Ladies and gentlemen, good day and welcome to the ANGI Homeservices Reports Quarter Three 2019 Results Call. At this time, I would now like to turn the conference over to Mr. Glenn Schiffman, the CFO of IAC. Please go ahead sir.

Thank you, operator. Good morning everyone. Glenn Schiffman here and welcome to the ANGI Homeservices third quarter earnings call. Joining me today is Joey Levin, Chairman of ANGI Homeservices and CEO of IAC; and Brandon Ridenour, CEO of ANGI Services. Joey and I will also address any questions you may have on IAC's third quarter results. Similar to last quarter, supplemental to our earnings quarterly earnings releases IAC has also published its quarterly shareholder letter. We will not be reading the shareholder letter on this call. It is currently available on the Investor Relations section of our website. I will shortly turn the call over to Joey to make a few brief introductory remarks and then we open it up to Q&A. Before we get to that, I’d like to remind you that during this call, we may discuss our outlook and future performance. These forward-looking statements typically may be preceded by words such as we expect, we believe, we anticipate or similar such statements. These forward-looking views are subject to - uncertainties and our actual results could differ materially from the views expressed today. Some of the risks - some of these risks have been set forth in both IAC and ANGI Homeservices third quarter press release and our reports filed with the SEC. We’ll also discuss certain non-GAAP measures, which is a reminder included adjusted EBITDA, which will refer to today as EBITDA for simplicity during the call. I’ll also refer you to our press releases, the IAC shareholder letter and again to the Investor Relations section of our websites for all comparable GAAP and full reconciliation for all material non-GAAP measures. Now let’s jump right into it. Joey?

Thanks, Glenn. Thanks everybody for joining. We entered this year with plans to accelerate revenue growth and really invest through our P&L in the form of higher margins. We're certainly doing for the first time in a really long time to accomplish that. And we did that for a few reasons. We saw opportunities and continue to see big opportunities in our addressable markets. We have fantastic leaders and fantastic categories and we wanted to catch those competitively, and we really like the price of internal investments more than the price of external investment opportunities and as we're nearing the end of the year. We feel very good about that decision. We're seeing the accelerating revenue growth we are looking for. We like our position as we end the year - start to end the year going into next year. And we have high confidence in the business including ANGI where we had a bit of a bumpy quarter last quarter and we're feeling good about our outlook now from here. I will see, we're on the middle of a discussion with the special committee of Match and that to the extent that happens could be a big transformation for our business. And it's a really exciting time for us at IAC because the extent, we can pull that off, we go back to the period of rebuilding which is a phase that we love that I think we can do well in and starting to focus on some new and interesting things. We can pull that up. I’m sure you all have a lot of questions. So let's transition that questions starting with the first now. Operator?

Thank you. [Operator Instructions] Our first question will come from Dan Salmon with BMO Capital Markets.

Hey. Good morning, everyone. Thanks for taking the questions. Joey, maybe if I could just start with which as you noted in the latter the process will take longer, maybe just any color you could add to us has the process changed, has it just been a little longer than expected, would just love to a little color on that. And then maybe Brandon, just obviously your search business stabilized. If you could just catch us up on that. But a big-picture question I'd love to ask you is how do you view Fixd Repair services? What is success for you in that business? One of the metrics you noted here in the letter was the 133 tasks on the platform. Is that something we should be thinking about? Do you think about it as a sort of what it makes up of the total business? I'd like to hear more about that. Thanks.

Thanks, Dan. So just one little correction. I didn’t say longer than we expected. I said longer than we would like. The process would always take longer than we would like. Once we sort of have a point of view, we’d like to just march forward but that we're significant is going to take a little longer than we'd like. And in terms of how long that takes, I think we don’t have an update on that. In the past, we’ve gone since this is different for various reasons. That's taken a few quarters and that is – don’t know at this point will be the same, but that is what things have taken in the past. And we’re in, as I said discussions with special committee, so I would hope that we will have an update relatively soon on whether we can reach an agreement on something there or not. I don't expect that to take meaningfully longer, but we'll see start to predict how things go.

