All right, ready to go? Finally. Thanks for joining us this evening for fireside chat with Chris Halpin, CFO and COO of IAC. For those of you who don't know Chris, he joined IAC in Jan of 2022. Prior to IAC, he had, you know, very storied career at the NFL, where he led strategy and growth, and he pioneered and helped the expansion into the international markets as well as online sports betting. Prior to the NFL, he was at Providence Equity for over 13 years and did a number of transactions in the U.S. and in Asia, great experience to bring to the table. You know, a graduate of Princeton University and very active in a lot of different charitable organizations, including the Children's Scholarship Fund and Good Sports New York. Chris, thanks for being here. Before we get started, you know, I know you've got the best job in the world right now, but your experience in the NFL must have been something. It was an extraordinary experience. Thank you for having me. I recognize all of you, we're standing between you and the end of the day. We'll try to keep it interesting as we go. It was a phenomenal experience. It was great to be part of something that is so meaningful to so many people. Also big. Then the exposure to media, digital, all of that that came with it was great. Maybe we can save some questions in the end for that. Just to you know, to set the table, you know, we've all read Joey's letter to shareholders. I thought it was humble, authentic, on point. From your perspective, what does back to basics mean? It means a few things. If you think about just the year, a little more than a year that I've been in the seat at IAC, the market and market expectations, market valuation metrics have changed so much. In a good and healthy way, where cash has gone from, you know, essentially earning zero return to 5.5%, 5%, depending on where you put it, so that there's just a fundamentally higher discount rate hurdle expectation. That manifests itself in terms of you look across companies, initiatives that might've made no sense or might've made sense when things were purely valued on a revenue basis don't make sense in that environment. Long-term returns that might be four or five years out don't make sense. Also there's greater focus when cash has greater value on being profitable, all of which this audience knows well. For us, it's about relentless prioritization to focus on the factors that will drive real equity value. It's also on very high-quality management teams and, you know, people who you'd say, "Okay, we'll keep them in that role," that our companies might keep someone in a role who's underperforming. This is the time you want best-in-class performance. You also need to be very clear on your initiatives that they have clear plans to ROI, that they do advance the business and that they're meaningful. It should translate to free cash flow. IAC's always been a free cash flow-oriented company in tech and digital. Just this is a market where that's put even greater premium on. That makes a lot of sense, especially it's during times like this where the strong companies get stronger coming out of the downturn. Why don't we kind of go into each of the companies now if that's okay. You know, Joey's been, you know, in the seat as CEO of Angi for a few months now. How do you see the opportunity? You know, how is Angi positioned in a multi-billion dollar opportunity, and how do you think, you know, the future looks like in terms of capturing that opportunity? Yeah, I mean, the positives and strengths of Angi and its opportunity are very clear and inarguable. Which is, excellent brand, massive consumer traffic of home services demand, the industry-leading footprint of service professionals, and very good matching technology in an highly under-penetrated market. Investors have been through a multi-year journey where all of that potential has not necessarily been manifest, and there've been moments where there was great performance, there's been required shifts in strategy. COVID was a real disruption to the business. We view it now as. It ties to the back to basics, but there are opportunities in front of the company of improving user acquisition, and some of these opportunities were created through, you know, mistakes Joey highlighted in the last letter that we made historically. Looking forward, clear opportunities in customer acquisition, clear opportunities to improve the consumer experience flow through prioritization, and real opportunities to improve profitability and free cash flow through rationalizing services and better cost management. Actually, on that point on rationalizing services, you're moving away from complex services to simpler services while improving the customer experience. Can you give us a few examples of each, and talk to us about the strategy and why, how it's gonna position you, especially from a consumer and a service provider perspective, to reduce friction and increase usage of the platform? Sure. You know, services done right present a fantastic solution for both consumers and pros where, and if you've never done an Angi service, you I'm not just talking my own book, you really should as an experience 'cause it is excellent, where a simple, repeatable service that's at a, you know, lower AOV, say $150-$200, is booked with certainty, of getting done, scheduled around your calendar with a highly rated pro and is completed. We know those experiences are one of the biggest drivers of lifetime value for our users. It drives repeat rate, and