Angi Inc. (NASDAQ:ANGI) is a leading provider of home services, connecting quality professionals with consumers across a wide range of categories, from home repair and maintenance to landscaping and cleaning. The company has demonstrated resilience in the face of market challenges, leveraging its extensive network of service professionals and innovative digital platforms to deliver value to both consumers and service providers.
Financial Overview
In the latest fiscal year, Angi reported annual revenue of 1,358,748,000, a testament to the scale and reach of its operations. However, the company faced some headwinds, reporting an annual net loss of 39,727,000. Despite these challenges, Angi generated a healthy annual operating cash flow of 104,845,000 and an annual free cash flow of 57,065,000, showcasing the strength of its underlying business model.Quarterly Performance
Angi's most recent quarterly results have been mixed, with the company reporting a year-over-year revenue decline of 14% in the first quarter of 2024. This decline was primarily driven by a 25% drop in consumer connection revenue, partially offset by a 15% increase in advertising revenue. The company's services revenue also declined by 36% during the quarter, reflecting the impact of strategic initiatives to improve profitability and the user experience.Despite the revenue challenges, Angi's profitability improved, with the company reporting a 21% decrease in selling and marketing expenses and a 12% decrease in general and administrative expenses. This led to a significant improvement in operating income, which swung from a loss of 10,881,000 in the prior-year quarter to a gain of 2,716,000 in the current quarter.
Segmental Performance
Angi's business is divided into three main segments: Ads and Leads, Services, and International. The Ads and Leads segment, which provides service professionals with the capability to engage with potential customers, saw a 15% decline in revenue, primarily due to a 25% drop in consumer connection revenue. This was partially offset by a 15% increase in advertising revenue.The Services segment, which allows consumers to request household services directly through the Angi platform, experienced a 36% decline in revenue, reflecting the company's efforts to exit less profitable offerings and focus on improving the overall user experience.
The International segment, which includes Angi's operations in Europe and Canada, reported an 18% increase in revenue, driven by a larger service professional network and higher revenue per service professional.
Business Overview
Angi's core business model revolves around connecting homeowners with trusted service professionals for a wide range of home-related projects. The company's Ads and Leads segment provides service professionals with the tools and resources to engage with potential customers, including quoting and invoicing services. The Services segment, on the other hand, allows consumers to request household services directly through the Angi platform, with the company connecting them with independent service providers.The company's international operations, which account for 12% of total revenue, have been a bright spot, with the segment reporting strong growth and improved profitability. Angi's focus on enhancing the user experience for both consumers and service professionals, as well as its strategic initiatives to improve operational efficiency, have been key drivers of its performance.
Liquidity
Angi maintains a strong liquidity position, with 363,337,000 in cash and cash equivalents as of the end of the first quarter of 2024. The company also has 496,241,000 in long-term debt, primarily consisting of the ANGI Group Senior Notes due in 2028.Angi's cash flow generation has been solid, with the company reporting 22,296,000 in net cash provided by operating activities and 57,065,000 in annual free cash flow. This financial flexibility allows the company to invest in strategic initiatives, pursue potential acquisitions, and return capital to shareholders through share repurchases.
Risks and Challenges
Angi faces several risks and challenges that could impact its future performance. These include the continued migration of the home services market online, the company's ability to effectively market its products and services, and the potential impact of changes in search engine algorithms and consumer behavior.Additionally, Angi's ability to maintain and enhance its various brands, as well as its ability to protect its systems and infrastructure from cyber threats, are critical to its long-term success. The company also faces the risk of potential changes in the contractor classification or employment status of its service professionals, which could have significant implications for its business model.
Outlook
For the second quarter of 2024, Angi expects revenue declines to be similar to the mid-teens levels seen in the previous two quarters. However, the company remains confident in its ability to improve profitability, guiding for adjusted EBITDA of 30 million or more per quarter for the remainder of the year.The company's focus on enhancing the user experience, improving operational efficiency, and strategic initiatives to exit less profitable revenue streams are expected to drive continued margin expansion and profitability improvements. Angi's management team, led by newly appointed CEO Jeffrey Kip, is well-positioned to navigate the company through the current market challenges and position it for long-term success.