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ANGI Homeservices Inc (NASDAQ:ANGI)
Q3 2019 Earnings Call
Nov 7, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good day. And welcome to the ANGI Homeservices Report Q3 2019 Results Call. At this time, I would like to turn the conference over to Mr. Glenn Schiffman, the CFO of IAC. Please go ahead, sir.

Glenn Schiffman -- Chief Financial Officer

Thank you, operator. Good morning, everyone. Glenn Schiffman here, and welcome to 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 Homeservices. Joey and I will also address any questions you may have on IAC's third 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 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 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'll 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 and full reconciliation for all material non-GAAP measures. Now let's jump right into it. Joey?

Joseph Levin -- Chairman of the Board

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 are certainly doing it 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 in fantastic categories, and we wanted to crack those competitively. And we really liked 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, starting -- end the year, going into next year. And we have high confidence in the business including at ANGI, where we had a bit of a bumpy quarter last quarter and we're feeling good about our outlook now from here.

Obviously, we're on the -- in the middle of a discussion with 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 if we go back to the period of rebuilding, which is a phase that we love that we -- I think we can do well in and starting to focus on some new and interesting things if we can pull that off.

I'm sure, you'll have a lot of questions, so let's transition that questions starting with the first now. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions]

Our first question will come from Dan Salmon with BMO Capital Markets.

Daniel Salmon -- BMO Capital Markets -- Analyst

Hey, good morning everyone. Thanks for taking the questions. Joey, maybe if I could just start with, which as you noted in the letter, the process will take longer. Maybe, just any color you could add to us, has the process changed, it's just been a little longer than expected, just 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 fixed services as a -- 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 love to hear more about that. Thanks.

Joseph Levin -- Chairman of the Board

Thanks, Dan. So just one little correction, I didn't say longer than we expected. I said longer than we would like. These processes always take longer than we would like. Once we sort of have a point of view, we like to just march forward, but that's how it works. In this case, it 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 done, Dan this is different for various reasons. But that's taken a few quarters. And that is, don't know if this one will be the same, but that is what things have taken in the past. And we're in, as I said, active discussions with the 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 space to take meaningfully longer, but we'll see. It's hard to predict how these things go.

Brandon Ridenour -- Chief Executive Officer

Yeah, this is Brandon. On search, the team did make really great progress, particularly around paid search. We saw, I think I alluded to this last 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 are seeing good results. So we expect to 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 loss grounds. 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. Overall, though, we're pleased with the progress we made around search generally speaking.

With fixed services, in terms of how we think about this and what we view as you know success, one thing I would just remind us all, we actually started down this path in 2017. So this is -- this has been a long time in formation. 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 does 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, really positive on all of those fronts, exceptionally positive, which is why we've leaned into it so heavily and grown so much quicker than what we communicated last quarter.

In terms of what does it look like in terms of the impact on our business, the 133 tasks already represents about 35% of the total volume of service requests 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 wanted to do for our business? Those 133 tasks cover billions and billions in GMV. The grain 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 were unable to fulfill and unable to monetize. That's obviously the clear and obvious opportunity. Those amount to a tremendous -- a portion of those volumes in GMV, and we don't know the answer yet, but our goal is to scale this as big as they can possibly get into process much of that transaction value as we can through the service.

Daniel Salmon -- BMO Capital Markets -- Analyst

Great, thank you very much everyone.

Joseph Levin -- Chairman of the Board

Thanks, Dan.

Operator

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

Jason Helfstein -- Oppenheimer -- Analyst

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

Brandon Ridenour -- Chief Executive Officer

With regard to Google, we're thinking about how do we address long term diversification. Obviously, we don't want to be overly reliant on any one source. Over the last 12 months, we brought in more than 26 million individual project requests for consumers. So we're doing a phenomenal job on customer acquisition. We are well diversified, but we can always do better. We are excited about the two partnerships we announced with Realogy and Nextdoor. Both of those have got 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 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 early data is achieving that. But we are also going to be driving a lot more of our business to 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.

Joseph Levin -- Chairman of the Board

And then I'll add a little bit to that and then 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 a consumer to go directly to us to get something done, and I think some of the things that the channels that we provide on, whether it's good, right, we are 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. So I mean we've always candidly very actively looked at, I think there is a finer point on it in a -- imagining a post-Match world and where we are highly capitalized with cash. But that doesn't change the discipline of buying new verticals where we think we can add value and where we think there is large 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 thing and evidence, and those are things that we're looking for.

