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IAC/InterActiveCorp  (NASDAQ:IAC)
Q4 2018 Earnings Conference Call
Feb. 08, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the ANGI Homeservices Fourth Quarter 2018 Results Call. I would now like to turn the conference over to Mr. Glenn Schiffman. Please go ahead, sir.

Glenn H. Schiffman -- Chief Financial Officer

Thank you, operator. Good morning, everyone. Glenn Schiffman here and welcome to the ANGI Homeservices fourth 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 fourth 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'll open it up to Q&A.

Before we get to that, I would 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 the risks have been set forth in both IAC and ANGI Homeservices fourth quarter press releases and our reports filed with the SEC.

We will 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 again to our press releases and 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 it. Joe?

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Thanks, Glenn. We're now up to almost 8,000 employees at IAC and I just want to thank all of them before another great quarter which capped I think the best year in IAC's history and it's fun to be a part of it and fun to have everyone among those 8,000 a part of it. We have lots to look forward to at IAC right now, so I want to get to questions quickly so we can answer on what that looks like. And with that, I'll turn it over to questions.

Questions and Answers:

Operator

(Operator Instructions) We will now take our first question from Dan Salmon from BMO Capital. Please go ahead, sir.

Dan Salmon -- BMO Capital Markets -- Analyst

Great. Good morning, everyone. Joey, a couple for you. First, there is a really interesting line in the letter here with regard to ANGI Homeservices where you talk about wanting to become the one-stop hubs for managing their home. I think of a lot of different businesses from utilities to ISPs to smart Home technology that could use that type of trade. Obviously, ANGI Homeservices have focused on your physical home traditionally. You've also added a business here with warranties. Could you talk a little bit more about that vision, if you have for a one-stop hubs for managing the home? And then just a second one, I think next year your ad partnership with Google is coming up for renewal we would love to hear, maybe just some precision on the timing of that and what you think it's important for investors to focus on with that? Thank you.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Sure. The first question, Dan, it's probably best for Brandon to answer, but I'll give it a second at the second question then turn it to Brandon. When you think about the whole mix of it, massive investment by consumer usually significantly more than their network and it's something that the vast majority of people have no experience doing, whether it's the financial component, certainly the repair components, maintenance, things like that. And we think that given our position in the market in terms of being able to help them with repair, help them understand the products that are in their home. The products that comprise their home. Though, we can add a lot of value to the consumer, I do think that will tie-in, that's being a little bit vague here, I do think that will tie in with the acquisition we just made on the warranty side, great consumers warranties, but there will be a time we believe in our future where a consumer can come to us through our apps and manage the significant components of their home through their relationship with us and that's what we're trying to build and in kind of one piece at a time.

Let me answer the second question then turn to Brandon. The current Google search deal expires in March of 2020, so about a year from now. But as we have typically done we've started that process much earlier and we are now in a position where I think actually coincidentally, we just send a signature page over to Google on an extension today or this morning or yesterday or something. So we are -- we will make a filing as soon as that becomes official, I guess within the next week or so. And for -- that's a three-year extension on that deal. That's been a great partnership for us, that's been a great partnership for Google, I think it's probably generated well over $10 billion of revenue between the companies over a -- probably close 20-year history now. And that is an important piece of revenue for our business -- some of the businesses within our emerging and other segment. I mean specifically at media and our (inaudible) applications business. So I think that's a good sign. Obviously, the extension is important to the sign of our relationship with Google and how that works and in that substantially the same terms as our previous agreements. But the thing I'll remind you, which I always remind when we talk about, in particular, the applications business is policy changes can happen, those going to happen outside the agreement. And so that's a risk that continues in that business. Let me turn to the Brandon on (inaudible).

Brandon Ridenour -- Chief Product Officer

Yeah. Joey did a nice job describing it. I think if you look at our North American properties, in the US in particular, we're reaching almost an unprecedented population homeowners -- HomeAdvisor and Handy. And fundamentally, we believe that we have the opportunity to productize home services in new and innovative ways that just have never existed before. And through that really transform how people maintaining care for their home the way HomeAdvisor and Handy work today is helping people is taking friction the process mix, makes caring for your home easier, but it's still episodic people have something go wrong, they react to that, decide they need to go find a specialist to come fix their project. And we think there's an opportunity to really change the way this works in a more complete way and take a lot of the pain and difficulty of friction out of just caring for your home. And so home warranty is -- you can think of this may be our first foray into dealing with unexpected repairs, that's one segment of the type of work people need to deal with. There are many others, as you know, and that's how we're thinking about it.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Yeah, Dan, just to maybe frame the opportunity, a little bit. The average homeowner in the United States goes to about six to eight jobs a year and between periodic maintenance and episodic repair, the average homeowner probably should do a dozen or so jobs a year. Right now, we do about 1.8 jobs for each of our customers, you may recall from a letter about two years ago we said that was 1.6. So we're making progress there, but as Brandon said, as we take friction out of the process we can drive closer to that six to eight and then help homeowners drive closer to the dozen jobs that they actually should do.

Getting back to the Google deal versus when we renewed it a couple of years back, we are a very different company. Our partnership with Google now is comprises less than 20% of our revenue, as you know, we have a lot of other engines of growth in the business.

Dan Salmon -- BMO Capital Markets -- Analyst

Great, thank you guys.

Operator

We'll now take our next question from John Blackledge from Cowen, please go ahead sir.

