Good day, and welcome to the ANGI Homeservices reports Q1 2020 results conference call. At this time, I would like to turn the conference over to Glenn Schiffman, Chief Financial Officer of IAC. Please go ahead, sir.

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

Thanks, Glenn. Welcome, everybody. Glenn and I are sitting here in New York City, six feet apart. We’ve got Mr. Ridenour on video in Colorado, where we’re exchanging hand signals to manage the call. But other than that, the earnings ritual is not much different. We always do this with everybody remote, and so hopefully that goes smoothly today. Normally, I’d like to thank our employees in the quarter when we’re doing great work and getting good results. I actually want to thank a different group today, which is our employees have the benefit right now of working from home with only minor inconveniences. And the only reason we’re all able to operate from the safety of our own homes is because there’s a lot of people and a lot of other companies who are putting themselves in harm’s way doing the – they’re doing the work on the frontlines. And I just want to say that on behalf of all 9,000 IAC employees, we’re incredibly grateful to that group of people for making what we do and a lot of other people do possible. Back to IAC. The – we’re really pleased with how the quarter turned out given the overall environment. And we’re cautiously optimistic on where things go from here. We have a meeting with the CEOs every Monday afternoon, which we’ve been doing since we started working from home and sheltering in place. And it’s really interesting to see the tone of the business has evolved over that with the first couple of weeks was a little bit of confusion and the next few weeks were a little bit of disappointment, and the two weeks after that, it seems like a lot of optimism among our businesses. And it’s tougher being – to be a part of IAC right now where we can see the benefit of a multi-business business and be able to communicate with each other on what’s going on and how we’re managing through changes in the business. And it’s great to see how our leadership is handling that. So we’ve posted all the numbers. You’ve got all the numbers. You could see the results. You’ve seen the – our numbers now through April, and I’m sure that raises some questions, which I’ll turn it to the operator to get the first question, which we can now start answering. Thank you.

Thank you. [Operator Instructions] And we’ll take our first question from John Blackledge with Cowen.

Thanks for the question, and hope everyone doing well. Broadly, for Joey, Glenn and Brandon, the April trending data across many of the businesses looks better than expected. Just given the uncertainty around the pandemic, it would be really helpful if you could walk through kind of the puts and takes on the trajectories for each business as we head through 2Q and into the second half 2020. Thank you.

Sure, John. Let’s – maybe I’ll just look at what the table is we published in the letter and walk you through that. Match, I guess, hopefully, a lot of you heard the call yesterday, with Shar and Gary, where I thought they did an excellent job talking about Match and what’s happening and what the outlook looks like. But you can see business is still growing, and we expect that business to continue to grow. And some of the dynamics inside of Match are pretty interesting. I think there’s – seeing the female engagement on that platform grow so nicely. Some of the trends that you see in that business kind of underlying the financial metrics are things that we’ve really tried hard with product over many years to get going. And certainly, no one would ever wish this pandemic on anybody, but one silver lining there: Match is seeing some of those metrics that really can support the business and the product experience start to move in the right direction, notwithstanding some changes in first-time subs and things like that. So we’re optimistic about Match and the future there, although it won’t likely be part of IAC much longer. At ANGI, it’s been really interesting to watch. We saw demand come down in the second half of March and the beginning of April. And then we’ve seen a lot of that demand come back since then. We don’t know if that’s permanent. We don’t know if a bunch of pent-up demand that didn’t come through or jobs that didn’t come through in March and early April as people were sheltering in place suddenly came through later in April and start of May. It’s possibly some of that. It’s possibly that the weather improved at the same time as things were starting to feel a little bit better. But it also could be that as people are spending time in their homes and spending less money on other things like vacations and restaurants and bars and things like that, they’re putting that money into their homes. And it’s possible that, that demand comes into our platform in a really interesting way. It’s really hard to make predictions in this business right now. We’ve got, I think, in the – within 43 days, we had both the seasonally adjusted kind of an all-time high and a three-year low. And when you get that kind of volatility in a business in a short period of time, you just – it’s hard to make any kind of predictions. But we’re cautiously optimistic on ANGI right now. I mean I feel we’ll spend some more time and Brandon will spend some time going through some of the puts and takes around there. In Vimeo, we’ve had great increase in demand for Vimeo. And you saw that in the bookings numbers we shared. You can see that in the revenue acceleration through April. On one hand, it’s really nice to see those numbers come through, and you worry though, is this temporary. The reality is this is a trend that we’ve been expecting for a very long time. We certainly didn’t expect it to come this quickly and this sharply, but this is a trend we’ve been expecting for some time, which is we’ve been saying to every small business, every enterprise, every entity that they ought to be using video to communicate. And that was when they still had a physical presence to communicate as well. Now that the physical presence is temporarily disabled for a lot of businesses, the video presence is the primary presence, and so you see a lot of people adopting. But our hope is that as people adopt these tools and as people realize these tools are effective tools for communication, that many of those stick and this becomes a trend, aiding what we thought should happen for a while. Meaning you – even when physical presences return, you still have audiences that you may want to reach that aren’t physically in your geographic reach or aren’t physically able to reach your fitness studio or your kid’s class or things like that. I mean video would be a very natural extension of those things. So we’re hoping that, that sticks, although I’m not sure it will stick at the elevated levels we’ve got right now, given the lack of physical presence for so many businesses. At Dotdash, we’ve been pleasantly surprised by how well Dotdash is holding up here. The traffic is not surprising. We’ve seen a big surge in traffic and – as everybody has as more people are spending more time on devices. But the advertising revenue has held up, in particular the performance revenue. And one of the differences we were talking about internally, and I was talking about this with Neil Vogel the other day, who runs Dotdash, is we’ve seen lots of business with traffic up 40%, and our traffic is up in that same neighborhood. And when I first heard the 40%, I was really excited about it. When I heard everybody is up 40%, I thought, okay, well, maybe we’re not taking share. But the difference, as Neil pointed out to me, and this is why we see our revenue holding up so well, is that our traffic is growing in areas with intent. The fundamental thing of Dotdash is our traffic is about intent. Our audience is trying to get something very specific done on our properties. So whereas a lot of folks are seeing traffic that is just sort of general entertainment or traffic that is sort of general news, things like that, our traffic is people trying to get very specific things done, like learning to cook new things or what to stock in the pantry or things that you could imagine that demonstrate a level of intent that advertisers would want to reach in a moment like this. And then you can see that playing out even more in the Performance Marketing where that advertising revenue is specifically related to performance, so a user taking a specific action and the advertiser paying only when that specific action happens. And obviously, that’s doing really well right now. The last bit, Applications, look, the Desktop revenue business is very disappointing for us. That continues to decline. I think – yes, I know the business is still profitable. And I think the business adds some – will continue to be profitable but at a lower level than it’s been historically. That was happening way before the pandemic, and the pandemic certainly didn’t help that business. But our mobile application business, which is Mosaic, is doing really nicely. It’s holding up in revenue and growth and subscribers. And we hope and expect that, that would continue from here. So that’s a very long answer to your question, John, but hopefully helpful as you think about these businesses and kind of the monthly trends.

