Angi’s (NASDAQ:ANGI) Q3 Earnings Results: Revenue In Line With Expectations But requests Fall

Adam Hejl

Mon, Nov 11, 2024, 1:44 PM 5 min read

Revenue: $296.7 million vs analyst estimates of $296.3 million (in line)
EPS: $0.07 vs analyst estimates of $0 ($0.07 beat)
EBITDA: $35.4 million vs analyst estimates of $32.94 million (7.5% beat)
EBITDA guidance for the full year is $142.5 million at the midpoint, in line with analyst expectations
Gross Margin (GAAP): 95%, up from 91.8% in the same quarter last year
Operating Margin: 2.6%, up from -2.9% in the same quarter last year
EBITDA Margin: 11.9%, up from 7.9% in the same quarter last year
Service Requests: 4.49 million, down 1.58 million year on year
Market Capitalization: $1.25 billion

Company Overview

Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.

Gig Economy

The iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech-enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.

Sales Growth

A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Angi’s revenue declined by 6.8% per year. This shows demand was weak, a rough starting point for our analysis.

This quarter, Angi reported a rather uninspiring 15.5% year-on-year revenue decline to $296.7 million of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to decline 3.3% over the next 12 months. Although this projection is better than its three-year trend, it's hard to get excited about a company that is struggling with demand.

When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.

Service Requests

Request Growth

As a gig economy marketplace, Angi generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.

Angi struggled to engage its service requests over the last two years as they have declined by 22.9% annually to 4.49 million in the latest quarter. This performance isn't ideal because internet usage is secular. If Angi wants to accelerate growth, it must enhance the appeal of its current offerings or innovate with new products.

In Q3, Angi’s service requests once again decreased by 1.58 million, a 26% drop since last year. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t moving the needle for requests yet.

Revenue Per Request

Average revenue per request (ARPR) is a critical metric to track for consumer internet businesses like Angi because it measures how much the company earns in transaction fees from each request. This number also informs us about Angi’s take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.

Angi’s ARPR growth has been impressive over the last two years, averaging 8.5%. Although its service requests shrank during this time, the company’s ability to successfully increase monetization demonstrates its platform’s value for existing requests.

This quarter, Angi’s ARPR clocked in at $66.08. It grew 14.1% year on year, faster than its service requests.

Key Takeaways from Angi’s Q3 Results

We were impressed by how significantly Angi blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. On the other hand, its number of requests declined and its requests fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 4.2% to $2.52 immediately following the results.

Angi’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Terms

and

WA Consumer Health Privacy Policy

Your privacy controls

News

Life

Entertainment

Finance

Sports

New on Yahoo

Yahoo Finance