Loading summary
Transcript19 lines
- [00:00]
Indiana University Narrator
Indiana University strengthens tomorrow's workforce with practical real world experience. IU grads make a difference in your community, serving as teachers, nurses and engineers who rise to tomorrow's challenges and meet them. Learn more at iu. Edu Impact
- [00:20]
Bloomberg Host
Bloomberg Audio Studios Podcasts Radio News well, it's sort of like hitting your finger with a hammer. We've all done that. It really hur just pointing this out because we did see shares of Angie dropping 35% last Wednesday following its latest earnings release after the online portal for Home Improvement reported first quarter revenue that missed expectations. They also plan to stop issuing quarterly guidance and outline outlined a major strategic pivot to refocus on AI. I do want to be fair though, the stock did bounce back the following two days after the earnings share price drop, gaining about 21% in that bounce back stock is down though another 12% in today's session. It's about a $207 million market stock. It is down Tim, about 60% year to date.
- [01:07]
Bloomberg Interviewer
After that intro, I'm going to let
- [01:08]
Bloomberg Host
you bring in Jeff Jeff, if you want to come in, we do welcome you back. We like talking to you. We think it's an interesting platform, tells us a lot about small business owners, talks to us about the consumer and about kind of the home market and then so much more. Jeff Kip is the CEO of Angie. He joins us from Cohasset, Massachusetts. You guys have a lot going on. Jeff, since we talked with you in mid February, got changes to your CFO and COO that happened in March and April. What happened that you guys said we got to do something different.
- [01:45]
Jeff Kip
So we have been working on the same technologies at Home Advisor for over 20 years from the Angie's List and handy Business is a little less. But we've had three old platforms we've been working on. The older your technology gets, the more code is layered on top of other code, slows you down, makes innovation harder. And we have been plotting a path to a new platform but we have just decided now's the time we needed to move quicker. The big catalysts are what I would call the biggest changes in technology in a generation which we really saw February when you saw things like Openclaw Cloud Opus 0.6 released and now our engineers are able to move a lot faster and the capabilities we have are a lot greater and it's time for us to stop fighting the old platform and kind of move into the present if you will.
- [02:35]
Bloomberg Interviewer
So what does that look like? Not just from you know, this is a two sided market so what does it look like from the provider and the home services professional standpoint, but also from the customer standpoint?
- [02:46]
Jeff Kip
So if you think about the homeowner customer, I think we are going to be able to have a more nuanced, more natural language conversation with the homeowner. Homeowners are not natural experts at describing their problems that they need pros to work on. And we're going to be able to ask better questions, upload photos and get to a better identification of the details that need work, give the homeowner better estimates. So we'll be going there over the course of the next year. The first stage of our new platform is to put the homeowner experience into place over the course of this year. On the pro side, we're going to build a set of tools for the Pro. We referred to it in our release and our letter as the Angie Pro Chief Revenue Officer. Pros are very good at doing work. They're not always good at calling the homeowner right away. They're not always good at making sure there's a sales trained technician or a salesperson at the appointment. They're not always good at following up. They're juggling a lot of balls in the air. We believe that agents really change the game for pros. You can already see it out there. There's startups out there doing pieces of this. We believe we can build a toolkit to make sure that our pros win jobs at a much higher rate, gets more value from the platform. And then if our pros are, the homeowners are getting more value from the platform too, because their jobs are getting done well by our pros.
- [04:01]
Bloomberg Interviewer
So what are the changes that happen internally at Angie to. To facilitate something like this? And what can investors, you know, understand about how this changes margins, what it looks like for the business and where they actually see differences.
- [04:16]
Jeff Kip
So internally, we need to change the way our teams work and the way they code. What Cloud Opus 4.6 did and you can read about all over the place, is that now you can not only write code, but you can write more code and you can check code using AI. Now you still have to have engineers who understand systems, understand the business and understand the ultimate product. They also need to understand how to test and spot issues in the code. But there's really a game changer there that it's going to allow our organization to move much quicker. One piece of what we're doing is we were midstream on building our homeowner experience afresh. We're now writing some of that with AI, but we're going to rebuild our entire Pro backend much faster using AI so effectively our teams are going to move to AI first coding. So we're going through a really material transition with our product technology, UX and data teams to make sure that we can do this effectively. But we think it's going to double our speed to market.
