Match Group, Inc. (MTCH) Earnings Call Transcript & Summary

Good morning, everyone. This is Nat Schindler, Internet analyst over here at BofA Merrill Lynch. I want to welcome you all to our virtual tech conference as well as to welcome our guest today, Neil Vogel, CEO of Dotdash, the publishing arm of IAC. Neil, can you just start with first -- we are very happy to have you and very happy to be able to do these -- this conference even in these trying times. If you -- can you start by just giving us an overview of Dotdash and IAC's publishing business, kind of the portfolio and then what's in it and how it's evolved over time?

Sure. It's easy. And thank you, everyone, for coming. I'm happy it's not a Zoom. I didn't take a shower, so this is great. The -- Dotdash is -- we are, as you said, we're a publisher owned by IAC. We are in the business of service publishing, which is sort of like need-to-know publishing, which is publishing that helps people. Sometimes it's easiest to define us by what we don't do. We're not news. We're not sports. We're not gossip. We're not style. We are content that helps people across 4 primary verticals: across finance, where we have a brand called Investopedia and The Balance; across health, where we have a brand called Verywell over a couple of different websites; in lifestyle, where we do home, food, tech and a little bit of travel; and in beauty and style, where we have a brand called Byrdie and a brand called Brides, which we, at some point, bought from Condé Nast. And what we do is really simple. What we do is we help people answer questions, solve problems, learn things, cook things. We help you manage your chronic condition if you have diabetes. We help teach you how to paint your kid's bedroom. We help you learn how to build the pantry during COVID when you haven't cooked at home in a really long time. And we -- our roots go back 20-plus years. We were once About.com, about 5 or 6 years ago. I got to IAC after they'd acquired About.com from the New York Times. And we set off to figure out what to do with this business. And we always knew that there was a really good business for service content online. And even at About.com, we didn't think very many people were doing it right. And not doing it right means not treating service content as if it is the most important content online, which it is. There are a number of use cases for you when you go online. There is sort of like the nice-to-know content, which is sort of like social and entertainment; and there's one-should-know content, which is news; and then there's a need-to-know content, which is us. I have to make dinner tonight. My iPhone screen is cracked. I have to set up a home office. I am getting married and I need to postpone my wedding. What do I do? That is the content we make. And what that results in is traffic. When people come to us, we know exactly what they want to do. There's no guessing. We don't need cookies to figure out what someone wants. We know what someone wants because we are already answering their question. We are further down the funnel than Google is that obviously sends us a lot of traffic. We are very different than Facebook. We don't rely on guessing what you might want to do based on a profile. We know because you've told us. And I think that's the key, key piece of our business. And I think when we set out to take what was once About.com and realize that sort of one general interest site wasn't working and break the business into verticals and launch our own brands, targeting health and targeting finance. We set out to do something different on the Internet. And we thought publishing -- everyone thinks publishing is this weird business that's failing and can't work, and I think we've proven that definitively to be wrong. What it is there's some bad ideas and some bad models that don't work. But when you have good ideas and a good model, you can build a thriving business that's really growing what we are. And what we do is super simple. We are really focused on everything we cover, whether it's in food, whether it's in health, whether it's in finance, writing the single best piece of content on the Internet on that specific topic. It's expensive. It's complicated. It requires us to make video and have a lot of data and make animated GIFs and illustrations and hire expensive writers, but we make the best content on the Internet because that is what people want. We are of the mind that the Internet doesn't need any more mediocre content, it's got plenty of it. If you want people to use it, you have to be the best. And then we did 2 other things that are -- that sound common sense and very basic but are actually not what anybody else is doing. And the second thing is if we're going to have the best content, we're going to build the fastest sites in publishing. We're going to build sites that operate as fast as they possibly can. So when somebody wants something from us, it comes right away, and that's what we did. We are consistently among the fastest publishing sites on the Internet, if not the fastest. We're usually -- of the sites they measure, we're usually like the first or second. And we are materially faster than any of our competitors, which is a big advantage. A big advantage for serving ads, a big advantage for user satisfaction. And then the third thing we did, as we said, part of the problem people don't like the Internet is they can't or don't like how other service publishers are creating content is because the content is not that great and the sites are impossible to use. The third thing we said is there's too many ads. So what we're going to do is we're going to put fewer ads on all of our verticals. And whether we started them or whether we bought them, we're going to do about 2/3 of the ad load of any of our competitors. And we are never ever going to do a pop-up, a free roll, anything that would annoy you as a human who uses the Internet. So all of a sudden, we are in these valuable areas. We've got great content. Our sites are superfast, and our ads are very respectful. And all of a sudden, the business works. And in 2016, when we started this endeavor, we did about a little less than $80 million of revenue and lost almost $20 million in EBITDA. Last year, we did $168 million in revenue and about $40 million in EBITDA. And we did that because we have brands that really resonate with people from The Spruce in food; and Investopedia, which I'm sure a lot of you guys know; to Lifewire in tech; to Brides and Byrdie and all these brands we have now. They're really resonating with people, and they're working because our experience is better. The second piece of this is, when you do these things and you create a better experience, we've also created a significantly better experience for advertisers. When your sites are fast and you have fewer ads and your traffic is super intent-driven, meaning you know exactly how to target people because you exactly know what your visitors want, that is a great formula to make ads perform. Because if there are 3 ads on a page versus 6 ads for a competitor, there's sort of a finite number of clicks in the world. You're definitionally going to get more clicks or whatever the KPI is for those ads. And when your audience is much more qualified because we know what they want based on the content and when your sites are superfast, so the ads serve properly and our tech is good, that really works. And what we've seen is over the last couple of quarters and IAC talked about this in earnings calls, we're anywhere from like -- if you look at any quarter, our top 25 advertisers, on any quarter, 23 or 24 of them are coming back quarter-to-quarter to quarter-to-quarter. So a lot of our advertisers, we're off something like RFP cycle because we perform and they need us. And the business is working. We, for the first time last month, crossed over 100 million users a month. On Comscore, we're one of the largest publishers now. We're really growing. We had a very good first quarter. Even in April with the effects of COVID, our revenue was still up 22% year-over-year because of some revenue diversity that we have, which is really interesting, which I'm sure we'll talk about today. But we're very optimistic about this business. We're very optimistic about publishing. We feel really good about where we're going. We're asked all the time, well, who are your competitors? And our competitors are very diverse. In health, our competitors are WebMD and Healthline. And in finance, our competitors are everybody from like The Wall Street Journal and the Bankrate. But the one consistent thing that we see is in every market in which we compete, we are not the biggest. Like, health, we're probably the third or fourth biggest health site on the Internet now, but the biggest guys are still 3x our size. There's so much room to grow. In food, The Spruce has been a tremendous success story in food and home. Allrecipes is still 4x our size. So despite everything we have going on, we have so much greenfield in front of us to run with. We've obviously -- we very much run an IAC playbook, where once we figured out the model, we've been very opportunistic about making acquisitions, and we've done 4 or 5 of them, generally fairly small economically, but we're in the market now looking at some bigger things. And hopefully, I think there's going to be some bigger opportunities given the wiggliness of the world right now. But we're just -- we're really optimistic. We feel great about where we are. We like the opportunities. We like what we're doing, and we're happy to tell you about it.

