Match Group Inc (MTCH) 2019 Q4 法說會逐字稿

Good day, and welcome to the ANGI Homeservices Q4 2019 Results Conference Call.

At this time, I would like to turn the conference over to CFO, Glenn Schiffman, of IAC.

Please go ahead.

Thank you, operator.

Good morning, everyone.

Glenn Schiffman here, and welcome to the ANGI Homeservices fourth quarter earnings call.

Joining me today is Joey Levin, Chairman of ANGI Homeservices and CEO of IAC; and Brandon Ridenour, CEO of ANGI Homeservices.

Joey and I will also address any questions you may have on IAC's fourth quarter results.

Similar to last quarter, supplemental to our quarterly earnings releases, IAC has also published its quarterly shareholder letter.

We will not be reading the shareholder letter on this call.

It is currently available on the Investor Relations section of our website.

I will shortly turn the call over to Joey to make a few brief introductory remarks, and then we'll open it up to Q&A.

Before we get to that, I'd like to remind you that during this call, 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 such statements.

These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from those views expressed today.

Some of these risks have been set forth in both IAC and ANGI Homeservices' fourth quarter press releases and our reports filed with the SEC.

We will also discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we'll refer to today as EBITDA for simplicity during the call.

I'll also refer you to our press releases, the IAC shareholder letter, and again, to the Investor Relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures.

Now let's jump right into it.

Joey?

Thanks, Glenn.

Thanks, everybody, for joining us on what we know to be a very busy morning.

This is the first call in IAC's 25th year under current management and a really great place to start 2020.

This is yet another big reset for IAC.

I think since I've been here, we probably had about 4 of these.

And right now, we're on the verge of separating from Match Group, which is the bulk of our current enterprise value and cash flow, which is a little bit daunting, but exciting because we're going to become a much smaller company again, which means we're going to focus on building.

We're going to focus on building new businesses and new categories.

And we love this stage of the business.

Wouldn't be possible without the support of the 8,600 employees now across all of IAC.

So I want to thank everybody for a great year in 2019 and an exciting outlook going forward in 2020.

In particular, there's one employee I want to thank, which is Mandy Ginsberg for her leadership over these last few years at Match Group, and an unbelievable run, and a seamless transition to Shar Dubey, who has been an incredible leader at Match throughout her tenure at the company and is, I think, going to do a fabulous job at the top.

So that's the exciting news, and let's switch to the questions now.

Operator, we'll take the first question.

(Operator Instructions) We'll take our first question from Eric Sheridan with UBS.

Joey, the section in the letter on public versus private market valuations, wanted to sort of see if we can get a little bit more granularity about your thinking there of what you're seeing on the landscape for capital allocation for new IAC and for the new entity going forward?

And maybe take the time to frame it in terms of Care, why that was a deal you guys wanted to do?

What do you see as an opportunity there?

And maybe if or if not that should be a blueprint people should think about the way the company might allocate capital going forward?

Yes.

Thanks, Eric.

I think that you're exactly right.

I think Care is a great blueprint for a bunch of reasons.

It is a public company.

It's probably a public company that maybe went public a little bit too early in its life, but built an unbelievable brand, built great liquidity on both sides of the marketplace, is a real marketplace business, and it's in a category that has tremendous relevance for consumers at a pretty regular frequency.

And those are the kinds of things we look for.

It's also a good size.

I mean, about a $500 million deal.

I think if we look through IAC's history, our best results have been in that kind of multi-hundred, million-dollar range in terms of value creation.

So we like that size of checks.

We like that size of business.

We like that size of market.

It did happen to be a public company, and we think it's -- ironically or maybe as a departure from the past, it's easier to get to transactions with public companies than with private companies.

And I do think that the private market remains sort of mysteriously priced from our perspective.

So Care is a great example.

And just to get into Care a little bit, we looked at that as a great analogy to ServiceMagic actually.

And ServiceMagic, some of you might recall, is the predecessor to HomeAdvisor and now ANGI Homeservices.

And when Brandon and team came in to ServiceMagic, that was a -- in many ways, similar to what Care.com is right now.

ServiceMagic was trying to, as quickly as possible, get a consumer in and get a consumer out and make some margin in between there, ideally.

And they did a wonderful job of that, but couldn't really scale the product because there wasn't the necessary product innovation happening in there.

And the folks on both sides of the marketplace, who were using the platform, didn't really appreciate the value that the platform could provide.

And what happened is Brandon and Chris and others really evolved it from what was sort of derisively lead gen to true matching.

And I think that, that adds a lot of value to the -- in the case of Care to caregiver, adds a lot of value to the care seeker and makes that process much more efficient.

That's what we're going to try and do in the product here with Care.com.

And it's a $300 billion market just in the U.S. It's got great tailwinds, we think, both in terms of an aging population and eldercare being very important to more families over time.

A lot of families with 2 working parents, which means that they're going to need help with child care.

Enterprise is very focused on making sure that their employees have help in this area so that they can show up for work, and there's still a very small penetration among enterprises in terms of providing solutions for care for their employees.

And we look at all that and say if we can get the product right -- and Care has done a wonderful job today building a product, and we think there's room to improve there.

If we can get that product right, we think it's a really, really big opportunity with a lot of relevance and a lot of frequency.

