Executive Summary / Key Takeaways

• Strategic Pivot to Profitable Growth: Angi Inc. has undergone a profound transformation, shedding over $400 million in low-quality revenue to refocus on profitable growth, driven by enhanced customer experience and unit economics. The company targets mid-single-digit revenue growth in 2026, underpinned by strong proprietary channel performance and stabilizing network volumes.
• Technological Edge with AI-First Platform: Angi is aggressively consolidating its disparate technical platforms into a single, modern, global, and AI-first system by 2027. Early AI initiatives, such as the LLM-based AI helper, are already demonstrating tangible benefits, including a 2.7x higher conversion rate for homeowners, enhancing matching quality and operational efficiency.
• Improved Customer Experience and Pro Engagement: The full implementation of "homeowner choice" has significantly boosted homeowner Net Promoter Score by 30 points over two years and increased pro win rates by nearly 30%. This customer-centric approach is driving higher pro retention and increased lifetime value per acquired professional.
• Disciplined Financial Management and Capital Allocation: Despite revenue declines in 2025 due to strategic shifts, Angi has improved profitability and free cash flow, with a commitment to strong fixed cost discipline and modest EBITDA leverage in 2026. The company has also been active in share repurchases, returning capital to shareholders.
• Competitive Positioning and Market Opportunity: Angi maintains a leading position in the fragmented home services market, leveraging its extensive network, strong brand, and specialized tools. Its strategic focus on higher-capacity professionals and online acquisition, coupled with AI integration, positions it to capture further market share against both direct and indirect competitors.

A New Chapter: Angi's Strategic Rebirth in the Home Services Ecosystem

Angi Inc., founded in 1995, has long been a cornerstone in connecting homeowners with skilled professionals across a vast array of over 500 home service categories. Operating under well-known brands like Angi, HomeAdvisor, and Handy, the company has built a substantial presence in both the United States and international markets, including Europe and Canada. Its core business model provides a vital marketplace, offering tools for quoting and invoicing to professionals while empowering consumers with resources to find pre-screened, customer-rated service providers.

The company embarked on a critical strategic overhaul around 2022, following a period marked by significant financial challenges, including a sharp decline in EBITDA and soaring capital expenditures. This downturn was attributed to internal missteps and ambitious, yet poorly executed, ventures into direct service provision. Under new leadership, Angi initiated a decisive pivot, strategically divesting from low-quality, unprofitable revenue streams. This transformation, which saw the company shed over $400 million in revenue, was not merely a cost-cutting exercise but a fundamental re-alignment towards sustainable, profitable growth. A pivotal moment in this journey was the company's spin-off from IAC Inc. (IAC) on March 31, 2025, marking its emergence as an independent public entity. This separation, alongside a 1-for-10 reverse stock split on March 24, 2025, ushered in a new era of focused execution.

The home services industry, a vast and often fragmented market, is experiencing a profound digital transformation. This shift is increasingly influenced by the rapid advancements in artificial intelligence and cloud computing, which are driving unprecedented demand for digital infrastructure and sophisticated matching algorithms. Data centers, the backbone of this digital economy, are projected to see their electricity usage surge by 160% by 2030, according to Goldman Sachs. Accenture forecasts that data centers alone could consume between 16% and 23% of U.S. electricity by 2033, with AI-driven demand accounting for a significant portion of this increase. This burgeoning digital landscape presents both immense opportunities and competitive pressures for platforms like Angi, necessitating continuous innovation and operational excellence.

Technological Leadership: The AI-First Platform Advantage

Angi's strategic response to the evolving digital landscape is deeply rooted in its commitment to technological differentiation. The company is actively consolidating its current four technical platforms in the U.S. and three internationally into a single, modern, global, and "AI-first" platform by 2027. This ambitious undertaking aims to address significant technical debt and legacy code that have historically hampered product innovation and operational efficiency. The transition is not a "big bang" event but a progressive improvement, with new AI-enabled software being deployed iteratively. This platform work is designed to accelerate business efforts and is fully integrated into Angi's forward-looking outlook.

A key technological differentiator is Angi's approach to AI, particularly its development of fine-tuned Large Language Models (LLMs). The company leverages its proprietary knowledge, such as conditional service request questions by task, and extensive data on customer behavior to train these LLMs. This creates a unique "learning loop" that differentiates Angi's experience from generic LLM applications. An early prototype, the LLM-based AI helper, has already demonstrated tangible benefits, showing a 2.7x higher conversion rate for homeowners who use it to articulate their service requests. This innovation directly enhances the quality of matches between homeowners and professionals, a critical factor in customer satisfaction and job completion.

