Angi Inc. (ANGI) Q4 2017 Earnings Report, Transcript and Summary

Please standby. Good day, and welcome to the ANGI Homeservices Report Q4 2017 Results Conference Call. At this time, I would like to turn the conference over to Mr. Glenn Schiffman, CFO of IAC and ANGI Homeservices. Please go ahead, sir.

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 Chris Terrill, CEO of ANGI Homeservices. Joey and I will 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'll 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 statements. These forward-looking views are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in both IAC's and ANGI Homeservices' fourth quarter press releases and our reports filed with the SEC. We'll 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 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? Joseph M. Levin - IAC/InterActiveCorp.: Welcome to the first official ANGI Homeservices quarterly earnings call, of course I'm sure we'll cover some IAC topics too and Glenn and I are happy to answer any questions you have on that. So let's go ahead with questions.

Thank you. We'll take our first question from Peter Stabler with Wells Fargo Securities.

Good morning. Thanks for taking the question. Two, if I could. On the Video segment for IAC, wondering if you could talk a little bit about the investment curve there, and maybe give a little bit more color if you could on the long-term EBITDA opportunity? And then switching gears one for Joey on ANGI, I wonder if you could talk a little bit about the sales force strategy. It sounds like a lot of work on integration has been completed. Can you remind us kind of the structure there and the independent sales forces, how much overlap is there and where are we in terms of completing the work and the integration? Thanks so much. Joseph M. Levin - IAC/InterActiveCorp.: Sure. Thanks, Peter. I'll let Chris do the ANGI question. On Video, just starting with the 2018 plan, I think there's a few things in there, clearly the biggest investment, biggest loss is Vimeo. But Daily Burn is in there for Q1, so that – I mean is in there for the year, but is more heavily – losses are more heavily weighted in Q1, because that's a seasonal business, and so you do all the marketing in Q1, when people are starting their new fitness plan. The biggest area where we're investing in Video generally and Vimeo specifically is really in sales and marketing. Obviously, we continue to invest in products, we continue to add technology and engineering resources. But the biggest growth is in sales and marketing and we've got over a four-year life on that, the subscribers in that business, which we've talked about a few times. That continues to hold or improve. And ARPU is – sorry, average revenue per user is also clearly rising right now, and that's as a result of launching new products like live which have a much higher price point. And we are – our subscription products, our pro products, our business products, those are starting to work. Those are starting to get engagement from enterprises, and so we have sales people selling those products. We're very much leaning into marketing and sales to bring in more customers with those metrics sitting behind them. And we can spend money very profitably in marketing. Part of that is going to be international marketing. We've got 50% of our paying subs at Vimeo are outside the U.S., but a greater portion of that of our basic users are – probably more like two-thirds are outside the U.S., and we've done very little marketing internationally. We know the math should work. So, we're going to really step on that growth. And the same will be true of our sales effort there in terms of, we're starting to look at international customers. And it's a SaaS business, so this revenue builds, and the more customers we add, the more we can drive ARPU, the more we can drive retention, the more incremental services we add, where we can sell to those existing customers, it makes sense for us to keep leaning in and adding to this customer base, while the math works very strongly in our favor. So, that sort of sets up, I guess the answer to your second question, which is what is the long-term EBITDA opportunity? I think that this business, I'm really talking about Vimeo specifically now, I think Vimeo can have very healthy margins in the future. I think it is not a near-term focus, and this business does have some cost of goods sold, some actual gross margin expense, because we have bandwidth and storage costs along with each customer with their videos. But after those costs, incremental customers are very high margin, the rest of that drops down to the bottom line. And so I think we can have healthy margins in this business. I mean, I think we can have healthy margins in this business tomorrow if we stopped investing in the way we are investing in it right now. So, the profit is there in this business, if we want it or when we want it, but we're going to keep pushing growth and trying to accelerate growth.

You saw in the letter, we talked about 2018 revenue of – in the Vimeo business of in and excess – in excess of $100 million. In previous letters, we talked about gross margins in and around 60% and growing from there. So, maybe that helps you dimensionalize it a little bit. Joseph M. Levin - IAC/InterActiveCorp.: Chris, do you want to talk about Angie's List.

Sure. So, Peter your question on the sales force metric is right. But just in general we have right-sized the Angie's List sales force to be in a much better place, to reflect how we've traditionally managed the sales force on the HomeAdvisor side, in terms of the right number of sales folks doing the right job. We've also eliminated areas like e-commerce and replaced that with a much simpler system, and we've taken sales that we used to go against that type of effort and got rid of those. So, I think we're in a very good place with the sales force in terms of the Angie's List business. At the same time we transitioned 250 sales folks over to HomeAdvisor, which was important, it was a part of our broader surge to catch-up to demand. We've invested heavily. We're still somewhat working through that processes, as you can imagine when you bring these folks over, they are not sort of top tenured from a productivity perspective, so they're getting up to speed. But we believe that as they get up to speed, that'll flow through to the rest of the year. So, I think we're in a good place with the sales force. We've got everything I think right-sized. And we're continuing to add as we can, training these folks and getting them up to speed is no easy task, but I think we're in a very good position for the rest of the year. Joseph M. Levin - IAC/InterActiveCorp.: You saw some of the early results of that sales force acceleration in some of the metrics we shared. SP grew 26% year-over-year, again, slightly above last quarter, and our net ads, we're in and around 9,000 in our highest net ads in about 4 quarters. So, again that will take some time as Chris said as these sales professionals get tenured and we get the productivity that we typically enjoy, but we're already starting to see the baby steps in that regard.