And John, I’ll go into a little more detail to help you navigate through the year. And look, given the uncertainty, the dispersion of outcomes in financial performance is going to be pretty wide this year. So I caution everyone not to run rate the March or April performance. Obviously, we don’t know the length of the quarantine. We don’t know consumer behavior thereafter. And we don’t know the depth of or the length of the recession that we expect to come in the back half of the year. But jumping into some of the details to help you, just a couple of flash points here. ANGI Homeservices, you see demand down in April, 8% for service requests, 11% for monetized transactions. We expect demand to be down all year. We don’t expect our ability to monetize that demand to be up. And you saw a little bit of that in March, you saw a little bit of that in April, where revenue per monetized transaction in the first quarter was up 17%. And where those lines cross, that demand down and our ability to monetize that demand, where those lines cross will determine if we grow for the year. And we have scenarios, obviously, where we’re growing, and we have scenarios where we’re not growing in that business. As Brandon will talk about, among the certain things we know in that business is we’ll continue to innovate, and we think we’ll continue to take share. As you think about EBITDA for the business, we came into the year thinking we’re going to create incremental margin, but that margin was going to be eaten up by that $30 million to $50 million of discretionary investments that we are planning on making. We still are planning on making and are currently making those $30 million to $50 million discretionary investments that’s in international, that’s in our fixed price initiative. But we, in all likelihood, given the revenue profile of the business this year, we won’t create incremental margin. We’ll have decremental margin. And then again, you got to weigh around that $30 million to $50 million. In terms of Vimeo, there is a lot of noise in the print here. Recall, the first quarter of 2019, we sold the hardware business. So we had that in the numbers. And I think it was about $2.3 million of revenue in Q1 2019. And then in Q2, in May, we bought the Magisto business. So you have that in our numbers. I think the best way to look at Vimeo is if you strip out the acquisition and look at the true organic growth rate. And there, you see in some of our disclosure, we said subs, ex Magisto, grew 10%, accelerating from 8% of last quarter; and ARPU, average revenue per user, grew 11%, that also accelerated. That created 22% organic growth for the quarter. You may recall, I said 19% organic growth at the end of last quarter. And while you saw in the press release, 59% bookings growth, that included Magisto; ex Magisto, 41% organic bookings growth. Bookings – revenue, of course, trails bookings by several quarters. So we expect that 22% to inch up – that organic growth rate to inch up but not grow dramatically. In terms of Dotdash, I would point you to that Performance Marketing revenue line item of 115%. And I think that just speaks to the diversity of the business. And again, a little bit like ANGI Homeservices, we think the performance-based marketing business, which includes e-commerce and other areas where we’re paid for action not for impression, we think that’s going to grow all year. We think display will likely shrink all year. And I think the 7% is going to get worse as we, of course, work through the backlog this quarter. And where those lines cross will determine if we grow this year. I think, as Joey said, we’re optimistic around Dotdash. But we’re still in Dotdash going to make investments in content and make investments to continue to capture share against the bigger brands in which we compete and the bigger brands in which we do well – against which we do well. Desktop. We saw it last quarter – sorry, Applications, we said last quarter will probably hit a low within the second quarter. We still believe that, but the low will be a little lower than we expected given some of the issues that we’re working through in the Desktop business. And Mosaic, as Joey said, will be resilient. If you’re bored at home, if you’re working at home, if you’re working out at home or you’re doing homework at home, we have an app for that. And those apps, of course, are doing well. The apps that are related to travel are doing less well. And then Emerging & Other, the step-up in growth in February, that’s the acquisition of Care. So you have a bunch of inorganic growth there. If you strip out Care, we’ll shrink year-over-year – or we shrank year-over-year in February, March and April, and we’ll shrink year-over-year throughout the rest of the year. So that’s kind of a trip around the horn, if you will. I would highlight the way I started the answer, which is uncertainty reigns here. But again, as we’ll talk about, hopefully, throughout this call, we’re certain that we’ll keep innovating in every business. We’re certain we have a flexible expense base, and we’re certain we will continue to penetrate the large addressable markets in which we compete.

