As filed with the Securities and Exchange Commission on August 6, 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2021

Or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________

Commission File No. 001-38220

Angi Inc.

(Exact name of Registrant as specified in its charter)

Delaware	82-1204801
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3601 Walnut Street, Denver, CO 80205

(Address of Registrant’s principal executive offices)

(303) 963-7200

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of exchange on which registered
Class A Common Stock, par value $0.001	ANGI	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

As of July 30, 2021, the following shares of the Registrant’s common stock were outstanding:

Class A Common Stock	82,217,972
Class B Common Stock	421,977,004
Class C Common Stock	—
Total outstanding Common Stock	504,194,976

TABLE OF CONTENTS

		Page Number
PART I
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheet	3
	Consolidated Statement of Operations	4
	Consolidated Statement of Comprehensive Operations	5
	Consolidated Statement of Shareholders’ Equity	6
	Consolidated Statement of Cash Flows	8
	Note 1—The Company and Summary of Significant Accounting Policies	9
	Note 2—Income Taxes	11
	Note 3—Financial Instruments and Fair Value Measurements	13
	Note 4—Long-term Debt	15
	Note 5—Accumulated Other Comprehensive Income (Loss)	15
	Note 6—(Loss) Earnings Per Share	16
	Note 7—Segment Information	17
	Note 8—Consolidated Financial Statement Details	21
	Note 9—Contingencies	22
	Note 10—Related Party Transactions with IAC	23
	Note 11—Subsequent Events	23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41
PART II
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
	Signatures	46

2

PART I

FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

	June 30, 2021		December 31, 2020
	(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	584,260	$	812,705
Marketable debt securities	—		49,995
Accounts receivable, net of reserves of $35,862 and $27,839, respectively	62,052		43,148
Other current assets	67,787		71,958
Total current assets	714,099		977,806
Capitalized software, leasehold improvements and equipment, net	111,054		108,842
Goodwill	892,616		891,797
Intangible assets, net	201,166		209,717
Other non-current assets, net	187,793		180,020
TOTAL ASSETS	$	2,106,728	$	2,368,182
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable	$	53,230	$	30,805
Deferred revenue	60,053		54,654
Accrued expenses and other current liabilities	178,629		148,219
Total current liabilities	291,912		233,678
Long-term debt, net	494,195		712,277
Deferred income taxes	1,662		1,296
Other long-term liabilities	104,998		111,710
Redeemable noncontrolling interests	4,536		26,364
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 99,111 and 94,238 shares, respectively, and outstanding 82,731 and 78,333, respectively	99		94
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 421,977 and 421,862 shares issued and outstanding	422		422
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding	—		—
Additional paid-in capital	1,338,208		1,379,469
(Accumulated deficit) retained earnings	(18,613)		9,749
Accumulated other comprehensive income	5,973		4,637
Treasury stock, 16,380 and 15,905 shares, respectively	(127,718)		(122,081)
Total Angi Inc. shareholders’ equity	1,198,371		1,272,290
Noncontrolling interests	11,054		10,567
Total shareholders’ equity	1,209,425		1,282,857
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,106,728	$	2,368,182

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

3

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except per share data)
Revenue	$	420,988	$	375,061	$	808,017	$	718,711
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	69,704		41,042		123,532		74,271
Selling and marketing expense	239,031		189,984		444,871		379,943
General and administrative expense	107,486		85,451		195,648		180,007
Product development expense	18,752		15,407		36,799		32,491
Depreciation	15,058		12,555		31,027		24,693
Amortization of intangibles	3,688		12,978		8,762		25,958
Total operating costs and expenses	453,719		357,417		840,639		717,363
Operating (loss) income	(32,731)		17,644		(32,622)		1,348
Interest expense	(5,814)		(1,620)		(12,431)		(3,894)
Other (expense) income, net	(636)		212		(1,403)		633
(Loss) earnings before income taxes	(39,181)		16,236		(46,456)		(1,913)
Income tax benefit (provision)	9,129		(3,025)		18,418		5,940
Net (loss) earnings	(30,052)		13,211		(28,038)		4,027
Net earnings attributable to noncontrolling interests	(241)		(544)		(324)		(318)
Net (loss) earnings attributable to Angi Inc. shareholders	$	(30,293)	$	12,667	$	(28,362)	$	3,709
Per share information attributable to Angi Inc. shareholders:
Basic (loss) earnings per share	$	(0.06)	$	0.03	$	(0.06)	$	0.01
Diluted (loss) earnings per share	$	(0.06)	$	0.02	$	(0.06)	$	0.01
Stock-based compensation expense by function:
Selling and marketing expense	$	865	$	720	$	1,882	$	1,723
General and administrative expense	7,410		13,131		7,494		36,111
Product development expense	1,268		908		2,201		2,500
Total stock-based compensation expense	$	9,543	$	14,759	$	11,577	$	40,334

