IAC InterActive Corp. (IAC) Q2 2020 Earnings Report, Transcript and Summary

[Call Starts Abruptly] …services 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 second quarter results and its investment in MGM. 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 IAC’s website. I will turn the call over to Joey shortly to make a few brief introductory remarks and then we will 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 as well as the prospects for IAC’s investments in MGM. 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 that are actual results to differ materially from the views expressed here today. Some of these risks have been set forth in IAC's ANGI Homeservices’ and MGM's second quarter press releases and our respective 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 or simplicity during the call. I’ll also refer you to our press releases, the IAC’s shareholder letter and again, to the Investors Relations section of our websites for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. Joey, let’s jump right into it.

Thanks, Glenn. The big news this quarter, on top of I think being, very strong quarter for IAC generally is the MGM investment. And we've gotten, as you’d imagine a lot of questions and curiosity around that. And the big thing I think I want to hit on is while the form of this investment is a little different than what we've done historically, in a sense it’s a public security, it’s a minority investment. The concept is totally consistent with what we do and what we've always done, which is to be opportunistic and seize the opportunities when we see them. That means, -- and opportunities of a theme. We look for very large market. We have that in gaming, for sure $450 billion globally, maybe a third of that in the U.S. and still less than 10% penetrated online, at which we could say we did an excellent offline to online transition and natural tailwinds. That 10% penetration is definitely getting bigger, it's definitely getting meaningfully bigger, maybe we'll pick the wrong horse or maybe the execution won’t be there, but there is no question that the 10% gets bigger over time, and you benefit from those natural tailwinds. The other thing is scale dynamics here. It's not a typical marketplace business, but this business, the customer experience improves in this business, actually both our offline business and our online business, as more customers are there in groups or every individual customer. And lastly, which is something that's always been important to us, and certainly important to us here is create value. This is a time where there is a -- and we think a temporary dislocation. We do believe -- we don't have any idea when the world comes back to normal, but we do believe the world eventually comes back to normal. And we do believe that, when it comes back to normal this business is incredibly well-positioned to benefit from that. But there is a value opportunity right now. Just the key question is whether they have enough capital to get from here to there, and we're highly confident that they do have the capital to get there. So, when we look at all that, that combination of offline to online, their real competitive advantages and value, and we say this is an opportunity for IAC and this is very consistent with opportunities for IAC that we've taken advantage of in our past. And we drew some analogies in letter, I know, I won't repeat here. The second thing I want to cover is this monthly metrics experiment we've got here, which is we're publishing the figures monthly. And you saw we now have numbers out through July. And I think that's important to understanding the business, understanding the flow and the rhythm of the business and giving you all the information that we have, and no longer need to rely on proxies for that information or some people being able to buy certain data sources or things like that with information. We can just publish it so everybody can see. The only thing I'd caution everybody is, again, we said this in the letter and we said this since we started is, we don't manage the business for a month, nor a quarter or a year, but certainly not for a month. And months can be volatile. There's all kinds of things that could be in prior year period or current period, and I wouldn't -- obviously people will trade whatever they want to trade on, and focus on whatever they want to focus on, it's not up to us. But I'd say the monthly numbers to move around, we'll do our best to explain them. But I wouldn't be -- we're not overly concerned about any particular month. And so, I'd just encourage you to understand that that's the way that we think about it, and we can explain what's going on as well as we know when we know it. So with that, I will turn it to questions. Mark Schneider has also joined us, you can't see him on the camera here. But Mark Schneider our Head of Investor Relations is more than six feet away from us over there, working the keyboard.

Thanks, Joey. We're going to start with our first question from Ross Sandler at Barclays.

Hey, guys, thanks for doing the call this way. I really appreciate it. So maybe we can start with MGM. Knowing you guys, you've probably looked at the digital gaming space for a number of years, and there's been a bunch of interesting transactions. So the question is what drew you specifically to MGM? Was it the licenses the loyalty program that they have? And given their partnership with GVC, what does IAC bring to the table that they maybe don't already have? And then Glenn, lastly, what's the cost basis on the investment? Thank you.