Great. That was a really great introduction, and there's a lot of ways I can go from here. But first, I want to jump into 2 different areas. We'll talk about the content side and the traffic side, so kind of your supply and your demand.

Sure.

On your content side, as you said, publishers have had a really hard time on the Internet in -- especially in that like-to-know category and -- as you said. Can you talk to us a little bit about the different length of value you can receive from a piece of content versus most other publishers? You're spending a lot of money in saying creating the content, but -- sorry, go on.

So the interesting thing for us is -- and it's where we really differ from other publishers is that the act of creating a piece of content for us is not an end, it's a beginning. So the -- if you're a news publisher or a sports publisher, the traffic curve on a piece of content is going to be a fairly big spike and then a really, really long tail. We're different in many ways. For a vast majority of our content, it is a slow build. So our best, most valuable pieces of content, things that we get lots of traffic on are often pieces of content that we made 1, 2, 3, 4, 5, 6 years ago because what we do is we are constantly improving and updating all of our content. And that is the sort of like, if you looked at our processes versus the processes of like New York Times or the processes of ESPN, we're doing -- the only thing we have in common is we both make content and sell ads. Nothing else in what we do, we have in common. Because we find these areas that people consistently need help in. We try and make the best thing and that we constantly refine this. We've got 120 editorial people on staff. We have -- well, probably 1,099, 1,000 people this year. All of our systems and all of our -- that we’ve built internally, everything is built to create pieces of content that we assume are very valuable. And we don't necessarily -- if you looked at the ROI on a lot of the content we make on a very short-term basis, like you would look at if we were a news publishing, you're like, "What are you guys doing?" But if you look at the ROI on a piece of content over 2 or 3 years, you'll be like, "I get it. That is the crux of what is happening here." And our whole business is based on us being trusted by users, right? And there's different levels of trust. If you're trying to pick a new broker and using Investopedia's recommendations of the best online brokers, that is a fairly high level of trust. If you're asking us to help you make like a really great spaghetti for -- or tacos for your family on Taco Tuesday, that's a level of trust, but a smaller level of trust. Everything that we are doing is to try and be more trusted than anybody else is doing what we're doing. And that is how we approach content. That's the basic approach for us.