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

4

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in thousands)
Net (loss) earnings	$	(30,052)	$	13,211	$	(28,038)	$	4,027
Other comprehensive income (loss):
Change in foreign currency translation adjustment	1,395		4,486		2,075		(2,082)
Comprehensive (loss) income	(28,657)		17,697		(25,963)		1,945
Components of comprehensive (income) loss attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests	(241)		(544)		(324)		(318)
Change in foreign currency translation adjustment attributable to noncontrolling interests	(45)		767		(739)		721
Comprehensive (income) loss attributable to noncontrolling interests	(286)		223		(1,063)		403
Comprehensive (loss) income attributable to Angi Inc. shareholders	$	(28,943)	$	17,920	$	(27,026)	$	2,348

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

5

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and Six Months Ended June 30, 2021

(Unaudited)

				Angi Inc. Shareholders’ Equity
				Class A Common Stock $0.001 Par Value			Class B Convertible Common Stock $0.001 Par Value			Class C Common Stock $0.001 Par Value											Total Angi Inc. Shareholders' Equity
																	Accumulated Other Comprehensive Income								Total Shareholders' Equity
	Redeemable Noncontrolling Interests												Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings				Treasury Stock				Noncontrolling Interests
				$		Shares	$		Shares	$		Shares
			(In thousands)
Balance as of March 31, 2021	$	4,608		$	98	98,408	$	422	421,958	$	—	—	$	1,333,294	$	11,680	$	4,623	$	(126,997)	$	1,223,120	$	10,823	$	1,233,943
Net earnings (loss)	48			—		—	—		—	—		—	—		(30,293)		—		—		(30,293)		194		(30,099)
Other comprehensive income	8			—		—	—		—	—		—	—		—		1,350		—		1,350		37		1,387
Stock-based compensation expense	—			—		—	—		—	—		—	11,477		—		—		—		11,477		—		11,477
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			1		697	—		—	—		—	(6,691)		—		—		—		(6,690)		—		(6,690)
Issuance of common stock to IAC pursuant to the employee matters agreement	—			—		6	—		19	—		—	—		—		—		—		—		—		—
Purchase of treasury stock	—			—		—	—		—	—		—	—		—		—		(721)		(721)		—		(721)
Adjustment of redeemable noncontrolling interests to fair value	(128)			—		—	—		—	—			128		—		—		—		128		—		128
Balance as of June 30, 2021	$	4,536		$	99	99,111	$	422	421,977	$	—	—	$	1,338,208	$	(18,613)	$	5,973	$	(127,718)	$	1,198,371	$	11,054	$	1,209,425
Balance as of December 31, 2020	$	26,364		$	94	94,238	$	422	421,862	$	—	—	$	1,379,469	$	9,749	$	4,637	$	(122,081)	$	1,272,290	$	10,567	$	1,282,857
Net (loss) earnings	(12)			—		—	—		—	—		—	—		(28,362)		—		—		(28,362)		336		(28,026)
Other comprehensive income	588			—		—	—		—	—		—	—		—		1,336		—		1,336		151		1,487
Stock-based compensation expense	—			—		—	—		—	—		—	14,019		—		—		—		14,019		—		14,019
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			2		2,288	—		—	—		—	(54,743)		—		—		—		(54,741)		—		(54,741)
Issuance of common stock to IAC pursuant to the employee matters agreement	—			3		2,585	—		115	—		—	(3)		—		—		—		—		—		—
Purchase of treasury stock	—			—		—	—		—	—		—	—		—		—		(5,637)		(5,637)		—		(5,637)
Purchase of redeemable noncontrolling interests	(22,938)			—		—	—		—	—		—	—		—		—		—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	534			—		—	—		—	—		—	(534)		—		—		—		(534)		—		(534)
Balance as of June 30, 2021	$	4,536		$	99	99,111	$	422	421,977	$	—	—	$	1,338,208	$	(18,613)	$	5,973	$	(127,718)	$	1,198,371	$	11,054	$	1,209,425

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

6

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and Six Months Ended June 30, 2020

(Unaudited)

