What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-01 compared with 2022-03-01 · 320 added, 203 removed, 299 unchanged (64% of the section changed)

1 unchanged sentence

Management Overview

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.

As of December 31, 2021, Angi had a network of approximately 240,000 transacting service professionals, each of whom paid for consumer matches and/or performed a job sourced or booked through Angi Ads and

Leads and/or Angi Services.

Collectively, this service professional network provided services in more than 175 categories, ranging from cleaning and installation services to simple home repairs and larger home remodeling projects, and 64 discrete geographic areas in the United States.

(“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.

As of December 31, 2022, Angi had a network of approximately 220,000 transacting service professionals, each of whom paid for consumer matches and/or performed a job sourced or booked through Ads and Leads and/or Services.

Collectively, this service professional network provided services in more than 167 top categories, ranging from cleaning and installation services to simple home repairs and larger home remodeling projects, and 64 discrete geographic areas in the United States.

Additionally, consumers turned to at least one of our brands to find a professional for approximately 29 million projects during the year ended December 31, 2022.

The Company has two operating segments:

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

and (ii) Europe.

In March 2021, the Company rebranded its North American brands which operate as follows:

Angi Ads operates under the Angi (formerly Angie’s List) brand, Angi Leads operates primarily under the HomeAdvisor, powered by Angi brand, and Angi Services operates primarily under the Handy and Angi Roofing brands.

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

Angi Leads provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals nationwide for home repair, maintenance and improvement projects.

Angi Services allows consumers to browse and buy common household services at set prices directly from Angi, 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.

The Company has four operating segments:

(i) Ads and Leads;

(ii) Services;

(iii) Roofing;

and (iv) International (Europe and Canada) and operates under multiple brands including Angi, HomeAdvisor, Handy, Total Home Roofing, and Angi Roofing.

Roofing includes the business the Company acquired on July 1, 2021 known as Total Home Roofing.

Ads and Leads provides service professionals the capability to engage with potential customers, including quote and invoicing services, and provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals nationwide for home repair, maintenance and improvement projects.

Consumers can request 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.

The matching and pre-priced booking services and related tools and directories are provided to consumers free of charge.

Angi Services also includes roof replacement services fulfilled via the Angi Roofing, LLC business.

In the U.S., the Company primarily markets its services to consumers through search engine marketing, television advertising, and affiliate agreements with third parties.

Roofing provides roof replacement and repair services through its wholly-owned subsidiary Angi Roofing, LLC.

In the U.S., the Company primarily markets its services to consumers through search engine marketing, affiliate agreements with third parties, and television advertising.

The Company also markets its services to consumers through email, digital display advertisements, partnerships with other contextually related websites and, to a lesser extent, through relationships with certain retailers, direct mail and radio advertising.

3 unchanged sentences

Unless otherwise indicated or as the context otherwise requires, certain terms, which include the principal operating metrics we use in managing our business, are defined below:

• Angi Ads and Leads Revenue primarily reflects domestic ads and leads revenue, including consumer connection revenue for consumer matches, revenue from service professionals under contract for advertising and membership subscription revenue from service professionals and consumers.

• Angi Services Revenue primarily reflects domestic revenue from pre-priced offerings by which the consumer purchases services directly from the Company and the Company engages a service professional to perform the service and includes revenue from Total Home Roofing, Inc.

(“Angi Roofing”), which was acquired on July 1, 2021.

• Angi Service Requests (“Service Requests”) are fully completed and submitted domestic customer service requests and includes Angi Services requests in the period.

• Angi Monetized Transactions are fully completed and submitted domestic customer service requests that were matched to and paid for by a service professional and includes completed and in-process Angi Services jobs in the period.

• Angi Transacting Service Professionals (“Transacting SPs”) are the number of service professionals that paid for consumer matches through Angi Leads or performed an Angi Services job during the most recent quarter.

• Angi Advertising Service Professionals (“Advertising SPs”) are the number of service professionals under contract for advertising at the end of the period.

• Senior Notes - On August 20, 2020, ANGI Group, LLC (“ANGI Group”), a direct wholly-owned subsidiary of the Company, issued $500.0 million of its 3.875% Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year, commencing February 15, 2021.

• Ads and Leads Revenue primarily reflects domestic ads and leads revenue, including consumer connection revenue for consumer matches, revenue from service professionals under contract for advertising and membership subscription revenue from service professionals and consumers.

• Services Revenue primarily reflects domestic revenue from pre-priced offerings by which the consumer requests services through a Company platform and the Company engages a service professional to perform the service.

• Roofing Revenue primarily reflects revenue from the roof replacement business offering by which the consumer purchases services directly from the Company and the Company engages a service professional to perform the service.

• Corporate primarily reflects costs for corporate initiatives, shared costs, such as executive and public company costs, and other expenses not allocated to the operating segments.

• International Revenue primarily reflects revenue generated within the International segment (comprised of businesses in Europe and Canada), including consumer connection revenue for consumer matches and membership subscription revenue from service professionals and consumers.

• Service Requests are (i) fully completed and submitted domestic service requests for connections with Ads and Leads service professionals, (ii) contacts to Ads and Leads service professionals generated via the service professional directory from unique users in unique categories (such that multiple contacts from the same user in the same category in the same day are counted as one Service Request) and (iii) requests to book Services jobs in the period.

• Monetized Transactions are (i) Service Requests that are matched to a paying Ads and Leads service professional in the period and (ii) completed and in-process Services jobs in the period;

a single Service Request can result in multiple monetized transactions.

• Transacting Service Professionals (“Transacting SPs”) are the number of (i) Ads and Leads service professionals that paid for consumer matches or advertising and (ii) Services service professionals that performed a Services job, during the most recent quarter.

Components of Results of Operations

Sources of Revenue

Angi Ads and Leads Revenue is primarily derived from (i) advertising revenue, which includes revenue from service professionals under contract for advertising, (ii) consumer connection revenue, which is comprised of fees paid by service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), and (iii) membership subscription revenue from service professionals and consumers.

Ads and Leads Revenue is primarily derived from (i) consumer connection revenue, which is comprised of fees paid by service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), (ii) advertising revenue, which includes revenue from service professionals under contract for advertising, and (iii) membership subscription revenue from service professionals and consumers.

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

Angi Services is primarily comprised of revenue from jobs (i) sourced through the “Book Now” feature which lets consumers complete booking the entire transaction digitally for work that is completed physically, (ii) under managed projects (including Angi Roofing) which are larger home improvement projects, and (iii) through retail partnerships for installation of furniture or other household items.

Services is primarily comprised of revenue from jobs sourced directly through the platform and through retail partnerships and completed by a service professional assigned by our platform.

Roofing is comprised of revenue from roofing projects.

International is primarily comprised of revenue from consumer connection revenue for consumer matches and membership subscription from service professionals and consumers.

From January 1, 2020 through December 31, 2022, Services recorded revenue on a gross basis.

Effective January 1, 2023, Angi Inc.

modified the Services terms and conditions so that the service professional, rather than Angi, Inc., has the contractual relationship with the consumer to deliver the service and our performance obligation to the consumer is to connect them with

the service professional.

This change in contractual terms requires net revenue accounting treatment effective January 1, 2023.

There is no impact to operating income or Adjusted EBITDA.

Cost of Revenue and Gross Profit

Cost of revenue, which excludes depreciation, consists primarily of (i) payments made to independent service professionals who perform work contracted under Services or Roofing arrangements, (ii) credit card processing fees, (iii) hosting fees, and (iv) roofing materials costs associated with Roofing.

Gross profit is revenue less cost of revenue.

Gross margin is gross profit expressed as a percentage of revenue.

Operating Costs and Expenses:

• Cost of revenue - consists primarily of payments made to independent service professionals who perform work contracted under Angi Services arrangements, credit card processing fees, hosting fees, and roofing materials costs associated with Angi Roofing.

• Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including fees paid to search engines;

offline marketing, which is primarily television advertising;

and partner-related payments to those who direct traffic to our brands;

compensation expense (including stock-based compensation expense) and other employee-related costs for our sales force and marketing personnel;

and facilities costs.

• General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions, fees for professional services (including transaction-related costs related to acquisitions), provision for credit losses, software license and maintenance costs, and facilities costs.

