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Aug. 5, 2021, 8:49 a.m. EDT

IAC feels a sting from Angi rebrand in first earnings report after Vimeo spinoff

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By Emily Bary

A lighter IAC/InterActiveCorp. began its latest chapter Wednesday with its first earnings report following the May spinoff of Vimeo.

The company, which also spun off Match Group Inc. /zigman2/quotes/207178501/composite MTCH +1.92% a year ago, is now focused on executing a rebrand at home-improvement company Angi Inc. /zigman2/quotes/209149959/composite ANGI -1.05% and driving further growth at Dotdash, which is a collection of media brands including Brides and Liquor.com.

IAC /zigman2/quotes/205118493/composite IAC +0.46% posted revenue of $829.5 million in the second quarter, up from $659.0 million a year earlier. Analysts tracked by FactSet were anticipating $853 million, though the consensus figure includes several estimates from before the completion of Vimeo’s spinoff. Just over half of the company’s revenue came from Angi, which posted $421.0 million on the top line, up from $375.1 million but below the $425 million FactSet consensus.

IAC shares fell 2.4% in after-hours trading following the release of the results, after closing with a 0.4% decline at $134.25. The stock has gained 6.6% so far this year, as the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.75% has gained 17.8%.

Angi is in the middle of a rebrand under its new chief executive, Oisin Hanrahan, as the company focuses on building up the Angi name in a modern twist on Angie’s List. There’s been some “financial pain involved” as the company de-emphasizes its HomeAdvisor brand name and pulls back on spending there, Hanrahan told MarketWatch, but he’s upbeat about the “unbelievable consumer awareness” for the Angi brand despite limited investments there in recent years.

“[W]hile we always knew the rebrand would be difficult and expensive, we underestimated the impact of the cumulative set of changes,” IAC Chief Executive Joey Levin said in a shareholder letter. “Fortunately, that audience from search has begun recovering, and while not yet completely recovered, we expect to eventually get back to where we started and beyond.”

Hanrahan said that Angi “made this an investment quarter” and is looking to reach its goal of unifying under a single brand more quickly without “worry[ing] about the pain of any one quarter.” Though the HomeAdvisor brand has decayed more quickly than expected in the absence of brand spend, he said that dynamic “reinforces the decision that this is the right thing to do.”

Angi is benefitting from continued consumer investments in home-improvement projects, without the “spikiness” witnessed in the early days of the pandemic, Hanrahan said. As people return to “some sort of normality,” they’re focused on a broader array of at-home projects undertakings beyond trendy pandemic projects like above-ground pools.

In the current housing market, people are buying homes that are “a little further out of the way than they would’ve normally bought,” meaning that they’re slightly larger and require more modernization, including to support hybrid work-living arrangements, he continued.

The company continues to see supply pressure as some professionals struggle to find day labor, limiting the projects they can take on.

Angi acquired Total Home Roofing at the beginning of July to help grow its roofing business more quickly and incorporate technology like aerial photography into the process of pricing and obtaining permitting for jobs. Angi disclosed 16% revenue growth for the month of July, up from 7% in each of May and June, though just the July metric reflects contributions from the roofing acquisition.

“We will likely operate the business in and around breakeven for the balance of 2021 at least, and the brand impacts on customer acquisition will keep year-over-year organic revenue growth down at the reduced current levels at least through the next few months, though the small acquisition in roofing shows an improvement in the figures posted,” Levin said in the shareholder letter.

For the second quarter, Angi posted a loss of $30.3 million, or 6 cents a share, versus net income of $12.7 million, or 2 cents a share, a year earlier. Analysts tracked by FactSet were expecting a 4-cent GAAP loss on a per-share basis. Angi bought back 700,000 shares at an average price of $11.71 apiece between May 7 and Aug. 3, and the company has 18.1 million shares remaining on its stock-repurchase authorization.

IAC posted net income of $194.8 million, or $2.02 a share, whereas it lost $96.1 million, or $1.13 a share, a year earlier. The improvement in profit reflects a $210 million after-tax unrealized gain stemming from the company’s investment in MGM Resorts International /zigman2/quotes/209932643/composite MGM -1.01% . Analysts were expecting a GAAP loss per share of 44 cents.

IAC saw the fastest top-line growth in the second quarter from its Dotdash media business, which posted revenue of $73.3 million, up 64%.

Dotdash has a variety of brands including Brides, The Spruce, Simply Recipes, TripSavvy and Liquor.com, and it’s focused on selling advertisers “context and intent” rather than audience as readers typically come to the sites with specific questions, like how to fix a slow wireless router or make a pie for 10 people, according to Neil Vogel, Dotdash’s CEO.

The company is benefiting from a recovery in the ad market relative to the worst part of the pandemic and it’s seeing rebounds in some of its content verticals that struggled earlier in the crisis. The travel business “went to near zero” but now people are interested in reading about domestic travel ideas, Vogel said, while the Brides publication is benefiting from people trying to fit two years’ worth of weddings into one year and looking for creative ways to get around venue shortages.

“Everyone wants to get married in a barn, for Instagram, with string lights,” Vogel quipped.

Dotdash generates about a third of its revenue from commissions when people buy things while reading its sites and the company is getting into the licensing business as it looks to create its own products. Various Dotdash brands sell their own rugs, pet sprays, and paints, Vogel said, and while this part of the business is “not material financially yet,” he sees opportunities to translate the knowledge that Dotdash editors have about consumer preferences into the sorts of products that people will be likely to buy.

IAC generated revenue of $183.6 million from its search business in the second quarter and posted revenue of $151.7 million in its emerging and other segment, which includes the Care.com platform for childcare and senior care. Both segments grew revenue by 40%.

/zigman2/quotes/207178501/composite
US : U.S.: Nasdaq
$ 160.02
+3.01 +1.92%
Volume: 1.92M
Oct. 15, 2021 4:00p
P/E Ratio
81.26
Dividend Yield
N/A
Market Cap
$45.18 billion
Rev. per Employee
$1.26M
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/zigman2/quotes/209149959/composite
US : U.S.: Nasdaq
$ 13.15
-0.14 -1.05%
Volume: 1.48M
Oct. 15, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.63 billion
Rev. per Employee
$287,828
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/zigman2/quotes/205118493/composite
US : U.S.: Nasdaq
$ 151.56
+0.69 +0.46%
Volume: 459,895
Oct. 15, 2021 4:00p
P/E Ratio
11.56
Dividend Yield
N/A
Market Cap
$13.52 billion
Rev. per Employee
$371,668
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/zigman2/quotes/210599714/realtime
US : S&P US
4,471.37
+33.11 +0.75%
Volume: 2.05B
Oct. 15, 2021 4:46p
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/zigman2/quotes/209932643/composite
US : U.S.: NYSE
$ 47.95
-0.49 -1.01%
Volume: 4.30M
Oct. 15, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.02%
Market Cap
$23.11 billion
Rev. per Employee
$122,907
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