Interestingly, the financial profile of ServiceMagic, when Brandon and team came on and rebranded it, is very similar to what you see at Care: LTM revenue at Care, about $200 million; and LTM EBITDA, a little in excess of $20 million.

So we're excited to execute the playbook.

We'll take our next question from Brad Erickson with Needham & Company.

Just had a couple on ANGI.

First, just on top line, I guess, lately, you've talked about kind of a 20% to 25% growth rate.

Are you able to stick to that in 2020?

And just help us what, if anything, is contemplated there for fixed price?

And then second, with the sequential decline you showed under the old definition of what counted as a service provider, can you talk about what's kind of going on there?

And then sort of why that's happening?

And then also why is the new disclosure, I guess, maybe more instructive for how to think about business going forward?

Yes, sure.

This is Brandon.

We're still committed to the long-term goal of 20% to 25% growth.

And I think as we sit here today, we're more confident in that than we have been in a while.

The drivers are really a few different areas: One is that Angie's List is accelerating from a growth standpoint.

We expect that to continue throughout 2020.

Handy, the acquisition there, has proven out even better than sort of what we had modeled in advance.

And then with HomeAdvisor, look at it from a few different ways, I think our position is much stronger on a relative basis to where they were same time last year.

And our traditional business there on the consumer side, we have made pretty dramatic progress in paid search.

And that's gone from a huge headwind last year at this time to a real area of strength and should be a good tailwind.

We are, as of the end of January, past the affiliate cuts from last year, which has been a big 12-month headwind for us.

And then SEO, while we haven't seen any significant improvement, has remained relatively stable, and we're optimistic that, that environment, which has been pretty volatile over the last few years, is more stable going forward.

And as we get through the spring and sort of the event we saw last May, that will also be favorable from a comp perspective.

So we feel really good about the consumer acquisition side of our business at HomeAdvisor.

On the provider side, we end the year with the largest salesforce in the history of the company.

A lot of the investment in expanding the sales force was back-weighted in the second half of the year.

And so we'd expect to see that investment drive SP capacity growth as the year progresses.

As always, we've got a lot of work to do to bring on more providers, but we're excited with where we end the year and what that portends for future growth.

And then lastly, taking all that into consideration, we're now able to marry, on top of it, fixed price -- this new fixed price line of business, which, obviously, we've been pleased with the progress there in the back half of the year and particularly Q4 being ahead of where we thought we would be.

And as we exit the year, we have a really good understanding of the run rate of fixed price transactions and have from that confidence in the contribution to the growth rate that we expect in 2020.

I think there's, beyond that, lots of opportunity for upside.

That is a little bit uncertain at this point.

Obviously, we've launched on 150 different project types.

Most of those are what we call low consideration projects which are lower ticket value projects.

There's a whole other category of projects that were sort of medium-priced projects that covers about $150 billion in TAM that we're in the early stages of experimenting with.

So the projects we've already unlocked cover about $50 billion in TAM, and the projects we're sort of in the early stages of experimenting with cover another $150 billion.

And so the pace and timing of how quickly we're able to roll out those medium-sized projects is uncertain, but I think we understand the baseline and expect fixed price to be a material contributor to growth for the next year.

In terms of the SP metric, the way we have classically defined paying SPs includes the distribution of the 12-month membership that service providers sign up for when they join.

And so as we look at paying SPs, it's whoever has paid us in the last 30 days, and if you have a membership, you may have only have the membership, which is what you're paying for in the prior month.

One of the things we began doing in the last quarter is experimenting and actually rolling out relatively significantly new package and promotion configurations during the sales process that include a free membership for providers.

And while we've seen really strong results from that promotion in terms of our ability to have much more productive salespeople and see actually improved retention, it has caused a huge distortion in this paying SP metric because effectively, you don't have the revenue recognition of that membership fee over a 12-month period.

In order to give ourselves maximum flexibility to offer the pricing and promotions and package configurations that are best suited to our customers and that drive the best sales performance and to better reflect where our business is going with fixed price transactions, we've introduced this new metric, which is transacting SP.

And I firmly believe that this gives much more transparency to the exact performance and inputs to our business.

Effectively, with the new metric, you will know exactly how many SPs transacted within the last quarter.

And ultimately, you'll be able to calculate things like number of transactions per SP, average order value per SP.

This is much more suitable to the hybrid model that we're going forward with and will better reflect on an absolute basis the growth, not only in providers, but in the activity of those providers which has been a little more opaque in the past.

So that's the reason for that.

The traditional number, unfortunately, is just heavily distorted by the introduction of this promotion, but the promotion was effective and appropriate for us to roll out.

And we'll see similar such numbers throughout the year as we continue to affect that sales strategy.

And our membership is a year, which means every quarter, obviously 25% of the membership is up for renewal.

And on a year-over-year basis, given the new membership strategy, membership-only SPs were down.

And then just to marry the 2 questions together to give you some backup, if you will, for the 20% to 25%, you can look at our transacting SPs, you can look at our monetized transactions.

And we look at double-digit growth rate for both of those metrics.

And then you look at revenue per transacting SPs and you look at revenue per monetized transaction, and we look at double-digit revenue growth for those 2 metrics as well.