I think, as always, we've prioritized 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 one for IAC, but relatively big one for Vimeo in terms of an acquisition with Magisto, and so that's going to take a little, little bit to digest. I don't expect much M&A at Vimeo in the near term. And so new verticals will be a factor. In terms of minority investments, that's not a pattern. And we said that that's where, 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.

Glenn Schiffman -- Chief Financial Officer

And Jason, in addition to obviously M&A in our existing verticals or 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, our growth verticals, the slowest grew 22% this quarter on the topline and if and when we spin off Match, well that's five verticals, the slowest of which grew 22% this quarter, all of which are have single digit market share and all of whom compete in markets that are hundreds of millions of dollars in size.

Operator

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

Ross Sandler -- Barclays -- Analyst

Hey, guys. Question on the spin details. So we can't 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 the 2008 core stub created nearly three-fourths 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 the framework for the spin in the addendum. I guess what do you view is the ideal amount of cash in a perfect world for new IAC and the ideal amount of debt for Match post-spin? Thank you.

Joseph Levin -- Chairman of the Board

Yeah, Ross, it's a valid question. I'm not going to answer the last one. What we've said is comfortable cash, and that's a pretty wide range you could imagine there but I don't think it's appropriate to answer that right now when 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. Well 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 Handy from that yet, Handy I'd say [indecipherable] comfortably well, well north of that. When you look at 2008, I think we had two businesses at that level of scale and the momentum was not in our favor then. There was also some general macro issues going on in the market at that time. But the momentum on each of those individual businesses wasn't really significantly in our favor.

I really like the momentum behind the businesses I'm talking about now, ANGI obviously Vimeo, Dotdash, Mosaic, and we've got a little bet. We had some little bet then too I mean then Vimeo was a little bet and it probably that no one was really paying attention to. There was a bunch of other ones. Many of those failed. We've got a bunch right now. Many of them may fail, but we've got really nice momentum in really large markets right now. And so I feel pretty confident there.

Some of the things that drives value of the -- that are factored 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 business at once. I think it's possible that that process for 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 that decade, and for the next few decades of unlocking value over time when businesses need a public currency or should be spun or whatever with the tools that we can use. We can use subsidiary equity to get deals done.

We can use the different balance sheets and use different currencies, all those things are tools that are at our disposal, and we will continue to be and do over time unlock value and of course there is 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 I think in the letter about how the share count has come down over that period. It's come down almost in half. I think something like that. So I think hopefully that answered your question, Ross, but any others? No, I think we lost Ross, so we will go to the next question.

Operator

Our next question comes from Eric Sheridan with UBS.

Eric Sheridan -- UBS -- Analyst

Thanks so much. Brandon, maybe coming back to the topic of where we're going over the medium to long term with the ANGI. 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 is some of the biggest initiatives you're trying to unlock to sort of realize the value of the 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 to sort of the goals over the longer period of time. Thanks so much.

Brandon Ridenour -- Chief Executive Officer

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 it reflects success of the investments we've been making there, that we've been talking about. And we expect to see Angie's List a growth from here. HomeAdvisor also finishes with strong momentum. We are seeing strong sales performance obviously, we've made progress in search. We expect to see both of these businesses modestly 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 rings true and important, which is we are laser focused on creating an exceptional experience for homeowners that is unrivaled by anything that exist today or has ever existed, and tied to that, but also critically important of 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 their costs are going to unmonetized today, provides a much better experience for our customers and substantially improves the economics of those transactions, improves the margins in the overall business. It gives us 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 one means to accomplish both of those goals. But we have a lot of other very similar investments we haven't talked about publicly yet that are oriented 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 as we're letting, we're letting the results guide our decisions. We -- I think last quarter, I said we will launch 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 is driven by the results we're seeing. And I guess, our excitement around the results we're seeing.

Next year, it's all about how fast we can scale I think more than anything this experience, that 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 in 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.

Joseph Levin -- Chairman of the Board

And to translate that into numbers that strategy obviously, and that roadmap 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 said, we're not optimizing for margin short term, but every one of those initiatives will help us drive toward our long-term margin targets.

