Page 1 of 14

ANGI INC. REPORTS Q3 2023

Q3 operating loss improves 9% to $10 million

Q3 Adjusted EBITDA improves 13% to $26 million

DENVER-November 7, 2023-Angi Inc. (NASDAQ: ANGI) released its third quarter results today. A letter to IAC shareholders from Angi Inc. Chairman and CEO and IAC CEO Joey Levin is available on the Investor Relations section of IAC's website at ir.iac.com.

ANGI INC. SUMMARY RESULTS

($ in millions except per share amounts)

Q3 2023

Q3 2022

Growth

Revenue

$

371.8

$

498.0

-25%

Pro Forma Net Revenue

371.8

433.3

-14%

Gross profit

343.1

389.0

-12%

Operating loss

(10.1)

(11.1)

9%

Net loss

(5.4)

(17.5)

69%

Diluted loss per share

(0.01)

(0.03)

70%

Adjusted EBITDA

25.9

22.9

13%

See reconciliations of GAAP to non-GAAP measures beginning on page 10.

Q3 2023 HIGHLIGHTS

  • Revenue was $372 million, reflecting the impact of the change to net revenue recognition for Services, which took effect January 1, 2023. On a pro forma net basis, revenue decreased 14% in Q3 2023 reflecting declines across the Domestic business, partially offset by 25% International growth.
  • Operating loss decreased 9% to $10 million and Adjusted EBITDA increased 13% to $26 million.
  1. Roofing operating loss and Adjusted EBITDA loss of $2 million (both improving $6 million year-over-year).
  1. Services operating loss decreased 64% to $4 million and Adjusted EBITDA improved $5 million to a $4 million profit.
    1. Ads and Leads operating income decreased 64% to $8 million and Adjusted EBITDA decreased 26% to $32 million.
  • There were 202,000 Transacting Service Professionals and 7.4 million Monetized Transactions in Q3 2023 (nearly 28 million for the trailing twelve months).
  • On November 1, 2023, Angi Inc. completed the sale of Total Home Roofing, LLC to a non-public third party. The historical results of the Roofing segment will be treated as a discontinued operation as of the date of the closing of the sale.
  • For the nine months ended September 30, 2023, net cash provided by operating activities increased $77 million to $89 million. Free Cash Flow increased $137 million to positive $53 million due in part to $59 million lower capital expenditures.
  • For the full year 2023, Angi Inc. expects $60-$25 million of operating loss and $100-$110 million of Adjusted
    EBITDA.
  • Angi Inc. intends to put in place a share repurchase plan with the intent of utilizing the full 14.0 million shares remaining in its current authorization.

Page 2 of 14

Revenue

Q3 2023

Q3 2022

Growth

($ in millions; rounding differences may occur)

Ads and Leads

$

292.0

$

345.5

-15%

Services

30.0

105.9

-72%

Roofing

21.4

26.0

-18%

Intersegment eliminations

(0.8)

(2.8)

72%

Total Domestic

$

342.6

$

474.6

-28%

International

29.3

23.4

25%

Total

$

371.8

$

498.0

-25%

Pro Forma Services Net Revenue

$

30.0

$

41.1

-27%

Total Pro Forma Angi Inc. Net Revenue

$

371.8

$

433.3

-14%

  • Revenue was $371.8 million, down 25% year-over-year, reflecting the change to net revenue recognition for Services, which took effect January 1, 2023. On a pro forma basis, revenue decreased 14% reflecting:
  1. Ads and Leads revenue decreasing 15% due to lower service requests driven by ongoing user- experience enhancements, homeowner and service professional acquisition optimizations and macro headwinds
  1. Services revenue decreasing 27% due to exiting complex services at the end of 2022, margin- optimization initiatives and lower service requests
  1. Roofing revenue decreasing 18% due to lower demand and exiting certain markets over the past year
  1. International revenue increasing 25% driven primarily by a larger service professional network and higher revenue-per-service-professional

Page 3 of 14

Operating income (Loss) and Adjusted EBITDA

($ in millions; rounding differences may occur)

Q3 2023

Q3 2022

Growth

Operating income (loss)

Ads and Leads

$

8.1

$

22.8

-64%

Services

(3.9)

(10.8)

64%

Roofing

(2.2)

(8.5)

74%

Corporate

(14.9)

(15.5)

4%

Total Domestic

$

(12.9)

$

(12.1)

-6%

International

2.8

1.1

162%

Total

$

(10.1)

$

(11.1)

9%

Adjusted EBITDA

Ads and Leads

$

32.2

$

43.3

-26%

Services

3.5

(1.9)

NM

Roofing

(2.0)

(7.9)

75%

Corporate

(11.9)

(12.5)