Yes. Ross, it's a little bit of all of that and more. And I'll probably do that in reverse order. But in -- the question, what do we bring to the table that they don't already have? The answer is, we don't know. When we entered travel, we didn't bring anything to the table in travel. When we entered home services, we didn't bring anything to the table in home services. When we entered dating, we didn't bring anything to the table in dating. What we looked at is, who is -- what do we think the future looks like. And I talked about that in the opener a little bit, this 10% penetration going to be the case 10 years from now. And our answer with high confidence is no, it will be meaningfully higher than that. And when we get into it, we'll learn more and we'll figure out where we can help. There are some general dynamics, I think that we're very familiar with, that we hope to share with MGM and try and be helpful in terms of things we've seen on conversion channels. We think that have been valuable to us. Things we've learned in direct marketing. Things we've learned in performance marketing. What kind of metrics, we view as successful metrics in certain channels, and what kind of metrics we view as unsuccessful metrics in certain channels, and those general learnings have been helpful to us, as we've entered new categories. But we'll learn. And so one of the things that that's great about MGM in what they're doing in digital is they have this partnership with GVC, and GVC seems to be quite capable there, top three player in I think 20 countries or more than 20 countries now. And they have scaled these businesses, they build the technology. They expanded the marketing and so they know what they're doing. And when you pair that expertise with the assets that MGM has, which we think are incredibly valuable in this area, we think that that's a winning combination. And so we look at this theme and say, how do we enter this category with a winning combination. Very little known fact that we actually did enter this category years ago, we had the timing right the execution wrong. We had after DraftKings and FanDuel, we had a also ran third player in the market called DraftStreet, which we built from scratch invested in and went nowhere. I think we sold it I can't even remember that. Sold isn't probably a generous term, I think we gave it to one of DraftKings or FanDuel and that was in our best execution we've ever done. But we followed the category for a while, and we look for the opportunity. Well, MGM has uniquely and again also with the joint venture is we view that the offline and the online are a complement to each other. A lot of times in a category you think the offline incumbent is going to move too slowly, it doesn't have the technical bones to do it, and has some expense infrastructure that is a drag rather than a benefit to the online. And you can think about that in areas like retail, where there's a big retail footprint that's expensive, or you can come up with a lot of analogies there. In gaming, our view is that the entertainment experience, the in-person experience in a hopefully a post-COVID world, but that experience is not replaceable online. And that experience is a tremendous complement to the online experience. Think about just one little benefit of that right now -- a little bit of -- probably a big benefit that MGM has in this category, they're doing millions of room nights, they're interacting with those customers on check in. That gives them an opportunity at a margin positive way to create a digital footprint on the device of their customers, and a digital interaction point on the devices of their customers. When you think about the billions of dollars that we spend on marketing across all of our brands to make that digital footprint, and then generate a revenue event or generate a positive customer experience in there, that's very, very expensive channel for us. MGM has that with all their customers, when they're checking into a room at a margin positive time before they've even started with a digital experience. And we think that that is a real significant overlap and a real asset, and we think that there's lots of assets along those lines. When you think about the pure digital players having to deliver a compelling, exciting, fun, physical experience as against the physical players having to deliver digital experience, I really like MGM's position on that and what they can deliver for the consumer. So that is pretty unique in the market, they're the only one. I think we've been very aggressive in that combined area. And they're playing to win. And that's why we like them. And that's why we're backing them. And that's why we're excited about it. And hopefully, we can add value over time in the ways that we've been able to add value with lots of these businesses over time. But at the start, it's a great team with a great vision and great assets to go after a category that's very large with tailwinds.

And then just some of the housekeeping items. We own 59 million shares. We paid $1.018 billion for that. So our basis is about $17.25 or so. And we're left after that investment with $2.9 billion of cash. So don't forget to put that 59 million in your stuff -- 59 million shares in your some of the parks. And then also from a housekeeping perspective, you saw in our balance sheet that was in marketable securities. In this quarter going forward, it'll be in long-term investments given our posture. And it'll be on a quarterly basis mark to market. So you'll see the ebb and flow of that investment going through the other income foreign expense line in the income statement.

Which basically means, net income will be useless from here on out. I'm not going to let everyone really focus on that particular metric. But I do view that as a relatively useless data point.

There will be volatility for sure.

Our next question will go to Cory Carpenter at JPMorgan.

Great. Thanks for the question. On ANGI, Brandon I was hoping you could give us some more color on what drove the demand and supply chains we saw in July? Maybe how those tracked versus expectations? And then also how to inform your thinking into the back-half of the year? Thanks.

Thanks, Cory. So obviously we've finished Q2 strong with May and June in particular being strong. In July, we saw a continuation of those same trends. In particular, if you just look at overall revenue, globally revenue in July was about flat to June and is actually up in North America. That's relatively in line with how we expect the business to perform on a sequential basis and was in fact, perhaps incrementally better than our internal views. From an operating metrics standpoint, SR volume and consumer demand continues to be elevated in July, relative to the post-COVID trends. And on the SP sales front, we continue to see a blistering pace of new sales originations. The last four months including July have been the highest four months in the history of the company. And then particularly in July, we were up 53% in SP sales year-over-year. So, July was in fact a strong month, really a continuation of the trends we saw in the late part of Q2. We look at the year-over-year sort of headline number, as Joey alluded to earlier, there's a number of things that can affect that. Last year was a particularly volatile year with weather if you guys recall, the first-half of the year saw a really damp and wet spring. So July was a bit of an outlier in terms of strong growth. And it makes for a difficult comp. Where we sit today, I think the consumer demand trends, as we've seen them, they are both strong and likely to sustain at this level for the foreseeable future. What the key for us and what's the most difficult is that we have seen the provider side of the equation. There's some pressure as an industry. And what I mean by that, we run a monthly sort of weekly sentiment survey. And right now more than two-thirds of SPs say their business is being negatively impacted by COVID, about 40% have indicated they're operating at a lower level of capacity. We track this every single week. And we did see -- we are seeing and did see the incremental improvement throughout June and July. It's a little slower than I think we would have hoped. I personally hoped coming out of the lockdown's that we would see a very fast resumption of a former sort of capacity levels. But we're seeing that as more of a week to week few points a week type of recovery. And the reason for that, as reported by SPs, is they're dealing with supply chain issues in certain categories. They've had some challenges hiring. So there's been bad year, I think it's good on the provider side is that, I don't believe you have to see an end of COVID-19 to see these businesses come back to full capacity. On the other hand, I think it's going to be an incremental process that takes place over the second-half of the year.