• Selling and marketing expense - consists primarily of (i) advertising expenditures, which include marketing fees to promote the brand to consumers and service professionals with (a) online marketing, including fees paid to search engines and other online marketing platforms, partners who direct traffic to our brands, and app platforms, (b) offline marketing, which is primarily television and radio advertising, (ii) compensation expense (including stock-based compensation expense) and other employee-related costs for our sales force and marketing personnel, (iii) software license and maintenance costs, (iv) outsourced personnel costs, and (v) facilities costs.

• General and administrative expense - consists primarily of (i) compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions, (ii) fees for professional services (including transaction-related costs related to acquisitions), (iii) provision for credit losses, (iv) software license and maintenance costs, (v) outsourced personnel costs for personnel engaged in assisting in customer service functions, and (vi) facilities costs.

Our customer service function includes personnel who provide support to our service professionals and consumers.

• Product development expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology, software license and maintenance costs, and facilities costs.

• Product development expense - consists primarily of (i) compensation expense (including stock-based compensation expense) and other employee-related costs that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology and (ii) software license and maintenance costs.

Non-GAAP financial measure

2 unchanged sentences

shareholders to operating loss to consolidated Adjusted EBITDA for the years ended December 31, 2022, 2021, and 2020.

The following discussion should be read in conjunction with Item 8.

Consolidated Financial Statements and Supplementary Data .

For a discussion regarding our financial condition and results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 16, 2021.

Services Investment

Services was launched in August 2019, and we invested significantly since its inception through 2022.

As previously disclosed, our investment in Services peaked in the first quarter of 2022 and we’ve seen both positive and negative trends on profits from the Services offerings since inception.

We expect a positive year-over-year trend to continue through 2023 as we focus on less complex services and more profitable business offerings.

Brand Integration Initiative

2 unchanged sentences

We rely heavily on free, or organic, search results from search engine optimization, and paid search engine marketing to drive traffic to our websites.

Our brand integration initiative has adversely affected the placement and ranking of Angi Inc.

websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List.

In addition, we shifted marketing to support Angi, away from HomeAdvisor, which has negatively affected the efficiency of our search engine marketing efforts.

Since the beginning of the integration process, these efforts have had a pronounced negative impact on service requests from organic search results and via our mobile applications, which in turn has resulted in increased paid search engine marketing to generate service requests.

These factors have increased marketing spend and reduced revenue during the year ended December 31, 2021, materially more than expected at the launch of the brand initiative in March 2021.

We expect the pronounced negative impact to organic search results, the increased paid search engine marketing costs and the reduced monetization from our mobile applications to continue until such time as the new brand establishes search engine optimization ranking and consumer awareness is established.

Angi Services Investment

Angi Services was launched in August 2019 and we have invested significantly in Angi Services and expect to continue to do so going forward.

We expect significant future revenue growth as we expand the business, refine the overall experience, and increase penetration in certain geographies and service categories.

This increased investment in Angi Services has contributed to losses for the Company for the year ended December 31, 2021 and this investment is expected to continue through at least 2023.

Our brand integration initiative initially adversely affected the placement and ranking of Angi Inc.

websites, particularly Angi.com, in organic search results.

Organic search results have been declining year-over-year and are still below pre-March 2021 levels.

The shift of marketing to support Angi, away from HomeAdvisor, powered by Angi, has had and continues to have a negative effect on the efficiency of our search engine marketing efforts.

We will continue to optimize the efficiency and conversion of marketing to HomeAdvisor to maintain profitable demand generation to that domain for the foreseeable future but we do expect the trend of declining traffic to continue due to sustained marketing emphasis in favor of Angi.

COVID-19 Update

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 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 described above.

Moreover, 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 continues 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 of 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 continue to 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.

The COVID-19 pandemic and the various responses to it created significant volatility, uncertainty and economic disruption.

Recently, there has been a return to more normal societal interactions, including the way we operate our business.

We cannot predict the future impacts of this ongoing and any new pandemic(s).

See Part 1, Item 1A:

"Risk Factors" in this Annual Report on Form 10-K for additional details.

Results of Operations for the Years Ended December 31, 2022, 2021 and 2020

The following discussion should be read in conjunction with Item 8.

Consolidated Financial Statements and Supplementary Data .

Included below are year-over-year comparisons between 2022 and 2021, as well as 2021 and 2020, where applicable, reflecting our current segment structure.

Refer to Note 2 “ Summary of Significant Accounting Policies ” for details regarding our segment change.

For further information on our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 for those items not affected by our segment change (interest expense, other income (expense), net, and income tax benefit), please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 1, 2022.

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

North America

Angi Ads and Leads:

Ads and Leads:

Consumer connection revenue $ 954,735 $ 56,313 6% $ 898,422 $ (753) —% $ 899,175

2 unchanged sentences

Other revenue 1,449 (6,935) (83)% 8,384 (10,618) (56)% 19,002

Total Angi Ads and Leads revenue 1,244,595 11,706 1% 1,232,889

Angi Services revenue 357,976 195,437 120% 162,539

Total North America revenue 1,602,571 207,143 15% 1,395,428

Europe 82,867 10,370 14% 72,497

Total Ads and Leads revenue 1,282,061 54,987 4% 1,227,074 8,319 1% 1,218,755

Services revenue 381,256 91,308 31% 289,948 127,409 78% 162,539

Roofing revenue 137,509 69,481 102% 68,028 68,028 NM —

Intersegment eliminations (10,340) (8,433) (442)% (1,907) (1,907) NM —

Total Domestic revenue 1,790,486 207,343 13% 1,583,143 201,849 15% 1,381,294

International

Consumer connection revenue 71,851 3,165 5% 68,686 10,994 19% 57,692

Service professional membership subscription revenue 28,192 (4,175) (13)% 32,367 5,142 19% 27,225

Advertising and other revenue 995 (247) (20)% 1,242 (472) (28)% 1,714

Total International revenue 101,038 (1,257) (1)% 102,295 15,664 18% 86,631

Total revenue $ 1,891,524 $ 206,086 12% $ 1,685,438 $ 217,513 15% $ 1,467,925

Percentage of Total Revenue:

North America 95 % 95 %

Europe 5 % 5 %

Domestic 95 % 94 % 94 %

International 5 % 6 % 6 %

Total revenue 100 % 100 % 100 %

Years Ended December 31,

2021 Change % Change 2020

2022 Change % Change 2021 Change % Change 2020

(In thousands, rounding differences may occur)

2 unchanged sentences

Monetized Transactions 28,938 (2,572) (8)% 31,510 (1,192) (4)% 32,702

Transacting SPs (a)

206 (2) (1)% 208

Advertising SPs 38 (2) (4)% 39

_________________________________________________________

(a) Angi Transacting Service Professionals (“Transacting SPs”) are the number of service professionals that paid for consumer matches through Angi Leads or performed an Angi Services job during the most recent quarter.

North America revenue increased $207.1 million, or 15%, driven by increases in Angi Services revenue of $195.4 million, or 120%, and Angi Ads and Leads revenue of $11.7 million, or 1%.

The increase in Angi Services revenue is due primarily to organic growth and, to a lesser extent from Angi Roofing, acquired July 1, 2021.

The increase in Angi Ads and Leads revenue is due primarily to an increase in Advertising revenue of $25.5 million, or 11%.

Europe revenue increased $10.4 million, or 14%, due to growth across its markets from increased consumer demand and the favorable impact of the weakening of the U.S dollar relative to the Euro and the British Pound.

Transacting SPs 220 (31) (12)% 251 — —% 251

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Ads and Leads revenue increased $55.0 million, or 4%, due primarily to an increase in consumer connection revenue of $56.3 million, or 6%, primarily as a result of price increases implemented during the second quarter of 2022 and increase in advertising revenue driven by a growth in sales.

Services revenue increased $91.3 million, or 31%, due primarily to an increase in average revenue per Monetized Transaction due to higher average-order-value jobs in complex service categories and an increase in Monetized Transactions in 2022 relative to 2021, as well as price increases in certain job categories.

Roofing revenue increased $69.5 million, or 102%, due primarily to a full year of Service Requests in 2022 compared to two quarters in 2021.

International revenue decreased $1.3 million, or 1%, due primarily to the unfavorable impact of the strengthening of the U.S.

dollar relative to the Euro and the British Pound.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Ads and Leads revenue increased $8.3 million, or 1%, due primarily to an increase in advertising revenue of $25.7 million, or 11%, partially offset by decreases in other revenue of $10.6 million primarily due to the disposition of a business in the second quarter 2021, and membership revenue of $6.0 million due to a reduction in the number of Ads paid consumer memberships.