also for pros, allows them a high volume source of traffic and jobs that provide very little customer management. That's it at its best. Everything from hanging a TV to small operations around the house, handyman services, lawn care, et cetera. Right. That model, this is, you know, as Joey said, we were testing, we were trying different things, but continued to expand where very large projects were being completed and done on a fixed price basis where, Angi would make the commitment and line up a pro to build a deck, or, do a large project. The reality is, the economics of services are one where if you just go off where we were before gross revenue, you had a gross margin that was 15%-35% of gross revenue, and then you had a series of semi-variable costs that got to a contribution margin that was anywhere in the, you know, mid-single digits to, in some cases, negative. Then you had fixed costs to manage the pros and make sure that the projects were completed. That model just doesn't work. It was one that drove us, in certain cases, in June, as we got in there and analyzed it, to say we need higher take rates which worked in a number of cases, but also rationalize cost structure. The net answer is the big projects don't scale. The model of trying to be the country's general contractor, there's almost no economies of scale at that level, and if anything, you're dealing with inefficiencies. Joey made the clear decision to shut down what we called managed projects, which are large, long-term, fixed price services, and really focus on the high velocity ones where we've got good margins and very good customer LTV. They also, from the pro experience, fit better with our broader ads and lead serve product. You've probably got the best data in the industry, right? Years and years of data to help you kind of hone the model, right? Figure out and create an evolution to the simpler services and see what works and does not work. Absolutely. There's also sort of, it's one of those things where data where it works well, data actually fits with your intuition when you think about it, which is, instant or fixed price fast booking fits with short-term, high-frequency services, whereas something that requires a site visit, some negotiation, customization is far better as an ad or a lead w here we hand off to the pro, they interface, make pitches, look at their own pricing mechanisms, you know, it's just progress in the business. Right. You were talking about, you know, growth opportunities. How do you see within each product, whether it's leads, ads or services, where are the growth opportunities? What do you see? Yeah. The ads and leads, we, you know, got them back to strong growth. And at the end of the day, you know, for those who followed Angi, we had loss of profitability across 2021. Part of that was the disruption of COVID. I hate when everyone blames everything on COVID, but it's pretty inarguable in some of these circumstances, where everyone sat in their house and said, "I hate this about my house. I wanna fix this." You had this enormous spike in home services demand. As a supply side pays two-sided marketplace, that is not good for Angi ads and leads marketplace, where when there was more consumer demand than pros could possibly satisfy, the value of a lead provided by Angi was diminished. We then exacerbated that issue by driving the rebranding in March of 2021, which long term is the is the right answer. Have a centralized brand formally. For those who don't know, we had Angie's List and HomeAdvisor, consolidated marketing behind the brand Angi. Right. To kind of do it to the patient at that point was quite severe. We lost significant SEO traffic, and we ended up paying to buy that traffic back, which Joey said in the third quarter shareholder letter was about a $100 million hit to EBITDA. We had a slide down in profitability driven by ads and leads, ads and leads, frankly, declining growth. We returned to growth last year, there are a few factors there in both ads and leads. Better consumer or better sales, better demand from pros as their direct traffic and overall demand in the market abated, the value of our leads improved, and they increased their budgets. Also, we see a real tailwind long term through driving, through better SEO, SEM, and a return to TV. We pulled out of TV during some of the friction of the rebranding, that we can just get more marketing efficiency and capture more traffic directly that we've been paying for. Ads and leads should be a strong grower. If anything in COVID, we probably thought the business was not as strong as it is, and now it's clearer the strength there. Then services, once we normalize the base, we've gotten rid of gross revenue, we can just keep executing and taking share there. I mean, barely penetrated. That makes sense. When you think about where-- You know, we live in interesting times, right? You know, using the example, during COVID, you know, the service providers didn't need you as much. Now it's probably the flip, right? Service providers need you a lot more than ever before. What's the outlook for 2023? As you think about the long term, like as a classic marketplaces model, right? It's very under-penetrated. How do you kind of see the margins kind of trending long term? Sure. 2023, one of the big changes we made is that we are now going to be reporting revenue for services net due to change in our terms and conditions. It's the right way to think about the business. From an overall profitability perspective, there's