As filed with the Securities and Exchange Commission on May 9, 2023

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, 2023

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 5, 2023, the following shares of the Registrant’s common stock were outstanding:

Class A Common Stock	84,547,999
Class B Common Stock	422,019,247
Class C Common Stock	—
Total outstanding Common Stock	506,567,246

TABLE OF CONTENTS

		Page Number
PART I
Item 1.	Consolidated Financial Statements
	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
	Notes to Consolidated Financial Statements
	Note 1—The Company and Summary of Significant Accounting Policies	8
	Note 2—Income Taxes	11
	Note 3—Financial Instruments and Fair Value Measurements	12
	Note 4—Long-term Debt	13
	Note 5—Accumulated Other Comprehensive (Loss) Income	14
	Note 6—Loss Per Share	14
	Note 7—Segment Information	15
	Note 8—Consolidated Financial Statement Details	18
	Note 9—Contingencies	20
	Note 10—Related Party Transactions with IAC	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
PART II
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6.	Exhibits	40
	Signatures	41

2

FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements

ANGI INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

	March 31, 2023		December 31, 2022
	(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	314,960	$	321,155
Marketable debt securities	12,495		—
Accounts receivable, net	92,303		93,880
Other current assets	66,574		69,167
Total current assets	486,332		484,202
Capitalized software, leasehold improvements and equipment, net	139,055		153,855
Goodwill	883,734		882,949
Intangible assets, net	175,592		178,105
Deferred income taxes	144,309		145,460
Other non-current assets, net	59,883		63,207
TOTAL ASSETS	$	1,888,905	$	1,907,778
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable	$	31,017	$	30,862
Deferred revenue	50,244		50,907
Accrued expenses and other current liabilities	188,875		200,015
Total current liabilities	270,136		281,784
Long-term debt, net	495,469		495,284
Deferred income taxes	2,932		2,906
Other long-term liabilities	72,031		76,426
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 104,119 and 102,810 shares, respectively, and outstanding 83,908 and 82,599, respectively	104		103
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	1,416,748		1,405,294
Accumulated deficit	(205,404)		(190,079)
Accumulated other comprehensive loss	(711)		(1,172)
Treasury stock, 20,211 and 20,211 shares, respectively	(166,184)		(166,184)
Total Angi Inc. shareholders’ equity	1,044,975		1,048,384
Noncontrolling interests	3,362		2,994
Total shareholders’ equity	1,048,337		1,051,378
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,888,905	$	1,907,778

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,
	2023		2022
	(In thousands, except per share data)
Revenue	$	392,407	$	436,159
Cost of revenue (exclusive of depreciation shown separately below)	42,041		98,998
Gross Profit	350,366		337,161
Operating costs and expenses:
Selling and marketing expense	204,909		225,801
General and administrative expense	102,518		109,655
Product development expense	25,312		17,859
Depreciation	25,435		13,999
Amortization of intangibles	2,662		3,804
Total operating costs and expenses	360,836		371,118
Operating loss	(10,470)		(33,957)
Interest expense	(5,029)		(5,022)
Other income (expense),net	3,811		(391)
Loss before income taxes	(11,688)		(39,370)
Income tax (provision) benefit	(3,312)		6,083
Net loss	(15,000)		(33,287)
Net earnings attributable to noncontrolling interests	(325)		(103)
Net loss attributable to Angi Inc. shareholders	$	(15,325)	$	(33,390)
Per share information attributable to Angi Inc. shareholders:
Basic loss per share	$	(0.03)	$	(0.07)
Diluted loss per share	$	(0.03)	$	(0.07)
Stock-based compensation expense by function:
Selling and marketing expense	$	1,280	$	1,239
General and administrative expense	8,898		9,635
Product development expense	2,699		2,111
Total stock-based compensation expense	$	12,877	$	12,985

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,
	2023		2022
	(in thousands)
Net loss	$	(15,000)	$	(33,287)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	502		(746)
Change in unrealized gains on available-for-sale marketable debt securities	2		—
Total other comprehensive income (loss)	504		(746)
Comprehensive loss	(14,496)		(34,033)
Components of comprehensive income attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests	(325)		(103)
Change in foreign currency translation adjustment attributable to noncontrolling interests	(43)		(57)
Comprehensive income attributable to noncontrolling interests	(368)		(160)
Comprehensive loss attributable to Angi Inc. shareholders	$	(14,864)	$	(34,193)

