What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-03-01 compared with 2021-02-16 · 418 added, 590 removed, 941 unchanged (52% of the section changed)

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Interest Rate Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s long-term debt, including current maturities.

At December 31, 2020, the principal amount of the Company’s outstanding debt totals $720.0 million, $500.0 million of which is the ANGI Group Senior Notes, which bears interest at a fixed rate, and $220.0 million of which is the ANGI Group Term Loan, which bears interest at a variable rate.

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s long-term debt.

At December 31, 2021, the principal amount of the Company’s outstanding debt is comprised of $500.0 million of ANGI Group Senior Notes, which bears interest at a fixed rate.

If market rates decline, the Company runs the risk that the related required payments of the ANGI Group Senior Notes will exceed those based on market rates.

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Such potential increase or decrease in fair value is based on certain simplifying assumptions, including an immediate increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period.

At December 31, 2020, the outstanding balance of the ANGI Group Term Loan of $220.0 million bore interest at LIBOR plus 2.00%, or 2.16%.

If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense on the ANGI Group Term Loan would increase or decrease by $2.2 million.

Foreign Currency Exchange Risk

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of ANGI Homeservices Inc.

To the Shareholders and the Board of Directors of Angi Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of ANGI Homeservices Inc.

We have audited the accompanying consolidated balance sheet of Angi Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 16, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Stock-Based Compensation

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the Matter During the year ended December 31, 2021 , the Company recorded stock-based compensation expense of $28.7 million.

As discussed in Note 11 to the consolidated financial statements, the Company issues various types of equity awards, including stock options, restricted stock units, performance-based stock units, market-based awards and equity instruments denominated in the shares of certain subsidiaries.

As disclosed in Note 10 to the consolidated financial statements, the Company issues various types of equity awards, including stock options, restricted stock units, performance-based stock units, market-based awards and equity instruments denominated in the shares of certain subsidiaries.

Auditing the Company’s accounting for stock-based compensation required complex auditor judgment due to the number and the variety of the types of equity awards, the prevalence of modifications, the subjectivity of assumptions used to value stock-based awards, the use of market-based vesting conditions and the existence of awards denominated in the shares of certain subsidiaries.

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New York, New York

February 16, 2021

ANGI HOMESERVICES INC.

March 1, 2022

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

December 31, 2021 December 31, 2020

(In thousands, except par value amounts)

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Total current assets 583,071 977,806

Capitalized software, leasehold improvements and equipment, net of amortization and depreciation 108,842 103,361

Capitalized software, leasehold improvements and equipment, net 118,267 108,842

Goodwill 916,039 891,797

Intangible assets, net of amortization 209,717 251,725

Other non-current assets 180,020 182,572

Intangible assets, net 193,826 209,717

Deferred income taxes 122,693 85,746

Other non-current assets, net 76,245 94,274

TOTAL ASSETS $ 2,010,141 $ 2,368,182

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current portion of long-term debt $ — $ 13,750

Accounts payable $ 38,860 $ 30,805

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Class A common stock, $ 0.001 par value;

authorized 2,000,000 shares, issued 94,238 and 87,007 shares, respectively, and outstanding 78,333 and 79,681 , respectively

authorized 2,000,000 shares;

issued 99,745 and 94,238 shares, respectively, and outstanding 80,578 and 78,333 , respectively

Class B convertible common stock, $ 0.001 par value;

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Additional paid-in capital 1,350,457 1,379,469

Retained earnings 9,749 16,032

Accumulated other comprehensive income (loss) 4,637 ( 1,379 )

Treasury stock, 15,905 and 7,326 , respectively

(Accumulated deficit) retained earnings ( 61,629 ) 9,749

Accumulated other comprehensive income 3,309 4,637

Treasury stock, 19,167 and 15,905 shares, respectively

( 158,040 ) ( 122,081 )

Total ANGI Homeservices Inc.

Total Angi Inc.

shareholders’ equity 1,134,619 1,272,290

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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,010,141 $ 2,368,182

$ 2,368,182 $ 1,921,611

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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Interest expense ( 23,485 ) ( 14,178 ) ( 11,493 )

Other income, net 1,218 6,494 17,741

Other (expense) income, net ( 2,509 ) 1,218 6,494

(Loss) earnings before income taxes ( 102,507 ) ( 19,328 ) 33,646

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Net earnings attributable to noncontrolling interests ( 884 ) ( 2,123 ) ( 485 )

Net (loss) earnings attributable to ANGI Homeservices Inc.

Net (loss) earnings attributable to Angi Inc.

shareholders $ ( 71,378 ) $ ( 6,283 ) $ 34,829

Per share information attributable to ANGI Homeservices Inc.

Per share information attributable to Angi Inc.

shareholders:

Basic (loss) earnings per share $ ( 0.01 ) $ 0.07 $ 0.16

Diluted (loss) earnings per share $ ( 0.01 ) $ 0.07 $ 0.15

Basic loss per share $ ( 0.14 ) $ ( 0.01 ) $ 0.07

Diluted loss per share $ ( 0.14 ) $ ( 0.01 ) $ 0.07

Stock-based compensation expense by function:

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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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Net (loss) earnings $ ( 70,494 ) $ ( 4,160 ) $ 35,314

Other comprehensive income (loss):

Other comprehensive (loss) income:

Change in foreign currency translation adjustment ( 1,219 ) 6,827 399

Change in unrealized gains and losses on available-for-sale debt securities — ( 3 ) 3

Total other comprehensive income (loss) 6,827 396 ( 4,859 )

Comprehensive income 2,667 35,710 72,648

Components of comprehensive (income) loss attributable to noncontrolling interests:

Change in unrealized gains and losses on available-for-sale marketable debt securities — — ( 3 )

Total other comprehensive (loss) income ( 1,219 ) 6,827 396

Comprehensive (loss) income ( 71,713 ) 2,667 35,710

Components of comprehensive income attributable to noncontrolling interests:

Net earnings attributable to noncontrolling interests ( 884 ) ( 2,123 ) ( 485 )

Change in foreign currency translation adjustment attributable to noncontrolling interests ( 109 ) ( 811 ) 86

Comprehensive (income) loss attributable to noncontrolling interests ( 2,934 ) ( 399 ) 577

Comprehensive (loss) income attributable to ANGI Homeservices Inc.

Comprehensive income attributable to noncontrolling interests ( 993 ) ( 2,934 ) ( 399 )

Comprehensive (loss) income attributable to Angi Inc.

shareholders $ ( 72,706 ) $ ( 267 ) $ 35,311

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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Years Ended December 31, 2021, 2020, and 2019

ANGI Homeservices Inc.

Shareholders’ Equity

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Class C Common Stock

ANGI Homeservices Inc.

Shareholders’ Equity

Comprehensive

Income (Loss) Total

Accumulated Other Comprehensive Income (Loss) Total

Shareholders’

Noncontrolling

Interests Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Treasury

Interests Additional Paid-in Capital (Accumulated Deficit) Retained Earnings Treasury

Stock Noncontrolling

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Balance as of December 31, 2018 $ 18,163 $ 81 80,515 $ 421 421,118 $ — — $ 1,333,097 $ ( 18,797 ) $ ( 1,861 ) $ — $ 1,312,941 $ 9,046 $ 1,321,987

Cumulative effect of adoption of ASU No.

— — — — — — — — 25,649 — — 25,649 — 25,649

Net (loss) earnings ( 146 ) — — — — — — — 77,318 — — 77,318 335 77,653

Other comprehensive loss ( 582 ) — — — — — — — — ( 4,093 ) — ( 4,093 ) ( 184 ) ( 4,277 )

Net earnings 142 — — — — — — — 34,829 — — 34,829 343 35,172

Other comprehensive income (loss) 39 — — — — — — — — 482 — 482 ( 125 ) 357

Stock-based compensation expense 148 — — — — — — 65,815 — — — 65,815 — 65,815

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Issuance of common stock to IAC pursuant to the employee matters agreement — — — 1 452 — — ( 1,766 ) — — — ( 1,765 ) — ( 1,765 )

Issuance of common stock to IAC pursuant to the post-closing adjustment provision of the Angie’s List merger agreement — — — 5 5,076 — — ( 5 ) — — — — — —

Issuance of common stock to the equity holders of Handy Technologies, Inc.

pursuant to the merger agreement — 9 8,586 — — — — 165,788 — — — 165,797 — 165,797

Distribution to IAC pursuant to the tax sharing agreement — — — — — — — ( 12,100 ) — — — ( 12,100 ) — ( 12,100 )

Purchase of noncontrolling interests ( 4,825 ) — — — — — — — — — — — ( 1,236 ) ( 1,236 )

Purchase of treasury stock — — — — — — — — — — ( 57,949 ) ( 57,949 ) — ( 57,949 )

Adjustment pursuant to the tax sharing agreement — — — — — — — 1,151 — — — 1,151 — 1,151

Purchase of redeemable noncontrolling interests ( 71 ) — — — — — — — — — — — — —

Adjustment of redeemable noncontrolling interests to fair value 8,242 — — — — — — ( 8,242 ) — — — ( 8,242 ) — ( 8,242 )

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Balance as of December 31, 2019 $ 26,663 $ 87 87,007 $ 422 421,570 $ — — $ 1,357,075 $ 16,032 $ ( 1,379 ) $ ( 57,949 ) $ 1,314,288 $ 9,264 $ 1,323,552

Net earnings 142 — — — — — — — 34,829 — — 34,829 343 35,172

Other comprehensive income (loss) 39 — — — — — — — — 482 — 482 ( 125 ) 357

Net earnings (loss) 767 — — — — — — — ( 6,283 ) — — ( 6,283 ) 1,356 ( 4,927 )

Other comprehensive income 439 — — — — — — — — 6,016 — 6,016 372 6,388

Stock-based compensation expense 15 — — — — — — 85,267 — — — 85,267 — 85,267

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Adjustment of redeemable noncontrolling interests to fair value 1,645 — — — — — — ( 1,645 ) — — — ( 1,645 ) — ( 1,645 )

Purchase of noncontrolling interests — — — — — — — — — — — — — —

Other — — — — — — — ( 692 ) — — — ( 692 ) 690 ( 2 )

Balance as of December 31, 2020 $ 26,364 $ 94 94,238 $ 422 421,862 $ — — $ 1,379,469 $ 9,749 $ 4,637 $ ( 122,081 ) $ 1,272,290 $ 10,567 $ 1,282,857

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Continued)

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Years Ended December 31, 2021, 2020, and 2019

ANGI Homeservices Inc.

Shareholders’ Equity

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Class C Common Stock

ANGI Homeservices Inc.

Shareholders’ Equity

Comprehensive

Income (Loss) Total

Accumulated Other Comprehensive Income (Loss) Total

Shareholders’

Noncontrolling

Interests Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Treasury

Interests Additional Paid-in Capital (Accumulated Deficit) Retained Earnings Treasury

Stock Noncontrolling

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(In thousands)

Net earnings 767 — — — — — — — ( 6,283 ) — — ( 6,283 ) 1,356 ( 4,927 )

Other comprehensive income 439 — — — — — — — — 6,016 — 6,016 372 6,388

Net (loss) earnings ( 23 ) — — — — — — — ( 71,378 ) — — ( 71,378 ) 907 ( 70,471 )

Other comprehensive income (loss) 515 — — — — — — — — ( 1,328 ) — ( 1,328 ) ( 406 ) ( 1,734 )

Stock-based compensation expense — — — — — — — 33,057 — — — 33,057 — 33,057

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Purchase of treasury stock — — — — — — — — — — ( 35,959 ) ( 35,959 ) — ( 35,959 )

Adjustment pursuant to the tax sharing agreement — — — — — — — 3,613 — — — 3,613 — 3,613

Purchase of redeemable noncontrolling interests ( 3,165 ) — — — — — — — — — — — ( 1,115 ) ( 1,115 )

Adjustment of redeemable noncontrolling interests to fair value 1,645 — — — — — — ( 1,645 ) — — — ( 1,645 ) — ( 1,645 )

Purchase of noncontrolling interests ( 28,318 ) — — — — — — — — — — — ( 160 ) ( 160 )

Adjustment of redeemable noncontrolling interests to fair value 1,462 — — — — — — ( 430 ) — — — ( 430 ) — ( 430 )

Other — — — — — — — ( 410 ) — — — ( 410 ) — ( 410 )

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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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Cash flows from operating activities:

Net (loss) earnings $ ( 4,160 ) $ 35,314 $ 77,507

Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:

Stock-based compensation expense 83,649 68,255 97,078

Amortization of intangibles 42,902 55,482 62,212

Net (loss) income $ ( 70,494 ) $ ( 4,160 ) $ 35,314

Adjustments to reconcile net loss to net cash provided by operating activities:

Provision for credit losses 88,076 78,229 64,278

Stock-based compensation expense 28,702 83,649 68,255

Depreciation 59,246 52,621 39,915

Amortization of intangibles 16,430 42,902 55,482

Deferred income taxes ( 36,306 ) ( 15,278 ) ( 3,250 )

Loss (gain) from the sale of a business 273 218 ( 13,237 )

Impairment of long-lived and right-of-use assets 12,671 169 30

Non-cash lease expense 12,880 13,659 12,318

Revenue reserves 8,569 10,251 5,934

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Accounts payable and other liabilities 14,018 30,597 24,332

Operating lease liabilities ( 16,847 ) ( 13,391 ) ( 10,705 )

Income taxes payable and receivable 232 ( 1,243 ) 1,650

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Withholding taxes paid on behalf of employees on net settled stock-based awards ( 61,908 ) ( 64,079 ) ( 35,284 )

Distribution from (to) IAC pursuant to tax sharing agreement 3,071 ( 11,355 ) —

Distribution from IAC pursuant to the tax sharing agreement — 3,071 ( 11,355 )

Purchase of noncontrolling interests ( 27,857 ) ( 4,281 ) ( 71 )

Other, net — — ( 3,732 )

Net cash provided (used in) by financing activities 337,053 ( 121,532 ) ( 49,021 )

Total cash provided 421,518 51,996 117,088

Net cash (used in) provided by financing activities ( 345,168 ) 337,053 ( 121,532 )

Total cash (used) provided ( 384,031 ) 421,518 51,996

Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 45 ) 565 661

Net increase in cash and cash equivalents and restricted cash 422,083 52,657 117,300

Net (decrease) increase in cash and cash equivalents and restricted cash ( 384,076 ) 422,083 52,657

Cash and cash equivalents and restricted cash at beginning of period 813,561 391,478 338,821

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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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NOTE 1— ORGANIZATION

ANGI Homeservices Inc.

connects quality home service professionals across 500 different categories, from repairing and remodeling to cleaning and landscaping, with consumers.

Over 240,000 domestic service professionals actively sought consumer matches, completed jobs or advertised work through ANGI Homeservices’ platforms and consumers turned to at least one of our brands to find a professional for approximately 32 million projects during the year ended December 31, 2020.

The Company has established category-transforming products with brands such as HomeAdvisor, Angie’s List, and Handy.

The HomeAdvisor digital marketplace service (“HomeAdvisor”) connects consumers with service professionals nationwide for home repair, maintenance and improvement projects.

HomeAdvisor provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals, as well as instantly book appointments online or connect them by telephone.

Handy Technologies, Inc.

(“Handy”), is a leading platform for connecting individuals looking for household services (primarily cleaning and handyman services) with top-quality, pre-screened independent service professionals.

Together, the Company refers to the HomeAdvisor and Handy businesses in the United States as the “Marketplace”.

The Company also owns and operates Angie’s List, which connects consumers with service professionals for local services through a nationwide online directory of service professionals in over 700 service categories, as well as provides consumers with valuable tools, services and content, including verified reviews of local service professionals, to help them research, shop and hire for local services.

In addition to its market-leading U.S.

operations, ANGI Homeservices owns leading home services online marketplaces in France (Travaux), Germany (MyHammer), Netherlands (Werkspot), United Kingdom (MyBuilder), Canada (HomeStars) and Italy (Instapro), as well as operations in Austria (MyHammer).

Nature of Operations

Angi Inc., formerly ANGI Homeservices, Inc., (“Angi,” the “Company,” “we,” “our,” or “us”) connects quality home service professionals with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping.

During the year ended December 31, 2021, over 240,000 domestic service professionals actively sought consumer matches, completed jobs, or advertised work through Angi Inc.

Additionally, consumers turned to at least one of our brands to find a service professional for approximately 33 million projects during the year ended December 31, 2021.

Angi Ads provides service professionals the capability to engage with potential customers, including quoting, invoicing, and payment services.

Angi Leads provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals.

Angi Services allows consumers to browse and buy common household services at set prices, rather than requesting quotes from vetted service professionals, as well as instantly book appointments online for household services (primarily cleaning and handyman services) with top-quality, pre-screened independent service professionals.

Consumers can request and pay for 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.

Additionally, Angi Services (including Angi Roofing) manages home improvement projects for consumers.

The Company has two operating segments:

(i) North America (United States and Canada), which includes HomeAdvisor, Angie’s List, Handy, HomeStars, and Felix, for periods prior to its sale on December 31, 2018, and (ii) Europe, which includes Travaux, MyHammer, MyBuilder, Werkspot and Instapro.

As used herein, “ANGI Homeservices,” the “Company,” “ANGI,” “we,” “our” or “us” and similar terms refer to ANGI Homeservices Inc.

(i) North America (United States and Canada), which includes Angi Ads, Angi Leads and Angi Services;

and (ii) Europe.

The brands operate as follows:

Angi Ads (formerly Angie’s List) brand, Angi Leads (formerly HomeAdvisor) brand, and the Angi Services (Handy and Angi Roofing) brand.

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 December 31, 2020, IAC owned 84.3 % and 98.2 % of the economic interest and voting interest, respectively, of ANGI Homeservices.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 2021, IAC/InterActiveCorp (“IAC”) owned 84.5 % and 98.2 % of the economic interest and voting interest, respectively, of the Company.

NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All intercompany transactions and balances between and among the Company and its subsidiaries have been eliminated.

All intercompany transactions between (i) ANGI Homeservices and (ii) IAC and its subsidiaries, with the exception of a promissory note payable to a foreign subsidiary of IAC, are considered to be effectively settled for cash at the time the transaction is recorded.

See “ Note 15—Related Party Transactions with IAC ” for additional information on transactions between ANGI Homeservices and IAC.

All intercompany transactions between (i) Angi Inc.

and (ii) IAC and its subsidiaries are considered to be effectively settled for cash at the time the transaction is recorded.

See “ Note 1 4 —Related Party Transactions with IAC ” for additional information on transactions between Angi Inc.

In the opinion of management, the assumptions underlying the historical consolidated financial statements, including the basis on which the expenses have been allocated from IAC, are reasonable.

However, the allocations may not reflect all of the expenses that ANGI Homeservices may have incurred as a standalone public company for the periods presented.

However, the allocations may not reflect all of the expenses that Angi Inc.

may have incurred as a standalone public company for the periods presented.

COVID-19 Update

The impact on the Company from the COVID-19 outbreak, which has been declared a “pandemic” by the World Health Organization, has been varied.

The extent to which developments related to the COVID-19 outbreak and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services (including those provided by certain of our service professionals) and other activity, and public reactions to these developments.

For example, these developments and measures have resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to the COVID-19 outbreak.

The longer the global outbreak and measures designed to curb the spread of the virus continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for the Company’s various products and services), the greater the adverse impact is likely to be on the Company’s business, financial condition and results of operations and the more limited will be the Company’s ability to try and make up for delayed or lost revenues.

When COVID-19 first impacted North America and Europe in the early spring of 2020, the Company experienced a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects).

Toward the end of the spring of 2020, the Company experienced a rebound in service requests, exceeding pre-COVID-19 growth levels, driven by increased demand from homeowners who spent more time at home due to measures taken to reduce the spread of COVID-19.

The Company continued to experience strong demand for home services in the last half of 2020.

However, many service professionals’ businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which has negatively impacted the Company's ability to monetize this increased level of service requests.

In addition, North America, which represents 95 % of the Company’s revenue for the year ended December 31, 2020, experienced a significant resurgence of the COVID-19 virus with record levels of infections being reported during the fourth quarter of 2020 and continuing into the first quarter of 2021.

Europe, which is the second largest market for the Company’s products and services, has also seen a dramatic resurgence in COVID-19.

This resurgence and the measures designed to curb its spread could materially and adversely affect our business, financial condition and results of operations.

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

ANGI HOMESERVICES INC.

The impact on the Company from the COVID-19 pandemic and the measures designed to contain its spread has been varied and volatile.

As previously disclosed, the initial impact of COVID-19 on the Company initially resulted in a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects).

While we experienced a rebound in service requests in the second half of 2020 and through early 2021, service requests did start to decline in May 2021 compared to the comparable months of 2020 as a result of the surge in 2020 and due to impacts of the brand integration initiative launched in March 2021.

Moreover, many service professionals’ businesses have

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities.

been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which continue to negatively impact our ability to monetize the slightly increased level of service requests.

Although our ability to monetize service requests rebounded modestly in the second half 2021, we still have not returned to levels we experienced pre-COVID-19.

No assurances can be provided that we will continue to be able to improve monetization, or that service professionals’ businesses and, as a consequence, our revenue and profitability will not be adversely impacted in the future.

The extent to which developments related to the COVID-19 pandemic and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.

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 contingent assets and liabilities.

Actual results could differ from these estimates.

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the fair values of cash equivalents and marketable debt securities;

the carrying value of accounts receivable, including the determination of the credit loss reserve;

the determination of revenue reserves;

the carrying value of accounts receivable, including the determination of the allowance for credit losses and the determination of revenue reserves;

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

the carrying value of right-of-use assets (“ROU assets”);

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Revenue Recognition

The Company adopted the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers, effective January 1, 2018 using the modified retrospective transition method for open contracts as of the date of initial application.

The effect of the adoption of ASU No.

2014-09 was that commissions paid to employees pursuant to certain sales incentive programs, which represent the incremental direct costs of obtaining a service professional contract, are now capitalized and amortized over the estimated life of a service professional (also referred to as the estimated customer relationship period).

The cumulative effect of the adoption of ASU No.

2014-09 was the establishment of a current and non-current asset for capitalized sales commissions of $ 29.7 million and $ 4.2 million, respectively, and a related deferred tax liability of $ 8.3 million, resulting in a net increase to retained earnings of $ 25.6 million on January 1, 2018.

The Company’s disaggregated revenue disclosures are presented in “ Note 1 1 —Segment Information .”

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Revenue is recognized when control of the promised services or goods is transferred to our customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.

Revenue is primarily derived from consumer connection revenue, which comprises fees paid by HomeAdvisor service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service) and revenue from completed jobs sourced through the HomeAdvisor and Handy platforms.

Revenue is primarily derived from consumer connection revenue, which comprises fees paid by Angi Leads service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service).

Consumer connection revenue varies based upon several factors, including the service requested, product experience offered and geographic location of service.

Consumer connection revenue is generally billed one week following a consumer match, with payment due upon receipt of invoice or collected when a consumer schedules a job through the HomeAdvisor and Handy platforms.

The Company maintains revenue reserves for potential credits issued to HomeAdvisor services providers and for services provided by Handy service professionals to consumers.

Revenue is also derived from (i) sales of time-based website, mobile and call center advertising to service professionals, (ii) HomeAdvisor service professional membership subscription fees, (iii) membership subscription fees from consumers and (iv) service warranty subscription and other services.

Angie’s List service professionals generally pay for advertisements in advance on a monthly or annual basis at the option of the service professional, with the average advertising contract term being approximately one year.

Angie’s List website, mobile and call center advertising revenue is recognized ratably over the contract term.

Consumer connection revenue is generally billed one week following a consumer match, with payment due upon receipt of invoice.

The Company maintains revenue reserves for potential credits issued to Angi Leads services providers.

Revenue is also derived from (i) sales of time-based website, mobile and call center advertising to service professionals, (ii) Angi Leads service professional membership subscription fees, (iii) membership subscription fees from consumers, (iv) service warranty subscription and other services and (v) revenue from completed jobs sourced through the Angi Services platforms.

Angi service professionals generally pay for advertisements in advance on a monthly or annual basis at the option of the service professional, with the average advertising contract term being approximately one year.

Angi website, mobile and call center advertising revenue is recognized ratably over the contract term.

Revenue from the sale of advertising in the Angie’s List Magazine is recognized in the period in which the publication is distributed.

Service professional membership subscription revenue is initially deferred and is recognized using the straight-line method over the applicable subscription period, which is typically one year.

Angie’s List prepaid consumer membership subscription fees are recognized as revenue using the straight-line method over the term of the applicable subscription period, which is typically one year.

Prior to January 1, 2020, Handy recorded revenue on a net basis.