Thank you.

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

Hi, guys. Thanks. Just a couple. One for ANGI. Maybe just talk about what you’re seeing ROI-wise at this stage in the Performance Marketing channels in particular and just kind of how you balance things between what I guess is a slight drop in demand relative to what I think is probably been a less competitive advertising environment. And then I have a follow-up.

Sure. This is Brandon. Thanks for the questions. We have seen costs come down across – as you guys are all aware, across just about every channel. And that’s been to our benefit. I think we find ourselves in a very fortunate position as really the only marketplace at scale focused solely on home services. We are – we have several thousand employees that wake up every single day with a singular focus, which is how do we improve the experience for homeowners and provide best-in-class tools for small businesses to reach those homeowners. And we saw, as you can imagine, a stress test of our business models unlike anything that we would have ever wanted to see, but nevertheless, got to see the results. And as demand declined sharply in the back half of March, we saw a couple of things. One, obviously, directly to your question, we saw costs come down across nearly every marketing channel that we use to acquire both service providers and homeowners. But we also saw the resiliency of our business model at Angie’s List, which was only modestly affected. And then in HomeAdvisor and in our Marketplace segment more broadly, of course, we do see the immediate effect of lower transactions. But we saw dramatic engagement from service providers, both those that already use our platform, who engaged more, but also the attraction and entrance of new service providers who are coming for the benefits of what we believe is the – far and away, the best ROI toolset to reach homeowners that exist today. `April for us was an incredibly strong month from an SP sales standpoint. We were able to bring on more SPs in April than we ever have in the history of the company while also seeing improvements in engagement from the SPs that were already part of our network. That served to substantially cushion the dramatic declines in demand. From an overall ROI perspective, the landscape is certainly favorable at the moment. And we haven't really seen that change even though, as you can see from our April results, we have seen a pretty strong recovery in overall consumer demand. We're still seeing relatively favorable dynamics from an ad rate standpoint.

Got it. That's great. And then just any quick update on fixed price, any milestones you can share? And just talk about any changes or maybe accelerated expansion on the rollout of that as a function of COVID. Thanks.

Yes. So there are two things with fixed price: First, we are still investing, as we said we would, and are on a pace that we plan to be on. Without a doubt, when you reduce the top of the funnel 40% or 50%, that's going to have an impact. But that proved relatively temporary. And in April, we are back on track and saw the biggest weeks in the history of fixed price from a bookings and a revenue perspective. So we're very happy with the trajectory and growth that we're seeing there, which is in line or maybe a bit ahead of our expectations. I think, perhaps more importantly, we have expanded into a number of different project categories where the projects are higher value and more complex. And what we've been able to prove out with certainty is that there is demand from a consumer and a homeowner standpoint and willingness to engage with and purchase these projects digitally. And obviously, that's the starting point. You have to know that there's a market for these things, and we've been able to prove that out and are very certain that we can scale a business in these complex, high-value projects. Our work ahead of us here is to master, if you will, the fulfillment and logistics around actually completing these projects. They are more complex. And by virtue of that, there's more work to be done to be able to do this at scale in every market, in every one of the foreign markets we serve nationwide. So those will continue to be our focus for the remainder of the year, which is to scale those, continue to scale and grow those project types that we launched last year but meaningfully master fulfillment for all of these new higher-value project types that we've launched this year. I think, just to draw everybody's attention back to the values we're talking about, I think the initial set of categories we launched had a TAM of something like $5 billion. While the next set is in the $25 billion-plus range. So we're unlocking a tremendous amount of additional potential GMV by expanding to these new categories, and getting the fulfillment right is both important from a financial performance standpoint but also quite clearly in terms of satisfying customers that are willing to make those purchases.

Great, thanks.