Great. Then on the demand side or on the consumer demand side, how do you build the traffic? Most publishers have complained for years that they're basically reliant upon Google and Facebook and their lives are controlled by Google and Facebook. How do you get around these...

Here's the thing that you have to realize. It's not 1995 anymore. You're not delivering magazines to people's living rooms. You're doing something very, very different. If you're going to be in the business of publishing, you have to understand that in very many cases, there is going to be an algorithm between you and between your users. And you have to think long and hard about algorithms that you can work with and algorithms that you can't work with. Now you'll always have direct traffic. You can build e-mail lists. You can do all of these things, but there is no publisher that is not reliant on an algorithm of some sort in some way. Like the most you're going to get, unless you're very unique, you can get like 1/3 of your traffic there. In our case, when we were building this coming together, we took a look at algorithms that we can work with. And we said, with our type of content, what do I do if I have a slow router, right? Like, what do I cook if I have these 3 things in my pantry? Like, how do I outfit my home office? That's not -- those are expensive to make. They require pictures and videos and sophisticated writers and explanations. So these are not going to be viral things and the content is going to be great. So we need to align ourselves to algorithms that care about where they send you. Like, if you go to Google and you have a query, Google's #1 job, and they don't have to use us for it, they can -- is to give you the best answer possible. Sometimes they'll do it themselves. Sometimes they'll send into a publisher. Sometimes they'll do something else. The trick for us is to say, "Well, we're in the business of being the best content. We need to figure out how to be the person they send people to." Same thing with Pinterest, same thing with Flipboard. But then you look at other algorithms that have very different things that they're doing. Like, I have no idea what Facebook is doing. I actually don't care what Facebook is doing. Twitter, no idea what they're doing. But it's not our kind of content. It's not our kind of algorithm. Like that's not -- they don't -- they neither appreciate nor value what we do, but it's because their user base doesn't appreciate. Like there's no -- like if you're, like, looking for some health diagnosis, like, no one's going to put that on Facebook and hope it goes viral. That's just not how this works. But we are -- when people need to learn things, solve problems, we need to be in the algorithms they use to do those things. And that's either going to be -- they're something they have a lot of interest in, so they get an e-mail. They come to us direct because they learn the brand or they pick us off of the search page. And what that translates into is our sites will be anywhere -- our traffic, anywhere from 60% Google to 80% or even 90% Google, depending on the site or the topic because Google is the front door to the Internet for our type of stuff. But we're okay with that. Like you'll never -- if you find yourself complaining about an algorithm, it's because you didn't do something right. Like you have to learn that like Google owes us nothing. Facebook owes us nothing. Pinterest and Flipboard owe us nothing. You have to understand what they want to do and figure out how you can act symbiotically with them, and we've been pretty good at that, and it's really working for us. And it's working for us because very simply, and in our case, Google is the most important algorithm, but there are others that matter. Like, do the best stuff on the fastest sites with the fewest ads. People are going to like it. You're going to build brands. When they list you, people are going to click on them and they're going to have satisfying experiences, you're going to do just fine. And that's how we look at the world. Like you'll never hear us complain about these algorithms because they don't need us. We have to make them need us, and that's how this whole thing works.

So it sounds like almost all of that traffic then is from Google's free site. How do you get around competitors or others getting above you on paid? And/or do you have to go into the paid channel at Google?