Effective January 1, 2020, the Company modified the Handy terms and conditions so that Handy, rather than the service professional, has the contractual relationship with the consumer to deliver the service and Handy, rather than the consumer, has the contractual relationship with the service

ANGI HOMESERVICES INC.

Service professional membership subscription revenue is initially deferred upon receipt of payment and is recognized using the straight-line method over the applicable

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

professional.

subscription period, which is typically one year.

Angi prepaid consumer membership subscription fees are recognized as revenue using the straight-line method over the term of the applicable subscription period, which is typically one year.

Consumers typically pay when a job is scheduled through the Angi Services platform, or when the job is completed for Angi Roofing.

Billing practices are governed by the contract terms of each project as negotiated with the consumer.

Billings do not necessarily correlate with revenue recognized over time as this is based on the timing of when the consumer receives the promised services.

Prior to January 1, 2020, Handy recorded revenue on a net basis.

Consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services.

This change in contractual terms requires gross revenue accounting treatment effective January 1, 2020.

Also, in the case of certain tasks, HomeAdvisor provides a pre-priced product offering, pursuant to which consumers can request services through a HomeAdvisor platform and pay HomeAdvisor for the services directly.

HomeAdvisor then fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services.

Revenue from HomeAdvisor’s pre-priced product offering is also recorded on a gross basis effective January 1, 2020.

The change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020, resulted in an increase in revenue of $ 73.8 million during the year ended December 31, 2020.

This change in contractual terms requires gross revenue accounting treatment was effective January 1, 2020 and resulted in an increase in revenue of $ 73.8 million during the year ended December 31, 2020.

Transaction Price

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Accordingly, such tax amounts are not included as a component of net revenue or cost of revenue.

For contracts that have an original duration of one year or less, the Company uses the practical expedient available under ASU No.

2014-09, applicable to such contracts and does not consider the time value of money.

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

Arrangements with Multiple Performance Obligations

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For sales incentive programs where the customer relationship period is one year or less, the Company has elected the practical expedient to expense the costs as incurred.

During the years ended December 31, 2020, 2019 and 2018 the Company recognized expense of $ 64.8 million, $ 56.8 million, and $ 50.0 million, respectively, related to the amortization of these costs.

During the years ended December 31, 2021 and 2020 and the Company recognized expense of $ 84.7 million and $ 64.8 million, respectively, related to the amortization of these costs.

The current contract assets are $ 38.0 million and $ 49.2 million at December 31, 2021, and 2020, respectively.

2 unchanged sentences

Performance Obligations

As permitted under the practical expedient available under ASU No.

2014-09, 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 we have the right to invoice for services performed.

ANGI HOMESERVICES INC.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 we have the right to invoice for services performed.

Accounts Receivables, Net of Credit Loss and Revenue Reserves

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Credit Losses and Revenue Reserve

The following table presents the changes in the credit loss reserve for the year ended December 31, 2020:

December 31, 2020

The following table presents the changes in the credit loss reserve for the years ended December 31, 2021 and 2020:

December 31, 2021 December 31, 2020

(In thousands)

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Cash and cash equivalents include cash and short-term investments, with maturities of less than 91 days from the date of purchase.

Domestically, cash equivalents consist of AAA rated government money market funds, treasury discount notes, commercial paper, time deposits and certificates of deposit.

Domestically, cash equivalents consist of AAA rated government money market funds, treasury discount notes, and time deposits.

Internationally, there are no cash equivalents at December 31, 2021 and 2020.

2 unchanged sentences

Marketable debt securities are adjusted to fair value each quarter, and the unrealized gains and losses, net of tax, are included in accumulated other comprehensive income (loss) as a separate component of shareholders’ equity.

The specific-identification method is used to determine the cost of debt securities sold and the amount of unrealized gains and losses reclassified out of accumulated other comprehensive income (loss) into earnings.

The Company reviews its debt securities for impairment, including from risk of credit loss, each reporting period.

The Company recognizes an unrealized loss on debt securities in net earnings when the impairment is determined to be other-than-

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company reviews its debt securities for impairment, including from risk of credit loss, each reporting period.

The Company recognizes an unrealized loss on debt securities in net loss when the impairment is determined to be other-than-temporary.

Factors the Company considers in making such determination include the duration, severity and reason for the decline in value and the potential recovery and our intent to sell the debt security.

The Company also considers whether it will be required to sell the security before recovery of its amortized cost basis and whether the amortized cost basis cannot be recovered because of credit losses.

If an impairment is considered to be other-than-temporary, the debt security will be written down to its fair value and the loss will be recognized within other income (expense), net.

The Company held $ 50.0 million in marketable debt securities at December 31, 2020.

If an impairment is considered to be other-than-temporary, the debt security will be written down to its fair value and the loss will be recognized within other (expense) income, net.

The Company held no marketable debt securities at December 31, 2021.

The Company held $ 50.0 million in marketable debt securities at December 31, 2020.

Capitalized Software, Leasehold Improvements and Equipment

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For the Company’s annual goodwill test at October 1, 2021, a qualitative assessment of the North America and Europe reporting units’ goodwill was performed and it was concluded that it was more likely than not that the fair value of these reporting units was in excess of their respective carrying values.

In the aggregate, ANGI Homeservices’ October 1, 2020 market capitalization of $ 5.5 billion exceeded its carrying value by approximately $ 4.3 billion.

The primary factor that the Company considered in its qualitative assessment for its Europe reporting unit were valuations performed during 2020 that indicated a fair value in excess of the carrying value.

The fair value based on the valuation that was most proximate to, but not as of, October 1, 2020 exceeded the carrying value of the Europe reporting unit by $ 131.4 million.

The primary factor that the Company

ANGI HOMESERVICES INC.

In the aggregate, Angi’s October 1, 2021 market capitalization of $ 6.2 billion exceeded its carrying value by approximately $ 5.0 billion.

The primary factor that the Company considered in its qualitative assessment for its Europe reporting unit were valuations performed during 2021 that indicated a fair value in excess

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

considered in its qualitative assessment for its North America reporting unit was the significant excess of the estimated fair value of the North America reporting unit over its carrying value.

of the carrying value.

The fair value based on the valuation that was most proximate to, but not as of, October 1, 2021 exceeded the carrying value of the Europe reporting unit by $ 164.2 million.

The primary factor that the Company considered in its qualitative assessment for its North America reporting unit was the significant excess of the estimated fair value of the North America reporting unit over its carrying value.

The fair value of the North America reporting unit was estimated by subtracting the fair value of the Europe reporting unit, based on the valuation described above, from the October 1, 2021 market capitalization of the Company;

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The three levels of the fair value hierarchy are:

Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

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.

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Under our warranties, we incur costs to ensure the services performed are up to the customers standard and/or to reimburse for any claim for damages submitted in accordance with our warranty terms and conditions.

These costs are recorded as a component of cost of revenue in the Consolidated Statement of Operations.

These costs are recorded in the period the associated revenue is recognized as a component of cost of revenue in the Consolidated Statement of Operations.

Advertising Costs

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Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination.

Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

De-recognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.

ANGI HOMESERVICES INC.

Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon

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ultimate settlement with a taxing authority that has full knowledge of all relevant information.

Earnings Per Share

Basic earnings per share is computed by dividing net earnings attributable to ANGI Homeservices Inc.

Basic earnings per share is computed by dividing net earnings attributable to Angi Inc.

shareholders by the weighted average number of common shares outstanding during the period.

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These put and call arrangements become exercisable by the Company and the counter-party at various dates.

During the year ended December 31, 2020, one of these arrangements was exercised.

No put and call arrangements were exercised during the year ended December 31, 2019, and one of these arrangements was exercised during the year ended December 31, 2018.

During the year ended December 31, 2021, the remaining redeemable non-controlling interest was exercised.

One of these arrangements was exercised during the year ended December 31, 2020, and none of these arrangements were exercised during the year ended December 31, 2019.

Because these put arrangements are exercisable by the counter-party outside the control of the Company, to the extent that the fair value of these interests exceeds the value determined by normal noncontrolling interest accounting, the value of such interests is adjusted to fair value with a corresponding adjustment to additional paid-in capital.

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The Company’s business is subject to certain risks and concentrations including dependence on third-party technology providers, exposure to risks associated with online commerce security and credit card fraud.

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and marketable debt securities.

Cash and cash equivalents are maintained with financial institutions and are in excess of Federal Deposit Insurance Corporation insurance limits.

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and marketable debt securities.

Cash and cash equivalents are maintained with financial institutions and are in excess of Federal Deposit Insurance Corporation insurance limits.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted

Adoption of Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

The Company adopted ASU No.

2016-13 effective January 1, 2020.

2016-13 replaces the “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses.

The Company adopted ASU No.

2016-13 using the modified retrospective approach and there was no cumulative effect arising from the adoption.

The adoption of ASU No.

2016-13 did not have a material impact on the Company’s consolidated financial statements.

Adoption of ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

The Company adopted ASU No.

2019-12 effective January 1, 2020, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes , and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

Most amendments within ASU No.

2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company adopted ASU No.

2019-12 on January 1, 2020 using the modified retrospective basis for those amendments that are not applied on a prospective basis.

The adoption of ASU No.

2019-12 did not have a material impact on the Company’s consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

Accounting Pronouncements Adopted by the Company

ASU 2021-08 – Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the Financial Accounting Standards Board issued ASU No.

2021-08, which changes how entities will recognize assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers.

The provisions of ASU No.

2021-08 will require acquiring entities to recognize and measure contract assets and contract liabilities, including deferred revenue, acquired in a business combination in accordance with ASU No.

2014-09 (Topic 606), Revenue from Contracts with Customers, as if it had originated the contracts.

The provisions of ASU No.

2021-08 are effective for fiscal years beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period.

The Company early adopted ASU 2021-08 effective in the fourth quarter of 2021.

An entity that early adopts in an interim period is required to apply the amendments (i) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early adoption and (ii) prospectively to all business combinations that occur on or after the date of initial application.

Early adoption has no retrospective impact on the Company.

The adoption of ASU 2021-08 may have a material impact on the purchase accounting for prospective business combinations.

Accounting Pronouncements Not Yet Adopted by the Company

There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect of the financial statement of the Company.

1 unchanged sentence

Certain prior year amounts have been reclassified to conform to the current year presentation.

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3— INCOME TAXES

2 unchanged sentences

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 or receivable from IAC under the tax sharing agreement and the current tax provision 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.

Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement and the current tax provision 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.

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and foreign (loss) earnings before income taxes and noncontrolling interests are as follows:

20 unchanged sentences

Income tax benefit $ ( 32,013 ) $ ( 15,168 ) $ ( 1,668 )

ANGI HOMESERVICES INC.

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Net operating loss (“NOL”) carryforwards $ 212,315 $ 182,449

Stock-based compensation 18,955 33,613

Long-term lease liabilities 26,182 29,314

Stock-based compensation 5,390 18,955

Other 35,384 28,637

4 unchanged sentences

Intangible assets ( 46,591 ) ( 47,858 )

Right-of-use assets ( 21,496 ) ( 24,836 )

Capitalized software, leasehold improvements and equipment ( 18,624 ) ( 16,152 )

Right-of-use assets ( 17,270 ) ( 21,496 )

Capitalized costs to obtain a contract with a customer ( 9,263 ) ( 12,233 )

15 unchanged sentences

gross deferred tax asset of $ 210.7 million that the Company expects to fully utilize on a more likely than not basis.

ANGI HOMESERVICES INC.

During 2021, the Company’s valuation allowance decreased by $ 10.5 million primarily due to a decrease in state and foreign NOLs and currency translation adjustments on foreign NOLs.

At December 31, 2021, the Company has a valuation

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During 2020, the Company’s valuation allowance increased by $ 5.6 million primarily due to an increase in foreign NOLs offset by a decrease in state NOLs.

At December 31, 2020, the Company has a valuation allowance of $ 77.1 million related to the portion of NOLs and other items for which it is more likely than not that the tax benefit will not be realized.

allowance of $ 66.6 million related to the portion of NOLs and other items for which it is more likely than not that the tax benefit will not be realized.