- [05:15]
Bloomberg Interviewer
You know, some analysts are out with, with different views. I'm just going to read from, read from Benchmark's note. They say we have no idea how much this is going to cost and over what time frame we should expect a return on investment. What would you say to Benchmark?
- [05:29]
Jeff Kip
So Dan is a great guy, very, very smart guy. I think that we are going to fund it effectively internally. In other words, we're not going to add headcount. We are probably going to add some token and AI software costs, but not massive. So we're going to fund it internally. I think what we're really talking about is opportunity costs where the reason we decided to pull our guidance is instead of working away at our old platform to optimize revenue and deliver product change that deliver revenue, which ultimately are hard to do on the old code, we are going to go fast forward to the new platform and be able to develop from there. We've estimated it's going to take us a year or so to get to the new platform and in that time we're also going to start building our first pro agents which we don't plan to monetize. We plan for it to improve the experience of our pros and maybe ultimately we'll monetize it if they want to use it for other leads from other platforms. But effectively what we said is we're not going to talk to you about where our revenue is going for a year. We gave some very rough directional comments and so that's really going to be the cost.
- [06:33]
Bloomberg Interviewer
Okay.
- [06:33]
Bloomberg Host
Hey, one of the things. Well, and also in that note from Benchmark that we also got Jeff, he said given the out of the blue nature of the new game plan, we suspect investors are simply going to assume that Angie's core business model just is not working. The the strategy could work out, but a lot of questions have to be answered for investors to get even remotely comfortable. Is that the case that the core business model was not working? And I bring up too the Decline in revenue, 56% drop in network revenue related to the implementation of homeowner choice last year as a practice of letting homeowners on the platform select which professionals they match with. Was it a strategy mistake? And is the core business not working because is this just a case about creating velocity?
- [07:22]
Jeff Kip
Yeah, the core business is working quite well fundamentally. If you look at Angie, over the last few years, we've gone from 1.5 billion to roughly a billion in revenue in the last few years. Most of that is giving up less profitable and lower quality revenue. So we've actually made a decision to move off what you might have termed an inflated model, bring it down so that the quality of the experience is much better for the homeowner and for the pro. You can see that our NNPS has moved 30% 30 points over three years. That is a cataclysmic change in the world of NPS. Our pro churn has come down 30%. We see that our win rate for pros has moved directionally about the same amount in terms of improvement. So we've dramatically changed the experience. We had a bit of an overbuilt revenue base, but we've pivoted and we still have the strongest band, the best acquisition machine and the largest pro network of anybody in our space. And we're spinning the flywheel as we go through this change.
- [08:18]
Bloomberg Host
Jeff, real quickly, 20 seconds. How long is this going to take to kind of play have an impact? Positively, Much more positively real quickly.
- [08:26]
Jeff Kip
We think we need a year to get our new platform in place and build out the first set of agents. But we think we should start seeing good moves by the end of this year and start accelerating our revenue in 2027.
- [08:38]
Bloomberg Host
Well, we look forward to continuing the conversation with you as you guys evolve. Jeff Kip, he's the CEO of Angie, joining us right here on Bloomberg businessweek Daily.
- [08:45]
Indiana University Narrator
Preparing for tomorrow's careers requires forward thinking education. Indiana University graduates are degrees above the competition, building on strong foundations to create new possibilities that make a difference where you live. From teachers and nurses strengthening communities to engineers advancing microchip research, Indiana University is investing in tomorrow's workforce through career ready training. Learn how IU is driving economic growth at iu. Edu Impact.
- [09:16]
Bloomberg Host
If you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments. With expertise, personal attention and independent agents who focus on relationships, not transactions, the Cincinnati insurance companies. Let them make your bad day better. Find an agent at Cinfin. Com.