John Blackledge -- Cowen & Co. -- Analyst

Great. Thanks for the questions and good thanks to Glenn and Mark and the team for the segment received before earnings. That was really helpful. Joey, in the letter, you kind of set the table for investments across the platforms this year given the respective opportunities. On Angie, maybe could you discuss the share gain opportunity in more detail and also provide kind of the key puts and takes to getting to and or exceeding the 25% revenue growth? And then just one question on Vimeo, how should we think about sub growth in particular kind of driving higher enterprise adoption this year and who are Vimeo's kind of key competitive threats, if at all? Thanks.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Sure. On the Angie share gain and 25% growth, I think the overall home services market in the US grows like low-single digits. So 25% growth that is by definition going to take share, I think that'll take share from -- by large -- by far our biggest competitor, which is Word Of Mouth, whom we think that's still 90% of the market. So that's the goal there. We have --- there's a number of things are going to drive the growth, the typical thing that we've been investing in sales and marketing being huge ones, sales -- adding more sales people, to add more service professionals after the platform or health service professionals who are already on the platform understand the opportunity there to spend more money and buying more customers through us. Separate from that, we are doing two things that gets what we were talking about before, what Brandon was talking about before, the warranty business that's going to be an investment.

The pre-priced transactions, we talked about that, I think a quarter or so ago with the acquisition of Handy, getting into prepaid transactions allows us to evolve our relationship with the consumer and it will be an investment over the course this year and can push revenue growth. But the biggest ones to get to that 25% growth is really pushing more into sales and marketing. And you'll recall that last year we pulled back and that's in the later we pulled back on marketing. We've now reaccelerated that marketing as we're ready to be able to absorb all that demand. We're also ready to be able to absorb all that demand because service professionals on our platform are now different than the service professionals of last year in the sense that they're capable of spending more money and they're capable of using more of our products. So all of those things come together in the rapid growth and the share gains. Brandon would probably want to add to that but I'll hit the Vimeo question too.

On Vimeo sub-growth, enterprises definitely a component of that, that's a relatively small component of total revenues in 2018. That continues to grow as the component still will be a relatively small component but a noteworthy component of revenue by the end of 2019.

That business I think is -- enterprise is probably doubling year-over-year right now and I think that that pace is likely to continue. When we think about the competitive landscape, we don't have competitor who does the full suite. We do have competitors who in any individual thing we're doing does compete. So take storage or hosting, I think Dropbox is there and storage take some of the editing tools, or review tools and I think, Adobe and Apple have products there. But really the end-to-end turnkey product for somebody who is not a video professional, by the way we have plenty of video professionals on our platform, but that product further sort of think about a small business somebody who is not in the media business but somebody who is in a different business that we have, I think the only product for that customer end-to-end.

Glenn H. Schiffman -- Chief Financial Officer

You want to talk?

Brandon Ridenour -- Chief Product Officer

Yes. So one thing to note is that the lion share of revenue acceleration next year to ANGI is still coming from the marketplace business. The advertising business is still shrinking and is still shrinking when you look at the entire year. We do expect that to turn around by the end of the year but still is a net drag for the entirety of 2019. Joey said this, but sales and marketing are really the engines that are going to drive marketplace business growth. We start the year with our service provider network in a stronger position than I've seen in a very long time and it's monetizing very efficiently. This led us in late Q4 to really lean back into marketing, which we are seeing returns on as we get into Q1. And that's really the formula that drove growth prior it up to the point of the merger of Angie's with it and that's what we've been eager to get back to, now that the integration there is complete and behind us and so that's the main engine.

Glenn H. Schiffman -- Chief Financial Officer

And look just to throw some numbers around fourth quarter to highlight it. This fourth quarter we've really set the stage for the acceleration going into 2019. Our capacity was up 36%, we've talked about that all year, I think last quarter was 34%. We continue to make products progress and rollout our opt-in product. You heard me on last call but the numbers continue around lifetime value for our service professionals, our 2018 cohort of service professionals the highest lifetime value that we've had, so that obviously flows through. And then in terms of investments to put a fine point on what Joey said between Angie home warranty and the investment in home hub of which Joey and Brandon spoke, we're looking at about $25 million of discrete investments in that and buffer that $25 million and our increased spend on marketing, of course, our margins would be going up here. There is real scale on this business, as I've talked about virtually in every line item and there will be real scale up from a margin perspective in every line item in 2019.

And you've also heard me talk about how we pulled a lot of margin improvement that we otherwise thought was was going to occur in 2019. We pulled it into '18 particularly on marketing and maybe one more little factor to train marketing -- marketing still will be as a percentage of revenue lower in '19 than it was in '17, again evidencing real scale economics in this marketplace.

John Blackledge -- Cowen & Co. -- Analyst

Thank you.

Operator

We will now take our next question from Brent Thill from Jefferies. Please go ahead.

Brent Thill -- Jefferies -- Analyst

Good morning, Joey. Last night, you had mentioned that ANGI is counter cyclical and I'm just curious if you could walk through the consumer starts to soften, why you have such confidence? You did see a little weakness in Q4 and I'm just curious if you could parse out perhaps what you saw in the fourth quarter?

Brandon Ridenour -- Chief Product Officer

This is Brandon. We are mindful of and obviously aware of the slowdown in the home industry but we have not seen any impact in our business. Our performance this year was largely driven by our pullback in marketing early in the year than our acceleration back in marketing late in Q4. That's a far bigger factor for us than any macro impact. In terms of how subject we are to those types of macro impacts, the reality is there are offsetting factors when and if that does occur that benefit us. So if consumer soften a little bit that tends to mean providers actually have a greater need for service in terms of finding new customers, providers are aware, we obviously make the majority of our revenue. And so, in general, we don't -- we think we're pretty, I know it's hard to say immune but we think we're pretty resistant to that effect.

