Joey Levin: Okay. So first question, Dan, this is so far a win-win, meaning, when we are matching homeowners with more service professionals, we are driving homeowner satisfaction, meaning that promoter score and we think ultimately repeat rate. And we have been seeing ROI for pros increase. And while we can’t measure this exactly, our thesis on this is more jobs are getting done on the platform as opposed to our platform. So while there may be more competition within our platform, meaning, if we were previously matching with less than one and now we’re matching with more than one, I think, monetized transactions per SR was 1.27 in the last quarter. While we’re matching with more and there is — therefore more competition, we think more of that is staying in our platform as opposed to the kind of unknown competition for that same job that was previously happening off platform.
So we want to keep driving that number up and we want to keep giving both homeowners and pros a better chance of success on the platform and we can see that play out in the numbers so far. So that balance that you’re asking about is, we want to continue pushing it up. We can’t push it up forever, but we want to continue pushing it up because we think it’s a win for all on the platform. In terms of verticals, the short answer to your question, I think is, no. But again, the things that we’re trying to do are focus on certain user paths and user experiences. So where a user comes in from and then what we do with that user as they move through our ecosystem. And that’s kind of how we’re organize is thinking about each of those paths into our ecosystem and making sure they deliver a winning consumer experience and a winning pro experience.
And a lot of that, as you’ve seen in our revenue is modifying those experiences to reduce some revenue. But we are, as I say, if we want to talk about a region confident, Europe did that, and Europe has had real success. So that’s the path in the U.S.
Christopher Halpin: Yeah. And thanks for the question on margins. You can see the scale in our margin structure by the incremental margins across ’23 and particularly, in Q4 of ’23 where we were at basically 90% incremental adjusted EBITDA margins on digital. For ’24, if you think about it as 10% plus, but just for simplicity say 10% digital revenue growth that would be $89 million of incremental revenue. If you pick the midpoint of the $280 million to $300 million adjusted EBITDA guidance and you said that is equivalent to Digital EBITDA. You’re talking about $47 million of adjusted EBITDA uplift. So there you have north of 50% incremental margins. Our investments in cost in digital are really content, especially video, which is performing well for us.
And frankly, our partners want more video out of our brands. Also performance marketing and then investments in D/Cipher. And we can fund those in part through reallocation of costs from historical activities that are less strategic. So we feel pretty good about our ability to continue to manage our cost structure and feel good about incremental margins. We’ve said we expect 50% to 60% incremental digital adjusted EBITDA margins in this business and we may be able to do better, but we also want to keep the growth momentum going.
Dan Kurnos: Thanks, guys. Appreciate it.
Christopher Halpin: Thank you. Operator, next question.
Operator: The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.
Eric Sheridan: Thanks so much for taking the questions. Maybe two if I could. First, just following up on John’s question earlier around Dotdash Meredith, in the letter you talked about the aspects of the business through the lens of premium, programmatic, and performance marketing. Can you talk us through some of the key learnings from 2023 and how you’re thinking about the opportunity set through those three prisms for the business looking out to 2024 and beyond? And then second, turning to Angi, you talked in the letter about transacting SPs declining but improving from a second derivative standpoint and you’re still shrinking the sales force. Can you talk about the balance between driving efficiency and return in the sales force and aiming that towards the optimized level of service provider growth? Thank you.
Joey Levin: Yeah. I’ll do the last one first before I forget it. This is — we, you’re right. We have been reducing the size of the sales force over the last 18 months and the main thing is driving up productivity by eliminating unproductive calls. I think, we were making a lot of phone calls to a lot of pros that in the end didn’t really make economic sense. So we’ve cut back on that meaningfully. [Technical Difficulty] That is a driver of the retention gains that we’ve seen, and that’s a driver of the efficiency gains that we’ve seen too. We’re also prioritizing prospects more smartly now. So we have data, we built a system last year to deploy against this. We have data now to rate prospects that we call and make sure that we’re focusing the effort of the sales on the best prospects that are most likely to impact our business for the better, meaning most likely to stick with our platform and most likely to get jobs done well for our homeowners.
That’s also the type of offer we’re pushing through our sales force. We’re focused on higher commitment offers that we’ve known this for a long time, but I think there was a period where we deviated from it that we really have to give pros a chance to succeed. And so that means getting them to a higher commitment so that they can see enough volume through our platform to see the positive ROI. That’s a little bit harder in the beginning because you’re not going to make as many sales, but it’s long term better because those sales are going to be more valuable and those pros have a better chance of succeeding with the platform. I think those are the big ones on the sales force. And now I forgot what the other questions were.