				Angi Inc. Shareholders’ Equity
				Class A Common Stock $0.001 Par Value			Class B Convertible Common Stock $0.001 Par Value			Class C Common Stock $0.001 Par Value											Total Angi Inc. Shareholders' Equity
																	Accumulated Other Comprehensive (Loss) Income								Total Shareholders' Equity
	Redeemable Noncontrolling Interests												Additional Paid-in Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests
				$		Shares	$		Shares	$		Shares
			(In thousands)
Balance as of March 31, 2020	$	23,813		$	88	87,624	$	422	421,757	$	—	—	$	1,379,079	$	7,074	$	(7,993)	$	(96,920)	$	1,281,750	$	9,260	$	1,291,010
Net earnings	220			—		—	—		—	—		—	—		12,667		—		—		12,667		324		12,991
Other comprehensive (loss) income	(786)			—		—	—		—	—		—	—		—		5,253		—		5,253		19		5,272
Stock-based compensation expense	—			—		—	—		—	—		—	18,607		—		—		—		18,607		—		18,607
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			1		1,452	—		—	—		—	(8,220)		—		—		—		(8,219)		—		(8,219)
Purchase of treasury stock	—			—		—	—		—	—		—	—		—		—		(15,888)		(15,888)		—		(15,888)
Adjustment of redeemable noncontrolling interests to fair value	1,846			—		—	—		—	—		—	(1,846)		—		—		—		(1,846)		—		(1,846)
Other	—			—		—	—		—	—		—	(2)		—		—		—		(2)		1		(1)
Balance as of June 30, 2020	$	25,093		$	89	89,076	$	422	421,757	$	—	—	$	1,387,618	$	19,741	$	(2,740)	$	(112,808)	$	1,292,322	$	9,604	$	1,301,926
Balance as of December 31, 2019	$	26,663		$	87	87,007	$	422	421,570	$	—	—	$	1,357,075	$	16,032	$	(1,379)	$	(57,949)	$	1,314,288	$	9,264	$	1,323,552
Net (loss) earnings	(55)			—		—	—		—	—		—	—		3,709		—		—		3,709		373		4,082
Other comprehensive loss	(687)			—		—	—		—	—		—	—		—		(1,361)		—		(1,361)		(34)		(1,395)
Stock-based compensation expense	15			—		—	—		—	—		—	40,818		—		—		—		40,818		—		40,818
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			2		2,069	—		—	—		—	(10,773)		—		—		—		(10,771)		—		(10,771)
Issuance of common stock to IAC pursuant to the employee matters agreement	—			—		—	—		187	—		—	(791)		—		—		—		(791)		—		(791)
Purchase of treasury stock	—			—		—	—		—	—		—	—		—		—		(54,859)		(54,859)		—		(54,859)
Purchase of redeemable noncontrolling interests	(3,165)			—		—	—		—	—		—	—		—		—		—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	2,322			—		—	—		—	—		—	(2,322)		—		—		—		(2,322)		—		(2,322)
Adjustment pursuant to the tax sharing agreement	—			—		—	—		—	—		—	3,613		—		—		—		3,613		—		3,613
Other	—			—		—	—		—	—		—	(2)		—		—		—		(2)		1		(1)
Balance as of June 30, 2020	$	25,093		$	89	89,076	$	422	421,757	$	—	—	$	1,387,618	$	19,741	$	(2,740)	$	(112,808)	$	1,292,322	$	9,604	$	1,301,926

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

7

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2021		2020
	(In thousands)
Cash flows from operating activities:
Net (loss) earnings	$	(28,038)	$	4,027
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Provision for credit losses	42,731		39,338
Stock-based compensation expense	11,577		40,334
Depreciation	31,027		24,693
Amortization of intangibles	8,762		25,958
Deferred income taxes	(20,344)		(6,290)
Impairment of long-lived and right-of-use assets	12,280		188
Revenue reserves	4,667		4,070
Other adjustments, net	2,592		1,266
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	(63,192)		(48,222)
Other assets	8,376		7,132
Accounts payable and other liabilities	43,199		35,930
Income taxes payable and receivable	315		(502)
Deferred revenue	5,301		(125)
Net cash provided by operating activities	59,253		127,797
Cash flows from investing activities:
Capital expenditures	(35,713)		(24,665)
Proceeds from maturities of marketable debt securities	50,000		—
Net proceeds from the sale of a business	750		731
Net cash provided by (used in) investing activities	15,037		(23,934)
Cash flows from financing activities:
Principal payments on Term Loan	(220,000)		(6,875)
Purchase of treasury stock	(5,637)		(54,400)
Withholding taxes paid on behalf of employees on net settled stock-based awards	(54,596)		(11,494)
Distribution from IAC pursuant to the tax sharing agreement	—		3,071
Purchase of noncontrolling interests	(22,938)		(3,165)
Net cash used in financing activities	(303,171)		(72,863)
Total cash (used) provided	(228,881)		31,000
Effect of exchange rate changes on cash and cash equivalents and restricted cash	546		(702)
Net (decrease) increase in cash and cash equivalents and restricted cash	(228,335)		30,298
Cash and cash equivalents and restricted cash at beginning of period	813,561		391,478
Cash and cash equivalents and restricted cash at end of period	$	585,226	$	421,776