Thank you all.

Thank you. Joseph M. Levin - IAC/InterActiveCorp.: Next question?

And our next question comes from Eric Sheridan with UBS.

Thanks for taking the questions. Maybe two if I can. Probably more for Joey than anything. One, on capital allocation, how should we broadly be thinking now after a couple years of repositioning assets in and out of the company, you've done the Angie's, HomeAdvisor deal, you've IPO-ed Match. Sort of how should we think about where cash can go going forward in terms of driving shareholder returns, either inorganically into M&A or shareholder returns? Or how you think about building the businesses that you already have in terms of incremental investments? And then maybe second, I would love to just get a little bit of color of what drove the inclusion of – in the Shareholder Letter around sort of framing the opportunity that the platform companies gave you over the years? And sort of the landscape of the platform companies versus the broader competitive dynamic in the Internet going forward? Thanks so much. Joseph M. Levin - IAC/InterActiveCorp.: Sure. On capital allocation, I think it's the same as we've always done, which is everything that you listed, Eric, are things that we have considered and continue to consider, meaning M&A is very much something that we spend real time and resources on. I've said and continue to believe that we're likely to focus on smaller things rather than larger things, but certainly don't preclude the possibility that we could do something larger. Of course, on all that, we're going to be disciplined on price as we've always been. Dividends, share repurchases, things like that, also always something that we think about. In the last two years. I think we've bought back or avoided dilution in terms of buying back the tendered shares, close to $1 billion of stock. That is something that is always in the forefront of our mind. So the whole gamut is things we'll consider. Oh, and investing in our existing businesses, I mean, just going back to Peter's question, we're putting more money into Vimeo, because we very clearly get a return on that. We'll look at that and – we continue to look at that in all of our businesses, just investing directly through the P&L to get that return. On the question about the platforms, I think it was really two things motivated that. One is, I want to describe kind of some of IAC's competitive advantages, and I think we've built up real expertise in these areas. And I think we've proven that that real expertise is repeatable and valuable, and it is necessary in the Internet today. And the second thing was that I do think that we all, just people in this country, just companies competing here, should be focused on concentrating so much power in these platforms. And how we can address that and make sure that they continue to operate for good and for the benefit of everybody. And it's just very rare to see so much power concentrated in so few hands. And that's something that we should all think about how to address.

I think it also ties to the back half of the letter as well, because as we think about the initiatives in each of our businesses and building the moat in each of our businesses, that's a very important component of it as well. And you see what we've done in our businesses, the investments, the brands that we've created it is to differentiate, enhance, accelerate and protect these business in the context of this ecosystem.

Great. Thanks for the color.

Our next question comes from John Blackledge with Cowen. John Blackledge - Cowen & Co. LLC: Great. Thanks. Joey, on the ANGI $270 million EBITDA guide, could you just provide some more color on your commentary around being on target? But kind of at the same time you seem to indicate you're not beholden to that guide if there was an investment opportunity or if something came up this year? And then relatedly kind of just wondering how the ANGI integration is going? And any color on the progress around synergies that you guys have called out prior? Thanks. Joseph M. Levin - IAC/InterActiveCorp.: Sure. Thanks, John. Maybe Chris and I will double team this one. The comment, look, we are on pace for the $270 million. We're deep in the thick of it right now. I think that there's a lot to get right between now and the end of the year, but we feel good about our ability to do that. And I think the early signs that we have suggest that we're on pace for that, that's both in the synergies, the execution, all of that feels good. And we can kind of enumerate where we are in each of the individual sort of buckets we've laid out previously. But I think it's important that everyone understand that our highest priority – or sorry, rather $270 million is not our only priority, it may not even be our highest priority. It is our target. We are on pace for it. But winning the market long term is our highest priority, and that's always true when we talk about guidance in any of our businesses, that's always true. We put that as a note, whenever we say forward-looking numbers, that we're looking to invest for the long term and we're looking to win the markets in which we compete. And that's the same way that we'll approach this over the course of the year. But we're on pace for the $270 million right now.

Sure, so I'll talk to the synergies. I want to first say, just you think about the size of these two companies, the complexity, the fact that we've done so much so quickly, the teams have done an amazing job. It's no easy task. And I'm just tremendously impressed with how well everyone is working, given the complexities of what we're trying to do. With that being said, cost savings were ahead and feeling good about those cost savings, they're relatively locked in. And I think we've communicated that in the past and that hasn't changed. Traffic synergies are progressing, I'd say we're in line there. We just launched the integration of the matching path onto the Angie's List home page recently. We are figuring out how to continue to optimize. We see tremendous opportunity in terms of continued optimization, tweaking, figuring this thing out. But as Joey said, we're in the thick of it right now. We went from sort of the theoretical to now we're actually executing and every day we learn something new, and are figuring things out, and I think we'll continue through the rest of the year. In terms of the sort of combined sales force, I think we've said that that is a much further thing out in the future. But like everything we do, we're already starting tests and figured out on a very small scale, we'll work through that, but it's going to take a long time to play out. But, in general, I think we're feeling good about sort of what we communicated, and where we are relative to executing against that.

