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Mostly Borrowed Ideas

5 Feb, 10 tweets, 5 min read

1/ Thread: Notes from $IAC+ $ANGI Earnings call 4Q'20

Lots of interesting data points related to Vimeo on this call. Continued conviction on fixed price at ANGI+ real excitement about Dotdash.

Here are my notes.

2/ Let's start with Vimeo.

$IAC owns 88% of Vimeo. 1 IAC share = ~1.6 Vimeo share

"TAM is every professional, every team, every organization in the world who now needs to use video to reach their customers"

70% of Fortune 500 companies use Vimeo. Total enterprise customers <4k

3/ 60% paying subs start as free first, and 60% of enterprise customers come from free or self-serve base. Most enterprise customers are SMBs.

Recent partnership with $SHOP, $GDDY, $HUBS, Mailchimp

Net revenue retention increased for 7 consecutive quarters.

4/ Vimeo was rule of 40 business in 2020; rule of 50 in Q4. Gross margin >70%. LT EBITDA margin target ~20%, prefers to invest in the business now since LTV/CACC is really strong.

FCF positive:~$30 Mn in 2020. Spin-off likely in April, worst case early May.

5/ $ANGI

January deceleration primarily because of changes in accounting treatment (the logic works backwards for the Q4 acceleration though)

9-10% topline growth till Q3, expect to hit ~20% in Q4

6/ Fixed price ended at 11% of total business in 2020, ahead of expectation. Target is to make it half the size of overall business.

Expect to hit 35% EBITDA (currently 10-15%) for traditional segment (will be lower for fixed price). How? See second image.

7/ Fixed price gives potential price leverage.

If you want to explore more on $ANGI, here's my deep dive (paywall): mbi-deepdives.com/angi/

8/ Dotdash

If Dotdash were a SaaS business (it's not)...

100% renewal rate, >100% net revenue retention

Jason from Oppenheimer suggested to brand Dotdash as "ad tech" business 😂

If you don't know what Dotdash is, go here: dotdash.com/our-brands/

9/ Care.com potential TAM $30-40 Bn

After Vimeo spin-off, IAC will have ~3 Bn cash, some of which will be deployed to Care and Dotdash.

Also, $IAC seems pretty pleased with how things turned out with $MGM

End/ Subscribe here for monthly deep dives:

mbi-deepdives.com/plans/subscrib…

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More from @borrowed_ideas

Mostly Borrowed Ideas

@borrowed_ideas

4 Feb

1/ Thread: $IAC/ $ANGI Q4'20 Update

"At IAC, 2020 was a year of giving back. Not just giving back via spinoffs or distributions to the shareholders who have supported us, but giving back to the communities that have enabled us."

A very stakeholder friendly into :)

2/ $1 invested in Silver King ( $IAC predecessor) in 1995 would be $40 today, which is 16% CAGR over 25-yr i.e. 50% higher than $SPY

What an incredible track record.

3/ $ANGI

Fixed price model generated $160 Mn in 2020. More data points in terms of how fixed price perfectly fits in.

$ANGI, however, dropped ~10% after seeing lukewarm growth in January. I expect $IAC to really hone its focus on ANGI once Vimeo spin-off.

Read 11 tweets

Mostly Borrowed Ideas

@borrowed_ideas

3 Feb

1/ Thread: $GOOG 4Q'20 Update

For the first time, GOOG segmented its cloud revenues/income separately, and overall revenue was >20% in 4Q which led to +7% after-hours reaction yesterday.

Here are my notes from earnings/press release.

2/ In the last quarter, here is the segment-wise growth:

Search +17.4%
YouTube ads +46.0%
Google Network Members +22.9%
Cloud +46.6%

Cloud more than doubled in the last two years.
Other bets losses $4.5 Bn in 2020 (vs $4.8 Bn in 2019)

3/ Operating margin in Q4 ~28%
FCF margin in Q4 ~30%

One of the big takeaways was the core business was even MORE profitable than most investors thought since cloud had -42.9% operating margin.

$GOOG's search business is a good comp for Fed in terms of "printing" money. JK.

Read 9 tweets

Mostly Borrowed Ideas

@borrowed_ideas

3 Feb

1/ Thread: $AMZN 4Q'20 Update

"If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive."

The market collectively nodded to that with +0.6% reaction.

2/ The best owner-operator perhaps the world has ever seen finally takes a backseat from the Everything Store, but pretty sure he won't be chilling.

"In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives."

3/ Andy Jassy, who had been with $AMZN since 1997 and became CEO of AWS in 2016 , will be the new CEO in 3Q'21.

AWS's new CEO is yet to be declared.

Read 12 tweets

Mostly Borrowed Ideas

@borrowed_ideas

28 Jan

1/ Thread: $FB 4Q’20 earnings update

While market’s reaction has been at best lukewarm to FB’s earnings, it is difficult to find faults on operating performance, but the temperature of the feud with $AAPL is rising exponentially.

Here are my notes for Q4.

2/ DAU +11% YoY; MAU +12%; Family DAP +15%

Revenue +33% YoY; Ad revenue +31%

Europe +35%, North America +31%, APAC +29%, RoW +25%

# of impressions +25%, avg price/ad +5% (first-time in a long time)

Other revenue reached $886 mn, up 156% driven by Quest 2

3/ Operating margin +46% (+400 bps)
FCF $9.4 Bn, up ~90% YoY (what?!)
FCF margin +33.6%, up by ~1,000 bps (what?!)

Outlook: expect topline to be stable or modestly accelerate in 1H, but decelerate in 2H because of tough comps

Read 14 tweets

Mostly Borrowed Ideas

@borrowed_ideas

24 Jan

1/8 Thread: The boon and bane of writing well

Mark Sellers once gave a famous speech to a group of Harvard MBAs. It was titled, "So You Want To Be The Next Warren Buffett? How’s Your Writing?"

In his speech, he equated writing well to being able to think clearly.

2/8 It makes intuitive sense, and in general, I agree.

If you want to be the next "Buffett", you probably do need to write clearly, speak eloquently, be quantitatively oriented, and perhaps more importantly, be lucky.

3/8 But I wonder whether it is harder for good writers to change their mind.

The whole thing sort of reminds me of competitive debates. During college, I got the opportunity to adjudicate competitive debates. I even went to World University Debating Championship.

Read 8 tweets

Mostly Borrowed Ideas

@borrowed_ideas

22 Jan

1/4 Short thread: Am I concentrated by choice?

My personal portfolio is fairly concentrated with just 11 stocks, but top 4 is ~70% of total portfolio.

Is this level of concentration by choice? My guess is probably not. Here's why.

2/4 As an analyst, I probably know just 25-30 stocks reasonably well.

If you know just 25-30 stocks, do you have any other alternative than being concentrated?

Unless I am eliminating more stocks that I know fairly well, how much stock picking is really happening?

3/4 I wonder whether concentrated portfolio on fintwit is *mostly* a function of age.

Younger investors have little alternative than being concentrated. It is only the older investors (or anyone who actually understand a lot of companies) who probably have an actual choice.

Read 4 tweets

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