Eric Sheridan -- UBS -- Analyst

Great, thanks for the color, guys.

Brandon Ridenour -- Chief Executive Officer

Thanks.

Operator

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

John Blackledge -- Cowen -- Analyst

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

Joseph Levin -- Chairman of the Board

Sure. In terms of steps, there is few key components which we laid out in the letter. One is moving the again all of this is caveat by saying as a proposal, and we need to reach agreement with special committee, which we may not, but the steps that would be consistent with what was outlined in the proposal are one moving the converts is what I'm calling the converts or actually exchangeable notes and related hedging instruments. But we'll just simplify by calling it the converts. Moving that -- should moving those to ANGI in exchange, I'm sorry, to Match in exchange for Match shares, and that's relatively straightforward. The other two components are dividend from Match to IAC of some amount, and a third thing that is potentially that may not happen, but potential equity offering, which had the effect of IAC's selling shares in new Match and those shares getting swapped, which in the separation ended up with IAC having more cash and new Match having fewer shares outstanding.

All of those things in theory happen kind of roughly or could happen kind of roughly at the same time. There is work to do to prepare for all those things, and that is a -- that is, I think maybe the best I can do. I don't know Glenn maybe, we are 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 bit limited in what we can say, and I don't know Glenn, you've got more to add.

Glenn Schiffman -- Chief Financial Officer

No, I think it was well said and timing, Joey you addressed that earlier when we've done spins in the past, they've taken a couple of 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 real incremental margin in the business, you know 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.

So that will be one factor. The second factor is the investments we make, that's in our international business, which is still losing money. That's in Fixd, that's a 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 offerings given the roll out there and then how we -- how effective we are.

And as Brandon said we're making real progress. But it's early days, indeed. I think all 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 toward gross revenue recognition for the Handy, for the Handy transactions on our platform and the fixed price transactions on the platform, because we will underwrite and we will backstop and guarantee those transactions. So the margins may be a little muddled next year because of that, but we will obviously walk you through it and attempt to reconcile that for you.

John Blackledge -- Cowen -- Analyst

Thank you.

Operator

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

Brent Thill -- Jefferies -- Analyst

Good morning. Joey, on the 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.

Joseph Levin -- Chairman of the Board

Sure. So one of the meaningful component of the Vimeo growth acceleration is, we completed the Magisto acquisition. So those numbers are in there now that accelerates the business and continues to grow nicely, without the acquisition, but that's certainly a driver of acceleration. The enterprise business is, I think still the fastest growing component of Vimeo, and so we're really excited about that and just an interesting stat we got the other day is that 60% of Fortune 500 companies have someone with a Vimeo account. And that doesn't mean that we have a 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 toward inbound inquiries. We have to nail the operation on outbound sales, but we view that as 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 pioneering here. We think with Vimeo, I keep saying that everybody that 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 are succeeding on doing that for a pretty wide audience. We got to pull that through in the business, but it looks compelling in the numbers right now.

Brent Thill -- Jefferies -- Analyst

Thank you.

Operator

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

Kunal Madhukar -- Deutsche Bank -- Analyst

Hi, thanks for taking the question. Two if I may, one on ANGI, one with regard to the outlook for 4Q that there seems to be a Q-over-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 salesforce kind 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.

Brandon Ridenour -- Chief Executive Officer

Yeah. On the fourth quarter guide, Kunal you're exactly right, it's the Handy comp, and that's a couple of points of growth. The other small thing we're seeing is as you recall in the first quarter of last year sorry, in the first quarter of this year, we shut off certain marketing channels that drove drove revenue and service requests. That was as a result of a slight uptick of those revenue -- that revenue and those service requests in the fourth quarter. 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 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.

Joseph Levin -- Chairman of the Board

And on the competitive landscape for enterprise, it's actually pretty wide. There is a wide range of things that we see. So there'll be some of the older players in this category, who build like very custom solutions for enterprises, which were expensive and took a lot of time and were hard to maintain, and we're seeing a preference in -- I think they want custom to start and then you sort of show that the cost differential and the feature differential and the ongoing maintenance differential and we're seeing a lot of people go to, OK, I'd rather be on a platform than have this complicated custom build.