Furthermore, Angi is in the midst of migrating its "Ads pros" to this unified platform, a process that was more than halfway complete by early November 2025 and expected to be substantially finished by November 15, 2025. This migration, the fifth of its kind following successful implementations in Europe, is designed to streamline operations, reduce overhead, and improve the efficiency of pro acquisition and marketing. By enabling all professionals to specifically choose the tasks and ZIP codes they opt into, the company expects higher engagement, better matching, and ultimately, a superior customer experience. This technological roadmap is central to Angi's competitive moat, driving higher conversion rates, lower costs, and a stronger market position.

Operational Excellence and Financial Performance

Angi's strategic pivot has yielded significant operational improvements. The full implementation of "homeowner choice" on January 13, 2025, a policy maintained despite the FCC rule change being vacated, has been a cornerstone of this enhancement. This ensures that every lead sent to a professional is explicitly chosen by a homeowner, leading to a substantial improvement in homeowner Net Promoter Score (up 30 points over two years) and a nearly 30% increase in pro win rates. While this shift initially caused a notable decline in network channel lead volume and revenue in Q1 2025, it is viewed as a necessary investment in long-term customer satisfaction and value creation.

The company's financial performance in the third quarter of 2025 reflects these strategic adjustments. Total revenue for the three months ended September 30, 2025, was $265.6 million, a decrease from $296.7 million in the prior year. Domestic revenue decreased by 12% to $233.2 million, primarily due to declines in advertising revenue (down 27%), services revenue (down 27%), and membership subscription revenue (down 34%). These declines were a direct consequence of sales force consolidation, marketing optimization, and the full implementation of homeowner choice. International revenue, however, saw a modest 2% increase to $32.4 million for the three months ended September 30, 2025, though it decreased by 2% for the nine months ended September 30, 2025, primarily due to a strategic decision to transition the Canadian business to a more profitable, self-serve European platform model.

Despite the revenue headwinds, Angi demonstrated improved profitability and cost discipline. Domestic cost of revenue decreased by 18% for the three months ended September 30, 2025, driven by lower credit card processing fees and reduced payments to third-party service providers. Selling and marketing expenses also saw significant reductions, with Domestic selling and marketing expense down 17% and International down 20%, largely due to headcount reductions. This disciplined approach led to a substantial increase in operating income, which rose by 179% to $21.8 million for the three months ended September 30, 2025. Segment Adjusted EBITDA for the Domestic segment decreased slightly by 2% to $31.1 million, while International Adjusted EBITDA surged by 135% to $8.6 million, reflecting the benefits of operational restructuring.

Angi's liquidity remains robust, with cash and cash equivalents of $340.7 million as of September 30, 2025. The company believes its existing cash and expected positive cash flows from operations will be sufficient to fund its normal operating requirements for the next twelve months. Capital expenditures are projected to be around $60 million for both 2025 and 2026, with 2026 expenditures being front-loaded due to ongoing platform development. Angi has also been actively returning capital to shareholders, repurchasing 6.7 million shares of Class A Common Stock for $103.2 million during the nine months ended September 30, 2025. Further share repurchase authorizations are in place, though subject to limitations following the tax-free spin-off from IAC.

Competitive Landscape and Strategic Positioning

The home services market is highly competitive, with Angi facing a diverse set of rivals ranging from broad review platforms to specialized service marketplaces. Angi's primary competitive advantage lies in its extensive network of approximately 118,000 Average Monthly Active Pros and its strong brand recognition, built over 30 years. The company estimates its revenue size to be comparable to the next two largest competitors combined, though precise market share data for all niche players is not publicly detailed.