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

8

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Angi Inc. (the “Company”), formerly ANGI Homeservices Inc., connects quality home service professionals with consumers across 500 different categories, from repairing and remodeling homes to cleaning and landscaping. Over 260,000 domestic service professionals actively sought consumer matches, completed jobs, or advertised work through Angi Inc. platforms during the three months ended June 30, 2021. Additionally, consumers turned to at least one of our brands to find a professional for approximately 34 million projects during the twelve months ended June 30, 2021.

The Company has two operating segments (i) North America (United States and Canada), which includes Angi (formerly Angie’s List), HomeAdvisor Powered by Angi, and Handy; and (ii) Europe, which includes Travaux, MyHammer, MyBuilder, Werkspot, and Instapro.

As used herein, “Angi Inc.,” the “Company,” “we,” “our,” “us,” and similar terms refer to Angi Inc. and its subsidiaries (unless the context requires otherwise).

At June 30, 2021, IAC/InterActiveCorp (“IAC”) owned 84.1% and 98.1% of the economic interest and voting interest, respectively, of the Company.

Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between (i) Angi Inc. and (ii) IAC and its subsidiaries, with the exception of a promissory note payable to a foreign subsidiary of IAC, are considered to be effectively settled for cash at the time the transaction is recorded. See “Note 10—Related Party Transactions with IAC” for additional information on transactions between Angi Inc. and IAC.

The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. For the purpose of these financial statements, income taxes have been computed as if Angi Inc. filed tax returns on a standalone, separate tax return basis. Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement between the Company and IAC and the current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the statement of cash flows.

The accompanying unaudited financial statements have been prepared in accordance with GAAP for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements and notes thereto for the year ended December 31, 2020.

COVID-19 Update

The impact on the Company from the COVID-19 pandemic and the measures designed to contain its spread has been varied and volatile.

As previously disclosed, the initial impact of COVID-19 on the Company resulted in a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). While we have experienced a rebound in service requests in the second half of 2020 and the first half of 2021, many service professionals’ businesses had been adversely impacted by labor and material constraints and many service professionals had limited capacity to take on new business, which negatively impacted our ability to monetize this increased level of service requests through the first quarter of 2021. Although our ability to monetize service requests rebounded modestly in the second

9

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

quarter of 2021, we are still not back to levels we experienced pre-COVID-19. No assurances can be provided that we will continue to be able to improve monetization, or that service professionals’ businesses will not be adversely impacted in the future.

The extent to which developments related to the COVID-19 pandemic and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.

Accounting Estimates

Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including those related to: the fair values of cash equivalents and marketable debt securities; the carrying value of accounts receivable, including the determination of the allowance for credit losses and the determination of revenue reserves; the determination of the customer relationship period for certain costs to obtain a contract with a customer; the carrying value of right-of-use assets (“ROU assets”); the useful lives and recoverability of definite-lived intangible assets and capitalized software, leasehold improvements, and equipment; the recoverability of goodwill and indefinite-lived intangible assets; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates and judgments on historical experience, its forecasts and budgets, and other factors that the Company considers relevant.

General Revenue Recognition

Revenue is recognized when control of the promised services or goods is transferred to the Company’s customers and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.

The Company's disaggregated revenue disclosures are presented in “Note 7—Segment Information.”

Deferred Revenue

Deferred revenue consists of payments that are received or are contractually due in advance of the Company’s performance obligation. The Company’s deferred revenue is reported on a contract-by-contract basis at the end of each reporting period. The Company classifies deferred revenue as current when the remaining term of the applicable subscription period or expected completion of its performance obligation is one year or less. At December 31, 2020, the current and non-current deferred revenue balances were $54.7 million and $0.2 million, respectively, and during the six months ended June 30, 2021, the Company recognized $46.0 million of revenue that was included in the deferred revenue balance as of December 31, 2020. At December 31, 2019, the current and non-current deferred revenue balances were $58.2 million and $0.2 million, respectively, and during the six months ended June 30, 2020, the Company recognized $49.5 million of revenue that was included in the deferred revenue balance as of December 31, 2019.