Yeah, and translating that into numbers, like we did on the last call, I don't want to reiterate a lot what I said on the last call. Remember, on the cost side our $50 million to $75 million range is net of revenue foregone. We've taken out expenses well in excess of that number, but we've also factored in the revenue degradation. So we continue to feel great about that $50 million for 2018. And then the opportunities to hit the high-end of the range is $75 million in 2019, again as we arrest the revenue degradation in the Angie's List business. And we have, as Chris has talked about, I think on the last call, we have designs on how to do that, that's increasing origination and that's stemming attrition and that's enhancing retention. And those are coming in throughout the year, given the nature of this revenue stream, it takes a while to see that pull through. Again, these are more subscription like revenue flows. On the traffic synergies, Chris said it very well, the Angie's List homepage is fully rolled out in January and that gets tweaked, that gets optimized, and the synergies they are from will accelerate throughout the year, and you see that also in our guide. So again, we feel great about the $50 million on the low-end, and like we said, last quarter the $100 million on the high-end, going into 2019. And we should have some real momentum leaving the year into 2019, as we continue to optimize and tweak. John Blackledge - Cowen & Co. LLC: Thank you.

Our next question comes from Ross Sandler with Barclays.

Hi, good morning. This is Mario Lu on for Ross. I have a couple of questions. One, how does the new tax laws impact the P&L in 2018 and going forward? And two, are there any corporate structure incentives like NOLs or the balance sheet that make it better to keep Match, ANGI Homeservices and IAC core, all under one roof, instead of the tax free spinoff idea?

Look, tax reform is going to be positive for us on a cash and a GAAP basis, including giving us the opportunity to repatriate about $445 million, and that will be tax free as a result of our existing NOLs. Effectively, we burn through some of these NOLs shielding that repatriation tax, but given the reduction in the tax rate to 21%, our NOLs last a little bit longer. Just to give you some details on it to forestall other questions. That $445 million, we'll keep some of that cash overseas to run our business. And then we will have as you saw on our press release, a book transition taxes at IAC of about $63 million, again, that was in the fourth quarter numbers, that won't be in 2018, and you saw Match yesterday had $24 million of a book transition tax. Again, we won't pay cash taxes on that given our NOL. We have as you saw on our press release a one-time deferred tax write-off at the IAC level at about $1 million, at the Match level about $69 million and at ANGI's of $33 million. ANGI's by the way doesn't have any foreign cash. So, there's no book transition tax there. We're fortunately – fortunately with our NOLs we're not a full cash U.S. taxpayer at the IAC level till 2021. We'll pay some modest taxes in 2020. At Match, we're not a full cash taxpayer till 2020. We'll pay some modest cash taxes in 2019. And then ANGI's, our NOLs without restriction, we'll probably fully utilize them in 2018, and then we have NOLs with restrictions from the ANGI HomeAdvisor merger that play out over the next couple of years, and we're not a full cash taxpayer till 2022. In terms of 2018 pro forma basis, our worldwide GAAP tax rate, again, this is for book and for modeling purposes. For IAC, it'll probably be mid-to-high 20s, for Match it'll be mid-to-high 20s, and all this is the impact of SPC and 2016-09, the accounting for SPC. That goes to the income tax provision. And then at ANGI's probably in the high 20s in terms of our GAAP tax rate. I think it's important as you think about our tax position, the operating leverage and the free cash flow profile of our businesses, all three of our financing entities or operating entities if you will, IAC ex Match and ANGI's will convert greater than 70% of EBITDA to free cash flow this year, so quite positive indeed. In terms of anything around the tax position or in our workings of our tax agreements that would otherwise prevent any corporate action, the answer is no. The way these things work in our Tax Sharing Agreement with our subsidiaries work, to the extent they can't utilize an NOL, and it's otherwise hung up on their balance sheet as a receivable from the U.S. Government, yeah, receivable from the U.S. Government, we can use that. And then when they have the opportunity to use that NOL obviously, they can. So, sure there is efficiencies in the system in terms of sharing tax attributes, but that in and of itself won't drive any thoughts or discussion around strategic actions. Joseph M. Levin - IAC/InterActiveCorp.: Mario, would you like us do a little longer on taxes, or does that answer?

Yeah. That's great. Thanks for the color. Joseph M. Levin - IAC/InterActiveCorp.: Next question, please.

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

Good morning, everyone. Chris, I asked this of your – Mandy, your corporate cousin yesterday, but similar to you, could you just at a high level walk through your current view on the competitive environment for ANGI Homeservices? Joey's comments in the letter notwithstanding about the big platforms, they do have some sort of direct competition with you. We also have group of startups in the area as well, where we see back players, and we also see them partnering or at times being acquired by some brick-and-mortar players. So, I would love to just hear that view from you at the highest level?

Sure. So, I think to your point setting aside sort of the big, big players that everybody is sort of simultaneously working with and worrying about, I don't think we've seen the competitive landscape sort of radically change. The people who have any kind of scale are still out there doing their things. In terms of what we focus on day in and day out, it's still the opportunity to move 90% of folks who are offline to online, and to try to go out there and do that we're spending a lot on television and we're sort of going after them in terms of helping them understand why we're a better alternative to word of mouth, so. I haven't seen anything in terms of startups. We haven't seen any startups that have got any sort of material traction. This is a very, very, very difficult space to start a business, it takes a tremendous amount of capital, it takes years and years and years to build up liquidity, and we've seen very few, if any, startups ever sort of get out of the starting gate and get much further. That being said, we look at what everybody does big, small or otherwise, and see if they're doing something interesting or unique. But I think at the end of the day, sort of we're setting the course in terms of our on-demand products, how we are thinking about removing friction from the space, how we are leveraging our scale and our matching algorithms. That's what we're worried about every single day, and how do we get more people who are turning their friends and family to turn to us. Joseph M. Levin - IAC/InterActiveCorp.: The only thing I'd add to that Dan and I thought Mandy did a really nice job answering your question as well yesterday, and I think it's true of both Match and of ANGI is just emphasizing the importance of liquidity in both of those markets, meaning there is lots of products that come out that have a particular product feature or a particular demographic appeal or a particular something. But in order to breakout to the scale that we have and the size that we have is, you need to actually fulfill on the promise. And to fulfill on the promise of what the product delivers, liquidity is more than anything else going to be the driving factor in doing that. That's true in dating, that's true in matching consumers with homeservice professionals. And that's what we've started to build in all these places, and that's where I think is the hardest to replicate really by anybody.