We'll probably be more efficient at monetizing than necessarily the nominal metrics over the next couple of quarters given all the product innovation and the scaling of fixed price.

But those two metrics and their corresponding revenue coefficients get us squarely and firmly to that 20% to 25% going forward.

We'll take our next question from Brent Thill with Jefferies.

Just a quick follow-up on fixed price.

I think, historically, you've said it's less than 10%.

Can you give us a sense of where you think that can go over time?

And real quick, Joey, just on Vimeo guidance calling for another $300 million EBITDA loss in 2020, realize you're investing in the platform.

But can you help us walk through the pathway to profitability for that business and where you think, ultimately, the margins for that business could go over time?

Sure.

I will -- I'll go first just because to correct one quick thing.

You said a $300 million EBITDA loss in Vimeo.

You meant a $30 million EBITDA loss in Vimeo, otherwise, we've made some big mistakes.

But the -- right now, Vimeo -- so just in terms of how we're thinking about profitability and when we're thinking about profitability, our internal discussion is around 2021 or 2022, and I think there's some choices in there for us to make.

And the main choices revolve around scaling enterprise sales and the salesforce for that and scaling marketing.

Of course, we continue to invest in product, and we've added product engineering, and we'll continue to add product engineering there.

But those are the kind of levers that we're thinking about as it relates to 2021 or 2022.

And really, that investment is on the enterprise business, which is growing incredibly fast right now, and new business, which we've talked about launching, that we're in the process of launching right now, which is around video creation.

And I think we'll learn a lot over the next few quarters on video creation, in particular on our ability to invest in there and accelerate there to drive revenue growth and top line.

The other thing -- so there's some choices in there.

But if you sort of pull away from those 2 businesses, which are new or newish to the rest of the business, we could make profitable if we want it to be or it really is profitable right now.

The other thing that come towards profitability for Vimeo are gross margins.

We've made real progress on gross margin over the course of 2019.

I think we've picked up somewhere in the neighborhood of 500 basis points of gross margin over 2019, and we're on our path, we think, very clearly to that 70% gross margin target that we talked about there.

And we're also starting to see, so far this year, more leverage on our marketing, marketing decreasing as a percent of sales.

And that's something that you see based on a very sticky customer base.

You build on that customer base every year, and so you can get real efficiency there in the core business.

So those are the levers there in our hands and that I think we'll play with over the course of this year and decide then from there whether it's 2021 or 2022.

But I don't think -- I don't see a scenario where we expand losses from here.

It's a question of sort of where and when we target profitability.

And then on the question of where we can get fixed price to as sort of a percentage of our business, I think there's a couple of ways to think about it: First, we've already launched 150 project types.

Those, as I mentioned earlier, those project types cover about a $50 billion addressable market.

As we experiment our way into the next tranche of projects to medium-priced projects, that is, from a GMV standpoint about -- GMV and TAM standpoint, about triple to $150 billion.

But they're both somewhat equivalent in terms of frequency of requests.

So we're already covering -- in terms of the opportunity for customers to engage, we're already covering about 1/3 of the service requests we get.

But if we can expand to the next 1/3 request, we essentially quadruple the addressable market that we're covering.

We believe we can get there.

The medium-sized projects are more complex because the scoping and pricing is just simply a more complicated effort, one that will take a little bit more time to work through.

But we are, as I said earlier, actively experimenting there, and the early signs we see are very, very encouraging.

And then lastly, once we have made this offering available on, let's call it, 2/3 of requests and perhaps $200 billion of addressable market, it all comes down to consumer preference.

And our philosophy here is that we're going to give people choice, the choice to connect to local providers, as our traditional business has always done, versus the choice to transact digitally and buy now directly from us.

And our expectation is that demographic trends and consumer preferences will meaningfully drive adoption of the sort of buy now option up over time, but I think we'll have to see how that trend ultimately plays out.

Did that answer your question, Brad?

Yes.

We'll take our next question from Kunal Madhukar with Deutsche Bank.

Two, if I may.

One the ANGI side.

I want to understand leverage.

That had been under pressure all of 2019.

I want to understand how you kind of see margin improvement and leverage across different line items in 2020.

And then on Match, a couple of quick questions there.

One is, what's the next step that we are going to see in terms of maybe it's an S-4 that gets filed?

Or when do we see that?

And how soon after that should we start seeing things coming out of both Match as well as IAC in terms of next steps?

And then second is with regard to exchange ratio.

I know you talked a bit about exchange ratio earlier in December when you were talking about the deal.

How should we kind of look at the exchange ratio for the convertible notes that will travel over to Match?

Sure.

Why don't Brandon go first and then Glenn and I will tackle the next one?

Yes.

Yes, on the margin leverage, we've talked before that ANGI creates operating margin in every line item, sales, ops, G&A, with the exception of marketing.

And importantly, this year, we're going to create real operating leverage in every line item, including marketing, and that's going to create some nice investment dollars.

And those investment dollars are primarily going into fixed price and our international business.

And we are framing those investment dollars at about $30 million to $50 million of expenses that we're investing in international and we're investing in our fixed price.

And notwithstanding that investment of $30 million to $50 million, given the incremental margin we're creating at HomeAdvisor at Angie's List, that will still enable us to drive incremental EBITDA this year and incremental profits.