Just a couple numbers, Cory, to support what Brandon said. Our SRs in July had 24% growth, was actually the third highest monthly growth rate in SR since 2018. So, I think that's nice and an elevated. Second of all, Brandon talked about the volatility. As you know, last year we grew revenue 20%. The dispersion of the monthly growth rates went from 15% to 26% throughout the year. So as Brandon said, it depends on the year-over-year comps. Mondays, for example are big day for us. And last July, we had five Mondays in the calendar. This July, we have four Monday’s in the calendar. And the 26% growth rate actually was July of last year. And the difference between the 15% and the 20% was over a three month period. You asked about the back-half of the year, and we expect it to accelerate clearly off of the July levels. And we're optimistic the third quarter will slightly accelerate off of the 9% that we clocked in the second quarter. And then the fourth quarter, we expect to continue to accelerate. Why? Because, as Brandon said, we think our COVID induced supply constraint, where the SPs are to some extent impaired. We expect that to lift during the year and as it does, our ability to monetize each transaction and continue to add value to our SPs, we think that will increase during the year, especially given the strong sales performance of which Brandon spoke.

Thanks. Our next question will be from Eric Sheridan at UBS.

Morning, everyone. Brandon, maybe I'll follow-up on Cory's question and pull the frame out a little bit. When you see the environment you're sitting in right now, how do you think about aligning your strategic priorities, about what's in your control versus what's out of your control on both the demand and supply side? When you sort of try to align those investments against your medium to long-term goals, where you try to take the business? Thanks.

That's a great question. Our goals and sort of pipeline of initiatives haven't changed from the beginning of the year. Obviously, COVID has presented some additional supply challenges, but our two primary goals remain. First, creating a sticky relationship with homeowners and more durable relationship. And then second, obviously, we need to bring more provider capacity to the marketplace. When I think about the key investments we're making, first of all, we have plans to rapidly grow our sales force in the second-half of the year. We were intending to do that in Q2. But as we moved our workforce remotes, we had to learn all over again. How do you actually hire and onboard sales people in remote fashion? So we've been working through that the last few months and are deeply scaling that at this point. We continue to scale fixed price that is a huge lever to bring more capacity to the marketplace. This is another situation where, -- later days of March, we pulled back perhaps on our pace of scaling providers, when if we'd had perfect foresight, we would have actually ramped our investment. We've corrected that as of late Q2, and are working feverishly to bring on as many providers as possible. We also have a number of new monetization models that we've already got live and are testing. It's hard to say exactly which of those are going to work. But I think the theme here is that we're going to bring a number of different tools and methods to the marketplace to get SPs engaged, as we have, as we all know, an enormous amount of consumer demand that that's currently going on monetized. On the consumer side and provider side, we've introduced a new payments platform, HomeAdvisor pay over the last quarter that has grown really, really rapidly and we intend to continue to see that scale over the remainder of the year. We'll soon layer on top of that a financing option for consumers that, frankly, we're very excited about. We don't really believe that consumers have had at your fingertips financing option when it comes to home projects and home services ever available to them. So, we think this is the first of its kind offering. And we continued to focus very heavily on driving engagement with our mobile app. We have set several records over the last few months in terms of mobile, interactive mobile app users, crossing the million user mark, I think for two or three months now. And over the last three months, we've grown that audience by 85% year-over-year. If you put all those things together, and you can kind of see the story, which is we're trying to drive deeper engagement, more long lasting relationships with consumers and we're trying to offer features and benefits that drive up the value proposition. We're seeing that resonate with the things we've already launched. We've got a lot in the pipeline to go forward. In terms of what we can't really control, we can't really control supply chain issues in the industry. We need those to be able to create somewhat in order to unlock additional capacity. We know these businesses are out there working actively to try to recover from the things that are sort of hindering them related to COVID. But we feel like they're solvable. We're seeing them be incrementally solved. And while that's outside of our control, I think we feel optimistic that that recovery will continue over the back-half of the year.

Eric, another great data point this quarter that we think bodes really well for the future, is our SRs from new consumers to the platform, grew 25% this quarter, and actually accelerated through the quarter. That needs to be about flat. And that shows us that either we're taking share from other solutions in the marketplace, or we're driving offline to online conversion, given all the great product work that's going on with Brandon and his team. And that is really interesting, because that creates tomorrow's repeat use, and that creates tomorrow's customer as well. So, we think we have an opportunity here to steal a march on our competitor be it, somewhat competitors be it someone else or offline.