Large or small. Joseph M. Levin - IAC/InterActiveCorp.: And – large or small, I totally agree. So that – we can't under exercise the importance of that, because that liquidity is what really allows us to innovate in product. We can deliver incredible new features to our users by virtue of having the liquidity to actually fulfill.

Great. Thank you both.

Our next question comes from Jason Helfstein with Oppenheimer. Jason Helfstein - Oppenheimer & Co., Inc.: Hey, thanks. I'll ask two, one to Joey, and then a follow-up to Glenn. So Joey, you clearly spent a good amount of Shareholder Letter talking about discount to some of the parts, and kind of arguing why you don't deserve it. I mean, from our perspective it seems pretty simple, the way you get discount to narrow is you tell the market we're going to spin off first Match and then initially ANGI, when it's appropriate. And that discount will go away. And specifically to Match, they are on a trajectory now to basically have inefficient leverage by 2019, call it 1X EBITDA would be inefficient. That's a business that should be levered probably closer to 3X, and this is an environment we want to lock in low interest rates, because they're only going higher. So, how do you balance kind of the desires at the IAC level versus what's best at the Match level, and then kind of achieve your overall agenda? So that's question one. And then Glenn just, you did go through kind of that $50 million to $100 million and then the $75 million, and what I thought I heard you say was, is it fair to say that $50 million – of the $50 million to $150 million on the funnel, that's kind of mentally already in your guidance for 2018, but not the $100 million, and then you're thinking at a $75 million more for next year when you have the full sales force integration? Thanks.

Do you want me to go first? Joseph M. Levin - IAC/InterActiveCorp.: Sure.

Yeah, in our guidance for 2018 is the $100 million, which is the low end of the $100 million to $250 million that we articulated when we announced the deal. And then the excess over the $100 million or the incremental $150 million, that will roll in over time. I imagine the bucket three synergies may not even be – and the bucket three synergies is the sales force optimization, that may not even be 2019, that could be into 2020. Chris gave a great answer last call on what we're doing around that, how hard it is, but how much potential upside there is. So, we'll be testing some things this year, we'll be learning this year, you may see a little bit of that $75 million, remember that bucket was 0 to $75 million, we may see some of that $75 million in 2019 and that could flow into 2020. Joseph M. Levin - IAC/InterActiveCorp.: On the discount Jason in your questions, look, I'll give the answer that we always give, which is we think about spins and we think about capital structure and we think about what the right setup is for each of our companies all the time, and we'll continue to do that. I think as it relates to for example optimizing Match's balance sheet, look, the story for spin for Match a few quarters ago was, there wasn't enough float. And that now there is a lot more float. And the reason that there is a lot more float at Match is because that business has executed incredibly well, continues to grow and continues to grow their valuation. And the valuation of the shares in the public is therefore a lot more than it was say a year ago. That – and I think the same or similar arguments can be made for the balance sheet. There's lots of options of things to do with cash, there's lots of ways to deliver cash to shareholders, there's lots of ways to grow the business with cash, and a spinoff is not the only one. It is one. And it is one that we think about and consider, but there are lots of other ones. Look, I think overall, our biggest priority and the thing that we spend the most time on is growing the businesses and executing at the businesses. And if there's a discount of a percentage or an amount at any particular time that we continue to grow the businesses and we continue to execute. Then we can continue to grow the value of our companies. And if that discount remains static or relatively static, then we can still grow value for everybody. We maintain the optionality for those onetime step function events, which may or may not end up with the consequences that people hope or expect them to. But we maintain the optionality for those onetime step function events, and we always think about them, and we have historically taken advantage of opportunities when they arise. But it is not our biggest priority to eliminate that discount through capital structure maneuvers right now.

Yeah. Hey, look, I think just on your liquidity point, in bull markets one thing that people often misprice is liquidity and the power of that liquidity. And I think the volatility of the last couple weeks has taught a lot of people the power and importance of liquidity, of which we have at all three of our – all three of our financing entities. Jason Helfstein - Oppenheimer & Co., Inc.: Thank you.

And our next question comes from Brian Fitzgerald with Jefferies.

Thanks, guys. On ANGI, you highlighted scale and liquidity. I wanted to know if we could drill down on that a bit, specifically on the success you've had recruiting service professionals to the platform. You mentioned in the letter you've seen significant increases thus far in 2018. Is that starting to catch up to demand? And are you comfortable with the current balance you have in that marketplace? And then maybe a quick one on GDPR, how you see that impacting both companies as you roll in through May?