So it's interesting. The paid, meaning like -- we pay for virtually no traffic. 99.5% of our traffic is organic. Occasionally, we'll have an advertising deal that we need to get a little traffic to a very specific place, and we'll buy a little bit. But in our type of content, people aren't buying their way on top of us. It's not like -- we're not like a lawyer looking for mesothelioma clients, right, who's willing to pay $10,000 to get a client in the door and they're going to bid up on SEM ahead of some other lawyers. That's not really what we do. And given we have got 300,000-plus pieces of content, and we functioned very well on the long tail. The #1 way we win things is just by being the best and winning on the algorithm organically. We don't do any paid. You're not going to find many publishers that do paid. Maybe in some very, very high-value areas. But I would -- what I would point out though, too, is what I'm telling you is, if you look at all of the other publishers that compete with us, whether it's -- WebMD's 95% of the traffic is from Google. If you look at across some of the publishers who are pretty good at this like Hearst, their percentages of traffic from Google look like ours, if not more than ours. So I just want to be really careful to say that, like, we're not some like -- we talk about Google far less than people would think we do. We talk a lot about making the best stuff, and that will win, and that's proven to be the right strategy for us.

Great. Now let's -- then let's move over to the other side of the demand on this equation.

Sure.

Advertisers. How do you compete with basically almost all ads on the Internet basically being served through a Google platform or a Facebook platform where they have log in capability and the ability to track users much more finely than almost anyone? How do you compete with an offer to the advertisers? And what is the offer you give specifically that gets them to say, "I want to go around the big platforms and go to you directly."

The secret sauce that we have is what Google and Facebook do, and they're both obviously great at what they do is Google is trying to harness intent, right? They know what your query is, so they're going to try and give you relevant ad. That's fine, but we're already further down the funnel in that because we're the thing that somebody already went to when they knew what they needed. So we're even closer to the user than Google is, which is interesting. Facebook is guessing what you want based on a profile that they're building on you, log-in profile. Contextual targeting beats profile targeting 100% of the time. So we compete with them on that. They obviously -- they can like scale and everything else, and there's a million reasons why you would argue you need to do both. But we compete very favorably with both of those. And also, building brands, it is very hard to build brands on Google and Facebook, which is why publishers exist. So what we've been able to do is because of how we set up our sites and our pages that our advertising performance -- and again, this is hard to actually prove out, but we believe, and I think the results speak for themselves, we performed better than just about anybody. And I remember when we first launched Verywell, which is our health site, which we took all the health information content off of About.com and reconstitute it. And this is like 3 years ago, 4 years ago. And we were running a deal for a large pharma company, which is a very good business for us. And we flipped over to Verywell half way through the deal, and then they called us like 2 weeks later, and they're like, "What are you guys doing? You're definitely cheating. Your ad performance has gone up so much versus what it was on About.com and you're so much better than competitors. Like, there's like some fraud going on." And no, there wasn't. We just had to explain to them what we were doing and why it's better to have like half as many ads on like twice as performance of the page when those ads are really contextually targeted, right? If it's -- it wasn't this, but it's very easy to see a diabetes medication around content that is only viewed by people that have diabetes or caregivers for people who have diabetes. That's kind of where you want to be. And if you're -- going back to my, like, we on Taco Tuesday analogy, if you're the person who's selling the taco shells, you want to be around all of the people who are looking at recipes and how to dice tomatoes for Taco Tuesday, and we know that. So the combination of contextual targeting, intent-driven traffic and our performance has been a little bit of the secret formula of why we do really well with ads. And look, it's hard for us. Like our brands are still young and a lot of people don't really know them. But once we get in the room and once we get your money, we tend to not lose it, which is why I was saying that sort of like top 25 advertiser stat. Like we see this a lot in everything from like the big home retailers to guys that are trying to get you to buy phones and phone plans. Like once they work with us for a while, they're like, "Whoa, there is no other person -- there aren't any other outlets -- we can't find any other outlet at scale that can do what you guys do, which is like give us a great branding experience on these beautiful websites and deliver performance as well." So that's what we're doing. And look, we definitely started from the performance side of things, right? We started like -- the #1 way we’ve got people to try us because we said we would be better than other people. And then as our brands evolve, we now compete on the sexier stuff and the software stuff. But it's been like -- it's been very interesting to learn this market. And for us to -- in many of the markets we're in, this is the last one I make, is there hasn't been a scaled new competitor who could credibly come into the market in a long time. And we see this in health where health was always WebMD and Healthline and Everyday Health, and now it's Verywell. We have the scale and the capabilities to do everything they can do. And I would argue, we do a lot of it better. Like in food, our Spruce Eats brand, like Allrecipes has not had a competitor emerge at this scale. And we see this across everything that we're doing, that being the new entrant is getting us to trial and our performance is getting us the rebuy.