The current and non-current deferred revenue balances at June 30, 2021 are $60.1 million and $0.1 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

Practical Expedients and Exemptions

As permitted under the practical expedient available under ASU No. 2014-09 Revenue from Contracts with Customers, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a

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wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which the Company has the right to invoice for services performed.

Commissions Paid to Employees Pursuant to Sales Incentive Programs

The Company has determined that commissions paid to employees pursuant to certain sales incentive programs meet the requirements to be capitalized as the incremental costs to obtain a contract with a customer. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods. Capitalized commissions paid to employees pursuant to these sales incentive programs are amortized over the estimated customer relationship period. The Company calculates the anticipated customer relationship period as the average customer life, which is based on historical data.

For sales incentive programs where the anticipated customer relationship period is one year or less, the Company has elected the practical expedient to expense the costs as incurred.

Assets Recognized from the Costs to Obtain a Contract with a Customer

The Company uses a portfolio approach to assess the accounting treatment of the incremental costs to obtain a contract with a customer. The Company recognizes an asset for these costs if we expect to recover those costs. To the extent that these costs are capitalized, the resultant asset is amortized on a systematic basis consistent with the pattern of the transfer of the services to which the asset relates. The current contract assets are $44.9 million and $49.2 million at June 30, 2021 and December 31, 2020, respectively. The non-current assets are $1.3 million and $0.4 million at June 30, 2021 and December 31, 2020, respectively. The current and non-current capitalized costs to obtain a contract with a customer are included in "Other current assets" and "Other non-current assets" in the accompanying balance sheet.

Recent Accounting Pronouncements

There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect on the results of operations, financial condition or cash flows of the Company.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2—INCOME TAXES

The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, the income tax benefit and/or provision has been computed for the Company on an as if standalone, separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows. The tax sharing agreement between the Company and IAC governs the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately governs the amount payable to or receivable from IAC with respect to income taxes. Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement and the current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the statement of cash flows.

At the end of each interim period, the Company estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.

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The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company’s tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision or benefit in the quarter in which the change occurs. Included in the income tax benefit for the three months ended June 30, 2021 is a benefit of $2.3 million due to a higher estimated annual effective tax rate from that applied to the first quarter’s ordinary loss from continuing operations. The higher estimated annual effective tax rate was primarily due to the increased impact of forecasted nondeductible items had on the increase in forecasted ordinary pre-tax losses.

For the three and six months ended June 30, 2021, the Company recorded an income tax benefit of $9.1 million and $18.4 million, which represents an effective income tax rate of 23% and 40%, respectively. For the three months ended June 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to benefits related to a change in the annual expected effective income tax rate, partially offset by nondeductible share based compensation expense. For the six months ended June 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting for stock-based awards. For the three months ended June 30, 2020, the Company recorded an income tax provision of $3.0 million, which represents an effective income tax rate of 19%. The effective income tax rate is lower than the statutory rate of 21% due primarily to the impact of benefiting previously unbenefited foreign net operating loss carryforwards. For the six months ended June 30, 2020, the Company recorded an income tax benefit of $5.9 million due primarily to a $5.7 million reduction to deferred taxes due to the true-up of the state tax rate for an indefinite-lived intangible asset and the impact of benefiting previously unbenefited foreign net operating loss carryforwards.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. There are currently no accruals for interest and penalties.

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service (“IRS”) has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31, 2013 through 2017, which includes the operations of the Company. The statutes of limitations for the years 2013 through 2017 have been extended to June 30, 2022. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2009. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

At June 30, 2021 and December 31, 2020, the Company has unrecognized tax benefits of $5.5 million and $5.3 million, respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at June 30, 2021 are subsequently recognized, the income tax provision would be reduced by $5.2 million. The comparable amount as of December 31, 2020 is $5.1 million.

The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and historical experience. The Company’s most significant net deferred tax asset relates to U.S. federal net operating loss ("NOL") carryforwards. The Company expects to generate sufficient future taxable income to fully realize this deferred tax asset prior to the expiration of these NOLs, the majority of which expire between 2030 and 2037, and a portion of which never expire.

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NOTE 3—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Marketable Debt Securities

The Company did not hold any available-for-sale marketable debt securities at June 30, 2021.

At December 31, 2020, current available-for-sale marketable debt securities were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Treasury discount notes	$	49,995	$	—	$	—	$	49,995
Total available-for-sale marketable debt securities	$	49,995	$