A reconciliation of the income tax benefit to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes is shown as follows:

4 unchanged sentences

State income taxes, net of effect of federal tax benefit ( 1,379 ) 1,641 2,693

Deferred tax adjustment for enacted changes in tax law and rates ( 5,244 ) $ 502 $ ( 1,431 )

Change in judgement on beginning of the year valuation allowance ( 3,544 ) $ — $ —

Stock-based compensation ( 10,331 ) ( 2,914 ) ( 12,768 )

Unbenefited losses 4,481 2,899 1,523

Change in judgement on beginning of the year valuation allowance ( 4,165 ) ( 3,544 ) —

Research credit ( 2,431 ) ( 2,494 ) ( 3,308 )

Deferred tax adjustment for enacted changes in tax law and rates 768 ( 5,244 ) 502

Net adjustment related to the reconciliation of income tax provision accruals to tax returns 335 ( 743 ) 448

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Additions for tax positions of prior years 264 423 344

Reductions for tax positions of prior years ( 91 ) — —

Settlements ( 460 ) ( 856 ) —

Balance at December 31 $ 6,298 $ 5,268 $ 4,025

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision.

At December 31, 2021, accruals for interest are not material and there are no accruals for penalties.

At December 31, 2020, there are no accruals for interest and penalties.

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax 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 has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31, 2010 through 2016, which includes the operations of the Company.

The IRS began its audit of the year ended December 31, 2017 in the second quarter of 2020.

The statute of limitations for the years 2010 through 2012 and for the years 2013 through 2017 have been extended to May 31, 2021 and December 31, 2021, respectively.

The Internal Revenue Service (“IRS”) has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31, 2013 through 2017, and has begun its audit of the years December 31, 2018 through 2019, which includes the operations of the Company.

The statutes of limitations for the years 2013 through 2019 have been extended to December 31, 2023.

Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2009.

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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.

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision.

At December 31, 2020, there are no accruals for interest and penalties.

At December 31, 2019, accruals for interest are not material and there are no accruals for penalties.

At December 31, 2020 and 2019, unrecognized tax benefits, including interest, are $ 5.3 million and $ 4.1 million respectively;

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 December 31, 2021 and 2020, the Company has unrecognized tax benefits, including interest, of $ 6.3 million and $ 5.3 million respectively;

all of which are for tax positions included in IAC’s consolidated tax return filings.

1 unchanged sentence

The comparable amount as of December 31, 2020 is $ 5.1 million.

The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $ 0.5 million by December 31, 2021, due to settlements, all of which would reduce the income tax provision.

At December 31, 2021, all of the Company’s international cash can be repatriated without any significant tax consequences.

NOTE 4— BUSINESS COMBINATIONS

Handy Acquisition

On October 19, 2018, the Company acquired 100 % of Handy, a leading platform for connecting individuals looking for household services, for total consideration of $ 168.4 million.

This includes the aggregate fair value of 8.6 million shares of Class A common stock issued by the Company of $ 165.8 million, which was based on the closing stock price of ANGI on the NASDAQ on October 19, 2018 of $ 19.31 and cash consideration paid by the Company.

During 2019, the Company finalized its assessment of net operating losses acquired in the Handy acquisition.

As a result, the Company revised the purchase price allocation for Handy by increasing the fair value of deferred tax assets by $ 27.2 million and decreasing goodwill by $ 27.2 million.

The financial results of Handy are included in the Company’s consolidated financial statements, within the North America segment, beginning October 19, 2018.

The table below summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:

(In thousands)

Cash and cash equivalents $ 5,710

Other current assets 2,050

Goodwill 115,183

Intangible assets 38,800

Other non-current assets 8

Deferred income taxes 20,070

Total assets 181,821

Current liabilities ( 13,419 )

Net assets acquired $ 168,402

The purchase price was based on the expected financial performance of Handy, not on the value of the net identifiable assets at the time of acquisition.

This resulted in a significant portion of the purchase price being attributed to goodwill because Handy is complementary and synergistic to the other North America businesses of ANGI Homeservices.

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:

(In thousands) Weighted-Average

Indefinite-lived trade name and trademarks $ 18,800 Indefinite

Developed technology 15,600 4

User base 3,400 1

Retail partners 600 3

Service professionals 400 1

Total identifiable intangible assets acquired $ 38,800

Other current assets, other non-current assets and current liabilities of Handy were reviewed and adjusted to their fair values at the date of acquisition, as necessary.

The fair values of the trade name and developed technology were determined using variations of the income approach;

specifically, in respective order, the relief from royalty and excess earnings methodologies.

The fair values of user base, retail partners, and service professionals were determined using a cost approach that utilized the cost to replace methodology.

The valuations of the intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates.

The amount attributed to goodwill is not tax deductible.

NOTE 4— GOODWILL AND INTANGIBLE ASSETS

6 unchanged sentences

The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill, for the year ended December 31, 2021:

2019 Additions (Deductions) Foreign

Balance at December 31, 2020 Additions (Deductions) Foreign

Translation Balance at December 31, 2021

3 unchanged sentences

Total goodwill $ 891,797 $ 26,822 $ — $ ( 2,580 ) $ 916,039

Additions relate to immaterial acquisition activity during the year (included in the North America segment).

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In July, 2021, Angi acquired certain assets and assumed certain liabilities of Total Home Roofing (“Angi Roofing”) (included in the North America segment), including $ 26.8 million of goodwill.

The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill, for the year ended December 31, 2020:

2018 Additions (Deductions) Foreign

Balance at December 31, 2019 Additions (Deductions) Foreign

Translation Balance at December 31, 2020

3 unchanged sentences

Total goodwill $ 883,960 $ 2,665 $ — $ 5,172 $ 891,797

Additions relate to the acquisition of Fixd Repair (included in the North America segment).

Deductions primarily relate to tax benefits of acquired attributes related to the acquisition of Handy (included in the North America segment).

Additions relate to immaterial acquisition activity during the year (included in the North America segment).

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Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions.

6 unchanged sentences

Technology 82,351 ( 60,619 ) 21,732 5.5

Memberships 15,900 ( 15,900 ) — 3.0

Customer lists and user base 800 ( 192 ) 608 8.0

Trade names 1,415 ( 1,415 ) — 5.0

10 unchanged sentences

Total $ 200,456 $ ( 162,627 ) $ 37,829 4.1

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 2021, amortization of intangible assets with definite lives for each of the next five years and thereafter is estimated to be as follows:

1 unchanged sentence

2022 $ 14,441

Thereafter 386

Total $ 22,399

1 unchanged sentence

Marketable Debt Securities

The Company did no t hold any available-for-sale marketable debt securities at December 31, 2021.

At December 31, 2020, current available-for-sale marketable debt securities were as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

2 unchanged sentences

Total available-for-sale marketable debt securities $ 49,995 $ — $ — $ 49,995

The contractual maturities of debt securities classified as current available-for-sale at December 31, 2020 are within one year.

The Company did no t hold any available-for-sale marketable debt securities at December 31, 2019.

For the years ended December 31, 2020 and 2019, proceeds from maturities of available-for-sale marketable debt securities were $ 50.0 million and $ 25.0 million, respectively.

The contractual maturities of debt securities classified as current available-for-sale at December 31, 2020 were within one year.

For the years ended December 31, 2021 and 2020, proceeds from maturities of available-for-sale marketable debt securities were $ 50.0 million, respectively.

There were no gross realized gains or losses from the maturities of available-for-sale marketable debt securities for the years ended December 31, 2021 and 2020.

ANGI HOMESERVICES INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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:

Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

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.

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

December 31, 2021

Quoted Market

Prices in Active

Identical Assets

(Level 1) Significant

(Level 2) Significant

Quoted Market Prices for Identical Assets in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs

(Level 3) Total

2 unchanged sentences

Money market funds $ 280,052 $ — $ — $ 280,052

Treasury discount notes — 324,995 — 324,995

Time deposits — 2,721 — $ 2,721

Marketable debt securities:

Treasury discount notes — 49,995 — 49,995

Total $ 280,052 $ — $ — $ 280,052

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2020

Quoted Market

Prices in Active

Identical Assets

(Level 1) Significant

(Level 2) Significant

Quoted Market Prices for Identical Assets in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs

(Level 3) Total

2 unchanged sentences

Money market funds $ 374,014 $ — $ — $ 374,014

Treasury discount notes — 324,995 — 324,995

Time deposits — 2,721 — 2,721

Marketable debt securities:

Treasury discount notes — 49,995 — 49,995

Total $ 374,014 $ 377,711 $ — $ 751,725

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.

During the year ended December 31, 2021, the Company recorded $ 12.7 million in impairment charges on ROU assets, leasehold improvements, and furniture and equipment, of which $ 9.6 million is a result of the Company reducing its real estate footprint in 2021.

Impairment expense was determined by comparing the carrying value of each asset group related to each office space vacated to the estimated fair market value of cash inflows directly associated with each office space.

Based on this analysis, if the carrying amount of the asset group is greater than the estimated future undiscounted cash flows, an impairment charge is recognized, measured as the amount by which the carrying amount exceeds the fair value of the asset.

Financial instruments measured at fair value only for disclosure purposes

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(In thousands)

Current portion of long-term debt $ — $ — $ ( 13,750 ) $ ( 13,681 )

Long-term debt, net (a)

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________________________

(a) At December 31, 2020 and 2019, the carrying value of long-term debt, net includes unamortized debt issuance costs of $ 7.7 million and $ 1.8 million, respectively.

The fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs .

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(a) At December 31, 2021 and December 31, 2020, the carrying value of long-term debt, net includes unamortized debt issuance costs of $ 5.4 million and $ 7.7 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 6— LONG-TERM DEBT

Long-term debt consists of:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2021 December 31, 2020

(In thousands)

3.875 % ANGI Group Senior Notes due August 15, 2028 (“Senior Notes”);

3.875 % ANGI Group Senior Notes due August 15, 2028 (“ANGI Group Senior Notes”);

interest payable each February 15 and August 15, commencing February 15, 2021

$ 500,000 $ 500,000

ANGI Group Term Loan due November 5, 2023 220,000 247,500

ANGI Group Term Loan due November 5, 2023 (“ANGI Group Term Loan”) — 220,000

Total long-term debt 500,000 720,000

current portion of Term Loan — 13,750

unamortized debt issuance costs 5,448 7,723

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ANGI Group Senior Notes

On August 20, 2020, ANGI Group, LLC (“ANGI Group”), a direct, wholly-owned subsidiary of the Company, issued $ 500.0 million in aggregate principal amount of the Senior Notes, the proceeds of which are intended for general corporate purposes, including potential future acquisitions and return of capital.

The ANGI Group Senior Notes were issued on August 20, 2020, the proceeds of which have been used for general corporate purposes, including the acquisition of Total Home Roofing, Inc.

(“Angi Roofing”) on July 1, 2021, and treasury share repurchases.

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.

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2025 and thereafter 100.000 %

The indenture governing the 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 (as defined in the indenture) exceeds 3.75 to 1.0.

At December 31, 2020, there were no limitations pursuant thereto.

ANGI Group Term Loan and ANGI Group Revolving Facility

ANGI was a party to a credit agreement that terminates on November 5, 2021.

The credit agreement governs the Term Loan and revolving credit facility (the “Revolving Facility”).

On August 12, 2020, ANGI Group entered into a joinder agreement with the Company, the other subsidiaries of the Company that are party to the credit agreement, and each of the other loan parties to the credit agreement, pursuant to which ANGI Group became the successor borrower under the credit agreement (“ANGI Group Credit Agreement”) and ANGI Homeservices Inc.’s obligations thereunder were terminated.

In addition, on August 12, 2020, the definition of “Permitted Unsecured Ratio Debt” in the credit agreement was amended to remove the requirement that guarantees of certain indebtedness of the borrower be subordinated to the guarantees under the credit agreement.

The outstanding balance of the ANGI Group Term Loan was $ 220 million and $ 247.5 million at December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company prepaid its quarterly principal payments totaling of $ 13.8 million due in 2021.

There are quarterly principal payments of $ 6.9 million for the one-year period ending December 31, 2022 and $ 10.3 million through maturity of the loan when the final amount of $ 161.6 million is due.

Additionally, interest payments are due at least quarterly through the term of the loan.

At December 31, 2020 and 2019, the Term Loan bore interest at LIBOR plus 2.00 % and LIBOR plus 1.50 % respectively.

The spread over LIBOR is subject to change in future periods based on ANGI Group’s consolidated net leverage ratio.

The interest rate was 2.16 % and 3.25 %, at December 31, 2020 and 2019, respectively.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The ANGI Group Credit Agreement requires ANGI Group to maintain a consolidated net leverage ratio of not more than 4.5 to 1.0 and a minimum interest coverage ratio of not less than 2.0 to 1.0.

The ANGI Group Credit Agreement also contains covenants that would limit ANGI Group’s ability to pay dividends or make distributions in the event a default has occurred or ANGI Group’s consolidated net leverage ratio exceeds 4.25 to 1.0.

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 (as defined in the indenture) exceeds 3.75 to 1.0.