Services revenue increased $127.4 million, or 78%, due primarily to more Monetized Transactions throughout 2021 compared to 2020.

Roofing was acquired July 1, 2021 and contributed $68.0 million to 2021 revenue.

International revenue increased $15.7 million, or 18%, due to growth across its markets from increased consumer demand and the favorable impact of the weakening of the U.S.

dollar relative to the Euro and the British Pound.

Cost of revenue

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

1 unchanged sentence

As a percentage of revenue 23% 19% 12%

North America cost of revenue increased $152.6 million, or 89%, and increased as a percentage of revenue, due primarily to the organic growth of Angi Services resulting in increased payments to third-party professional service providers and $51.2

million of costs attributable to the inclusion of Angi Roofing acquired July 1, 2021, primarily for roofing materials and third-party contractors.

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Ads and Leads cost of revenue decreased $1.6 million, or 4%, and decreased as a percentage of revenue, due primarily to a $6.0 million decrease resulting from the disposition of a business in the second quarter of 2021, partially offset by increases of $3.1 million in transaction processing costs, and $2.8 million in website hosting fees.

Services cost of revenue increased $64.1 million, or 28%, due primarily to a $58.1 million increase in payments to third-party professional service providers, however, cost of revenue decreased as a percentage of revenue.

Roofing cost of revenue increased $49.4 million, or 97%, due primarily to the inclusion of a full year of costs in 2022 compared to two quarters of costs in 2021, however, cost of revenue decreased as a percentage of revenue relative to 2021 due to Roofing’s ability to more effectively react to supply pricing movements in 2022.

International cost of revenue increased $0.2 million, or 9%, and increased as a percentage of revenue, due primarily to increased website hosting fees.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Ads and Leads cost of revenue decreased $3.6 million, or 8%, and decreased as a percentage of revenue, due primarily to a $10.1 million decrease resulting from the disposition of a business in the second quarter 2021, partially offset from the increase of $2.1 million in website hosting and $2.4 million in transaction processing costs.

Services cost of revenue increased $104.8 million, or 82%, and increased as a percentage of revenue, due primarily to organic growth resulting in $89.1 million in increased payments to third-party professional service providers.

Roofing was acquired July 1, 2021 and contributed $51.2 million to cost of revenue primarily for roofing materials and third-party contractors payments.

International cost of revenue increased $0.2 million, or 9%, due primarily to an increase of $0.1 million in transaction processing and $0.1 million in website hosting fees, however, decreased as a percentage of revenue.

Years Ended December 31,

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

Revenue $ 1,891,524 $ 206,086 12% $ 1,685,438 $ 217,513 15% $ 1,467,925

Cost of revenue (exclusive of depreciation shown separately below) 438,060 112,180 34% 325,880 152,599 88% 173,281

Gross profit $ 1,453,464 $ 93,906 7% $ 1,359,558 $ 64,914 5% $ 1,294,644

Gross margin 77% (4)% 81% (7)% 88%

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Angi gross profit increased $93.9 million, or 7%, due primarily to the revenue growth described in the revenue discussion above, partially offset by the increased cost of revenue as a percentage of revenue described in the cost of revenue discussion above.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Angi gross profit increased $64.9 million, or 5%, due primarily to the acquisition of Roofing and revenue growth described in the revenue discussion above, partially offset by the increased cost of revenue as a percentage of revenue described in the cost of revenue discussion above.

Selling and marketing expense

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

1 unchanged sentence

As a percentage of revenue 48% 52% 52%

North America selling and marketing expense increased $122.5 million, or 17%, driven by increases in advertising expense of $63.6 million, compensation expense of $36.9 million, consulting costs of $11.1 million, and $14.0 million in expense from the inclusion of Angi Roofing.

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Ads and Leads selling and marketing expense increased $11.9 million, or 2%, driven by increases in advertising expense of $20.9 million and software maintenance costs of $3.5 million partially offset by a decrease in compensation expense of $10.3 million.

The increase in advertising expense was due primarily to an increase of $23.3 million in online marketing spend.

The increase in online marketing spend was primarily due to lower organic traffic and increased cost per service request.

The increase in software maintenance costs was due primarily to general maintenance.

The decrease in compensation is primarily due to a decrease in headcount.

Services selling and marketing expense increased $13.6 million, or 22%, driven by increases of $17.6 million in compensation expense, $3.7 million in professional fees and $1.6 million of software maintenance costs, partially offset by a decrease $9.5 million of advertising expense.

The increase of compensation expense was due primarily to an increase in headcount.

The increase in professional fees is primarily from an increase of $4.1 million in outsourced personnel costs for improving the customer service experience offset by a decrease of $0.4 million in consulting costs primarily due to fees paid in 2021 that were a part of the investment in Services in 2021.

The increase in software maintenance costs was due primarily to general maintenance.

The decrease in advertising expense was primarily due to a decrease of $6.7 million in service professional marketing spend and $2.7 million search engine marketing spend primarily due to high advertising costs in 2021 to promote Services.

Roofing selling and marketing expense increased $19.0 million, or 136%, driven by a full year of expenses compared to only two quarters in 2021.

Corporate selling and marketing expense decreased $4.9 million, or 55%, driven by a decrease in lease expense of $5.4 million.

The decrease in lease expense is a result of the Company repurposing its real estate space for general and administrative functions and reducing its real estate footprint in 2021.

International selling and marketing expense decreased $1.8 million, or 4%, driven by a decrease in compensation expense of $1.6 million, which was primarily due to lower headcount.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Ads and Leads selling and marketing expense increased $77.7 million, or 11%, driven by an increase in advertising expense of $60.3 million and an increase in compensation expense of $30.1 million, partially offset by a decrease in lease expense of $11.6 million and the disposition of a business decreasing expense by $3.1 million.

The increase in advertising expense was due primarily to increases of $49.6 million in online marketing spend and $9.7 million in television spend.

The increase in online marketing spend was attributable to the brand integration initiative described above under “Brand Integration Initiative.” The increase in television spend in 2021 reflects the return to historical spending levels as compared to the cost cutting initiatives during 2020 due to the impact of COVID-19.

The increase in compensation expense was due primarily to increased commission expense, in addition to an increase in sales force headcount, net of an equity based compensation capitalization increase.

The increase in consulting costs was due primarily to various sales initiatives at Angi Services.

Europe selling and marketing expense decreased $1.5 million, or 4%, driven by a decrease in compensation expense of $3.7 million, partially offset by an increase in advertising expense of $2.6 million.

The decrease in compensation expense was primarily due to severance costs recorded in 2020 associated with headcount reductions in France and lower headcount in 2021.

The increase in online marketing spend was attributable to the Company’s transition to new brands and domains.

The increase in television spend in 2021 reflects the normalization of spending levels as compared to the cost cutting initiatives during 2020 due to the impact of COVID-19.

The increase in compensation expense was due primarily to increased commission expense.

The decrease in lease expense is primarily due to new alignment and repurposing of lease locations in 2021.

Services selling and marketing expense increased $21.7 million, or 55%, driven by an increase in consulting fees of $9.1 million, an increase in compensation expense of $7.0 million, and an increase in advertising expense of $4.1 million.

The increase in consulting costs was due primarily to various sales initiatives.

The increase in compensation expense was due to an increase in sales force headcount.

The increase in advertising expense was due primarily to an increase of $3.9 million in online marketing spend attributable to the brand integration, offset by a decrease of $0.1 million in television spend.

Roofing was acquired on July 1, 2021 and contributed $14.0 million in selling and marketing expense.

Corporate selling and marketing expense increased $8.9 million, driven by an increase in lease expense of $8.0 million.

The increase in lease expense is primarily due to new alignment and repurposing of lease locations in 2021.

International selling and marketing expense increased $0.7 million, or 2%, driven by an increase in advertising expense of $2.5 million, partially offset by a decrease in compensation expense of $1.6 million.

The increase in advertising expense was due, in part, to decreased advertising expense in 2020 to mitigate the negative impact of COVID-19 on revenue.

The decrease in compensation expense was primarily due to severance costs recorded in 2020 associated with headcount reductions in France and lower headcount in 2021.

General and administrative expense

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

1 unchanged sentence

As a percentage of revenue 25% 24% 25%

North America general and administrative expense increased $24.5 million, or 7%, due primarily to an increase of $25.5 million in professional fees, $10.8 million of expense from the inclusion of Angi Roofing, $9.6 million in one-time costs related to the Company reducing its real estate footprint in 2021, increases of $7.5 million in the provision for credit losses, and $6.9 million in software license and maintenance costs, offset by a decrease of $42.4 million in compensation expense.