Yeah. So in terms of service rise, we're making progress. We're still not where I think we can be and will be in terms of catching up to demand. As we've said, we've added a lot of sales folks, but it takes a long time for them to become tenured. That is no easy task. And we've gotten much, much better at getting them up to speed, but you still have to work through those large classes, and let them sort of do what they do. I think at the same time, I don't always focus specifically on the nominal SPs, I focus on the quality of those SPs. And I think the ability for a service provider to be a high quality service provider that has lots of capacity and stays in the system for a long time is incredibly important. We've made a lot of changes over the years to make sure that we're not just adding in nominal service providers that don't add anything to the network that have no capacity or that are in some area where no one really needs their services. So I think we're doing a good job of getting our sales folks tenured. We'll keep pushing on that. As they get tenured, you'll see the flow through of service providers, and then we're continuing to push to make sure we bring in quality service providers, so that they have lots of capacity and an ability to match demand. Joseph M. Levin - IAC/InterActiveCorp.: Yeah. And you see that quality quotient coming through. Revenue per SP this quarter was up 5%, last quarter I think it was up about 6%. So that's one of the metrics and where you see what Chris said translate into the financials. And then as Chris said on the SP side, as we continue to grow the SPs through the effectiveness of the sales force, that's why this will be more of a backend loaded year than we've seen. All right, next question.

We'll move onto our next question with Chris Merwin with Goldman Sachs. Joseph M. Levin - IAC/InterActiveCorp.: Oh, sorry. Before we go to Chris...

Hey, Chris, before – I'm sorry, we forgot GDPR. Look, we're taking it obviously extremely seriously. We've had a taskforce on this for the last six-plus months. We're working diligently towards full compliance across all of our businesses when the law takes effect in May. But there shouldn't be a material impact at all on our businesses. We may be tweaking some practices here and there to make sure we're fully in the right spot. And, yes, as I think Gary also alluded to on the call yesterday, there will be some increased costs around our business to ensure compliance and to throw the right resources at it, but all that's embedded in our guidance of course.

Thanks, guys.

Sorry, Chris.

And Brian Fitzgerald with Jefferies is next.

No, I'm good. They got my questions, it's Chris next.

Yeah. And Chris Merwin is next, operator, or tried.

One moment, please. Joseph M. Levin - IAC/InterActiveCorp.: Can we get Chris back on line?

Sorry, Chris.

And Mr. Merwin, your line is open. Christopher Merwin - Goldman Sachs & Co. LLC: Okay. Thank you. Yes, just a couple from me. For Vimeo, I think you had bookings growth at 25%, and that was well ahead of sub growth at 14%. So, it looks like ARPU trends are definitely getting better there. Can you talk a bit about what's driving that, is that existing customers going upstream to higher cost subscriptions, are you bringing in new customers at higher levels of spend? And then secondly, for ANGI, can you refresh us on what percentage of bookings are coming from Instant Book (sic) [Instant Booking] (36:20) right now. I think in the past, it's been around 10%, but just curious about how that can move higher over time, given the bespoke nature of many of the jobs at HomeAdvisor, and to the extent, it does move higher, does it make it easier to close the take rate gap that ANGI has today, relative to some other marketplaces out there? Thanks. Joseph M. Levin - IAC/InterActiveCorp.: Thanks, Chris. On bookings and bookings growing faster than ARPU, it is a combination of the two things you said, it is both bringing in new higher tier users, but also up-sell, and I'd say it's probably more of the latter, meaning more upselling people into higher products than bringing in new. But it has to be a mix of both. It is a mix of both and will continue to be a mix of both, but upsells are bigger at the moment.

So on your Instant Booking and Instant Connect, our on-demand products, it's still roughly 10%, but obviously that base has grown nominally. So that is growing nominally, and there are huge numbers considering we really just rolled these things out of the last couple of years. I will say in terms of growth, there is some step function to this. We introduced products and we learned from them and then we figure out what adoption looks like and then you sort of see that plateau, and then we introduced new products and you see a jump up as well. We've got some interesting things in the pipeline that we're working on, as well as we're continuing to learn. You find out things like, instant – someone is looking for Same Day Service for example, you might think that means same day, but in our space that may mean 72 hours. So we've introduced products that leverage those kinds of learnings, we'll get people to be exposed to those products, and you'll see sort of growth against our ability to let them understand how it works. In terms of take rate, we do charge more for our on-demand products, but I would argue, we charge much less than their intrinsic value, and we have probably time over the years, as we get more adoption and more usage to move the price of those. But right now, we're trying to keep it very simple. We do charge a bit of a premium, but it's not a – as much as we probably sit over time. Christopher Merwin - Goldman Sachs & Co. LLC: All right. Thank you. Joseph M. Levin - IAC/InterActiveCorp.: And just a little bit back – sorry, Chris, just a little bit back to Vimeo, one of the things that drives ARPU is the live product which is at a much higher price point. And so that we'll see as that adoption happens that that grow people into higher tiers. And we've also been changing features around like for services around like storage caps and things like that, where we're getting more competitive with the rest of the marketplace, and that drives people into the higher tiers. Christopher Merwin - Goldman Sachs & Co. LLC: All right. Thank you. Joseph M. Levin - IAC/InterActiveCorp.: We'll go to the next question.