In terms of Match next steps, we should file the S-4 at some point next week, and then that has to navigate through the SEC.

We have to wait -- we have to get comments and react to the comments post that.

When it gets cleared, we mail it -- we have to mail it to our shareholders and the Match shareholders, then there'll be a shareholder vote.

And then there'll be an averaging period for all the calculations embedded in, of course, the exchange and the merger.

So we still continue to believe the end of the second quarter, probably the end of June, is the best estimate for when all these will be done by.

And then in the exchange ratio, I think there's a couple of things embedded in that.

I think your question related to 2 of -- 2 mechanics as it relates to the merger.

One, how many shares we -- IAC give up to Match in exchange for the net liabilities that Match assumes.

And we announced in December in the deck, and I'll refer you to that deck, I think when you went through all the calculations and all the puts and takes that we laid out in the appendix, I think IAC was distributing 2.35 shares, of Match shares to the IAC shareholders.

Given the movement in the stock prices, I think we're now at 2.36.

The numerator in that calculation tends to move with the denominator.

So we don't see that moving a lot.

As it relates to the exchangeables, specifically in the appendix, we laid out how the exchangeables move to Match.

And these instruments will be converted from IAC to Match based on the relative market values of new IAC and new Match at closing.

So for example, our exchangeable that's due in 2030, once you include obviously all the adjustments that I talked about as well as the adjustments associated with the call spread, that instrument currently converts into IAC shares at $457 per share.

And again, this is a representative calculation that will be done at the time of spin.

But right now, we estimate that instrument will convert into Match shares at $140 per share.

We'll take our next question from Brian Fitzgerald with Wells Fargo.

I wanted to ask a little bit about the thought process around Homeservices.

To what extent you can leverage back-end processes or best practices or maybe even infrastructure across kind of all the dozens of brands you have in there: Fixd, CraftJack, MyHammer?

And then do Care.com and NurseFly and Bluecrew, do they fit in this discussion as well?

Maybe one way to ask the question might be, is Care.com more like a NurseFly or Bluecrew or more like ANGI?

I'll take the last one first, and then Brandon can go to the brands inside of ANGI.

We think of Care separately and NurseFly and Bluecrew separately.

Is there an opportunity maybe in the long-distant future where you start to see some synergies among them in terms of the consumer or the worker?

Perhaps, but really today and for the foreseeable future, they'll all be organized separately with separate leadership building their businesses on their own.

Yes.

We, for a long time at IAC, we believe in sharing information, sharing best practices, sharing learnings.

But we don't believe in synergies between these businesses unless they have natural synergies.

And we don't believe in forced synergies because of a common ownership.

So Care has a lot of work to do on the product.

Care has a lot of work to do in building out that marketplace, building out the tools bespoke for caregivers and care seekers, and that's going to be the priority there.

They will learn.

I mean, Tim Allen is going to have call Brandon Ridenour and pick his brain on a number of things and throughout the organization in terms of what you've learned in conversion, what you've learned in retention, what's possible in areas like this, I think, is really helpful to be able to talk to somebody who's been through it, to be able to get access to all their performance data.

Those are excellent tools for building a business, and we view that throughout IAC.

I'm not talking about using consumer data, consumer information, but I'm talking about of what is possible in terms of running a business and things like conversion or other factors you'd use to drive the business.

So that will be helpful, I think, invaluable to people who run these businesses.

But each individual business is going to run on its own.

They do have common themes, common threads, which is what we're doing in each of the 4 businesses.

You talked about ANGI, Care, NurseFly, Bluecrew is we're helping people get jobs, helping people find work and really making that process much easier and taking out a lot of bureaucracy in that process to just get people working.

And that's something that we feel good about.

It's a mission, and that really just add a lot to this country.

But operating them as businesses, they're going to operate separately as businesses.

Yes.

On ANGI Homeservices, we are creating commonality and leveraging technology and platforms where it makes most sense.

I think in our international businesses, where we're in 5 countries, we're seeing them converge on a common model and including replatforming in some cases where it makes most sense.

In the U.S., we have the Handy platform, which is really the engine of our fixed price offering across all of our brands: so at Handy, at HomeAdvisor and at Angie's List.

And while Handy is a brand.

It's more importantly, a platform that is powering this innovation across these 3 very large brands at this point.

And then lastly, we've made some changes to fold in mHelpDesk, which is our field service tech offering, into Angie's List.

That combination makes a ton of sense because Angie's List tends to deal with larger service providers, and this is a software SaaS offering that delivers the most value to larger providers.

So we are taking advantage of the opportunities to sort of get synergies from a capability standpoint.

But at the same time, we're not forcing a combined replatforming across all 10 of these brands.

It doesn't make a ton of sense to create that level of distraction in a space that's moving so quickly from an innovation standpoint.

We'll take our next question from Ross Sandler with Barclays.

A couple of questions about the core stub business.

I guess, starting with Apps, so this business will generate, aside from ANGI, the most EBITDA in the core business post spin.

So congrats on getting to the $200 million milestone, $200 million milestone with Mosaic.

Can you just talk about how that $200 million is concentrated among the big ones like RoboKiller or iTranslate versus some smaller ones?