Make sense. So I could see a lot of the advantages of learnings across different brands that have very different categories like health, food and investment advice, but probably not a lot of advertiser overlap. Are you able to cross-sell brands to the advertisers? And additionally, what are the KPIs, what are the metrics that the advertisers are trying to get from you and are tracking you and judging you on most?

They're all very good questions. So let me take the first one in order. Depending on what the advertiser is and what the advertiser wants, if the advertiser is an online brokerage and they want new account sign-ups, it is very clear who's going to talk to them and where they're going to go. They're going to go on Investopedia and they're going to go on The Balance, and that is very narrow. If you're a new gluten-free cooking product, we're actually going to put you in a lot of places. We're going to put you in Verywell Fit. We're going to put you in Verywell. We're going to put you on Spruce. We may put you in other places that we know correlate with gluten-free stuff. We're going to put you on celiac disease content because those people need to be gluten-free. We're going to put you in health content. We're going to put you on some exercise content because we're very good at figuring out like what relates to your topic. So in those cases, we'll sell across brands. A new brand acquisition we have, we just bought a brand called TreeHugger, which is sort of the biggest green site on the Internet. Treehugger and green goes across all of our brands because there is something green and sustainable in virtually everything we do. So it really depends on the advertiser. But by and large, our success to date has come in the first bucket, like fairly endemic people that want to get to very specific audiences. Now we -- with stated intent. Now we can -- like, "Okay. I'm going to buy this very specific content on Lifewire for people who I know are looking for adjustable desks." But then we'll often extend it across other sites using other data that we have. But it's, by and large, that. Well, I forgot the second question you asked now. What was the second part?

What were the metrics that they were -- that they were really tracking off you and buying off you?

Again, it really depends. Sometimes an actual branding campaign, it may just have like click metrics. If it's like Merrill Lynch brokerage accounts, everything we do is going to click back to some customer acquisition cost. And there's really a sliding scale as to what people want. And I think one of the interesting things that I think that we're pretty good at is we work really -- like when we started doing this, we were not doing big campaigns with big CPG companies and big brokerages and big auto companies, which we are doing now. So we really had to learn how each of our sites work and performed. So we -- the way we do is we try. And again, it's hard. It tells us a good story, but it's very hard to do. We try and like work backwards. Like if you can really get -- it's sometimes pretty hard to get out of an advertiser exactly the KPI they want. They'll tell you what they want the outcome to be, but you don't really know what they mean. We can figure out the KPI they want. More often than not, we can get it. And it just depends on like we will often help people with creative because we know how our people respond, which is not uncommon for publishers to do, but we're pretty good at like knowing what works on our sites. And what unit types and where to put them and with what frequency. So the concern for us isn't -- like the concern for us is we need to get a KPI from our advertisers that we can work with, but sometimes the places where we struggle if it's straight branding. Because if you look at the -- like The Spruce, we're bigger than HGTV, but no one ever got fired for giving HGTV money. And we're a competitor of Allrecipes, but no one ever got fired for giving Allrecipes money because they know what those things are. So the performance really helps people justify buying us as we try and build these brands, so we can be the thing that people have to buy. Investopedia is a thing people have to buy, and no one gets fired for buying Investopedia. But you can't say this thing about our other brands yet. And for us, figuring out what -- if we can figure out what the KPI is, we're good. But sometimes when it's branding, that's when it gets hard for us. That's when it gets hard for us.

That actually leads into a great -- another question. So can you go through some of your brands that you think have really worked or really scaled where you're really dominant or doing extremely well in and go through some of the brands where you're really early in and you see opportunity? And maybe even talk about any brands that you've since pulled back on or abandoned, where you see that they didn't work and kind of why, where -- why at various levels.

That is a very, very good question. And I'll take these -- I'll take them in order. If I start going too long, just cut me off. So...

No. Go ahead.