Clearly if there were some sort of major collapse in consumer demand that would be a different story but I don't think what we're seeing, which is largely probably driven by interest rate effect on home buyers is really affecting our business demand.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

And we just looked at what happened in 2008 in the business. It was a very different business then but one consistent thing then we expect would be consistent is activity among service professionals let up, mean they were more engaged on the platform, they were spending more time on the platform, during that period and I think that is something we'd expect if that's just on the market.

You can also argue are opt-in product is tailor-made potentially for an economic slowdown because you know, an SP can react to a job and potential opportunity based on is up to the minute or up to the minute schedule as against the month or year old budget that they negotiated with a member of our sales force. So again as we move more and more to an on-demand opting type model that of course helps us in that in terms of being more recession-resistant.

Operator

We will now take our next question from Robert Coolbrith from Wells Fargo Securities, please go ahead.

Robert Coolbrith -- Wells Fargo -- Analyst

Good morning, thanks for taking our questions. On Angie, Just wanted to ask on the 2019 EBITDA guide. Does that reflect a more aggressive investment spend versus what you've been contemplating around that at the time of the 3Q call? Has there been any changes in your thinking on around the investments that you would be making over the course of the year?

And then also on fixed, curious if we get a little more detail on the business, are they go to market today in terms of mix of customer acquisition channels, directly consumers versus broker, anything you might be able to tell us but retention in the business would be interesting as well? Thank you.

Glenn H. Schiffman -- Chief Financial Officer

Great, I'll take the 2019 guide and then Brandon will take fixed. One big thing obviously that happened was fixed and that's losing money, of course, and that's part of that 25 million discrete investment that I just mentioned earlier and that wasn't in our contemplation when we talked about the potential guide but recall in the letter, in the third quarter letter and on the call, we said revenue will grow faster than EBITDA then therefore margins will go down. So fixed is clearly one.

And then as we finished our year-end planning and we saw some of the real momentum inside the business, some of the unit economics inside of the business, some of the metrics inside of the business in Q4 almost across the board the investments that Joey mentioned earlier we wanted to lean in, mostly it's marketing but again it's across the board to drive the revenue growth that we expect. We mentioned the 25% target and that is absolutely our goal for the year.

Brandon Ridenour -- Chief Product Officer

With regard to fixed, what we really like about fixes Is it that they're delivering a product that meets customer's expectations and makes people happy with regard to warranty service. Obviously, our plan and our thought around this is that we have this amazing reach to millions and millions of US homeowners, they're Angie's, Home Advisor, and Handy, and so our intent is to offer this product to the homeowners we are already contact with from a direct to consumer standpoint, we have both a unique ability here to offer this at amazing acquisition economics and also some interesting promotional opportunities.

When you think about all the home owners that are coming, let's say the home advisor telling us very specifically the type of project they need, we might be able to identify a subset of projects that we could promotionally offer as being included in the warranty if somebody were to sign up today that's really unique to us and it's something I think that can't be replicated elsewhere. So that's kind of how we're thinking about, it's small, it's in a few markets in Texas, there's a long way to go to get this full scale, but we think we have some natural synergies there in terms of how we can bring it at this market.

Robert Coolbrith -- Wells Fargo -- Analyst

Great. Thank you.

Operator

(Operator Instructions) We will now take our next question from Jason Helfstein from Oppenheimer.

Jason Helfstein -- Oppenheimer -- Analyst

Thanks. Just two part on ANGI and then IAC question. So can you guys talk about how ANGI performed in the quarter at least an EBITDA relative to your expectations? I think there was some confusion perhaps relative to Street numbers just given the moving parts. And then again related to ANGI's, the logic behind the buyback, that would be a pretty high percentage of the float for stock that it doesn't have a lot of flow to maybe talk about the timing and the logic behind that?

And then Joey, as far then kind of M&A allocation in capital, it does look like there will be some movement with Yelp as far as an activist shareholder wouldn't be surprised if they get pushed to have a formal process, clear that their legacy business of having local sales people doesn't work. You guys have a lot of experience around local, it looks like that business would have at least if you move more to a lead type of business, i.e., ANGI or GrubHub, i.e., 24, there would be a lot of synergies with your business. Maybe just talk broadly about how you think about -- how you think you know about local and that platform? Thanks.

Brandon Ridenour -- Chief Product Officer

Sure. So on Q4 performance, I think we've said we -- our most recent number was $260 million to $270 million for the year, we came in at $260 million. So we're happy with that outcome. If we can go further back, we said two years ago we are going to do $270 million and so coming in where we came in I think we're thrilled with. The one thing I would have liked to see is some back to revenue acceleration. I think we are probably off by maybe a month there, meaning we knew we pulled back on marketing. We pulled back on marketing after Q1 of last year. We then started, as Brandon mentioned, accelerate that marketing late in Q4 also last year. And I think we're seeing the benefit of that in our numbers now as we started the year, or maybe you would have liked to see that a month earlier but we are now debating days. So, overall, I think we're quite happy with where we are in that business and and our outlook for that business.

As it relates to the buyback that is something we like to have for good housekeeping. We have one in place at mass (ph), we have one in place at IAC. I think we should, we always want to have all pools available for capital allocation and buyback is one that you need to obviously layout in advance and with the Board and so that's what we did in this case and it's just something we want to have on the shelf as a tool that's available for us. There is nothing I think more to read into that in a sense, it doesn't mean we're on the verge of something or not on the verge of something. It just means we'd like to have access to that tool as a mechanism.

As it relates to Yelp, I think we've said for a long time, I don't know, but we are practically, we love to have a commercial deal with Yelp. We think we can do a great job for them as a partner on this segment that we are in (inaudible) of services and we're totally open to that. We'd love to do that. That would certainly be our first choice and how to do something as it relates to M&A to the extent something becomes available we always take a look at everything in every category where we are in, when there is an opportunity to do that but we wouldn't comment beyond that.