So that's one area of people do things themselves historically. They put together a bunch of different solutions to make something work and so having a sort of simple end to end turnkey solution, we found it as a good antidote to the self-serve or to the self-build solution. And then a lot of -- for a lot of folks is new. They have they just haven't used video to tell the story of their talent. The enterprise area is we've 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 why we are not going to compete against the custom solution that is generally much more expensive. And then the other is enterprise and that's usually where there isn't an incumbent, where they just haven't been communicating with their employee base and their customer base. They haven't felt a need to communicate by video, they've generally been communicating by text or by pictures and now we've seen the opportunity to communicate by video and that turns out to be compelling, but there's not sort of one big or two big folks that we see as incumbents or other voices in the room right now.

Kunal Madhukar -- Deutsche Bank -- Analyst

Thank you.

Joseph Levin -- Chairman of the Board

Thanks, Kunal.

Operator

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

Brad Erickson -- Needham & Company -- Analyst

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 obviously many of us could offer an opinion there, it would be good to hear that from you. And then second, can you just remind us sort of the -- why 40% of unmonetized leads has been so persistent like if you had in the bucket the top three or four things 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.

Joseph Levin -- Chairman of the Board

Yeah. Great questions. So on the partnerships, both of these partnerships are very attractive, and we start with Nextdoor. Obviously, Nextdoor has a phenomenal audience of neighbors. About 20% of the requests that happen 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 of this as a long-term strategic partnership, I think the opportunity to do really innovative things there is quite exciting. Obviously, neighbors aren't sharing word of mouth recommendations, but there are a number of ways that we can add value to those conversations, whether it'd be the people wants additional options or whether it'd be that in some cases that there needs to be a backstopper 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, Realogy is involved in more real estate transactions than any other -- than any other entities in the US and the opportunity -- what we're doing with them is effectively offering the seller of the home, the opportunity to fix up that home, presale 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, gets 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 is attractive in terms of Realogy being able to serve its 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're seeing. And with that partnership, it's a little bit of a market by market expansion.

One of the things that's exciting about it is, it 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 homeservices demand that's generated. And we can't always expect people to jump online. Some other stuff is happening offline as we all know.

In terms of the 40% of unmonetized leads that we talked about last quarter, I don't know that I would call it stable. I would say that is a number that's largely grown 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 makes yourself felt. The solution is a straightforward of the problem, which is we need more service providers with more capacity and we're making good progress with our traditional products.

We're seeing good momentum there, as I mentioned earlier from a sales standpoint, but the real answer is we've got to have more products and more offerings that bring more providers in to participate. The fixed service product that we've been talking about is just such an example and in the case of Fixd Repair services we actually go out to providers and offer to pay them to do a job, which is quite a bit different than our traditional product where they have to pay us. And you can imagine how that could be compelling for a 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 segments of service providers and filling the 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 saw that will have an enormous impact on the economic profile of the business.

Brad Erickson -- Needham & Company -- Analyst

Got it. That's great, thanks.

Operator

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

Youssef Squali -- SunTrust -- Analyst

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 relative -- 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 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 marketplaces. Is there any reason to believe that that's not the case this time around? Thank you.

Brandon Ridenour -- Chief Executive Officer

Yeah, this is Brandon. I'll start on the fixed price margin question. The reality is offering a 133 different types of services in 40,000 zip codes on this fixed price basis is an enormous problem to solve. As we scale it, the faster it grows, the more it will initially cost us, right? That's just essentially the way it works and a lot of that just has to do with building a capacity to perform these jobs in so many micro locations. What I can say is that in our most -- in our most mature categories where we've been offering fixed price the longest the margins are extremely compelling, and if you compare 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.

Glenn Schiffman -- Chief Financial Officer

Yeah, that's exactly right. After this, after the start-up cost to spool -- to figure out how to price the job, to spool up the demand and get the infrastructure in place, it is going to be accretive to our long-term, long-term margins. One, we attack those zero accepts and we just change the whole price-value relationship with the SP without that incremental cost of marketing. Again, for this 40% zero accept, we've already paid marketing to get that. Two, Brandon referenced is the take rate. Our take rate, as you know, on 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 says, we open up SP capacity that is also majorly margin accretive because we don't have to rely on our salesforce, which is of course quite effective, but it's also expensive for sure. And all these -- all this product innovation among the many things that it does, it's going to drive repeat rate, it's going to drive down those 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.