Our next question comes from Justin Patterson with Raymond James. Justin T. Patterson - Raymond James & Associates, Inc.: Great. Thank you very much. To add on to Chris' question on Instant Booking, would love to get a better sense of the customer base and engagement there. How much of that's existing customers versus repeat? And then just how the product or project size is compared to what you typically get on ANGI Homeservices? And then stepping back turning to the Angie's List acquisition, would love to get a better sense of just that customer base and your learnings there relative to the HomeAdvisor customer base. What's the HomeAdvisor like experience on the site now? How are customers engaging with that, and then how the project size is compared to those on HomeAdvisor? Thanks.

Sure. I'll talk about sort of the question on IB and IC was, can you remind me again? Justin T. Patterson - Raymond James & Associates, Inc.: Getting a better sense of... Joseph M. Levin - IAC/InterActiveCorp.: Customer base and engagement. Justin T. Patterson - Raymond James & Associates, Inc.: ...customer mix new versus existing, and then how exactly those project sizes are?

Yeah. So, I don't think we've broken that out. Certainly, if you think about how the product is implemented, it could be just as much someone is who the repeat user experiencing, and it could be someone first time. We give the user choices they come through to decide how they want to engage in the product. So, we haven't broken that out, and we haven't sort of frankly even spent a lot of time looking at that, because it is a situational structure that depends on the needs of a person submitting a service request at the time. So that... Joseph M. Levin - IAC/InterActiveCorp.: Probably by a service request, you're not going to Instant Book a kitchen remodel to start 10:00 AM tomorrow morning.

Yeah. Joseph M. Levin - IAC/InterActiveCorp.: You will Instant Book or want an appointment first.

Sure. And then, you look at Same Day Service, that's obviously I'm stuck in my garage. The garage door is broken, I need help right now, I've got a leak in the basement. I need immediate help. So it just depends on the type of need of the homeowner. Joseph M. Levin - IAC/InterActiveCorp.: Also the way that we're presenting the Instant Connect, as well as Same Day Service and Next Day Service, things like that is based on our liquidity in that particular job, so we want to make sure that we can fulfill on the user and fulfill on a certain period of time. So, we're going to do those in – the way we're offering them is not based on consumers repeat rate or even necessarily the job value, although you can imagine certain things like Chris and Glenn were saying impacting the job value. It's based on our liquidity in that particular market, in that particular job, at that particular moment, is going to be a real driver.

Yeah, I think the other question was on the customer basis. Are we seeing sort of material differences? We're not really. There's not sort of one group does remodeling, the other does repairs, it not the case. It's a pretty normal bell curve, when you have sort of top brands with national reach, and you're spending a lot of offline marketing to drive in homeowners, you tend to get a pretty normal bell curve in terms of what people are submitting, what they look like. So we're not seeing any sort of material differences. I think the other question was the experience on Angie's List and how that has changed? As we've talked about it, but we've introduced our matching into their ecosystem. We feel this is good on two fronts. One, it gives homeowners more choices to how they want to engage with the service provider. They can use the traditional Angie's List directory, which has some of the most reviews of any site out there or they can use our matching engine if they want help immediately and wants someone to do a little bit more for them. So, we'll continue to look at what the right balance is putting features and functionality on Angie's List, which you'll see on HomeAdvisor, but so far that's what we've worked through. Justin T. Patterson - Raymond James & Associates, Inc.: Great. Thank you.

Our next question comes from Paul Bieber with Credit Suisse. Paul Bieber - Credit Suisse Securities (USA) LLC (Broker): Good morning. Thank you for taking my questions. Actually most of the questions have been answered, but I do have one question on the Publishing segment. I was hoping you could just spend a little bit of time about what's some of the underlying drivers are in the Publishing segment that are resulting in a return to growth and just a better profitability outlook for 2018? Joseph M. Levin - IAC/InterActiveCorp.: Sure, probably worth doing it in the two different pieces, which is we break Publishing into what we call Premium Brands and Ask & Other. And both of those things are growing and both of those things are delivering profits now. The biggest driver of growth in the premium brands is Dotdash. And Dotdash, I talked about becoming the modern publisher, that's really our objective there. I think we have six verticals now within Dotdash. Each one is a leader within its respective category as it relates to audience size. We're competitive now with folks like Box, Meritus (44:48) and Time Inc., Hearst, where we've got that kind of audience and we've got those kinds of brands and advertisers are paying attention now. So Dotdash, I think grew traffic over 50%, maybe are paying attention now. So, Dotdash, I think grew traffic over 50%, may be – or over 60% in Q4 and revenue is coming alongside that. I think Dotdash could grow revenue in Q1 on numbers like that 50%, 60%. So that's good. Dictionary is also executing, I think, it's just some blocking and tackling there and figuring out where to invest and where not to invest, and so that business is delivering more profits than it was previously. Investopedia as a business, we continue to run at breakeven, but has nice top line growth. What we're really trying to do in Investopedia is become a resource for people in this early-stage of their financial career, where they're making financial decisions. And we can help people make those decisions and advertisers are very interested in people at that stage in the career, making the kinds of decisions that they're making on our site, which is how to do their 401k, how to invest their money, how to choose credit cards, how to choose borrowings and things like that. I think that we can really help them in their process, and also offer tools to the consumers, we have the Investopedia Academy right now, where we're actually selling courses to consumers and we're seeing real nice adoption in that quickly. And then on the Ask & Other side, that business is really driven by performance marketing and in any given period, where we figured out areas and opportunities to market that. And we've been able to figure out a lot over the course of 2017 and going into 2018, and we've been able to drive profit there. It's also been – we did a huge restructuring in that business a year or so ago, and took out a huge amount of cost. And we're seeing the benefits of all of that now flow through. Paul Bieber - Credit Suisse Securities (USA) LLC (Broker): Okay. Thanks a lot.