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, 2023 and 2022

(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 (Loss) Income								Total Shareholders' Equity
											Additional Paid-in Capital		Accumulated Deficit				Treasury Stock				Noncontrolling Interests
		$		Shares	$		Shares	$		Shares
	(In thousands)
Balance as of December 31, 2022		$	103	102,811	$	422	422,019	$	—	—	$	1,405,294	$	(190,079)	$	(1,172)	$	(166,184)	$	1,048,384	$	2,994	$	1,051,378
Net (loss) earnings		—		—	—		—	—		—	—		(15,325)		—		—		(15,325)		325		(15,000)
Other comprehensive income, net of tax		—		—	—		—	—		—	—		—		461		—		461		43		504
Stock-based compensation expense		—		—	—		—	—		—	13,870		—		—		—		13,870		—		13,870
Issuance of common stock pursuant to stock-based awards, net of withholding taxes		1		1,308	—		—	—		—	(2,411)		—		—		—		(2,410)		—		(2,410)
Other		—			—		—	—		—	(5)		—		—		—		(5)		—		(5)
Balance as of March 31, 2023		$	104	104,119	$	422	422,019	$	—	—	$	1,416,748	$	(205,404)	$	(711)	$	(166,184)	$	1,044,975	$	3,362	$	1,048,337
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

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,
	2023		2022
	(In thousands)
Cash flows from operating activities:
Net loss	$	(15,000)	$	(33,287)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for credit losses	24,872		21,611
Stock-based compensation expense	12,877		12,985
Depreciation	25,435		13,999
Amortization of intangibles	2,662		3,804
Deferred income taxes	1,147		(8,133)
Non-cash lease expense (including impairment of right-of-use assets)	3,672		3,352
Other adjustments, net	(433)		(193)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	(23,187)		(37,769)
Other assets	1,740		1,930
Accounts payable and other liabilities	(9,829)		22,119
Operating lease liabilities	(5,074)		(4,454)
Income taxes payable and receivable	843		1,909
Deferred revenue	(665)		1,392
Net cash provided by (used in) operating activities	19,060		(735)
Cash flows from investing activities:
Capital expenditures	(11,862)		(26,903)
Purchases of marketable debt securities	(12,362)		—
Proceeds from sales of fixed assets	68		87
Net cash used in investing activities	(24,156)		(26,816)
Cash flows from financing activities:
Purchases of treasury stock	—		(8,144)
Withholding taxes paid on behalf of employees on net settled stock-based awards	(1,379)		(1,322)
Net cash used in financing activities	(1,379)		(9,466)
Total cash used	(6,475)		(37,017)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	179		(205)
Net decrease in cash and cash equivalents and restricted cash	(6,296)		(37,222)
Cash and cash equivalents and restricted cash at beginning of period	322,136		429,485
Cash and cash equivalents and restricted cash at end of period	$	315,840	$	392,263

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. connects quality home service professionals with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping. During the three months ended March 31, 2023, over 206,000 transacting service professionals actively sought consumer matches, completed jobs, or advertised work through Angi Inc. platforms. Additionally, consumers turned to at least one of our brands to find a service professional for approximately 29 million projects during the twelve months ended March 31, 2023.

The Company has four operating segments: (i) Ads and Leads; (ii) Services; (iii) Roofing; and (iv) International (consisting of businesses in Europe and Canada) and operates under multiple brands including Angi, HomeAdvisor, Handy, Total Home Roofing, and Angi Roofing.

Ads and Leads provides service professionals the capability to engage with potential customers, including quote and invoicing services, and provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals nationwide for home repair, maintenance and improvement projects. Services consumers can request household services directly through the Angi platform and Angi fulfills the request through the use of independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. The matching and pre-priced booking services and related tools and directories are provided to consumers free of charge. Roofing provides roof replacement and repair services through its wholly-owned subsidiary Angi Roofing, LLC.