5%

Total Domestic

$

21.8

$

21.0

4%

International

4.0

1.9

113%

Total

$

25.9

$

22.9

13%

  • Operating loss decreased 9% to $10.1 million and Adjusted EBITDA improved 13% to $25.9 million driven by:
  1. Services operating loss decreased 64% to $3.9 million reflecting:
    • Adjusted EBITDA increasing $5.5 million to earnings of $3.5 million due primarily to lower sales and marketing as a result of improved unit economics and exiting complex services
    • Lower stock-based compensation expense as a result of exiting complex services
    • Higher depreciation due to investments in capitalized software in the prior year
  1. International operating income increased $1.7 million to $2.8 million and Adjusted EBITDA increased $2.1 million to $4.0 million due primarily to a 25% increase in revenue and operating expense leverage across all expense categories
  1. Roofing operating loss decreased 74% to $2.2 million and Adjusted EBITDA loss decreased 75% to $2.0 million due primarily to:
    • Lower and more efficient marketing spend
    • Lower general and administrative expense due to lower headcount primarily driven by exiting certain markets

Page 4 of 14

  1. Ads and Leads operating income decreased 64% to $8.1 million reflecting:
    • Adjusted EBITDA decreasing 26% to $32.2 million reflecting:
      • 15% lower revenue
      • Higher selling and marketing expense as a percentage of revenue due to a higher concentration mix of paid versus organic traffic channels
      • Lower general and administrative expense due to lower compensation costs, bad debt and other operating expenses
    • Higher depreciation due to investments in capitalized software in the prior year

Income Taxes

The Company recorded an income tax benefit of $6.0 million in Q3 2023 for an effective tax rate of 53%, which is higher than the statutory rate due primarily to an adjustment to the forecasted annual effective tax rate. The Company recorded an income tax benefit of $0.9 million in Q3 2022 for an effective tax rate of 5%, lower than the statutory rate due primarily to lower realized tax benefits related to the vesting of stock-based awards and state taxes.

Operating Metrics

Q3 2023

Q3 2022

Growth

Service Requests (in thousands)

6,065

7,901

-23%

Monetized Transactions (in thousands)

7,355

7,779

-5%

Transacting Service Professionals (in thousands)

202

245

-17%

Page 5 of 14

Free Cash Flow

For the nine months ended September 30, 2023, net cash provided by operating activities was $88.8 million, a $77.4 million increase year-over-year. Free Cash Flow increased $136.9 million to $52.7 million due primarily to $59.4 million lower capital expenditures, favorable working capital and higher Adjusted EBITDA.

($ in millions; rounding differences may occur)

Nine Months Ended September 30,

2023

2022

Net cash provided by operating activities

$

88.8

$

11.4

Capital expenditures

(36.1)

(95.5)

Free Cash Flow

$

52.7

$

(84.2)

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2023:

  • Angi Inc. had 506.8 million Class A and Class B common shares outstanding.
  • IAC's economic interest in Angi Inc. was 83.8% and IAC's voting interest in Angi Inc. was 98.1%.
  • Angi Inc. had $367 million in cash and cash equivalents and $500 million of debt (due August 15, 2028), which was held at ANGI Group, LLC (a subsidiary of Angi Inc.).

Angi Inc. had 14.0 million shares remaining in its stock repurchase authorization, pursuant to which share repurchases can be made over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

As of the date of this release, Angi Inc. intends to put in place a share repurchase plan with the intent of utilizing the full 14.0 million shares remaining in its stock repurchase authorization. The plan will be subject to price and volume limitations.

CONFERENCE CALL

IAC and Angi Inc. will host a conference call to answer questions regarding their third quarter results on Wednesday, November 8, 2023, at 8:30 a.m. Eastern Time. This conference call will include the disclosure of certain information, including forward- looking information, which may be material to an investor's understanding of IAC's and Angi Inc.'s businesses. The conference call will be open to the public at ir.angi.comand ir.iac.com.

Page 6 of 14

DILUTIVE SECURITIES

Angi Inc. has various dilutive securities. The table below details these securities as well as potential dilution at various stock prices (shares in millions; rounding differences may occur).

Avg.

Exercise

As of

Dilution at:

Shares

Price

11/3/23

Share Price

$1.67

$2.00

$3.00

$4.00

$5.00

Absolute Shares as of 11/3/2023

507.2

507.2

507.2

507.2

507.2

507.2

SARs

0.4

$

3.11

0.0

0.0

0.0

0.0

0.1

Options

0.5

$

11.73

0.0

0.0

0.0

0.0

0.0

RSUs and subsidiary denominated equity awards

26.0

7.1

7.0

6.9

6.8

6.7

Total Dilution

7.1

7.0

6.9

6.8

6.8

% Dilution

1.4%

1.4%

1.4%

1.3%

1.3%

Total Diluted Shares Outstanding

514.3

514.2

514.1

514.0

514.0

The dilutive securities presentation is calculated using the method and assumptions described below, which are different from those used for GAAP dilution, which is calculated based on the treasury stock method.