The increase in professional fees is due primarily to an increase in outsourced personnel costs, and to a lesser extent, legal fees, recruiting fees, and consulting costs.

The increase in outsourced personnel costs is due primarily to an increase in call volume related to our customer booking assistance function.

The real estate related costs are the result of impairments of right-of-use lease assets, leasehold improvements and furniture and equipment associated with office space we vacated.

The increase in the provision for credit losses is primarily due to higher Angi Services revenue as the provision for credit losses as a percentage of revenue has remained relatively flat.

The increase in software license and maintenance expense is due primarily to increased investment in software to support our customer service function.

The decrease in compensation expense was due primarily to a decrease of stock-based compensation expense of $54.1 million, partially offset by an increase of $11.4 million in wage related expenses resulting primarily from annual wage increases and a certain departments’ headcount now being aligned to general and administrative functions under the brand integration initiative, contributing $5.8 million of the increase.

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Ads and Leads general and administrative expense increased $23.7 million, or 9%, due primarily to an increase of $16.4 million in provision for credit losses, $6.6 million in outsourced personnel costs, and $5.7 million in legal expense, partially offset by a decrease of $2.9 million in compensation expense.

The increase in the provision for credit losses is due primarily to revenue growth.

The increase in outsourced personnel costs is due primarily to the use of outsourced firms to support customer service needs.

The increase in legal expense is primarily due to certain legal matters in the third and fourth quarters of 2022.

The decrease in compensation expense is due to a $7.4 million decrease primarily due to lower headcount, offset with a $4.5 million increase in stock-based compensation.

Services general and administrative expense increased $27.8 million, or 71%, due primarily to an increase of $19.1 million in compensation expense, $5.3 million in professional fees, and $2.2 million in software license and maintenance expense.

The increase in compensation expense is primarily due to an increase of $10.5 million in stock-based compensation expense and $8.6 million in wage-related expense from higher headcount.

The increase in stock-based compensation expense is primarily due to management departures in the fourth quarter of 2022 and new awards granted.

The increase in professional fees is due

primarily to an increase in legal expense of $6.0 million due to certain legal matters in the current quarter.

The increase in software license and maintenance expense is due primarily to general maintenance.

Roofing general and administrative expense increased $16.2 million, or 149%, due primarily to a full year of expenses incurred compared to only two quarters in 2021.

Corporate general and administrative expense increased $9.3 million, or 20%, due primarily to increases of $14.4 million in compensation expense and $1.5 million of software license and maintenance expense, partially offset by a decrease of $4.4 million in lease expense.

The increase in compensation expense is due to an increase of $12.9 million in wage-related expense from higher headcount and $1.6 million in stock-based compensation expense.

The increase in stock-based compensation expense is the result of the reversal of previously recognized stock-based compensation as a result of the forfeiture of unvested awards due to management departures in the first quarter of 2021, management departures in the third quarter of 2022, and new awards granted in 2022.

The increase in software license and maintenance expense is due primarily to increased spend on software to support our customer service function.

The decrease in lease expense was due primarily to a decrease in impairments of right-of-use assets and related leasehold improvements, furniture, and equipment from the Company reducing its real estate footprint in 2021.

International general and administrative expense decreased $8.6 million, or 20%, due primarily to a 2021 charge of $7.0 million in compensation expense related to the acquisition of an additional interest in our MyBuilder business at a premium to fair value.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Ads and Leads general and administrative expense increased $32.5 million, or 14%, driven by an increase in $9.7 million of outsourced personnel costs, compensation expense of $9.4 million, professional fees expense of $6.2 million, and software license and maintenance expense of $5.7 million, partially offset by a decrease of $0.4 million in the provision for credit losses.

The increase in outsourced personnel costs is primarily due to an increase in call volume related to our customer booking assistance function.

The increase in compensation expense is due to annual wage and headcount increases.

The increase in professional fees is due primarily to an increase in legal and recruiting fees.

The increase in software license and maintenance expense is due primarily to increased investment in software to support our customer services function.

Services general and administrative expense increased $16.2 million, or 70%, driven by an increase in the provision for credit losses of $7.8 million, outsourced personnel costs of $6.6 million, and professional fees expense of $3.3 million.

The increase in the provision for credit losses is primarily due to higher revenue as the provision for credit losses as a percentage of revenue has remained relatively flat.

The increase in outsourced personnel costs is primarily due to an increase in call volume related to our customer booking assistance function.

The increase in professional fees is due primarily to an increase in legal fees.

Roofing was acquired on July 1, 2021 and contributed $10.8 million in general and administrative expense.

Corporate general and administrative expense decreased $37.3 million, or 44%, driven by decreases in compensation expense of $53.3 million, partially offset by increases of $9.6 million in one-time costs related to the Company reducing its real estate footprint in 2021, lease expense of $5.0 million and professional fees of $1.5 million.

The decrease in compensation expense is due to a $50.6 million decrease in stock-based compensation expense.

The decrease in stock-based compensation expense was due primarily to $30.8 million in stock appreciation rights expense recognized during the twelve months ended December 31, 2020, which was not incurred in 2021 as the awards became fully vested in 2020, and a net decrease of $7.7 million due to the reversal of previously recognized expense related to unvested awards that were forfeited due to management departures in the first quarter of 2021, partially offset by the issuance of new equity awards since 2020.

Europe general and administrative expense increased $7.2 million, or 25%, due primarily to a charge of $7.0 million in compensation expenses related to the acquisition of an additional 25% interest in our MyBuilder business at a premium to fair value and a $1.7 million increase in professional fees related to corporate restructuring, partially offset by a $2.6 million decrease in compensation expense driven by severance costs recorded in 2020 associated with headcount reductions in France.

The real estate related costs are the result of impairments of right-of-use assets associated with office space we vacated.

International general and administrative expense increased $9.5 million, or 28%, due primarily to a charge of $7.0 million in compensation expenses related to the acquisition of an additional 25% interest in our MyBuilder business at a premium to fair value and a $1.8 million increase in professional fees related to corporate restructuring.

Product development expense

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

1 unchanged sentence

As a percentage of revenue 4% 4% 5%

North America product development expense decreased $3.5 million, or 6%, due primarily to decreases in compensation expense of $4.9 million and lease expense of $1.0 million, partially offset by an increase in software license and maintenance expense of $1.4 million.

The decrease in compensation expense is due to certain departments’ headcount that were previously included within product development now being aligned to general and administrative functions under the brand integration initiative described above under “Brand Integration Initiative.”.

Europe product and development expense increased $5.6 million, or 49%, due to an increase in compensation expense of $5.3 million due primarily to higher headcount and fewer software development projects being capitalized.

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Ads and Leads product development expense decreased $4.5 million, or 11%, due primarily to a decrease in compensation expense of $11.5 million, offset by increases in outsourced personnel costs of $4.9 million and software license and maintenance expense of $1.1 million.

The decrease in compensation expense is primarily due to certain departments’ headcount that were previously included within product development now being aligned to general and administrative functions in 2022.

The increase in outsourced personnel costs is primarily due to an increase in costs for IT support.

The increase in software license and maintenance expense is due primarily to increased spend on software licensing.

Services product development expense increased $3.0 million, or 31%, due primarily to a $3.9 million increase in compensation expense.

Roofing incurred immaterial product development expense due to the nature of the business.

International product and development expense increased $3.1 million, or 16%, due to an increase in compensation expense of $3.1 million from higher headcount and higher average compensation.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Ads and Leads product development expense decreased $5.3 million, or 11%, due primarily to decreases in compensation expense of $6.0 million and lease expense of $1.0 million, partially offset by an increase in outsourced personnel costs of $0.9 million and software license and maintenance expense of $0.8 million.

Services product development expense increased $0.8 million, or 9%, due primarily to increases in software license and maintenance expense of $0.5 million and compensation expense of $0.2 million.

Roofing incurred no product development expense due to the nature of the business.

International product development expense increased $6.6 million, or 52%, due to an increase in compensation expense of $6.2 million due to primarily higher headcount and fewer software development projects being capitalized.

Years Ended December 31,

2021 $ Change % Change 2020

(Dollars in thousands)

2022 $ Change % Change 2021 $ Change % Change 2020

(In thousands)

Depreciation $ 78,270 $ 19,024 32% $ 59,246 $ 6,625 13% $ 52,621

As a percentage of revenue 4% 4% 4%

North America and Europe depreciation in 2021 increased from 2020 due primarily to investments in capitalized software to support our products and services.