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, 2023, IAC Inc., formerly known as IAC/InterActiveCorp (“IAC”) owned 83.9% 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. See “Note 10—Related Party Transactions with IAC” for information on transactions between Angi 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 or benefit 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, 2022.

Segment Changes

As a result of management’s continued assessments of reporting structure, there was a decision in the fourth quarter of 2022 to refine segments to more effectively measure the businesses’ performance. Management has identified four reportable

8

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

segments with discrete financial results to appropriately match operating costs to the revenues generated for these businesses (Ads and Leads, Services, Roofing and International). Our financial information for the first quarter of 2022 has been recast to conform to the current period presentation.

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 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; the determination of the customer relationship period for certain costs to obtain a contract with a customer; the recoverability 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

The Company accounts for a contract with a customer when it has approval and commitment from all parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. 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.”

From January 1, 2020 through December 31, 2022, Services recorded revenue on a gross basis. Effective January 1, 2023, we modified the Services terms and conditions so that the service professional, rather than Angi Inc., has the contractual relationship with the consumer to deliver the service and our performance obligation to the consumer is to connect them with the service professional. This change in contractual terms requires revenue be reported as the net amount of what is received from the consumer after deducting the amounts owed to the service professional providing the service effective for all arrangements entered into after December 31, 2022. This change in accounting treatment resulted in a decrease in revenue of $25.7 million for the three months ended March 31, 2023. There is no impact to operating loss or Adjusted EBITDA from this change in revenue recognition.

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 or expected completion of its performance obligation is one year or less. At December 31, 2022, the current and non-current deferred revenue balances were $50.9 million and $0.1 million, respectively, and during the three months ended March 31, 2023, the Company recognized $31.9 million of revenue that was included in the deferred revenue balance as of December 31, 2022. 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.

The current and non-current deferred revenue balances at March 31, 2023 are $50.2 million and less than $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

9

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

For contracts that have an original duration of one year or less, the Company uses the practical expedient available under Accounting Standards Codification (“ASC”) ASC 606, applicable to such contracts and does not consider the time value of money.

In addition, as permitted under the practical expedient available under ASC 606, 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.

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 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 and are included in “Selling and marketing expense” in the accompanying statement of operations. 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.

The current capitalized sales commissions are $33.8 million and $37.2 million at March 31, 2023 and December 31, 2022, respectively. The non-current capitalized sales commissions are $2.5 million and $1.9 million at March 31, 2023 and December 31, 2022, respectively. The current and non-current capitalized sales commissions are included in “Other current assets” and “Other non-current assets” in the accompanying balance sheet.

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 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.

10

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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.

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 provision and/or benefit 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 or benefit 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 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, 2023, the Company recorded an income tax provision of $3.3 million, despite a pre-tax loss, due primarily to nondeductible stock-based compensation, foreign income taxed at different rates, and state taxes, partially offset by research credits. 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 rates.

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’s income taxes are routinely under audit by federal, state, local and foreign authorities 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 completed its audit of IAC’s federal income tax returns for the years ended December 31, 2013 through 2019, which includes the operations of the Company. The settlement of these tax years has been submitted to the Joint Committee of Taxation for approval. The statutes of limitations for the years 2013 through 2019 have been extended to

11

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

December 31, 2023. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2014. 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, 2023 and December 31, 2022, the Company has unrecognized tax benefits of $6.6 million and $6.2 million, respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at March 31, 2023 are subsequently recognized, the income tax provision would be reduced by $6.2 million. The comparable amount as of December 31, 2022 is $5.8 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, 2023, the Company has a U.S. gross deferred tax asset of $205.6 million that the Company expects to fully utilize on a more likely than not basis. Of this amount, $22.8 million will be utilized upon the future reversal of deferred tax liabilities and the remaining net deferred tax asset of $182.8 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 $108.0 million. The Company expects to generate sufficient future taxable income of at least $514.5 million prior to the expiration of these NOLs, the majority of which expire between 2032 and 2037, and a portion of which never expire, to fully realize this deferred tax asset.