The Company currently settles all equity awards on a net basis; therefore, the dilutive effect is presented as the net number of shares expected to be issued upon exercise or vesting, and in the case of options, assuming no proceeds are received by the Company. Any required withholding taxes are paid in cash by the Company on behalf of the employees assuming a withholding tax rate of 50%. In addition, the estimated income tax benefit from the tax deduction received upon the exercise or vesting of these awards is assumed to be used to repurchase Angi Inc. shares. Assuming all awards were exercised or vested on November 3, 2023, withholding taxes paid by the Company on behalf of the employees upon net settlement would have been $20.4 million, assuming a stock price of $1.67 and a 50% withholding rate. The table above assumes no change in the fair value estimate of the non-publicly traded subsidiary denominated equity awards from the values used at September 30, 2023. The number of shares ultimately needed to settle these awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant subsidiary. In addition, the number of shares required to settle these awards will be impacted by movement in the stock price of ANGI.

Page 7 of 14

GAAP FINANCIAL STATEMENTS

ANGI INC. CONSOLIDATED STATEMENT OF OPERATIONS ($ in thousands except per share data)

Three Months Ended September 30,

20232022

Nine Months Ended September 30,

20232022

Revenue

$

371,837

$

498,036

$

1,139,312

$

1,449,977

Cost of revenue (exclusive of depreciation shown separately below)

28,737

109,057

102,440

335,826

Gross Profit

343,100

388,979

1,036,872

1,114,151

Operating costs and expenses:

Selling and marketing expense

204,006

234,397

621,628

711,357

General and administrative expense

102,476

128,260

301,979

357,541

Product development expense

21,497

15,816

72,358

54,629

Depreciation

22,596

17,759

70,210

45,112

Amortization of intangibles

2,633

3,805

7,958

11,413

Total operating costs and expenses

353,208

400,037

1,074,133

1,180,052

Operating loss

(10,108)

(11,058)

(37,261)

(65,901)

Interest expense

(5,037)

(5,030)

(15,100)

(15,078)

Other income (expense), net

3,891

(2,296)

12,890

(4,437)

Loss before income taxes

(11,254)

(18,384)

(39,471)

(85,416)

Income tax benefit

5,967

945

4,705

10,693

Net loss

(5,287)

(17,439)

(34,766)

(74,723)

Net earnings attributable to noncontrolling interests

(69)

(40)

(614)

(379)

Net loss attributable to Angi Inc. shareholders

$

(5,356)

$

(17,479)

$

(35,380)

$

(75,102)

Per share information attributable to Angi Inc. shareholders:

Basic loss per share

$

(0.01)

$

(0.03)

$

(0.07)

$

(0.15)

Diluted loss per share

$

(0.01)

$

(0.03)

$

(0.07)

$

(0.15)

Stock-based compensation expense by function:

Selling and marketing expense

$

1,822

$

1,544

$

4,586

$

4,674

General and administrative expense

6,906

8,755

22,040

27,052

Product development expense

2,013

2,077

7,122

7,052

Total stock-based compensation expense

$

10,741

$

12,376

$

33,748

$

38,778

Page 8 of 14

ANGI INC. CONSOLIDATED BALANCE SHEET

($ in thousands)

September 30,

December 31,

2023

2022

ASSETS

Cash and cash equivalents

$

366,825

$

321,155

Accounts receivable, net

77,269

93,880

Other current assets

71,702

69,167

Total current assets

515,796

484,202

Capitalized software, leasehold improvements and equipment, net

121,244

153,855

Goodwill

883,468

882,949

Intangible assets, net

170,263

178,105

Deferred income taxes

158,495

145,460

Other non-current assets, net

56,493

63,207

TOTAL ASSETS

$

1,905,759

$

1,907,778

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:

Accounts payable

$

52,790

$

30,862

Deferred revenue

55,162

50,907

Accrued expenses and other current liabilities

195,765

200,015

Total current liabilities

303,717

281,784

Long-term debt, net

495,853

495,284

Deferred income taxes

2,923

2,906

Other long-term liabilities

57,989

76,426

Commitments and contingencies

SHAREHOLDERS' EQUITY:

Class A common stock

106

103

Class B common stock

422

422

Class C common stock

-

-

Additional paid-in capital

1,437,141

1,405,294

Accumulated deficit

(225,459)

(190,079)

Accumulated other comprehensive income (loss)

(937)

(1,172)

Treasury stock

(169,581)

(166,184)

Total Angi Inc. shareholders' equity

1,041,692

1,048,384

Noncontrolling interests

3,585

2,994

Total shareholders' equity

1,045,277

1,051,378

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,905,759

$

1,907,778

Page 9 of 14

ANGI INC. CONSOLIDATED STATEMENT OF CASH FLOWS

($ in thousands)