At December 31, 2021, there were no limitations pursuant thereto.

The $ 250.0 million ANGI Group Revolving Facility expires on November 5, 2023.

At December 31, 2020 and 2019, there were no outstanding borrowings under the ANGI Group Revolving Facility.

The annual commitment fee on undrawn funds is based on ANGI Group’s consolidated net leverage ratio most recently reported and was 35 basis points and 25 basis points at December 31, 2020 and 2019, respectively.

Any future borrowings under the ANGI Group Revolving Facility would bear interest, at ANGI Group’s option, at either a base rate or LIBOR, in each case plus an applicable margin, which is based on ANGI Group’s consolidated net leverage ratio.

The financial and other covenants are the same as those for the ANGI Group Term Loan.

The ANGI Group Senior Notes and ANGI Group Credit Agreement are guaranteed by certain of ANGI Group’s wholly-owned material domestic subsidiaries and ANGI Group’s obligations under the ANGI Group Credit Agreement are secured by substantially all assets of ANGI Group and the guarantors, subject to certain exceptions.

The ANGI Group Term Loan and outstanding borrowings, if any, under the ANGI Group Revolving Facility rank equally with each other, and have priority over the ANGI Group Senior Notes to the extent of the value of the assets securing the borrowings under the ANGI Group Credit Agreement.

Long-term debt maturities :

Long-term debt maturities as of December 31, 2020 are summarized in the table below:

Years Ending December 31, (In thousands)

Total 720,000

unamortized debt issuance costs 7,723

Total long-term debt, net $ 712,277

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ANGI Group Revolving Facility

The $ 250.0 million ANGI Group Revolving Facility, which otherwise would have expired on November 5, 2023, was terminated effective August 3, 2021.

No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

ANGI Group Term Loan

As of May 6, 2021, the outstanding balance of the ANGI Group Term Loan was repaid in its entirety.

The outstanding balance of the ANGI Group Term Loan at December 31, 2020 was $ 220.0 million and bore interest at 2.16 %.

NOTE 7— SHAREHOLDERS’ EQUITY

Description of Class A Common Stock, Class B Convertible Common Stock and Class C Common Stock

Except as described herein, shares of ANGI Homeservices Class A common stock, Class B common stock and Class C common stock are identical.

Except as described herein, shares of Angi Inc.

Class A common stock, Class B common stock and Class C common stock are identical.

Holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders.

2 unchanged sentences

Holders of the Company’s Class A common stock, Class B common stock and Class C common stock do not have cumulative voting rights in the election of directors.

Shares of ANGI Homeservices Class B common stock are convertible into shares of our Class A common stock at the option of the holder at any time on a share for share basis.

Such conversion ratio will in all events be equitably preserved in the event of any recapitalization of ANGI Homeservices by means of a stock dividend on, or a stock split or combination of, our outstanding Class A common stock or Class B common stock, or in the event of any merger, consolidation or other reorganization of ANGI Homeservices with another corporation.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Shares of Angi Inc.

Class B common stock are convertible into shares of our Class A common stock at the option of the holder at any time on a share for share basis.

Such conversion ratio will in all events be equitably preserved in the event of any recapitalization of Angi Inc.

by means of a stock dividend on, or a stock split or combination of, our outstanding Class A common stock or Class B common stock, or in the event of any merger, consolidation or other reorganization of Angi Inc.

with another corporation.

Upon the conversion of a share of our Class B common stock into a share of our Class A common stock, the applicable share of Class B common stock will be retired and will not be subject to reissue.

Shares of Class A common stock and Class C common stock have no conversion rights.

The holders of shares of ANGI Homeservices Class A common stock, Class B common stock and Class C common stock are entitled to receive, share for share, such cash dividends as may be declared by ANGI Homeservices Board of Directors out of funds legally available therefor.

The holders of shares of Angi Inc.

Class A common stock, Class B common stock and Class C common stock are entitled to receive, share for share, such cash dividends as may be declared by Angi Inc.

Board of Directors out of funds legally available therefor.

In the event of a liquidation, dissolution or winding up, holders of the Company’s Class A common stock, Class B common stock and Class C common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of all liabilities and accrued but unpaid dividends and liquidation preferences on any outstanding preferred stock.

At December 31, 2020, IAC holds all 421.9 million outstanding shares of the Company’s Class B common stock, which represents an 84.3 % economic interest and 98.2 % voting interest in the Company.

In the event that ANGI Homeservices issues or proposes to issue any shares of ANGI Homeservices Class A common stock, Class B common stock or Class C common stock (with certain limited exceptions), including shares issued upon the exercise, conversion or exchange of options, warrants and convertible securities, IAC will generally have a purchase right that permits it to purchase for fair market value, as defined in the agreement, up to such number of shares of the same class as the issued shares as would (i) enable IAC to maintain the same ownership interest in the Company that it had immediately prior to such issuance or proposed issuance, with respect to issuances of our voting capital stock, or (ii) enable IAC to maintain ownership of at least 80.1 % of each class of the Company’s non-voting capital stock, with respect to issuances of our non-voting capital stock.

At December 31, 2021, IAC holds all 422.0 million outstanding shares of the Company’s Class B common stock, and 2.6 million outstanding shares of the Company’s Class A common stock, in total representing approximately 84.5 % economic interest and 98.2 % voting interest in the Company.

In the event that Angi Inc.

issues or proposes to issue any shares of Angi Inc.

Class A common stock, Class B common stock or Class C common stock (with certain limited exceptions), including shares issued upon the exercise, conversion or exchange of options, warrants and convertible securities, IAC will generally have a purchase right that permits it to purchase for fair market value, as defined in the agreement, up to such number of shares of the same class as the issued shares as would (i) enable IAC to maintain the same ownership interest in the Company that it had immediately prior to such issuance or proposed issuance, with respect to issuances of our voting capital stock, or (ii) enable IAC to maintain ownership of at least 80.1 % of each class of the Company’s non-voting capital stock, with respect to issuances of our non-voting capital stock.

Reserved Common Shares

In connection with equity compensation plans, 40.2 million shares of ANGI Homeservices common stock are reserved at December 31, 2020.

In connection with outstanding awards under our equity compensation plans, 25.6 million shares of Angi Inc.

Class A common stock are reserved for future issuances at December 31, 2021.

Common Stock Repurchases

On March 9, 2020 and February 6, 2019, the Board of Directors of ANGI Homeservices authorized the Company to repurchase up to 20 million and 15 million shares of its common stock, respectively.

During the year ended December 31, 2020, the Company repurchased 8.4 million shares of ANGI common stock for aggregate consideration, on a trade date basis, of $ 62.6 million.

On March 9, 2020 and February 6, 2019, the Board of Directors of Angi Inc.

authorized the Company to repurchase up to 20 million and 15 million shares of its common stock, respectively.

During the year ended December 31, 2021, the Company repurchased 3.2 million shares of Angi Inc.

common stock for aggregate consideration, on a trade date basis, of $ 35.4 million.

At December 31, 2021, the Company has approximately 16.1 million shares remaining in its share repurchase authorization.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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NOTE 8— ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

Year Ended December 31, 2020

Adjustment Unrealized Gains On Available-For-Sale Debt Securities Accumulated

Comprehensive

(Loss) Income

(In thousands)

Balance at January 1 $ ( 1,379 ) $ — $ ( 1,379 )

Other comprehensive income 6,016 — 6,016

Net current period other comprehensive income 6,016 — 6,016

Balance at December 31 $ 4,637 $ — $ 4,637

Year Ended December 31, 2019

Adjustment Unrealized Gains On Available-For-Sale Debt Securities Accumulated

Comprehensive (Loss) Income

(In thousands)

Balance at January 1 $ ( 1,864 ) $ 3 $ ( 1,861 )

Other comprehensive income (loss) before reclassifications 485 ( 3 ) 482

Net current period other comprehensive income (loss) 485 ( 3 ) 482

Balance at December 31 $ ( 1,379 ) $ — $ ( 1,379 )

Year Ended December 31, 2018

Adjustment Unrealized Gains On Available-For-Sale Debt Securities Accumulated

Comprehensive

Income (Loss)

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

Years Ended December 31,

2021 2020 2019

Adjustment Accumulated Other Comprehensive Income Foreign

Adjustment Accumulated Other Comprehensive Income (Loss) Foreign

Adjustment Unrealized Gains on Available-For-Sale Debt Securities Accumulated Other Comprehensive (Loss) Income

(In thousands)

Balance at January 1 $ 4,637 $ 4,637 $ ( 1,379 ) $ ( 1,379 ) $ ( 1,864 ) $ 3 $ ( 1,861 )

Other comprehensive (loss) income before reclassifications ( 4,044 ) 3 ( 4,041 )

Amounts reclassified to earnings ( 52 ) — ( 52 )

Net current period other comprehensive loss ( 4,096 ) 3 ( 4,093 )

Other comprehensive (loss) income ( 1,328 ) ( 1,328 ) 6,016 6,016 485 ( 3 ) 482

Balance at December 31 $ 3,309 $ 3,309 $ 4,637 $ 4,637 $ ( 1,379 ) $ — $ ( 1,379 )

The amounts reclassified out of foreign currency translation adjustment into earnings for the year ended December 31, 2018 relate to the liquidation of an international subsidiary.

At December 31, 2021, 2020, and 2019, there was no tax benefit or provision on the accumulated other comprehensive income (loss).

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10— EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted (loss) earnings per share attributable to ANGI Homeservices shareholders:

NOTE 9— (LOSS) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted (loss) earnings per share attributable to Angi Inc.

Class A and Class B Common Stock shareholders:

Years Ended December 31,

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Net earnings attributable to noncontrolling interests ( 884 ) ( 884 ) ( 2,123 ) ( 2,123 ) ( 485 ) ( 485 )

Net (loss) earnings attributable to ANGI Homeservices Inc.

shareholders $ ( 6,283 ) $ ( 6,283 ) $ 34,829 $ 34,829 $ 77,318 77,318

Weighted average basic shares outstanding 498,159 498,159 504,875 504,875 484,232 484,232

Dilutive securities (a)(b)(c)

Net (loss) earnings attributable to Angi Inc.

Class A and Class B Common Stock shareholders $ ( 71,378 ) $ ( 71,378 ) $ ( 6,283 ) $ ( 6,283 ) $ 34,829 $ 34,829

Weighted average basic Class A and Class B common stock shares outstanding 502,761 502,761 498,159 498,159 504,875 504,875

Dilutive securities (a) (b)

— — — — — 13,044

Denominator for earnings per share—weighted average shares 498,159 498,159 504,875 517,919 484,232 513,597

(Loss) earnings per share attributable to ANGI Homeservices Inc.

Denominator for (loss) earnings per share—weighted average shares 502,761 502,761 498,159 498,159 504,875 517,919

(Loss) earnings per share attributable to Angi Inc.

shareholders:

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________________________

(a) For the year ended December 31, 2020, the Company had a loss from operations and as a result, approximately 24.9 million potentially dilutive securities were excluded from computing dilutive earnings per share because the impact would have been anti-dilutive.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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 years ended December 31, 2021, 2020, and 2019, 17.5 million, 24.9 million, and 5.5 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) If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock appreciation rights, stock options and subsidiary denominated equity and vesting of restricted stock units (“RSUs”).

For the years ended December 31, 2019 and 2018, 5.5 million, and 3.1 million potentially dilutive securities, respectively, are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Shares issuable upon exercise or vesting of market-based awards and performance-based stock units are included in the denominator for earnings per share if (i) the applicable performance or market condition(s) has been met and (ii) the inclusion of the market-based award and performance-based stock units is dilutive for the respective reporting periods.

For the years ended December 31, 2019 and 2018, 0.9 million, and 1.3 million shares underlying market-based awards and performance-based stock units, respectively, were excluded from the calculation of diluted earnings per share because the performance or market condition(s) had not been met.

(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 years ended December 31, 2021, 2020, and 2019, 2.2 million, 2.0 million and 0.9 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 10— STOCK-BASED COMPENSATION

The Company currently has one active stock plan, which became effective in 2017 upon the completion of the combination of IAC’s HomeAdvisor business and Angie’s List, Inc.

on September 29, 2017 (the “Combination”).

The 2017 plan covers stock options, stock appreciation rights and RSU awards, including those that are linked to the achievement of the Company’s stock price, known as market-based awards (“MSUs”) and those that are linked to the achievement of a performance target, known as performance-based awards (“PSUs”), denominated in shares of ANGI Homeservices common stock, as well as provides for the future grant of these and other equity awards.