NOTE 3—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Marketable Debt Securities

At March 31, 2023, 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	$	12,493	$	2	$	—	$	12,495
Total available-for-sale marketable debt securities	$	12,493	$	2	$	—	$	12,495

The contractual maturities of debt securities classified as current available-for-sale at March 31, 2023 are within one year.

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

Fair Value Measurements

Instruments measured at fair value on a recurring basis

Cash and cash equivalents are measured at fair value and classified within Level 1 and Level 2 in the fair value hierarchy, because we use quoted prices for identical assets in active markets.

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

12

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	March 31, 2023
	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	$	213,747	$	—	$	—	$	213,747
Treasury discount notes	—		24,917		—		24,917
Marketable debt securities:
Treasury discount notes	—		12,495		—		12,495
Total	$	213,747	$	37,412	$	—	$	251,159

	December 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	$	189,000	$	—	$	—	$	189,000
Treasury discount notes	—		24,961		—		24,961
Total	$	189,000	$	24,961	$	—	$	213,961

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.

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, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Long-term debt, net (a)	$	(495,469)	$	(386,250)	$	(495,284)	$	(368,750)

________________________

(a)    At March 31, 2023 and December 31, 2022, the carrying value of long-term debt, net includes unamortized debt issuance costs of $4.5 million and $4.7 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:

13

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	March 31, 2023		December 31, 2022
	(In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 (“ANGI Group Senior Notes”); interest payable each February 15 and August 15	$	500,000	$	500,000
Less: unamortized debt issuance costs	4,531		4,716
Total long-term debt, net	$	495,469	$	495,284

ANGI Group Senior Notes

ANGI Group, LLC (“ANGI Group”), a direct wholly-owned subsidiary of Angi Inc., issued the ANGI Group Senior Notes 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, plus accrued and unpaid interest thereon, if any, to the applicable redemption date set forth in the indenture governing the notes.

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 exceeds 3.75 to 1.0, provided that ANGI Group is permitted to incur such liens under certain permitted credit facilities indebtedness notwithstanding the ratio, all as defined in the indenture. At March 31, 2023, there were no limitations pursuant thereto.

NOTE 5—ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

	Three Months Ended March 31,
	2023						2022
	Foreign Currency Translation Adjustment		Unrealized Gains on Available-For-Sale Debt Securities		Accumulated Other Comprehensive Loss		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income
	(In thousands)
Balance at January 1	$	(1,172)	$	—	$	(1,172)	$	3,309	$	3,309
Other comprehensive income (loss)	459		2		461		(803)		(803)
Balance at March 31	$	(713)	$	2	$	(711)	$	2,506	$	2,506

At March 31, 2023 there was an inconsequential amount of tax provision on the accumulated other comprehensive income.

At March 31, 2022 there was no tax benefit or provision on the accumulated other comprehensive loss.

NOTE 6—LOSS PER SHARE

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	Three Months Ended March 31,
	2023				2022
	Basic		Diluted		Basic		Diluted
	(In thousands, except per share data)
Numerator:
Net loss	$	(15,000)	$	(15,000)	$	(33,287)	$	(33,287)
Net earnings attributable to noncontrolling interests	(325)		(325)		(103)		(103)
Net loss attributable to Angi Inc. Class A and Class B Common Stock shareholders	$	(15,325)	$	(15,325)	$	(33,390)	$	(33,390)
Denominator:
Weighted average basic Class A and Class B common stock shares outstanding	505,033		505,033		502,005		502,005
Dilutive securities (a) (b)	—		—		—		—
Denominator for loss per share—weighted average shares	505,033		505,033		502,005		502,005
Loss per share attributable to Angi Inc. Class A and Class B Common Stock shareholders:
Loss per share	$	(0.03)	$	(0.03)	$	(0.07)	$	(0.07)

________________________

(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, 2023 and 2022, 29.6 million and 25.1 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, 2023 and 2022, 0.9 million and 4.5 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.

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.

As a result of management’s continued assessments of reporting structure, there was a decision in the fourth quarter of 2022 to refine segments to more effectively measure the businesses’ performance. Management has identified four reportable segments with discrete financial results to appropriately match operating costs to the revenues generated for these businesses (Ads and Leads, Services, Roofing and International). Our financial information for prior periods has been recast to conform to the current period presentation.