Joseph Levin -- Chairman of the Board

In terms of post-spin interests, marketplace is -- it's still exciting for us. It's -- I'd say 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 [indecipherable] that test. So that is something that we will look forward. 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 of 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.

Youssef Squali -- SunTrust -- Analyst

Okay, thanks guys.

Operator

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

Douglas Anmuth -- JP Morgan -- Analyst

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

Brandon Ridenour -- Chief Executive Officer

Yeah, just to reiterate on paid search. Last quarter, I mentioned that we were testing some new tactics and bidding new 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 is a quite a bit of work left that we expect to drift into Q1. But I would expect by the end of Q1, we are largely -- largely completely migrated. I -- what we've accomplished doesn't bring down costs. It improves profitability, which is fine with us. We can't control the cost of that ecosystem. But 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.

Glenn Schiffman -- Chief Financial Officer

In terms of Dotdash, we kind of look at each vertical as a huge opportunity. So it's picking one which is up. We're doing a nice job analysis. I think we're ranked three in the top five, when you look at audience in health 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, freshest content and fewest ads, which means in all of these areas and helping one in some ways we're looking at undercutting the competition on price with the number of ads effectively or the kind of way you monetize that is effectively the way you price the content and you price the service because we really only monetize with that, and now we monetize with other formats of advertisers I think of e-commerce and the format of advertising where we're sending audience on to other sites that monetizes on their side, but really the way we built this product allows us to undercut the competition on price. 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 is a lot of big players in front of us. Finance, there is huge players in front of us, several of them. And we're 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 freshest content, and best of size and fuel that. Beauty is another one, home is another one. All these are multi-billion dollar categories of advertising online where we think we can deliver really compelling content and a really compelling service.

So it's when we think about just 2020 it's more content, more better content in our existing categories. 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.

Douglas Anmuth -- JP Morgan -- Analyst

Great, thank you both.

Operator

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

Mike Ng -- Goldman Sachs -- Analyst

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

Joseph Levin -- Chairman of the Board

Okay. Sure. In terms of the benefit of being -- ANGI's benefit of being inside IAC, I probably can't answer that, really can force Brandon to answer that for me in the room here, but it is one of the things that we've talked about ANGI doing right now is investing in the business and that's what we've done over the course of 2019. And I think 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 the ability to take more share and the ability to deliver a really 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 thing. The other is, I do think we -- there is ANGI -- in terms of 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.

Brandon Ridenour -- Chief Executive Officer

Yeah, on the margin -- on the margin point, we've -- on the last call, I said don't expect margin improvements and on a steady state basis, 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 same EBITDA base, the margins would -- if you do that just math, the margins would slightly go down.

We will 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 we will be very much investing into 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.

Mike Ng -- Goldman Sachs -- Analyst

Great, thank you very much.

Operator

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

Victor Anthony -- Aegis Capital -- Analyst

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

Brandon Ridenour -- Chief Executive Officer

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 a project, I think that's the higher the take rate can ultimately be. Obviously as you get into a larger more complex projects that have supplies and materials involved that changes things 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 third live a lot more quickly than we thought. I think we are obviously going to also pursue that next third, but it's a little too early to comment on that at this point. In terms of GMV, I don't think, I don't think we're ready to break out sort of what the percentage of the GMV are, can only tell you that we have a enormous amount of untransacted or potential GMV that's going to have monetized and there is a ton of it in this first one third of transactions that we are 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 third of transactions. We will certainly be making efforts toward our second third, but just aren't there yet. And I think we've debated this quite a bit internally, but I think we have, I think it's important that we protect the experience around this first third of transactions that we've enabled. They do represent 35% to 40% of the requests that we received for consumers and our goal, more important just processing the GMV, which is obviously desirable is to create an experience that just knocks people socks off. And so we want to really get this first third of transactions right.

We've got life, 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? Yeah. Building supplies. Yeah. So when you are supply constrained as we are, obviously we want to roll out new products that appeal to new segments of that speed that we're having a hard time getting, fixed price does that. It doesn't mean that we can also offer those jobs into our traditional network and I'm sure we will do that as well over time, but our core -- you know 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 rose.