The Company currently has one active stock plan, which became effective on September 29, 2017 (“the Combination”).

The 2017 plan (“the Plan”) covers stock options, stock appreciation rights and RSU awards, including those that are linked to the achievement of the Company’s stock price, known as market-based awards (“MSUs”) and those that are linked to the achievement of a performance target, known as performance-based awards (“PSUs”), denominated in shares of Angi Inc.

common stock, as well as provides for the future grant of these and other equity awards.

The Plan authorizes the Company to grant awards to its employees, officers, directors and consultants.

At December 31, 2021, there are 8.1 million shares available for grant under the Plan.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Plan has a stated term of ten years , and provides that the exercise price of stock options and stock appreciation rights granted will not be less than the market price of the Company’s common stock on the grant date.

The plan does not specify grant dates or vesting schedules for awards, as those determinations have been delegated to the Compensation Committee of ANGI Homeservices Board of Directors (the “Committee”).

The Plan does not specify grant dates or vesting schedules for awards, as those determinations have been delegated to the Compensation Committee of Angi Inc.

Board of Directors (the “Committee”).

Each grant agreement reflects the grant date and vesting schedule for that particular grant as determined by the Committee.

Stock options and stock appreciation rights granted subsequent to the Combination through December 31, 2018 generally vest in equal annual installments over a four-year period from the grant date.

RSU awards granted subsequent to the Combination through December 31, 2020 generally vest either in two 50 % installments over a three and four-year period or in equal annual installments over a four-year period, in each case, from the grant date.

MSU awards granted subsequent to the Combination generally vest in five installments over a two-year period from the grant date.

Stock options and stock appreciation rights granted under the Plan generally vest in equal annual installments over a four-year period from the grant date.

RSU awards granted under the Plan generally vest either in one installment over a three-year period or in equal annual installments over a four-year period, in each case, from the grant date.

MSU awards granted under the Plan generally vest in five installments over a two-year period from the grant date.

PSU awards granted subsequent to the Combination generally cliff vest in a two to five-year period from the grant date.

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(ii) equity instruments denominated in shares of its subsidiaries;

and (iii) IAC denominated stock options and PSUs held by ANGI Homeservices employees.

and (iii) IAC denominated stock options and PSUs held by Angi Inc.

The amount of stock-based compensation expense recognized is net of estimated forfeitures.

2 unchanged sentences

At December 31, 2021, there was $ 107.7 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.9 years.

The total income tax benefit recognized in the accompanying consolidated statement of operations for the years ended December 31, 2020, 2019 and 2018 related to all stock-based compensation is $ 24.3 million, $ 28.8 million and $ 49.5 million, respectively.

The total income tax benefit recognized in the accompanying consolidated statement of operations for the years ended December 31, 2021, 2020, and 2019 related to all stock-based compensation is $ 16.9 million, $ 24.3 million, $ 28.8 million, respectively.

The aggregate income tax benefit recognized related to the exercise of stock options and stock appreciation rights for the years ended December 31, 2021, 2020, and 2019 is $ 10.8 million, $ 11.4 million, and $ 27.9 million, respectively.

There may be some delay in the timing of the realization of the cash benefit of the income tax deductions related to stock-based compensation because it will be dependent upon the amount and timing of future taxable income and the timing of estimated income tax payments.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options and Stock Appreciation Rights

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Exercisable 1,609 $ 7.32 3.84 $ 5,954

The aggregate intrinsic value in the table above represents the difference between ANGI Homeservices closing stock price on the last trading day of 2020 and the exercise price, multiplied by the number of in-the-money awards that would have been

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

exercised had all award holders exercised their awards on December 31, 2020.

The aggregate intrinsic value in the table above represents the difference between Angi Inc.

closing stock price on the last trading day of 2021 and the exercise price, multiplied by the number of in-the-money awards that would have been exercised had all award holders exercised their awards on December 31, 2021.

The total intrinsic value of awards exercised during the years ended December 31, 2021, 2020, and 2019 is $ 103.8 million, $ 120.9 million and $ 107.5 million, respectively.

The following table summarizes the information about stock options and stock appreciation rights outstanding and exercisable at December 31, 2021:

Awards Outstanding Awards Exercisable

Awards outstanding & exercisable

Range of Exercise Prices Outstanding

1 unchanged sentence

life in years Weighted

price Exercisable

2020 Weighted average

life in years Weighted

(Shares in thousands)

5 unchanged sentences

1,609 3.8 $ 7.32

$ 9.01 to $ 12.00

405 6.0 10.54 324 5.7 10.47

$ 12.01 to $ 15.00

369 5.5 12.94 306 5.3 12.98

$ 15.01 to $ 18.00

$ 18.01 to$ 21.00

115 2.2 19.88 115 2.2 19.88

$ 21.01 to $ 24.00

16 2.6 22.02 16 2.6 22.02

10,689 5.7 $ 4.67 8,944 5.6 $ 4.59

There were no stock options or stock appreciation rights granted by the Company for the years ended December 31, 2020, 2019 or 2018.

In connection with the Combination, the previously issued HomeAdvisor (US) stock appreciation rights were converted into ANGI Homeservices’ equity awards resulting in a modification charge.

Included in stock-based compensation expense in the years ended December 31, 2020, 2019 and 2018 were charges of $ 21.1 million, $ 29.0 million and $ 56.9 million, respectively, related to these modified awards, and the remaining charge of $ 0.9 million will be recognized over the remaining vesting period of the modified awards.

In connection with the departure of the president and chief operating officer in the fourth quarter of 2020, the Company recognized a modification charge of $ 6.8 million related to the acceleration of vesting of his unvested stock appreciation rights and the extension of the post-termination exercise period for his vested and exercisable stock appreciation rights.

In connection with the chief executive officer transition during the fourth quarter of 2018, the Company accelerated $ 3.9 million of expense into 2018 from 2019.

No cash was received from stock option exercises during the year ended December 31, 2020 because they were net settled in shares of ANGI Homeservices’ common stock.

Cash received from stock option exercises was $ 0.6 million and $ 4.7 million for the years ended December 31, 2019 and 2018, respectively.

The Company currently settles all equity awards on a net basis.

In connection with the Combination, previously issued stock appreciation rights related to the common stock of HomeAdvisor (US) were converted into ANGI stock appreciation rights that are settleable, at the Company’s option, on a net basis with the Company remitting withholding taxes on behalf of the employee or on a gross basis with the Company issuing a sufficient number of Class A shares to cover the withholding taxes.

In addition, at IAC’s option, these awards can be settled in either Class A shares of ANGI or shares of IAC common stock.

If settled in IAC common stock, ANGI reimburses IAC in either cash or through the issuance of Class A shares to IAC.

Assuming all of the stock appreciation rights outstanding on December 31, 2020 were net settled on that date, ANGI would have issued 3.4 million Class A shares (either to award holders or to IAC as reimbursement) and ANGI would have remitted $ 45.2 million in cash for withholding taxes (assuming a 50 % withholding rate).

Assuming all other ANGI equity awards outstanding on December 31, 2020, were net settled on that date, including stock options, RSUs and subsidiary denominated equity described

ANGI HOMESERVICES INC.

There were no stock options or stock appreciation rights granted by the Company for the years ended December 31, 2021, 2020, and 2019.

In connection with the Combination, the previously issued HomeAdvisor (US) stock appreciation rights were converted into Angi Inc.

equity awards resulting in a modification charge.

Included in stock-based compensation expense in the years ended December 31, 2021, 2020, and 2019 were charges of $ 0.9 million, $ 21.1 million, and $ 29.0 million, respectively, related to these modified awards, and the remaining charge will be recognized over the remaining vesting period of the modified awards.

No cash was received from stock option exercises during the years ended December 31, 2021 and 2020 because they were net settled in shares of Angi Inc.

common stock.

Cash received from stock option exercises was $ 0.6 million for the year ended December 31, 2019.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

below, ANGI would have issued 6.0 million shares and would have remitted $ 76.8 million in cash for withholding taxes (assuming a 50 % withholding rate).

The Company currently settles all equity awards on a net basis with the Company remitting withholding taxes on behalf of the employee or on a gross basis with the Company issuing a sufficient number of Class A shares to cover the withholding taxes.

In addition, at IAC’s option, certain awards can be settled in either Class A shares of Angi Inc.

or shares of IAC common stock.

If settled in IAC common stock, Angi Inc.

reimburses IAC in either cash or through the issuance of Class A shares to IAC.

Assuming all of the stock appreciation rights outstanding on December 31, 2021 were net settled on that date, ANGI would have issued 0.3 million Class A shares (either to award holders or to IAC as reimbursement) and ANGI would have remitted $ 2.9 million in cash for withholding taxes (assuming a 50 % withholding rate).

Assuming all other ANGI equity awards outstanding on December 31, 2021, were net settled on that date, including stock options, RSUs and subsidiary denominated equity described below, ANGI would have issued 9.1 million Class A shares and would have remitted $ 83.5 million in cash for withholding taxes (assuming a 50 % withholding rate).

Restricted Stock Units, Market-based Stock Units and Performance-based Stock Units

RSUs, MSUs and PSUs are awards in the form of phantom shares or units denominated in a hypothetical equivalent number of shares of ANGI Homeservices common stock and with the value of each RSU and PSU equal to the fair value of ANGI Homeservices common stock at the date of grant.

The value of each MSU is estimated using a lattice model that incorporates a Monte Carlo simulation of ANGI’s stock price.

RSUs, MSUs, and PSUs are awards in the form of phantom shares or units denominated in a hypothetical equivalent number of shares of Angi Inc.

common stock and with the value of each RSU and PSU equal to the fair value of Angi Inc.

common stock at the date of grant.

The value of each MSU is estimated using a lattice model that incorporates a Monte Carlo simulation of Angi Inc.’s stock price.

Each RSU, MSU, and PSU grant is subject to service-based vesting, where a specific period of continued employment must pass before an award vests.

MSUs also include market-based vesting, tied to the stock price of ANGI before an award vests and PSUs include performance-based vesting, where certain performance targets set at the time of grant must be achieved before an award vests.

For RSU grants, the expense is measured at the grant date as the fair value of ANGI Homeservices common stock and expensed as stock-based compensation over the vesting term.

MSUs also include market-based vesting, tied to the stock price of Angi Inc.

before an award vests and PSUs include performance-based vesting, where certain performance targets set at the time of grant must be achieved before an award vests.

For RSU grants, the expense is measured at the grant date as the fair value of Angi Inc.

common stock and expensed as stock-based compensation over the vesting term.

For MSU grants, the expense is measured using a lattice model and expensed as stock-based compensation over the requisite service period.

For PSU grants, the expense is measured at the grant date as the fair value of ANGI Homeservices common stock and expensed as stock-based compensation over the vesting term if the performance targets are considered probable of being achieved.

For PSU grants, the expense is measured at the grant date as the fair value of Angi Inc.

common stock and expensed as stock-based compensation over the vesting term if the performance targets are considered probable of being achieved.

Unvested RSUs, MSUs, and PSUs outstanding at December 31, 2021 and changes during the year ended December 31, 2021 are as follows:

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In 2019, the Company granted certain MSUs that are liability-classified stock-settled awards with a market condition.

The fair value of these awards is subject to remeasurement each reporting period until settlement of the award.

The total expense related to these awards will ultimately be equal to the number of shares vested based on the fair value of ANGI Homeservices’ common stock on the settlement date.

The weighted average fair value of RSUs granted during the years ended December 31, 2020, 2019 and 2018 based on market prices of ANGI Homeservices’ common stock on the grant date was $ 7.37 , $ 13.16 and $ 18.08 , respectively.

The fair value of these awards were subject to remeasurement each reporting period until settlement of the award occurred in 2021.

The total expense related to these awards recognized was $ 10.4 million, equal to the number of shares vested based on the fair value of Angi Inc.

common stock on the settlement date.

The weighted average fair value of RSUs granted during the years ended December 31, 2021, 2020, and 2019 based on market prices of Angi Inc.

common stock on the grant date was $ 12.73 , $ 7.37 , and $ 13.16 , respectively.

The weighted average fair value of MSUs granted during the years ended December 31, 2021 and 2019, based on the lattice model, was $ 14.39 and $ 3.67 , respectively.

There were no MSUs granted during the year ended December 31, 2020.

The weighted average fair value of MSUs granted during the year ended December 31, 2019 based on the lattice model was $ 3.67 .

The weighted average fair value of PSUs granted during the years ended December 31, 2020 and 2019 based on market prices of ANGI Homeservices’ common stock on the grant date was $ 6.92 and $ 15.93 , respectively.

