As filed with the Securities and Exchange Commission on May 10, 2022

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 March 31, 2022

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)

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 May 6, 2022, the following shares of the Registrant’s common stock were outstanding:

Class A Common Stock	80,322,073
Class B Common Stock	422,019,247
Class C Common Stock	—
Total outstanding Common Stock	502,341,320

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	7
	Note 1—The Company and Summary of Significant Accounting Policies	8
	Note 2—Income Taxes	10
	Note 3—Financial Instruments and Fair Value Measurements	11
	Note 4—Long-term Debt	13
	Note 5—Accumulated Other Comprehensive Income (Loss)	13
	Note 6—(Loss) Earnings Per Share	14
	Note 7—Segment Information	15
	Note 8—Consolidated Financial Statement Details	17
	Note 9—Contingencies	19
	Note 10—Related Party Transactions with IAC	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34
PART II
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	39
	Signatures	40

2

PART I

FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

	March 31, 2022		December 31, 2021
	(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	391,286	$	428,136
Accounts receivable, net of reserves of $37,813 and $36,360, respectively	100,043		84,387
Other current assets	67,646		70,548
Total current assets	558,975		583,071
Capitalized software, leasehold improvements and equipment, net	138,032		118,267
Goodwill	913,384		916,039
Intangible assets, net	189,819		193,826
Deferred income taxes	131,240		122,693
Other non-current assets, net	73,373		76,245
TOTAL ASSETS	$	2,004,823	$	2,010,141
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable	$	56,558	$	38,860
Deferred revenue	55,255		53,834
Accrued expenses and other current liabilities	194,499		183,815
Total current liabilities	306,312		276,509
Long-term debt, net	494,730		494,552
Deferred income taxes	2,269		1,883
Other long-term liabilities	87,079		91,670
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 100,425 and 99,745 shares, respectively, and outstanding 80,214 and 80,578, respectively	100		100
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 422,019 and 422,019 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	1,361,540		1,350,457
Accumulated deficit	(95,019)		(61,629)
Accumulated other comprehensive income	2,506		3,309
Treasury stock, 20,211 and 19,167 shares, respectively	(166,184)		(158,040)
Total Angi Inc. shareholders’ equity	1,103,365		1,134,619
Noncontrolling interests	11,068		10,908
Total shareholders’ equity	1,114,433		1,145,527
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,004,823	$	2,010,141

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 March 31,
	2022		2021
	(In thousands, except per share data)
Revenue	$	436,159	$	387,029
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	98,998		53,828
Selling and marketing expense	225,801		205,840
General and administrative expense	109,655		88,162
Product development expense	17,859		18,047
Depreciation	13,999		15,969
Amortization of intangibles	3,804		5,074
Total operating costs and expenses	470,116		386,920
Operating (loss) income	(33,957)		109
Interest expense	(5,022)		(6,617)
Other expense, net	(391)		(767)
Loss before income taxes	(39,370)		(7,275)
Income tax benefit	6,083		9,289
Net (loss) earnings	(33,287)		2,014
Net earnings attributable to noncontrolling interests	(103)		(83)
Net (loss) earnings attributable to Angi Inc. shareholders	$	(33,390)	$	1,931
Per share information attributable to Angi Inc. shareholders:
Basic (loss) earnings per share	$	(0.07)	$	0.00
Diluted (loss) earnings per share	$	(0.07)	$	0.00
Stock-based compensation expense by function:
Selling and marketing expense	$	1,239	$	1,017
General and administrative expense	9,635		84
Product development expense	2,111		933
Total stock-based compensation expense	$	12,985	$	2,034

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 March 31,
	2022		2021
	(in thousands)
Net (loss) earnings	$	(33,287)	$	2,014
Other comprehensive (loss) income:
Change in foreign currency translation adjustment	(746)		679
Total other comprehensive (loss) income	(746)		679
Comprehensive (loss) income	(34,033)		2,693
Components of comprehensive income attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests	(103)		(83)
Change in foreign currency translation adjustment attributable to noncontrolling interests	(57)		(693)
Comprehensive income attributable to noncontrolling interests	(160)		(776)
Comprehensive (loss) income attributable to Angi Inc. shareholders	$	(34,193)	$	1,917

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 Months Ended March 31, 2022 and 2021

(Unaudited)