And then on the Desktop side of the Apps business, there's obviously lots of changes happening in the browser world.

So any comment on the sustainability of that $60 million to $70 million of EBITDA that Apps is going to generate this year on a go-forward basis?

And then lastly, post-spin, what's likely to happen with the corporate expense line, the negative $125 million, what will that look like after you spin out Match and potentially bring that down a little bit?

Sure.

Thanks, Ross.

It's been a while since we got an Applications question, which is good.

So it is -- on Mosaic, the way to think about the concentration, definitely the 2 that you mentioned are big ones, translation, for sure, one of our best categories and really a phenomenal product or phenomenal series of products, but iTranslate being the biggest and worth trying if you're traveling abroad or need to communicate with somebody in another language.

RoboKiller, another big one for sure.

The other areas, weather is a big area for us.

Productivity is a big area, sleep, airplane trackers, things like that are all apps that are important.

And I think we've got something like...

40.

40 apps right now and probably a dozen greater than 2 million.

2-ish thousand, yes.

Okay.

The -- so Mosaic, we think, big opportunity in a category with about -- when we added it up, 20 billion downloads, I think, or over 20 billion downloads last year in the areas where we have products.

And we're continuing to build products, both in areas we're in, in adjacent areas and in new areas, with 20 billion downloads across iOS and Google in the areas where we currently have product, and that's growing.

And monetization is growing there too.

People are more accustomed to subscription there now, and so we booked our products as 90-something percent subscription.

We're moving towards longer-term subscriptions to annual subscriptions, which is going well, too.

So we're pretty excited about Mosaic continuing to add there both through organic builds and through acquisition where we've done reasonably well on those acquisitions.

On the Desktop side.

We had a -- we've been in this business a very long time.

We've been through a lot of volatility in this business, both up and down.

We had a nice comp period for several years of great cash flow and over the course of 2019, took another step down.

I think that was a series of things.

There were definitely some changes in the browsers -- some changes in the browsers.

It was definitely some changes on the Google side.

And I think that we're now at another new baseline.

It's a step down for the Desktop business.

I think sort of the way we look at it now, probably bottoming out in Q1 and then setting a new baseline from there, and then we do think sustainable cash flow at that new level.

And remember, we just signed a new Google deal last year, extending that deal for another 3 years.

On the corporate expense side.

Remember, one big thing in there, which is important to call out, is we are endowing the IAC Foundation out of our 25th year to support the IAC Fellows program with $25 million.

So that entirely hits in the year 2020.

That is not a recurring expense.

And so you can adjust that out, and then I'll let -- or you can adjust it however you want.

But I'll let Glenn pitch in a little bit.

Yes.

And then also this year, we have $20 million of expenses in respect of the Match spin-off.

So we think, steady state, probably 2021 we get back to where we were in 2018, call it $75 million of corporate, plus or minus, depending on the transactional activity or what we look like then.

Because as we talked about in the letter, the goal, obviously, is to grow again, and we want to make sure we have all the resources to do said action.

Joey talked about -- he's been on earnings calls for now, what, 6, 7 years.

I will bet one of the first calls -- one of the first questions he got when he was running the Desktop Applications business years ago was the longevity and the future of that business.

And since he answered that question probably in 2013, '14, we've generated $1 billion of EBITDA out of the Desktop Applications business.

So we think, obviously, the rumors of its demise are not going to be true.

And we think we have some nice cash flow on a go-forward basis for a period of time, as Joey said, with the Google deal renewed.

We'll take our next question from Cory Carpenter with JPMorgan.

Two on ANGI.

First, Brandon, maybe following up on marketing, you touched on this a bit earlier.

Could you expand some on the trends you saw across paid and organic search and maybe where you are today versus 6 months or a year ago?

And then on the international business, could you talk about what impacted revenue growth this quarter?

And how we should think about that going forward?

Yes.

Absolutely.

So in terms of marketing, if you look at where we were this time last year, we had seen -- on the paid side of things, we'd seen a rapid increase in essentially cost per click within the search environment.

Unprecedented, I think, at the time, we said it was north of 30% on a year-over-year basis, which is just like something we've never seen before.

And on the organic side, this time last year, we were seeing a dramatic amount of change on the search results pages and culminating with a pretty big impact that we saw in May, specifically.

Since that time, on the paid side, we have built out a new approach to how we bid and operate within paid search environments.

And we've seen that yield really dramatic improvement, such that paid search is one of the greater areas of strength right now for our business in terms of driving consumer acquisition.

And we expect that to be a pretty major tailwind throughout 2020.

On the organic side, that -- and you can look at the pages, the environment there has gone through dramatic change over probably the last 2-plus years and has been incredibly volatile.

But we believe, or at least are optimistic, that most of that change is behind us, simply just given the nature, the way the pages look today.

And our hope is that we see reasonable stability.

We have seen that to be the case since sort of the drop last May.

And we're hopeful that, that continues throughout the year.

Obviously, we don't control that, and the future is always a little uncertain there.

But I think there are some reasons to be optimistic that, that level of volatility that's been present there is not what it has been in the past.

And on international, if you want to take that, Joey?

What was the question on international?

The question was on the Q4 growth rate and prospects there.