Nine Months Ended September 30,

2023

2022

Cash flows from operating activities:

Net loss

$

(34,766)

$

(74,723)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation

70,210

45,112

Provision for credit losses

67,288

82,216

Stock-based compensation expense

33,748

38,778

Non-cash lease expense (including impairment of right-of-use assets)

9,571

11,535

Amortization of intangibles

7,958

11,413

Deferred income taxes

(13,015)

(13,950)

Foreign currency transaction (gain) loss

(510)

6,520

Other adjustments, net

(100)

(192)

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

Accounts receivable

(50,669)

(102,411)

Other assets

(6,068)

(10,014)

Accounts payable and other liabilities

13,450

26,692

Operating lease liabilities

(17,375)

(13,229)

Income taxes payable and receivable

4,856

2,014

Deferred revenue

4,220

1,597

Net cash provided by operating activities

88,798

11,358

Cash flows from investing activities:

Capital expenditures

(36,105)

(95,521)

Purchases of marketable debt securities

(12,362)

-

Proceeds from maturities of marketable debt securities

12,500

-

Proceeds from sales of fixed assets

336

224

Net cash used in investing activities

(35,631)

(95,297)

Cash flows from financing activities:

Purchases of treasury stock

(3,397)

(8,144)

Withholding taxes paid on behalf of employees on net settled stock-based awards

(4,780)

(5,587)

Other, net

(57)

-

Net cash used in financing activities

(8,234)

(13,731)

Total cash provided (used)

44,933

(97,670)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

127

(2,079)

Net increase (decrease) in cash and cash equivalents and restricted cash

45,060

(99,749)

Cash and cash equivalents and restricted cash at beginning of period

322,136

429,485

Cash and cash equivalents and restricted cash at end of period

$

367,196

$

329,736

Page 10 of 14

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

($ in millions; rounding differences may occur)

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

For the three months ended September 30, 2023

Operating income

Stock-based

compensation

Amortization of

(loss)

expense

Depreciation

intangibles

Adjusted EBITDA

Ads and Leads

$

8.1

$

6.1

$

15.4

$

2.6

$

32.2

Services

(3.9)

1.1

6.3

-

3.5

Roofing

(2.2)

0.2

0.1

-

(2.0)

Corporate

(14.9)

2.9

-

-

(11.9)

Total Domestic

(12.9)

10.3

21.8

2.6

21.8

International

2.8

0.5

0.8

-

4.0

Total

$

(10.1)

$

10.7

$

22.6

$

2.6

$

25.9

For the three months ended September 30, 2022

Stock-based

Operating income

compensation

Amortization of

(loss)

expense

Depreciation

intangibles

Adjusted EBITDA

Ads and Leads

$

22.8

$

5.0

$

12.9

$

2.7

$

43.3

Services

(10.8)

4.0

3.8

1.0

(1.9)

Roofing

(8.5)

0.2

0.3

0.2

(7.9)

Corporate

(15.5)

3.0

-

-

(12.5)

Total Domestic

(12.1)

12.2

17.1

3.8

21.0

International

1.1

0.2

0.7

-

1.9

Total

$

(11.1)

$

12.4

$

17.8

$

3.8

$

22.9

For the nine months ended September 30, 2023

Stock-based

Operating income

compensation

Amortization of

(loss)

expense

Depreciation

intangibles

Adjusted EBITDA

Ads and Leads

$

26.4

$

16.9

$

49.0

$

8.0

$

100.2

Services

(21.5)

6.5

18.1

-

3.1

Roofing

(3.1)

0.2

0.5

-

(2.5)

Corporate

(46.4)

9.0

-

-

(37.4)

Total Domestic

(44.6)

32.5

67.6

8.0

63.4

International

7.4

1.2

2.6

-

11.2

Total

$

(37.3)

$

33.7

$

70.2

$

8.0

$

74.7

For the nine months ended September 30, 2022

Operating income

Stock-based

compensation

Amortization of

(loss)

expense

Depreciation

intangibles

Adjusted EBITDA

Ads and Leads

$

61.5

$

15.3

$

35.0

$

8.0

$

119.8

Services

(57.6)

13.1

7.2

2.9

(34.4)

Roofing

(18.5)

1.4

0.6

0.5

(16.0)

Corporate

(46.7)

8.6

-

-

(38.1)

Total Domestic

(61.2)

38.3

42.8

11.4

31.3

International

(4.7)

0.4

2.3

-

(1.9)

Total

$

(65.9)

$

38.8

$

45.1

$

11.4

$

29.4

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Disclaimer

ANGI Inc. published this content on 07 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 November 2023 21:18:31 UTC.