Let's do first the scale of brands that we're very excited about. Number one in health is our Verywell brand. Our Verywell brand has gone from -- I'm going to give the number slightly wrong, but it's directionally correct, single-digit million users a month when we launched it from what was then About.com's health section into mid-30 million users a month, which makes us, again, the third or fourth largest health brands on the Internet. There are 4 domains. There's Verywell the main conditional health thing; we have Verywell Mind, which is mental health; Verywell Fit; and Verywell Family, which are fairly self-explanatory. This is one of our more developed brands. I think on like a recognition in the health space, it's actually a brand people are starting to know just because we've had so much success winning traffic. Advertisers are thrilled with us because there's a new competitor in the space, and it's doing really well. And we are investing very, very, very heavily. The situation we have with Verywell is analogous to what we have in other brands and that WebMD is 25 years old. Everyday Health is, I don't know, 20-plus years old. We are essentially like 3 years old. And we are doing a crash course to build these brands, but it's working and this one has got a very good trajectory. We feel great about it. Investopedia. If you're drawing the grid -- so as I move on to our finance vertical, Investopedia is probably our most mature brand. That said, the traffic is up 40% or 50% year-over-year. We basically -- we "acquired it". It was sort of run independently at IAC, and we sort of took it over about a little less than 2 years ago. And it is on fire. And it is a real trusted brand in finance. It works with like more hardcore investors. There's a fairly big student audience as well. The full update of the creative of how we write, the editor -- the EIC, the editor in chief, is on TV pretty much every day as a commentator. And this is a brand that is really getting into the zeitgeist of finance, at least from our POV in the evergreen way. We are not a market site. We're not going to tell you why the stock went up and down generally, but we're a little bit more of a the larger concepts, let's talk about like what negative interest rates actually mean in the scheme of history kind of thing. So that's a brand we're thrilled with. And The Balance, which is a brand that no one's ever heard of, and we've really struggled with getting the brand recognition is probably the biggest personal finance site online. It's more than half women. It's definitely the largest female audience of any finance site. It's all personal finance. Like how do I get a car loan? What should I do with my student loans? How do I buy a first house? And our finance group together is really large and very exciting. In our lifestyle bucket, the flagship brand there is called The Spruce. And The Spruce is a home brand, which is called The Spruce and a food brand called Spruce Eats. And we have smaller brands in pets called The Spruce Pets and Crafts, which is like a family sort of like crafting site. The Spruce is probably are maybe not among this audience, but if you -- this is like -- if you go to the mall in Iowa, The Spruce is the brand that the most people have heard of, just because it's done so well on food and recipes and on home and design. We are the site to go on the Internet when you have to get a red wine stain out of your sweater, we have to unclog your toilet at home. Like some of this are not glamorous, but it is like we solve all of the home and food problems for people. And it's been really successful. Lifewire is our tech site. We've struggled a little bit with that. I mean it's like -- look, basically, everything I'm listing here so far -- since launch, our acquisition traffic has doubled or tripled. Like every single one of our brands is growing. So when I say struggling, I'm more talking about like the brand isn't where it should be in terms of what people know. Lifewire is our tech site, does really well. It's still small. It's competitive space. TripSavvy is our travel site, which is -- it's never been a big business for us because travel is a surprisingly a smaller content business. It's a very lucrative site. It's obviously gotten crushed in the last couple of months. But -- and then we have Liquor.com, which is part of The Spruce. And then moving on to, I think, what we think is going to be our -- really are what's going to be our really fastest growth area is our beauty group, which is the site called Byrdie that we acquired from a bunch of entrepreneurs; and Brides, which we bought from Condé Nast, which is sort of like an overlooked brand there. Byrdie, we've doubled the traffic since we've gotten it. There is a real opportunity. Beauty is a market on the Internet that's like bigger than the market for finance. It's a huge market. We really like the competitive position. We've been investing heavily. It's very small, but the brand is well-known, and we're very excited about it. So again, we're across health, lifestyle, finance, beauty and style. We like our verticals. We have -- our brands are all at different places unlike the life cycle curve, but we're all very, very young brands. And they're very young. We're trying to grow them. We're trying to be really crafty and creative. But building brands is super hard. To the extent that we're going to have trouble in our model is if we can't build brands. Now to date, half of these brands didn't even exist 4 years ago. So we're thrilled with what we've done. But sort of like we've got from 0 to 1. Now we've got to get 1 for 2. Like Byrdie needs to be in the same sentence as Cosmo. The Spruce needs to be in the same sentence as Better Homes & Gardens. Verywell needs to be in the same sentence as WebMD, right? Investopedia and The Balance need to be talked about, "Oh, interesting, that's Bankrate and The Wall Street Journal." So we have a lot of work to do, but we know that it's the work we have to do. So that's sort of like the path -- that's the path forward. But everyone -- we don't have a single brand that isn't growing, other than TripSavvy, but that's a little bit of an outside factor. I mean we feel really good about our portfolio. We really like it. Now we'd like to add some stuff, obviously. And I think if we're going to add things, we -- I think we learned from Investopedia that where we can get our hands on a brand that has already has established cred, we can do remarkable things very quickly. I think that's going to be a little bit of the focus of M&A. But sort of that's where the brand portfolio is right now.