Victor Anthony -- Aegis Capital -- Analyst

Thank you.

Operator

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

Ygal Arounian -- Wedbush Securities -- Analyst

Hey, thanks guys. So your service requests growth came in accelerated nicely comps a little bit easier, but still kind of nicely and were 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've developed just kind of what's leading to growth there and expectations. And then also on the distribution point -- last time, last time, you mentioned Redfin Home Services that they're kind of building out the service there, iBuying network and led the partnership with Realogy just wanted to get your thoughts on partnering with the iBuyer community. There is obviously a ton of supply there, or iBuying margins just too slim for them to kind of -- to give that business out and partner or is there an opportunity for you guys to create efficiency in that model for them and take part of the share? Thanks.

Glenn Schiffman -- Chief Financial Officer

Yeah. That's great question. Let me address the second one first. I think iBuying is interesting. However, the transaction volumes are still relatively small when you think about the scale we're at. We actually think the traditional brokerages and the partnership we have with Realogy, it just offers a much larger opportunity to reach homeowners during these transactions. I do think ultimately the slim margins in iBuying, they may need to do this themselves. 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.

Brandon Ridenour -- Chief Executive Officer

By the way to put a number on that, I mean just think about it for $100 million, for every $100 million of capital that goes into iBuying, we have $200,000 average home price, let's say, that's 500 homes. It just I mean think about relative to 26 million whatever the number is I think over 20 million homeowners that are coming through our platform it's just very small.

Joseph Levin -- Chairman of the Board

Yeah, that's right. And then on service, the answer is a little bit 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 are nascent but important. Glenn, do you want to add more color on that?

Glenn Schiffman -- Chief Financial Officer

Yeah. And just taking a step back on. We are -- we get a lot of questions on SP growth and 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 task mix that throws -- that throws some of those relationships with [indecipherable]. It's also what the ecosystem, what's going on in the ecosystem at the time and also the year-over-year comp.

Our goal for all four of those metrics obviously is double-digit growth. We've been real strong on revenue per SP. You saw that a record $1,200 this quarter, up 16% odd. All that will support our 20% to 25% long-term growth rate here, but again they can unduly around every quarter. Next quarter, we'll probably see a slight dip in SP growth. We'll probably see a slight dip in SR growth again given the comps, but we'll make that up on 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 this supply and demand, which we are getting with all of our liquidity.

Joseph Levin -- Chairman of the Board

We have time for one more operator.

Operator

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

Benjamin Black -- Evercore ISI -- Analyst

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

Brandon Ridenour -- Chief Executive Officer

Yeah, on buybacks. Yeah, we don't really comment on forward projected to buybacks. We did buyback I think about 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, being a push for us right now is around video creation. And that is, it starts with the Medusa -- sorry acquisition, but we've got a big integration to pull off right now to in terms of integrating that into the core Vimeo product. And that does a few things for us it, one, it allowed us to sort of manage the full customer lifecycle in video, but importantly, allows us to talk to customers earlier. In other words, right now, we're out looking for customers of Vimeo we're trying to find people after they had made a video before they found in place to keep that video and do some other services that we offer them for that video and 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 haven't gotten started or barely get started, don't think they have the talent or the team to get started, or the tools 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 our allotted lot of time here. So thank you all very much for joining, and thanks for all the questions and we hope to have updates for you all soon. Thank you.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Glenn Schiffman -- Chief Financial Officer

Joseph Levin -- Chairman of the Board

Brandon Ridenour -- Chief Executive Officer

Daniel Salmon -- BMO Capital Markets -- Analyst

Jason Helfstein -- Oppenheimer -- Analyst

Ross Sandler -- Barclays -- Analyst

Eric Sheridan -- UBS -- Analyst

John Blackledge -- Cowen -- Analyst

Brent Thill -- Jefferies -- Analyst

Kunal Madhukar -- Deutsche Bank -- Analyst

Brad Erickson -- Needham & Company -- Analyst

Youssef Squali -- SunTrust -- Analyst

Douglas Anmuth -- JP Morgan -- Analyst

Mike Ng -- Goldman Sachs -- Analyst

Victor Anthony -- Aegis Capital -- Analyst

Ygal Arounian -- Wedbush Securities -- Analyst

Benjamin Black -- Evercore ISI -- Analyst

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