Yes. And this is Brandon. On search, the team did make really great progress particularly around paid search. We saw - I think I alluded to in the past quarter where we were testing and employing some new technologies and tactics, particularly around bidding. We made really good progress throughout Q3 in that area and we're seeing good results. And we expect a more or less complete our conversion to this new platform if you will over the next two quarters. I really think paid search, there's a lot of opportunity there and I expect that to be more of a tailwind next year. Within the organic search arena I would call it stable. I don't think we made up lost ground. We do have a plan going forward that we're optimistic about. But as we all know that that environment works a little differently in a little different pace. Over although we're pleased with the progress we've made around search generally speaking. With Fixd Repair services, in terms of how we think about this and what we view the success, one thing I would just remind us all, we actually started down this path in 2017. So this has been a long time information. The acquisition of Handy has allowed us to materially accelerate our efforts in this area and really governed by what we're seeing as we put it in the hands of customers. There are two ways to look at what success means. First of all, just in terms of the experience, we're looking at the purchase rate, the conversion rate by homeowners. We're looking at their satisfaction levels, and we're looking at repeat use. What is this deeper richer experience mean for consumers in terms of their frequency of use of our service and their long-term loyalty? Right now all the early data - all the data while early looks really positive on all of those fronts, exceptionally positive, which is why we've lean into it so heavily and done so much quicker than what we communicated last quarter. In terms of what is it look like in terms of the impact in our business, the 133 tasks already represents about 35% of the total volume of service request we get. And that's not by value, but in terms of the frequency and just pure volume of those requests. And why that’s important is that we're able to offer this experience to a pretty large percentage of our customers and we simply think it's going to be a superior experience both for them and ultimately in terms of the relationship it creates for us. What do we want to be of our business? Those 133 tasks cover billions and billions in GMV. The grand question here is how much of that GMV can we get processed through this experience. We talked last quarter about having 40% of our requests that we're unable to fulfill and unable to monetize. That’s obviously the clear and obvious opportunity. Those amount seem -- a tremendous portion of those billions in GMV and we don't know the answer yet, but our goal is to scale this as big as it can possibly get into process as much of that transaction value as we can through the service.

Great. Thank you very much everyone.

Thanks.

Thank you. Our next question comes from Jason Helfstein with Oppenheimer.

Thanks. Two questions. One, kind of a follow-up and then IAC question. So, overall seems Google has become a less reliable -- really become less reliable for SEO, more expensive for SEM not just Homeservices, but travel other verticals as well. Just longer term, how do you think about moving the balance away from Google? You mentioned some partnerships in the letter. Would you consider buying properties that could drive expensive traffic or potentially more brand spending? So just maybe longer term after you finish the platform conversion. And then as IAC, once the company is recapitalized what verticals will you pursue M&A? And should we think of the minority investment in total as a one-off? Or will you consider minority stakes in the future events?

With regard to Google or thinking about do we address long-term diversification; obviously we don't want to be overly reliant in any one source. Over the last 12 months, we brought in more than $26 million individual project request for consumers, so we’re doing a phenomenal job in customer acquisition. We are well diversified, but we can always do better. We are excited about the two partnerships we announced with Nextdoor, both of those great brands and very large audiences that have obvious relevance to us. And so we’re going to keep pressing on finding new avenues to acquire customers, but Google continues to be a good place to acquire customers and we don't expect that to change. The long-term solution here or I'll even call it the medium-term solution is to acquire customers, get them into a much stronger product ecosystem that is a lot stickier and that drives a lot more repeat use. We have a ton of innovation in the pipeline for the coming year that we believe is going to do just that. Obviously, we think this fixed price experience and we know from the early data is achieving that but we're also going to be driving a lot more of our business our mobile app where we already see materially higher repeat use and customer loyalty. We've got an extraordinarily strong and aggressive strategy to drive, accelerated penetration of our mobile app into our homeowner base. And that's really the answer is it's not about getting away from Google, it's about acquiring customers in Google and everywhere else and keeping them. And that's where our focus is.

And then I’ll add a little bit of that and I'll answer your other question Jason. I think, we've talked about this before. The key in all of these businesses is to make your experience more compelling to go direct. And everything that Brandon talked about I think takes big leaps forward in making that experience easier, more efficient for our consumers to go directly to us to get something done. I think some of the things that the channels that we provide on we're doing we're actually making it less compelling to go through their platforms and I think that that could be a long-term benefit for us. In terms of new verticals, I think it's something we're very actively looking at -- something we've always candidly very actively looked at. I think there's a finer point on it in imagining of post-match world and where we're highly capitalized with cash. But that doesn’t change the discipline of finding new verticals where we think we can add value and where we think there's larger addressable markets with leaders and where the - as we say the future is obvious meaning there's things that we know consumer behavior will evolve at a certain direction because of existing things and evidence and those are things that we're looking for. I think as always, we're going to prioritize capital on our existing verticals because that's where we have the best advantage. I think we've done little M&A at Dotdash with nice success so far. We're going to continue to look for opportunities there. We seem to be able to integrate things relatively quickly and add value relatively quickly there. We just did a small and pricey, but relatively big one for Vimeo in terms of an acquisition with Magisto and so that's going to take a little bit to digest. I don't expect much M&A at Vimeo in the near-term, and so new verticals will be affected. In terms of minority investments, that's not our pattern. We said that last quarter when we did the Turo investment. We feel great about the Turo investment. We feel great about the progress in that business, but we are prioritizing capital in areas where we can have control and we think that that's the best place that we can put things to get a return.

And Jason in addition to obviously M&A and our existing verticals, our new verticals, there's a lot of organic growth in the portfolio. And you saw that across the board given the strong results this quarter of Vimeo and Dotdash and the continued strong results at Mosaic. As you know, we have six verticals - growth verticals. The slowest grew 22% this quarter on the top line, and if and when we spinoff Match well, that's five verticals the smallest of which grew 22% this quarter. All of which have single-digit market share and all of whom compete in markets that are hundreds of millions of dollars in size.

Thank you. Our next question comes from Ross Sandler with Barclays.