We'll take our next question from Cory Carpenter with JPMorgan. Cory Carpenter.: Great, thanks for the questions. Brandon, I was hoping you could provide some more color on the performance across different categories and geographies in the quarter in April. And then maybe a follow-up to the marketing question, just how you think about the right level of spend as the business starts to recover. Thank you.

Yes. That's a great question. In mid-March, and I said this before, the day they canceled the NBA season or suspended the season, the next day, sort of the bottom fell out nationwide in effectively every market and every category. I think people were just in shock. That lasted for a couple of weeks, and then we began to see a very aggressive, essentially V-shaped recovery in demand even as lockdowns were continuing to spread across the country, which I think is interesting. As you would anticipate, there's a big difference between projects that happen indoors and projects that happen outside and projects that you have to do versus projects that are discretionary. And what I can tell you is that where we're seeing the biggest impact is in indoor discretionary projects. These are things like cleaning services or remodeling. Everything else, whether it's a nondiscretionary service that's indoors or whether it's any type of outdoor project, we've seen a very strong recovery. All of these actually are recovering quite well, but certainly indoor discretionary, we continue to see hesitancy amongst consumers to take on some of those projects. So if there's an area where we continue to see some drag, it's there. Quite frankly, we're seeing a couple of things that are really interesting. First, we've seen – in terms of the mix of customers coming to our site, we've seen since the beginning of – or sometime in February, we've seen a pretty significant shift in terms of mix toward new customers that we've never seen come to our marketplace before. And we have a 20-year history, so we have served, over that 20 years, a great deal of households. But we are seeing more people that are completely new to us as a percentage of our customers than we ever have or that we ever have of late. I think it's really interesting because to me, it suggests perhaps an acceleration in terms of the shift from off-line to online. And that's obviously something we're keen to lean into. People are, as you know and are experiencing, staying at home and have fewer alternatives in terms of their time and money. And if you're anything like me, you've got a list of home projects that you didn't have before that are suddenly top of mind. How long that secular trend lasts? I don't think any of us know, quite a lot of uncertainty around that. But for the moment, the home is top of mind, and people are spending a lot of time there. There's more wear and tear, there's more desire to improve. In terms of other opportunities to differentiate and sort of lean into that off-line to online transition, we believe our marketplaces have always offered an advantage over traditional word-of-mouth referrals and the way people used to do things but changing behavior is hard. In a world of social distancing that we are in at the moment, and that seems to be the case for the foreseeable future, we believe our platforms offer substantial additional value to help people get work done safely and securely and with confidence as such. And so we are rapidly introducing new features. We've done so recently, including contactless payments, video calling. The ability for providers to indicate what precautions they take when they come into your house and so on. And we have more to come. We think that we can meaningfully deliver value to homeowners and to SPs to help them both feel comfortable and actually be safe and getting home projects done. And I think in doing so, we can help drive a recovery in helping people feel comfortable in getting those discretionary indoor projects done, and that's a big focus for us for the rest of the year. In terms of channel ROI, look, this is pretty straightforward. We always manage to – a margin requirement in every channel from an ROI standpoint. The favorability of rates makes it easy for us to lean in. I think one of the areas where we have held back a bit has been in TV, but TV rates, at least for the moment, are extremely favorable. And you'll see us lean in there over the balance of Q2 and, hopefully, the rest of the year if that holds. But otherwise, we always manage to – an ROI target based on a margin requirement, and we continue to do so.

Great, thank you.

Our next question comes from Kunal Madhukar with Deutsche Bank.

Hi, thanks for taking the question. A bigger picture question. In terms of looking at the portfolio that you have and how you intend to manage it for the long-term, how should investors kind of look at milestones that you set? How do we measure you against those milestones? Just trying to understand the portfolio strategy going forward and how one should kind of evaluate things on a time-to-time basis. Thanks.