Operating (loss) income

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Domestic depreciation increased primarily due to $15.5 million in capitalized software impairments in addition to investments in capitalized software to support our employees, products, and services partially offset by a decrease in capitalized computer equipment depreciation.

International depreciation decreased due primarily to capitalized software projects reaching the end of their depreciable lives.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Depreciation in 2021 increased from 2020 due primarily to investments in capitalized software to support our products and services.

Goodwill impairment

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(In thousands)

Goodwill impairment $ (26,005) $ (26,005) NM $ — $ — NM $ —

As a percentage of revenue 1 % — % — %

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Goodwill impairment increased at Roofing due to exiting certain markets and projected reduction in future profits from the business.

Operating income (loss)

Years Ended December 31,

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

North America $ (63,316) $ (68,127) NM $ 4,811

Europe (13,197) (2,018) (18)% (11,179)

Total $ (76,513) $ (70,145) NM $ (6,368)

Ads and Leads $ 85,593 $ 20,108 31% $ 65,485 $ (67,880) (51)% $ 133,365

Services (95,166) $ (31,182) (49)% (63,984) $ (19,392) (43)% (44,592)

Roofing (50,685) $ (42,089) (490)% (8,596) $ (8,596) NM —

Corporate (61,794) $ (5,598) (10)% (56,196) $ 28,478 34% (84,674)

Total Domestic (122,052) (58,761) (93)% (63,291) (67,390) NM 4,099

International (4,253) 8,969 68% (13,222) (2,755) (26)% (10,467)

Total $ (126,305) $ (49,792) (65)% $ (76,513) $ (70,145) (1,102)% $ (6,368)

As a percentage of revenue (7)% (5)% —%

1 unchanged sentence

NM = Not meaningful

North America operating income decreased $68.1 million to a loss of $63.3 million due to a decrease in Adjusted EBITDA of $143.5 million, described below, and an increase of $5.3 million in depreciation, partially offset by decreases of $54.5 million in stock-based compensation expense and $26.2 million in amortization of intangibles.

The increase in depreciation was due primarily to the investments in capitalized software to support our products and services.

The decrease in the amortization of intangibles was due primarily to certain intangible assets becoming fully amortized during 2020.

Europe operating loss increased $2.0 million, or 18%, due primarily to an increase in Adjusted EBITDA loss of $1.4 million, described below, and an increase of $1.3 million in depreciation expense, partially offset by decreases of $0.4 million in stock-based compensation expense and $0.3 million in amortization of intangibles.

Operating losses for fiscal year 2022 compared to fiscal year 2021 and fiscal year 2021 compared to fiscal year 2020 increased due primarily to the factors described above in the revenue, cost of revenue, sales and marketing, general and administrative, product development, goodwill impairment, and depreciation expense discussions.

At December 31, 2022, there is $68.9 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 2.5 years.

1 unchanged sentence

Years Ended December 31,

2021 $ Change % Change 2020

2022 $ Change % Change 2021 $ Change % Change 2020

(Dollars in thousands)

North America $ 35,328 $ (143,526) (80)% $ 178,854

Europe (7,462) (1,412) (23)% (6,050)

Ads and Leads $ 168,952 $ 32,692 24% $ 136,260 $ (94,537) (41)% $ 230,797

Services (52,126) $ (3,923) (8)% (48,203) $ (18,950) (65)% (29,253)

Roofing (21,400) $ (13,889) (185)% (7,511) $ (7,511) NM —

Corporate (49,866) $ (3,800) (8)% (46,066) $ (22,196) (93)% (23,870)

Total Domestic 45,560 11,080 32% 34,480 (143,194) (81)% 177,674

International (481) 6,134 93% (6,615) (1,745) (36)% (4,870)

Total $ 45,079 $ 17,214 62% $ 27,865 $ (144,939) (84)% $ 172,804

1 unchanged sentence

For a reconciliation of net loss attributable to Angi Inc.

shareholders to operating loss to consolidated Adjusted EBITDA, see “ Principles of Financial Reporting .” For a reconciliation of operating (loss) income to Adjusted EBITDA for the Company’s reportable segments, see “ Note 1 1 —Segment Information ” to the consolidated financial statements included in “ Item 8 .

shareholders to operating loss to consolidated Adjusted EBITDA, see “ Principles of Financial Reporting .” For a reconciliation of operating income (loss) to Adjusted EBITDA for the Company’s reportable segments, see “ Note 11—Segment Information ” to the consolidated financial statements included in “ Item 8.

Consolidated Financial Statements and Supplementary Data.

North America Adjusted EBITDA decreased $143.5 million, or 80%, to $35.3 million, and decreased as a percentage of revenue, despite higher revenue of $207.1 million, due primarily to an increase in selling and marketing expense of $122.5 million as well as growth of Angi Services due to factors described above in the cost of revenue and selling and marketing discussions.

Europe Adjusted EBITDA loss decreased $1.4 million, or 23%, due primarily to an increase of $10.4 million in revenue, largely offset by the increase in general and administrative expense of $6.7 million (excluding stock-based compensation expense), which included a charge of $7.0 million related to the acquisition of an additional 25% interest in MyBuilder at a premium to fair value, and the increase in product development expense of $5.6 million.

For the year ended December 31, 2022 compared to the year ended December 31, 2021

Ads and Leads Adjusted EBITDA increased $32.7 million, or 24%, to $169.0 million, and increased as a percentage of revenue, due primarily to higher revenue of $55.0 million, partially offset by an increase in general and administrative expense of $23.7 million.

Services Adjusted EBITDA loss increased $3.9 million, or 8%, to a loss of $52.1 million, and increased as a percentage of revenue, driven by higher revenue of $91.3 million, partially offset by increases in cost of revenue of $64.1 million, general and administrative expense of $27.8 million, and selling and marketing expense of $13.6 million.

Roofing Adjusted EBITDA loss increased $13.9 million, or 185% to a loss of $21.4 million, and decreased as a percentage of revenue, due primarily to a full year of losses incurred compared to two quarters in 2021 and, to a lesser extent, higher selling and marketing and general and administrative expenses relative to 2021.

Corporate Adjusted EBITDA loss increased $3.8 million, or 8%, to $49.9 million, primarily due an increase in compensation expense, partially offset by a decrease in lease expense.

International Adjusted EBITDA loss decreased $6.1 million, or 93%, due to a decrease in general and administrative expense of $8.6 million, which was primarily due to the 2021 charge of $7.0 million related the acquisition of an additional interest in MyBuilder at a premium to fair value.

This was partially offset by a decrease of $1.3 million in revenue and an increase of $3.1 million in product development expense.

For the year ended December 31, 2021 compared to the year ended December 31, 2020

Ads and Leads Adjusted EBITDA decreased $94.5 million, or 41%, and decreased as a percentage of revenue, due primarily to increases in selling and marketing expense of $77.7 million and general and administrative expense of $32.5 million.

Services Adjusted EBITDA loss increased $19.0 million, or 65%, and increased as a percentage of revenue, due primarily to increases in cost of revenue of $104.8 million, an increase in selling and marketing expense of $21.7 million and an increase in general and administrative expense of $16.2 million, partially offset by an increase in revenue of $127.4 million.

Roofing was acquired on July 1, 2021 and contributed a $7.5 million decrease to Adjusted EBITDA.

Corporate Adjusted EBITDA loss increased $22.2 million, or 93%, primarily due to increases in selling and marketing expense, partially offset by a decrease in general and administrative expense.

International Adjusted EBITDA loss increased $1.7 million, or 36%, and decreased as a percentage of revenue, due primarily to an increase of $15.7 million in revenue, largely offset by the increase in general and administrative expense of $9.5 million, which included a charge of $7.0 million related to the acquisition of an additional 25 % interest in MyBuilder at a premium fair value, and the increase in product development expense of $6.6 million.

Interest expense

9 unchanged sentences

Interest expense $ 20,107 $ (3,378) (14)% $ 23,485

Interest expense increased due primarily to the issuance of the ANGI Group Senior Notes in August 2020 and the write-off of deferred debt issuance costs associated with the termination of the ANGI Group Revolving Facility, partially offset by a decrease in interest expense due to the repayment of the ANGI Group Term Loan during the second quarter of 2021.

Other (expense) income, net

Interest expense decreased primarily due to the repayment of the ANGI Group Term Loan during the second quarter of 2021.