Just take it, Glenn.

Yes, we're going through an exciting transition actually in international, where our biggest market, we're replatforming that, not dissimilar to what Brandon and his team did with ServiceMagic years ago.

So you saw the growth rate was 1%.

In constant currency, it was a little higher.

It was about 4%.

But with our biggest business going through that platforming, and when you go to the platform, you take 1/2 step back to hopefully take 3 or 4 steps forward.

So if you break that out, we still have 3, 4 thriving businesses all of whom have grown greater than 30% throughout the course of the year.

And then I think some pretty -- a couple of exogenous items in the fourth quarter in Europe, obviously, with the Brexit situation and the strikes in France.

But it's largely by design, given the replatforming in France.

And I think we'll have a good sense of how that replatforming in France is going in the first half of this year.

And we'll decide sort of how to invest or how to approach it from there.

But the actual technological transition, I think, just was completed this week.

And now there's some transition with customers and getting people to adopt the new system and new platform.

And if we can get these businesses operating on common infrastructure, then we start to get, as Brandon alluded to earlier, real leverage in the international business.

We'll take our next question from Jason Helfstein with Oppenheimer.

I'll ask 2 questions: one on video and then another on Care or Vimeo.

So obviously, it's going to get a lot more focused post spin.

Any updated thoughts about the advertising opportunity?

We obviously understand the subscription opportunity, but just any more thoughts there?

And then secondly, on Care.com, just maybe elaborate a bit more and maybe go through, number one, the issues that they faced with kind of verification.

Was that kind of solved, do you think, internally before you buying them?

Number two, how impaired do you think that brand is out there?

And then, I guess, the third question, do you have any thoughts on how you solve some of the challenges with consumers going around kind of the pay function?

And any thoughts you might have about improving the monetization of it.

And I do know it's early, but just any thoughts there.

Those are all good questions on Care.

And what we each individually spent a lot of time on those questions.

So I'll go through it.

On Vimeo quickly, advertising, no, we're not planning to change anything with respect to advertising.

The thing that we do a little bit and we'll do more of is we will offer the creator, the subscribers on Vimeo, tools to incorporate advertising to the extent they want to in their videos.

But we, as Vimeo, aren't going to be monetizing the Vimeo user base with advertising.

That is really the best way to think about it, as a tool that our subscribers can use if they want to.

And that's been fundamental to Vimeo for a very long time.

The creators, the subscribers, control the experience, they control their relationship with their audience, and they'll do what makes sense there.

And if they want ads, they'll -- we'll try and give them tools to help them with that.

But we don't plan to, near term, be fundamentally in the advertising business.

On the Care side, so starting with background check verification, identity verification, things like that, I think one of your questions was, is it solved?

And the answer to that is it's never solved.

I mean, it's an ongoing process.

You have to continue to innovate here.

You have to continue to get better, and you have to continue to make sure that you're a step ahead of everybody else in terms of the cutting-edge products to drive safety for both sides of our marketplace.

And we know that from Match, we know that from ANGI, and we'll certainly apply that in Care, which is we have to continue to innovate there.

And one of the things that we've considered and continue to consider is in that area of background checks and identity verification.

Care have rolled out some products there that verify identity.

And when people enroll in those products, both sides of the marketplace see more engagement and better engagement.

There's precedents in other markets where actually people on those platforms pay for those services.

We haven't decided what exactly we're doing or who we might charge or whether we pay for those charges in the platform itself.

But that is -- there's a wide range of options there that we think are viable.

And that can actually enhance the experience for everybody on the platform, add real value in ways that -- where one side or another of the platform would pay for that incremental value, may be willing to pay for that incremental value.

In terms of the brand.

The brand is in, I think, excellent shape.

Obviously, there was some bad press in 2019, which, I think, was not good for the ecosystem.

But I don't think we should confuse sort of the investor reaction, the stock price, and things like that, with consumer reactions around the brand.

And we're looking at traffic and audience and all those things are in, we think, really healthy places and meaningfully recover.

In terms of providers or care seekers circumventing the platform.

This is another issue that we're very familiar with.

People asked this question, ask about ANGI all the time, which is if you find a plumber and that plumber works, you get off the platform.

And my answer in that case, and in this case, remains the same.

That's a totally fine outcome.

In fact, that's an excellent outcome.

If a bunch of people are coming onto the platform and filling up a book of business by virtue of having been on the platform, then we have succeeded and they have succeeded.

And the nature of this category is people come into and out of this category very frequently.

And if caregivers are saying, well, I built my entire book of business on Care and now I work directly, great.

And if care seekers are saying I found an entire fleet of caregivers here and now I work directly, great.

And they'll inform the next generation of people interested in those categories to come onto the platform.

But also -- and this is really important in terms of how we are planning to innovate in the product.

It's -- we have to make it easier.

And the easier you make it, the more people want to keep that on the platform.

The more it makes sense that the convenience of the platform actually adds real value such that you'd rather do things on the platform than off the platform.

If we get that level, I think we get to that stickiness, and that's totally possible and that's a economic trade-off that will make a lot of sense for both sides of the platform, again, very analogous to ANGI.

And if we don't do that, then people will move off the platform.

And I think that that's really a product innovation issue that I think we're totally capable of handling and really excited to get our hands into.