Thanks, Kunal. It's a great question. We still have to look at IAC or we still look at IAC in pieces, not in the sort of one aggregate revenue or one aggregate earnings. And I think that will remain true post separation from Match. So we really do have to answer that question then into pieces. And take ANGI Homeservices, I mean ANGI is, we still think, in the very earliest stages of its market penetration in a very large market. The things that we're doing in product right now look like they have the potential to us to unlock a lot more of that market and bring changed consumer behavior in a way where it becomes much more naturally for consumers and – becomes much more natural, sorry, for consumers and service professionals to transact online to get jobs done. That's what we're looking for in ANGI Homeservices. Of course, that comes through in increased demand, increased supply and ultimately increased revenue in that business. But that's what we're looking for in that business. And we would be disappointed if we can't build the business multiples bigger than it is right now by executing against some of the things that we've already discussed in our product pipeline. Vimeo, similar story. I think meaningfully helped in the last couple of months. But we believe every business needs video and we'll – we look at subscribers and growth bookings and ultimately, both of those things flow to revenue as the drivers of that. And again, if it's not multiples bigger than it is right now, I believe in Vimeo, we're on good trajectory. We need to continue that trajectory. We need to continue to innovate in product there. We need to continue to make it easier to use these tools for more small businesses and entities to be able to use these tools and to self-enroll into these tools. But the current trajectory has to continue with product innovation. And if that's true, again, you could see a business multiples bigger than it is right now. Dotdash is a story where both the publisher and aggregate, I think, has done incredibly well by focusing on the right things, the right kind of content for consumers to be digestible, to be freshest, fastest, freshest content, fastest site, fewest ads. They've done a wonderful job on that. But if you look even – at Dotdash, you can look at Dotdash into pieces and say, in health care, we can be multiples bigger than we are right now. In finance, with Investopedia and The Balance, we could be multiples bigger in each of those areas. In home, same story. In each of those areas, we have a much bigger competitor, and that's what we're going after to build that business. And then Care.com would be the other big growth engine that's already in there. And there is –Care is probably 30 times bigger than the next competitor, but it's still a tiny fraction of the market of what happens off-line. And we all know it will be much more convenient if you could book a reliable, high-quality, good caregiver with a click and not with a multi-interaction process. And that's what we're trying to put in place. That's what we put in place at Care with –sorry, that's what we put in place at ServiceMagic a long time ago that has evolved the business we have today, and I think that's what's possible at Care. So those are the big growth engines. And I think we're really excited about each one of those. Maybe we won't get all of them right, but I think they're all on the right path of the trajectory. And the last piece outside of those businesses, of course – and we have other smaller businesses, of course, we've been working on. Those are much earlier. But the last piece is the cash. And we will have a large pile pro forma for the Match separation. And depending on what happens with this equity sale, we will have a substantial pile of cash. And when we look at where the kind of world is heading right now and where the market is heading, we're hopeful that there's opportunities to deploy that cash. In the past, when we've been very well capitalized in markets that have been more challenged, we've been able to do well with that cash and putting it to work. And that's certainly going to be our goal through this period, and we should certainly be judged and judged harshly on how we do with that cash.

Thank you.

Operator, next question please.

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

Thanks. Two questions. One, I just want to dig a little more into ANGI and then I'll follow up on Care. So down 2% in April is very impressive given COVID has scared people from having professionals in their house. And then I want to focus, to the extent that one-third of your GMV is coming from discretionary projects, and I imagine people are delaying that, what does that mean for the other two-thirds that we'll call necessary projects? I mean did that actually grow? If you could kind of almost like cohort those two and how you're thinking about that. And then the second question, how does Care.com avoid liability during COVID? Thanks.

Yes. Thanks, Jason, for the question, two-third is nondiscretionary, as we've always said, but a big chunk of the discretionary is also outside. And people seem very, very comfortable getting the outdoors work done. So when you boil that all down, only the indoor nondiscretionary has been impacted. And it has been impacted. We are seeing it recover some but not back to where it was previously. I think the short answer to your question is we entered April at a major deficit, and we exit with some strength. Overall, as Joey said earlier, there's a lot of uncertainty around the nature of that strength. You can postulate that it is delayed demand or pent-up demand from the sort of period of shock in late March. On the other hand, it could be the beginning of a sort of secular boom in home services from people being in their home much more than they were before and with much more focus on spending time in the home and in a world where you can't go to restaurants, having people over to dinner in their home and so on and so forth. So I think the future is very uncertain and the dispersion of outcomes is very wide. What we feel confident about is certainly that we're in a pretty strong position financially. We're – financial performance, I think, in April is good given the situation. And we think we can make a real difference in the world we're living in here for the – at least, the near and medium term in terms of accelerating people from off-line to online and providing them features that make a material difference in terms of getting them over the hump and being comfortable in getting that indoor work done. We believe that, that indoor work done can – indoor work can ultimately be done safely if people are following the right guidelines and have confidence in how it's being done, and that's a huge focus for us. I think that's kind of the overview, but we're definitely seeing – in everything but into our discretionary, we're definitely seeing a lot of focus and demand in those areas.

Yes. And just our resilience, Jason, is not just discretionary/nondiscretionary. As you know, we're in 500 different categories. As you know, we're in 400 different markets. And just to talk about geography for a second, obviously, we saw a bigger hit in the eye-of-the-storm areas, so Pacific Northwest, Northeast and northern part of the Midwest. But in other areas of the country, things played out a lot better. Recall in times of reduced demand, SPs need us more. And we're seeing that now given, as Brandon said earlier, the ROI to an SP on our platform is pretty significant and better than competing platforms. We've talked previously for every dollar you spend, it's a 25x or 30x return on that dollar. And then additionally, as you know, I think we talked about this in our – in the last letter, our fixed cost base here is quite low and our variable cost base is 70% to 80% of the total, so we can adjust our expense base if we so choose. And this year, we may not, but we could adjust our cost base with reduced demand.