Actually, that just walks right into my acquisition strategy question. Obviously, you have grown through acquisition. There are a lot of sites out on the web. What -- that probably have no access to the public markets and the capital that you guys do within IAC, and especially all the cash you'll have post the Match deal closing off. Where do you think -- where are you going to focus on your acquisition strategy?

We are -- I think that right now, we're really good at one thing. We're really good at, right, service content, this type of need-to-know content. We're very good at monetizing it. We haven't really talked about it. But in the first quarter, 1/3 of our revenue was from transactional sources like helping people pick a broker or helping them decide what vacuum to buy, which is a really interesting opportunity for us. But we really like the verticals that we're in. What we would like to focus on is more known brands from more traditional publishers. And I think we had a really unique opportunity. We've had IAC. Before our story started, we had a couple of years at IAC, we were trying to figure this out and they are very patient with us. We now have this model that we can plug into something we acquire. And if we acquire something and they do something our way versus their way, there's both cost savings and lots and lots of growth. Look, it's -- I think one of the things for us is most people in publishing can't do what we've done because if you're part of a public company or part of a large entity and you really want to fundamentally change what you do and make your sites fast and put fewer ads on the page and really change your content and really upscale it, that is going to cost you an awful lot of money in the short term. And you're going to have to hope traffic goes up and the ad thing performs. No one has the appetite to do that. So you're going to see publishers continue to struggle. And I think we're -- I think valuations -- I mean the market is -- what the market is now, I think -- I don't think valuations are matching up with people's prospects. And that's obviously what IAC is very good at. So what I would say is we're doing a lot of hanging around the hoop right now. And hopefully, there'll be something for us. But the deals we've done so far, where we bought Byrdie and we bought Liquor.com and we bought "Investopedia", and we recently bought this environmental site called TreeHugger. We bought brands that we thought we could run our playbook on. And we've learned how to do this. I think we would like to do some bigger things. And -- but a lot of -- deals are complicated, but that is definitely the plan.

Make sense. Can you tell a little bit more on the margin breakdown? You're doing about 25% EBITDA margins right now. That 75% in there, how much of that is content and how much of that is ad sales? And where other -- where are other big buckets of spend that you guys have to deal with?

Our big -- I mean again, without getting too specific, our biggest bucket of spend is content and what I would call tech, but we're not makers of primary tech. We are builders of really performing, really beautiful websites, which is expensive. And how we make and maintain our content is expensive. That's our biggest bucket of cost. And obviously, people, which I would allocate into those 2 buckets. We are really focused, like you're not going to hear from us that we are opening up Dotdash studios to try and make TV shows for Netflix and staffing it with 40 people and hoping something works. That's not what we do. You're not going to hear like the Dotdash TikTok strategy. That's not what we do. So I think you'll find we have a really nice model where we can invest heavily. And I would argue, we're investing as much as anybody I can think of right now in these very tricky times and still maintain really attractive margins just because of -- we're a fairly disciplined org. I mean none of the people that run this place have ever worked in publishing before, and I think that is our #1 advantage and that we did not have any -- and we still don't. We don't have any of the, "Well, I worked at this place for 20 years and that's how they do it." We sort of had to figure it all out, which turns out to be better because if you just look at the world and be like, "Well, your sites are slow and your content is crap and you have too many ads. Why would anybody want to use that? I don't care how good your brand is eventually that's going to run out." So we just said, "Well, let's just do it the other way and see what happens." And we ended up in fairly good shape.

Can you talk about other monetization avenues that you possibly could go down? And specifically, Glenn and Joey brought up several years ago at times an idea of turning Investopedia into almost a marketplace for personal financial advisers. I have never seen that fully develop. I don't know where it's going, if that's still on the cards. But what are the other avenues in which you could monetize this besides the normal brand advertising against specific relevant content?