15

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table presents revenue by reportable segment:

	Three Months Ended March 31,
	2023		2022
	(In thousands)
Revenue:
Domestic
Ads and Leads	$	293,506	$	294,746
Services	32,059		76,450
Roofing	38,372		36,687
Intersegment eliminations (a)	(1,462)		(1,677)
Total Domestic	362,475		406,206
International	29,932		29,953
Total	$	392,407	$	436,159

________________________

(a)    Intersegment eliminations related to Ads and Leads revenue earned from sales to Roofing.

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

	Three Months Ended March 31,
	2023		2022
	(In thousands)
Domestic
Ads and Leads:
Consumer connection revenue	$	212,935	$	214,347
Advertising revenue	67,181		63,902
Membership subscription revenue	13,199		16,237
Other revenue	191		260
Total Ads and Leads revenue	293,506		294,746
Services revenue	32,059		76,450
Roofing revenue	38,372		36,687
Intersegment eliminations (a)	(1,462)		(1,677)
Total Domestic revenue	362,475		406,206
International
Consumer connection revenue	24,745		21,803
Service professional membership subscription revenue	5,058		7,856
Advertising and other revenue	129		294
Total International revenue	29,932		29,953
Total revenue	$	392,407	$	436,159

________________________

(a)    Intersegment eliminations related to Ads and Leads revenue earned from sales to Roofing.

16

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

	Three Months Ended March 31,
	2023		2022
	(In thousands)
Revenue
United States	$	362,226	$	405,508
All other countries	30,181		30,651
Total	$	392,407	$	436,159

	March 31, 2023		December 31, 2022
	(In thousands)
Long-lived assets (excluding goodwill, intangible assets, and ROU assets):
United States	$	133,403	$	147,322
All other countries	5,652		6,533
Total	$	139,055	$	153,855

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

	Three Months Ended March 31,
	2023		2022
	(In thousands)
Operating income (loss):
Ads and Leads	$	13,480	$	15,486
Services	(12,452)		(25,750)
Roofing	411		(6,150)
Corporate	(14,939)		(13,022)
International	3,030		(4,521)
Total	$	(10,470)	$	(33,957)

	Three Months Ended March 31,
	2023		2022
	(In thousands)
Adjusted EBITDA(b):
Ads and Leads	$	39,851	$	34,325
Services	$	(2,168)	$	(18,567)
Roofing	$	821	$	(5,026)
Corporate	$	(12,354)	$	(10,450)
International	$	4,354	$	(3,451)

(b)    The Company’s primary financial measure and GAAP segment measure is Adjusted EBITDA, which is defined as operating income (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 income (loss) for the Company’s reportable segments and net loss attributable to Angi Inc. shareholders to Adjusted EBITDA:

17

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	Three Months Ended March 31, 2023
	Operating Income (Loss)		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA(b)
	(In thousands)
Ads and Leads	$	13,480	$	5,491	$	18,218	$	2,662	$	39,851
Services	(12,452)		$	4,209	$	6,075	$	—	$	(2,168)
Roofing	411		$	165	$	245	$	—	$	821
Corporate	(14,939)		$	2,585	$	—	$	—	$	(12,354)
International	3,030		$	427	$	897	$	—	$	4,354
Operating loss	(10,470)
Interest expense	(5,029)
Other income, net	3,811
Loss before income taxes	(11,688)
Income tax provision	(3,312)
Net loss	(15,000)
Net earnings attributable to noncontrolling interests	(325)
Net loss attributable to Angi Inc. shareholders	$	(15,325)

	Three Months Ended March 31, 2022
	Operating Income (Loss)		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA(b)
	(In thousands)
Ads and Leads	$	15,486	$	4,920	$	11,257	$	2,662	$	34,325
Services	(25,750)		$	4,540	$	1,668	$	975	$	(18,567)
Roofing	(6,150)		$	830	$	127	$	167	$	(5,026)
Corporate	(13,022)		$	2,572	$	—	$	—	$	(10,450)
International	(4,521)		$	123	$	947	$	—