Angi (NASDAQ:ANGI) Exceeds Q1 Expectations, Stock Soars

Radek Strnad /
2023/05/09 4:39 pm EDT

Home services online marketplace ANGI (NASDAQ: ANGI) reported Q1 FY2023 results that beat analyst expectations, with revenue down 10% year on year to $392.4 million. Angi made a GAAP loss of $15 million, improving on its loss of $33.3 million, in the same quarter last year.

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Angi (ANGI) Q1 FY2023 Highlights:

  • Revenue: $392.4 million vs analyst estimates of $384.3 million (2.11% beat)
  • EPS: -$0.03 vs analyst estimates of -$0.06 ($0.03 beat)
  • Free cash flow of $7.2 million, up from negative free cash flow of $5.1 million in previous quarter
  • Gross Margin (GAAP): 89.3%, up from 77.3% same quarter last year
  • Domestic Customer Service Requests : 6 million, down 0.7 million year on year

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.

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

Angi's revenue growth over the last three years has been unremarkable, averaging 10.7% annually. This quarter, Angi beat analyst estimates but reported a rather lacklustre 10% year on year revenue decline.

Angi Total Revenue

Before the earnings results were announced, Wall St analysts covering the company were estimating revenues to decline -7.39% over the next twelve months.

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Usage Growth

As a gig economy marketplace, Angi generates revenue growth by the volume of services its users order (e.g. rides, deliveries, freelance jobs) and how much commission it earns from each service unit provided.

Angi has been struggling over the last two years as the number of service requests, a key usage metric for the company, declined 9.02% annually to 6 million. This is one of the lowest levels of growth in the consumer internet sector.

Angi Domestic Customer Service Requests

In the number of service requests decreased by 0.7 million, a 10.4% drop year on year.

Key Takeaways from Angi's Q1 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Angi’s balance sheet, but we note that with a market capitalization of $1.3 billion and more than $327.5 million in cash, the company has the capacity to continue to prioritise growth over profitability.

It was good to see Angi outperform Wall St’s revenue expectations this quarter despite a miss on service requests. That feature of these results as well as a meaningful EBITDA beat really stood out as positives. On the other hand, there was a decline in number of users and the revenue growth was somewhat weak. Overall, this quarter's results were mixed but overall encouraging. The company is up 8.43% on the results and currently trades at $2.7 per share.

Angi may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.