Jason Helfstein -- Oppenheimer -- Analyst

Thank you.

Operator

We will now take our next question from Anthony DiClemente from Evercore.

Anthony DiClemente -- Evercore -- Analyst

Thank you very much and good morning. Just a couple, just on Vimeo trends, so the subscriber growth for Vimeo has trended closer to around 10% the last I think three quarters. So (inaudible) growth has been there. As we think about the forward outlook, just talk a little bit about expectations around revenue growth from here for Vimeo and should we expecting a reacceleration in that subscriber growth or will be more of the growth comes from pricing going forward?

And then more broadly on Vimeo just the investment strategy would drive growth, how would you sort of rank your priorities for it between new products, marketing, international I do imagine it' s all of the above, but any more color on the investment for growth strategy would be great on Vimeo? Thank you.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

I'll start with the second part now and then turn to Glenn for some of the specific on the numbers. It certainly is, as you said all of the above. when we're thinking about growth, maybe taking a step back, the thing that is happening at Vimeo, which is our design is we are transitioning that business to a higher value, higher type of customer -- not necessarily away from the basic customers who use to only the most basic feature but certainly emphasize our energy around leveling up, so that video professionals that's all small, medium-sized businesses and certainly enterprises. Each one of those segments is very important to us. This sort of casual video maker uploading for their iPhone is not really an emphasis, we can serve that customer -- we can have certainly done in the process, anything you bring their customer into that's not we're emphasizing our product roadmap and our vision. It's really around the pros of the small, medium-sized businesses and the enterprises and all of those segments are growing and all those segments will continue to grow.

Now -- the math of an enterprise customers were $20,000 and a basic customers was worth $60. So I think that probably 300 and something for one to math one to the other, but that's the fact. And the bigger point is, we think that's roughly $20 billion market. Just to give you an example, which I found our bullet(ph) take a customer like Warby Parker, it a nominal company, they are in the eyeglass business, the retail business, they are not in the video business, but they're making five videos a day and they are publishing those videos on social media to talk to their customers, we get to that -- what they do, they are a very forward leaning company and their customers expect out of them that's how they communicate. Go back even two years, three years, four years somebody making five videos a day would be a media company. But this is an Eye glass company making those videos and they're using our platform to do that, I think about all businesses need to be doing that, whether need to or not, will be doing that over the next 10 years. And when we look at that tailwind that's kind of how we think about it and that's how we're emphasizing it and there is some math in there as it relates to the subs when the higher value subs grow and the lower value subs don't grow that's the math that gets to the numbers that we've been seeing.

Glenn H. Schiffman -- Chief Financial Officer

Yeah. To give you specifics around that math. Business in premium tiers are the fastest growing from a sub-perspective that's obviously logical based on which Joey said in terms of our mix shift and enterprise is the fastest growing from a revenue perspective, but business in premium are not that far behind. Joey earlier in the call mentioned the enterprise revenue doubled year-over-year. Translating that into how to model this business on a go-forward basis, we've talked about from a subscriber perspective, 10% to 15% sub growth. I think we're going to be at the lower end of that, we did 9% this quarter, we could get down as we accelerate that mix shift, we could be 8%, 9% for the next couple of quarters. Maybe 10% going forward, or maybe we never quite get up to 10%, given this mix shift. But what you will see is continued ARPU strength and that ARPU strength this quarter was 22% and we guided ARPU at kind of 10% to 15% and I would think we'd skewed to the high-end for sure of that range on a go-forward basis. More broadly, the way those factors interplay, as we've talked about 20% to 30% growth for Vimeo for a while now, given the tailwinds in the marketplace and given the strength of our solution.

Anthony DiClemente -- Evercore -- Analyst

Makes sense. Nice job on Cramer, Joey.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Yeah. Thanks.

Operator

(Opearator Instructions) We will now take our next question from Doug Anmuth from JP Morgan.

Douglas Anmuth -- JP Morgan -- Analyst

Thanks for taking the questions. Joey, in the letter you noted that a bit more than 10 years later you've replaced the profits from the spends in 2008. So now that you have a big base of EBITDA and free cash flow once again, how are you thinking about your ability to create more shareholder value by potentially shifting the structure and how do you think about your positioning now versus 10 years ago?

And then if I could also ask you talk about Blue Crew a little bit in the letter as well and I think this is probably business people don't know much about, can you just explain more of your thesis around that business and how do you view it kind of relative to your other marketplace businesses? Thanks.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Sure. So on profitability and how that relates to capital structure, I wasn't trying to portend some big change on the horizon. I think it's been interesting spend that we're proud of. But it doesn't mean that we've sort of hit the trigger where we start to take things apart again. we always say and always will, those are things that we consider regularly, those are things that we -- that a lot of factors go into how we consider whether or when to spend something, and we continue to evaluate the cost and benefits of transactions like those and always work.

The second was about Blue Crew. Blue Crew grew up. I'll start by saying Blue Crew is tiny, less then tiny as it relates to -- I think the opportunity there is massive but it is tiny, we probably won't talk about Blue Crew again for a little while. I really put that in the letter to illustrate just as is this service interesting dichotomy which we fall victims to I think others probably looked into as well, is you size the investment in something like Blue Crew based on the opportunity ahead and so we are going to invest in that and I'll explain why in a minute, but I think that the right framework for all future investments, it's not just a small company, they are losing money out then it should be the big companies that are making money and that aren't back strongest with that -- the most certain return.