We'll take our next question from Anthony DiClemente with Evercore.

Thanks so much. Maybe first for Joey. You talked earlier in the call about investments and planned investments in Vimeo and that was helpful. And I know that you guys broadly have quite positive view on the addressable market for Vimeo. My question is, are there ways for Vimeo to build upon its competitive position in this – in the space it operates perhaps by way of strategic partnerships? Are there other options – you've done a smaller acquisition of Livestream recently, so are there other opportunities whether it'd be partnerships or strategic options, just would be great to get an update on your thinking there as it pertains to that asset? And then another one is just more broadly I guess for anyone who's willing to kind of take it, on marketing. I mean, it strikes me that InterActiveCorp has so much experience and institutional knowledge as to what works as far as marketing and media mix. And Match yesterday, they said that TV wasn't working as well in terms of the ROI there, I think Chris said earlier that ANGI is spending on TV and marketing there. So, I understand there are different demos and different considerations. But just wondering if you've got any thoughts around reaching people around digital, and where your marketing spend should or could be optimized or emphasized in order to capture the maximum mindshare? Thanks a lot. Joseph M. Levin - IAC/InterActiveCorp.: Sure, Anthony. Well, I'll start with Vimeo. I thought you wrote a great report on Vimeo. We absolutely are looking at partnerships and we absolutely have partnerships. So for example, folks like Dropbox, where we integrate with directly; Apple, where we integrate with directly; Google, where we integrate directly, where people are using our tools around their video, and may use that in conjunction with somewhere else that they're using storage or other things. And I think those sorts of on-ramps are useful to us and valuable to us and very valuable to our users. So we're going to continue to look for opportunities like that, and lean into the opportunities that we have. I don't think that there's sort of one or two or 10 transformational sorts of partnerships on the horizon or even existing within the business right now. But I do think that that partnership channel in aggregate is an important one and one that we'll continue to focus on. And really in the interest – not just in the interest of, of course growing our business, but also in the interest of driving utility for our users. One of the things that we do at Vimeo, for example, or will do at Vimeo is we give our users the ability to publish their videos into any platform. It's not just publishing onto Vimeo.com, it's publishing into any platform. We can do that as the sort of Switzerland here, and make things easier for users, where for any individual user or any individual business, multiple platforms and their own proprietary platforms may be relevant to them. And we try and make that as seamless as possible for the user. On the marketing expertise, this is something we've thought a lot about recently, I've thought a lot about recently. And I think Mandy's comment on this, and something we've all been feeling is, television is a phenomenal marketing channel for us and has worked very well for a number of our businesses. And I think we've developed real expertise in that. The issue with television is that the audience in television is disappearing. And as that audience continues to taper off, what the television world has done is, they've been raising prices. And we've continued to figure out how to keep getting better on our own technology and make that work where we can keep up with the price increases. But at some point that audience decrease is just – there's just less people to reach. And that sort of lean back experience is relatively unique to television, meaning an audience listening to a story, a commercial story, but listening to a story that we're telling is relatively unique to television. And we don't see it replicated as much online, where people are more mission driven, meaning they're going into something – to watch something relatively short. And they're very focused on their path to that thing, rather than leaning back. So what we're looking for and where we're doing a lot of experimentation, where I'm highly confident we will figure something out and be innovative, is where do you replicate that experience online? And we're experimenting with every platform that you can imagine, every media that you can imagine, and figuring that out. And as we figure things out we share that intelligence across the businesses. And I think we'll continue to develop expertise there. But that's kind of my overall view on sort of where television is right now, and how that's impacting the business. I think just Match relative to ANGI, Match has been in the television business, and spending television at significant scale for probably a decade, and ANGI is spending at real scale, but still relatively early in the lifetime ramp of that, in terms of finding new media on television.

Thanks a lot, Joey. Joseph M. Levin - IAC/InterActiveCorp.: Sure.

Our next question comes from Douglas Anmuth with JPMorgan.

Thanks for taking the question. This is Cory Carpenter on for Doug. Just a follow-up to the earlier Vimeo investment question. Is it fair to think maybe 2018 could be the peak investment year in that business? Or could there – could we see another step up next year? Or maybe just any additional color on how you're thinking about the potential timeline or a path to profitability would be helpful? Thanks. Joseph M. Levin - IAC/InterActiveCorp.: Look, it's a very good question, and I don't know the answer to it definitively. I'd say that if we wanted 2018 to be the peak investment year in Vimeo, we certainly could do that. But what the horizon looks like beyond 2018, I'm not sure. It'll really depend on what things look like as we approach that.

And as Joey said in the letter, obviously one of the main goals of Vimeo is to deploy more capital there, both on the marketing side and the M&A side. And obviously we bought a great business, Livestream, at the end of last year. That is money losing, but that gives another outstanding product to share with our users. So the M&A patterns also could impact that. Joseph M. Levin - IAC/InterActiveCorp.: Also just in the Vimeo segment overall, there are losses outside of Vimeo. And I do think those losses will go away one way or another.

Thank you.