So I don't think you're going to see a marketplace for financial advisers. I think that was an old idea before we took over the business. But what -- one of the -- again, I think we talked a little before about. Our business is all about trust and people trusting us. And if people trust us, it turns out they don't just -- when your router is slow and they Google like, "Oh, my router is too slow." Like a very likely outcome of that is they need a new router. And then people trust what we tell them on which router they should buy and the needs and the price range they want. So they go and buy it and we get paid for that. Or someone is looking for a new -- someone is trying to figure out whether they should use Betterment or Wealthfront or the Charles Schwab thing and they want a robo broker, someone will go to our reviews and figure out which is the robo thing that I really want to do. I trust Investopedia's recommendations. They're really good. So -- and then we send them something and we get paid for that. So commerce for us and sourcing transactions for people, which is part of what we do, which is part of helping people have been a really -- it was 25% of our revenue, $40 million plus in sort of like these sort of referral fees. In '19, it was about 25% of our business. In the first quarter, it was about 1/3 of our business. A little of that is aided by COVID, which was March because this is really starting to accelerate. But we're really interested in finding ways to make money that are in line with our core mission of helping people, and this really works. And I think we've gotten pretty savvy and pretty sophisticated at doing these things. But we're really like -- I don't know and this is like first or second inning for us on how to do these things. And even in April, which IAC talked about in the earnings letter when sort of ads slowed and ads were down like 7% year-over-year, our transaction business like had more than double year-over-year. It was up more than 100%. So we're very, very excited about helping people take the next step down the funnel from where they arrive with us. And sometimes, they arrive and they just want to know the best handheld vacuum, and we help them and we help them buy it. But other times, there's a longer process. "I want to buy a home warranty because I'm moving into a new house. How do I do that?" So we will teach them what a home warranty is. We'll teach them what to look for, and then we'll help them buy it. And we get paid for that. And that has been a really, really interesting business for us.

Great. I'll do one last question before we turn over the last 5 minutes to the audience to see if they can -- if they have any questions. But obviously, you just touched on it, coronavirus and shelter in place. Can you just walk through the various puts and takes that, that has had on your business and how things have evolved?

Yes. Sure. So just a very simple way to look at our business is if you take like -- you look at '19, and this isn't exact, but it's -- we're probably -- on the ad side, 1/3 of our revenue is health, 1/3 is finance, 1/3 is lifestyle, which gets us to -- and in total, adds are 75% of our business, right? So 25% each. And then transactions are like 25%. Again, it's moving -- the transactions are growing. We have -- I think part of the reason we've done fairly well in this. We're -- like no layoffs, no furloughs, no nothing like you're hearing all other business. We're actually still hiring -- being very smart about it, but we're still hiring. We're still investing. We're still growing. Pharma business has been fairly strong. We had -- we've had a lot of – we’ve got a fair number of pauses, but this is a little pharma specific, generally around drugs that weaken your immune system, like some -- because that's not a good time to have a weak immune system. So we've got some pauses. But that business is looking up. The finance business has been actually particularly strong because a lot of the finance advertising that we get correlates to volatility. So volatility is good. And the lifestyle ad business, I mean, there's no other way to say it, has gotten crushed. It's probably off 40% or 50%, but we're seeing signs that that's on the way back, too. So that's encouraging. And while this is going on, you've seen transactional revenue really, really ramp up as the habits of human beings have fundamentally changed. I mean there was a period there where for most of America, there was not a store that was open. So everything had to be bought online, and we were right in the middle of that. And it really, really helped us. I don't -- we -- things are never going to go back to the way they used to be before COVID. So we think this transaction thing is -- we always thought it was a big opportunity. I just think we did 4 or 5 years of evolution in a couple of months. So that is really interesting for us. As the world has like opened up a little bit, I think we've seen traffic slow, but not really that much. And I think it's important to note, I think, our business had a different reaction, our publishing business, to COVID than others did because we're not really news. So what happened to like you named the publisher that does news. Their traffic went bananas, but they couldn't sell any of it because nobody wanted to be against COVID news, right? Same thing is happening now. People's traffic is going nuts because of very unfortunate state of our world right now. And -- but it's not monetizable, where we are not news. What we are is content on Verywell, which is like, "How do I deal with the mental health of isolation of working at home? Or how do I prepare a pantry when I can't shop frequently anymore? Or how do I set up a home office?" So our traffic all grew to areas that are super friendly and really intent-driven. So that's been really helpful to us because we've gotten a lot of people to try out what we do, and we think it's going to have a lasting positive impact.

Okay. Great. I actually just learned that we might have already run over, and you do have a group meeting to move on to. It's just figuring out this virtual conference stuff. But Neil, thank you very much for a very interesting conversation. And anyone out there who has questions that they didn't have a chance to ask, please e-mail them to me, and I'll e-mail them through the channels at IAC. And hopefully, we'll have -- we'll be able to get something back from Neil as well.

Cool.

Is that okay, Neil?

Yes. That's great.

Great. Thanks, again.

Thanks guys.

Thank you very much.