On Care.com, Jason, a lot of you are probably seeing that the liability landscape of COVID-related things is certainly evolving. It's a regulatory question. It's a policy question, and we just don't know yet how that's going to shake out. What I can tell you is that one of the benefits of using this platform is that the interactions are more limited. So you can find somebody, you can find somebody reliable and your sort of field of exposure is effectively 1:1. As soon as there's systems, of course, that everybody in the world is looking for, which is whether you can verify that somebody is safe or has antibodies or has been tested or get instant tests and things like that, we'll try to avail ourselves of all of those tools. But until those things become available, one, if we – somewhat beneficial thing here is limited interactions, limited interactions with bigger groups, which means it's a smaller field of exposure there. But we'll have to see how that landscape evolves. At some point, there is responsibility between people making decisions of what exposures they are comfortable with and what exposures they're not comfortable with and a lot of that is going to be informed by, of course, the regulatory environment and government recommendations. Next question?

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

Great, good morning everyone. Maybe first for Joey and maybe both Glenn and Brandon as well. Yesterday, Shar talked about more use of video tools, more female engagement and it seems like that's an opportunity for sort of specific product development for Match that has emerged due to COVID. You've already both spoken a little bit about accelerated shifts of behavior change. But can you point to maybe some areas where you already see specific product opportunities for ANGI or across the IAC businesses? Joey, Vimeo seems like an obvious one, but any others that you'd highlight would be great to hear. And then just the second for Glenn. You've activated the option to sell up to $1.5 billion of Match stock. Can you elaborate on your thinking and the timing for that? What sort of disclosures we can expect going forward? And any other context, that would be great.

Sure. Brandon, why don't you go first on ANGI and video, and then I'll hit the IAC part and the business part.

Yes. So let me give you just two examples that we're excited about. First, we introduced contactless payments just in this last quarter. Contactless payment means that any project that is submitted across the entire HomeAdvisor marketplace, not just fixed price but any project can now be paid for – from the consumer to the SP through the HomeAdvisor app. And obviously, that offers a level of convenience that is attractive to people anyway. But in a time of social distancing and the situation we're in, nobody wants to exchange a check or cash or have to frankly interact in person if they can avoid it. The timing for introducing contactless payment is obviously perfect. And if you think about the potential impact of that, if we can close the loop on a significant number of the projects that get completed in our marketplace, remember, we're – our GMV for the entire marketplace is north of $10 billion. If we can close the loop from a transactional standpoint, the opportunity to test different business models, to introduce things like the opportunity for financing, and maybe in a more basic way, simply drive deeper engagement and convenience to our customers to drive more loyalty and ultimately more – a longer lifetime and longer lifetime value is really significant. So I don't think we could be any more excited about a feature than we are about contactless payment. We also introduced video calling. This was very specific to the situation and enables the consumer and SP to talk via video through our app. The consumers obviously appreciate this for reasons that are obvious in terms of social distancing. SPs appreciate it for the same reason, but they actually are attracted to it for a different reason, which is if they can save a trip across town, it saves time and expense and makes – enables them to run their business much more efficiently. We're seeing real affinity for this feature from our service providers. And the thing that's interesting about all this is these features were always there, and the benefits could have always been derived when you think about running your business efficiently. But what people need is something to get them over the hump of making that behavioral change in terms of how they operate their business, and this situation is forcing that. But by – as it's happening, these folks are learning and understanding the benefits. And when the situation resolves itself, which we all know it will the behavior isn't going to change. They're not going to go back. So we are seeing behavioral change driving people toward these digital features, and we expect those to be lasting changes in terms of how people conduct business.

Yes. I agree with that and you can expand that to other businesses. But just going to Vimeo, we've seen just, as a couple of examples kid's channels. That's a big user of Vimeo's tools. We've seen 15x increase in sign-ups in kids' channels. We don't monetize that, but the point is that the people who run those kid channels see that benefit in there in reaching this kind of audience. Similar with personal trainers, gyms, fitness experts, these are individuals who are putting up their own channels and seeing something like 5x increase in demand. And of course, that's bringing more channels onto our platform, which is important for our business. So you could see it throughout Vimeo and all the places that Vimeo touches of the economy and all the kinds of different businesses that Vimeo touches. I think that's probably, besides what you mentioned in Match and what Brandon just talked about at ANGI, I think that's the main areas where video impacts us. I mean Dotdash uses video as a tool to communicate and will continue to use video as a tool. But that's not like, I don't think, a fundamental change in user behavior like you're seeing now, where people who previously would only communicate or use text or pictures as a tool now use video as a tool and where it can replace or supplement, and I think long-term, supplement is really important, physical presence.

Regarding the $1.5 billion, I like your choice of words, activate the option, that's well said. We filed the S-3, that was done to register the $1.5 billion shares we may sell, and those shares will become shares of Match common stock in the separation. People may have been a little confused by that as those shares were called Class M, and that's simply due to the mechanics of the transaction. There's a lot of technical’s that go into that, but given the shares will not be delivered to the buyers until closing, those shares will not be entitled to the $3 per share cash distribution. This filing gives us the option, not the obligation to sell those shares, which depending on market conditions, as Joey said in the letter, we may in fact, do. And the sale of the shares will not happen until the transaction closing, which we expect to be shortly after the shareholder vote on June 25, but we can enter into transactions and agreements to sell the shares with potential buyers prior to.