Our next question comes from Sam Kemp with Piper Jaffray. Samuel James Kemp - Piper Jaffray & Co.: Hey, guys, thanks for taking the question. So, Chris, last night you all talked about rolling out a take rate model on (54:22) platform to better monetize the volume going through there. I was just wondering if you could talk from a high level about how you think about like that in context of ANGI Homeservices? Obviously, we all are aware of the 3% to 5% effective take rate that you get and that that could go higher. Is that one of the ways you could see enacting that? And then, Joey, we're certainly in a period of strength where Publishing has been doing very, very well. As you look out to the landscape of kind of mid-scale Publishing assets out there, is this a category, a segment that you'd feel comfortable putting meaningful M&A dollars behind? Thanks. Joseph M. Levin - IAC/InterActiveCorp.: I'll answer the last one first, which is in Publishing, well, the question was, will we put M&A dollars into Publishing? Yeah, I don't expect that, no. Again, I don't want to say never on anything, because anything is possible. But I wouldn't think that that's where we'll put M&A dollars. I very much like the organic path. I think if we do M&A in that area, it would likely be very small. And we've got so much to do and we're having such great progress on the organic path, I don't see M&A likely in that area.

Sure. To your take rate question, I will say the models that say that you can have a sort of take a part of the job are the unicorns of our space. Everybody says, wow, it'd be great, looks great on paper, we've tested it over and over and over again, and it's extremely difficult to execute. You have to rely on a completely closed loop system, hope that everybody reports accurately within that system, doesn't go outside of it. You've got to sort of track the job. Sometimes, it may take months before it's completed. Extremely difficult to execute. We've tried it over and over and over again. We've had some limited success with the high-end, but I would say if you're building a business around that which many startups have, good luck. That being said, we have payment processing that we're working on, that gets the SP closer into our ecosystem the sort of natural way. With certain service providers you could start to potentially see a deeper partnership where we may take a percentage of the job with certain guys. I think we're also doing some fixed price testing on smaller jobs, which makes a lot of sense, because those are very discrete jobs, and you could theoretically over time take a percentage of that as well. We're not against the idea, but I would be very cautious against that being some sort of amazing breakthrough. It's been tried over and over and it's extremely difficult to execute. We like it, we'll look at it, and we think about it, but it is not something that we're executing on right now. Samuel James Kemp - Piper Jaffray & Co.: Okay, thanks. Joseph M. Levin - IAC/InterActiveCorp.: We – I think we're just about an hour time, so we will do one – we will do one more question. We'll do one more question operator.

And we'll go to Kerry Rice with Needham. Kerry Rice - Needham & Co. LLC: Thanks for fitting me in under the wire there. Maybe one more question on the marketing strategy, particularly it relates to Angie's. Have you done any discernible changes in that marketing strategy, maybe since you acquired Angie's. It doesn't seem at least from my own anecdotal evidence that I see as quite as many Angie's commercials there? That's the first question. The second question, I'm sorry if I missed this, did you give any update on the percentage of SP's spending capacity for the quarter? And then finally the other part of revenue for ANGI Homeservices, the advertising and other that's made up of these small businesses, is it fair to assume, it looks like it was about $8 million last year, is it fair to assume it's about that same size, if you can give any context on that? Thank you.

Yeah. I'll get to the third one just to kick it. Joseph M. Levin - IAC/InterActiveCorp.: Yeah.

Embedded in – if you look at the pro forma line, and it's a great question, because people got confused on this. Look at the pro forma line in our operating metrics, I mean advertising other includes the Angie's List historical business, as well as mHelpDesk, Felix and our Canadian business. And the mHelpDesk quarter-over-quarter you saw down about $8.5 million embedded in that negative $8.5 million is a $2 million gain in our other businesses. But said another way, those non-ANGI's business is about $10 million – comprised about $10 million of quarterly revenue or so. By playing with that, you can see obviously the trend line a little better in the Angie's List business. Kerry Rice - Needham & Co. LLC: And then on the ad...

Give me a second. The strategy – sorry, go ahead. Joseph M. Levin - IAC/InterActiveCorp.: Yeah. The question is on marketing (59:10).

Yeah on the marketing strategy, so couple of things. One, I think shortly after we closed we actually had some new spots that we had created. The goal of those spots was to see if we could give similar performance in terms of response that we were seeing on HomeAdvisor. Those spots have been out there. We've been testing them. One of the things that we are working through is, how do we drive greater monetization on the ends of those platforms, so that all of our marketing can be more effective. We've made some good strides. We're continuing to work through that. We put the matching engine onto their – into their ecosystem. We're tweaking that matching engine to get the sort of monetization up to our HomeAdvisor. And I think once we get to that point, we'll be able to lean much more heavily into Angie's List offline marketing and traditional TV marketing. But we are running additional spots. We are trying to get some baseline to understand how to improve performance in terms of response, and you'll see us leaning more into the business, as we improve its underlying economics.

Yeah. And just on a macro level obviously around marketing, given the strength of our SRs and given the strength of our historical marketing, in 2018 marketing will be – won't grow as much as it has in the past, and that's one of the reasons why you're seeing such terrific incremental margin pick up in 2018. And then no, we didn't cover the unused cap. I think last quarter we said it was 60%, which was 7% growth year-over-year from obviously 53%. We are inching that up, we're about 61% now... Joseph M. Levin - IAC/InterActiveCorp.: Used, not unused.

Oh, I'm sorry, used gap. So we're shrinking the unused gap. Thanks for the clarification, Joey. Kerry Rice - Needham & Co. LLC: Thank you very much. Joseph M. Levin - IAC/InterActiveCorp.: All right. Thanks everybody for your time this quarter, and we'll speak to you next quarter.

And that does conclude today's conference, we thank you for your participation.