But going in the Blue Crew, this temp labor market is a multi-hundred billion dollar category and the amazing thing is, it is still basically entirely offline. People are getting labor onto factory floor or into a venue or whatever the case may be based on boundaries (ph) today and totally inefficient information. This is the kind of problem. They can be solved with software and can be meaningfully enhanced by marketplace. Liquidity and jobs on the one side, we have liquidity and employees on the other side, if that whole thing is working, people can choose exactly when and where to work for what pay and employers can choose exactly when to hire quickly with the click of a button. I do think that more hiring will happen with a click of a button than it will with the labor process around interviews et cetera, one software is in there and can help inform hiring decisions meaningfully and that's what we're going after there with I think both investment capital, M&A capital, whatever we can we see a big opportunity and it's very, very earliest stages there, but again impact on IAC immaterial for quite some time, I would say.

Douglas Anmuth -- JP Morgan -- Analyst

Thank you.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Thanks, Doug.

Operator

We will now take our next question from Eric Sheridan from UBS.

Eric Sheridan -- UBS -- Analyst

Thanks so much for taking the question. Maybe two, one on the revenue side. Now that we have the breakout of Vimeo and Dotdash, is there anything we should be aware of that traditionally from the seasonality standpoint tends to have how those businesses are to this year, just be aware of in terms of cutting those things up in our model on a going forward basis? And then with respect to Dotdash, if you can give a little bit more color there on what are some of the key investments or how are you thinking about the drivers there going forward that could continue to compound that from a growth standpoint? Thanks so much.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

So, definitely seasonal Q4 is going to be by far the biggest quarter and I would think in that business forever just because of the ad rates in the fourth quarter with retail are much higher. Vimeo, I think much less seasonal I don't know. I mean I know we're spending a lot in Q1 this year, which is not a seasonal thing, it's just a timing -- a choice of ours in terms of marketing, but I don't think it's exactly seasonal.

Glenn H. Schiffman -- Chief Financial Officer

That's correct, just one thing to watch there. We broke out the hardware business. So we got the SaaS platform business, we broke out in our press release and hardware. So you'll see a little more volatility in the hardware given it's a SaaS business, it's very predictable but hardware is what could undulate the fair amount quarter-to-quarter there. Yeah Dotdash obviously is fourth quarter weighted as Joey said. You see in our guide, the first quarter Dotdash is a little lower, it's about 10% is our guide is lower than kind of our baseline that we've talked about for that business because we're transitioning the Investopedia business onto the Dotdash platform and program and just as when we verticalized all the other businesses we traffic gets set, revenue gets set, then we come out stronger the other end. But other than the fourth quarter and this first quarter of '19 that's the seasonality, you need to kind of factor.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

And then Dotdash growth opportunity I think is inside the existing verticals, of course and then entering new verticals. So inside the existing verticals it's creating more valuable content that they know works, where works, where there is demand for that content, and they've done a very nice job of growing that I think in almost all of their verticals and it's six of those same three simple principles, it's the previous content, it's the lowest ads, and it's the fastest site and they keep doing that putting in good high quality material, I think that growth.

Entering new verticals, we just entered a new one a few weeks ago, which is the beauty vertical. It's one that we had our eye on for a while, we founded little acquisition, I mean really tiny acquisition to do there and we'll see how that one goes. We did our first experimental acquisition let's say by acquiring an internal company, meaning moving Investopedia internally on to the Dotdash platform. Now we've got the external one with -- in the beauty vertical. And then the last thing and we talked about this in the priorities for Dotdash is building the brands. We have a lot more traffic to those properties than we do brand and we've got big ideas and big concepts around how to build up those brands and as you build the brand, you the build that brand recognition, to that through a lot of different means, primarily just delivering a great experience but we've got some tricks up our sleeve there. And I think that we start to get more repeat business and that's how that business grows. Of course, getting better at advertising and ad sales, it helps that.

Glenn H. Schiffman -- Chief Financial Officer

I think, I said this on the last call, but these are very large categories here that we're in. So don't underestimate the amount of blue ocean we have here, each of our categories have sub categories within it and each of our categories compete with much larger players who are actively taking share of it.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

That's the goal and that's what everybody at Dotdash know and understand and that is aiming for right now. In our health vertical, we're going after WebMD and we think we can, we'll be disappointed if we don't that's a huge ambitious goal but that's what we're going after. In our beauty vertical, we're going after Vogue and Glamour and all these big traditional brands.

In our home vertical, we're going after much (inaudible) or whatever things like that. We don't see a reason why we can't, if we keep doing what we're doing and we keep doing it well go at those and others are big businesses and big markets and that's the goal.

Eric Sheridan -- UBS -- Analyst

Thanks so much.

Operator

We will now take our next question from Ross Sandler from Barclays.

Ross Sandler -- Barclays Capital, Inc. -- Analyst

Hi, guys two questions. First, in the area that doesn't really get that much of your time, your mobile apps business. So I think you got a bunch of different brands and strategies in there and we saw recently that (inaudible) raised a bunch of money and is actually profitable. So, any color you can provide on -- is that a subscriber SAC LTV business, is it more advertising arbitrage, any brand that you're excited about within the mobile apps business, the portfolio that you have there, any color there?

And then 4Q buybacks were a little bit lower than the prior quarters. How do you think about the buyback cadence relative to the value of course -- can you just talk about that? Thank you.