Yes, I'll just add to that. We do a similar survey every week at scale with SPs, and surprisingly, about 50% of them are telling us they're seeing lower consumer demand. And that obviously does not match up with what we're seeing in terms of our marketplace and the overall level of consumer demand. So, we believe that we were really sitting at the nexus of two different trends. One is obviously people are focusing more on their home. But as they look for solutions and services, they're I think, disproportionately coming online and looking for digital needs to accomplish that. So, those are obviously both very positive in terms of providing a structural tailwind for us.

Our next question will come from Brad Erickson at Needham.

Thanks. Just a couple follow-ups for Brandon. We've kind of talked about this a little bit, but wanted to go a little deeper on the SP constraints. I guess, something like 50% of SRs went unmonetized this quarter. Is there any concern that at that level of zero accepts persists that you're maybe losing some of those customers may be forever? And then second, just related to Google. Are you going after? When you think about HomeAdvisor, is HomeAdvisor going after the same types of SPs that Google is? Or do you think there's maybe been sort of a separation in the types of SPs and draw value from a platform like HomeAdvisor versus Google? Just any thoughts there would be great?

Yes, those are both great questions. So, first of all, whether or not we monetize a request, doesn't indicate whether or not we've satisfied a customer. And even if we're not able to monetize, we still have a deep reservoir -- the deepest reservoir of providers to draw up on and to connect consumers with. So, the fact that we are seeing such significant growth in consumer demand and such an elevated level of service request today is sort of filling our database and filling our CRM pipeline and our email pipeline, and will drive further growth for the remainder of the year and into next year. If we weren't able to satisfy those customers, that might be a different story, but monetization really is not an indication of whether or not we make those customers happy. And in fact, with the offering of fixed price we now offer -- they give the percentage off the top of my head, but of the 200 to 500 projects, we're always offering a solution, even if folks decide not to engage or pull the trigger, or if they still had a good experience and were still offered a viable outcome. I would think of that a little bit like if you go to Google and search, you don't necessarily need to see an ad at the top, or Google doesn’t need to monetize for you to had a successful outcome and finding what you're looking for. And we treat it a little bit the same way, which is we're going to try to make that consumer happy and fulfilled, even if we aren't able to monetize. So, the fact that we have this huge influx of demand is going to pay off for quite a while for us. I think when it comes to Google, it's a very different products. If you think about the way Google's product generally works, they are reacting to something like a search for plumbers in Denver. It's a level higher than us, it's less targeted. And they don't really offer the same types of capabilities around targeting zip codes or targeting individual project types, because that's not the way people search in Google. I generally think that the types of service providers that are attracted to what was offered to those folks that really want to get an inbound phone call more than anything else, and that want to compete in an environment where there's less price competition. I do think there's some segmentation that's happening naturally, but I don't have the data to back that up. And we haven't really seen, as evidenced by our sales productivity and four record sales months, we haven't really seen that competition put pressure on us. It's not to say that we won't ever in the future, but I do think the products are sufficiently different that either the market is so big that we just don't bump into each other, or somehow we're tapping into different SP segments and not really overlapping as much as one might think.

Okay. Our next question will be from John Blackledge at Cowen.

Great. Thanks. On Vimeo, the mid-teen ARPU growth was a great outcome, particularly with the enterprise ARPU as a key driver plus 20% year-over-year. Could you guys discuss the enterprise adoption during COVID-19 and enterprise demand signals thus far in the third quarter? And then should we expect the enterprise ARPU growth levels to be sustained in 3Q, and as we head towards the end of the year? And Glenn, if you could just talk about the gross margins at Vimeo, what you saw in the quarter that would be great, too? Thank you.

Enterprise is doing very, very well right now. And the product works and certainly the timing works. When we think about just using IAC as a microcosm, and this is where is harsh on our own businesses as we are an external business. But going into COVID, I was saying to the Vimeo team, if anybody at IAC tried to expense $10,000 for town hall software, I'd say we've got a big problem with that individual paying $10,000 for a town hall software. And now, if somebody says we don't have the best town hall software, I'd say, well, we got a big problem with that individual, if they weren't able to find us the best town hall software independent of price. And I don't think that changes. Right now, we're accustomed to this. We've got this format and this call where we're all using video, we're not using Vimeo for this but where we're using video this is just a better way of doing it. We're going to do that going forward. Town halls, we never have had everybody in the same room. You could do it in one location, but you can't have all locations. And we're going to continue to do that forever. And we're going to want to use the best software to do that the system that is flawless, the system that has all the features that you want. And I think that is true of most enterprises now. So what we're seeing is we're going into these enterprises, where we already have somebody or a group of people using it, and they're using it in just charging it on a credit card or using it in disparate ways. And we're going to enterprise and saying we can now be your video solution where everybody can access it, everybody can access it from one place. It's at one reasonable price. But that is generally higher than sometimes meaningfully higher than it's been for one person using it in one spot, and giving the enterprise access to multi licenses in place is a very natural thing for us to do, a very natural place for us to go. And it's working. And again, I do believe that’s sticky. Once you've gone to software for video to solve these problems, you do want that. The physical isn't going to replace that completely or replace some small instances of it. But you're going to want this as a supplement forever. And that's what enterprise is benefiting from. We can see it in the length of the sales cycle, which I think in like late March, early April was literally cut in half, that’s come out a little bit, but it's still meaningfully better than it was going into COVID, which going into COVID it was actually a relative, it was a 30 day sales cycle now or maybe at a 20 day sales cycle at the peak was probably 15. And the amount of spend is there, the ARPU is hanging in there. And we continue to add features. So, I view that as something that I think is reliable for quite some time from here. I think that answered the bulk of the -- oh, [Indiscernible] on gross margin.

