmm. And on the new businesses that you mentioned for M&A, how do you think about the priorities, right? Is there types of sectors, investments, just kind of how do you think about that chess board?
Yeah, I mean, we're looking in sectors that are large and have a tailwind. I think that we've been great beneficiaries for 20 years over a tailwind of consumer internet that has lifted a lot of businesses and allowed room for mistakes and things like that. I think there are other categories that we have done well in that sort of overlap with that consumer internet. So travel and leisure is another example. We've generally done very well in that category, and if you look back for the last 20 years, it's meaningfully outgrown other components of GDP and other components of consumer wallet share, probably by, like, 40% or 50%, and we expect that to continue. There's a number of things that we think contribute to that.
Technology, large technology platforms, social media, and things like that, which grow the top of the funnel, have been, we think, big drivers of that. And we expect that to continue. Other things like technology advancing the speed of travel, advancing access to travel, new countries or regions or portions of countries coming online for travel. Once things go online for travel, they stay online for travel. And so we view travel and leisure as a general beneficiary and, you know, between Turo and MGM, these are areas where we've done well. And so that has been some focus of our capital, but certainly not an exclusive focus of our capital, but just as an example of things that we think can do well over time.
Great. Thank you. So just maybe a few minutes here, just around other segments. You've, you've touched on Care.com, but anything in that segment you'd highlight? Anything that you're focused on for that business in particular?
Sure. Care, again, phenomenal category leader, probably an audience 30 times bigger than the next. And we still only monetize about 2% of that audience. So, we monetize that audience with a subscription product. We've done well with that. It's a healthy margin business. We've doubled revenue since we've owned it. We've doubled profit since we've owned it. And that's good. What we have to do next is unlock the next set of product innovations. So we think that goes beyond subscription or adding elements to the subscription that can open up a bigger market.
Right now, again, users come to our site, and we say, "Subscribe to a monthly or annual product to access the supply on Care." So access the caregiver network. I think we have the opportunity, and we've been experimenting with products in this area, to have one-time products or use one-time products to empower the upsell of a subscription. And we also have new categories. So vast majority of Care's revenue happens on the childcare side, whether that's nannies or babysitters. We have opportunities in pet care, we have opportunities in senior care, we actually have opportunities in home care, and we're starting to experiment with some of those.
And we also have a healthy enterprise business, which has grown well, that we think that there's natural tailwinds in the enterprise category, where employers are now taking on behalf of their employees some of the care costs that are a significant burden on individuals. And we expect that trend to continue, too.
Great. Then on Search, right? This is a business you've been running for profit for a while. Any changes to that philosophy? Any notable updates for the group?
No, I mean, that business has been in sort of a natural state of decline for a very long time, and it generates cash flow for IAC. That's important, but I don't expect us to be reinvesting capital in that business. I think that continues to be a good business with a good team generating cash flow, but not a grower. That business is in decline.
Great. And maybe one last question from me before I open it up to the audience: What are the one or two things you're most excited about for IAC as a whole?
Yeah, I'd maybe go back to where we were at the beginning. I think, DDM, Angi... I'll just hit the biggest ones, but DDM, Angi, MGM, and Turo, all, I think, are in a place where they can generate significant upside relative to where they are right now. DDM, with our ad product, D/Cipher, if we unlock access to advertisers in the way that we've started to and the way that we think we can continue to, we think we can be a very, very meaningful player in the open internet advertising. We have an incredible asset to help us there in our content and our audience, and how that's allowed us to map intent, and I think we have the potential there to unlock something very big.
Again, Angi, way more upside than downside in the sense that, as we unlock a better consumer product, we're seeing behavior of consumers and pros improve in ways that are early but encouraging to us. We think we're in a very good place with our services business there, where we can start to address the AI market of people using assistants to ask for a service. We're basically the only place that you can nationwide book a service, pay for, and we can fulfill on that service nationwide. And so accessing that demand, we think, will be pretty interesting.
But just delivering on the fundamental Angi product of matching homeowners with service professionals in a better way with healthy unit economics, we think, has plenty of upside relative to where it is right now. We think that Turo, category leader in peer-to-peer car sharing and taking share from rental cars, is a great business with a great consumer product. I mean, the Net Promoter Scores that that business sees and the health of the cohorts is incredibly encouraging. And not enough people have heard of Turo, not enough people have tried Turo, so I'll use this as a commercial to go give Turo a try. And once you use Turo, you never go back to one of the other solutions. It's just a better experience from beginning to end.
And MGM, I mean, it is just an incredibly powerful business in Las Vegas. It is an incredibly powerful business in the regionals in terms of its ability to deliver the fundamental product experience and to generate cash flow in delivering that product experience. And digital remains an unlockable upside for that business, still very early in the digital life. $2 billion of revenue is nice, but there's a we think, a very large business potential there, in particular in iGaming, and we're excited about that upside there. So, I guess that's not one, that's four I just listed, and I could keep going, but we're excited about each of those.
Excellent. Any questions from the audience? Yes, please.
Can I just double back on that MGM comment?
Sure.
Thanks. So on MGM, you talked about the positives of the investment thesis and the path around digital. Can you talk about, and I guess on that, investors could get exposure to it themselves if they wanted. What's the value add of you still being there, and how are you helping unlock that?
Sure. Probably the area where we spend most of our time is on capital allocation at MGM. I chair the finance committee. Barry Diller and I are both on the board of MGM, and we have a very productive, regular dialogue with Bill Hornbuckle, the CEO, Paul Salem, the chairman, and the MGM management team on a number of key issues for the business. We've been very focused on number one, kind of, elevating the portfolio, which you've seen MGM do over time with purchase of Cosmopolitan and sale of some other assets. We've been very focused on putting the cash to work on, probably most significantly, share repurchases, but other areas of CapEx.
That combination of things we think has the potential to unlock significant val-has unlocked, and we think has the potential to unlock significant value over time. And while it's true anyone can buy MGM, not anyone can be in a position to collaborate with an exceptional management team on helping to allocate capital and grow the business. And that's the position that we're in right now, and you know, we feel pretty good about.
Anything else from the audience? All right, well, if not, we're right on time. Thank you so much again for joining us at the conference today.
Thank you, all.