Glenn H. Schiffman -- Chief Financial Officer

Sure. I'm glad, Ross you asked about the mobile product. So it is a fun roll (ph) area that doesn't get a lot of attention. We are very much a subscriber business, now 90% subscription revenue, and it is very much driven by subscriber acquisition costs relative to LTV and we think we've got those systems that back up that spend and that LTV measurement pretty well nailed right now. And products in there like RoboKiller is a fantastic product gets prevent robo calling on your phone. So not only does it stop the calls from coming in but also for the entertainment of our customers there is allow the robot to talk to robot or their, what they called speed callers that call in and record that for everybody entertainment, that's a fun one, that one is growing really nicely right now. What I've just one staff of when the government would shut down for a little while that do not call registry was also shut down. And so that was a great moment for RoboKiller in that they were -- a lot of things were happening in terms of we and -- in robo calls and RoboKiller was able to prevent that for their customers, which is fine.

We guys have a business called iTranslate which does real-rime translation similar one in that vein called converse, which makes it really easy to people to use their phone -- two people speaking two different languages to use their to phone to speak out loud back and forth. We have Daily Burn in the fitness category, which we moved from elsewhere and really totally revamped that business inside our mobile applications around subscriber acquisition costs and LTVs. We have weather apps. We have a airplane tracking app. One thing we did miss to your point, is this meditation category and based on that fundraising evaluation, I think that was a big mistake. That's probably something we should look at. But these business by the way are also profitable, they are comfortably profitable. And they're fun to build. I think we're going to keep launching products, keep digging in the existing verticals that we're in whether that's translation or call blocking things like that. And we're optimistic for the future here, which is the first time in a while inside of applications where we've said, we really see a bright future a multiyear future beyond just kind of doing what we're doing. There was another question.

Ross Sandler -- Barclays Capital, Inc. -- Analyst

Yeah, buybacks?

Brandon Ridenour -- Chief Product Officer

To same answer, we always give we're regularly considering buybacks. In addition to M&A -- in addition to and was sent through the P&L and that's something that we'll continue to do. I don't have a specific view on buybacks in the last 90 days nor in the next 90 days but it's something that we'll continue to consider.

Glenn H. Schiffman -- Chief Financial Officer

Yeah, getting back to the mobile business. It may be clouded given the acquisitions but that business organically grew 136% in the fourth quarter that doubled from the third quarter when it grew organically 77% and then the second quarter it grew organically 44%. So that has become a gem of a business here.

Brandon Ridenour -- Chief Product Officer

I hope we can do more M&A there. Because we seem to have again a system that works where we can plug things in.

Operator

(Operator Instructions) We will now take our next question from Ben Schachter from Macquarie.

Benjamin Schachter -- Macquarie Research -- Analyst

Can you talk a bit more about your appetite for acquisitions and how it's evolving into '19? Our readable letter looks like you're getting a bit more aggressive, and if that's true, how should we expect that to manifest itself are you going to be doing bigger deals, more tuck-ins, specific platforms et cetera? And then separately, we expect the platform fees on app stores could come under pressure in some time? Yesterday, we asked your colleagues at Match about how that would impact their business. Just wondering your thoughts on it and how it might impact some of the businesses you have? Thanks.

Brandon Ridenour -- Chief Product Officer

On the second question, I hope you're right. We would definitely be a beneficiary if you are. And Match is the by far, in a way, the biggest beneficiary inside the family but does mobile applications business, which we are just talking about would also benefit for sure. I don't -- I can't think of anywhere else that it would matter.

The other question was M&A. I don't think we're getting more aggressive in M&A. I think that we are -- perhaps we have just more opportunities today than we did 12 or 24 months ago. Again mobile applications we are just talking about, I certainly would not have said M&A is available in the applications business sometime ago and now that we've got it in there, that is available. I don't think, again maybe perhaps thinking on the word, I don't think that's more aggressive. It's just that but now that fits within our acquisition criteria. I think in the last 12 months, we've been integrating HomeAdvisor and Angie's List, which is our massive project, which I think the team there did phenomenally well. And so, now that we've digested that, again back to the same criteria that is now -- M&A is now available again there. And maybe that defies in more places and I guess I am just starting to answer the other part of their question. We certainly do favor talking and we certainly do favor smaller. I think that that just kind of those have a higher chance of success and we have a greater embedded competitive advantage when we do acquisitions like that.

I say there's a lot, I know I'll repeat myself by saying when we do acquisitions in our existing categories we believe we can be the smartest people in the room. Because we know that category well, because we've seen every business model in that category, because we know what metrics look like in that category. That means we can be smarter than other buyers. Sometimes that means we can know the business or the potential better than the seller. And so that's where we'd like to emphasize our capital. But that doesn't mean we won't -- we always have and always will look at things outside of our businesses and we'll look for opportunities, big and small there when we can put capital to work.

Operator

We will now take our next question from Youssef Squali from SunTrust.

Youssef Squali -- SunTrust Robinson Humphrey -- Analyst

Great, thank you very much. Two questions please. One is a follow-up to the M&A question. Could you comment on the -- your thoughts on the current public, private valuations relative to where they've been in the last couple of years and relative to where you see opportunities? And then secondly, at a high level, at the IAC-level, can you just again help us rank quarter maybe your investment priorities by categories -- beyond, even beyond 2019. I think the guidance you guys gave for 2019 is very helpful. But I was just curious as to how you look at that beyond -- how we should look at it beyond 2019? Just where you see the need for the most investment, lease investment, biggest opportunities, lease opportunities? Thank you.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Sure. I still think private valuations are pretty rich, more so than public valuations. I'm not sure -- we have a bunch of theories as to why that's the case, but I do still think risk adjusted, they are generally pretty rich, just comparing to -- things I would say to that have a lot left approvals. They're in big category and they've got a little momentum that they have a lot left to prove relative to businesses that have most. They've built over 20 years and incredible cash flow and the dichotomy and price the risk there is -- I think are -- but that doesn't mean our gems and business opportunities in the private market and those are certainly things that we look at. What was the second question?

