Angi hits earnings as CEO says company is benefiting from home improvement cooldown

An earlier version of this report misstated Angi’s adjusted earnings before interest, taxes, depreciation and amortization for the most recent quarter. It has been corrected.

The home improvement craze is slowing down, and it’s actually proving beneficial for Angi Inc.

The company, which combines the former Angie’s List and HomeAdvisor services, grew revenue 23% in its most recent quarter, highlighted by improved performance in Angie’s ANGI,
+0.33%
ads and leads.

One way Angi makes money is when home service professionals post ads or engage in “performance marketing” aimed at driving new customers. During the height of the pandemic, these professionals were so busy with jobs that they didn’t need to actively seek new business, but now that home improvement trends are cooling, they’ve proven more willing to wade into paid promotions.

“Consumer demand has slowed, particularly on discretionary assignments,” chief executive Oisin Hanrahan told MarketWatch. “This has led to professionals being more engaged because every job we have is worth more to a professional.”

Angi’s advertising and lead businesses grew revenue by 5% in the most recent quarter, marking the first quarter of growth since the second quarter of 2021.

“It’s a net good thing for Angi if there are professionals who want to use to run their book of business,” Hanrahan continued, adding that the company is looking for a “moderate” balance between supply and demand.

Read: People are getting “squeezed” by skyrocketing rents, especially Gen Z, according to Bank of America data

Overall, Angi grew revenue to $515.8 million from $421.0 million a year ago, while analysts tracked by FactSet expected $495.4 million.

Hanrahan pointed to a mix of big picture trends in the past quarter. While consumers are pulling back on non-discretionary projects, there is still “sustained demand” for discretionary projects like electrical maintenance or air conditioning repair.

Even in the non-discretionary realm, priorities change. Now that consumers are leaving their homes more, they are not destroying as many toilets, dishwashers and ovens as they might have done earlier in the pandemic. But they still show a high need for heating, ventilation and air conditioning (HVAC) maintenance due to high temperatures.

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Angi also earns money through a service business where homeowners pay the company for services that professionals list on the platform. Trends there have “definitely softened,” but the company is trying to “push for profitability” in that part of the business, according to Hanrahan.

The company generated an overall net loss of $24.2 million, or 5 cents per share. per share, in the most recent quarter, down from $30.3 million, or 6 cents per share. share, in the same period last year. Analysts modeled a GAAP loss per share of 6 cents for the second quarter.

Angi posted adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $9.7 million, versus a loss of $4.4 million by that metric a year earlier. The FactSet consensus was for $3 million in adjusted Ebitda.

Hanrahan noted that the company continued to see a “very strong growth rate” in its advertising and leads business in July, although growth in services slowed as the company divested its acquisition of a roofing business and also dealt with some operational challenges in that business.

Angi ads and leads revenue rose 7% in June year-over-year, while service revenue growth reached 18%, down from 107% in the second quarter. The total turnover increased by 10 per cent.

IAC/InterActiveCorp. IAC,
-0.18%
has the largest financial interest in Angi, and IAC also released second-quarter results on Tuesday.

IAC generated a net loss of $869.1 million, or $10.02 per share, in the most recent period, whereas it recorded net income of $194.8 million, or $2.02 per share, in the prior quarter. The net loss figure reflects unrealized losses from the company’s investment in MGM Resorts International MGM,
-1.68%
and an $87 million impairment charge related to, among other things, the company’s Mosaic business.

Analysts tracked by FactSet predicted a GAAP loss of 65 cents per share. stock.

IAC reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $37.4 million, up from $26.4 million a year earlier, while the FactSet consensus was for $40 million.

IAC’s revenue rose to $1.36 billion from $829.5 million, while analysts were modeling $1.38 billion. Revenue at the company’s Dotdash media unit grew 568%, boosted by the company’s acquisition of Meredith brands late last year.

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