				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 December 31, 2021	$	—		$	100	99,745	$	422	422,019	$	—	—	$	1,350,457	$	(61,629)	$	3,309	$	(158,040)	$	1,134,619	$	10,908	$	1,145,527
Net (loss) earnings	—			—		—	—		—	—		—	—		(33,390)		—		—		(33,390)		103		(33,287)
Other comprehensive (loss) income	—			—		—	—		—	—		—	—		—		(803)		—		(803)		57		(746)
Stock-based compensation expense	—			—		—	—		—	—		—	13,556		—		—		—		13,556		—		13,556
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			—		681	—		—	—		—	(2,473)		—		—		—		(2,473)		—		(2,473)
Purchase of treasury stock	—			—		—	—		—	—		—	—		—		—		(8,144)		(8,144)		—		(8,144)
Balance as of March 31, 2022	$	—		$	100	100,426	$	422	422,019	$	—	—	$	1,361,540	$	(95,019)	$	2,506	$	(166,184)	$	1,103,365	$	11,068	$	1,114,433
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	(60)			—		—	—		—	—		—	—		1,931		—		—		1,931		143		2,074
Other comprehensive income (loss)	580			—		—	—		—	—		—	—		—		(14)		—		(14)		113		99
Stock-based compensation expense	—			—		—	—		—	—		—	2,542		—		—		—		2,542		—		2,542
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			1		1,591	—		—	—		—	(48,052)		—		—		—		(48,051)		—		(48,051)
Issuance of common stock to IAC pursuant to the employee matters agreement	—			3		2,579	—		96	—		—	(3)		—		—		—		—		—		—
Purchase of treasury stock	—			—		—	—		—	—		—	—		—		—		(4,916)		(4,916)		—		(4,916)
Purchase of redeemable noncontrolling interests	(22,938)			—		—	—		—	—		—	—		—		—		—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	662			—		—	—		—	—		—	(662)		—		—		—		(662)		—		(662)
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

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

6

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Cash flows from operating activities:
Net (loss) earnings	$	(33,287)	$	2,014
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities:
Provision for credit losses	21,611		19,118
Stock-based compensation expense	12,985		2,034
Depreciation	13,999		15,969
Amortization of intangibles	3,804		5,074
Deferred income taxes	(8,133)		(10,268)
Impairment of long-lived and right-of-use assets	22		2,503
Non-cash lease expense	3,352		3,275
Revenue reserves	1,506		2,910
Other adjustments, net	(215)		1,586
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	(37,757)		(34,638)
Other assets	1,930		(2,702)
Accounts payable and other liabilities	20,601		8,804
Operating lease liabilities	(4,454)		(4,265)
Income taxes payable and receivable	1,909		938
Deferred revenue	1,392		2,993
Net cash (used in) provided by operating activities	(735)		15,345
Cash flows from investing activities:
Capital expenditures	(26,903)		(18,743)
Proceeds from maturities of marketable debt securities	—		50,000
Proceeds from sale of fixed assets	87		—
Net cash (used in) provided by investing activities	(26,816)		31,257
Cash flows from financing activities:
Principal payments on Term Loan	—		(6,875)
Purchase of treasury stock	(8,144)		(4,916)
Withholding taxes paid on behalf of employees on net settled stock-based awards	(1,322)		(48,168)
Purchase of noncontrolling interests	—		(22,938)
Net cash used in financing activities	(9,466)		(82,897)
Total cash used	(37,017)		(36,295)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(205)		384
Net decrease in cash and cash equivalents and restricted cash	(37,222)		(35,911)
Cash and cash equivalents and restricted cash at beginning of period	429,485		813,561
Cash and cash equivalents and restricted cash at end of period	$	392,263	$	777,650

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

7

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. (“Angi,” the “Company,” “we,” “our,” or “us”) connects quality home service professionals with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping. Over 239,000 domestic service professionals actively sought consumer matches, completed jobs, or advertised work through Angi Inc. platforms during the three months ended March 31, 2022. Additionally, consumers turned to at least one of our brands to find a service professional for approximately 32 million projects during the twelve months ended March 31, 2022.

The Company has two operating segments: (i) North America (United States and Canada), which includes Angi Ads, Angi Leads, and Angi Services; and (ii) Europe. In March 2021, the Company rebranded its North American brands which operate as follows: Angi Ads operates under the Angi brand, Angi Leads operates primarily under the HomeAdvisor, powered by Angi brand, and Angi Services operates primarily under the Handy and Angi Roofing brands.

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

At March 31, 2022, IAC/InterActiveCorp (“IAC”) owned 84.5% and 98.2% 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 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 on an as if standalone, separate 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.