Glenn H. Schiffman -- Chief Financial Officer

Investment priorities over the next several years.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Yeah, look, I think -- I hope we're in a position where we'll have investment opportunities in all of the business over the next many years. I think ANGI Homeservices is in a -- I think a special and unique position in that. That market is so big. It is so our penetration relative to that market is so small and there are so many adjacencies to that business based on the core of what we've built so far. I think it is very easy to articulate arrange investments big and small over the next decade in that area. So I do think that will get -- I do think hope that we can put a lot of capital there. But you saw that chart that we put at the end of the letter, where in all of these markets there are multi-billion or tens of billions or in some case hundreds of billions of dollar market. Our share is single digits in all of them. And if we're executing then we ought to be able to invest into each of them. The good news is, we're also generating real cash flow along the way. So we've got a lot more that we should be able to invest and that's something that we think a lot about it.

Glenn H. Schiffman -- Chief Financial Officer

Look, taking a step back, 2018 was a real proving ground for a lot of our businesses and for us in total. EBITDA grew around 70 odd percent to about $1 billion across the entire family, and importantly, that was done while the underlying metrics were getting more solid and stronger, which is what underlies and underpins our confidence for the future and I just want to harp on the last point Joey made. Our margin profile allows us to continue to grow profits as we invest in other company. Other companies may not have that luxury who have to shout out in the investment year and that investment year would come at great parallel to the P&L.

I think we are fortunate given the underlying power of our businesses, the diversity of our businesses. We had six growth engines. Sorry -- we have six growth engines in the portfolio right now. Every single one of them grew revenue greater than 20% in the fourth quarter. That's of course Match, Angie, Dotdash, Vimeo, the mobile business inside of applications, which we've renamed Mosaic (ph) and of our small -- for small business Blue Crew. And as Joey said, against the TAM, that sets us up for an interesting couple of years.

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Well said.

Youssef Squali -- SunTrust Robinson Humphrey -- Analyst

Thank you.

Operator

We will now take our next question from Brad Erickson from Needham & Company.

Brad Erickson -- Needham & Company -- Analyst

Thanks. Just had two follow-ups on Angie. First, where do you think your SPs are capacity-wise at the moment? Meaning, while they may be paying us fees on Home Advisor, they obviously can pause their SRs as their backlog. Where do you think that we are in the cycle at the moment? Sort of what expectations you have on that? Are you assuming in your guidance for 2019? And then I have a follow-up.

Brandon Ridenour -- Chief Product Officer

This is Brandon. As I mentioned earlier, SP capacity and the ability to monetize a consumer or homeowner request is the most important factor in driving growth for the business. And we ended the year in a stronger position than I've seen in a very long time and there are a couple of factors that went into that. One of them was the implementation of the opt-in platform last year which essentially created a significant expansion of capacity from just the existing SP base.

Secondly, we made other optimizations to our algorithms that actually resulted in us seeing our SPs take on more consumer requests than they had been previously. And that's all really came to fruition, opt-in platforms were earlier in the year and then in Q4, unlike Q3, we made some further advancements. And so that's put us in a row of strong position at the end of the year. Let's say, as we talked about in the Q3 and talked about today, let us to really lean and starting in December on the consumer marketing front and that continues a pace now. Our assumptions for the year are based on what we see currently in terms of what's in the guide here.

Brad Erickson -- Needham & Company -- Analyst

Got it. And then just conceptually in ANGI, you're basically sounds like you're spending more to sort of seemingly arrive at kind of the same point you've talked about historically in terms of top line growth, am I my stating that right or the message should say more than you're seeing opportunities for maybe bigger growth potentially and so that's what the spending is really geared toward doing, which of those would you say is kind of more accurate? Thanks.

Brandon Ridenour -- Chief Product Officer

Yeah, it's the latter unequivocally. So when we announced the transaction, we said 20% to 25% go-forward revenue growth. And as we realize the synergies that may take up time to get to the top end of that range of 25%. And last quarter and reiterating this quarter we're going to be at 25% for 2019. And look we call in the first quarter that this combined enterprise grew 15% and our marketplace business grew 28% and we closed the year at 37% and 21%, respectively on our scale. So we are definitely investing to be our previous expectations at previous cases.

Brad Erickson -- Needham & Company -- Analyst

That's very helpful. Thanks.

Brandon Ridenour -- Chief Product Officer

And great report on the ROI. I think that was some real good original work. So thank you.

Operator

Our next question comes from Kunal Madhukar from Deutsche Bank. Please go ahead.

Kunal Madhukar -- Deutsche Bank -- Analyst

Hi, thanks. A couple if I could, one on Angie and the other one on the upside. On Angie, given that you've been growing capacity and Brandon you just talked about how opt-ins have helped grow capacity significantly, why the capacity growth isn't -- we are not seeing that translating to like revenue growth?

Brandon Ridenour -- Chief Product Officer

Yeah.

Kunal Madhukar -- Deutsche Bank -- Analyst

Overall on the marketplace side. So what's happening? Is it not the right time, right place, right person kind of a thing or what's the issue there? And then on the app side, one of the things that you mentioned was in your letter was e-commerce as a potential opportunity, wanted to get a sense of what you're thinking there?