Coming back to Vimeo.

One of the reasons why advertising isn't a priority is we're really seeing a big opportunity in the SMB and the enterprise ecosystem.

You saw us in the letter talk about enterprise revenue grew 45%.

Last quarter, we talked about record bookings.

This quarter was another quarter of record bookings and as bookings are accelerating.

So we're really seeing a rich and deep vein in our SMB and our enterprise opportunity there, and the management team is executing well against it.

We'll take our next question from John Blackledge with Cowen.

Great.

On ANGI, on fixed price, could you discuss, Brandon, maybe the conversion uplift you see when you move a task to fixed price?

On Dotdash, we saw the recent acquisitions.

Joey, maybe can you level set how Dotdash is set up for 2020?

And how we should think about potential for adding further verticals?

And then maybe Glenn or Joey, just continuing quarterly guide, kind of what went into the decision process there?

Yes, sure.

This is Brandon.

Just starting with the conversion uplift.

As I mentioned earlier, our philosophy here is to give people the option, the choice as to whether they want to connect directly with the high-quality local business or purchase a service through us directly.

And that is being presented relatively as an either/or choice.

I mentioned earlier that we sort of exit the year understanding a baseline run rate and through that can be confident in the contribution to our growth rate this year.

But let me share a little bit of data that made us so excited and drove us to go even faster than we originally anticipated.

We're seeing user satisfaction for folks to buy a fixed price transaction is -- it was more than 35 points higher than it is in our traditional model.

We're seeing those customers come back and reuse service at greater than a 50% increased rate.

And we are seeing that same audience engaged with our mobile app at a greater than 30% increased rate.

And it was sort of these sort of side effects, if you will, that really -- led by our customers, drove us to understand that there's a dramatic interest in this, that there's good engagement with it.

And that it's going to drive some of the behavioral changes that we think are really important for the long-term health of the business.

I think what we have the opportunity to do going forward is to drive more and more engagement with fixed price offering as a percentage of our transactions.

And obviously, the first stage of this is simply just making it available, which is what we've been focused on for the last 6 to 8 months.

But over the coming year, we'll be optimizing that offering.

We'll be optimizing pricing.

Right now, our pricing for the task is generally at a national level.

And the power of getting that pricing in a more sophisticated place where it's localized is going to drive much higher engagement.

And then in the very long term, we can start to look at pricings and promotions and other ways to drive engagement with these services.

And as long as we're seeing -- as long as we're seeing these improvements to the characteristics of our customers in terms of satisfaction, in terms of repeat use, and in terms of engagement with our mobile app which is a strategic priority for us, we're going to continue to lean in to drive people more and more to engage on the fixed price side of this.

On Dotdash, 2 things: In terms of M&A, we're not counting on any M&A for 2020 as it relates to our growth objectives.

We're certainly going to keep looking and hope to find things to add there.

I don't think we need any more verticals.

I think we have a lot of opportunity in our existing verticals.

Beauty, which is one we added in 2019, we think has significant room.

Now maybe we can add some things within Beauty, but we think there's significant room there.

We also think there's significant room in Health.

We think there's significant room in Finance.

We just added the sustainability vertical, which actually, stand-alone, is a really interesting category, but also has knock-on effects to all the other categories, where people in Beauty very much care about Sustainability and people in Health very much care about sustainability, in Home care about stainability, et cetera.

So I don't think we need more verticals, but we'll keep our eyes open there.

And acquisitions overall, I mean, to 2019 weren't a huge factor in driving the growth in that business.

All of our acquisitions that we've done in that business are very small.

They get a lot of attention because media likes to cover media, but they're very, very tiny deals for IAC and even really for Dotdash.

In terms of 2020 growth, there's a lot of good things that push us into 2021, and you could just start with the bigger audience baseline in some of the key areas, in particular, the most monetizable areas and that from the content investment we've made over the last few years and continue to make in terms of just winning with the best content.

The other area that's been growing fastest is our Performance Marketing, where we're not just selling impressions, and we've done a very nice job selling impressions, but also selling transactions, so clicks -- either clicks or clicks that go through to ultimately do transactions.

And because our audience, and we keep saying this, and we've been saying this to the display advertisers for a long time, because our audience is so intent-based, that audience performs well for advertisers.

And we've, in essence, been putting our money where our mouth is and saying, we'll allocate a lot of our inventory to say we only get paid on performance because we know this audience is so intent-based.

The other benefit of that right now, in particular, in media is there's a big movement right now, I'm sure you've all seen, to end cookies and most of the big platforms, blocking cookies in one way or another or limiting the reach of cookies in one way or another.

And what cookies do is they just put a mark on a user's computers to identify that user in one way or another or identify some traits of that user.

And so that's been historically an important tool to a lot of advertisers.

That tool is not nearly as important to Dotdash and Dotdash's properties because we don't need it.

The reason we don't need it is because our content shows what the user wants.

We don't have to guess that this is a 40-year-old female who is interested in shoes.

They're looking at an article that's about shoes for women, and they're trying to figure out which is the right shoe to buy.

And that context, that, you imagine, is very effective media for somebody who wants to buy that kind of advertising.

And that's especially enhanced by the fact that people who were out trying to target these users with cookies have less options to do that.

