IAC explores Match Group and ANGI Homeservices spin-off

Tinder logo displayed on a smartphone.

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CAI said on Wednesday he was exploring a possible split of his stake in Match group and ANGI Home Services to its shareholders. IAC stocks rose 6% in after-hours trading before settling on a slight gain.

In a letter to shareholders that coincided with the release of the company’s June quarter results, IAC CEO Joey Levin said the company was considering splitting the two publicly traded subsidiaries, but that “we don’t know. not yet where this process will lead “and said he may ultimately choose to part ways with both, or one or the other of the companies.

IAC owns 80% of Match Group, which includes online dating service providers like Tinder, Match, Hinge, and OKCupid. IAC also owns 83% of ANGI Homeservices, which owns digital market companies like Angie’s List and Handy.

“It’s not just legal jargon to preserve ETI options with an expected outcome in mind – we sincerely haven’t decided what’s best yet,” Levin wrote. “But given the increased interest in the topic among shareholders, we felt it was appropriate to update you on our thinking before a more formal assessment process is underway, and as it will begin. shortly, we have decided to include this information in this update. “

This is not the first time that IAC has taken such a step: more than a decade ago, IAC said it was spinning HSN, Ticketmaster, Interval and LendingTree as separate listed companies.

Levin said in the note that since the company is still evaluating its portfolio setup, exploring the separation of Match and ANGI is not “really” up to date. “

“But given the healthy outlook for these companies, we take a fresh look at whether each company is ready to part with the IAC mothership, and we hope to come to a conclusion in the months to come,” Levin wrote.

In a section on ANGI Homeservices, Levin wrote that the company is “a large, healthy and growing company that is clearly a leader in a huge category and gaining market share.” But the segment is lagging behind where IAC wants it due to a “combination of marketing issues and an increasingly tight supply of service professionals in certain categories.”

These marketing issues included what Levin said was an unanticipated increase in the cost of customers from Google, its biggest source of traffic. He wrote that Google’s free and paid customers account for just under 40% of service requests, but with Google dedicating more page space to Google products. He said that another recent problem was that the ANGI “stumbles over [its] own feet “in terms of Google’s ecosystem.

“When we cut our spending in 2018 due to the tidal wave of consumer demand resulting from the integration with Angie’s List, we lost the pace of our search engine marketing spending and turned our pay attention to other areas, ”Levin wrote. “It became too obvious in the middle of the quarter when Google released a change that caused clicks to shift dramatically from free to paid, and we weren’t ready to absorb it. search results were down from the previous year, while users arriving through paid search results were up substantially, but significantly more expensive. “

Levin wrote that declining marketing effectiveness will weigh on this year’s numbers, but said the company is adjusting and replacing its search engine marketing systems with “strong first results.” The company is also focusing on pre-priced services, as it has found that its service professionals using on-demand products such as “instant book” have higher success and retention rates.

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