Christopher Halpin: I’ll start.
Joey Levin: Okay. Go ahead.
Christopher Halpin: So Eric, on DDM, you hit on the three key digital revenue categories, drivers of premium, programmatic and performance marketing. The one top of the funnel, so to speak element though is traffic. So to talk about all the supports or drivers of revenue growth. Traffic is growing. You saw we’re getting to stability on overall sessions and core is growing 10% in the quarter. Those trends have continued indoor strengthened so far this year. So overall traffic sessions, impressions increasing that then from an ad perspective either falls into the first is premium that we sell directly to our advertising brands and agencies. And then what’s left over essentially is based to programmatic. Premium, it’s been a tough market for us since we acquired DDM, since we acquired Meredith, really starting in May of ’22, when the ad market fell out of bed.
But we are seeing momentum there and as Joey said earlier, we’re seeing performance by the combined salesforce and we’ll keep that momentum going. Programmatic, the team has done a great job with our ad stack and continuing to optimize and improve the performance of our ads and our monetization. D/Cipher will definitely be a tailwind for Premium. And then increasingly as we do the connections into things like Amazon other DSP platforms, we think we’ll increase our programmatic yield, which will be a tailwind there. And then finally, performance marketing. Neil and the team are exceptional performance marketers and you can see the acceleration quarter-to-quarter across the portfolio. And performance marketing going zero plus, 12 plus, 22 plus, 31.
We expect it to continue. Comps will get tougher, but we think we’re as good as anybody in that space. And then finally, we don’t talk about it much, but licensing, which has been a drag on digital revenue due to some syndication partners and other dynamics is starting to get stronger. And we think some of our syndication partners can be a source of growth in ’24. So they’re all separate factors, but we feel good about the pace and executing on those this year forward to drive growth. Thanks, Eric. Operator next question.
Operator: The next question comes from Kunal Madhukar with UBS. Please go ahead.
Kunal Madhukar: Hi. Thanks for taking my questions. One on organic traffic, can you talk about what percentage of your total traffic on both DDM as well as Angi is organic? And then the second question relates to Angi, and you talked about it earlier in terms of the number of transactions per service request, the monetized transactions per service request being at 127%. So can you talk about in an ideal state, what is this percentage level that you are targeting and what does it mean for a revenue per monetized transaction? Thank you.
Christopher Halpin: Sure. On the breakdown of traffic, we don’t provide that publicly. I think we’ve given some data on DDM in the past, but that we don’t share. Obviously, organic is a very important and large portion of the mix, but we don’t do the breakdown. In terms of monetized transactions per SR, it’s a very good and fair question and the answer is we don’t know yet. And it gets a little bit back to Dan’s question from earlier. We want to keep pushing that up. We want to keep giving homeowners and pros a better chance of a job done well on our platform. There is a point that you would go too high, and so we don’t want to go beyond that point, and we haven’t found that point yet. So certainly room from here, but it doesn’t go up to infinity.
And in terms of revenue per SR, that’s a little bit different. Obviously, monetized transactions per SR is going to be a very big driver of that. But also, I’ll call it quality of the SR. But quality may be an unfair word. It’s what mix it is. So a home remodel job is worth meaningfully more than a home cleaning job. The channel it comes through matters how sort of far down the purchase funnel the homeowner might be matters. How much information there is within the SR matters. And so those things, as we refine the service request can drive revenue per SR up. And one of the things that’s been happening certainly over the course of the last year is, we’ve been both improving the mix shift and improving the quality of those SRs to help drive the win rate and that’s something that we hope to continue.
Christopher Halpin: The only thing I’d add is just we’ve become increasingly focused on monetized transactions per SR, as an indication of the two-sided health of the platform and quality of the experience. So yeah, and there’s no silver bullet to optimize that. Clearly having it greater than one is good because that’s a better consumer experience. If it got to four, that’s suboptimal for SPs because in terms of their experience. So, there’s something in there. But the more that number increases, the higher the quality of SRs we’re getting and also the higher the quality of our matching technology and of our SP base. So, we believe it has room to run, as Joey said, and it’s a key metric to us in terms of the improvement in our overall two sided marketplace. Thank you. Drew, next question.