There were no MSUs or PSUs granted or outstanding during the year ended December 31, 2018.

The total fair value of RSUs that vested during the years ended December 31, 2020, 2019 and 2018 was $ 23.4 million, $ 16.1 million and $ 19.5 million, respectively.

The total fair value of MSUs that vested during the years ended December 31, 2020 and 2019, was $ 5.2 million and $ 3.2 million, respectively.

There were no PSUs that vested during the years ended December 31, 2020, 2019 and 2018.

ANGI HOMESERVICES INC.

The weighted average fair value

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In connection with the departure of the president and chief operating officer in the fourth quarter of 2020, the Company recognized a modification charge of $ 7.3 million related to the acceleration of vesting of his unvested RSUs.

of PSUs granted during the years ended December 31, 2021, 2020, and 2019 based on market prices of Angi Inc.

common stock on the grant date was $ 13.51 , $ 6.92 and $ 15.93 , respectively.

The total fair value of RSUs that vested during the years ended December 31, 2021, 2020, and 2019 was $ 35.2 million, $ 23.4 million and $ 16.1 million, respectively.

The total fair value of MSUs that vested during the years ended December 31, 2021, 2020, and 2019 was $ 2.1 million, $ 5.2 million, and $ 3.2 million, respectively.

The total fair value of PSUs that vested during the year ended December 31, 2021 was $ 3.6 million.

There were no PSUs that vested during the years ended December 31, 2020 and 2019.

Equity Instruments Denominated in the Shares of Certain Subsidiaries

ANGI Homeservices has granted stock appreciation rights denominated in the equity of certain non-publicly traded subsidiaries to employees and management of those subsidiaries.

has granted stock appreciation rights denominated in the equity of certain non-publicly traded subsidiaries to employees and management of those subsidiaries.

These equity awards vest over a period of years, which is typically four years .

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These interests can have significant value in the event of significant appreciation.

The fair value of these interests is generally determined by negotiation or arbitration when settled, which will occur at various dates through 2026 and are ultimately settled in IAC common stock or ANGI Homeservices Class A common stock, at IAC’s election.

The fair value of these interests is generally determined by the board of directors of the applicable subsidiary when settled, which will occur at various dates through 2026 and are ultimately settled in IAC common stock or Angi Inc.

Class A common stock, at IAC’s election.

These equity awards are settled on a net basis, with the award holder entitled to receive a payment in shares equal to the intrinsic value of the award at exercise less an amount equal to the required cash tax withholding payment.

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NOTE 11— SEGMENT INFORMATION

The overall concept that ANGI employs in determining its operating segments is to present the financial information in a manner consistent with:

how the chief operating decision maker views the businesses;

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.

The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent with how the chief operating decision maker views the businesses.

In addition, 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.

The following table presents revenue by reportable segment:

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Europe 82,867 72,497 76,313

Total $ 1,467,925 $ 1,326,205 $ 1,132,241

ANGI HOMESERVICES INC.

$ 1,685,438 $ 1,467,925 $ 1,326,205

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Years Ended December 31,

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North America

Angi Ads and Leads:

Consumer connection revenue (a)

$ 896,711 $ 899,175 $ 867,307

Service professional membership subscription revenue 50,975 63,872 66,214

Advertising revenue (b)

252,010 226,505 214,259

Membership subscription revenue (c)

68,062 74,073 92,975

Other revenue 27,812 33,136 23,844

Total Marketplace revenue 1,131,320 992,668 774,495

Advertising and other revenue (b)

Total Angi Ads and Leads revenue 1,244,595 1,232,889 1,198,385

Angi Services revenue (d)

357,976 162,539 51,507

Total North America revenue 1,602,571 1,395,428 1,249,892

Consumer connection revenue (c)

Consumer connection revenue (e)

68,686 57,692 59,611

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________________________

(a) Includes fees paid by service professionals for consumer matches and revenue from pre-priced jobs sourced through the HomeAdvisor and Handy platforms.

(b) Includes Angie’s List revenue from service professionals under contract for advertising and Angie’s List membership subscription fees from consumers, as well as revenue from mHelpDesk, HomeStars and Felix.

Felix was sold on December 31, 2018 and its revenue for the year ended December 31, 2018 was $ 36.9 million.

(a) Includes fees paid by service professionals for consumer matches through the Angi Ads and Leads platforms.

(b) Includes revenue from service professionals under contract for advertising.

(d) Includes revenue from pre-priced offerings and revenue from Angi Roofing.

(e) Includes fees paid by service professionals for consumer matches.

Revenue by geography is based on where the customer is located.

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The United States is the only country whose revenue is greater than 10 % of total revenue of the Company for the years ended December 31, 2021, 2020, and 2019.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2021 December 31, 2020

(In thousands)

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Total $ 118,267 $ 108,842

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Years Ended December 31,

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(In thousands)

Operating income (loss):

Operating (loss) income:

North America $ ( 63,316 ) $ 4,811 $ 48,967

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(In thousands)

Adjusted EBITDA (d) :

Adjusted EBITDA (f) :

North America $ 35,328 $ 178,854 $ 208,192

Europe $ ( 7,463 ) $ ( 6,050 ) $ ( 5,895 )

___________________________

(d) The Company’s primary financial measure is Adjusted EBITDA, which is defined as operating income excluding:

(f) The Company’s primary financial measure is Adjusted EBITDA, which is defined as operating (loss) income excluding:

(1) stock-based compensation expense;

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and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable.

The Company believes this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature.

Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables reconcile operating income (loss) for the Company’s reportable segments and net (loss) earnings attributable to ANGI Homeservices Inc.

The following tables reconcile operating (loss) income for the Company’s reportable segments and net loss attributable to Angi Inc.

shareholders to Adjusted EBITDA:

Year Ended December 31, 2021

Operating Income (Loss) Stock-Based Compensation Expense Depreciation Amortization of Intangibles Adjusted EBITDA

Operating Loss Stock-Based

Compensation Expense Depreciation Amortization

of Intangibles Adjusted

(In thousands)

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Interest expense ( 23,485 )

Other income, net 1,218

Earnings before income taxes ( 19,328 )

Other expense, net ( 2,509 )

Loss before income taxes ( 102,507 )

Income tax benefit 32,013

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Net earnings attributable to noncontrolling interests ( 884 )

Net loss attributable to ANGI Homeservices Inc.

Net loss attributable to Angi Inc.

shareholders $ ( 71,378 )

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2020

Operating Income (Loss) Stock-Based Compensation Expense Depreciation Amortization of Intangibles Adjusted EBITDA

Operating Income (Loss) Stock-Based

Compensation Expense Depreciation Amortization

of Intangibles Adjusted

(In thousands)

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Europe ( 11,179 ) $ 716 $ 4,106 $ 307 $ ( 6,050 )

Operating income 38,645

Operating loss ( 6,368 )

Interest expense ( 14,178 )

Other income, net 1,218

Earnings before income taxes 33,646

Loss before income taxes ( 19,328 )

Income tax benefit 15,168

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Net earnings attributable to noncontrolling interests ( 2,123 )

Net earnings attributable to ANGI Homeservices Inc.

Net earnings attributable to Angi Inc.

shareholders $ ( 6,283 )

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2019

Operating Income (Loss) Stock-Based Compensation Expense Depreciation Amortization of Intangibles Adjusted EBITDA

Operating Income (Loss) Stock-Based

Compensation Expense Depreciation Amortization

of Intangibles Adjusted

(In thousands)

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Net earnings attributable to noncontrolling interests ( 485 )

Net earnings attributable to ANGI Homeservices Inc.

Net earnings attributable to Angi Inc.

shareholders $ 34,829

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Total $ 70,215 $ 52,488 $ 68,804

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12— LEASES

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The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Leases Balance Sheet Classification 2021 2020

19 unchanged sentences

________________________________

(a) Includes $ 0.04 million and $ 0.6 million of short-term lease cost and $ 1.8 million and $ 1.4 million of sublease income for the years ended December 31, 2020 and 2019, respectively.

(a) The years ended December 31, 2021 and 2020 includes $ 0.1 million and $ 0.04 million of short-term lease cost, respectively, and $ 1.8 million of sublease income for both years.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Maturities of lease liabilities as of December 31, 2021 (b) :

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(b) Lease payments exclude $ 1.2 million of legally binding minimum lease payments for leases signed but not yet commenced.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following are the weighted average assumptions used for lease terms and discount rates as of December 31, 2021 and 2020:

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Cash paid for amounts included in the measurement of lease liabilities $ 23,506 $ 20,939

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 13— COMMITMENTS AND CONTINGENCIES

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Purchase obligations $ 26,262 $ 4,515 $ — $ — $ 30,777

Purchase obligations include (i) a remaining minimum payment of $ 5.6 million that is due in 2021 under the Company’s allocable share of a three-year cloud computing arrangement, and (ii) payments of $ 7.3 million related to advertising commitments to be made in 2021.

The Company has an allocable share of a three-year cloud computing arrangement between IAC and a third party provider of $ 15.6 million, of which $ 3.2 million and $ 5.6 million was paid in 2020 and 2019, respectively, and the Company had a related prepaid asset of $ 4.2 million and $ 4.3 million at December 31, 2020 and 2019, respectively, which is included in “Other current assets” on the consolidated balance sheet.

Purchase obligations include (i) payments of $ 13.0 million related to advertising commitments to be made in 2022, (ii) payments of $ 6.6 million related to technology contracts spend, (iii) payments of $ 6.1 million related to communication spend, and (iv) payments of $ 3.1 million related to background check services.

In the ordinary course of business, the Company is a party to various lawsuits.

The Company establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

Management has also identified certain other legal matters where we believe an unfavorable outcome is not probable and, therefore, no reserve is established.

As a result, a $ 3.8 million legal reserve is established.

Management has also identified certain other legal matters where we believe an unfavorable outcome is not probable.

Although management currently believes that resolving claims against us, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the 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.

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See “ Note 3—Income Taxes ” for additional information related to income tax contingencies.

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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Relationship with IAC

ANGI Homeservices and IAC have entered into certain agreements to govern their relationship.

and IAC have entered into certain agreements to govern their relationship.

These agreements include:

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and an employee matters agreement.

On October 10, 2018, ANGI issued 5.1 million shares of its Class B common stock to IAC pursuant to the post-closing adjustment provision of the Angie's List merger agreement.

Contribution Agreement

The contribution agreement sets forth the agreements between the Company and IAC regarding the principal transactions necessary for IAC to separate the HomeAdvisor business from IAC's other businesses and to cause the HomeAdvisor business to be transferred to ANGI Homeservices prior to the Combination, as well as governs certain aspects of our relationship following the Combination.

Under the contribution agreement, the Company agreed to assume all of the assets and liabilities related to the HomeAdvisor business and agreed to indemnify IAC against any losses arising out of any breach by the Company of the contribution agreement or the other transaction related agreements described below.

The contribution agreement sets forth the agreements between the Company and IAC regarding the principal transactions necessary for IAC to separate the Angi business from IAC's other businesses, as well as governs certain aspects of our relationship.

Under the contribution agreement, the Company agreed to assume all of the assets and liabilities related to the Angi business and agreed to indemnify IAC against any losses arising out of any breach by the Company of the contribution agreement or the other transaction related agreements described below.

IAC also agreed to indemnify the Company against losses arising out of any breach by IAC of the contribution agreement or any of the other transaction related agreements described below.

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There were no outstanding receivables or payables pursuant to the services agreement as of December 31, 2021 and 2020, respectively.

At December 31, 2018, the Company had an outstanding receivable due from IAC of $ 0.1 million pursuant to the services agreement.

This amount was deducted from the charges due to IAC pursuant to the services agreement discussed above during the first quarter of 2019.

Separately, the Company subleases office space to IAC and charged rent of $ 1.8 million and $ 1.4 million for the years ended December 31, 2020 and 2019, respectively.

There were no amounts charged pursuant to subleases for office space to IAC for the year ended December 31, 2018.

Separately, the Company subleases office space to IAC and charged rent of $ 1.6 million, $ 1.8 million, and $ 1.4 million for the years ended December 31, 2021, 2020, and 2019, respectively.

IAC subleases office space to the Company and charged the Company $ 0.6 million of rent for the year ended December 31, 2021.

IAC did not sublease office space to the Company for the years ended December 31, 2020 and 2019.

There were no outstanding receivables due from IAC or payables due to IAC, pursuant to sublease agreements, for the year ended December 31, 2021.

