Angi Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; filed May 7, 2024. Angi connects consumers with home-service professionals through Ads and Leads, Services, and International businesses. It reported approximately 192,000 transacting service professionals in the quarter. Total Home Roofing was sold in November 2023 and is presented as a discontinued operation; prior-period figures have been recast.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $305.4 million | $355.5 million |
| Gross profit / margin | $292.9 million / 96% | $338.6 million / 95% |
| Operating income (loss) | $2.7 million | $(10.9) million |
| Adjusted EBITDA | $36.0 million | $29.7 million |
| Net loss attributable to Angi shareholders | $(1.6) million | $(15.3) million |
| Operating cash flow, continuing operations | $22.3 million | $21.2 million |
- Revenue declined 14%. Domestic revenue fell 17% to $270.0 million; International revenue increased 18% to $35.4 million.
- Ads and Leads revenue declined 15% to $249.6 million, including a 25% decrease in consumer connection revenue, partly offset by 15% growth in advertising revenue. Services revenue fell 36% to $20.5 million.
- Service Requests decreased 31% to 4.1 million; Monetized Transactions fell 15% to 5.5 million; Transacting Service Professionals declined 7% to 192,000.
- Gross margin increased one percentage point. Selling and marketing expense decreased 21% to $157.1 million and general and administrative expense decreased 12% to $85.5 million. Adjusted EBITDA margin increased to 12% from 8%.
- Adjusted EBITDA is a non-GAAP measure; the company defines it as operating income excluding stock-based compensation, depreciation, and specified acquisition-related items.
Financial position and cash flow
- At March 31, 2024, cash and cash equivalents were $363.3 million, total assets $1.835 billion, and current liabilities $242.2 million.
- Long-term debt, net, was $496.2 million, consisting of $500 million face value of 3.875% senior notes due August 2028. The filing reports no covenant limitations at quarter-end.
- Continuing-operations investing cash outflow was $12.8 million, including $12.8 million of capital expenditures. Financing cash outflow was $10.1 million, including $6.9 million for share repurchases and $3.2 million for employee withholding taxes on net-settled awards.
- Cash and cash equivalents and restricted cash decreased $0.7 million during the quarter. Management believes existing cash and expected positive operating cash flows will cover normal operating needs, debt service, and other commitments for at least the next 12 months.
Changes, outlook, and risks
- Management attributed lower domestic connection revenue and service requests to reducing unprofitable sales and changing demand channels to improve lead quality, customer experience, matching efficiency, and bidding optimization. Advertising growth reflected continued sales growth.
- Lower marketing costs reflected improved efficiency; lower general and administrative expense included reduced credit-loss provisions and legal fees. Services profitability improved as the company exited complex, less-profitable offerings.
- 2024 capital expenditures are expected to be approximately 15%–30% above 2023’s $47.8 million, primarily due to a higher capitalization rate for software development. No specific revenue or earnings guidance is provided in the filing.
- Liquidity could be affected by weaker demand, economic conditions, financing-market disruption, or limits on additional borrowing. IAC owns 84.3% of Angi’s economic interest and 98.2% of its voting interest, giving it control over financing decisions. Jeffrey W. Kip became Angi CEO on April 8, 2024; Joseph Levin remains chairman.
- In the HomeAdvisor service-professional litigation, the court largely denied class certification, rejecting proposed monetary-relief classes while certifying certain injunctive-relief classes. Reconsideration and cross-motions for summary judgment on the remaining class claim were pending. Legal accruals were $1.7 million; management notes litigation outcomes remain uncertain.
- Unrecognized tax benefits, including interest, were $8.5 million; the company said $8.0 million would reduce tax expense if recognized. Management also identifies risks involving competition, marketing effectiveness, service-professional relationships, privacy and cybersecurity, contractor classification, economic conditions, and its relationship with IAC.
Important facts for investors to verify
- Whether declines in service requests and consumer connection revenue stabilize as demand-channel and matching changes take effect.
- Whether advertising and International growth can offset continued softness in domestic consumer connections and Services.
- Whether Adjusted EBITDA improvement translates into sustained GAAP profitability and cash generation.
- Capital-expenditure execution, cash available after repurchases, and the company’s ability to service its 2028 notes.
- Developments in the HomeAdvisor litigation, tax exposures, and any material changes to demand or liquidity assumptions.