Yes. On the numbers, enterprise is clearly our fastest growing line of business. This quarter it actually grew greater than 70%. And then bookings were triple digits. So we have a nice runway there. And as you articulated, one of the reasons why it's growing at that clip is because of ARPU. And I think we had a case study on Joey’s recent presentation. It might have been at your conference where we talked about a retailer that used to be spending $660 with Vimeo on the self-serve, because 40% of our enterprise customers have graduated from self-serve. So this retailer used to spend $660 with us. We converted them to an enterprise customer, as Joey talked about that, that more people in that organization said, wow, this is a great solution. And now we're getting $660,000 from that enterprise customer. And that has lifted ARPU. That will lift ARPU. In terms of gross margins, we laid out, I think about two years ago, the target of 70% and we're closing in on that. And we're making such progress there that we think 70% may ultimately prove to be conservative.

Great. Thank you.

Our next question will come from Youssef Squali at SunTrust.

Okay, great. Thank you so much. Joey, couple of questions, maybe on MGM again. How do you affect change by being the minority investor in a public company like MGM? You guys have been known best as basically taken over entire companies, extracting more value, using your tried and true playbook. Just try to understand how you guys do that as a minority shareholder? And then will you, as a minority shareholder, actually need be licensed by gaming authorities or you don't need to? I know there is a certain threshold. I don't know what that threshold is. Maybe you can help us with that. One of the things we've heard is that it was just very expensive and burdensome process to go through, that has traditionally stopped other companies from getting into this space. So any clarity there would be great?

Sure. The second one, yes, we're going to -- it varies by state, but there's some rules at a 5% ownership threshold and some other rules at a 10% ownership threshold. But in each state, basically, we're going to have to go through a regulatory process, which is, as we understand it, quite burdensome. And we are prepared for that and that will go through in its course. Other than the hassle of it, we're not particularly worried about that. But that is a process that we're going to have to go through. On your first question, as it relates to minority investment and affecting change. Again, our goal here is not to "affect change." Our goal here is to be helpful. And I think that we can be helpful in a number of ways as a minority investor. MGM, did say that they intend to advise the board, which we think is fantastic. And we think we can be very helpful in that way. And separately, we can help through access to our people, our businesses, our learnings. Remember one of the things I always say with our internal businesses, whether we own 100% or less than 100% is the biggest synergy between our businesses the biggest synergy that exists in IAC is we never forced the businesses to work with each other. We do force the businesses and it doesn't need to be forced because everyone wants to do it is to share data, share information, share learnings. People like sharing what they know, and they like learning from others, especially in areas where people have been successful in showing off things that they've done well. And we had a call with the CEOs of IAC businesses yesterday, and I said we should treat MGM in this area in the same way in the sense of it's a totally open book, share anything you want to the extent there's anybody who wants to learn something of anything that we're doing, which they may not, but to the extent they do, we're a totally open book. We've got $1 billion into this investment. That's more cash capital than actually we've invested in any of the other IAC businesses that are currently in the portfolio. And using that information, we should use that information liberally for anyone at MGMs benefit wherever we can. So, that's something that we certainly can and will do and hopefully that's helpful. And as we get more involved, as we learn more, we'll try and find other ways to add value and help the business reach what we think is enormous potential, again, not dissimilar from other areas where we've tried to help businesses involved with IAC reach enormous potential.

Thank you.

Great. Our next question will come from Jason Helfstein of Oppenheimer.

Thanks. Two questions. One, if you could talk a bit about the Vimeo product pipeline for the second-half, any color on kind of what the team is working on? And then second, maybe just broadly on acquisition direction, Joey. So you did shout out [ph] minority investment, you just did MGM minority into a public. Should investors expect you to get back to kind of -- again, historically what you've done which is more like a share.com finding something that you can control that time works in your favor to kind of fix broke in or businesses that have more opportunity? Thanks.

Yes. Again, I'll do it in a reverse order. Short answer to your second question is yes, you should expect us to focus on buying businesses, buying entire businesses and shaping those businesses. That's where we would expect to put the bulk of our capital and potentially share repurchases and all the other places where we have historically put cap. I think that is more likely than minority investments from here. Again, anything's possible. We always say anything's possible. We always say we'll be opportunistic and look for things. But I do think that it's more likely more of our capital goes into those things which you've seen more historically. In product at Vimeo, there is a very robust pipeline. One of the things that we're focused on right now is how to verticalize the product a bit in certain categories. So, to go deeper in faith, to go deeper in fitness, to go deeper in education, whatever it might be the areas where we're going to prioritize, make sure that the tools that we're building really work for verticals. We're not building any bespoke tools for any individual customer. But we are starting to think about what are tools we could build that make -- really help in the relevance for a vertical. We want to do that because we think that's really good for our customers. We want to do that because we don't want to open up the competitive opportunity for someone else to come in and start picking up verticals. So, we're doing a bunch in that area. There's also with the world now in remote, a lot of the tools are -- there's new tools that are relevant. So, for example, one thing we're using right now is screen recording and things like that, where you can access more of the enterprise or find new entry points into the enterprise. We've got products along those lines that we're working on. And one of the other things we're talking about right now, this is more generic, but because we are generating more, I'll say cash flow at Vimeo we can be investing more every quarter. And so, we're very focused right now on Vimeo in how can we put more in, where can we put more. Every month now, every quarter, there's more dollars to invest there even before choosing to go negative, there's more dollars we can be investing there. And so we're trying to grow the product pipeline right now and grow the product resources, to release more products and invest some of this incremental benefits that we're seeing at the business.

Okay. Thanks.

Great. Our next question will go to Benjamin Black at Evercore.

Great. Thanks for the question. Could you guys talk a little bit about the marketing environment at ANGI? Does it remain as favorable as you mentioned just last month? And if some of the supply tightness remains intact, how willing are you to lean into marketing investments in the back-half of the year? And then on fixed price, you mentioned it's available on 200 tasks or so. I'd be curious to hear how high that could go? And do you think -- what do you think about fixed price revenue contribution at ANGI over the next call it 12 to 18 months? Thank you.

Great question. So the marketing environment, I think just broadly remains really favorable. And that's a combination of I think, just generally lower rates across those channels, combined with organically higher levels of consumer intent and consumer demand. And so, we look at things like the TV environment, I think rates are favorable 20% or 30% relative to where we thought they would be. And you see these similar -- you see similar levels of favorability and other channels as well. We definitely pulled back in Q2. It was particularly early in Q2, it was obviously a highly uncertain environment. But by June, we had begun to lean in and ramp up, particularly on TV. But I would say, the answer to this question is for most channels, we manage them clearly on an ROI basis. And so we will spend as much as the channel will return on profitable basis. With a channel like TV, it's a longer payback period and there are secondary and tertiary benefits that are long lasting. We've started to lean in, in June. I think we'll continue to spend there for the remainder of the year, particularly if rates remain in the ballpark where they are now. So that will be a difference on a go forward basis relative to the expense line in second quarter. For fixed price, we're on 200 tasks that makes up about 30% of the requests we get, meaning 30% of the customers that come in and submit a request are exposed to a fixed price offering. What we've been doing over the course of this year is launching into some much higher price categories. And we did that in Q1 originally. And our first proof point was to figure out if consumers homeowners would actually buy a project online that cost $5000. And we were able to really figure out quickly that there was a desire for that amongst consumers. There was a willingness to pull out a credit card and purchase the project at that level. And that's all we really needed to know to know that there is a market there and these higher priced projects. Obviously, I think I've said this before, the first section of projects we went after have a global TAM in the U.S. about $50 billion. But the next step, we're tackling have a TAM of about $200 billion. These are things like installing a wood privacy fence, installing a deck so on and so forth. And the nature of these projects are such that we have to go project by project and figure out how to accurately price, pricing upfront manner these more complex projects. We're working through that now. We're seeing growth that I think is certainly at or above our expectations. And in terms of how far it goes, the truth of the matter is we have to do each project and see how it works, because they're also very different. The contribution over the next 12 to 18 months, in our internal plans, we expect this to grow rapidly and be a meaningful contributor to our growth rate over not just the next 18 months but over the next five years. In terms of how high it'll get in the next 18 months, I don't think we've been specific on that. And I'll leave that open for the moment.

And look, in terms of our investments in marketing of which Brandon spoke as well as fixed price, that's why we stand by our EBITDA posture for the year. And that is we do not expect margins to go up this year. We're going to continue to invest to take share throughout the market place. And then just to frame up the opportunity that we see in fixed price, and the opportunity when our supply constraints gets lifted, you saw we did 9.4 million service requests this quarter, and on a latest 12 months basis about 29 million. You saw our zero access were 50%, justified monetized transactions by service requests, okay. If we only get from that 50% to 40%, our historical average, and our goal is a lot lower than 40%, that’s 940,000 SRs. You saw we monetized SRs at $30 a click. That's nearly $30 million of quarterly revenue, vast preponderance if not all of it falls to the bottom line. So that’s our opportunity going forward. That's why we’re so focused on product. That's why we’re so focused on marketing. And that's why we're so focused on penetrating the category, because that’s our opportunity and that's just one quarter.

Our next question will be from Michael Ng at Goldman Sachs.