At both December 31, 2020 and 2019, there were outstanding receivables of less than $ 0.1 million due from IAC, pursuant to sublease agreements, which were subsequently paid in full in the first quarter of 2021 and 2020, respectively.

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federal, state, local and foreign income taxes.

Under the tax sharing agreement, the Company is generally responsible and

ANGI HOMESERVICES INC.

Under the tax sharing agreement, the Company is generally responsible and required to indemnify IAC for:

(i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes the Company or any of its subsidiaries to the extent attributable to the Company or any of its subsidiaries, as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any of the Company's or its subsidiaries’ consolidated, combined, unitary or separate tax returns.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

required to indemnify IAC for:

At December 31, 2020 and 2019, the Company had outstanding payables of $ 0.9 million and $ 0.2 million, respectively, due to IAC pursuant to the tax sharing agreement, which is included in “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheet.

There were $ 3.1 million of refunds received from IAC pursuant to this agreement during the twelve months ended December 31, 2020.

During the first quarter of 2019, $ 11.4 million was paid to IAC, pursuant to this agreement.

At December 31, 2021 and 2020, the Company had outstanding payables of $ 0.3 million and $ 0.9 million, respectively, due to IAC pursuant to the tax sharing agreement, which are included in “Accrued expenses and other current liabilities,” in the accompanying consolidated balance sheet.

There were $ 1.5 million of payments to IAC pursuant to this agreement during the year ended December 31, 2021.

There were $ 3.1 million of refunds received from IAC pursuant to this agreement during the year ended December 31, 2020.

Employee Matters Agreement

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health and welfare plans, 401(k) plan and flexible benefits plan and the Company reimburses IAC for the costs of such participation.

In the event IAC no longer retains shares representing at least 80 % of the aggregate voting power of shares entitled to vote in the election of the Company’s Board of Directors, ANGI Homeservices will no longer participate in IAC’s employee benefit plans, but will establish its own employee benefit plans that will be substantially similar to the plans sponsored by IAC prior to the Combination.

In addition, the employee matters agreement requires the Company to reimburse IAC for the cost of any IAC equity awards held by ANGI Homeservices current and former employees, with IAC electing to receive payment in cash or shares of our Class B common stock.

In the event IAC no longer retains shares representing at least 80 % of the aggregate voting power of shares entitled to vote in the election of the Company’s Board of Directors, Angi will no longer participate in IAC’s employee benefit plans, but will establish its own employee benefit plans that will be substantially similar to the plans sponsored by IAC prior to the Combination.

In addition, the employee matters agreement requires the Company to reimburse IAC for the cost of any IAC equity awards held by Angi current and former employees, with IAC electing to receive payment in cash or shares of our Class B common stock.

This agreement also provides that IAC may require stock appreciation rights granted prior to the closing of the Combination and equity awards in our subsidiaries to be settled in either shares of our Class A common stock or IAC common stock.

To the extent shares of IAC common stock are issued in settlement of these awards, the Company is obligated to reimburse IAC for the cost of those shares by issuing shares of our Class A common stock in the case of stock appreciation rights granted prior to the closing of the Combination and shares of our Class B common stock in the case of equity awards in our subsidiaries.

Lastly, pursuant to the employee matters agreement, in the event of a distribution of ANGI capital stock to IAC stockholders in a transaction intended to qualify as tax-free for U.S.

Lastly, pursuant to the employee matters agreement, in the event of a distribution of Angi Inc.

capital stock to IAC stockholders in a transaction intended to qualify as tax-free for U.S.

federal income tax purposes, the Compensation Committee of the IAC Board of Directors has the exclusive authority to determine the treatment of outstanding IAC equity awards.

Such authority includes (but is not limited to) the ability to convert all or part of IAC equity awards outstanding immediately prior to the distribution into equity awards denominated in shares of ANGI Class A Common Stock, which ANGI would be obligated to assume and which would be dilutive to ANGI's stockholders.

For the years ended December 31, 2020, 2019 and 2018, 0.3 million, 0.5 million and 0.9 million shares of ANGI Homeservices Class B common stock were issued to IAC, respectively, pursuant to the employee matters agreement as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by ANGI Homeservices employees.

Class A Common Stock, which Angi Inc.

would be obligated to assume and which would be dilutive to Angi Inc.'s stockholders.

For the years ended December 31, 2021, 2020, and 2019, 0.2 million, 0.3 million, and 0.5 million shares of Angi Class B common stock were issued to IAC, respectively, pursuant to the employee matters agreement as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by Angi employees.

For the years ended December 31, 2021, 2.6 million shares of Angi Inc.

Class A common stock were issued to IAC pursuant to the employee matters agreement as reimbursement for IAC common stock issued in connection with the exercise and settlement of certain Angi Inc.

stock appreciation rights.

There were no shares of Angi Inc.

Class A common stock issued to IAC during the years ended December 31, 2020 and 2019.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 15— BENEFIT PLANS

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Matching contributions under the IAC Plan for the years ended December 31, 2021, 2020, and 2019 were $ 8.4 million, $ 7.7 million, and $ 6.3 million, respectively.

Matching contributions are invested in the same manner as each participant’s voluntary contributions in the investment options provided

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

under the IAC Plan.

Matching contributions are invested in the same manner as each participant’s voluntary contributions in the investment options provided under the IAC Plan.

An investment option in the IAC Plan is IAC common stock, but neither participant nor matching contributions are required to be invested in IAC common stock.

1 unchanged sentence

The Company’s contributions for these plans for the years ended December 31, 2021, 2020, and 2019 were $ 0.7 million, $ 0.6 million, and $ 0.5 million, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16— CONSOLIDATED FINANCIAL STATEMENT DETAILS

Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying balance sheet to the total amounts shown in the accompanying statement of cash flows:

December 31, 2021 December 31, 2020

4 unchanged sentences

Total cash and cash equivalents, and restricted cash as shown on the consolidated statement of cash flows $ 429,485 $ 813,561

Restricted cash included in other current assets at December 31, 2020 primarily consists of cash received from customers at ANGI through the Handy platform, representing funds collected for payment to service providers, which were not settled as of the period end.

Restricted cash included in other current assets at December 31, 2019 primarily consists of a deposit related to corporate credit cards.

Restricted cash included in other non-current assets at December 31, 2020 and 2019 consists of deposits related to leases.

Restricted cash included in other current assets at December 31, 2021 primarily consisted of funds collected from service providers for disputed payments which were not settled as of the period end, in addition to cash reserved to fund insurance claims.

Restricted cash included in other current assets at December 31, 2020 primarily consists of cash received from customers at Angi Inc.

through the Handy platform, representing funds collected for payment to service providers, which were not settled as of the period end.

Restricted cash included in other non-current assets for all periods presented above primarily consisted of deposits related to leases.

Restricted cash included in other non-current assets at December 31, 2021 also included cash held related to a check endorsement guarantee for Angi Roofing.

(In thousands)

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Capitalized software, leasehold improvements and equipment, net $ 118,267 $ 108,842

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

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Accrued expenses and other current liabilities:

Accrued advertising expense $ 30,033 $ 29,682

Accrued employee compensation and benefits $ 46,464 $ 47,310

Accrued advertising expense 36,231 30,033

Current lease liabilities 17,098 15,700

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Accrued expenses and other current liabilities $ 183,815 $ 148,219

Other (expense) income, net

Years Ended December 31,

1 unchanged sentence

(In thousands)

Other income, net $ 1,218 $ 6,494 $ 17,741

Other income, net in 2020 principally includes interest income of $ 1.7 million, offset by other expense of $ 0.5 million.

Other income, net in 2019 includes interest income of $ 8.0 million and net foreign currency exchange gains of $ 0.6 million, partially offset by a $ 1.8 million mark-to-market charge for an indemnification claim related to the Handy acquisition that will be settled in ANGI shares held in escrow.

Other income, net in 2018 includes a gain of $ 13.2 million related to the sale of Felix and interest income of $ 4.8 million.

Supplemental Disclosure of Non-Cash Transactions:

On October 19, 2018, ANGI issued 8.6 million shares of its Class A common stock valued at $ 165.8 million in connection with the acquisition of Handy.

On October 10, 2018, ANGI issued 5.1 million shares of its Class B common stock to IAC pursuant to the post-closing adjustment provision of the Angie’s List merger agreement.

Interest income $ 239 $ 1,725 $ 7,974

Gain (loss) on the sale of a business (a)

31 ( 454 ) ( 218 )

Foreign exchange (losses) gains ( 1,656 ) ( 57 ) 559

Loss on extinguishment of debt (b)

( 1,110 ) — —

Other ( 13 ) 4 ( 1,821 )

Other (expense) income, net $ ( 2,509 ) $ 1,218 $ 6,494

________________________

(a) Loss from acquisition/sale of a business for the year ended December 31, 2020 includes a $ 0.2 million mark-to-market charge for an indemnification charge related to the Handy acquisition that was settled in Angi Inc.

shares during the first quarter of 2020 and a $ 0.3 million charge related to the final earn-out settlement related to the sale of Felix.

(b) Represents the write-off of deferred debt issuance costs related to the ANGI Group Term Loan, which was repaid in its entirety during the second quarter of 2021.

Supplemental Disclosure of Cash Flow Information:

5 unchanged sentences

Interest expense—related party — — 54

Income tax payments, including amounts paid to IAC for ANGI Homeservices' share of IAC's consolidated tax liability 1,789 12,224 332

Income tax refunds, including amounts received from IAC for ANGI Homeservices' share of IAC's consolidated tax liability ( 3,506 ) ( 957 ) ( 172 )

ANGI HOMESERVICES INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 18— QUARTERLY RESULTS (UNAUDITED)

Quarter Ended

September 30 (a)

Quarter Ended

December 31 (a)

(In thousands, except per share data)

Year Ended December 31, 2020

Revenue $ 343,650 $ 375,061 $ 389,913 $ 359,301

Cost of revenue 33,229 41,042 48,253 50,757

Operating (loss) income ( 16,296 ) 17,644 ( 3,019 ) ( 4,697 )

Net (loss) earnings ( 9,184 ) 13,211 5,203 ( 13,390 )

Net (loss) earnings attributable to ANGI Homeservices Inc.

shareholders ( 8,958 ) 12,667 4,472 ( 14,464 )

Per share information attributable to ANGI Homeservices Inc.

shareholders:

Basic (loss) earnings per share (c)

$ ( 0.02 ) $ 0.03 $ 0.01 $ ( 0.03 )

Diluted (loss) earnings per share (c)

$ ( 0.02 ) $ 0.02 $ 0.01 $ ( 0.03 )

Quarter Ended

September 30 (b)

Quarter Ended

December 31 (b)

(In thousands, except per share data)

Year Ended December 31, 2019

Revenue $ 303,443 $ 343,896 $ 357,358 $ 321,508

Cost of revenue 10,011 10,722 13,312 12,448

Operating (loss) income ( 3,641 ) 11,403 24,726 6,157

Net earnings (loss) 9,851 7,234 18,324 ( 95 )

Net earnings (loss) attributable to ANGI Homeservices Inc.

shareholders 9,969 6,968 17,999 ( 107 )

Per share information attributable to ANGI Homeservices Inc.

shareholders:

Basic earnings (loss) per share (c)

$ 0.02 $ 0.01 $ 0.04 $ ( 0.00 )

Diluted earnings (loss) per share (c)

$ 0.02 $ 0.01 $ 0.04 $ ( 0.00 )

_________________________________________________________________________

(a) The first, second, third and fourth quarters of 2020 include after-tax stock-based compensation expense of $ 8.8 million, $ 2.6 million, $ 4.0 million, and $ 1.5 million, respectively, related to the modification of previously issued HomeAdvisor equity awards and previously issued Angie’s List equity awards, both of which were converted into ANGI Homeservices’ equity awards in the Combination.

(b) The first, second, third and fourth quarters of 2019 include after-tax stock-based compensation expense of $ 7.3 million, $ 6.2 million, $ 5.7 million, and $ 5.6 million, respectively, related to the modification of previously issued HomeAdvisor equity awards and previously issued Angie’s List equity awards, both of which were converted into ANGI Homeservices’ equity awards in the Combination.

(c) Quarterly per share amounts may not add to the related annual per share amount because of differences in the average common shares outstanding during each period.

Income tax payments, including amounts paid to IAC for Angi Inc.'s share of IAC's consolidated tax liability 4,647 1,789 12,224

Income tax refunds, including amounts received from IAC for Angi Inc.’s share of IAC's consolidated tax liability ( 587 ) ( 3,506 ) ( 957 )

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk