Home services online marketplace ANGI (NASDAQ: ANGI) missed analysts' expectations in Q2 FY2023, with revenue down 27.3% year on year to $375.1 million. Angi made a GAAP loss of $14.7 million, improving from its loss of $24 million in the same quarter last year.
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Angi (ANGI) Q2 FY2023 Highlights:
- Revenue: $375.1 million vs analyst estimates of $402.4 million (6.79% miss)
- EPS: -$0.03 vs analyst expectations of -$0.02 (27.9% miss)
- Free Cash Flow of $48.3 million, up from $7.2 million in the previous quarter
- Gross Margin (GAAP): 91.6%, up from 75.2% in the same quarter last year
- Domestic Customer Service Requests : 6.86 million, down 1.64 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.
Angi's revenue growth over the last three years has been unimpressive, averaging 7.65% annually. This quarter, Angi reported a year on year revenue decline of 27.3%, missing analysts' expectations.
Before the earnings results were announced, Wall Street analysts covering the company were projecting revenue to decline -3.63% over the next 12 months.
The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.
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 has been struggling to grow its service requests, a key performance metric for the company. Over the last two years, its requests have declined 11.5% annually to 6.86 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q2, Angi's service requests decreased by 1.64 million, a 19.3% drop since last year.
Key Takeaways from Angi's Q2 Results
Sporting a market capitalization of $1.92 billion, Angi is among smaller companies, but its more than $370.6 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
Other than a beat on free cash flow, we struggled to find many other positives. The decline in its user base was concerning, and total service requests (a key measure of volumes on the platform) missed badly. Also, its revenue growth was quite weak. Overall, the results could have been better. The company is down 9.79% on the results and currently trades at $3.5 per share.
Angi may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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The author has no position in any of the stocks mentioned in this report.