Brandon Ridenour -- Chief Product Officer

Yeah, this is Brandon I'll take the first question. In Q1 we saw as we adjusted the big jump in demand from Angie's List. We saw that we didn't have enough capacity. We pulled back on some of our marketing channels not margins and did that both up and those margins and serve our customers better. We made tons of progress throughout the year on building up capacity. At the end of Q3, we said we saw strength in revenue growth and we said, you know what, we've made a huge amount of headway on the capacity front in terms of expanding our network, we going to lean back until consumer marketing which obviously drives revenue. We did that in Q4, we got to and as Joey said a little later than probably would have liked and really it kind of hit it running in December and the that's kind of the story. As we get into Q1 we're obviously seeing that accelerate and flow through, but from the time you start marketing particularly TV, there is some time necessary to build momentum and to see that flow through to consumer demand and that's really the entire story, and Glenn, you probably have a comment on revenue growth?

Glenn H. Schiffman -- Chief Financial Officer

Yeah, revenue growth accelerated as per my answer to the last question. Revenue growth accelerated all year. Yeah, as I said, we started out marketplace growth at 28% and it was 36% this last quarter. And just like it takes time for marketing to kick into to unlock that capacity, that capacity stays with us and that capacity will be with our SPs for 2019 if we continue to do a great job and beyond, for sure.

On the -- on your second question, the e-commerce business that's inside of Dotdash. And we've talked about that on previous calls that's our affiliate eCommerce business given the strength of our traffic and the intent-driven nature of our traffic we think we can monetize that traffic through an affiliate e-commerce business. I think Joey gave the example of when you're searching for scooters or the best scooter on last call, you can serve it up a way to purchase the said scooter.

Brandon Ridenour -- Chief Product Officer

And maybe this is, though, that is the capacity growth is translating to revenue growth and you get it directly in the accelerator marketplace revenue--

Glenn H. Schiffman -- Chief Financial Officer

Yes, 100%.

Operator, I think we have time for one more and we'll let everyone get another day.

Operator

We will now take our last question from Ygal Arounian from Wedbush.

Unidentified Participant -- -- Analyst

Hey, good morning guys. It's (inaudible) for Ygal. So just a couple on Angie, maybe one more follow-up on the marketing and on the service request side. So I think there's a couple of things going on over the last year or so on service request, you had the Angie integration and volume coming in from placing deposit (ph) funnel there. I think that lifted the year-over-year growth for a little bit, you scale back on marketing and now you're scaling with that.

Anyway you can help us kind of understand with appropriate trajectory for growth is? Should we start to see it reaccelerate again from this 24% -- comments spending more on marketing? And with your marketing spend, you talked about the investment next year both to go out of service providers and to go after consumers, anyway to help think about the split between the two, is it kind of equal between both, is it more of a focus on one over the other? Thanks.

Glenn H. Schiffman -- Chief Financial Officer

Yeah. On the marketing, on the marketing point, yes, it's more going after consumers. We have a large sales force and we're growing the sales force not as collateral benefits when you go after consumers service professional see that, but it's much more weighted toward consumers to drive service requests. And it's good question on the cadence of service request, the growth is 24%. I think we're going to be in and around those levels. Joey mentioned this in the letter and Brandon talked about it, we've got a lot more efficient with our spend and our ability importantly to monetize every one of those service request. So the service requests are becoming more valuable to us.

You saw that in one metric revenue per service request and that was actually the highest it's been since 2014 and that speaks to the efficiency of our system in terms of taking advantage of the demand we have on the platform. So, no, I don't think service requests are going to grow dramatically from here. They could as we even get more efficient the growth could go down, especially because you remember in the first quarter of last year we hadn't dialed back the marketing. So the first quarter service requests grew 38% last year. So in the first quarter we have a difficult comps. So I think this mid to low to maybe high 20% service requests growth for the next couple of quarters that feels about right.

Unidentified Participant -- -- Analyst

Okay. That's really helpful. And if I could squeeze in one more, just on how you think about building versus buying. You have to two of your -- kind of things you're focusing on next year, you are right. In the later building for repeat usage and then entering adjacent categories through M&A feels like sometimes those things could overlap like the warranties business as is nascent(ph) business but also helps with repeat usage. Just if you could help us think about how you think about building versus buying? I'll leave with that.

Glenn H. Schiffman -- Chief Financial Officer

Look I think what you said is exactly right. There definitely is overlap and that definitely is -- the vision for it we think this category can go is very informative. How we prioritize M&A and putting those things together. And at any moment we're evaluating a build versus buy, in fact anytime we're buying something we are usually simultaneously building that and then we figure out what's really hard to build and whether we want to continue building or we are prepare to buy and we do that math and make a transaction with that. That's how we prioritize those decisions.

All right. I think we are out of time. Appreciate all the questions and everyone's support and we will talk to you in next quarter. Thank you.

Operator

Ladies and gentlemen, this now concludes today's conference call. Thank you for participating . You may now disconnect.

Duration: 63 minutes

Call participants:

Glenn H. Schiffman -- Chief Financial Officer

Joey Levin -- Chairman, ANGI Homeservices Inc and Chief Executive Officer, IAC/InterActiveCorp

Dan Salmon -- BMO Capital Markets -- Analyst

Brandon Ridenour -- Chief Product Officer

John Blackledge -- Cowen & Co. -- Analyst

Brent Thill -- Jefferies -- Analyst

Robert Coolbrith -- Wells Fargo -- Analyst

Jason Helfstein -- Oppenheimer -- Analyst

Anthony DiClemente -- Evercore -- Analyst

Douglas Anmuth -- JP Morgan -- Analyst

Eric Sheridan -- UBS -- Analyst

Ross Sandler -- Barclays Capital, Inc. -- Analyst

Benjamin Schachter -- Macquarie Research -- Analyst

Youssef Squali -- SunTrust Robinson Humphrey -- Analyst

Brad Erickson -- Needham & Company -- Analyst

Kunal Madhukar -- Deutsche Bank -- Analyst

Unidentified Participant -- -- Analyst

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