no impact, just basically significantly reduces revenues that we contributed to, or we passed on to the pro previously. It's gonna be an odd year to look at overall revenue. We're guiding to essentially flat like-to-like net revenue, and if you look in our grids and metrics, you can see the bridge from historical gross to net. It's a year where services, we're also rationalizing what we offer, so that'll be a drag. Ads and leads should keep growing. We've guided the $60 million-$100 million of adjusted EBITDA this year, and a significant decrease in CapEx, which should aid in, which will drive free cash flow. Longer term, I, you know, we've said we should get the business back to low double-digit growth, as well as driving, continually increasing margins. Joey's still, you know, early in his tenure, so we're not providing specific long-term guidance, but, as we firm that up, we will to the market. Excellent. Should we switch gears to Dotdash? Sure. You know, online advertising is the first to get pulled back, right, during a downturn, because easy, you can flip the switch and you can turn it off, right, unlike other forms of advertising, but also the first to come back. What are you seeing in the current advertising, the macro environment? Are you seeing that dynamic kind of play out as, you know, first quarter, second quarter, and what's the outlook? When we think about what the year should look like, I'll just go back to last year because that'll be in the denominator when we think about trends. Exceptional first quarter last year. Frankly, you know, a lot of advertisers weren't able to spend in late 2021 all their money, so it flowed over into 2022. Really in mid-May, sorry, right around when Walmart and Target reported their earnings, there was a big step down that you can draw a pretty clear line of sight to, particularly in retail, CPG, home, those areas. Really tough June. We were down 18%. Some of that was specific to our migration, but you could just see in big categories, a real freeze. Soft summer. It started to firm up again in, post Labor Day. Pretty decent October. We were hoping for a good holiday period, for advertising and the brands really threw on the brakes in the mid-November, and December was terrible. Coming into January. This is everything from direct sales where basically nobody was booking premium direct sales to programmatic, where we had pretty good insight that our experience matched the market of down 10%-15% on programmatic CPMs. What we said in our earnings call is that, you know, so far this year it's been stable weakness, so that it's no longer, you know, second derivative negative like it was in December. You're down, but it's kind of rational that you're down versus extraordinary strength. Last January, February. You're seeing advertisers return to the market who were totally out of it in December. As the year goes on, the comps will get easier, particularly end of May, June, July. You won't have retailers and those folks totally out of the market like you did this year. As you get to the back end of the year, it'll be a lot easier. You know, I said to some accounts today, it's really hard to imagine not being up as a market in December since almost nothing was transacted this past year. Sounds like your crystal ball is working. I don't know. I hope it is. It's a magic eight ball that I carry. Yeah. I mean, that's a big question, right? You know, when does advertising come back? People expecting second half recovery. You know, hopefully the, you know, retailers will come back, right? As you get into, you know, the summer season and back to school and then, you know, and Q4. Yeah, the whole time it really has been an industry, or, you know, category by category phenomenon, where retail's gotta spend, you know, to compete for share. CPG, food had a very tough time last summer and fall with inflation. That should abate input costs. Those factors. Electronics is just bad. Right. Electronic, streaming, those guys who were workhorses in late 2021, early 2022, that's been flipped on its head. You'll have these patterns, but we feel great about travel, pretty good right now about retail, food, beauty, those categories. But, you know, assuming it's hard to predict you know, where the economy goes, but assuming stability, you should see back-end strength. That's great. You made a big acquisition, Meredith. Talk to us about the rationale and how's the integration gone for the acquisition? Certainly. Dotdash buying Meredith was a bit, you know, it's not the minnow swallowing the whale, but sort of the orca swallowing the blue whale, where you have a smaller, much faster, more aggressive, you know, sort of set of killers in Dotdash acquiring the preeminent publisher. When I say publisher, really think about this as digital. As Joey likes to say, Meredith was a digital business obscured by print. The idea was taking Meredith's leading consumer brands, many of which were the premier brand in categories where Dotdash had exceptional strength, bring them together, like, run what we call the Dotdash playbook, move the Meredith sites over, fine-tune them, and, you know, drive them to a new level. I'd say overall, t he print category business that they have, run them well, close some of them that should've been closed years ago, and then the real workhorses manage efficiently. Overall, the Meredith brands are even better than we thought in terms of their strength, their resonance, their performance digitally, performance on social media. Right. The opportunity from where the Meredith digital assets were is as strong as we thought that their sites. You know, speeding up the sites, reducing ad clutter, improving ad performance, refreshing content, driving opportunities on search engines and others, clear opportunity to drive relevant share, et cetera. Our integration plan was too aggressive. The pace of migrate that was assumed of migrating the Meredith sites onto the Dotdash platform, we've talked about this a number of times was too rapid and too cookie cutter. It was a grind. We got it all done by October, and now we're on the other side of that. Integrating the sales forces, a lot of good, some headaches getting there. Feel good about the sales forces now. So we're through it. Now it's about executing, and we feel very good about the combination. It's great to hear. Some of your sites, the way we look at it is very differentiated from some of the other sites in the categories, right? How do you think you're positioned, and what are the key points of differentiation? Sure. The What advertisers can get out of Dotdash Meredith is large scale ad buys in especially for endemic advertisers in major categories across a number of segments in a brand safe environment. We're not relying on third party data and cookies. We know intent. The categories we're in, we're clear leaders, and we've got a number of stacked properties that reach different segments, from The Spruce to Better Homes & Gardens with Southern Living and a variety of other complementary assets across home, food, travel, finance, et cetera. Especially in this environment, having very contextually strong sites really drives a lot of ad revenue, right? Completely. I mean, the CPM rates, they're premium, better quality, and, you know, you can't use the cookies anymore, so it's gonna be very different looking forward. Yeah, when I came into it from the NFL, something that struck me of the ability to sell instant, relevance and knowledge of intent without having to know the individual is very compelling. A lot of advertisers. Can you talk about OpenAI, ChatGPT, Jasper AI? I mean, how it's gonna impact publishing, especially, you know, you've got some of the best sites in the world, right? Yeah. We got a lucky head start, which was Sam Altman was actually the keynote. He was interviewed by Barry at our annual planning meeting in December. We had no idea they were launching ChatGPT that week. We just got dumb lucky. He spoke for extended period of time to us and also demoed it, and it started us thinking, this was to all our teams. If you start with Dotdash Meredith, there's a few elements that are relevant. The simplest is content generation, and there are going to be opportunities which we're, you know, already gonna start testing. To use these, this generative AI as a outline tool, as a rough draft tool, we actually and we had a long board discussion about it, and board members indicated that's already starting in other industries as well. There's no way, you know, and Neil said this recently at the IAB, there's no way the machines are gonna write articles at the quality we expect. Right. Not accurate enough. They're not creative enough. There's just such an element of first-class writers associated with first -class product. There will be cost savings, efficiency, speed ups from generative AI. From the threat perspective, one is it would be just a wholesale shift in search traffic and, you know, advertising models around it. That one, I think is more is vaguer, is gonna take longer, and there will still be-- Premium content will still be valued. Frankly, a lot of these tools, this has continued for a while, consumers are just distrustful of unbranded internet sourced information right now, whether it's fake reviews, you know, content farms. We actually like the positioning of premium brands and Surfacing the best content. We've been dealing with Google and others, commoditizing commodity content for, decades. Yeah. The if anything, premium brands producing premium content will benefit. The third is the plagiarism risk. That's one which there's been, you know, we've all been around. There's been multiple iterations of this issue across technology. I think the players here, Google, Microsoft, others, are going to want good relationships with top publishers. Ziff Davis, others have said this, you know, they're gonna need to respect content and also drive traffic to the sites that generate. Absolutely. Copyright. I think it opens a new revenue stream, right, for copyrighted material. You can use that for maybe creating content. You get paid for it. That's right. You'd wanna be a copyright lawyer right now, right? You'd gotta know. Should we shift to Care? Sure. Can you talk a little bit about, you know, it's still smaller relative to the other businesses. Can you talk to us about the growth opportunity in core as well as enterprise? Yeah. Care is a good business. It's in our emerging and growth category. There's two main revenue sources. About half the revenue is the direct-to-consumer business. Roughly a third is the enterprise business. Just for those who don't know, consumer is you come on and source a, it's a two-sided marketplace, care seekers on one side, caregivers on the other. You source a babysitter, nanny, senior care person through the network. Brand's extremely strong. Our search, we are multiples bigger than the number two and, like, three operators, and we've got an exceptional caregiver supply side. We bought the business, it was troubled. Spent a lot of time improving the platform, improving the matching, the product. Still, looking to improve the product through what we call Instant Book, which is faster, sourcing. It is really just a continue to drive the funnel improve the flow through, roll out new products as we go, new offerings. Things like daycare, you know, and other categories. It's just a solid business. Right. Last year, last fall, we've said top of funnel slowed down a bit. you know, it probably was versus some very high, post-Labor Day comps in 2021 when a lot of people were going out again. We're focused on fixing that, and feel good about the business share and its minor penetration. Enterprise is selling that backup care service as a credit basis or a access form to companies. Disney and players like that. Google and everything from big companies to small. Very good business. Key benefit that companies are increasingly needing to provide, especially coming out of COVID. There was a massive pull forward into the beginning of 2021 where a number of companies contracted ahead of the market to start to get people in. We've gotten through that and lapped what we're probably 18 months, two years pulled forward. We're gonna go from there and feel good about both businesses. Good margins, good growth. You can see in growth in emerging, A, that Care is a clear driver of profit, and B, the benefits of selling Bluecrew last year, which had been a drag on profit. Yeah, these markets are very underpenetrated online. I mean, there's a huge opportunity. How do you kind of increase the usage of the platform, the frequency? What kind of products, how you position the products against that? Yeah. That is definitely the Instant Book product which is just more real-time liquidity of caregivers if you need a babysitter for that night. That is what's exciting about that is it's an easier entry point than the existing subscription product to a new user. It's also a, it brings more value to the subscription for a subscriber through lower take rate, et cetera. We'll, you know, potentially with the exceptional job market out there softening, there's also likely to be more demand from caregivers as well. We haven't had a real issue, but it should improve liquidity even more. Right. Do you see synergies between the sites, for example, pets and childcare and others, I mean, families, right? Right. Do you see some kind of network effects building over there? We do. There's Pets is an interesting category. We actually get a lot of demand side liquidity that we haven't historically satisfied for pet care, both, walking as well as, stay. It's an interesting source of liquidity to utilize. Also, senior, it continues to be a interesting source. You know, there's always extensions, daycare and other things. Got it. Yeah, that sounds like a great opportunity for growth, right? If you think about the different pillars, I mean, huge potential. It's a great brand. I mean, it's a great brand for across the home front, things like housekeeping as well. Shifting to corporate, can you give us an update on the Turo business? I know that did incredibly well during the pandemic, and travel continues to be a nondiscretionary, you know, line item now in people's budgets. You know, people have turned down heating and not pay for gas, but travel is absolutely still number one, right? Yeah. Can you talk us, talk to us about Turo a bit? Yeah. For those who don't know, we own about 27% of Turo with a warrant for another 10%. It's a great business. It clearly benefited significantly in-- They have a amended S-1 on file, so they're, you know, considering an IPO. We're on the board. There's not too much we can say in some vein, but they got a tailwind from COVID in the post-pandemic period, but they have just continued to execute and build on that strength and momentum. They've really figured out the margin dynamics in a way, that probably would've been unlikely or inconceivable, to quote The Princess Bride, in 2017, 2018, but it allows them a scale and an advantage over other competitors. They compete with the rental car companies. They compete with, you know, a variety of different sources of cars. It's an excellent business, works for hosts and users. They've continued to scale. They opened New York last summer, reopened New York after being out of the market for a number of years. We feel very company even at these share prices due to three factors. One. The portfolio, especially Las Vegas, it is hands down the leader in, particularly in the high end, Las Vegas continues to really only move from strength to strength. You're gonna see it with F1 coming. You're gonna see it, likely with an NBA team. It's just going to increasingly become the center, and they are in the best position to benefit. Very, very well-run company. Two is digital. BetMGM solidly the number three sports betting player, number one iCasino operator, well-run business, and with tailwinds. Also our digital strategy, at MGM led by our LeoVegas acquisition continuing to roll up digital M&A as Bill Hornbuckle and team talked about. Three is China. China was, you know, for the last two years, a kind of, you know, dead money in the gaming space because of the dynamics there. You've since had, you know, the regulatory overhang and the zero COVID policy overhang. That is going to be a very strong source of growth. We love the management team, we love the assets and the positioning. Great. Last question. As you go into capital allocation, you've got a big war chest. There are a lot of good opportunities out there. There's also, you know, the stock is under pressure like everybody else. How are you balancing capital allocation, organic, inorganic, share repurchase? How are you thinking about it? Yeah, it's, you know, since I've been at IAC, it's an active, regular dialogue with Joey, with Barry, and all of us. We view our share price as not reflecting the value of our private assets. You know, as people pointed out in different ways. When you back out the stock and the of Angi and MGM and the cash, you're basically, there's very little value put on Dotdash Meredith, which we guided at $250 million-$300 million of EBITDA, Care, Turo stake, Vivian that we raised capital at last year at an attractive valuation. Just real businesses in there, as well as our search cash machine. We think about that. In the M&A environment, we think it's a compelling time to put capital to work. Mid and small cap companies, especially, you know, the small cap companies are gonna have a hard time getting focused. These are the type of opportunities when you've got a longer term horizon that you can buy good businesses and see through near-term disruptions. We also wanna, you know, some of our companies we wanna keep getting bigger and view them as great platforms to add to. Great position to be in. We've got time for a couple of questions. I've got some rapid-fire questions as well. Wanna open it to the audience for questions, and then we can go through some of the fun questions at the end. Sure. Okay. Everyone likes the rapid fire. What non-IAC stock would you pick and why? I'm a terrible stock picker, don't listen to me. You guys are-- I love Microsoft. I think Satya has done a tremendous job. I think they're gonna keep taking share in cloud, they're in a good position. I also like F1. You know, clear disruption. Sponsorship's gonna be tough, they have tremendous momentum and by far the biggest sports media market in the world, they will keep adding to those deals domestically. I was hoping you would say DB stock since you're at a DB conference. Right. I know that, Lydia-- I'll run that slide real quick. Next one. Top NFL off-season trade prediction. I think Derek Carr can be exceptional if he goes-- I mean, it's all system. I always say, like, actually David Carr, his brother, went through a terrible system, and Ben Roethlisberger went to the best system, one was a TV announcer, and the other's a Hall of Famer. I think Derek Carr, guy was great 12 months ago. He had one bad year. This is like Drew Brees. He could go to another team and be excellent. Great. If you could change one rule in the NFL, what would it be? Oh, wow. Maybe first down for defensive holding, probably because of recency bias though. Great. Everyone signed an NDA in this room before they entered. Can you tell us a few stories that everyone would like to hear and nobody knows about the NFL? Yeah, I mean, it strictly stays in this room. Yeah. I just, I guess a couple things. One, we did a, this is nerdy, but we did a big data analysis coming out of 2016, 2017 when ratings were down, analyzing what really drives ratings and had a, you know, massive, data sets, everything, correlations. It's a lot of, like, good data that turns out to be intuitive, but it's all different by window. Monday Night Football literally matters just how close the game is. Right. You know, you in Seattle and others come home from work and it's like, "Okay, if it's close, I'll stay up and watch it. The East Coast, I'll tune in. That is the among other things, is the biggest factor. 1 o'clock, Sunday it is, are the big teams good? Right. Giants, Bears, Jets. Like, you know, you realize in retrospect, but if they're good, all the people in those markets tune in, doesn't even matter if the games are that close. Sunday Night Football, how close the game is. It's basically did the, one of the five most popular teams play and how close is the game? 'Cause good people will stay up. Thursday Night Football is much more just what channels it's on, 'cause the same people will go to the bar and whatever and watch all night. Those types of things, I, you know, one thing. The 2020 season in COVID was the most incredible thing I've ever been involved in to make that season happen. One thing that always kind of irritates me or I always think about is the players don't get enough credit. Everyone talks about the players who have, and this isn't propaganda, the players who have discipline issues, you know, the 5 year, 10 year. The reality is our season happened and we never missed a game because the football players are incredibly disciplined people. Right. They were told. You know, they went home. They didn't go out. They stayed out of those scenarios and it's a really incredible when you're around it that, you know, these are 25-year-old guys. I was a knucklehead when I was 25. Still maybe. You know, at that point, they were living the by and large, the protocols required and kind of they didn't wanna let their teams down, and they wanted to, you know, they didn't wanna lose their spot. Yeah. It was amazing to get that done. It was an incredible experience. The NFL is, you know, I was watching the TV. Now it's Combine. It's gonna go into free agency. It's gonna go into draft. It's sort of all year long. Quite a grind. No, I mean, the viewers thank you for what you did during the COVID season. Yeah. We are out of time, and I think it's time to hit the bar. Thank you for coming. Thank you all. Thanks for staying.