And Dan, I just thought of one more example, which is a tiny one but a fun one. This is in Bluecrew where we're matching employers with employees in the light industrial temp labor space; we're able to bring employees on through video interviews. And actually, the same is true in care.com; we talked about this in the letter where you can hire people over video. And that makes things – again, it reduces contact, but also it makes things a lot more convenient for the person doing the hiring and allows us to build the tools that enable other people to scale, how to be able to scale their systems to drive conversion. Essentially, a family can scale by doing a lot more by being able to meet with caregivers or employer meet with workers by doing these things over video and being able to improve and optimize those things over time.

Okay. Thanks everyone.

All right. Next question out there please.

Next question comes from Eric Sheridan with UBS.

Thanks so much for taking the question. I want to know, could we double back first to your comments on Dotdash and the level of success you're seeing in direct response and e-commerce? I wanted to get a little more granularity on what you were seeing and what that might mean in terms of how you align that sort of engagement and monetization inside that part of the company for the long-term? And then I know we're not giving guidance for the full year, but there are a couple of moving pieces this year that we just want to make sure we have clarified things on spin costs, the care.com acquisition costs, the endowment piece that you've called out before, just so we make sure where some of those individual pieces might fall as you look through the fiscal year? Thanks everyone.

I'll let Glenn do the second part. In terms of the performance marketing piece of Dotdash, it is – so first of all, there's really hundreds of advertisers using those tools on our platform and so it's starting to scale really nicely and starting to diversify. The key in there, I mean you talk about engagement and monetization, the key in there then is having content that's actionable. So for example, finding a brokerage account. Number one, like, why do I need a brokerage account? What do I do with a brokerage account? How do I do certain things around there? That's the kind of content that would be existing in Investopedia and the balance. But also within there is, okay, where should I open a brokerage account? What are the rates of one versus the other? And what are the rates that matter? What are the rates that are likely to be something that affects me and my kind of account as against somebody else and their kind of account? And us building those tools, building those tools completely and partially, the great thing about what we're doing is we're coming here from scratch, so we don't need to protect any revenue. We don't need to protect anybody's revenue here. Our goal is just to deliver for the consumer. And so long as we're just delivering for the consumer the best, impartial, fastest, freshest information, then sometimes they click-through to the advertisers and that's where that gets monetized. Well, that's our goal. Our goal is just to make that content in areas where it's intent-driven but to deliver that impartial content for users. And so long as we continue to do that across a very wide range of categories, I think we'll be able to monetize it because the users are coming to us with the intent. We don't need to guess what they're doing. We don't need to cookie them. We don't need to understand their demographic information. We don't need to understand their personally identifiable information. We know somebody looking for a brokerage account is looking for a brokerage account, and that's what matters to the sort of folks on the other side of that advertising equation.

Yes. In terms of our one-off costs related to the separation and the acquisition, care.com costs were about $40 million, half of which is going to be deferred revenue. You saw $13 million of that already in the first quarter. We think there'll be a similar amount in the second quarter. And then the balance will be split roughly equally in the third and the fourth quarter, maybe a little weighted to the third, that's Care. In terms of the spin costs, we estimate that about $20 million, $8 million of which was in the first quarter. The rest of it will be in the second quarter. That will be in the corporate line. The Care costs, sorry, will be in the Emerging & Other line. And then the third cost, as you said, was the funding of the endowment, the IAC Fellows endowment in celebration of IAC's 25th year. That will be $25 million, and that will hit in the corporate line in the second quarter.

All right, next question.

The next question comes from Ross Sandler with Barclays.

Hey, guys. Barry was on TV a couple of weeks ago and mentioned that you're looking at large deals. So given how the environment for private company financing has changed since the last six months, how are you thinking about large versus small deal size versus buyback? And what kinds of companies do you think you're most interested in? Is it still kind of two-sided marketplaces? And then second question is just spin mechanics. So I mean you guys have said the vote should be completed on June 25, and then we go when-issued. Will the new shares be trading by the end of the second quarter before June 30? Any color on what happens after June 25? Thanks a lot.

Sure. On deal size, Ross, we're looking at everything, small to big; share repurchases would also definitely be in the mix. The – I guess the one thing that has perhaps changed is that some big deals have gotten smaller recently and so – or may get smaller soon, and that may create some opportunity. I don't think that there's a fundamental shift in how we think about capital or how we think about deploying capital or our willingness to bet the company, which we haven't historically been willing to do, and I don't think we'll do going forward. But there are opportunities that may become available in an environment with a lot of dislocation, and we would certainly look at those and give it a fair shot. So that's, I think, really it on deal size. Glenn, do you want to do the other question?