In management's opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company's consolidated financial position, consolidated results of operations and consolidated cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

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 impact of COVID-19 on the Company initially 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 experienced a rebound in service requests from mid-2020 through early 2021, service requests started to decline in May 2021 and continued to decline into the first quarter of 2022 because of Angi Inc.’s brand integration that began in March

8

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2021 and, in late 2021 and early 2022, the Omicron variant surge. Moreover, many service professionals’ businesses have been and continue to be adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which continues to negatively impact our ability to monetize service requests. Although our ability to monetize service requests rebounded modestly in the second half of 2021 and first quarter of 2022, we still have not returned 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 and, as a consequence, our revenue and profitability will not continue to 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 goods or services 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 goods or services.

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, 2021, the current and non-current deferred revenue balances were $53.8 million and $0.1 million, respectively, and during the three months ended March 31, 2022, the Company recognized $35.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021. At December 31, 2020, the current and non-current deferred revenue balances were $54.7 million and $0.2 million, respectively, and during the three months ended March 31, 2021, the Company recognized $34.4 million of revenue that was included in the deferred revenue balance as of December 31, 2020.

The current and non-current deferred revenue balances at March 31, 2022 are $55.3 million and $0.1 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

9

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Practical Expedients and Exemptions

As permitted under the practical expedient available under Accounting Standard Codification (“ASC”) 606, 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 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 commissions 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 $40.6 million and $38.0 million at March 31, 2022 and December 31, 2021, respectively. The non-current assets are $1.3 million and $1.1 million at March 31, 2022 and December 31, 2021, 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 adopted or that have not yet been adopted by the Company that are expected to have a material effect on the results of operations, financial condition, or cash flows of the Company.

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 in the consolidated statement of shareholders’ equity and financing activities within the consolidated 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

10

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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.

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.

For the three months ended March 31, 2022, the Company recorded an income tax benefit of $6.1 million, which represents an effective income tax rate of 15%. For the three months ended March 31, 2022, the effective income tax rate is lower than the statutory rate of 21% due primarily to tax shortfalls generated by the exercise and vesting for stock-based awards and foreign income taxed at different tax rates. For the three months ended March 31, 2021, the Company recorded an income tax benefit of $9.3 million due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest are not material and there are currently no accruals for 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, and is currently auditing the years December 31, 2018 through 2019, which includes the operations of the Company. The statutes of limitations for the years 2013 through 2019 have been extended to December 31, 2023. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2012. 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 March 31, 2022 and December 31, 2021, the Company has unrecognized tax benefits of $6.6 million and $6.3 million, respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at March 31, 2022 are subsequently recognized, the income tax provision would be reduced by $6.3 million. The comparable amount as of December 31, 2021 is $6.0 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. At March 31, 2022, the Company has a U.S. gross deferred tax asset of $219.3 million that the Company expects to fully utilize on a more likely than not basis. Of this amount, $49.7 million will be utilized upon the future reversal of deferred tax liabilities and the remaining net deferred tax asset of $169.6 million will be utilized based on forecasts of future taxable income. The Company’s most significant net deferred tax asset relates to U.S. federal net operating loss (“NOL”) carryforwards of $124.6 million. The Company expects to generate sufficient future taxable income of at least $593.4 million prior to the expiration of these NOLs, the majority of which expire between 2030 and 2037, and a portion of which never expire, to fully realize this deferred tax asset.

NOTE 3—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

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ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Marketable Debt Securities

The Company did not hold any available-for-sale marketable debt securities at March 31, 2022 and December 31, 2021.

Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

•Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

•Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the Company’s Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.

•Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities.

The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:

	March 31, 2022
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	250,077	$	—	$	—	$	250,077
Total	$	250,077	$	—	$	—	$	250,077

	December 31, 2021
	Quoted Market Prices for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	280,052	$	—	$	—	$	280,052
Total	$	280,052	$	—	$	—	$	280,052

Assets measured at fair value on a nonrecurring basis

The Company’s non-financial assets, such as goodwill, intangible assets, ROU assets, capitalized software, leasehold improvements and equipment are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:

	March 31, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Long-term debt, net (a)	$	(494,730)	$	(421,500)	$	(494,552)	$	(486,875)

________________________

(a)    At March 31, 2022 and December 31, 2021, the carrying value of long-term debt, net includes unamortized debt issuance costs of $5.3 million and $5.4 million, respectively.

The fair value of long-term debt is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

NOTE 4—LONG-TERM DEBT

Long-term debt consists of:

	March 31, 2022		December 31, 2021
	(In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 (“ANGI Group Senior Notes”); interest payable each February 15 and August 15, which commenced February 15, 2021	$	500,000	$	500,000
Total long-term debt	500,000		500,000
Less: unamortized debt issuance costs	5,270		5,448
Total long-term debt, net	$	494,730	$	494,552

ANGI Group Senior Notes

The ANGI Group Senior Notes were issued on August 20, 2020. At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium. Thereafter, these notes may be redeemed at the redemption prices set forth in the indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the applicable redemption date.