Direct competitors include:

• Yelp (YELP): A well-established platform known for user reviews across various local businesses. Yelp reported Q3 2025 revenue of $376 million, up 4% year-over-year, with a net income of $39 million (up 2% YoY) and Adjusted EBITDA of $98 million (down 3% YoY). Yelp's strategy focuses on advertising revenue from its Services businesses and has recently introduced AI-powered features like Yelp Host and Yelp Receptionist. While Yelp offers broader reach, Angi differentiates itself with a more specialized and integrated home services experience, including tools for quoting and invoicing.
• Porch Group (PRCH): A home services platform emphasizing software for professionals and integrated home improvement resources. Porch Group reported Q3 2025 revenue of $118.1 million, a 6% increase year-over-year, but a net loss of $10.857 million. Its 3-year revenue growth rate stands at 29%. Porch's strategic shift towards higher-margin management fees, particularly within its insurance services segment, highlights a different monetization approach. Angi's strength lies in its direct consumer-professional matching and broader international presence, while Porch's integrated software tools for professionals could offer a different value proposition.
• Thumbtack: A private online marketplace connecting users with local service professionals. Thumbtack operates on a lead-fee revenue model, charging professionals for customer contacts. It has secured significant funding, with a $3.2 billion valuation in 2021. Thumbtack's customizable experience and local focus are key differentiators. Angi's verified professional ecosystem and end-to-end transaction tools provide a more comprehensive and trusted experience, potentially leading to higher customer loyalty.

Indirect competitors include traditional word-of-mouth referrals, DIY platforms, and large tech players like Google (GOOGL) with its direct-to-pro advertising. Google is considered a formidable competitor due to its control over search highways. Angi's strategic response involves leveraging its strong brand, continuously improving its customer experience, and investing in online marketing expertise, including its "AI MAX" product for Google advertising, which now accounts for over 10% of its spend. The company also sees the emergence of LLMs as a significant opportunity, actively building proprietary applications for major LLM platforms to maintain its competitive edge.

Angi's market penetration is estimated at around 5% of professionals in America, with an under-index in higher-capacity professionals (those with 10 or more employees). This presents a substantial opportunity for growth by shifting its sales motion towards these larger Pros and expanding its online pro acquisition efforts, modeled after its successful European online enrollment platform.

Outlook and Risks

Angi's outlook for 2026 is centered on a return to profitable revenue growth, targeting mid-single-digit expansion. This growth is expected to be driven by continued strong performance in proprietary channels, which saw 11% service request growth, 16% lead growth, and 11% revenue per lead growth in Q3 2025. The network channel, having undergone significant restructuring, is anticipated to remain relatively flat year-over-year in 2026, providing a stable base for the accelerating proprietary segment. The company plans to significantly reinvest in branded advertising, with intentions to "double-ish" its TV spend in 2026, leveraging positive returns observed in 2025.

Revenue per lead is projected to begin growing in Q2 2025, primarily due to price optimization and the migration of legacy "Ads pros" to the single platform. Angi expects to achieve modest leverage from revenue to EBITDA growth in 2026 by maintaining strong fixed cost discipline, building on the $100 million reduction in overhead since 2022. The company anticipates a return to nominal active pro growth by the end of 2026 or early 2027, fueled by stabilizing sales headcount and the rollout of online pro acquisition in the second half of 2025.

Despite this optimistic outlook, several risks warrant attention. The macroeconomic environment, while stable since June 2025, could still see shifts in consumer confidence and spending behavior, particularly impacting discretionary home improvement projects. Regulatory changes, such as the Digital Services Act in Europe requiring ID checks for professionals, have already caused a 5% to 8% impact on the international network due to conversion hits. Furthermore, the company faces ongoing legal proceedings and vendor-related matters, which, while not currently deemed material, introduce inherent uncertainties. The rapid evolution of AI technology also presents a dynamic competitive landscape, requiring continuous investment and adaptation to maintain a technological edge.

Conclusion

Angi Inc. stands at a pivotal juncture, having successfully navigated a challenging period of strategic restructuring to emerge as a more focused, efficient, and customer-centric enterprise. The company's unwavering commitment to improving the homeowner and professional experience, evidenced by significant gains in Net Promoter Score and pro win rates, forms the bedrock of its investment thesis. By aggressively pursuing a single, AI-first platform and strategically optimizing its operational model, Angi is not merely adapting to the digital age but actively shaping its future within the home services industry.

The path to profitable revenue growth in 2026, driven by robust proprietary channel performance and enhanced unit economics, appears increasingly clear. Angi's disciplined financial management, coupled with its strategic investments in technology and marketing, positions it to capitalize on the vast, yet fragmented, home services market. While macroeconomic uncertainties and competitive pressures remain, Angi's foundational strengths—its extensive network, powerful brand, and innovative technological roadmap—provide a compelling narrative for investors seeking exposure to a transforming leader in the digital home services landscape.