Hey, good morning. Thank you very much for the question. I just had a couple on MGM. First, can you discuss your views on the incrementality of online betting? And if it ends up being somewhat cannibalistic is that a net positive for MGM? And then second, Joey to your earlier point it's clear that online gaming penetration should continue to increase over time. Do you think MGM is well-positioned to capture more than its share of online gaming relative to its traditional gaining base? Thanks.

Yes, I do think a significant portion of that actually is incremental, but it's who knows and I think, there is always potential for cannibalization, but I do think it's meaningfully, potentially incremental. And their ability to take share is, again I said earlier, I think the combination of offline and online in this category, in that whole experience where somebody who's playing and customer of the company in a digital capacity has the ability to enter a physical place and get some benefit of their digital play, I think is a real advantage. And we expect that to accrue to MGM's benefit in share. When you think about the category, it's all the same sports. It’s generally roughly the same lines, odds, payouts things like that. So how do you differentiate? You got to differentiate with a customer experience. And we think that MGM has a lots of tools and its tool kit to differentiate meaningfully in a customer experience. And that's the thing that excites us there. So we would hope that they can take real share here.

And next one is a follow-up.

Sure.

Could you just talk about your long-term plans with the MGM stake, any success three to five years from now? Do you expect that stake to increase over time? Is there an opportunity to do something with the online betting joint venture? I would just love to hear your thoughts around that. Thank you very much.

Sure, it's an important question. And I don't have a great answer for it, in a sense of we haven't thought that far ahead. We’ve said that we are -- once we’re in this, we’re in it for the long-term, and in it for the long-term could mean anything. Before COVID, MGM was very much focused on repurchasing shares with the excess capital that they have generated in the asset type strategy. So, if there’s a time where MGM has the ability to repurchase shares then we would hope the ownership would accrete over time. And who knows lots of other things could intervene in there, that that could accelerate or decelerate that, or really anything can happen. So, we’re totally open to the range of options here. The only thing I'll say is we're certainly not flipping it. We're certainly not in this to try and flip for a quick buck.

Great. Thank you very much.

Our next question will be from Brian Fitzgerald at Wells Fargo.

Thanks guys. A quick one on ANGI and then one on Dotdash. Any update on consumer intent or comfort levels that you're seeing with indoor jobs versus outdoor jobs, discretionary versus non-discretionary? What's in the trend there over the last couple months? And then on Dotdash, we saw a number of advertisers pause advertising coming through Q2, as they made adjustments to and made sure they weren't clashing with messaging with current events. Can you talk to the trends there? What you're seeing in terms of resurgence in brand, maybe substituting out of performance? Thanks, guys.

Thanks, Brian. Yes, thanks this will be brief. We've seen a strong recovery in really every category of work, but it's definitely disproportionately over indexing in our report and then required work. Some of the big projects like bathroom remodels and kitchen remodels and large indoor discretionary projects have returned to, I'll call it flat to up modestly year-over-year from a consumer demand standpoint, which I think is great, given the context and given the fact that, there's close personal contact related to those projects. But it's lagging where we would have otherwise thought it would be in our general 20% sort of growth goal. So, we're happy with the recovery, but it's not quite where we think it would be otherwise. And there does continue to be some impact there that will resolve is the fear around COVID results.

On Dotdash, the thing -- I can't speak to the broader ad quite candidly, we see some data in there. But Dotdash has certainly defied my expectations and odds generally in the category in that they have -- they continue to generate advertising dollars, continue to see real interest from advertisers. Obviously travel, there's no travel advertising right now. And so that category is basically short-term gone. But other categories have more than made up for it. So, this business is growing ad dollars, it's seeing interest among advertisers. One of the issues that we don't need to confront is we are not in Dotdash we're not in the news business. So, we're not in controversial stories. We have this intent based media, which is people trying to get specific things done. So, people are advertising around those specific things, people are trying to get done. And there's always providers, advertisers who want to reach the consumer when they're trying to get that specific thing done, whether it's pharma around health, or whether it's CPG around cooking, things like that there, there seems to be advertisers there and engaging. And I keep waiting for -- don't tell him as Neil Vogel to say that, we're not growing and we're struggling with the ad dollars and it's going to be rough. And he keeps saying the opposite of that, which is I think pretty amazing a testament to what they built and how well they're executing.

Thanks, Joey. Thanks, Brandon.

Our next question will come from Ygal Arounian at Wedbush.

Hey. Thanks, guys. I have two questions. One on MGM and M&A and the one on ANGI. So historically after you enter a space, you noted travel, HomeServices dating, kind of continue to continue to consolidate there, have continued to be active in the space. With taking a minority stake here in MGM is that roadmap still applicable to you guys? Can you continue to be active? Does the partnership allow you to take full stakes in other areas and kind of skirt around the regulatory environment or you kind of hedged MGM in the past that they go on. And then on ANGI, just wanted to ask about the partnership with Lowe's. We'd love to hear a little bit more about that, expectations on how that didn't drive. Both SP and SR growth in the near-term and long-term? Thanks.

Yes, look I think anything is possible at MGM and more in the space. Our goal would certainly be to help MGM or participate as MGM is as aggressive as we would be when we believe in a space. And they seem to be very keen on being aggressive and winning. And so, we used all the tools that are available in being aggressive and winning. And I think that that is a great vehicle to do it, but we have flexibility and options and we will always maintain flexibility and options. I think that answers the MGM question. The other one was ANGI?

Yes. So the new partnership with Lowe's is something we're very excited about. It's new and it's multifaceted and I'll talk a bit about it. I think first just understanding it conceptually. If you look at MGM Services, we've had 29 million requests for service submitted by homeowners over the last 12 months, which is obviously enormous scale. If you think about that services led approach that we have combined with Lowe's as one of the premier retail offers of building supplies materials, and products for the home it's natural that there's opportunities to combine those two together and create value. First, we offer fixed price services, I think in their retail environment. So that's one opportunity for us to drive consumers through our experience via handy. And then secondly, with the partnership we explicitly announced, Lowe's is able to offer a membership to MGM Services and home advisor to their pros as a benefit of being a customer at Lowe's. So, the intent there is to create some loyalty amongst service providers to Lowe's and obviously be the destination they go to get building materials and props. And that then ultimately drives those providers to ANGI HomeServices and HomeAdvisor to join at a discounted rate. And so this is a situation where the provider wins. Lowe's is able to build a more loyal relationship with those providers. And then we hopefully will be able to expand our network as well. I think we're in the early stages of this. Obviously, we just announced that. I personally feel like the opportunity, the synergy opportunities are pretty extensive. Hopefully, this works out well and leads to bigger, better things over time.

And we have got room for one.

Yes, we'll take our last question from Dan Salmon at BMO.

Great. Thanks everyone. Joey and Glenn, we know you'll keep plans for cash use. Would it be fair to say that another big acquisition is a lower probability now? Or is another billion or multibillion acquisition still a likely outcome amongst the different options we are looking at. And then follow-up for Brandon. I can't remember if you mentioned it today, but at the Investor Day, you talked about having separate sales teams for the traditional SPs versus the ones coming in at fixed price. And that you were planning to integrate those more in the back-half of the year. Can you just talk a little bit more about that? I hope I got the details right. And the impact you expect from it? And how that may relate to the comment you made earlier about picking up sales hiring in the back-half too? Thank you.

Dan, you faded a little bit, but I think I got the gist of it, which is do we have a mega acquisition plan or we less likely on a mega multibillion acquisition. I think nothing massive planned right now. I don't know that it's any more or less likely right now, I think always doing something very large as a very high bar here. We prefer smaller things, tuck-in things. I think the things that we're working on very actively right now are quite small and add-ins to our existing businesses. But we will be as likely, which is not highly likely, but we'll be as likely now as we were previously to look at things that are larger. I think, again go to the overall environment, things are not generally particularly cheap right now. There's everything has only gone up for a very long time. That is, what it is there's a whole spec situation going on where there's this avalanche of specs taking companies public, which we actually think is long-term very good for us in the sense that getting a company public via spec is not a very high bar because the people who are -- because the way the incentives work in that system. I'll just say it that way. So there's going to be a lot of companies that can go public that may not have otherwise been able to go public. And we view the public markets generally, we talked about this or written about this. We view the public market is generally much more honest than the private markets, or much more true than the private markets. And so I think if all these companies have all these facts can bring companies that are in or around our area or internet consumer technology companies public, that that will over the medium-term, not immediately, but over the medium-term give us a much better landscape of companies to look at. And we'd be excited about a trend like that. I mean, I think it'll take a little while to play out but we're cheering the spec parade on of more capital being raised and more of these companies coming out and into the light and us and others getting a chance to look at them for good or for bad.

And just briefly on the fixed price question, you did have that right. We’ve run these sales forces separately for fixed price versus our traditional advertising, or leads model. It's likely that we'll always run separate sales forces because they really are very different. And the challenge of going out and selling fixed price, which is frankly not selling at all, it's offering people that pay to do jobs, is very different from selling advertising. So I think those will stay separate. But what you're touching on, which I think is important, is we do plan to bring these offerings together so that once a provider comes into the ecosystem, let's say they're sold on a leads model, leads advertising model, but they can also receive offerings for fixed price services. And our general -- we will bring those things together so that every provider has the opportunity to engage in all these products once in the environment. And I think the key there, the way we think about it is that once you do come into the HomeAdvisor ecosystem, you actually will never leave. You may decide to stop advertising on leads, but you stay because why not see the fixed price opportunities that come across from time to time. And you can choose to engage with those, when you want and not when you don't want. So that's the concept. And I think that is perhaps, last quarter of the year or first part of next year where we'll begin to bring those things together.

Great. Thanks, Brandon. Thank you all for joining us again, and again embracing the new format, which I really like and we're definitely going to stick with going forward. And I hope everyone stays safe and healthy. And we'll talk to you again soon.

Terrific to see you.