Other income (expense), net

Years Ended December 31,

1 unchanged sentence

(In thousands)

Other (expense) income, net $ (2,509) $ (3,727) NM $ 1,218

Other income (expense), net $ 1,178 $ 3,687 NM $ (2,509)

Other income, net in 2022 primarily includes interest income of $4.5 million, partially offset by net foreign currency exchange losses of $3.4 million.

Other expense, net in 2021 primarily includes net foreign currency exchange losses of $1.7 million and the write-off of $1.1 million of deferred debt issuance costs related to the ANGI Group Term Loan which was repaid in its entirety during the second quarter of 2021, partially offset by interest income of $0.2 million.

Other income, net in 2020 primarily includes interest income of $1.7 million, partially offset by a $0.2 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in Angi Inc.

shares during the first quarter of 2020.

Income tax benefit

3 unchanged sentences

Income tax benefit $ 17,252 $ (14,761) (46)% $ 32,013

Effective income tax rate 31% NM

Effective income tax rate 12% 31%

In 2022, the effective income tax rate was lower than the statutory rate of 21% due primarily to unbenefited realized losses, nondeductible stock-based compensation expense, and foreign income subject to tax in the United States, partially offset by research credits.

In 2021, the effective income tax rate was higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and a change in judgment about the valuation allowance at the beginning of the year, partially offset by unbenefited foreign losses.

For further details of income tax matters, see “ Note 3—Income Taxes ” to the consolidated financial statements included in “ Item 8.

Consolidated Financial Statements and Supplementary Data .”

In 2021, the effective income tax rate was higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and a change in judgement about the valuation allowance at the beginning of the year, partially offset by unbenefited foreign losses.

In 2020, the Company recorded an income tax benefit of $15.2 million.

The income tax benefit was due primarily to a reduction to deferred taxes due to the true-up of the state tax rate of an indefinite-lived intangible asset, a change in judgement about the valuation allowance at the beginning of the year, and excess tax benefits generated by the exercise and vesting of stock-based awards.

PRINCIPLES OF FINANCIAL REPORTING

1 unchanged sentence

generally accepted accounting principles (“GAAP”).

This measure is one of the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated.

This measure is one of the primary metrics by which we evaluate the performance of our businesses and our internal budgets are based and may impact management compensation.

We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results.

12 unchanged sentences

Years Ended December 31,

2022 2021 2020

(In thousands)

3 unchanged sentences

Income tax benefit (17,252) (32,013) (15,168)

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

Other (income) expense, net (1,178) 2,509 (1,218)

Interest expense 20,107 23,485 14,178

3 unchanged sentences

Amortization of intangibles 14,441 16,430 42,902

Goodwill impairment 26,005 — —

Adjusted EBITDA $ 45,079 $ 27,865 $ 172,804

17 unchanged sentences

(In thousands)

Cash and cash equivalents and marketable debt securities:

Cash and cash equivalents:

United States $ 311,422 $ 404,277

1 unchanged sentence

Total cash and cash equivalents $ 321,155 $ 428,136

Marketable debt securities (United States) — 49,995

Total cash and cash equivalents and marketable debt securities $ 428,136 $ 862,700

Long-term debt:

Senior Notes $ 500,000 $ 500,000

Term Loan — 220,000

Total long-term debt 500,000 500,000

1 unchanged sentence

Total long-term debt, net $ 495,284 $ 494,552

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

At December 31, 2022, all of the Company’s international cash can be repatriated without significant tax consequences.

Cash Flow Information

2 unchanged sentences

(In thousands)

Net cash provided (used in) by:

Net cash (used in) provided by:

Operating activities $ 27,069 $ 6,209

$ 6,209 $ 188,419

Investing activities $ (116,086) $ (45,072)

$ (45,072) $ (103,954)

Financing activities $ (17,227) $ (345,168)

$ (345,168) $ 337,053

Net cash provided by operating activities consists of earnings adjusted for non-cash items and the effect of changes in working capital.

Non-cash adjustments include stock-based compensation expense, provision for credit losses, amortization of intangibles, depreciation, impairment of long-lived and right-of-use assets, non-cash lease expense, and deferred income taxes.

Adjustments to earnings consist primarily of $88.1 million of provision for credit losses, $59.2 million of depreciation, $28.7 million of stock-based compensation expense, $16.4 million of amortization of intangibles, $12.9 million of non-cash lease expense, $12.7 million of impairment charges on long-lived and right-of-use assets, and $8.6 million of revenue reserves, partially offset by $36.3 million of deferred income taxes.

The decrease from changes in working capital consists primarily of an increase of $115.4 million in accounts receivable and a decrease of $16.8 million in operating lease liabilities, partially offset by increases of $14.0 million in accounts payable and other liabilities.

The increase in accounts receivable is due primarily to revenue growth, primarily attributable to Angi Services.

The increase in accounts payable and other liabilities is due primarily to increases in accrued advertising and related payables and accrued roofing material costs related to Angi Roofing.

Net cash used in investing activities includes $70.2 million of capital expenditures, primarily related to investments in capitalized software to support the Company’s products and services, and $25.6 million of cash principally related to the acquisition of Angi Roofing, partially offset by proceeds of $50.0 million from the maturities of marketable debt securities.

Non-cash adjustments include provision for credit losses, depreciation, stock-based compensation expense, impairment of goodwill, non-cash lease expense, amortization of intangibles, foreign currency transaction losses, and deferred income taxes.

Adjustments to earnings consist primarily of $108.2 million of provision for credit losses, $78.3 million of depreciation, $52.7 million of stock-based compensation expense, $26.0 million for goodwill impairment, $15.1 million of non-cash lease expense, and $14.4 million of amortization of intangibles, and $3.4 million for foreign currency transaction losses, partially offset by $21.6 million of deferred income taxes.

The decrease from changes in working capital consists primarily of an increase of $116.5 million in accounts receivable, a decrease of $17.3 million in operating lease liabilities, and a decrease of $2.8 million in deferred revenue, partially offset by an increase of $11.6 million in accounts payable and other liabilities, and an increase of $3.2 million in income taxes payable and receivable.

The increase in accounts receivable is due primarily to revenue growth, primarily attributable to Services.

The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion.

The decrease in deferred revenue is due to lower annual membership count.

The increase in accounts payable and other liabilities is due primarily to increases in accrued expenses related to the brand integration and accrued roofing material costs related to Roofing.

The increase in income taxes payable and receivable is due primarily to accrual of taxes in excess of payments.

Net cash used in investing activities includes $116.4 million of capital expenditures, primarily related to investments in capitalized software to support the Company’s products and services.

Net cash used in financing activities includes $8.8 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled and $8.1 million for the repurchase of 1.0 million shares of Angi Inc.

Class A common stock, on a settlement date basis, at an average price of $7.80 per share.

Adjustments to earnings consist primarily of $88.1 million of provision for credit losses, $59.2 million of depreciation, $28.7 million of stock-based compensation expense, $20.7 million of non-cash lease expense, $16.4 million of amortization of intangibles, and $1.7 million in foreign currency transaction losses, partially offset by $36.3 million of deferred income taxes.

The decrease from changes in working capital consists primarily of an increase of $114.1 million in accounts receivable, and a decrease of $16.8 million in operating lease liabilities, partially offset by an increase of $21.3 million in accounts payable and other liabilities.

The increase in accounts receivable is due primarily to revenue growth, primarily attributable to Services.

The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion.

The increase in accounts payable and other liabilities is due primarily to increases in accrued advertising and related payables and accrued roofing material costs related to Roofing.

Net cash used in investing activities includes $70.2 million of capital expenditures, primarily related to investments in capitalized software to support the Company’s products and services, and $25.6 million of cash principally related to the acquisition of Roofing, partially offset by proceeds of $50.0 million from the maturities of marketable debt securities.

Net cash used in financing activities includes $220.0 million for the prepayment of the ANGI Group Term Loan, which otherwise would have matured on November 5, 2023, $61.9 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled, $35.4 million for the repurchase of 3.2 million shares of Angi Inc.

Class A common stock, on a settlement date basis, at an average price of $11.06 per share, and $27.9 million for the purchase of redeemable noncontrolling interests.

Adjustments to earnings consist primarily of $83.6 million of stock-based compensation expense, $78.2 million of provision for credit losses, $52.6 million of depreciation, $42.9 million of amortization of intangibles, and $13.7 million of non-cash lease expense.