Hey, guys. A question on the spin details, so we can all see the negative value that you have for core IAC - the core IAC stub you laid that out in many prior quarterly letters. And you noted in the letter, this time that 2008 core stub created nearly three-fourth of the value that you see today. So if this is the same playbook, I guess, what's the market missing and what will you guys do post-spin to help unlock some of that hidden value? And then the second question is you laid out a framework for the spin in the addendum. I guess what do you view as the idea amount of cash in the perfect world for new IAC and the ideal amount of debt for Match post-spin?

Yes. Ross, it’s a valid question. I'm not going to answer the last one. What we said is comfortable cash and that is a pretty wide range you can imagine there, but I don't think it's appropriate to answer that right now, given where we are in the discussion. In terms of relative to 2008, it is a -- it's really interesting. I mean, I'm more confident now than I remember being in 2008 thinking about it. We have three businesses right now that are doing each $50 million a quarter in revenue or about Vimeo, Dotdash, Mosaic and those businesses are growing nicely. When we - I think we had two - by the way I'm excluding ANGI from that yet. ANGI I would say four and one comfortably well north of that. When you look at 2008, I think we had two businesses at that level scale and the momentum was not in our favor. There was also some general macro issues going on the market at that, time but the momentum in each of those individual businesses wasn't really significantly in our favor. I really like the momentum behind businesses I’m talking about now ANGI obviously Vimeo, Dotdash Mosaic and we've got some little bet and we've had some little bet then too. I think Vimeo with a little bit and it's probably that no one was really paying attention to. There was a bunch of other ones. Many of those failed. You got a bunch right now. Many of them failed. But we've got really nice momentum and really large markets right now and so I feel pretty confident there. Some of the things that drive value of the -- or the factors in the negative stub are kind of general concepts meaning people not understanding a lot of different businesses or not wanting to bet at the same time on a number of different businesses at once. I think it's possible that that persists but our goal is to be as clear as we can on the prospects of the businesses that we own the metrics of the businesses that we own, so that people can see what it is and be able to make those conclusions and then there is the set of tools that we've deployed for the past decade and for the next few decades of unlocking value over time when businesses need a public currency or bond or whatever, those are tools that we can use. We can use subsidiary equity to get deals done. We can use different balance sheets and use different currencies all those things are tools that are at our disposal and will continue to be and do over time unlock value. And of course there's a big one if we fail in all of that which is share repurchases and that was also a very big tool over the course of the last decade. And we talked in the letter about a share count has come down over that period. It's come down almost in half I think something like that.

Yes.

So I think I hope that answer your question Ross, but any others?

No, I think you we lost Ross, so we’ll go to the next question..

Our next question comes from Eric Sheridan with UBS.

Thanks so much. Brandon may be coming back to the topic of where we're going over the medium to long-term with ANGI. A lot of initiatives on both the demand side, the customer relationship side as well as continuing to build out the supply side. We'd love to just take a step back and maybe you could frame, what you see as for the biggest initiatives you're trying to unlock the sort of realized the value as a potential for ANGI medium to long-term as a business. And how investors are supposed to think about some of the investments you're making over the short to medium-term to bridge sort of the goals over the longer period of time. Thanks so much.

Sure. So we're ending Q3 with good momentum at our two largest businesses. Obviously Angie's List returns to growth for the first time in a very long time. That's an important milestone and reflects success in the investments we've been making that we've been talking about, and we expect to see Angie's List grow from here. We're also finishes with strong momentum. We are seeing strong sales performance obviously we made progress in search. We expect to see both of these businesses mostly accelerate again next quarter. As we look forward to 2020, we're really focused on a couple of things. Joey said this earlier, but it brings two important which is we're laser-focused on creating an exceptional experience for homeowners that is unrivaled by anything that exist today or ever existed. And tied to that, but also critically important on its own right is bringing on far more service provider capacity. These two things together solve a lot of problems for us as a business. Being able to monetize through additional service provider capacity, all of their going on monetized today provides a much better experience for our customers, substantially improved the economics of those transactions, improves the margins for all business and gets this far more buying power as a business to go out and drive further growth. So that's critical. We've talked about fixed price and that's certainly to accomplish both of those goals and we have a lot of other very similar investments we haven't talked about publicly yet that are around the same problems and are focused on achieving the same outcomes. Separately, through a better experience for consumers and through a stronger product ecosystem including through the app, we are very, very focused on acquiring customers and keeping them. And we believe that a differentiated experience that is superior to anything else including traditional word-of-mouth style referrals is the key to doing this. Obviously, again, as we think about improving repeat use, it solves the same sort of economic problems in the business. It makes our marketing investment look substantially better. It improves our buying power and obviously over time also impacts the margin profile of the business. The investments we're making are obviously rapid. They are happening right now, and as I mentioned earlier, we've been investing in Angie's List throughout the year. We're seeing that pay off. We've accelerated our investments, particularly in fixed price, but in a few other areas as well against capacity. And the way we're thinking about that frankly is we're letting the results guide our decisions. I think last quarter I said we launched 100 tasks by Q1 of 2020. We're at 133 by Q3, so we're almost six months ahead of where we thought we would be and that was driven by the results we're seeing and I guess our excitement around the results we're seeing. Next year is all about how fast we can scale, I think more than anything this experience, the deep experience around fixed price services. A lot of that will be governed by consumer interest and engagement. And as we roll this out and put it -- and make the opportunity available to more consumers and more of our acquisition channels, we will see how fast it scales. But if it scales faster, we will invest faster and that's really the way we're thinking about investment around fixed-price services. We continue to have investments in other parts of the business. I think we will continue to invest in Angie's List although probably not at the same pace as this year. And then we have investments in other areas including the acquisition of Fixd last year and international.

And to translate that into numbers that strategy, obviously in that road map underpins our significant confidence in our 20% to 25% revenue growth rate on a long-term basis including next year. And on margins as we've said, we're not optimizing for margin short term, but every one of those initiatives will help us drive towards our long-term margin targets.

Great. Thanks for the color guys.

Thank you. Our next question comes from John Blackledge with Cowen.

Great. Thanks. Joey, we got a lot of questions on the spin process. Just curious if you can offer color kind of like the steps and timing once there is an agreement on the spin. And then just on ANGI with the good page search stabilizing Glenn maybe could give us color on what that implies for ANGI margins next year? Thank you.

Sure. In terms of steps, there's a few key components which we laid out in the letter. One is moving the -- again all of this is a caveat by saying, it's a proposal and we need to reach agreement with special committee which we may not. But the steps that will be consistent what was outlined in the proposal are one moving that converge what I'm calling the converts or exchangeable notes and related hedging instruments, but we'll just simplify by calling it converts. Moving that, should moving those to ANGI in exchange -- I'm sorry moving those to Match in exchange for Match shares. And that's a relatively straightforward. The other two components are dividend from Match to IAC of some amount and a third thing that is potentially may not happen but potential equity offering which has the effect of IAC selling shares in new Match and those shares getting swapped in the separation ends up with IAC having more cash and new Match having fewer shares outstanding. All of those things in theory happened roughly could happen kind of roughly at the same time. There's work to do to prepare for all of those things and that is I think maybe that can do I don't know Glenn maybe we're a little bit limited in what we can say here. I apologize for that and I want to have a real complete update for everybody soon, which I'm hopeful we can get to. But right now, we're just a little limited in what we can say. I don't know if you want more to add to that.

I think that was well said. And timing Joey you addressed that earlier when we've done spins in the past, they may take a couple quarters to be complete. So I think that -- again as Joey said, we'll update you when we can. In terms of margins next year for ANGI to translate everything Brandon just walked through. Margins are dependent on three things. One is our overall revenue growth because ex marketing we create the real incremental margin in the business ops, G&A sales, all of our other costs grow well below our revenue growth given obviously the strength of the business and the scale of the business. That will be one factor. The second faster is the investments we make. That's in our international business which is still losing money that's in Fiexd the small business we bought in early 2019 that's handy and that's our fixed-price initiative. And as Brandon said as we see success we may continue to invest into that. And then third, it will depend on marketing. Partially that's the choices we make, and as you know we're partial to investing in category expansion, given the opportunity in front of us and we're going to want to broadcast the fixed-price offering given the rollout there, and then how effective we are. And as Brandon said, we're making real progress, but it's early days indeed. I think all of that adds up. We'll give you obviously our outlook early next year. I think all that adds up to margins not increasing and maybe depending on the elective choices we make potentially even margins could come down. Something that may skew the margins a little bit and we'll of course transparently walk you through that is in all likelihood the accountants are going to force us towards growth revenue recognition for the Handy transactions in our platform and the fixed price transaction on the platform, because we will underwrite and we will backstop and guarantee those transactions. So, the margins may be model next year because of that but we obviously walk you through it and attempt to reconcile that for you.

Thank you.

Thank you. Our next question comes from Brent Thill with Jefferies.

Good morning. Joey, on that Vimeo growth acceleration if you could just comment what you're seeing there and the progress you're making on the enterprise side that would be extremely helpful.

Sure. So, the one component are -- component is we completed the Magisto acquisitions, so those numbers are in there now, so that accelerate the business continues to grow nicely without the acquisition, but that's certainly a driver of acceleration. The Enterprise business is, I think still fastest growing components of Vimeo and so we're really excited about that. And just interesting stuff we got the other day is that 60% of Fortune 500 companies have someone with Vimeo account, and that doesn't mean that we have an active relationship at the corporate level with those companies. What it does mean is that people are using it and there is a big opportunity for us there. We got to get organized, of course, on how to pursue that, which we've been doing in terms of building the enterprise sales force, organize the enterprise sales force. We still weighted heavily towards inbound inquiries. We have to nail the operation on outbound sales. But we view that as a real validation in terms of the size of the market and the size of the opportunity. And remember this is a $50 billion TAM that we think Vimeo is aiming here. We think Vimeo, I keep saying this to everybody, but Vimeo is a relevant narrative tool for all enterprises, entities, events, individuals and we're trying to make those tools very easy and I think we're succeeding on doing that for a pretty wide audience. We got pulled that through in the business, but it looks compelling in the numbers right now.

Thank you.

Next question?

Thank you. Our next question comes from Kunal Madhukar with Deutsche Bank.

Hi. Thanks for taking the question. Two if I may. One on ANGI, one with regard to the outlook for 4Q, there seems to be a Q-on-Q decline in the revenue growth rate. How much of that is because you have lapping handy? And how much of that is for other reasons? And then on Vimeo, as you go out and as your enterprise sales force kinds of goes out and meets with potential customers, who else do you see in the room? Who are the key competitors? What is the value proposition? And how would you differentiate it? Thank you.

Yes. On the fourth quarter guide Kunal, you're exactly right it's the Handy comp. So that's a couple points of growth. The other small things we're seeing as you recall in the first quarter of last year - sorry first quarter of this year we showed of certain marketing channels that drove revenue and service requests. That was as a result of a slight uptick of those revenue to - that revenue and those service requests in the fourth quarte,r so we're also obviously comping against that. That will be a tailwind as we roll into 2020. But it's those two things and that's a couple of points of growth. So absent that it's actually not a deceleration. And then further to that if you strip all of that out and you look at the core Angie's List business and you look at the core HomeAdvisor marketplace business, we're actually accelerating and the acceleration started in the second quarter of this year.

And on the competitive landscape for enterprise, it's actually pretty wide. There's a wide range of things that we see. So there's some of the older players in this category who built like very custom solutions for enterprises which were expensive and took a lot of time and were hard to maintain and we're seeing the preference and everyone takes in one custom to start and then you sort of fill the cost differential and feature differential and the ongoing maintenance differential and we're seeing a lot of people go to hook at, I'd rather be out of platform than have this complicated custom-built. So that's one area. People do things themselves historically. They put together a bunch of different solutions to make something more and so having that sort of simple end-to-end R&D solution we found is a good antidote to the self-build solution. And then a lot of folks it’s new. They've had - they just haven't used video to tell the story that they're telling. The enterprise area is we got both OTT customers over the top customers, that means people who are essentially building a channel and our platform works very well for people who are building a channel and that's a lifetime going to compete against custom solution that is generally much more expensive. And then the other is enterprise and that's usually in incumbent where they just haven't been communicating whether it's their employee base or their customer base, they haven't felt the need to communicate by video. They’ve generally been communicating by text or by pictures and now seeing the opportunity to communicate by video and that turns out to be compelling, but there's not sort of one big or two big focus that we see as incumbents or other voices in the room right now.

Thank you.

Our next question comes from Brad Erickson with Needham & Company.

Hi, thanks. Just a couple on ANGI. First for both of these partnerships with Realogy and Nextdoor, can you talk about some of the key aspects that I guess were attracted to both parties from your perspective? I think probably so many of us could offer an opinion there, but it'd be good to hear that from you. And then second, can you just remind us sort of why 40% of monetized leads, has been so persistent? Like if you had a bucket the top three or four things that that's caused by, be a useful reminder as you obviously look to drive that number lower with things like fixed price and on demand. Thanks.

Great questions, Brad. So on the partnerships, both these partnerships are very attractive. We started Nextdoor. Obviously Nextdoor has a phenomenal audience of neighbors. About 20% of the requests that happened on Nextdoor have to do with local services in some form or fashion. So it's incredibly relevant audience for us to get exposure to. We think this as a long-term strategic partnership. I think the opportunity to do some really innovative things, there is quite exciting. Obviously, neighbors are sharing word-of-mouth recommendations. But there are a number of ways that we can add value to those conversations, whether it’d be people who want additional options or whether it’d be that in some cases that there needs to be a backstop for these recommendations. I would look at that as a partnership that will continue to innovate and grow over time. Realogy is really a completely different animal [ph]. Realogy is involves in more real estate transactions than any other states in the US. What we’re doing with them is effectively offering the seller at the home the opportunity to fix up that home pre-sale to generate either a higher purchase price or a faster sale. This is a win-win-win for all three parties involved. Obviously the owner of the home gets the opportunity to get those benefits. We get the opportunity to form a relationship there and help manage the process of home improvement. And then this is a service overall that's attractive in terms of Realogy being able to service customers. We are excited about the early results with the Realogy partnership. It was just in a few markets, but we are expanding quickly based on what we've seen. And with that partnership is a little bit of a market-by-market expansion. One of the things that's exciting about it is it's really gets us in not only into this sort of offline relationship, but into the relationship around real estate transactions where there's just an enormous amount of home services demand is generated. And we can't always expect people to jump online. Some of the stuff is happening offline as we all know. In terms of the 40% of un-monetized leads that we talked about last quarter, I don't really would call it stable. I would say that is a number that is largely growing over time. It's a really - there's only one explanation and it’s really simple, which is -- if you look over the last five or six or seven years, we have grown really fast as a marketplace but we've always grown faster on the consumer demand side. And if you're growing consumer demand at 30% or 40% or 50% and service providers are growing at 20% or 30% that catches up with you over a five-year period. It really make itself felt. The solution is straightforward as a problem, which is, we need more service providers with more capacity and we're making good progress with our traditional products. We're seeing a good momentum there, as I mentioned earlier, from our sales standpoint. But the real answer is we got to have more products and more offerings to bring more providers than to participate. The fixed service product that we've been talking about is just such an example. In the case of fixed-price services, we actually go out to providers and offer to pay them to do a job which is quite a bit different in our traditional products where they have to pay us, and you can imagine how that could be compelling for our service provider and how it might enable us to tap into service providers that perhaps are resistant to our traditional product. We are in fact seeing good success doing just that and that's one example where we are bringing - tapping into new segment to service providers and bringing completely new capacity online. We are going to be chasing quite a few of these in parallel to solve what's a pretty big problem and one that as we solve that we have an enormous impact on the economic profile of the business.

Got it. That’s great. Thanks.

Thank you. Our next question comes from Youssef Squali with SunTrust.

Great. Thank you, very much. Two quick questions. One, either Brandon or Glenn, can you -- as you guys push the fixed-price offering more aggressively next year, I was trying to understand maybe the economics of the model of that product offering relative to the traditional offering. In other words, is it margin-accretive margin-dilutive? I know - I think Glenn, you talked earlier about having to change the revenue recognition there. So, just maybe help us understand how those things work at least the short term. And then Joey, as you go through with the spin with -- I was just trying to understand how you think about business models that you may be interested in. Historically, you guys have had a bias to market places. Is there any reason to believe that that's not the case this time around?

Yes. This is Brandon. I'll start on fixed-price margin question. The reality is offering 133 different types of services and 40000 ZIP codes on this fixed-price basis is an enormous problem solved. As we scale it, the faster it grows, the more it will initially cost us, right? That just essentially the way it works and then a lot of that just has to do with building up capacity to perform these jobs in so many micro locations. What I can say is that in our most mature categories, where we've been offering fixed price the longest, the margins are extremely compelling. And if you compared the take rate of our traditional business relative to the take rate we get on these mature fixed price services, it's substantially better. And I'll turn to Glenn to add more color.

Yes that's exactly right. After the start-up cost to school to figure out how to price the job, to spill up the demand and get infrastructure in place, it is going to be accretive to our long-term margins. One, we attack those zero accepts and we just change the whole price-to-value relationship with the SP without that incremental cost of marketing. Again, for these 40% zero accepts, we've already paid marketing to get that. Two, Brandon referenced it's the take rate. Our take rate as you know, in our marketplace matching is around mid-single digits. Our take rate is higher, simply because our win rate is so higher for the SP. The job is guaranteed. And then when Brandon said, we open up SP capacity, that is also majorly margin-accretive because, we don't have to rely on our sales force, which is of course quite effective, but it's also expensive for sure. And all these product innovation among the many things that it does, it's going to drive repeat rate, it's going to drive down the zero accepts and it's going to increase SP retention and those are the three most powerful margin drivers that we have in our P&L.

In terms of post-spin interests marketplaces is still exciting for us. It's a preference not a rule. We have said we like businesses where scale improves the product, not just the price. That is I think our most successful businesses in our past and current meet that tests. So, that is something that we will look for. But if we find a new vein that's exciting, that's possible too. Some of the dynamics that we've seen in marketplace businesses are things that we think; we can do a nice job identifying. And we think we can do a nice job amplifying. And so that does favor marketplace businesses. But does not require marketplace businesses I guess I'd say.

Okay. Thanks, guys.

Thank you. Our next question comes from Douglas Anmuth with JPMorgan.

Thanks for taking my questions. First, Brandon, I just want to follow-up on paid search. Can you just help us understand, where you've stabilized now relative to last quarter and then also perhaps six to 12 months ago? And then, Joey or Glenn just wants to shift gears and talk about Dotdash. You talked about having emerging brands in 710 categories there. Can you talk about the key priorities for 2020 for the business? Thanks.

Yes. Just to reiterate on paid search. Last quarter, I mentioned that we were testing some new tactics and bidding technologies. In Q3, we migrated, a fairly significant portion of our activity to a new bidding platform, where we've seen substantially better profit profile. We really completed the majority of that toward the end of the third quarter. There's quite a bit of work left that we expect to drift into Q1. But I would expect by the end of Q1, we're largely completely migrated. I don't -- what we've accomplished doesn't bring down costs. It improves profitability, which is fine with us. We can't control the cost of the ecosystem but what we can -- what we have been able to do is control the profitability of our investments. And it looks like it's going to be very favorable.

In terms of Dotdash we kind of looked at each vertical as a huge opportunity. So if picking one which helps, we're doing a nice job in and out. I think we're ranked three in the top five, when you look at audience in-house. And there are some very, very big players ahead of us there, in terms of both revenue and profitability, and we've been very focused on innovating in product in this area. We've been, as we said, focused on having the best content, precious content, and few of that which means in all of these areas and helping one in some ways we're looking at undercutting the competition on price. The number of ads effectively kind of way you're monetizing that is effectively, the way you price the content and you price the service, because we've really only monetized with that. We monetized with other format of advertising. And I think of e-commerce as a format of advertising, but we're sending audience on to other sites that monetizes on their sites. But really the way we built this product allows us to undercut the competition on pricing. And we're going to continue to do that. And I think that we can do that sustainably, because we're doing that I think comfortably profitably today. So there's no big players in front of us, finding there's huge players in front of us several of them. And we were doing very well with Investopedia and the balance and we're going after the people who are bigger than us with bigger audience and bigger revenue. And again, doing that with the precious content of that size and a few of that. Beauty is another one. Home's another one. All these are multibillion-dollar categories of advertising online where we think we can deliver really compelling content and really compelling service. So, it's - when we think about just 2020, it's more better content in our existing category. And then we're going to continue to look for either new verticals or new additions in our existing verticals. So we've done that in some categories already, and I think we've done a few in beauty right now, and we'll keep looking in that area for more.

Great. Thank you both.

Thank you. Our next question comes from Mike Ng with Goldman Sachs.

Great. Thank you for the question. I just have two. First, in the letter you guys have talked about how ANGI could benefit for the remaining for the time being. Could you just elaborate what those benefits are? Is this helping to think about whether strategic initiatives or it's about M&A? And then, just on the second question. Glenn, I was just hoping you can clarify the ANGI margin outlook for 2020. I think you mentioned that they may be a little bit modeled next year because of some of the investments. Just any additional color that would be helpful. Thanks.

Sure. So in terms of the benefit of being -- the ANGI's benefit of being an IAC, I probably shouldn't answer that. Of course, Brandon to answer that in the room here. But one of the things that we talked about ANGI doing right now is investing in the business and that's what we've done over the course of 2019 and then we'll continue to do over the course of 2020. Some of that is easier with a very large shareholder, who is very aligned with you on the size of the long-term opportunity in the category and ability to take more share and the ability to deliver the compelling consumer product. And we have that sort of outlook and that patience and I think that can work well for ANGI in this phase of its evolution especially as we look at a particular new product around fixed price. That's one of the things. The other is I do think there is ANGI, when I talk about operating flexibility whether that means M&A or whether that means something else, I'm not sure but we have the sort of firepower and the wherewithal to do lots of aggressive things in this category and we'll continue to look to operate that way.

Yes. On the margin point, on the last call I said, don't expect margin improvements and on a steady-state revenue basis that is we don't think margins are going to increase. And depending on again the decisions we make to invest more aggressively in fixed price, to invest in marketing, to invest in a lot of the growth initiatives that Brandon talked about, margins could go down on a steady-state basis. And then if you layer in the gross revenue recognition obviously, the numerator is higher, so on the staying EBITDA base the margins would throughout just math, the margins would slightly go down. We'll update all of this obviously when we share our outlook in February, as we're working on our plans now, our marketing plans and our investment plans. But it’ll be very much investing in the success next year as opposed to this year where margins came down given some of the volatility in the ecosystem and our reaction to it.

Okay. Thank you very much.

Thank you. Our next question comes from Victor Anthony with Aegis Capital.

Hey, guys. Thanks for putting me on. Just a follow-up there's an earlier question about the economic impact of shifting the business to fixed price. So first, you also mentioned, I guess, the low single-digit take rate of a traditional business. Why shouldn't the take rate for fixed price eventually be in the teens -- maybe high-teens given that other non-fixed price businesses other Internet marketplaces tend to have any high take rates? That's one. You've also talked about in the past one-third of GMV is easy to convert. I think you're already there, I think to fixed price and the next one-third is probably harder to attain. You also talked about billions of dollars of GMV has shifted. I'm kind of curious exactly the mix, the GMV mix between the one-third to one-third and one-third of -- if that makes sense for you guys. And lastly, I guess, the trade-off kind to building supply for the fixed-price business versus migrating existing SPs -- what's the trade-off there? Thanks.

Sure. So I certainly think the take rate in the team seems very achievable. I do think it depends on the individual project. The smaller the project the less materials that are required for project I think the higher to take rate can ultimately be. Obviously, as you get into larger more complex projects that have supplies and material involved that change a bit. But mid teens seems extremely reasonable and I think we all believe that here. The one-third, one-third, one-third was more about the number of tasks and I do think obviously we've gotten that first one-third live a lot more quickly than we thought. I think we are obviously going to also pursue that next one-third, but it's a little too early to comment on that at this point. In terms of GMV, I don't think we're ready to break out sort of what the percentages of the GMV are. I can only tell you that we have an enormous amount of untransacted or potential GMV that's going on monetized and there's a ton of it in this first one-third of transactions that we're enabling. Obviously, you get into higher-value projects and those make up a large part of our untapped GMV as well. But we've made great progress in enabling the first one-third of transactions. We will certainly be making efforts towards that second third, but just not there yet. And I think we have -- we've debated this quite a bit internally, but I think we have -- I think it's important that we perfect the experience around this first one-third of transactions that we've been able. They do represent 35% to 40% of the requests that we receive for consumers. And our goal more important just processing the GMV which is obviously desirable is to create an experience that just knocks people's socks off so we were really want to get this pair of transactions right. We've gotten live. We still got a lot of work to do to perfect that experience and then we'll move on from there. What was the last question? Yes, building supply, yes. When your supply constraints as we are obviously, we want to roll-out new products that appeal to new segments of SPs that we having a hard part getting. Fixed price and does that. It doesn't mean that we can't offer those jobs in to our traditional network and I'm sure we will do that as well over time. But our core - goal of ours is to bring a lot more providers into this marketplace as participants and we're seeing really, really, really good success with fixed price out of the gates on that front. I would expect us to extend that to the entire network over time as scale grows.

Thank you.

Thank you. Our next question comes from Ygal Arounian with Wedbush Securities.

Hey. Thanks, guys. So I'll ask on your service request growth came in accelerated nicely, comps were little bit easier but still accelerating nicely we're above our expectations. And I just want to kind of hear a little bit more about that in light of some of the marketing challenges. Was it search kind of coming back and improving? Was it the other distribution partnerships that you have developed? Just kind of what's leading to growth there and expectations? And then also on the distribution point, last night you mentioned breaks [ph] in home services that they're kind of building out service there are buying network and led the partnership with Realogy. Just want to get your thoughts on partnering with the high buyer community. There is obviously a ton of supply there. Are buying margins just to slim for them to kind of - to give that business out and partner? Or is there opportunity for you guys to create efficiency in that model for them and take part of the share? Thanks.

Yes it’s a fair question. Let me answer the second one first. I think high buying is interesting however, the transaction volumes are so relatively small when you think about the scale we're at. We actually think the traditional brokerages and the partnership we had with Realogy, it just offers a much larger opportunity to reach homeowners during these transactions. I do think openly but the slim margin and high buying they may need to do this themselves and so I'm not sure exactly how big of an opportunity that will be for us. But at this point, the scale of it is too small to warrant our attention. We have bigger opportunities in other places.

By the way to put a number of that, think about it for every $100 million of capital that goes into high buying, it has $200,000 average home price, let's say that's 500 homes. When you think about relative to 26 million or whatever that number over 20 million homeowners that are coming through our platform it's just very small.

Yes that’s right. And the answer is a little all of the above we did see real progress on paid search but our proprietary channels also did really well and then we have these new partnerships which nascent but important. Glenn you want to add more color?

Yes just taking a step back we get a lot of questions on SP growth on SR growth. And just remember the marketplace business is driven by SP growth, the one side of the marketplace. SP growth and revenue per SP. And on the other side of the marketplace is SR growth and revenue per SR. And they're not going to be linear or frankly predictable. There's a lot of levers that of course the management team, Brandon and his team pull to optimize, it also is past mix that throws some of those relationships it's under. It's also the ecosystem, what’s going on in the ecosystem at the time and also year-over-year comp. Our goal for all four of those metrics obviously, is double-digit growth. We've been really strong on revenue per SP. You saw that record $1,200 this quarter up 16%. All that will support our 20% to 25% long-term growth rate here, but again, they make it Anjali around every quarter. Next, quarter we'll probably see a slight deep in SP growth, we will probably see a slight dip in SR growth again given the comps but we'll make that up in revenue per SP and revenue per SR. I'm not foreshadowing a price increase, it's as we get more and more efficient about matching the supply and demand, which we are getting with all of our liquidity.

Thanks.

We have time for one more operator.

Thank you. Our last question will come from Benjamin Black with Evercore ISI.

Hey, guys. Thanks for squeezing me in here. Just a quick one on Vimeo, wondering if you could provide some color on your product pipeline as we look to 2020, what are some of your key focus points there? And then a quick one on cap allocation, I mean, you guys are pretty active this quarter on the ANGI buyback. Would love to hear what your priorities are as you look to 2020 particularly ANGI trading at these levels? Thank you.

Yes. On buybacks, we don't really comment on forward projected the buybacks. We did buy back I think 1% of ANGI in the quarter which is I think a-third of our authorization and something that we look at and we'll always look at. In terms of Vimeo product big push for us right now is around video creation and that is starts with acquisition – sorry, acquisition but we've got a big integration to pull off right now too in terms of integrating that into core Vimeo products. And that does a few things for us. One it allows us to sort of manageable full customer life cycle in video, but importantly, allows us to talk to customers earlier. In other words right now what we're looking for customers of Vimeo we're trying to find people after they've made a video, before they find a place to keep the video and do some other services that we offer them to that video, and while we've been very successful there but that's a relatively narrow window in which to capture some – to find somebody. When you think about video creation before they create a video, and as I've said before we think many entities every entity almost needs video right now, but many of them having gotten started or afraid to get started. They don't think they have the talent or the team to get started or the tool to get started. And we can kind of offer all of them – all of that right now in one package and so we think from a marketing perspective that starts to really open up opportunities for us and that's what our big focus is certainly right now and I'd say for 2020 getting that product integrated and live and really seamless for users. I think we're over a lot of time here so thank you all very much for joining. Thanks for all the questions. And we hope to have updates for you all soon. Thank you.

Thank you. Ladies and gentlemen that concludes the ANGI Homeservices report Q3 2019 results call. You may now disconnect. And thank you for joining us this morning.