Now we're looking at, okay, where can we find that with intent.

It's similar, although I think it's ambitious of us, but Google has always been the ultimate intent-based media.

We buy -- we've, over our history, bought billions of dollars worth of media from Google and hundreds of millions of dollars a year from Google on that intent information.

And we think we have similar dynamics here with Dotdash in the sense that we are providing the answers.

People are going to Google with the questions and very often, Dotdash is the answer to that, which means we're at the right place to reach those users.

And the other thing that you see with our advertisers, which I've talked about a lot, which is a stat we're hugely proud of, is the repeat rate on advertisers.

So we enter 2020 with a good base of advertisers.

Those advertisers are significantly repeating and now we're adding new advertisers to grow on top of that.

So we have a lot of reasons to be optimistic about Dotdash.

I could go on for a while, but we're really excited about the team that we have there and the assets that we've built.

I think your last question was quarterly guidance.

And the philosophy there in terms of pulling it back is we don't manage the business for quarters.

We don't want to manage the business for quarters.

And we're trying to put sort of our money where our mouth is there by saying, let's pull away this quarterly guidance so that it doesn't become a tracker for the business.

I think we have always tried to avoid organizing by quarter, but when you put out a quarterly guidance, that lends a little more weight to it, and we really want to focus on longer term.

And so we are going to continue to talk about the year, and I think that our shareholders should know how we think about the year and how we think about the future and what our ambitions are for the future.

But breaking that down into individual quarters, we think, is too narrow or too shortsighted.

And so we don't want to continue to do that in new IAC.

We didn't want to do a sort of abrupt pull back in that.

So we did this quarter, but really looking forward for new IAC, we don't think quarters are as important in thinking about how to build the business and how to build long-term value.

We'll take our next question from Dan Salmon with BMO Capital Markets.

Brandon, maybe just a quick update on some of your partnerships with Nextdoor and Realogy, others as you make efforts to tap into different pools of demand and diversified traffic?

And then just one for Joey.

Obviously, Match has gotten most of the attention, but you've also made some other small divestments from the portfolio over the past year or so.

Can you just give us an update on those efforts and whether we should expect more of that as well?

Yes, sure.

This is Brandon.

So on the partnership front, 2019 was, I think, an exciting year.

Nextdoor partnership is something, obviously, we're excited about in terms of the audience that we're reaching there.

It's a large and growing audience of neighbors who oftentimes are looking for local services.

So the synergies there in terms of intent are significant.

The Nextdoor partnership is already a meaningful contributor to our business, but we think it's just in the early stages and really has far greater potential.

And we're working actively with the team there and looking forward to what additional value we can unlock in 2020.

In terms of Realogy, it's a very different animal in the sense that it gives us sort of entrée into real estate transactions that are off-line.

And so the ability to serve a home seller while they are in the process of selling their home and to be able to reach them through the agent is a powerful new avenue for us to reach people at the right moment for when they're looking for home services.

The other thing that makes it very different is that it's very much a market-by-market sort of ground game.

And so in 2019, we started with testing in just 4 markets, but we have very, very, very quickly expanded that to dozens and dozens of markets and looking forward very much to seeing that scale meaningfully in 2020.

The other thing that's interesting about the Realogy partnership is it really gives us a fundamentally new capability that we'll be able to take to market and offer to other similar providers or situations where we can reach people off-line at a time when they have significant home services needs.

So I think both of those partnerships, we're obviously very excited about the potential growth in 2020.

And then we have -- we're very focused on sort of the partnership pipeline, and hope to have more to talk about.

Dan, in terms of divestments, I'll try to be really quick so we can squeeze in one more question.

I think we've largely done the cleanup that we were -- we're set out to do over the last couple of years and we're in a nice place.

Now that doesn't mean that we won't -- businesses aren't working or things change.

Obviously, we'll continue to clean up.

But right now, we're in a place where I think we're -- we've cleaned up all this -- or the vast majority of the things we intended to clean up.

We'll take our next question from Youssef Squali with SunTrust Robinson.

Great.

So Joey, going back to your letter and given what you said about valuations in the private market, are your return expectations changing?

Trying to understand how you guys balance the return threshold expectations, which is how fast you want to deploy your new-found capital?

And on ANGI, can you maybe speak to the pace of buyback?

I know you bought some stock back.

It wasn't a lot.

You still have a fair amount of dry powder and considering the performance of the stock over the last several quarters, I was wondering if there are any plans to accelerate that.

Yes.

On speed to deploy the capital and return threshold, I don't think anything has changed there.

We're not in a rush to deploy the capital.

We've never been in a rush to deploy the capital.

It's really opportunity specific.

We've generally been overcapitalized.

And I think our plan generally is to remain overcapitalized to be flexible for the right opportunities.

And that's a good segue to your second question, which is share repurchases.

We certainly want to have some powder for share repurchases, to make that available if it makes sense.

We did some share repurchases of ANGI in the last quarter, and it's definitely done.

We'll continue to look at it over the future, as we always do.

I think that's it.

We're out of time.

We're grateful, as always, for everybody for joining us for this call and look forward to talking to you next quarter.

Thank you.

This concludes today's call.

Thank you for your participation.

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