The decrease from changes in working capital consists primarily of an increase in accounts receivable of $79.8 million, a decrease in operating lease liabilities of $13.4 million, and an increase in other assets of $7.7 million, partially offset by an increase in accounts payable and other liabilities of $30.6 million.

The increase in accounts receivable is due primarily to revenue growth.

The increase in accounts payable and other liabilities is due primarily to an increase in accrued advertising and related payables, and accrued compensation costs due, in part, to the deferral of payroll tax payments under the Coronavirus Aid, Relief, and Economic Security Act.

Net cash used in investing activities includes purchases of marketable debt securities of $100.0 million and capital expenditures of $52.5 million, primarily related to investments in the development of capitalized software to support the Company’s products and services, $2.3 million related to the acquisition of a business, partially offset by $50.0 million of proceeds from maturities of marketable debt securities, and $0.7 million of net proceeds received in 2020 related to the December 31, 2018 sale of Felix.

Net cash provided by financing activities includes $500.0 million of proceeds from the issuance of the Senior Notes and a $3.1 million distribution from IAC pursuant to the tax sharing agreement, net of $63.7 million for the repurchase of 8.5 million shares of Angi Inc.

Class A common stock, on a settlement date basis, at an average price of $7.47 per share, $64.1 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled, $27.5 million in principal payments on the Term Loan, including the prepayment of the $13.8 million of principal payments that were otherwise due in 2021, $6.5 million for debt issuance costs, and $4.3 million for the purchase of redeemable noncontrolling interests

Liquidity and Capital Resources

Financing Arrangements

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 Angi Roofing, and treasury share repurchases.

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%.

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.

For a detailed description of long-term debt, see “ Note 6—Long-term Debt ” to the consolidated financial statements included in “ Item 8.

Consolidated Financial Statements and Supplementary Data .”

Share Repurchase Authorizations and Activity

Du ring the year ended December 31, 2022, the Company repurchased 1.0 million shares, on a trade date basis, of its common stock at an average price of $7.80 per share, or $8.1 million in aggregate.

From January 1, 2022 through February 11, 2022, the Company repurchased an additional 1.0 million shares at an average price of $7.80 per share, or $8.1 million in aggregate.

has 15.0 million shares remaining in its share repurchase authorization as of February 11, 2022.

The Company may purchase shares over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors Angi Inc.

management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

The Company has 15.0 million shares remaining in its share repurchase authorization as of February 10, 2023.

The Company may purchase their shares and debt instruments over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors the Company’s management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

Outstanding Stock-based Awards

1 unchanged sentence

At IAC’s option, certain Angi stock appreciation rights can be settled in either Class A shares of Angi or shares of IAC common stock.

If settled in IAC common

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

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

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

9 unchanged sentences

Stock appreciation rights $ 80 $ 40 14

RSUs 58,925 28,855 10,405

Other equity awards (a)(b)

131,743 65,040 7,747

Total outstanding employee stock-based awards $ 59,077 $ 28,931 10,431

_______________

(a) Includes stock options, RSUs, and subsidiary denominated equity.

(a) Includes stock options and subsidiary denominated equity.

(b) The number of shares ultimately needed to settle subsidiary denominated equity awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant award at the time of exercise.

2 unchanged sentences

The Company enters into various contractual arrangements as a part of its continued operations.

Many of these contractual obligations are discussed in the notes to the financial statements included in “ Item 8—Consolidated and Combined Financial Statements and Supplementary Data .” As of December 31, 2021, material obligations discussed in the notes included principal and interest payments on the Company's long-term debt discussed above and in “ Note 6 — Long -term Debt ,” operating leases discussed in “ Note 1 2 —Leases ,” and postretirement benefits discussed in “ Note 1 5 — Benefit Plans .”

In addition, as of December 31, 2021, the Company has material purchase obligations which represent legally binding agreements to purchase goods and services that specify all significant terms.

These obligations are discussed in “ Note 1 3 —Commitments and Contingencies .”

Material contractual obligations described in the accompanying notes to the financial statements within “ Item 8.

Consolidated Financial Statements and Supplementary Data ” include principal and interest payments long-term as debt described in “ Note 6 — Long-term Debt ,” operating leases as described in “ Note 12—Leases ,” and postretirement benefits as described in “ Note 15—Benefit Plans .”

The Company has material purchase obligations which represent legally binding agreements to purchase goods and services that specify all significant terms.

Future payments under these agreements at December 31, 2022 are as follows:

Amount of Commitment Expiration Per Period

(In thousands)

Purchase obligations $ 39,401 $ 13,263 $ — $ — $ 52,664

Purchase obligations include (i) payments of $25.5 million related to a three-year cloud computing arrangement, with payments of $12.5 million expected to be made within the next twelve months and the remaining payments of approximately $13.0 million expected to be made by September 2024, (ii) $17.9 million related to media spend to be made in 2023, (iii) $6.9 million related to technology contracts spend, and (iv) payments of $2.3 million related to communication spend.

Capital Expenditures

The Company’s 2022 capital expenditures are expected to be higher than 2021 capital expenditures of $70.2 million by approximately 15% to 20%, due primarily to increased investment in capitalized software to support the development of our products and services.

The Company’s 2023 capital expenditures are expected to be lower than 2022 capital expenditures of $116.4 million by approximately 50% due primarily to decreased investment in capitalized software.

Liquidity Assessment

The Company’s liquidity could be negatively affected by a decrease in demand for its products and services due to COVID-19 or other factors.

As described in the “COVID-19 Update” section above, to date, the COVID-19 outbreak and measures designed to curb its spread have adversely impacted the Company’s business.

The Company’s liquidity could be negatively affected by a decrease in demand for its products and services due to economic or other factors, including COVID-19.

At December 31, 2022, IAC held all Class B shares of Angi Inc., which represent 84.1% of the economic interest and 98.1% of the voting interest of the Company.

As a result, IAC has the ability to control Angi Inc.’s financing activities, including the issuance of additional debt and equity securities by Angi Inc.

or any of its subsidiaries, or the incurrence of other indebtedness generally.

While Angi Inc.

is expected to have the ability to access debt and equity markets if needed, such transactions may require the approval of IAC due to its control of the majority of the outstanding voting power of Angi Inc.’s capital stock and its representation on the Angi Inc.

board of directors.

Additional financing may not be available on terms

favorable to the Company or at all.

As a result, IAC has the ability to control Angi’s financing activities, including the issuance of additional debt and equity securities by Angi or any of its subsidiaries, or the incurrence of other indebtedness generally.

Angi’s ability to access the debt and equity markets may require the approval of IAC due to its control of the majority of the outstanding voting power of Angi’s capital stock and its representation on the Angi board of directors.

The Company believes its existing cash, cash equivalents, and expected positive cash flows generated from operations will be sufficient to fund its normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards, and investing and other commitments, for the next twelve months.

We may elect to raise additional capital through the sale of additional equity or debt financing to fund business activities such as strategic acquisitions, share repurchases, or other purposes beyond the next twelve months.

Additional financing may not be available on terms favorable to the Company or at all, and may also be impacted by any disruptions in the financial markets.

In addition, the Company’s existing indebtedness could limit its ability to obtain additional financing.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

6 unchanged sentences

What follows is a discussion of some of our more significant accounting policies and estimates.

Credit Loss and Revenue Reserves

Credit Losses

The Company makes judgments as to its ability to collect outstanding receivables and provides reserves when it has determined that all or a portion of the receivable will not be collected.

2 unchanged sentences

The duration of time between the Company’s issuance of an invoice and payment due date is not significant.

The Company also maintains reserves for potential revenue adjustments.

The amounts of these reserves are based primarily upon historical experience.

The carrying value of the credit loss and revenue reserves is $36.4 million and $27.8 million at December 31, 2021 and 2020, respectively.

The carrying value of the credit loss is $43.2 million and $33.7 million at December 31, 2022 and 2021, respectively.

The provision for credit losses was $108.2 million and $88.1 million for the years ended December 31, 2022 and 2021, respectively.

1 unchanged sentence

Acquisitions, which are generally referred to in GAAP as business combinations, are an important part of the Company’s growth strategy.

The Company invested $29.2 million and $2.7 million in acquisitions for the years ended December 31, 2021 and 2020, respectively.

The Company made no acquisitions in the year ended December 31, 2022 and acquisitions totaling $26.6 million for in the year ended December 31, 2021.

The purchase price of each acquisition is attributed to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets that either arise from a contractual or legal right or are separable from goodwill.

1 unchanged sentence

The reporting unit determination is important beyond the initial allocation of purchase price because future impairment assessments of goodwill, as described below, are performed at the reporting unit level.

At October 1, 2021, the Company has two reporting units:

North America and Europe.

Historically, when the Company’s acquisitions have been complementary to these reporting units and the goodwill has been assigned to either the North America or Europe reporting unit.

At October 1, 2022, the Company has four reporting units:

Ads and Leads, Services, Roofing and International.

Historically, the Company’s acquisitions have been complementary to these reporting units and the goodwill has been assigned to the reporting unit.

The allocation of purchase price to the assets acquired and liabilities assumed based upon their fair values is complex because of the judgments involved in determining these values.

6 unchanged sentences

Indefinite-lived intangible assets, which consist of the Company’s acquired trade names and trademarks, have a carrying value of $170.1 million and $171.4 million at December 31, 2022 and 2021, respectively.

Goodwill and indefinite-lived intangible assets are assessed annually for impairment as of October 1, or more frequently if an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit or the fair value of an indefinite-lived intangible asset has declined below its carrying value.

or the fair value of an indefinite-lived intangible asset has declined below its carrying value.

In performing its annual goodwill impairment assessment, the Company has the option under GAAP to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value;

10 unchanged sentences

If the goodwill of a reporting unit is allocated to newly formed reporting units, the allocation is usually made to each reporting unit based upon their relative fair values.

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 the Company concluded 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’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 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;

the estimated fair value of the North America reporting unit exceeded its carrying value by approximately $4.9 billion.

The fair value of the Company’s Europe reporting unit is determined using both an income approach based on discounted cash flows (“DCF”) and a market approach when it tests goodwill for impairment, either on an interim basis or annual basis as of October 1 each year.

In the fourth quarter of 2022, our segment presentation was changed to reflect our four new operating segments, which now include (i) Ads and Leads, (ii) Services, (iii) Roofing and (iv) International (includes Europe and Canada).

Goodwill was allocated to reflect the new segment presentation.

The allocation of goodwill to Roofing and Canada reflects their respective historical carrying values because of the lack of operational integration with the legacy North America segment;

the allocation of the remaining goodwill to Ads and Leads and Services was based upon their relative fair values as of October 1, 2022.

For the Company’s annual goodwill test at October 1, 2022, as a result of the significant changes in the operating segments and reporting units, we elected to perform a quantitative assessment of the reporting units’ goodwill first, instead of performing a qualitative assessment.

The quantitative test for the reporting units of Ads & Leads, Services and International included use of both an income approach based on discounted cash flows (“DCF”) and a market approach.

The quantitative test for the reporting unit of Roofing only included an income approach based on DCF as there were no relevant publicly traded company comparables to perform a market approach.

Determining fair value using a DCF analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates.

2 unchanged sentences

Assumptions used in the DCF analyses, including the discount rate, are assessed based on the reporting units' current results and forecasted future performance, as well as macroeconomic and industry specific factors.

The discount rate used in determining the fair value of the Company’s Europe reporting unit was 15% in both 2021 and 2020.

The discount rate used in determining the fair value of the Company’s Ads & Leads, Services, Roofing and International reporting units was 12%, 15%, 16% and 18.5%, respectively for 2022 and 15.0% for the International reporting unit in 2021.

Determining fair value using a market approach considers multiples of financial metrics based on both acquisitions and trading multiples of a selected peer group of companies.

1 unchanged sentence

To determine a peer group of companies for our respective reporting units, we considered companies relevant in terms of consumer use, monetization model, margin and growth characteristics, and brand strength operating in their respective sectors.

As a result of the valuation process, we determined that the fair value of the Ads & Leads, Services and International reporting units exceeded the carrying value and thus there was no impairment of goodwill in 2022.

The fair value based on the valuation exceeded the carrying value of the Ads & Leads, Services, and International reporting units by $1.3 billion, $40.0 million, and $143.0 million.

For the Roofing reporting unit, we determined the carrying value exceeded the fair value, resulting in an impairment being recorded to goodwill totaling $26.0 million in 2022.

The Company determines the fair value of indefinite-lived intangible assets using an avoided royalty DCF valuation analysis.

1 unchanged sentence

The discount rates used in the DCF analyses are intended to reflect the risks inherent in the expected future cash flows generated by the respective intangible assets.

The royalty rates used

in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the Company’s trade names and trademarks.

The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the Company’s trade names and trademarks.

The future cash flows are based on the Company's most recent forecast and budget and, for years beyond the budget, the Company’s estimates, which are based, in part, on forecasted growth rates.

1 unchanged sentence

The discount rates used in the Company’s annual indefinite-lived impairment assessment ranged from 12.0% to 18.5% in 2022 and 11.1% to 15.0% in 2021, and the royalty rates used ranged from 2.0% to 4.5% in 2022 and 2.0% to 5.0% in 2021.

The 2021 and 2020 annual assessments of goodwill and indefinite-lived intangible assets identified no impairments.

The 2022 annual assessment of goodwill and indefinite-lived intangible assets identified impairments to goodwill for the Roofing segment and 2021 annual assessment identified no impairments.

Recoverability and Estimated Useful Lives of Long-Lived Assets

20 unchanged sentences

We consider many factors when evaluating and estimating our tax positions and unrecognized tax benefits, which may require periodic adjustment and which may not accurately anticipate actual outcomes.

Although management currently believes changes to 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 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.

or the outcome of any review of our tax returns by the various tax authorities, as well as actual operating results of the Company that vary significantly from anticipated results.

Although management currently believes changes to 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 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.

The ultimate amount of deferred income tax assets realized and the amounts paid for deferred income tax liabilities and unrecognized tax benefits may vary from our estimates due to future changes in income tax law, state income tax apportionment or the outcome of any review of our tax returns by the various tax authorities, as well as actual operating results of the Company that vary significantly from anticipated results.

The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and historical experience.

6 unchanged sentences

The Company recorded stock-based compensation expense of $52.7 million and $28.7 million for the years ended December 31, 2022 and 2021, respectively.

Included in stock-based compensation expense in the years ended December 31, 2021 and 2020 is $1.0 million and $22.2 million, respectively, related to the modification of previously issued HomeAdvisor equity awards and Angie’s List equity awards, both of which were converted into Angi’s equity awards when the businesses combined on September 29, 2017.

These modified awards finished vesting in the first quarter of 2021.

Additionally, in the first quarter of 2021, the Company recognized a net decrease of $7.7 million due to the reversal of previously recognized expense related to unvested awards that were forfeited due to management departures, and, in connection with the departure of the president and chief operating officer of the Company in December 2020, the Company recognized $14.1 million of expense related to the acceleration of vesting of his unvested stock appreciation rights and RSUs and the extension of the post-termination exercise period for his vested and exercisable stock appreciation rights.

Included in stock-based compensation expense in the year ended December 31, 2022, the Company recognized a net decrease of $2.1 million due to management departures.

Also included in stock-based compensation expense in the year ended December 31, 2021 is $1.0 million related to the modification of previously issued HomeAdvisor equity awards and Angie’s List equity awards, both of which were converted into Angi’s equity awards when the businesses combined on September 29, 2017.

These modified awards finished vesting in the first quarter of 2021, therefore, there was no modification charge for the awards in the year ended December 31, 2022.

Stock-based compensation at the Company is complex due to our desire to attract, retain, inspire and reward outstanding entrepreneurs and managers at the Company, including recently acquired companies, by allowing them to benefit directly from the value they help to create.

17 unchanged sentences

The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, the most significant of which include expected term, expected volatility of the underlying shares, risk-free interest rates and the expected dividend yield.

In addition, the recognition of stock-based compensation expense is impacted by our estimated forfeiture rates, which are based, in part, on historical forfeiture rates.

addition, the recognition of stock-based compensation expense is impacted by our estimated forfeiture rates, which are based, in part, on historical forfeiture rates.

For stock appreciation rights and stock options, including equity instruments denominated in shares of subsidiaries, the grant date fair value of the award is recognized as an expense on a straight-line basis, net of estimated forfeitures, over the requisite service period, which is the vesting period of the award.

The Company also issues RSUs, PSUs

The Company also issues RSUs, PSUs and MSUs.

For RSUs, the value of the instrument is measured at the grant date as the fair value of the underlying Angi’s common stock and expensed as stock-based compensation expense over the vesting term.

5 unchanged sentences

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 7. Management’s Discussion and Analysis