Yes. On the mechanics, as you said, the shareholder vote is the 25th. We expect the, well, securities – we expect the transaction to be done by the end of the quarter, so call it in and around June 30. And then post then; the two stocks will trade separately. Obviously, there's a lot of complexity in that, but to simplify it, I think we have an example in the previous letter, a little bit updated for this letter. An IAC shareholder who owns 1 share of IAC, come July will own that same share of IAC. And then based on stock prices, I think last night, we'll get 2.38 shares of Match. And if we avail ourselves of the option to sell the $1.5 billion, we'll get 2.18 or 2.17 shares of Match. And all that obviously will depend on the stock prices prior to – the stock prices at the time. But it's – the mechanics are simple, and I refer you back to the deck we presented in December, which I think did a really nice job of demystifying what, yes, is a complicated transaction.

Thank you.

Next question.

We'll take our next question from Nick Jones with Citi.

Okay. Thank you, all for taking my question. I guess just on care.com, in the shareholder letter, you furbished quite the opportunity. You called out rapid bookings, video interviews, improved matching. Can you maybe expand on the opportunity and maybe what the use case is today? It sounds like it's more kind of long-term care. And what you see the use case is in the future?

Sure. I do think long-term care is still very much going to be a focus of Care forever. What we're trying to do is also open up the 78 million babysitting and short-term-duration child care jobs. And what that does besides being a new revenue opportunity, Nick, is it hopefully drives frequency. So it's just a platform where it's easy every week is when you need care for an elder or for a child, you can go on press a button and get it done, then I think people will also turn to us for the long-term care and other kinds of care in their home. That's the goal on that. The market is quite large. Most families need care at some point, and families in a certain age range need care very frequently over the course of the year. And obviously, things happening with schools being available and day care centers being available right now certainly changes a lot of the dynamics but hopefully in ways where we can satisfy incremental consumer demand. So that's the opportunity, I think a very large one. The business was growing when we bought it. And I think that there are lots of opportunities to optimize some of the tools inside of there to make them work more efficiently, to drive conversion, to allow easier enrollment. And if we could just get some of that blocking and tackling done, I think even before creating wildly new, innovative tools, we can drive real growth there.

Okay. Thank you.

Okay. Let’s do one more question, please, operator.

We'll take our next question from Ygal Arounian with Wedbush Securities.

Hey, guys. Good morning and thanks for the question. So I want to ask, if I could squeeze in two. Just back on the M&A question and not focusing on deal size, but how your outlook on target type of companies may have changed in the current environment. Like for example, e-commerce has really grown to kind of shine through in this kind of environment and maybe other businesses that are more exposed to local, maybe having more challenges. So any change in the kind of target companies that you might be interested in pursuing? And then on ANGI, just as you talk about the sales channel being really productive and ROI SPs are getting, maybe just similar to everybody else, a little bit surprised in some of the resiliency in that business. Can you help maybe give some color on what the discussions are like with SPs? Are ROIs higher or lower today? Are you giving kind of incremental offers to get people onto the platform? Just a little bit of insight on what those discussions are like. Thanks.

Brandon, why don't you do the ANGI one first, and I'll close out with the other question.

Yes. So the nature of the business model, particularly in our Marketplace segment is very resilient. The less consumer demand there is, the more obviously providers need us. And as you guys know, we've had an excess of consumer demand for a long time. So even as demand goes down, we still have a lot of it, and we see SPs engage more, make themselves active and available more. In terms of bringing new SPs on, in April, I said it was our highest all-time sales month in the history of the company. To put some more perspective around that, we were up 38% versus last April, and that's on a sales force that's roughly the same size. So it gives you a sense of the absolute productivity of our sales force. Part of it is need and just having best-in-class tools in terms of helping these small businesses get customers. But another part of it is that we've become far more sophisticated over the course of the last year in being able to tailor our offering to the right customer in the right way at the right time. I think in our 20-year experience up to this point, we've always approached it in a one-size-fits-all way. But the reality is a handyman or a maid is very different than somebody who does kitchen remodels. And in the same way, a company that is one or two people is very different than a business that might have 100 techs. And so we have come up with a range of offerings and products and configurations that are tailored to unique situations and segments that we simply found have opened up our ability to bring on more SPs because of the appeal of those configurations. We think we've got a long way to go there in terms of a lot of runway and being able to get even better at that, considering we just started over the course of the last, let's call it nine months. But we're seeing very early positive impacts from that segmentation and customization.

In terms of kind of companies we're looking at, and Ross asked this question, I forgot to answer this part of Ross' question, too, so thanks for raising it. It is – I don't think e-commerce is likely something for us. I mean anything is possible. We don't rule anything out. But I think those kinds of inventory businesses are not typically where we've historically done well. I think certainly, we feel like marketplace businesses, and we'll always be looking for marketplace businesses. But really, what we're looking for is category leaders in very big categories where we think there's significant room to run. And that could be really anywhere. But I suppose if you picked one, e-commerce. I think it's probably less likely to be e-commerce but more likely to be, we think, good brands in big categories with big potential.

And with that, we will wrap it up. Thank you all for joining us. Everyone, stay safe, stay healthy, and we will speak to you next quarter.

Thank you.

And that does conclude today's conference. We thank you for your participation. You may now disconnect.