The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money in the event a default has occurred or ANGI Group’s secured leverage ratio (as defined in the indenture) exceeds 3.75 to 1.0. At March 31, 2022, there were no limitations pursuant thereto.

ANGI Group Revolving Facility

The $250 million ANGI Group Revolving Facility, which otherwise would have expired on November 5, 2023, was terminated effective August 3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

ANGI Group Term Loan

During the three months ended March 31, 2021, ANGI Group prepaid $6.9 million of the ANGI Group Term Loan principal that was otherwise due in the first quarter of 2022 and, as of May 6, 2021, the outstanding balance of the ANGI Group Term Loan was repaid in its entirety.

NOTE 5—ACCUMULATED OTHER COMPREHENSIVE INCOME

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ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following tables presents the components of accumulated other comprehensive income and items reclassified out of accumulated other comprehensive income into earnings:

	Three Months Ended March 31,
	2022				2021
	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income
	(In thousands)
Balance at January 1	$	3,309	$	3,309	$	4,637	$	4,637
Other comprehensive loss	(803)		(803)		(14)		(14)
Balance at March 31	$	2,506	$	2,506	$	4,623	$	4,623

At both March 31, 2022 and 2021, there was no tax benefit or provision on the accumulated other comprehensive income.

NOTE 6—(LOSS) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted (loss) earnings per share attributable to Angi Inc. Class A and Class B Common Stock shareholders:

	Three Months Ended March 31,
	2022				2021
	Basic		Diluted		Basic		Diluted
	(In thousands, except per share data)
Numerator:
Net (loss) earnings	$	(33,287)	$	(33,287)	$	2,014	$	2,014
Net earnings attributable to noncontrolling interests	(103)		(103)		(83)		(83)
Net (loss) earnings attributable to Angi Inc. Class A and Class B Common Stock shareholders	$	(33,390)	$	(33,390)	$	1,931	$	1,931
Denominator:
Weighted average basic Class A and Class B common stock shares outstanding	502,005		502,005		500,663		500,663
Dilutive securities (a) (b)	—		—		—		9,990
Denominator for (loss) earnings per share—weighted average shares	502,005		502,005		500,663		510,653
(Loss) earnings per share attributable to Angi Inc. Class A and Class B Common Stock shareholders:
(Loss) earnings per share	$	(0.07)	$	(0.07)	$	0.00	$	0.00

________________________

(a)    If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and subsidiary denominated equity and vesting of restricted stock units (“RSUs”). For the three months ended March 31, 2022 and 2021, 25.1 million and 5.2 million of potentially dilutive securities, respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute all earnings per share amounts.

(b) Market-based awards and performance-based stock units (“PSUs”) are considered contingently issuable shares. Shares issuable upon exercise or vesting of market-based awards and PSUs are included in the denominator for earnings per share if (i) the applicable market or performance condition(s) has been met and (ii) the inclusion of the market-based awards and PSUs is dilutive for the respective reporting periods. For the three months ended March 31, 2022 and 2021, 4.5 million and 1.4 million underlying market-based awards and PSUs, respectively, were excluded from the calculation of diluted earnings per share because the market or performance condition(s) had not been met.

14

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 7—SEGMENT INFORMATION

The Company has determined its operating segments consistent with how the chief operating decision maker views the businesses. Additionally, the Company considers how the businesses are organized as to segment management and the focus of the businesses with regards to the types of services or products offered or the target market.

The following table presents revenue by reportable segment:

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Revenue:
North America	$	411,172	$	361,041
Europe	24,987		25,988
Total	$	436,159	$	387,029

The following table presents the revenue of the Company’s segments disaggregated by type of service:

	Three Months Ended March 31,
	2022		2021
	(In thousands)
North America
Angi Ads and Leads:
Consumer connection revenue(a)	$	212,796	$	221,430
Advertising revenue(b)	63,776		60,747
Membership subscription revenue(c)	16,237		16,882
Other revenue	5,226		7,278
Total Angi Ads and Leads revenue	298,035		306,337
Angi Services revenue(d)	113,137		54,704
Total North America revenue	411,172		361,041
Europe
Consumer connection revenue(e)	21,803		22,351
Service professional membership subscription revenue	2,890		3,328
Advertising and other revenue	294		309
Total Europe revenue	24,987		25,988
Total revenue	$	436,159	$	387,029

________________________

(a)    Includes fees paid by service professionals for consumer matches through the Angi Ads and Leads platforms.

(b)    Includes revenue from service professionals under contract for advertising.

(c)    Includes membership subscription revenue from service professionals and consumers.

(d)    Includes revenue from pre-priced offerings and revenue from Angi Roofing.

(e)    Includes fees paid by service professionals for consumer matches.

15

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Geographic information about revenue and long-lived assets is presented below.

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Revenue
United States	$	405,508	$	356,444
All other countries	30,651		30,585
Total	$	436,159	$	387,029

	March 31, 2022		December 31, 2021
	(In thousands)
Long-lived assets (excluding goodwill and intangible assets):
United States	$	131,338	$	111,136
All other countries	6,694		7,131
Total	$	138,032	$	118,267

The following tables present operating loss and Adjusted EBITDA by reportable segment:

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Operating loss:
North America	$	(29,654)	$	9,577
Europe	(4,303)		(9,468)
Total	$	(33,957)	$	109

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Adjusted EBITDA(f):
North America	$	341	$	31,165
Europe	$	(3,510)	$	(7,979)

(f)    The Company’s primary financial measure is Adjusted EBITDA, which is defined as operating loss excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable.

The following tables reconcile operating loss for the Company’s reportable segments and net loss attributable to Angi Inc. shareholders to Adjusted EBITDA:

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ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	Three Months Ended March 31, 2022
	Operating Loss		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
North America	$	(29,654)	$	12,994	$	13,197	$	3,804	$	341
Europe	(4,303)		$	(9)	$	802	$	—	$	(3,510)
Operating loss	(33,957)
Interest expense	(5,022)
Other expense, net	(391)
Loss before income taxes	(39,370)
Income tax benefit	6,083
Net loss	(33,287)
Net earnings attributable to noncontrolling interests	(103)
Net loss attributable to Angi Inc. shareholders	$	(33,390)

	Three Months Ended March 31, 2021
	Operating Income (Loss)		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
North America	$	9,577	$	1,936	$	14,578	$	5,074	$	31,165
Europe	(9,468)		$	98	$	1,391	$	—	$	(7,979)
Operating loss	109
Interest expense	(6,617)
Other income, net	(767)
Loss before income taxes	(7,275)
Income tax benefit	9,289
Net earnings	2,014
Net earnings attributable to noncontrolling interests	(83)
Net earnings attributable to Angi Inc. shareholders	$	1,931

NOTE 8—CONSOLIDATED FINANCIAL STATEMENT DETAILS

Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying balance sheet to the total amounts shown in the accompanying statement of cash flows:

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ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	March 31, 2022		December 31, 2021		March 31, 2021		December 31, 2020
	(In thousands)
Cash and cash equivalents	$	391,286	$	428,136	$	777,041	$	812,705
Restricted cash included in other current assets	92		156		176		407
Restricted cash included in other non-current assets	885		1,193		433		449
Total cash and cash equivalents, and restricted cash as shown on the consolidated statement of cash flows	$	392,263	$	429,485	$	777,650	$	813,561

Restricted cash included in other current assets at March 31, 2022 primarily consisted of cash reserved to fund insurance claims.

Restricted cash included in other current assets at December 31, 2021, March 31, 2021 and December 31, 2020 consisted of cash reserved to fund insurance claims and cash received from customers through the marketplace platforms, representing funds collected for payments to service providers, which were not settled as of the period end.

Restricted cash included in other non-current assets for all periods presented above primarily consisted of deposits related to leases. Restricted cash included in other non-current assets at March 31, 2022 and December 31, 2021 also included cash held related to a check endorsement guarantee for Angi Roofing.

Credit Losses and Revenue Reserve

The following table presents the changes in the credit loss reserve for the three months ended March 31, 2022 and 2021:

	2022		2021
	(In thousands)
Balance at January 1	$	33,652	$	26,046
Current period provision for credit losses	21,586		19,118
Write-offs charged against the credit loss reserve	(21,371)		(20,570)
Recoveries collected	1,213		758
Balance at March 31	$	35,080	$	25,352

The revenue reserve was $2.7 million and $3.5 million at March 31, 2022 and 2021, respectively. The total allowance for credit losses and revenue reserve was $37.8 million and $28.9 million as of March 31, 2022 and 2021, respectively.

Accumulated Amortization and Depreciation

The following table provides the accumulated amortization and depreciation within the consolidated balance sheet:

Asset Category	March 31, 2022		December 31, 2021
	(In thousands)
Right-of-use assets (included in “other non-current assets”)	$	45,622	$	40,757
Capitalized software, leasehold improvements, and equipment	$	119,026	$	108,235
Intangible assets	$	162,346	$	159,356

18

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Other expense, net

	Three Months Ended March 31,
	2022		2021
Interest income	$	64	$	97
Foreign exchange losses	(456)		(860)
Other